20110805 Weekend

Dow 11,444.61 +60.93
Nasdaq 2,532.41 -23.98. Another huge volume down day.
SP500 1,199.38 -0.69
30-yrBond 3.8230% +0.1010

Massive downtick of -1752 portends a bounce. Margin calls will be happening early next week, so Monday might open down.

GLD 161.75 +1.11
SLV 37.32 -0.29
PTM 20.06 -0.13
XLE 68.07 -0.66
XLF 13.43 -0.26
VXX 30.31 +1.42 (4.92%)

USA major stock indices are negative for the year. T-bill rates went negative (similar to 2008).

According to Bloomberg, "... the past week’s market plunge wiped out about $2 trillion in global equity value."

This week USA politicians raised debt ceiling beyond 2012 election and promised future spending reductions. A day later there was big volatility worldwide in all sectors. Crude oil and copper plunged. Gold and silver held up relatively well, though miners were hit.

On the week, gold was higher and silver was lower.
Gold made another record high this week. Gold is being bought in large amounts by governments and private individuals. While someone with a large interest in GLD could liquidate and precipitate further selling, gold held up well this week.
Silver is very volatile. While it could break down, when it eventually has a weekly close above $50 I expect it to quickly rise to $80+. $62 silver in January 2012 is possible.

A Chinese rating agency downgraded USA debt. The USA-based Standard & Poor's rating agency downgraded USA debt from AAA may precipitate selling (pensions, endowments, insurance, etc.). State and municipal downgrades should quickly follow.
Neil Cavuto discussing debt rating with Presidential candidate Ron Paul:


Any positives are being sold - bearish action. When will there be a bounce, and will it be sustained? Was this sell-off a setup for QE3? The Fed meets Tuesday. There has been recent stealth easing such as the release of oil from the Strategic Petroleum Reserve, which depressed prices.

In a sign of dysfunctional monetary policy and predatory banks BNY Mellon will charge negative interest on accounts with large cash deposits: Bank of New York Mellon Corp. on Thursday took the extraordinary step of telling large clients it will charge them to hold cash.

Labor participation dropped to a multi-decade low. This makes unemployment numbers look better than the reality.

Germany is saying Italy's debt problems are too big to be handled by the EU. "The government doubts whether even tripling the size of the rescue fund, known as the European Financial Stability Facility, would enable it to save Italy because the country's financing needs are so enormous, the magazine reports without naming the source of its information." If Italy's banks start to fail, there will be exposure of worldwide financial insolvency.

ZSL 14.33 +0.25. ProShares UltraShort Silver. Went long Friday to hedge some of the physical silver in my possession. This is simply a hedge. Anticipate keeping this hedge for a few trading days - until some normalcy returns.

Recent trade analysis:
Good to sell MDW after huge run.
Expired trailing stop on leveraged BGU inflicted pain. Lessons - nice sell, moved too fast into leverage on other side, away from markets without trailing stop.
Tried to trade volatility on Friday and was stopped out for mostly losses. Good to step back and stop trading.

Other than MDW, miners have been lagging. To step away from markets and into cash, sold the remaining miners Friday, mostly for losses:
RTRAF
TKRFF
OKOFF
UXG
MDW
GPL
EXK

BAC 8.17 0.66 (7.47%). 52 week range 8.03 - 15.31. Intraday 2 year low. The ridiculously cheap $8.5 billion "settlement" has the New York Attorney General pusuing BAC for related violations.
F 10.84 -0.02
GM 26.31 +0.32. 52 week range 24.49 - 39.48. Intraday 52 week low.

IPSU 9.44 -13.75 (59.29%). Imperial Sugar Co. 52 week range 9.21 - 25.68. Intraday 52 week low.