…FTSE100 and S&P500 swinging back up by a few hundred pips…
Those pesky computers just do not know when to stop
being cheeky…
Soon enough they will be switched off and then the real fun will begin…(=panic selling).
a market crash always comes unanticipated and suprisingly to all participants
I cannot wait
Not always.
Sometimes the handwriting is on the wall, plainly visible to anyone who is paying attention.
Here’s an article from the current issue of [I][B]Futures/Modern Trader[/B][/I] magazine —
Bear market in US stocks looms…Indeed a déjà vu of 2007-2008
And here is an excerpt from that article —
“Indubitably, this current U.S. stock market topping pattern is fueled by unbridled greed and unrealistic Stock Buy-Back schemes fueled by the Fed’s Negative Interest Rate Policies (i.e. Quantitative Easing). However, as it did in 2001-2003 and again in 2007-2008, Irrational Exuberance will slowly morph into fear and panic as stocks begin to crash. Only this time, the Dow Index and S&P 500 Index may well suffer more severe losses. Moreover, it is highly probable that global stock markets will accelerate and exacerbate their prevailing bear market trends…especially in China.”
.
Great article , Clint . . . I had heard of theBaltic Dry Index before and it was good to see someone bringing it up…
History might well repeats itself. Afraid it might be a real bigger recession than previous ones.
This is like someone continuously climbing up a
rope that is burning from the bottom: eventually he/she
will hit the ceiling and there will be no rope left to hold on
to… The waiting game, sadly, is still very much on, and
the seven-year cycle is being skewered by a number of
factors, including the BoE’s continuing QE…
agree. its not hard to see the signs of the crash. if you want my opinion: im waitibg for it since 1.5 years.
what i was reffering to was that you cant pinpoint the timing when the raw mass sees what you see and believes in the “failure of the system” yet again and creates the fundamemt for the crash. the timing for a crash is impossible to figure out, but timing is 99% in trading, and especialy when you trade leveraged contracts. crashes always come suprisingly to market participants just like every year everyone is surprized :
“huh next week is xmass i must hurry buy presents!! i completely skipped/forgot its xmass next week!”
it always does repeat itself.
next repeating is going to be much more hurtfull since the system itself is not functioning as it should. 2008-today (quantative easening, 0%-interest rates, helicopter money etc etc) was only :buying time" before the inevitable must happen sooner or later, it was in no way “fixing” or “changing”
I like the Christmas analogy
I have been waiting for this crash for about the same time as you and the only reason why I entered
last summer is because the Chinese market crash looked like the right trigger to set off the
sell-off…it did not, but I thought: why chase the market around? So I sat with that position and
the cost of the transaction (negative swap) will be worth it when the fall actually comes, as I will
capture a lot more of the move than if I had tried to enter at the height of panic, when brokers
would struggle to fill orders
Agreed.
Can we elaborate also on why there is this distortion in economics where it seems that everyone
expects banks to fix a country’s growth, rather than the people who are ELECTED to do that?
It should be Thomas Perez, not Janet Yellen, who creates jobs for Americans; it should be Steven Joyce,
not Graeme Wheeler to look after growth in New Zealand; and so on…
The extreme and misguided expectation that BANKS should fix the economy is destined to
bring no happy ending, and yet the whole system is so hard-wired into this that if the NFPs
come out poorly, for example, it is somehow the fault of the Federal Reserve, not of the
Secretary of Labor…
This is clearly insane and I hope the markets will finally show central bankers how it is
not THEY or any single institution who can somehow stop market cycles, no matter how
much money they throw at them…
Francis!
i sense a potential big move in the dow starting tomorrow.
how is the psychological state of mind in the s&p? do you sense any panicing from the all time high its having right now? i observed a lot of negative opinions of the s&p in the last few days. many opinions shifting towards it beeing overblown and too high.
im asking because the publics opinion is better seen in the s&p then in the blue chip dow jones with 90% institutionals as investors.
Valuations in America (on the S&P) are very high.
There are going to be 10 articles citing why the S&P will crack 2200 before the end of year, and there are going to be 10 articles citing why the S&P will trade @ 1600 before the end of the year.
