Wednesday, October 18, 2017

"They Don't Tell You You're An Idiot At The Top"

Because they're too busy selling into strength...

Pump and dump worst stock in the Dow. Check.

"How did IBM "beat" again? By once again applying a lower tax rate than a year ago: a paltry 11.0%, down from the already laughable 12.5% in Sept 30, 2016. Had IBM used even last quarter's 12.5% tax rate, it would have missed."

Dow 23,000 compliments of tax avoidance:

Pump and dump Chinese tech IPO. Check.

What's wrong with America in a nutshell:

 The Casino is more important than the 'Conomy: 

This is going to be a hard lesson to learn for the casino class...

It's too late to worry.

"Indeed, when comparing the daily index levels for the S&P 500 in 1987 with the progression thus far in 2017, they appear to follow an eerily similar path"

But Stovall said there are key differences between this market and the one from 30 years ago.

"First, the market this year is not exhibiting the same signs of euphoria it was back in 1987"

Jumping to number three:

"interest rates are much lower now than they were 30 years ago"

Because the 'Conomy's been outsourced. Which is so obviously "bullish"

"this bull market is much older than the one that ended in 1987"

I can't argue with that logic

TRUMPTOPIA: Double Or Dog Food

"Brexit and Trump are the history of Thatcher and Reagan repeating as dangerous farce"

Trump has imploded three casinos. This will be his fourth...

"The crash of October 1987 sensitized investors to the potential for stock market crashes and forever changed their view of S&P 500 returns. Investors now realize that S&P 500 tail risk - the risk of outlier returns two or more standard deviations below the mean - is significantly greater than under a lognormal distribution. The Cboe SKEW Index is an index derived from the price of S&P 500 tail risk. Similar to VIX, the price of S&P 500 tail risk is calculated from the prices of S&P 500 out-of-the-money options.

SKEW typically ranges from 100 to 150"

Yesterday was the lowest S&P 500 ETF volume in over a decade, including all half trading days for Christmas and Thanksgiving...

The second lowest volume day in a decade was August 7th:

Since the election, casino volume has collapsed amid the low volatility Jedi Mind Trick:

"Getting in was so easy"

But first, a message yesterday from the croupier-in-chief to his Kentucky Fried base:

"Come on bitchez, double or dog food"

"Professional traders are taking a record amount of short positions against the Dow Jones Industrial Average"

"The opposite also is true. When noncommercial traders increase their long positions, the market usually drops shortly thereafter. It seems they have a habit of buying the market at exactly the wrong time."

Let's pretend I need to continue...

Options and futures positioning may well be subjective, however, realized volatility is purely statistical. Here we see that volatility shorts followed S&P volatility lower, which was a function of the relentless overnight EM bid:

Now of course, EM is a tad overbought and VIX sensitivity is record high because of the large volatility short position:

The S&P 500 is 3% above its 50 day, and 6% above the 200 day. So even a mere re-test of these moving averages is going to be "interesting":

With global Central Banks now tightening, a repeat of the Brexit stick save seems a tad unlikely. Institutions are out of the way, Central Banks are out of the way and stock buybacks are on hold for earnings season...

Monday, October 16, 2017

The Year Of Trumptopia aka. Global Synchronized Asset Crash

The first year of Trumptopia is ending. The world has been enraptured by his leadership, everything 'risk' got bought with both hands. Nevertheless, one can make the case that the next 12 months won't be the same as the last...

It's been almost a year since the election - a year of unprecedented low volatility Trumptopian "bliss". Concerns about WWIII, Brexit, Trump, China, Fed tightening, trade wars, OPEC, are worlds away. The 24x7 rally in large cap EM stocks created the illusion of a one-way market, obliterating short-sellers and otherwise collapsing volume and volatility to record lows. Of course, these are now the riskiest stocks in the casino...

"To everything - turn, turn, turn
There is a season - turn, turn, turn"

But first, it speaks volumes about Globalization that those who control the capital are wholly oblivious to the plight of those who provide the imaginary recovery aka. the labour. The casino class has no fucking clue if there's a recovery at the bottom of this ponzi scheme. They take it as an article of their enduring fake faith that the Fed isn't right now imploding recovery again the way they did in 2000, 2007, and 2017...

One of the central tenets of Elliott Wave theory is that risk is "all one market", meaning that on the downside all global assets reach a correlation of '1'. We saw that in 2008, and again in 2015. 

Great question - is this the meltup prior to the meltdown? If so, which stocks should I buy and who will tell me when to get out?

