The SPX (S&P 500; the US stock market) prints a new all-time record high at 3329.88 and new all-time record closing high at 3329.62 on Friday, 1/17/20. Market participants wait for the Godot Top to finally appear and roll over, but keep waiting. The happy trade deal news, the never-ending Fed backstop and the promise for middle class tax cuts keep stocks elevated. Everyday is another beautiful wonderful day at Itchycoo Park. We'll touch the sky there, oh my, the stock market, it's all too beautiful.
Traders Kneel and Worship at the feet of the Federal Reserve and other global central bankers since they are the modern-day Money God's in charge of the world's Financial Temple. All Hail the Power and Majesty of Pope Powell and his entourage of Doves!
The Fed had a religious experience in September when they thought a liquidity event was about to crash the markets and economy. Powell soiled his pants and immediately ran downstairs in the Eccles Building, while managing that pant load, and cranked up the Golden Printing Press announcing more QE for as far as the eye can see. What Glory, Praise Be.
The world's 20 important central banks are all easing in one form or another creating the massive melt-up in global stock markets. The screenprinter's cannot keep up with the record highs since new hats are required to commemorate market milestones, but they keep ticking off like crazy to the upside with no end in sight. The central bankers are the market. Do you understand this or are you stupid? The four central banker horsemen of the Apocalypse, the Fed, BOJ, ECB and PBOC, are the God's of Earth's Financial Kingdom. The PBOC cut triple R's out of the gate this year pumping stocks higher. The BOJ, ECB and BOE are all set to pump stocks over the coming days. Face it; these folks are sick pups.
Anyhoo, judgement day always comes, and the technicals have been champing at the bit to take the stock market down for over a month now. The low put/calls verify the rampant complacency in the stock market and a significant market top at hand. Traders and investors are buying stocks without a care in the world. No one does homework on the fundamentals anymore. That is old hat. The central bankers always pump nowadays so all you have to do is buy stocks (moral hazard).
Folks that never comment on stocks are now experts proclaiming that the rally will continue a long time. The IPO's failing are reminiscent of Webvan and Pets.com at the top of the dotcom bubble in 1999. The recent mess with SoftBank is reminiscent of all the side businesses that Enron got into before it imploded back then. So many things are rhyming. The current parabolic stock move in the indexes is similar to the January 2018 top that peaked out right during/after Davos; as the billionaires were trying to impress the millionaires. Will that behavior rhyme two years later? It was ugly.
The table is set. Dirt pie and mud brownies are on the menu. You should have protection in place as well as throwing some shorts on going forward. Single and 2x 'short ETF's' are all in play such as going long SH, SDS, DOG, DXD, PSQ, QID, you get the idea, or, shorting SPY, SSO, DIA, QQQ, and so forth. Remember, as Keystone always says, never play the 3x ETF's and ETN's. They are flawed instruments; you will only lose your money if you mess with that 3x garbage. If you have strong conviction for a particular sector or index, and seek a little leverage, then take a ride on the wild side with a 2x ETF, but never, ever, play a 3x instrument. We should see what the bears got this week. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added Monday Evening 6:03 PM EST: S&P +2.
Note Added 6:30 PM EST: S&P -2.
Note Added 7:17 PM EST: S&P -2. Dollar/yen 110.17. The USD/JPY pair is flatter than a newlywed's souffle right now. There you go, 110.18, dead-flat. Thus, the dollar/yen is at a 110.18 pivot point. If the pair moves lower to a 109-handle, it is risk-off in markets and stocks will sink. If USD/JPY remains above 110, the stock market bulls are fine.
Note Added 8:03 PM EST: S&P -3. Dollar/yen 110.17.
