Hotel Brussels

And in other news one of the oldest democracies in the world just quietly passed away this morning after a democratic referendum was unceremoniously flushed down the toilet by a bunch of British bureaucrats. Which basically renders the European Union a giant roach motel: Yes, you can check in – but no matter what you do, you won’t be checking out. This whole train wreck gave me a great idea on how the Brits can solve their looming energy gap over the coming decade: Just hook up a big dynamo to Winston Churchill’s grave and you’ll be selling excess capacity to the rest of Europe in no time. Then again he is the one attributed to the aphorism that the best argument against democracy is a five minute conversation with the average voter. Judging by the less than civilized discourse I’m seeing on various political forums right now I think he may have been spot on.

Now just guess which chart this is? Our lesson of the day is that less democracy equals more strength for its fiat currency. Heck, I’ve been saying that for years! If you ask me we should just return to some sort of 21st century feudal system. I for one look forward to declaring prima nocta in one of the remote regions of the U.K. I intend on acquiring a few years from now.

Alright, enough gallivanting. In comparison with large moves overnight in gold and on the currency side the response in equities has been rather tepid. Thus far our series of lower highs and lower lows remains intact. A push to ES 2106.50 is needed to invalidate the series and open up the possibility of a first reversal.

The long term picture shows us in the middle of nowhere on the weekly side but there is an active NLBL which we touched and thus far seems to be holding. Maybe this was it – tough to say – until we drop below 2089 the roaring bear may just turn out to be another cub. Speaking of cubs – believe it or not, the Chicago Cubs won the world series for the first time in 108 years. The curse has finally been lifted!!

I should point out that the Russell has been leading the current decline and is now sitting on long term support. Thus the odds of a bounce are increasing here, especially given the increasing propensity for volatility as we are only days away from the U.S. presidential election.

Gold has dropped – well, like a very heavy object overnight and my trail was touched near 1295. It’s tempting to look for long entries here but I think it would be a bit premature. Volatility is on the increase and now more so than ever we should take great care in only participating when the odds are solidly in our favor. So I’d like to see at minimum a more pronounced spike low – preferably a push up followed by a retest.

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