“For the first time in a number of years,” investors are looking at a “global economic recovery” that is synchronized

Gamblers, economists, Wall Street, and most ironically Central Banksters have all conflated synchronized asset levitation with global synchronized recovery. The exact same levitation Central Banksters themselves sponsored. Leave aside the fact that Wall Street's narrative has conveniently rotated around the globe for the entire past year since the election: first U.S.-led reflation, then European reflation, then Emerging Markets reflation, now just to stretch the narrative to the most asinine extent possible - Japanese reflation. Sure. Because if you buy it they will come. 

The top performing "asset" this past year wasn't Bitcoin, which has risen ~500% year-to-date, it's another crypto-currency Ethereum, which has risen 4,000% year-to-date:

As we see, it peaked in June and again in late August (corrective) and is now clinging to the uptrend line, barely:

The S&P 500 is up ~14% year-to-date. The top performing U.S. sector is semiconductors +36%. Of the top 12 performing stocks in the S&P 500, 5 are in the semiconductor index: Nvidia, Micron, AMD, Applied Materials, and Lam Research.

Semiconductors are interesting, because they are the locus of S&P 500 momentum, they are heavily tied to crypto-currency mining, and they are the locus of Nasdaq 100 momentum:

One can make the case that they are the linchpin to the grenade:

Speaking of melt-up to meltdown, driving this relentless bid of low volatility for this past year are Emerging Market stocks. Primarily Chinese tech stocks which are the global linchpins  (Alibaba, TenCent, Baidu, Sohu, YY etc.) traded on multiple exchanges in China, the U.S. and Hong Kong. 

These are the stocks that give the casino its 24x7 perpetual low volume low volatility bid. Every time the pre-market opens, these stocks already have a bid from the overnight session. They are handed off from one exchange to the next:

It never occurs to gamblers who are now asleep at the wheel after 12 months of low volatility "bliss", that this process will work the opposite in reverse. These same over-bought over-owned stocks will get sold in the overnight, leading to pre-market Shanghai surprise:

No surprise, then that Hong Kong is the top performing global market year-to-date:

Unfortunately, China Tech is already a tad overbought:

Revenueless Biotech had a great run in 2015, but this time can only manage a deep three wave retracement:

Wall Street's most recent unicorn IPOs are all imploding, relative to their first day pump and dump:

Europe has peaked, Canada has peaked, Australia peaked a long time ago. The average U.S. stock has peaked. The fact that bulltards are now hanging their hats on Japan is not overly bullish:

When Genius Failed. To Exist

The Fed knows that Trump is a big, fat, ugly bubble of nothing, but they're going to monkey hammer his dumbfuck acolytes anyways aka. the "value-less" voters. It's a solid plan, after all who could warn them, they don't trust anyone who can be trusted...

Remember back in 1998 the LTCM domino collapse caused by the Asian Financial Crisis? Despite the prevailing end-of-cycle tightening mode, Greenspan quickly lowered interest rates one full percentage point which set-off the parabolic Nasdaq rally into Y2K. Needless to say it was a disaster to gun risk assets after a decade-long rally...

Now fast forward, and Global Central banks used Brexit as the rationale for the exact same thing. Of course, the Fed itself was in tightening mode during the past year, so the heavy lifting was left to Japan, China, and Europe:

Ah, good times

Had they not intervened of course, it could have been a different outcome:

Meanwhile, Yellen is now very concerned about excessive speculation sponsored by her Central Bank counterparts:

And she fully admits that Trumptopia is a Jedi Mind Trick for weak-minded fools:

"Prospects for U.S. fiscal stimulus [tax cut] have buoyed sentiment but have not yet impacted spending and investment"

In other words, Trump's tax cut is a figment of the imagination, whereas rising interest rates and balance sheet rolloff are the real deal. And these excessive valuations have to be brought under control. 


"A sharp drop in asset prices would not necessarily be troubling to the economic outlook, said Dallas Fed President Rob Kaplan on Thursday"

This bullishit needs to be brought under control

"Prospects for U.S. fiscal stimulus [tax cut] have buoyed sentiment but have not yet impacted spending and investment"

ZH: iPhoney 8 Is A Bust

Moonlaunch Apple prior to crash. Check.

Bitcasino needs to get busy living or get busy dying. Doji on the daily - which way do we go?

A break below 5,000 makes this a fakeout breakout...

Days with at least a 1% move up or down (365 day moving average):

The doors to the casino are already bolted shut:

"When they raise interest rates [while I'm bullshitting every day as usual] believe me, you're going to see some very bad things happen"