I am going to make this short and to the point, since the majority of my recent blogs have been long winded, bloated, crap pieces.
1997, 1998, 2000, 2001, 2008, 2011, 2014.
Which one of those doesn’t belong?
Each and every big market pullback was based around a reason, whether it be a stupid reason or a real one like in 2008. But at least there was a reason for the collapse, whether it be LTCM liquidation, Asian Contagion, Dot com bust, 9/11, Credit Crisis, Euro Scare etc.
Do you remember why the dot com bubble bursted? It’s true that valuations were excessive and the market got ahead of itself. That’s not why it crashed. It was almost a self-fulfilling prophecy. Confidence jacked the market up and then the lack thereof took it all away. See, companies were coming public too early, losing money, and using the capital markets to fund their businesses.
What does that mean?
Well, XYZ came public and part of their business plan was to do secondaries or raise capital through bond issuance, in order to fund operations. To be honest, there’s nothing too disingenuous about that either. That’s why companies list: access to capital.
So when XYZ’s stock price cratered and they were unable to issue shares because the market was shot to hell, liquidity dried up for them and they went out of business. With a snap of a finger, just like that, dozens of stocks vanished, all bankrupt due to lack of access to capital. Without collateral, it’s real hard to issue bonds.
Imagine 12 tech stocks, all who buy products from CSCO, going belly up at once. Now you know how the domino effect wrecked the large cap players. It was all one giant house of cards.
Are things different today?
You betcha. For the most part, companies have lots of cash on the balance sheets and most tech companies make money, hand over fist.
So then why are stocks crashing?
Could it be THE BLOOD MOON?
The scary part about this drop is that I can’t think of any catalyst that might arrest it. There is nothing to be resolved, or that the Fed could do to help, or Obama can say to assist with confidence. No one cares. This drop, if not stopped soon, will crush consumer confidence and cause a real spiral in the real economy.
The fiction will soon become the reality, unless we stop going lower.
https://www.youtube.com/watch?v=mIUY3PO4E0g
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hi.
your mother
Perhaps the war against HFT algos is more serious than we think the big guys all trading in dark pools over lit exchanges seems to be the trend maybe this is causing dislocations or maybe I’m just a dribbling conspirator wallowing in my losses like a god damn pussy
doubt it
There is no crisis… It’s to prove the markets are rigged.
If there’s no reason why the market is going down, then it won’t need a reason to go back up either.
Fly, I think the market will soon go back up for no reason. But if it doesn’t, you are welcome to join me in playing accordions in small Italian villages. It’s quite pleasant.
part of my day job is helping a company in the jewelry business. We first saw top line decay prior to credit crisis in late 2007/early 2008… And then the bottom fell out of the business. Today, sales are stronger than any point in the last 5 years coming off a relatively strong performance in January-March quarter and a strong December period. Banks are knocking on the door with capital…
So, about that wing shit…..
No worries…. Futures are up and ZOES IPO tomorrow!!!!
Can’t wait for that soup kitchen to ipo
I’m not saying it’s THE reason, but maybe the great hedge fund unwind of 2014 is to blame. If so, how much more do they possibly have to unwind? The selling has been rather extreme for the last few weeks. OA pointed out something very important today, volume was not near what it has been.
All I know is I’m buying very small position sizes and going with longer dated options (since I trade mainly options). Even though I’d like to run some winners into huge gains I’m playing for singles, i.e., sell the rips, buy the dips, in and out in 1-2 days. That’s what this market has sadly become.
Later this year, maybe this summer, it will be safe to let some winners run. I think we will rip some bear faces off later this year in a fashion that will blow the minds of the great traders on CNBC. I’m looking you at Dennis Gartman.
Nasdaq Composite volume was huge, take a look http://i.imgur.com/6YoM1HD.jpg . Volume in S&P500 stocks was also huge.
That tells you the high frequency tra…, er- front runners- were in there making trades.
Your table list $GOOG as having been down 53% for the month. That would be wrong.
Thats the awesome power of the PPT analytic engine son 😆
it’s because of stock split.
Due to goog split
One other thing. Bank earnings tomorrow morning are going to be rocket fuel for the market. It will probably be a one day event, leading to more selling of momo names on Monday.
So for tomorrow, TNA in the morning, TZA into the close.
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… no one is gonna want to be LONG into the Close and over the weekend !
I CERTAINLY DON’T !!!
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Any gap UP will be faded !!! IMO
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Fiction, Reality?
I think there are people figuring out the the supposed reality was in fact fiction.
All the money on balance sheets across the world was not created by normal market forces but rather by the machinations of central bankers and governments, which we all know do not in fact create wealth.
Heaterman
That hasn’t changed
It hasn’t changed but it sure has slowed down. Perception is reality and even if there is not much difference in the monthly QE rate, its the perception that the spigot is stopping that is scaring people. Jeez, even the BoJ has suddenly decided the money pumping needs to slow.
