I Just Got Back from Vacation!

I go away for one lousy week and the financial world goes on bajunga tilt. Unreal. Plenty to cover.

Final Word on Silver for a While
The relentless pressure on silver continues. I see many calling for a bottom or a bounce around $34 and that is probably some fibonacci line thing. I guess it is possible. What I think is that a concerted effort to target silver happened. Sure, there was plenty of hot money, leveraged money (way more than I thought, I was wrong) in silver and other commodities but NYSE margin debt is at all time highs and I fail to note that margin increase movement.

Let's look at it another way, who the hell cares is over leveraged silver buyers blow themselves up? Why the worry about silver specifically? I cannot wrap my mind around this one. If anyone comments that regulators are concerned over speculators getting in trouble, that sure is rich. I wish Kid Dynamite was not on vacation, I would love his take on this. Does the industrial lobby for silver usage have that kind of sway? The jewelers? If silver is a useless relic not fit for anything but cave men to buy, who cares what happens to it and those that buy it? Answers welcome.

That said, Economic Disconnect is against leverage in all forms and thinks we should all play with what we have, not what we can move around in shell games. There is a saying in racing circles at local tracks on "open" night; "You have to run what you brung" meaning the car you drove in with is what you race. Most would think I am pissed silver is getting crushed, but actually I would like the exit of levered nervous players from the whole space. If it craters, it does. It has anyway.

My man Josh Brown was giving props to Market Anthropology for hitting the silver top and that was good work. I think he was beaten by Eric Janzen at iTulip however.

I have no idea if Market Anthropolgy was a silver follower, but EJ has been since 2001! Some of my earliest ideas about the metals were formed reading his ideas. On April 29th EJ cashed out, calling the top very well. As about 100 people I read were calling the top in silver for over a month, my prize goes to Janzen who was along for the ride a long time.

I would add when silver passed $35 on March 7th I said $40 was not a big psychological barrier and that $50 would pose a problem but who cares:

Silver I think could run to $50 as I do not think $40 is an important psychological barrier. Gold is still lagging a bit behind.

I reiterated that in my sell silver at $50 post 2 weeks ago as well:

If you are so worried about the metals being in a bubble then it is time to let loose. I have no idea where you bought yours, but a hefty profit should come around the $50 (silver),$1550 (gold) mark. Take it. Move on.

I tried.

As for Economic Disconnect? Nothing has changed. Other than one big trade in SLV last year (way back at the $18-$22 range!) I have been sitting still for years. And I still am. I have mentioned many times that I felt a correction when silver was around $30 back to $22-$22.50 would have been the best thing to happen. It did not and now here we are. At $22.50 I am interested and not before. End of story.

Sentiment Does not Exist in a Vacuum
What has me puzzled is how the sentiment that the commodities crush will in no way spill over into the credit markets nor the stock markets is shared by almost 100% of the people I am reading right now. Where are the contrarians? Probably setting up their shorts!

In 2008 we had this kind of set up. Oil dropping 20% was supposed to be a positive for equities, the TRANSPORTS in particular, remember? Perhaps it is different this time.

I feel that sentiment and fear are huge factors in market behavior. Massive short squeezes and liquidations in silver will require those players to sell other assets. Now maybe I have no idea, and I fully allow for that, but how does this not force pressure on stocks unless the silver dead men walking are only in silver and oil? Again, feel free to offer an idea in the comments section.

As is, many individual stock names are getting hammered badly, while the indices seem to stay above real damage. The end of QE 2.0 with no QE 3.0 in sight (though the CNBC heads brought it up right after the bad jobs claims number!), pressure on commodities, and the summer season are all things which could be headwinds. For now, most seem comfortable enough.

Added:
Who remembers "The Gooch"; the bully from the series "Different Strokes"?:

Wonderful.

Have a good night.