US broader markets continue to charge higher overnight and all of the major indices are very close to overbought. The junk bond market is well into overbought territory so one has to wonder how it can be possible that the worst quality bonds are charging higher in an environment where we see unprecedented capital destruction with the economy collapsing and companies going bankrupt at an alarming rate. The answer is simple. Central bank buying and jawboning. Then we have gold which was under pressure all yesterday and then dropped precipitously just after 10pm aest creating a $30 hit.What could be the cause of that. The answer is simple.Central bank smashing. I prattled on earlier about the timing of a change coming around the middle of the year which under normal conditions would more than likely produce a high somewhat similar to September last year or January this year. It looks like the clear interference in these particular markets has negated the likelihood in the short run of this happening so the "correction we have here is likely to be more shallow and less long lasting than would have been the case without the interference. Gold stocks were however quite overbought in a lot of cases and were and still are at risk of a steep correction. Fridays unemployment report may be gold bullish as these morons quite often hammer gold into a gold bullish announcement and then try and cap the rally while allowing gold to move higher. A bit like a parachute on the back of an airplane coming in to land to slow the move. We shall see.
