iBankCoin
Recovering Large Cap Growth PM. How I invest my own money is nothing like how I had to play the insane benchmark game.
Joined May 7, 2014
165 Blog Posts

“Sell 30 April At 142!” Nothing Has Changed: We Are At Or Near A Top.

Nothing has changed.  Draghi is going to print some more euros.  So what? What have we learned about ECB QE people? It doesn’t makes US stocks go up!  It make the Euro go down and European stocks go up.  Did the S&P go up the last time they did ECB QE? No they barely limped sideways and then crashed into August.  ECB QE actually makes the dollar go up which then causes more deflation and financial stress around the world.  Today’s equity move was an ending move with a final short squeeze and late to the party FOMO chasing.  All the divergences mentioned yesterday are still in force and have only gotten more extreme.  The small caps where not even in the game.  This was a risk off day despite price going higher.  The Boyz were busy selling to retail today.

Look at the charts below.  The volatility has not disappeared.  It is hiding.  The VVIX is turning up and the VVIX/VIX ratio is even more extreme.  What this tells me is that the rally is stretched. It is not real and we will reverse hard within the next 72 hours.  My guess is we top out (baring another CB intervention) tomorrow.  The sell off and subsequent correction will tell us whether we are heading much lower or if we are going to new ATHs (very doubtful).  I am fairly certain that in the very near term one can make some money fading this market with some well timed puts tomorrow.

In the video above is the scene where Winthrop waits for the short squeeze to mature before he sells at the top.  I did not add to my positions today as I was waiting for a moment like the scene above after I heard Draghi utter his nonsense.  I am going to find my moment to yell “Sell 30 April at 142” tomorrow baring some crazy set up that suggests a melt-up.

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56 comments

  1. Superpositron

    Ill follow on those puts. Might as well.

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  2. Mark W.

    I forgot how good that movie was. Great scene.

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  3. DeTocz

    Trading places is based on the book of job, where god and the devil (duke and duke) make a bet on job’s virtue.

    in the old testament version job stays true to god, the devil loses the bet and we all learn that god tests us all so suffering is part of life – even for the righteous. The film version has some excellent twists on the original plot. After all, the devil seems to win most of the time so why not make ’em suffer? That’s great storytelling. And what better place to depict the devil but in the stocked market – where financiers have bypassed ethics, morality and consequence for hundreds of years.

    “Where’s beeks?”

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  4. GM

    The Bulls elsewhere on this little blog are jubilant, so pleased with themselves.
    I have no doubt next week the trouble begins.
    No shorts left to cover on the way down, new lows ahead, post full moon.

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  5. juice

    yeah man – looks like there are only a few stocks doing the heavy lifting while the bulk of them languish in the realm of the bear

    If you’re in FB AMZN GOOGL, all is well, even a few of yesteryears stars are shinging – INTC MSFT … all else is Kingdom of the Uugly

    narrow narrow

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  6. jimmy_two_times

    Interesting charts Blue. Any chance posting a longer term ratio chart?

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  7. Ro

    is the Chinese cut the bizarre set up that implies a melt-up?

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  8. trashman

    Good timing. Again

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  9. Everreddy

    I want to buy stocks again – I really do. But according to my (evidently) archaic logic, PEs have to be a third of what they are now. A quarter point change here and there won’t do this so I dabble in puts while waiting for the wheels to fall off. This is my strategy and I’m sticking to it and thanks Blue for your expert insight which helps strengthen my resolve.

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  10. gorby

    We need a catalyst for the implosion.
    Anyone got an idea what that might be.

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  11. jimmy_two_times

    Quite a sad state of affairs when we hang on every word from CBs, Don’t waste time or money on MBA or even CFA, just wait for CB chatter.

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  12. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    Wait for it Gentleman…Wait for it.

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  13. Jakegint

    100% agreement. My only day query at this point is should I go with cube puts or some more $YANG?

    ______

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  14. juice

    Jake the Gint – no way! how ya been man?

    who u like on ur side of the aisle thus far?

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  15. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    The Chinese Rate Cut and the ECB Talk were obviously coordinated and why I mentioned it last night. This is like last year when we should have crashed but it was relentless CB announcements all fall. Can you imagine the panic if we begin to roll and it becomes apparent that the marginal return of CB Stimulus on stocks is now Zero? Food for thought.

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  16. Sy

    “Can you imagine the panic if we begin to roll…?”

    We’re up more than 10% across the board in roughly a couple weeks. That is food on the table, as you offer food for thought.

    Not cracking on you. I’ve been all cash and frustrated. But is the CB coordination enough to make you rethink your short position, or are you adding to it? Market is pricey, but with CB bazookas in action, it’s nowhere near extremely overvalued.