Spx took some technical damage today. The money is rushing for the exits on the momo names and hiding in the “quality” but still wasn’t enough.
I don’t know what to think. If I tune everything out and look solely at the S&P daily chart, it looks like a trip to sub 1800 is on deck.
However, patterns have been smacked around by the market this year with all kinds of fake outs.
Bottom line, I’ve learned my lesson for good in that every time I make a new significant account high I take a nice fat hair cut. Next time I make a high I’m shutting down trading for a month.
+1. Thats what my chart says too.
Also, Matt Kuchar has a workday logo on his shirt. Maybe him winning the masters will give the company a boost. lol
This past Sunday he had it on when he hit his approach shot intonthe water on the 18th and ended up blowing a big lead….
Looks to me the reason is Japan having trouble holding it together.
Simple: Debt
This is not complicated…..here are the very simple reasons:
1) The US market is richly valued, if not historicaly in generally, then at least versus 2-years ago.
2) Tech and Bio-tech valuations reached laughable levels
3) The Fed IS TIGHTENING. That’s what tapering is.
4) Japan and China are possibly in disaster mode. Not confirmed, but much evidence.
Thats the entirety of the reason-set for the decline.
There is only one question — is this a modest valuation correction, or is there something much more deeply insidious going on coming out of China or Japan (or both).
I believe we’ll see a full 10% -15% correction occur no matter what….mostly a simple “take some profits off the table exercise.”
The bigger risk of the china/japan factors will have to play out over time, but its not going to turn clearly positive anytime soon.
good poins pertaining and probably driving the situation at hand
GOOG needs to be adjusted in the PPT to account for the stock split. Doesn’t change your thesis, but seeing that number scared the crap out of me.
test
The “crash” started with the fed backing off from QE and its accelerated since. The cause of this bubble pop was the withdrawal of that which pumped the air into the bubble in the first place. Much of the great corporate growth you refer to is really a result of legendary money pumping along with artificially low inflation. Now the money pump is slowing down, world growth is slowing down, everyone is depressing their currency (except for the idiots in Europe) because nobody remembers the last currency wars, and inflation is starting to get a little frisky. Talk about a perfect storm.
yep, agree with tha
HA!
Any idea when Duc_ati is expected to show up in these halls and start throwing tomatoes?
I will always feel that this bullshit Bull market never was real and always was suspect of a large pullback at anytime. It was almost criminal. At the end of 2013 I pulled out a lot of positions and still lost 100K in two days. I hate to think how much more I would have lost if I didn’t sell and take a 100% cash position almost a month ago. I feel for you Fly, from one trader to another I never wish anyone to lose money bull or bear. Its a hell of a way to make a living as you know. My friends think I’ve got it made, But secretly I wish I knew another way to make money.
Sloop
I know exactly how you feel.
that’s real. Thankful for the day job I’m able to go to that doesn’t have the pressure of this. Pressure there is, but not like this.
You can always shelf milk at your nearest grocey store.
What a fucking song.
Dr Fly all of this nonsense selling will abate tomorrow. My colleages have been selling stocks to pay their taxes since they have been sitting on gains. Just go with your gut feeling and you have been very successful.
cheers
funny, I just finished writing my check to the man. it makes sense. it might not abate for 4 more days.
Are you serious Fly? You honestly think this will have an effect on the real economy? The major index is only down about 4%. Yes some high beta tech stocks have been taken down, but none of the big ones (AAPL, GOOG, MSFT) have. This isn’t going to affect the economy. It’s only going to affect fund managers who were betting on high risk plays with leverage. Everyone else is going about their business as if nothing happened. Look at VTI, or VEU. Barely a blip.
You have created blaspheme. Index funds are not to be discussed here, only high beta degenerate stocks and 2X 3X ETF’s.
These are not degenerate stocks. These are leaders and they’ve been shot. Full crisis is mounting. Very soon, your fucking tobacco stocks will get smoked and you will get sex changes
Mr FLy.
I stand by my opinion your only in this
market because the blog requires you to be.You started all cash and you were pulled in.They(we) won’t let you go
We’re 3% off the all time highs, doesn’t even qualify as a dip – what crisis are you talking about?
You old men are in another world , trading zero coupon bonds and Msft.
Look at that list of one month drops! All mkt caps over 1 billion.
Those aren’t “momo” names, but leadership
The market internals are horrible and it will spread to the rest of market if it keeps up but for now it looks tame.
Personally I think we’ve been in a topping process since Jan, the length of which causes me to believe we’re looking at a serious correction – at least 10% more likely a new bear market, >5yrs is a long time for a bull, needs to end.
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Sir Fly,
It is time to bring back the musical genius of Rick Astley !
You HAVE to do it !
