I am constantly not amazed when these bailed out billionaires point to some secondary metric such as "EBITDA" to illustrate the day's excesses while ignoring the trillion dollar money printing operation required to keep this bubble inflated. Were it not for a decade of monetary bailouts, these billionaires would have a fraction of their current wealth.
Nevertheless, outside of a handful of widely ignored cassandras, the order of the day is keeping the brainwashed sheeple locked in the casino. The mantra buy and hold is rock solid now. Everyone convinced they can ride out an imploding Tech bubble through greater recession. The Nasdaq drawdown was -80% post Y2K; I would expect nothing less than the same this time around, as the broader market left this rally over a year ago.
Below we see the con job of the day, this belief that everything is great in the world except the coronavirus. A fantasy that has given con men cover to continue recommending stocks at the end of the cycle, amid deepening economic weakness. Worse yet, today's collapsing interest rates are used as a rationale to justify asinine valuations, based on earnings predictions which at this point in the cycle have the veracity of a Magic 8 Ball.
"He said the market is trading at 20 times his estimates for this year’s earnings.
“That is not unreasonable,” considering the low interest rate environment, he said. “But it’s certainly not cheap.”
And when their estimates turn out to be a figment of the imagination, what will they say? What they alway say at the end of the cycle, "Oh well, we were off by a minus sign".
In other words, it has never been more difficult to be a sane investor, because there has never been more mass insanity than right now. The forgotten term "unrealized gains" is the lesson these people have yet to learn. Everyone believes that they alone will retire at the apex of human history's largest super bubble.
Overnight, the first pillar of delusion began to fall as come to find out the virus is not contained, quite the contrary it's rapidly increasing, and/or vastly under-reported. Likely both.
"The hard-hit central province of Hubei reported 242 deaths in just one day and 14,840 new patients -- by far its biggest one-day tally since the crisis erupted last month."
Of course, the futures were down overnight as the rest of the world sold off, but the order of the day in the U.S. was "BTFD". Because everyone knows that an expanding pandemic is a buying opportunity.
Here we see via Momentum Tech that the urgency to BTFD has been increasing for three weeks straight. Every gap up is followed by a rollover with weakness peaking post weekly opex aka. Monday:
Here we see via the call/put options ratio, that speculative surge precedes every implosion. The magnitude of the surge and expiration matches the magnitude of the volatility spike (lower pane). Note, I used the Global Dow to show that U.S. speculative appetite is following global patterns of risk:
The widely ignored Hindenburg Omens have been warning as to what is about to come, as new highs are rolling over and new lows are expanding (not shown):
Yesterday I showed the NYSE HO count, here's the Nasdaq HO count. The right shoulder is now identical to the left shoulder per the moving average:
Prepare for global panic
aka. "Overnight risk"