    I hope my comment marks the top. 🙂

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  17. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    SY,

    Thanks. Yes I should have taken more profits at he lows. Still short. But my point is just that we rallied without CB intervention which is normal. Now they come out with bazookas.But if we roll after this sugar candy it will be telling and frightening. WE all know absent Fed QE this market is range bound. Now the range is here or a little higher to 1845. Enjoy the fun. The smart play from here is short bias. If we take out August lows god help us all.

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  18. jimmy_two_times

    last year it was Bullard jaw boning mid October, followed by Japan. I guuess the end game comes when the CBs own all issued bonds. But then they will drop cash by helicopter!

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  19. pb

    JG: I vote for QQQ december expiry puts…with my wallet.

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  20. pb

    Because the odds of the China exchanges being shutdown are higher than that of the US. Don’t like the prices? Just close the exchange.

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  21. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    Jimmy,

    Bullard had nothing to do with the rally In October 14. We were going to get one anyways. It was the # central banks all at once that proped it up.

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  22. Nocturne

    BluestAr, love your conviction. Kept me profitably short oil. FWIW I am with you on the indices failing into Fed. And good point, wtf was ECB and CCB greasing the wheels after most of 8/24 was recovered? FGS what reason does the Fed now have to keep O/N [email protected] zero…. except to bail out well connected losers?

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  23. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    Nocturne,

    If we fail from here and take out August Lows the omnipotent CB theme dies a quick death. We always knew this day might come. Lets see.

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  24. jimmy_two_times

    Blue, you don’t think Bullard’s jaw bonning contributed to the mid month rally? Check the date on his comment on possible delaying the end of QE to the rally mid month. Before hand it was braking down. The Japanese then stepped up with moar QE.

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  25. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    Jimmy,

    No I don’t. I was getting signals to cover a day before he spoke. Then when we rallied we were tracing out the 1929 analogue the BOJ came out with their bazooka right before we were about to roll. I remember it well. The BOJ affected the USDJPY which caused US stocks to rally

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  26. superpositron

    Blue what are your thoughts on the market? Wait and see? Step aside from shorting given cb intervention?

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  27. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    Wait for it people…wait for it!

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  28. freebie

    What are we waiting for? A precise to the minute call on the market top?

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  29. probucks

    @freebie we’re obviously waiting for a swift retest of the LOWS! Do you follow markets or are you just sniffing fairy dust like the BTFD investors

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  30. nocturne

    Another chance to be able to tell your grandkids how you shorted S&P at 2070 in 2015.

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  31. superpositron

    Why are people buying this market?

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  32. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    superpositron et al.

    I still haven’t added yet. No idea why people are buying. Its the last gasp of CB omnipotence. But for now I have been clearly wrong as to the length of this rally.

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  33. Option Addict

    I come in peace…

    Are there any signals or things that might happen that could change the underlying viewpoint?

    I’ve wanted to have this dialogue with someone, but I get clawed for asking folks.

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  34. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    OA,

    Nothing yet in my mind. Still a counter trend. Granted a rip your ass off counter trend.

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  35. Option Addict

    Many of the signals that the bear crowd pointed out have now been invalidated, respectfully.

    So if we just trend from here on out, nothing will change that opinion at all?

    Thanks for the reply.

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  36. rogue wave

    Kudos to the CB’s! They have the best pr people in the world working for them. The fact that they have kept things going this long is beyond impressive. Negative interest rates – who would have believed that could have been pulled off.
    Still, they will ultimately lose the battle with financial mother nature. As always, the question is when not if.
    I’m a Jimmy Roger of timing. I rarely get timing right. In fact I owned some airlines awhile ago. I sold out for little gain. One week later, oil dropped like a rock.
    I miss some smaller waves, but sometimes catch some big ones.

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  37. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    OA,

    Nothing in my mind has been invalidated. Interesting Statement you made. You come here and use the straw man argument. “Many of the signals of the bear crowd have been invalidated.” Who is this bear crowd? What signals are you referring to? Is this a smart way of insulting me? I am sure I am reading your comments wrong. I can’t imagine you would be so childish and narcissistic to do that. Please tell me I am wrong. Additionally you tempt the market gods if that was your intention. I don’t recall coming over to your blog and insulting you. If I have in the past I apologize ahead of time and I am truly sorry.

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  38. GM

    Blue, you should read his latest post and my comments, and his reaction.
    It will tell you all you need to know.
    Meanwhile, I do believe the game is up:

    http://screwtapefiles.blogspot.co.uk/2015/10/fibonacci-to-markets-sorry-your-time-is.html

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  39. Option Addict

    Insult? Fuck man, really?

    Funny when it gets to the point that people can’t respectfully disagree. I only quote the same tech signals we’ve engaged on in the past and am curious as to what changes ones opinion. All the guys that share this opinion are saying the same thing “I’m not wrong.”

    Ok.

    And shut the fuck up GM. You are the genital wart of my blog. That has nothing to do with what used to be a good exchange of intellect between he and I.