If EVER there was an occasion that SCREAMED for Rick Astley …
.
This is dedicated to YELP, FEYE, WDAY, SPLK etc… etc… etc …
… and Fly !!!
—–
Never Gonna Give You Up
We’re no strangers to love …
You know the rules and so do I …
A full commitment’s what I’m thinking of …
You wouldn’t get this from any other guy !
I just wanna tell you how I’m feeling …
Gotta make you understand !
Never gonna give you up …
Never gonna let you down …
Never gonna run around and desert you !
Never gonna make you cry …
Never gonna say goodbye …
Never gonna tell a lie and hurt you !
Oooh !
Never gonna give, never gonna give
… give you up !!!
—–
Stocks are trading vehicles … nothing more !
If you fall in love with them … they will break your heart … and then punch your face in with a box of jelly donuts !
EVERY TIME !!!
.
.
… posted in jest … sorta !
There IS an intended message there (not that you need one) !
Know that I wish you “good trading” … In the future !
SERIOUSLY !!!
—
OH !!!
And bring back that Rick Astley video for one last hurrah ! I confess … I have had a thang for the blonde in that video for like 20 years !
😉
.
… and, lastly …
that “Hitler video” is just about the funniest damn thing I’ve seen in a long while !
“Trulia” hilarious !!!
.
Hitler vid was hilarious
the overall sp500 is only down about 5 percent. A five to ten percent correction might even be healthy.
Nevermind
End of Petrodollar, Rise of PetroYuan
just throwin it out there after listening to this>> http://www.youtube.com/watch?v=Dz_4fBtxyJI
I’ve mentioned this for a while. When you have teenage traders being highlighted on cnbc you have froth no doubt. Toss in excessive #’s of ipo filings and the fed pulling back on stimulus and you have the recipe for a 20 to 30% pullback. Nothing catastrophic
The little girls club was looking for dates.
I blame it on the NIIT (Net Investment Income Tax) that they snuck in with Obamacare!
Bubble started in 2009, Grew and Grew. I thought SPX 1755 was the top, yet I have had to sit thru all of this…The Great Shanghai Copper Bubble is the reason. Mainly, Global Govt’s/Central Banks tried to stimulate the global economies by buying up Commodities, ETF’s, Bonds, etc…but in the end, it didn’t work and only deflation emerged.
If new QE is announced (from. somewhere.) we (may) go up
If Fedheads talk tomorrow. we (may) go up. The number of times uptrends restarted, from someone talking. What a lot of rallys were built on. Not kidding
The secondaries, ipos, valuations, sentiment, buybacks, debt floats, have been leading to some sort of climax
Fuckery
Mutha-Fuckery…..
Fly, the one thing that is altogether different from other drops is that this time the dollar isn’t crashing the euro. In other words it’s not a macro,macro type drop. The dollar yen also hasn’t been crushed.
Feels like one giant margin call
That’s what scares me. No way to know when it’s going to end, each dip lower puts more funds in trouble. We start breaking 2013 bases and it’ll be katy bar the door.
I own three stocks that will survive and pay me well thru the correction ; STZ , SPG , and EMES . EMES is the very best situation I’ve seen in a very long time .
The catalyst is a Chinese crash. When China’s credit bubble pops and its economy tanks, the World economies will follow.
There hasn’t been a Chinese crash or any talk of one.
You’re an idiot of the first order.
https://www.youtube.com/watch?v=WHYxPbvRC-I&feature=youtu.be
Hitler on the bio-bubble bursting 😀
a little more pain and I’m a buyer. Nazzy futures to 3450 and I’m in. Momo names gonna bounce hard
agree with huggie bear for generally where we are right now…..10-15% or maybe even 20% pullback…….what I struggle with is the amount of leverage in the system due to OPTIONS being en vogue and u have weekly and monthly’s on the big ones, add in hft’s and simplicity, anniversary date of low in 09 was 3-09-09, yes, earnings very strong….if things slow, question is how fast will they cut prices, on the ground looking for new vehicle and ford is discounting hard 10-20% depending on model and accessories……….part of process imho fed is discovering is how deflationary the inet is…………reason for tepid job growth…..
this is the gap down to buy IMO
i find it funny you make blog posts about markets make moves without reason, throw away charts, etc….yet here we are trying to find a “reason” to validate a sell-off.
This might not be an ordinary correction… bulls are simply tired… we might be entering bear market… not planning to be long anything for now.
“This drop, if not stopped soon, will crush consumer confidence and cause a real spiral in the real economy”
I have to beg to differ.. Other than the financial blogs I’ve heard very little of the general public (like the office I work in) even mention the stock market and all this doom and gloom. Makes me think the only people even noticing these pullbacks are the traders getting crushed trying to time the bottoms etc..
oh and ” or Obama can say to assist with confidence” LOL, good one! the less he says the better, as always!
