Tech Super Wreck

Amid the new permanent crack high of delusion and crash risk coalescing at record highs, it falls on us still-sane "perma-bears" to explain why liquidity-driven melt-ups into expanding pandemics are not buying opportunities. Everyone else has been thoroughly lubricated by the virtual simulation of prosperity and its acolyte QE. I hope they understand how all this is going to look after-the-fact; because like table dancing drunk naked, these things always make a lot more sense at the time...

"I never thought Trump would lie about the economy just to get re-elected and stay out of jail. Selfish bastard"

If one is to believe that the riskiest stocks are safe havens from global pandemic, this all makes perfect sense.

Let's begin with the drugs being served at this party:

"Risk appetite recovered in a big way Tuesday, as global equities surged amid more signs the PBoC is prepared to do what it takes to inoculate China’s economy and financial markets from the Wuhan outbreak."

In other words, gamblers now believe that central banks can inoculate society against viruses.

From the casino perspective, recall that last week the entire reflation trade crashed amid a rotation to Tesla, the new safe haven. Which set-up the "fifth wave" blow-off top in risk which accelerated early this week with the China bailout.

Now, that Tech blowoff top is beginning to reverse, led by Tesla:

Today, Tesla was down -25% from yesterday's high. Once again this stock led all others in dollar volume by a wide margin.

Here we see the mother of all key reversals on the weekly chart. Gains are measured from the bottom up, whereas losses are measured from the top down. At the current level, the stock is now up 315% in 7 months:

The other stock of interest is Microsoft. When the Coronavirus hit, money rotated to software which was viewed as a safe haven during the trade war as well. Since the virus outbreak, gaining 15%:

A major reversal today:

Here we see the software sector deja vu of August:

On the other hand, here we see that semiconductors peaked over a week ago on Friday January 24th, crashed last week, and rallied to a lower peak today.

I've noticed that liquidity is peaking mid-week and then collapsing into the end of the week recently. Which indicates distribution by institutions. The two big red candles are the past two Fridays:

Which leaves us with what is driving this late stage melt-up in the S&P futures:

Here we see fracking stocks having the best day in months:

Banks having the best day in weeks

Of course in China, this Coronavirus selloff has been going on for two weeks now. Here again, we see that liquidity is peaking mid-week lately:

In summary, too many bears were expecting meltdown to occur this past Monday when Chinese markets came back from Lunar New Year, however, the PBOC came in with the bazooka and blew them up. In the event, the PBOC sponsored a monster short-covering rally featuring three massive gaps below this current level, which the algos will gladly fill sooner rather than later.

Below those gaps is nothing but blue sky and stained underwear...

All of which sets up you know what...