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  40. Quality Control Inferno
    Quality Control Inferno

    I’ve refrained from selling this market for 6 weeks, but sadly missed a monster rally.

    I continue to wait it out as the chance of a melt up is increasing, but a pullback is probably imminent. At this point tho it’s hard to say whether playing a pullback is worth getting your face blown off.

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  41. Quality Control Inferno
    Quality Control Inferno

    Shit man, finally giving the short a shot here. Let 2080-2090 level be it.

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  42. freebie

    I’ve seen this for the last 6 years, bears being stubborn with no clear criteria that would change their thesis. Jeff asks a valid question.

    Be careful guys – you are trying to time an all time market top down to the day/week? Good luck. Did you call the 2007 top within days/weeks? I would love to see a link proving so.

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  43. Option Addict

    I have podcast episodes from July 07 on where this was called, and became daily warnings from there on out. I can mail them to you. Have many people that can validate that as we had a fairly large audience.

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  44. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    OA,

    LOL,

    Shit storm of sensitivity. What I meant was what bear signals are you talking about? You claim they are invalidated. So list them with your proof. To come here and say they nave been invalidated is a statement not a discussion. So far price is on your side for the last 4 weeks. So fire away. Tell me why I am wrong. Did I come over to your blog and say your 1998 analogue was invalidated at the September lows without saying why? I don’t think I am out of line for responding to you the way I did. Think before you write. Imagine if I had come to your blog and posted what you did. I know you would have said to me what are you talking about?

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  45. Sy

    I’m not at all happy to be bearish and I don’t really expect to make much money being this way. Aside from hyper-fast and hyper-risky trading (that many on this site seem to excel at), there’s really no justification for being long as an equity investor other than a sort of blind trust that Central Banks will backstop any significant market thesis. That has been a pretty good thesis and plenty of folks have been enriched, but to me it’s a bit like trusting the best robber in town when he says he’ll never get caught. It’s hard to argue with his skill, but man, if the gig is ever up….

    Maybe I’m overstating the risk (like all bears) but it seems these days your dollars in the market are votes for policy tools rather than sound investments in earnings and value, and while these tools may seem invincible, I just can’t get on board.

    That said, too much is riding on the market for it to be a bummer for very long, so bulls have a decided advantage as long as the system holds. There will be scary selloffs, and the occasional outright crash, but I’m guessing those moments are less than 10% of the market’s experience. And if it’s going to head up 90% of the time, why the hell am I so bearish?

    See Paragraph #1 above.

    So, Blue: are you bracing for a melt-up, and would this get you to cover or add to shorts, and conversely, if we sold off to 1860ish, would you safe(ish) selling puts agreeing to buy the S&P around 1750?

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  46. Sy

    (Now re-reading my post and seeing some careless and confusing typos. I trust you can decipher my main points…)

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  47. Everreddy

    Sy thanks for the post. I was about to write a similar rant but you said it all and better. I too despite observing these (baffling) melt ups just cannot bring myself to buy. I’ve been kicked in the junk too many times being on the wrong side of “buy low sell high” (also in RE). In my experience there is no battle between bulls and bears in markets – this is a fantasy. The only thing that causes a bear market is lack of buyers. The share buybacks using debt have to end at some point.

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  48. jeff

    Blue Star one of your post said a break of 2077, so that’s one of the clues you are looking for.

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  49. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    Jeff,

    Remind me what I said. thanks.

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  50. Monte Cristo

    There is always a bear crowd but it sure isn’t a large one at this point
    https://twitter.com/jessefelder/status/659757332700639232

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  51. blackgld

    This feels like a top just based on the arrogant tone from OA and his followers. Bulls are starting to get more and more aggressive Blue. This next move is going to catch them all off guard and by January you will be vindicated. I hope he comes back after we crash through the August lows to apologize. He will need to start a Gofundme when this is over.

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  52. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    blackgld,

    OA is fine. I take no offense. This is not US vs Them. I am glad they made back some money. This market is tough. Its about making money. I made some and I gave some back. I will make some more once we roll. I do my own thing. No one needs to apologize. This is a market its not personal. Markets don’t care about feelings. Don’t get angry. Use their cockiness as a sign of sentiment. Just like at the bottom bears were high Fiving each other.

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  53. Option Addict

    Fuck you blackgld.

    Arrogance? If you are reading arrogance from me, check your insecurities asshole.

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  54. BearRaid

    Lol. My favorite blog by far.

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  55. BlueStar: Contrarian Investor
    BlueStar: Contrarian Investor

    To all,

    Lets make something clear. I like and respect OA. I was teasing him earlier. Lets not get into this nonsense. I wish I had covered more when OA was pounding the table at the lows. Don’t come here and bash OA. This is a tough game. Lets move on to more productive uses of our time. OA love you man. Peace.

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