It looks like we will eventually take out the lows from last Monday. I have been quietly watching traders on twitter trying to nail the low. The BTFDs keep running into brick walls and their foreheads are now bloody. Let me help you out here. The selling you are seeing is not some futures trader with a big PA or the Wall Street Boyz having algo fun. This is big boy institutional selling. In July I warned the MOU Hedge Fund fellows it might be in their best interest to skip vacation this year and get a head start on everyone else. I can actually hear the helicopters lifting off this afternoon from the Hamptons after their CFO’s called to say “Houston we have a problem!” and the CFO’s said to the MOU’s that they needed to get their asses back to the trading floor.
All sorts of trend following strategies and risk parity folks are taking gross down as fast as possible. This is just starting to get interesting. Not to mention all the Sovereign Wealth Funds and CB’s who just loaded up on stocks and now have to dump them in order to stem the petrodollar’s demise or defend their currency from capital out flows. Trillions of Dollars of financial assets need to be sold. This selling should take a while and will become self perpetuating just like it was on the way up. This is what we call reflexivity to the downside. STFR replaces BTFD.
We have a primary bearish trend change. There will be bottoms and rallies along the way. A real bottom is not likely until November Or December. There is an outside chance we see 1700 S&P by Friday. Yes that is not a misprint. However, we may rally tomorrow but I am confident we take out Monday’s low sometime soon. Good luck all! If you are a trader stop trying to nail the bottom. Its now easier to short the rips. If you are a long only investor and not a trader its time to raise cash and reduce your beta. All others should step to the side and raise as much cash as possible.
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Is it weird that this post gave me a woody?
I will dance in the streets if we get 1700. That’s my secondary target, roughly. Whatever 200 wma ends up being on $SPX.
I got short a large wedge of XBI on thursday and its been fun ever since.
What’s up with weakness in the dollar, bonds, and equities. What the hell does that mean. And gold doesn’t seem particularly strong last few days. All about that Yen
Thanks for the advice blue star.
Boring!!
kidding … Blue’s got the ball and he’s running into daylight with his eyes on the end-zoned prize
Nice contrast to Jim Cramer who seems to think some stocks can be bought down here. Thanks
VIX agrees with you, Senor BlueStar.
http://deflationland.blogspot.com/2015/09/the-problem-with-vix.html
Midnight oil, nice, fits that post. But catching short term bottoms has been so rewarding 🙂 well, until it’s not.
Great post.
Super post Blue. Just one question – and yes, I’m blonde, so that explains the lack of brain cells – what’s a MOU?
Billie,
patience my son. The market may drift higher before killing the bulls once and for all.
superpositron,
have patience with this put. The market looks like it wants to squeeze us for a few days.
mhass33,
Bonds are done. We had the three year cycle top in January. We have a situation where both bonds and stocks will go down. You have not seen what true panic is yet.
Christian,
Thanks. looks like a squeeze First.
cat,
MOU is Master Of the Universe.
I’m a rock.
Damn Blue, For at least the last six/eight months I thought I was the Bears Bear at least till I go and read some of your posts.
I’ve been of the opinion something like SPX 1070 was ‘MAYBE’ doable but taking out the 3/09 lows? Ouch, you got me beat. I guess now I feel like an optimist!
Blue,
My only two positions are $GPRO and $SHAK, you suggest getting out of both? I bought both this week.
http://www.foxbusiness.com/business-leaders/2015/09/01/marc-faber-have-reached-some-kind-tipping-point/
LOL. You have Gartman, Bill Gross, and Marc Faber telling us we’re in a major bear market.
Noni,
First of all my advice is only advice but make your own decisions. But in a bear market those two stocks are death. If you are trading and have stop losses then fine. But if those are buy and hold positions you will be not pleased over the next twelve months.
Jon V,
I like you and you have been respectful. However, I recall you giving people a rather spirited argument as to why they were not right. I believe the SPY was around 210-211 if I am not mistaken. Just because a bunch of media folks call this out does not mean its not a possibility. You do realize bear markets last a long time.
morons
I don’t know what will happen, but I do know that my local coin shop, which has been in business for 40-50 years has not a single silver coin from a national mint. They have silver rounds but no Eagles, Maple Leaf’s, etc. They have them on order; tentative delivery late Oct. My understanding is that no dealers are able get delivery.
Perhaps it’s just short term, but Demand up, Supply down, prices down/flat. Something has to give.
http://srsroccoreport.com/global-silver-inventories-tipping-point-new-threat-to-the-fracking-industry/global-silver-inventories-tipping-point-new-threat-to-the-fracking-industry/
Blue star – a few things: (1) I’ve been bullish since the market move above the 200dma in June 2009.
(2) I said we would get a 10-15% correction
(3) I have been mostly in cash since we broke down below the 200dma (this is my line in the sand for getting aggressive) which I’ve commented about in the other blogs on this site
too many bears use their emotions and these three talking heads are classic emotional indicators for me. Correction isn’t over yet until we reclaim the 200dma.
Keeping it simple, I see bear flags in the S&P and FTSE, a very weak rebound compared to the Oct 2014 dips.
I think the bulls have had it.
Jon V,
Lets be real about your statements:
1) Bluestar has said repeatedly that he has been bullish since ’09 as well. He turned bearish in January of this year i believe. The implication that being bullish since ’09 covers for how wrong you were about this selloff is simply irrelevant.
2) To the reader that didn’t see your actual post at the time; your current claim that you said…”we would get a 10-15% correction” would make it seem to the uninformed reader that you were anticipating this all along and were positioned for imminent selloff. When in fact, you were positioned bullish and were mocking Blustar for his now proven to be accurate sell call. Your “correction call” wasn’t one at all, you simply said something along the lines of “Bluster will eventually be right, eventually we will get a 10-15% correction”…..real bold call there captain obvious.
3) I saw your post about going to cash, this statement is true; however, do you think its relevant to point out that the 200dma on S&P is 100 points higher than current price?
Nothing more annoying than someone talking smack and then attempting to modify the record so as not to look as foolish. I’m no supporter of anyone other than myself, but I do call a spade a spade.
Blue,
How do you see things unfolding from now through year end? Apple was down today, when the market was up, before the market finished flat, is that a telling sign to you?
Billie – chill Man. I just find it funny how CNBC trots out the ultimate contrarians at inflections points. So far this has been nothing more than a standard correction. The U.S. economy is still doing well so I wouldn’t get all beared up here. Cautious is another thing entirely.
As far as being bullish from June 2009 to August 2015 for 1200 s&p pts (and personally several multiples of my money) vs getting stopped out and moving to cash after a 100 pt drop…I’d say that’s well worth the risk / reward
Nothing but love for you Jon V., but I still don’t see how the economy is doing that great. The Feds have papered over some really terrible economic activity by changing the inputs, or flat out ignoring people that gave up looking for jobs, stuff like that, etc. etc. Take out the “garbage” and you have a shiny turd of an economy.
One day, and very soon IMO, we will see just how bad things are. Recession is coming.
Qci – I pay attention to things like pmi ism housing data and rail traffic. Jobs data is usually a bit backward looking and not the greatest indicator. All of these are strong although rail traffic slowed recently. I would love nothing more than a 30-40% drawdown as I and my managed accounts will be in cash until we get a return above the 200dma, outside of day trades.
Jon V. – Sounds like you have a plan, which is more than I can say for some people. lol. GL.