This week is shaping up like the OPEX week of August when we crashed into the abyss. The big question is: can the dealers hold the Pin? In August they lost control and they chased it down with all their gamma hedging. On Monday it looks like this market topped and appears to be rolling. As I have said we are in a bear market and this rally is counter trend. The question before us is: Do we accelerate to the downside from here or rally up one more time? It all depends on this OPEX week in my mind. Normally in a healthy bull market the street can temporarily manipulate the market to screw the maximum number of option holders as possible by magically pinning it to the level where the most damage is done. Will the street be able to control the action or will the selling overwhelm them and we crack hard again to the downside? Earnings so far are awful so they won’t help as numbers appear to be coming down quickly. Additionally, the carry trade seems to be in jeopardy as USDJPY looks like it is rolling hard out of a triangle wedge pattern. If the carry trade is disturbed the dealers may be overwhelmed with selling tomorrow and Friday. This will be a nail bitter for the longs. Regardless of whether it begins this week I expect the market to be lower over the next several weeks as fundamentals continue to deteriorate and we break the lows of August. As far as I can tell the bull thesis is that we will get multiple expansion on declining earnings. I have never seen that happen before this close to ATHs but I guess there is a first for everything.
congrats
Dr. Fly,
I am speechless but I did read your note about detente with your enemies. By the way I hate fucking bear markets. I just play the cards dealt.
Only CB intervention can save us now.
Blue, great post again. What’s your take on the USD ? The USYEN is pointing down but the JPY weighting to USD only 14% compare to EUR 55% …Lately, they’ve been both strengthening against the USD but why should the Euro go much higher ? I have a hard to imagine that the world’s big money could flow to a sick Europe…
To me, the DXY looks bull flagging (on a 5yr time frame) and the bearish sentiment on the dollar is probably at highest this year. If (when)the market roll over, you wouldn’t think the US dollar could resume its uptrend?
Thanks for posting and good luck to you.
Looks like the futures are getting juiced. Still trying to figure out why the semi’s popped on heavy volume. Consolidation? Rumors?
That chart looks tits.
Futures juiced by Hilsenrath comments. No rate hikes for 2015. You gotta be kidding? Shelf line shouldn’t last long. Strongly agree with Bluestar, markets should drop hard soon, even if there’s a brief delay. If so, presents a better entry point for shorts.
Bull or at least standstill thesis:
If the market believes that this lower earnings season
is a one time thing or a kitchen sink quarter
aka DB then we float between ranges until
a real direction emerges.
Of course I think
this is a blip and we go higher later.
Well as of 3:08 pm I gotta give the dealers an “A”. But the week is still young ……. in Algos terms.
They did it. Yeah! But at what cost?
Blue,
On Friday, /CL front month was smacked down in the morning then walked up from about 11:30am to the close. It did not eclipse the morning high.
The Russell, IWM, was walked down from the open and bounced hard at 2:00pm and did not eclipse the opening high.
Each security came within .02 – .03% of the morning high.
In your experience does this suggest any pattern going into next week? bullish? bearish? Just the dominant algo of the day? …. I noticed your tweet last evening E.S.T. regarding no crash scenario, ice cube melting.
Thank you for your time.
A long interview, over 1.5hrs, but worthwhile imho
http://www.thesurvivalpodcast.com/nicole-foss-liquidity-crunch-depression
start at 14.5 mins
Blue,
I see credit markets still ain’t buying the dip here. It seems the contraction we suffered in August has shaken the tree somewhat.
What happens here – do we get months more sell-side action while this divergence builds in momentum OR do you you see this divergence closing for a further years’ worth of stock market gains?
The second option is the scarier outcome, imo.
nocturne,
it is meaningless action. no volume on open Friday.
detocz,
I see a top very soon and a continuation of the down trend.
Blue,
Bull markets are born on pessimism, they grow on skepticism, they mature on optimism, they die on euphoria.
Do we need euphoria to crash? Comments?
True story: when I was a young lad, I rafted down the Salmon river in Idaho.
With the group was a family from NY. The (Leon) Coopermans.
This tape is killing my mind…..
No reason to buy…. yet no signal confirmation to sell.
No speed.
No upcoming econ data points.
We might not see it all resume until Oct. Fed Statement again 🙁
We are so very close here. One more sugar rush higher.
“CalPERS financial officials estimate that it may take 30 years to reduce the [expected return] rate to 6.5% [from current 7.5%].”
http://touch.latimes.com/#section/-1/article/p2p-84757348/
Interesting thoughts on this and I’d like to see this exnaedpd upon. This ‘test’ was done in hindsight. I fell into the wait and see, but I also think the market is going lower in the next 12 months so I didn’t want to be early in taking a contrarian position.
Olin, olit kaunis ja ihana! Kiitos sinisestä jakusta, se on nätti! Hieno ele siirtää pöytämaksu Japanin katastrofirahastoon, olet hyvä ihminen.Toivon sinulle menestystä kaikessa mihin päätätkin ryhtyä.-Sini
ILIA TOLI,I do not hev problem with serbs, it just that in Kosovo i sided with Albania, when the yugoslav civil war happened i was pro-serb, simply because the territory was mostly serbian inhabited, that war was anyway crazy, serbs, bosnian and croats are the same people. They are fraticidal one with another because of minor differences!Now what's this thing with Mahound?
Considering that it’s basically a no-rules RPG running on a message board, it’s hard to see how an ebook would even be relevant. It would be like trying to use a Kindle to play D&D.*****I do like the idea that this is a way for authors to get around the whole question of fanfic. However, I’m left wondering whether this won’t turn out to be like the Star Wars Expanded Universe, where whole swathes of independently-developed canon get wiped out because the main author wants to do something different.