Tuesday, April 26, 2016

Will the Fed Pull a Bank of Japan?

There was an old buy side trader term called the Ax...who has it to grind that day.

It meant who had the biggest buy or sell order which determined intraday trading direction of any particular stock.

Across the Pacific, it would be the central Bank of Japan.

For everything.

What a slippery slope.

Why wouldn't the Fed do something similar if the market pressured it enough by trending lower? I mean its morally bankrupt but look at the time its bought Japan....


Saturday, February 27, 2016

Quote of the Day

No one can figure out how and why America’s youth have borrowed a collective $1 trillion for college tuition, and yet received so little education and skills in the bargain. Today’s campuses have become as foreign to American traditions of tolerance and free expression as what followed the Weimar Republic. To appreciate cry-bully censorship, visit a campus “free-speech” area. To witness segregation, walk into a college “safe space.” To hear unapologetic anti-Semitism, attend a university lecture. To learn of the absence of due process, read of a campus hearing on alleged sexual assault. To see a brown shirt in action, watch faculty call for muscle at a campus demonstration. To relearn the mentality of a Chamberlain or Daladier, listen to the contextualizations of a college president. And to talk to an uneducated person, approach a recent college graduate.

- Victor David Hansen



Pithy, erudite, and spot-on.

Wednesday, February 24, 2016

I Systemically Spy with My Little Eye ....

Scroll down for my partial systemic indicator risk list.

Im going to highlight some of the weakest.

Dollar yen and euro yen carry trades act bearish and continue their downtrends. This is a large currency headwind for stocks. Euroyen is weaker.

JGB's have once again gone into negative rate land. The 2yr German Bund failed to rally with equities and is close to making a new negative yield low.

Poor technical price action from EU banking weaklings: CS, RBS, DB, SAN, HSBC.

Back across the pond, ailing AIG can't even close above its 14 day exponential average with this latest market rally. That's profoundly weak.

Note the 2yr/10yr spread fails to rally with equities and makes a new low in its move down. The flattening spread shows a persistent belief on growing economic weakness. The first chart shows the huge support break, the second drills down showing the latest new low.



At Alpha Trader, my next piece of market analysis discusses the Return of the QE, and how it actually works. I dispell common myths. And there are a few whoppers.

Lastly, I discuss some of the strongest cash flow and relative strength stocks in the market now. Some we already own and a new issue sticking out like a green blade of grass in the desert. These are the next new market leaders when pressure releases from the broader market.


Saturday, February 20, 2016

Magazine Covers Coinciding with Major Market Turns

I wrote up a study on emotional magazine covers at important market turning points.

Enjoy a read.

This week Barron's and the Economist have covers out. Click to enlarge.

 

If you've read the link above, you'll note that neither of these covers make a declarative bearish statement. The Economist is wishy-washy. Barron's has a rough seas cover but their small print wording is bullish and complacent.

There is no "the sky is falling" in either of these.

So while we have two covers from financial rag-mags, they fail stand your ground bearishness of  covers which tend to coincide with major market turns.


Wednesday, February 17, 2016

Weakest Rallies of My Systemic Risk Watch List

Watchlist is here.

After this market rally, some things I notice:

Euro Yen, no rally and a humongous top in place. Note the support trend line from 2013. The EU yen carry trade. Lots of pressure on EU equity longs if/when that trend line falls. Size of the top projects for a large trend lower.

Credit Suisse; no rally;

AIG, no rally

Friday, February 12, 2016

The Fix is In - For a bit...


Why else would well connected banker Dimon buy a year's salary slug of shares?

The S&P reversed yesterday, testing its spike low and holding. Today is up. 

NASDAQ tested Jan Feb lows three times, now up. 

I'll be watching for what does rally and what fails to do so on my systemic list I posted yesterday.

Red bean BKLN - leveraged loan index - fails to rally today..so far.

The Dimon buy can work for a bit, but its NOT an all clear sign. There are too many global macro forces at play outside the US.

Thursday, February 11, 2016

I smell a whiff of deleveraging and forced selling

Extremely oversold on sentiment and market fails to rally and have any follow thru to the upside.

The selling keeps coming.

Yellen's speech yesterday.....behind curve. Got beat up politically. Suggests bigger fight for her to act, so market gives a bigger drop to get supportive political/monetary action because its not happening at current price levels.

How bout China. To bastardize a good spaghetti western, HANG SENG 'em High. Lots of leverage 'n lies getting scrubbed there.

PRU is ailing.....

JPM just broke important fifteen month support at 54.

SAN, Spanish bank, note long term chart.  Took out 2002 and 2009 and 2011-12 EU crisis lows. Shows clear systemic issues based on its price action, size, and name brand status.

Keep an eye on commodity trading firm Glencor across the pond. Big leverage. Along with DB - head of DB and Schauble out defending the stock yesterday. Parroting and squawking everything is fine. Reminds me of 2008. They're lying because their lips are moving.

Here is a portion of my systemic watch list I review for developing/intensifying problems - smoke, fire, etc.

Includes ETF/ETN providers. Lots 'o leverage in the system....switch a few letters to move from virtuous to vicious.

IGOV
BKLN
USDJPY
PGF

GS
EUFN
DB
SAN

RBS
STT
IVZ
RF
GLNCY  - Glencore
CS

GREK
EWJ
ARGT
FXI
EWP
EWI


BWX
@DX - dollar index
FXI

AIG
MET
PRU

Tuesday, February 9, 2016

Fed Easing "Tell"

Race to the currency bottom intensfies. Ease to buy China breathing room with its Yuan manipulation. 

Dollar headed lower. Easing ahead. Yellen speaks tomorrow, text released 830am EST.

Ready, set.....



Friday, January 22, 2016

Bounce Part Deux





So here we are again at bounce part two. US equities are severely oversold (duh) based on many measures including the McClellan Oscillator. So up we now go to relieve the pressure. Buy rumor, sell March news/implementation.

With EU QE drug pusher Mario "Super G" Draghi

From Jason G at Sentimentrader.com 
Another concern is that stocks have now suffered two 10% corrections in a short span. This is difficult to quantify, but according to our tests, this has only happened on three other unique dates, in 1929, 2000 and 2008. All of those preceded major bear markets.
The first and third were clear credit events. The second - while having credit related issues - was a bear market correction of clear, blowoff excesses in stocks.

The current selloff is credit related - souring bets and loans in oil related companies on less light sweet and more dour and sour crude prices. Banks are upping loan loss reserves and some, like WFC, likely are playing hinky games with portfolio valuations. Extend and pretend part deux as well.

Take a look at BKX. Looks like a significant new downtrend has taken hold



Notice the surge in credit default swap prices to the resistance trend line.


Chart courtesy of Sentimentrader.com. Get the service. It's excellent.



The quality and sustainability of the rebound is what generates new bull markets. I'm keeping my eye on the above to canaries in a coal mine. The BKX leads as do CDS's to an important but lesser extent because CDS can get diluted with speculative excess more-so than BKX.