Rule #1: Never go full Idiocracy
When I first started investing, I subscribed to multiple different financial information sites. Over time, I dropped them one by one. Now, I have zero subscriptions. I came to realize that in a society run by and for salesmen, anyone who relies solely upon other peoples' opinions, instead of reality and facts, will eventually be imploded by conflict of interest.
Here we are.
In other words, it was never reality that was the problem, it was the hairless monkeys telling me to ignore reality who were the real problem.
In other words, it was never reality that was the problem, it was the hairless monkeys telling me to ignore reality who were the real problem.
Looking around at today's asinine punditry, there is no mainstream or even non-mainstream source of information that adequately informs us on the current level of risk. They are too busy selling pablum to babies.
Which is why none of them adequately describe the themonuclear detonation in progress.
Which is why none of them adequately describe the themonuclear detonation in progress.
Ironically, this morning (Friday), the market found its low for the week off of a headline saying that the WHO just upgraded the Coronavirus to "very high risk". Which is deja vu of late January when the WHO first called it a pandemic - the market staged a short covering rally. Which fell apart one day later.
Of course, today was also the end of February which benefited from end-of-month window dressing, and then shorts covered ahead of Sunday on rumours that the Fed may coordinate a bailout. Many on Wall Street are now predicting meaning praying for a surprise rate cut.
Picture a Fed with record low dry powder saying they are cutting the Fed rate down to where market rates are already trading, in order to offset a global virus pandemic. And regardless, the yield curve remains inverted. Hanging hope on a rate cut bailout is like jumping out a 20 story building using a pillow to break your fall. The world's second largest economy is imploding in real-time, and gamblers STILL believe that free money is the solution to everything.
All this week, home gamblers bought the fastest crash in U.S. history, while hedge funds monetized their hedges. Now, with the VIX at 40 it's too expensive to hedge, so the only option left is to sell to reduce risk. Which is why today's volume was 4x average.
"Investors largely held their breath, hoping for the selling to exhaust itself. The lack of panic, in fact, may be a negative."
As the article states, home gamers didn't panic, however machines were selling like crazy. As always, this was viewed as a positive for the market. Stoned zombies watching their portfolios implode while machines lose control over the casino. This week, multiple brokers had outages (Schwab, Fidelity, Ameritrade), and on Thursday the entire Toronto Stock Exchange was offline.
Imagine in the worst weekly selloff since 2008, and the entire stock exchange is offline. Merely a hint at what's coming. There is no place to hide in Trump Casino.
This week we saw record down volume in the Nasdaq sans panic and yet the machines almost lost it. Now picture down volume WITH panic.
This week we saw record down volume in the Nasdaq sans panic and yet the machines almost lost it. Now picture down volume WITH panic.
Speaking of nowhere to hide, the "low volatility" index once again proved to the inverse of its marketing claim. These critical over-owned "safe havens" have no support in any direction now.
Here we see VixPlosion 2.0 on the right shoulder, as promised:
Among the momentum growth stocks, here we see the Nasdaq (100) gapped down to the 50 dma backtested that level a few times and then gapped down to the 200 day which was backtested a few times today.
These are the most overbought and overowned stocks in the market. MAGA (Microsoft, Apple, Google, and Amazon). Now at critical support.
Both Microsoft and Apple warned on Coronavirus impacts to this quarter's profits.
Both Microsoft and Apple warned on Coronavirus impacts to this quarter's profits.
Next stop smash crash:
The real carnage was in economic cyclicals which went bidless this week, led by energy stocks which are now down -35% from their recent highs.
Banks, transports, retail, industrials - the reflation trade is dead, as U.S. bond yields reached record low levels all week.
If the Fed cuts rates this coming week, these stocks will explode. If the Fed does nothing this coming week, these stocks will explode.
Any questions?
Any questions?
In summary, there is no place to hide in Trump Casino
After the close on Friday:
"In the latest reading, non-manufacturing PMI – a gauge of sentiment in the services and construction sectors – also dropped, to 29.6 from 54.1 in January. Analysts polled by Bloomberg had expected the February reading to come in at 50.5"
