Monday, August 3, 2020

Dash For Crash

It appears that the vast majority of today's gamblers don't know a Tech bubble in a bear market when they are buying one with both hands. And why would they? After all, there is an election to rig...

The casino class is well lubricated for what comes next.

This fraudulent rally serves several purposes. First and foremost, it keeps the Idiocracy fat and happy while the real economy implodes in real-time. What I call Monetary Euthanasia, which is now being used on a biblical scale. 

"In the broadening top formation five minor reversals are followed by a substantial decline."

It is a common saying that smart money is out of market in such formation and market is out of control."

Outside of the Tech bubble, this is the third lower high for the equal weight S&P 500:

The second purpose served by this fraudulent rally is that it allows insiders to cash out in near record size:

"The ratio of companies with insider buying compared to insider selling is at 0.27 in July, the lowest level since at least 2000"

Third, it allows major companies to raise MASSIVE amounts of new capital. Meaning that while corporate insiders were leveraging their companies to the maximum extent possible during the COVID depression, they were also selling their stock to useful idiots en masse.

Note the difference between 2008 and now in corporate debt ($ change, quarterly):

Fourth, as I always say, the casino only exists for Wall Street pump and dump. And in this cycle we are seeing a dash for trash on an epic scale:

"The traffic at the U.S. Securities and Exchange Commission’s filing window last week looked like the last turn in a NASCAR race. Sixteen new IPO filings (S-1s and F-1s) rolled in"

To chum the waters for this massive influx of new IPOs, the Wall Street algos are sending Tech stocks into the stratosphere. Not only the MAGA cap dumb money stocks, but also the junkiest crap in the market.

For example, recent IPO Fastly, living up to its name having rallied 1,000% since March:

Part of Cramer's proprietary COVID-19 index:

Docusign, another high flyer on the COVID 19 stay at home implosion bubble

Wayfair didn't make Cramer's list, but it's part of the whole shop-at-home ecommerce bubble:

The bottom line in all of this unhinged speculation is that global RISK OFF, is no longer an option. Because the machines can't handle what comes next.

Going back five years ago to August 2015, we recall that the Chinese tried a similar feat of bidding up a stock market bubble to generate fake wealth. Which I called Shanghai Surprise. They tried everything to stop it from imploding. They finally succeeded -60% lower.

FULL Disclosure: Not everyone has bought into this last pump and dump