One of my most hated penchants of Wall Street is its desire to always retest the lows. Last night the NASDAQ futs tumbled 150 and now we’re up 126; but it’s weak like Ukraine and plenty of stocks are down over fears of a reversal in order to RETEST ZE LOWS.
Why must we retest the lows?
I often asked myself this very question as I attempted to make sense of the world. But it’s of no use. The market always wants to retest the lows because it SHAKES others out and causes them harm and ruin and Wall Street loves that sordid blend of misery. It’s all fun and games until your margin clerk liquidates your fucking account and tells you to fuck off.
Early going I was up more than 100bps and then the fade hit so I sold and sold and sold until I was left with just two positions in my trading: WCLD at 16% weight and SHOP at 5%. My Quant is fully long and my new Algo based account is 33% long TNA. I am +70bps in my trading because SAAS is strong and is ignoring the weakness underneath the veneer of this tape. Breadth is just 53% and I would not be surprised to see the markets reverse into the close. It’s important to note we are in the midst of a legitimate crisis, as Russian troops and equipment steam towards Europe, menacing the fucks in Ukraine and the Baltics. If Russia invades the Ukraine, expect sharply lower prices. I do not know how we might price in the specter of cruise missiles landing in Berlin.
As for today, keep an eye on bond yields. Should they pressure higher, stocks will drop and vice versa.
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All foreign policy of the past 50 years has been built around the tacit, unproven assumption that international trade will reduce the prospect of war.
And the critical failure of this assumption is that a bad actor will ALWAYS do materially better by just killing you and taking your shit than trading with you at some fraction of its real value.
Lot of people about to learn that lesson the hard way…
Bah. Foreign policy is built around money/power/dick measuring. If those in control get more money and power by trading with you – they’ll trade. If they get more money and power by killing you, starving you, sanctioning you …so that you don’t compete with their lust for money and power …that’s what they’ll do.
70 years without war between the most powerful countries in the world kind of does prove the assumption.
The action in LMT suggests war is coming.
Small bounce in stocks and bonds.
Huge move higher in commodities, stagflating our brains all over the ceiling.