I agree, unless market drops another 20% from here, nobody cares, but traders.
The only crisis is the media creating chaos here. The people that created this sell off will soon be back in accumulation mode because there is no other place to put their cash. The reversal will be soon.
I wonder if Fly opens the comment section, in part at least, to gauge sentiment.
gold star
fed is there . it’s always been . and will be .
this sell off is big hands ( “T”he money ) pushing down . there is reason for it .
“M”oney have been selling in big time becasue of target reached . Then they invest elsewhere. At the moment they’re selling . Later they will invest . Rest assured they yet now where and when .
errrrrrrr breaking news, Le Fly!
This was also a long-winded, bloated, crap piece
Don’t shoot the messenger!
1987 didn’t have a reason either
premarket feels like a reality tv episode…someone is being voted off the iBC island today.
who’s leveraged?
how many dead bankers will it take? 28-29… (if you been following this). traders in a sense are also money changers… just a thought. i think the russian thing is a big part of the market tremor. they have all of the eu by the balls. smart money might just be pulling out…. or maybe nothing to worry about at all?
most of the selling seems has reached overdue state . jmo .
they may want to scuff off the last bits of porks
Just an irrelevant observation.
I am surprised that nobody mention tax bills. Personally, my tax return was a disaster because of disallowed wash sales. In fact, had i made the kind of profits my tax implies, I would be moving into a new house… paid in cash. Instead… you know what I did?… I cashed out some money from trading account to pay for moar taxes. Transfer takes 3 days. Anybody in similar situation had to do yesterday, at the latest.
Now, thats what I call TAX SELLING
jm2c
If you have a “wash sale”. you didn’t lose any real money.
You just can’t take an alleged loss that has been offset by a gain in another trade of that same security.
Fantasy land trading is always soooo profitable….he-he
What do you think, I didn’t go over all this with an accountant? I even got second opinion (for only $300…lol)
The verdict: Pay the Fucking Tax… or trade less…much less
Yes – your right.. small individual investors that need to sell stock to pay there tax bill are moving the market. No offense…
That I don’t know.
But I did point out in a beginning, that its an ‘irrelevant observation’ pertaining to market movements.
Besides, as far as ‘Market’ is concerned, SPX is stone throw from ATFH, this is nothing… S&P500 has very little cloud and biotech…
But what do I know, Im just a little smelly fruit
Yes – good point. I didn’t read that part.
Atleast you have a tax problem… better then the opposite.
Hence the reason to have to pay more taxes. The losses are disallowed.
Tax selling combined with a NEEDED correction. Look at the TLT!! Who is buying bonds in here?
why would there be tax selling in April? Come on man.
Because this is when you pay taxes.
There is no tax selling only for those who didn’t make any money last year… thats what my accountant told me…rotfl
Your accountant is an idiot. I would fire him.
I think his point is most of us are paying taxes quarterly. That is generally how things work or you pay fines.
The wash sale rule does suck though. I am sorry to hear you got hit.
Your quarterly is not based on last year. He is referring to your extension. Either way.. it still doesn’t make any sense. Wash sales rules don’t suck – they were put there so you don’t harvest losses.
Its funny that you called the April 15th filing an “extension,” that is usually what I end up filing as well. I think we should let the people decide whether the wash sale rule sucks or not. Anyone else want to comment???
I’m sending in a 6 figure cheque to the IRS on Tuesday. I sold shares to raise the cash.
Mine will have 7 figures, if you include the two numbers to the right of the decimal point. Congratulations on a good year!
I got a refund since I run profit through Lucerne and Ireland. I call this my double dutch sandwich. Additionally, I sold my IP (superior stock picking) to a Swiss company and charge myself a licensing fee that puts me at a 1% operating margin in the US.
huge recovery from morning lows, congrats to all
Nasdaq green! Another PPT win?
where is Sir Fly ??? I am really worry !!!
Bad time to sell. Bad time to buy. Catch it on the upswing.
this market is heading higher . i didn’t sell a big bunch of paper i should have ( was wrong ) but will get on with them on new highs .
F-in ZOES. Requested a 10,000 shares allotment and got 400. Slap in the face. of course they new I was going to flip it on the pop. Could have been a beautiful day. Fu**ers.
You never get what you ask for in hot ipos. whatever you put in for is meaningless.
normally I get a relatively decent allotment. 400 on a 10K request is a bit** slap.
The tax loss on a wash is merely added to the basis of the next purchase of the same security so you don’t lose the loss (assuming of course the subsequent sale of same is profitable).
Take the $3,000 loss max on the 1040 and roll the rest over to future years.
How quickly we forget about the weather in Jan and Feb. Any less-than-stellar numbers are due to that. Durables are FLYING out the door right now (in real time). Summer rally coming, once the data catches up. Mark it down.
second that
lot of money parking in the pipelines. almost all green today.