After being in this game for so long, and a contrarian by nature, more and more I see my self second guessing ANY analysis I see anywhere simply b/c most of these guys are salesman for their brokers simply doing their job. If you worked for Goldman and your only job was to make a market for Healthcare-related stocks, would you be on CNBC telling people to sell?
you are perfectly right on that. i know what you mean but i have the approach of “castles in the air” when it comes to stock indexes and therefore i need some market sentiment. im not trading the s&p but francis is so i appreciate his opinion. since i know that the small and middle size companies first loose their investors before the blue chips start gettong hit i need to have a picture or idea of the psychological state of the s&p.
you have market PR people who shout “get in its still cheap” and you have evaluations from reputabke companies with solid numbers and you have the biggest factor which is the perception of the participants. the PR people are easy to spot and ignore (prettymuch all online forums. online news papers. blogs and last but not least; people invested in s&p trying to unload to the broad public (finding the greater fool) and governments) the hard numbers are easy to find. the psychology comes only from participants.
i never read any analysises. you are right on putting them as “advertisements” of sales people. not even standard and poors abalysises are reliable anymore as we have seen in 2008/2009 when it comes to raw numbers.
i analyse myself when it comes to stocks in a simple way: anual income minus expanses minus investments divided by the companies total worth in shares = simple KGV (sorry dont know the english expression) of the company and anything above 15 years is overblown. 10-12 is ok and fair value less then 10 is a good investment.
the s&p average KGV at the moment is somewhere around 17 if i remember correctly. but the numbers dont mean much if the broad public believes its going to go higher abd still doesnt cash out.
I agree…however the fact that even the Fed lamented a market ‘froth’ last year means that they are aware of overvaluation and the danger that a burst equities bubble can pose to the fragile balance they have created through QE and low rates…
I agree with you, Jake… I make my own analysis and I have entered short the S&P500 last month: is it a good trade? Only time will tell…but less and less momentum in the S&P’s ascent means that the time is ripe for a rebalancing of cash flow out of these overexposed, minimum-yield assets and into profit-taking, ready for the new opportunities that will arise from the ashes of a market crash… Crashes are a function of greed, and an essential part of market cycles: they should not be negatively typecast and banks should not attempt to ‘cushion’ them with QE, because market cycle distortion through such means is even more dangerous than the deleveraging itself…
Hello Turbo,
I follow John Kicklighter of DailyFX.com, and as the Chief Strategist he has been watching the S&P500 closely for as long as I can remember: in his daily videos he starts the forex markets analysis with a view of the S&P500, which he sees as the chief gauge for market sentiment, a last stronghold of moral hazard that has long lost the ability to.provide strong returns and yet refuses to come down from all-time highs…
I share his view because it explains a lot of things post-QE and I also think that risk aversion, signs of which we have already seen in August 2015 and January 2016, is shaping up nicely…
That is my view and that is what my bias is: short ‘the market’, so to speak.
Does this make sense?
Well said. However, can’t the argument be made that the US equities market is simply the “best house in a bad neighborhood”? Where else can investors seek the equivalent yield that US equities can provide? Look, I’m right there with you…My portfolio is over -200 deltas right now (weighted against the SPX), so I’m in the same boat feeling the heat. Trying to call a top on market (as we all know) is one of the most dangerous games you can play.
Trying to call a top on an 8 year, FED-backed artificially low interest rate QE infinity market, is even more dangerous. The risk trade is crowded, but, it can also easily continue to run up much further than our portfolios can handle. Ever hear of a melt-up? One really quick way to hunt for some liquidity is to get EVERYONE who has been stubbornly short since early/mid FEB to capitulate and cover their shorts.
You are right, of course… and I will be among many who may pay the price of calling a top too soon…
I have made my plans and positioned small to allow plenty of breathing room, so even if this beast
went up to 3000(0), I would not sweat… but you are right, the S&P500 is indeed the 'best house
in a bad neighbourhood’…
I can but continue with my plan and manage it as events unfold…
What do you mean by “-200 deltas” ?
That’s good to hear…I can’t unfortunately say the same. I geared up to trade the downside.
Delta hedging: Delta neutral - Wikipedia
Google “delta neutral portfolio” for more if you’re interested.