Thursday, April 22, 2021
ALL WARNINGS IGNORED.
Wednesday, April 21, 2021
Nothing Matters Until It Explodes Spectacularly
Tuesday, April 20, 2021
Pigs To The Slaughter
In what can only be described as human history's biggest mass con job, central banks have systematically desensitized gamblers to all risk. They are now cycle high fat, dumb, and happy. I call it monetary euthanasia...
Compliments of central bank alchemy, the shortest bear market in history yielded the best one year market gain to an all time high in market history. In addition, inflation expectations are the highest since the end of the last cycle, retail investor speculation is cycle high, and now we learn that the market is two decade overbought.
All late cycle indicators peaking at "the beginning of a new cycle".
One of the indicators I haven't shown recently, shows the ratio of mid cap stocks to the large cap Dow. What we see is that mid caps peak relatively early, they underperform for a while and then they burst higher at the end of the cycle due to short covering. In addition, commodity stocks (second pane) outperform at the end of the cycle and of course inflation expectations are highest at the end of the cycle:
This fraudulent recovery which is based solely upon asset inflation has seen some ludicrous moves in asset prices. However, few sectors are as insane as the retail sector which was blighted by the pandemic. And yet, it's the top performing sector over the past year. This entire sector has been "Gamestopped" higher amid record store closures.
Which has fulfilled the circular mirage of "recovery" based upon capital misallocation.
Another thing you don't see at the beginning of a cycle is cycle high IPO/SPAC issuance:
Herein lies the problem:
Over the course of this 12 year continuous monetary bailout cycle, investors have become more and more complacent. I use a ratio of NYSE down volume over up volume to show the degree of panic selling.
Back in 2008 when it was the end of the cycle, panic selling peaked. Subsequently, we have seen lower peaks over the course of the cycle. We are to believe that the lowest level of selling in the entire cycle marks the beginning of a new cycle.
Sure.
What we are about to witness is 12 years of pent up selling, which will make 2008 look like a picnic.
And then everyone will know what we know. It's the end of the cycle.
And this is no time for bullshit from the same proven assholes who lied last time.
Monday, April 19, 2021
This Orgy Of Excess. Is Leveraged To DogeCoin
We still don't know why the cryptos crashed. It could be that the last fool was found. Like Gamestop, cryptos are uniquely suited to the Congressionally approved Ponzi investment strategies hatched on Reddit...
The intended design behind Bitcoin and other cryptos is to create scarcity. As price moves higher, the amount of supply becomes increasingly constrained by the mining algorithms, difficulty level, and available hashrate/computing power. Therefore, liquidity becomes constrained as well. These were precisely the conditions that attended the massive Gamestop short squeeze. However, the scarcity factor for Gamestop came from the fact that hedge funds had borrowed the shares and were forced to buy them back. Low liquidity is a critical requirement for parabolic price moves, but unfortunately it cuts both ways. Which is why Bitcoin is known for its two way volatility. It will never be a stable currency. It's a speculative toy. The rest of the cryptos are even worse. There are now over 6700 cryptos and they are proliferating like rabbits. The fact that they are all 100% correlated should serve as a warning sign to speculators.
New "flash loans" are allowing crypto speculators to use cryptos as collateral to buy other cryptos. In the same way that 2007 era subprime CDOs were built upon other subprime CDOs creating instantly exploding CDO "squared", which had the shelf life of a rotten banana.
We now have a similar thing in Crypto Ponzi schemes:
“In a way, flash loans make everyone a whale” said Nikola Jankovic, community manager at flash loan provider DeFi Saver, referring to the crypto industry nickname for large investors who are often able to move markets by themselves."
Leveraged cryptos are the ultimate form of speculation. It's the crack cocaine of gambling, so it should come as no surprise that the crypto bubble is one of the last and largest speculative bubbles to burst.
Ponzi King Mike Novogratz warned last week that we are seeing a blow-off top in crypto speculation:
"I've seen a lot of weird coins like dogecoin and even XRP have huge retail spikes, which means there's a lot of frenzy right now."
"In the next week, certainly we could have some volatility because of the excitement around Coinbase."
