As I stated many weeks ago the short squeeze would be brutal. Now I am being asked is the bull market resuming? Do we go to new highs?…maybe we do. However, take a look at the following two charts. They are HYG compared to TLT and XLY compared to XLP. As you can see they are making lower highs so far in this rally. In 2009 at this point in the rally off the March lows it was clear that High Yield and Cyclicals were starting to outperform as they blew away the prior structural highs with ease. Its hard to get excited about a market run, as impressive as this has been, without seeing credit and cyclicals leading to the upside. Rather than waiting for the market to roll I am looking at cyclical sectors that have already started to roll over. I think the bear market is still here, alive and well, lurking for it’s next victim.
The bottom line is that our friend Janet Yellen has managed to pump the algos into a frenzied index eating machine on no volume but if you look underneath you can find the canaries of the top in individual names and sectors. I would take a look at everything auto as the sub-prime auto loan sector has rising delinquencies that will reverberate throughout the whole food chain ripping it asunder.
If you enjoy the content at iBankCoin, please follow us on Twitter
Sell in May and go away?
I would suggest sooner big bear.
Blue – Would you be a buyer of treasuries here? 10yr/30yr
fryguy,
it looks like the chart wants a retest of the highs. Plus fundamentally I am Uber bearish.
TLT is my biggest position. Curious how bonds have not backed off during this rally.
will $AZO ever crack?
CACC …all they do is subprime auto loans.
Perhaps something to keep on your radar if it isn’t already.
One of the stocks on my radar is Polaris (PII). Anecdotal, but I notice that the local dealership is stuffed to the gills with the side-by-side type of OHVs. So much so, that I find it difficult to believe that the dealer actually paid Polaris up front for all these units. From past observation of such inventory, I don’t think that there is a snowball’s chance in hell that they will sell all these units in 2016. BUT…this type of distribution channel stuffing could get them a pop in earnings.
I took your suggestion and unloaded, BlueStar. Would be uncomfortable holding here, things precipitate and emotions get involved. Riding Fly’s Ark, less oil shorts.
Bluestar – I hear ya but in general it has always paid to be optimistic.
jon v,
normally you are correct. however this is a Fed induced abortion of a market. I see bullshit rallies with mini crashes as far as the eye can see. it actually favors smaller players such as you and I.
Raul,
Thanks
Doing work.
zephler,
I am focused on the shitty part of the chain. thats a solid company.
Fixed Income liquidity is scary & US Equity dislocation from credit and usd/jpy is also alarming.
I’m looking into the idea that all Yellen rally cares about are LT rates remaining low. If they’re low she gets hawkish and if they start trending higher she turns back dovish.
She maybe could care less about credit and equities as long as she thinks she can hike rates without the back end blowing up.
Thoughts?
war on poverty – po folks: fail; gov buracracy: home run (HR)
war on (some) drugs – joe sixcrack: fail; dea – HR, prison system – HR, rehab apparati HR; drug dealers: HR
fight for the cure – joan double mas…: fail; med equip manufrs – HR, Cancer Ctrs – HR
affordable care act: Jose Dumfux: fail; Drug Cos – HR, Med Ctrs HR
war on foreign brown people- Syria, Libya, Afghanistan, Iraq…: brown people – fail; military industrial complex – grand slam
equitable sharing ( aka civil forfeiture) Joe Wrong place, wrong time: fail; fed & local police: helicopter money from heaven
war on cash / NIRP – John Q Saver: fail; fed: fail
I think the war on cash will eventually fail, but that won’t deter attempted implementation
my miner minors ar up 76% ytd. Don’t ask about last year.
BRIZF BRAZIL RESOURCES is running on uranium news. Wait till uranium bounces back.
probucks,
yellen is a fop. I think given the choice between the equity market and the treasury market she would sacrifice the former for the latter. Right now she is walking the tightrope. Winds are picking up.