A personal note to my readers – I have been trading for a living for over 25 years and have to say, that these are some of the most chaotic and unpredictable markets I can ever recall seeing over that time span.

That is why I have been strongly urging you to trade smaller portions of your portfolios that you have in the past.

Reversals, flips, flops, you name it, we are getting it. Every bit of it has been caused, in my opinion, by the Central Bankers of the West, who simply refuse to get out of the constant interference in the markets game. It does not take an highly educated observer to understand that the path which the global equity markets want to take is DOWN, IF THEY WERE LEFT TO THEMSELVES.

The uncertainty, sluggish growth, mediocre job creation, abysmally low interest rates, all suggest stock prices that are grossly overpriced for the actual real economy and yet, until just today, the S&P 500 was not far off all time record highs once again.

The problem is, as soon as the equity markets look set to rollover by actually factoring these fundamental conditions into prices, up pop the Central Bankers with yet another barrage of words, phrases, adjectives and, oh yes, something “stimulative” in nature – at least in theory – which then completely frustrates the downside in equities and produces yet another upside move higher in stocks.

These rallies last long enough to manage to flip most technical indicators onto the buy side, whereupon at that point, the market realizes that the move is not based on anything solid but rather on repositioning, short covering, yield seeking or momentum buying, none of which have anything to do with the actual effectiveness ( lack thereof) of the CB’s policy prescriptions. When that occurs, back down they go, again and again and again.

Hedge funds are getting shredded in this environment with a growing realization that the markets have become unhinged from reality. What we are getting instead is simply movements in price created by computers firing off buy or sell orders in huge numbers.

My point is simple – if the Central Bankers would get the hell out of the business of trying to manage markets by producing never ending bull markets in stocks, we might actually see some solid trending moves in which equity prices adjust to reality. That would produce a trend, albeit a lower one, which would work to bring valuations back to some semblance of normalcy. It would also eliminate the constant, non-stop, unceasing flipping and flopping that has become the new normal when it comes to our markets.

Price discovery cannot occur in markets which are regularly being interfered with by central planners because the background against which buyers and sellers are working against is changing too frequently. One could make the argument that the Central Bankers are deliberately trying to alter the background until they get it to conform to something of their own liking. In effect, they are attempting to impose their will on an inanimate market. The problem is that what they wish for and what is real are two completely different things.

What we traders are being subjected to is nothing less than a sort of grand experiment – one in which one side believes in an all-powerful set of Central Banks and their ability to conjure up some sort of utopian market/economic conditions that will result in unending growth – the other which believes that there is a limit to what those same Central Banks can do. The latter side also believes that the prescription being doled out by these self-appointed physicians is going to do irreparable harm to the patient. Put me in the latter category.

Today we witnessed yet another RISK OFF event. Tomorrow- Who the hell knows?

In all honesty, this is NOT HOW MARKETS WERE DESIGNED TO FUNCTION. PRICE DISCOVERY IN THIS ENVIRONMENT IS IMPOSSIBLE.

Why? Because most realize that left to themselves, the economy/markets would do what they have always done over the years, clear the system of excesses and rebalance supply with demand setting the stage for an eventual restoration healthy growth. Central Bankers however refuse to allow this process to function.

By this stubborn refusal and unwillingness to allow a free market to function, Central Banks have become the CHIEF ARCHITECTS OF EVERY SINGLE BIT OF CHAOS THAT IS NOW BEING SEEN IN OUR MARKETS.

I would challenge anyone who doubts this to speculate on what these same markets would do if they were indeed left to themselves, without any CB interference.

To suggest this could be remotely possible in this day and age however is to engage in a sort of wishful fantasy. The end result is that those of us who are trying to make informed decisions about where to best place our wealth and protect and grow it, have all become VICTIMS of this pestilential band of arrogant elitists.

Is it any wonder that such a large portion of the electorate is in such a foul mood these days. Instinctively, many realize something is seriously wrong with our economy and our markets. Sadly, I see nothing that gives me the least bit of hope that any of this is going to change anytime soon.

Just so that i can leave you with a chart so that this set of comments contains something besides a diatribe against Central Bankers and the chaos they create.

Gold stocks ran back up to that resistance zone noted on the chart. The gap higher is impressive. The question is what happens tomorrow?

Sames goes with gold.. it ran to resistance and then faded back a bit.

The daily chart shows the move to the Median Line of the Bollinger Bands. Price is right at that level. A push back above there in tomorrow’s trading will shift the short term advantage back to the bulls. The lower oscillator is hinting at an upside bullish crossover. I have no idea whether we will get it or not.

Tell me what the mood of the markets will be tomorrow, and i will tell you whether or not we do.

Insert Daisy Petal picture here….