Indeed, we have already started to see some volatility. I showed this chart below on my Twitter feed which overlays the Google trends search term "Crypto", onto a graph of the Global Dow. As we see, they peaked simultaneously in 2018. This time, crypto searches peaked back in February with the Nasdaq and is having a double top now with the Global Dow. We also see that margin debt peaked in early 2018 when the crypto bubble exploded. This time however, a "washout" in crypto could have carry-over effects into mainstream financial markets. Why? Because now, BitCon has gone mainstream and is the "most crowded" hedge fund trade of 2021. In addition, Robinhood now allows stock gamblers to buy cryptos on their platform.
It's the equivalent to linking the U.S. banking system to the subprime housing market in a speculative housing mania. It's a bad idea, considering there is now record margin debt AND crypto is a $2 trillion market cap - almost three times larger than in 2018. It's a disaster wanting to happen.
The way I see it, the same way Gamestop fueled a manic reach for risk that exploded in February, the Coinbase IPO fueled a manic reach for risk that is peaking now.
The question on the table is if a $20 billion pump and dump scheme almost crashed the market, what does that portend for a $2 trillion pump and dump scheme that is 100x larger?
Feb. 17th, 2021:
April 17th, 2021:
“It’s reminiscent of GameStop”
Indeed.
Sunday, April 18, 2021
Buy And Explode
Saturday, April 17, 2021
Chain Reaction
Friday, April 16, 2021
Rigged To Explode
This cycle will end the exact same way it started, with broke Millennials protesting Wall Street corruption. This time however, there will be no rich assholes laughing at them, because their last bailout is in the rear view mirror...
As the market approached the February high I said there were more red flags than a Chinese parade. Since the Nasdaq crashed and burned and was resurrected, the red flag parade has become far larger:
The market is now a giant casino. Everyone is now playing against everyone else. It's clear that today's gamblers enjoy looking around the Blackjack table at all the people they hope to plunder in a zero sum game. Today CNBC and Marketwatch were lauding a crypto called "Dogecoin". It was started as a joke on the crypto market, but then it garnered the attention of billionaires Mark Cuban and Elon Musk so now it has zoomed from four cents to forty cents over the past few weeks "minting overnight millionaires". What they forgot to mention is that these millionaires are benefiting at the expense of those coming in at the end of the pump and dump. The many are minting the wealth of the few. Sound familiar? It's the S&P 500 in crypto form. Somehow a forty cent pump and dump scheme is now front page news.
As I pointed out yesterday, the Nasdaq has now round tripped back to the February opex high. Both stimulus rallies lasted the same amount of time - six weeks. The Nasdaq has now filled all of the open gaps from its breakdown in February. Now all of the open gaps are below the market and the options manipulation "stimulus" is set to expire.
Revisiting the red flags that were evident in February, we notice that risks have only grown exponentially in the meantime.
First of all, the SPAC bubble (not shown) with respect to listings has doubled in magnitude over the past two months, even though many deals are now failing and many SPACs are trading below net asset value.
Next, from a positioning standpoint, the Rydex ratio peaked in February and it's making an even higher peak this month:
Active Managers were extremely bullish in February, then they got extremely bearish and now they've round-tripped back to la la land. In addition to gamblers going ALL IN at the end of the cycle, this robo rally has been fueled by bears capitulating en masse:
The crypto market was at $1.4 trillion in market cap in February and now it's at over $2 trillion. So that Ponzi scheme grew much larger. As a measure of social mood we can see that Dogecoin fever peaked in February as well, however that % gain was TWICE as large as this recent rally:
Those are the similarities to February - all indicating that risks have grown in the meantime. Here are the major differences:
First off, most Tech stonks did not join this latest round trip to all time highs on the Nasdaq. Here we see the ultra popular Ark ETF is obeying the opex rollover signal:
Unlike the Nasdaq, the NYSE keeps making new highs, but it too is highly manipulated by the monthly options cycle. New lows keep expanding with every passing opex and are correlated to Nasdaq new lows:
Here we see options expiration relative to the S&P 500. As we see, new lows on the NYSE and Nasdaq are becoming more sensitive to declines in the S&P 500: