Thursday, January 28, 2021


In the U.S. there is now bipartisan support for market imploding pump and dump schemes. How else would this all end?

Joe Biden inherited the worst economy in 90 years, the worst pandemic in 100 years, and the biggest end of cycle asset mania in U.S. history. All compliments of McDonald Trump, the most derelict reality TV president in developed world history. The people who still believe in this government run Ponzi scheme specialize in being idiots. The only thing they won't believe, is the truth.

These Disney markets are a direct reflection of this society. NeverNeverLand is on a vacation from economic reality sponsored by central banks. Back in the Dotcom days, we didn't have any Reddit WallStreetBets forum. We had Yahoo message boards. Which started out with congenial discussion and then quickly descended into a toxic waste dump overrun with anonymous trolls. Which is why I don't take comments on this blog, because it attracts the dregs of humanity. Nothing back in those days was as "sophisticated" as these Reddit bear raids however. That's how Jim Cramer refers to these pump and dumpers, he lauds them as sophisticated. In the same way Bernie Madoff was sophisticated. Sadly, most of the people engaging in these pump and dumps will get wiped out financially. A small few will make massive profits at everyone else's expense. Those leading the attacks will surreptitiously cash in their chips while they are still cultivating the enthusiasm of others. And then, they move on to the next one, and the next one, until there is no one left to follow.

Now Congress is getting involved to protect the rights of the Reddit Mafia, because everyone knows the right to pump and dump stocks and implode brokerage companies is a Constitutional right. According to these bipartisan morons, those of us investors who have been prevented from making trades due to outages caused by group market manipulation have no rights, only the kids manipulating stocks have rights in Disney markets. 

It's abundantly clear these politicians are totally clueless as to the risks posed at this intersection of monetary liquidity overdose, extreme over-valuation, and speculative pump and dumps schemes. Wait until these brokerages go off line for hours at a time, then these bipartisan idiots will realize WHY the brokerages restricted Ponzi gambling. But it will be far too late for that realization. The accumulation of ignored risks and flash crashes has been taking place for over a decade.  

Here we see via the hourly chart, the condition of the last Trump Casino is quite parlous at this juncture. Late yesterday, the lower trendline was tested once again. Today's rally bounced back to retest the upper trendline of the rising wedge channel. And was rejected. A solid break of the lower trend line portends meltdown. 

Here we see that yesterday second derivative volatility was the highest since the last meltdown. VVIX measures the sensitivity of implied options volatility (VIX) to the underlying S&P 500. When VVIX is elevated, it means that small moves in the market create outsized moves in implied volatility, which creates outsized moves in the market, as hedging becomes more expensive. It's a momentum feedback loop in the wrong direction.

Nasdaq total volume is setting new records this week. Usually volume recedes on rallies and rises on selloffs. Not in this meltdown mania.

Picture what happens when the Reddit mob discovers the sell order for the first time. 

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

"Most of the selling is completed in the early stage by big players and the participation is from general public in the later stage"

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

"About 44 circuit-breaker halts were triggered in the first two hours of trading Wednesday amid the rapid ascension of amateur investors armed with Robinhood and their favorite social media platforms"