Note Added 8:54 PM EST: Boom. Double-whammy. China says the novel coronavirus has killed four people and sickened hundreds and is now spreading human to human. A health worker falls seriously ill. The lunar holiday is coming which is a mass pilgrimage of folks to see family and friends so that virus may spread like wild fire across China and Asia. Like the SARS virus years ago, companies that sell masks and hygiene products will make out like bandits while travel and tourism companies, hotels and airlines will be punched in the face. Also, Hong Kong's credit rating is downgraded by Moody's due to the many months of social unrest. Perhaps global traders are worried about potential contagion. HSBC will trade soggy since it has a large footprint in Hong Kong. Asian stocks trade lower. Hong Kong's HSI collapses -2%. Japan's NIKK -1%. Topix -0.666%. South Korea's KOSPI -0.6%. Samsung -1.2%. China's CSI300 -1%. SSEC -0.7%. Airlines nose dive. S&P futures -13. Dow -101. Nasdaq -42. Dollar/yen slips below 110 to 109.94. Oil flat. Copper -0.9%.
Note Added Tuesday Morning, at 1:30 AM EST: S&P -15. Dow -110. Nazzy -48.
Note Added Tuesday Morning, at 2:31 AM EST: S&P -11. Dow -63. Nasdaq -35. Asian markets puke overnight. HSI -2.6%. NIKK -0.9%. Topix -0.5%. KOSPI -1.1%. CSI300 -1.7%. SSEC -1.4%. Straits Times -1.2%. India stocks are sold off. Oil -0.8%. Natty gas plummets -4% to 1.92. Gold 1562. Silver 18.03. Copper loses -1.3% to 2.808. Dr Copper should be joyous considering the hyped-up US-China trade deal. Dollar/yen is trying to sneak back above 110 at 110.01. Futures are off the lows. US Treasury yields are; 2-year 1.55%, 5-year 1.60%, 10-year 1.80%, 30-year 2.26%. The 2-10 spread is 25.5 bips.
Note Added Tuesday Morning, at 4:09 AM EST: S&P -12. Dow -85. Nasdaq -44. Russell -8. VIX is up to 13.15 a 13-handle when the 11-handle was in vogue last Friday. The VIX 200-day MA is at 14.93 which is where the wheels would fall off the market bus. The Keybot the Quant algo remains long since early December and is tracking VIX 13.68 as a key bull-bear line in the sand. At 13.15 right now, the bulls are okay, but the bears will shine if volatility moves a bit higher. US Treasury yields are; 2-year 1.54%, 5-year 1.60%, 10-year 1.80%, 30-year 2.25%. The 2-10 spread is 25.3 bips. WTIC oil -0.9%. Brent oil -1.2%. Copper tanks -1.8%. Gold 1556. Silver 18.02. Dollar/yen 109.97. Asia markets and US futures are ill this morning and Europe also catches the sickness. DAX -0.5%. CAC -1%. FTSE -1%.
Note Added Tuesday Morning, at 5:45 AM EST: S&P -14. Dow -86. Nazzy -48. Russell -9. VIX 13.23. Dollar/yen 109.98. Copper -1.666%.
Note Added Tuesday Morning, at 6:23 AM EST: President Trump provides a keynote speech at Davos. It was uneventful by Trump standards; he phoned it in. Trump looked tired, probably from the flight over, stopping in France first, then jumping to Davos. King Donny takes a swipe at Fed Chairman Powell saying the Fed raised rates too fast and has lowered them too slow. The president sets up Powell as the scapegoat if the markets and economy collapse this year. S&P -12. Dow -73. Nazzy -43. Russell -7. VIX 13.10. Dollar/yen 110.07. 10-year yield 1.81%. China says the coronavirus has killed six people. The SARS outbreak years ago killed about 8 hundred so this new outbreak is in its infancy. With the lunar holiday ahead, however, Chinese and Asian folks may be spreading the virus everywhere.
Note Added Tuesday Morning, at 9:20 AM EST: S&P -10. Dow -65. Nasdaq -27. Russell -5. VIX slips back below 13 to 12.92 so the bulls laugh at the bears. The bulls are out in force at Davos and elsewhere. Hedge fund manager Ray Dalio tells investors to remain long the stock market. Dalio proclaims, "Cash is trash." He suggests remaining long the stock market going forward and says a small amount of gold can be bot to diversify. Will lightning strike twice? It was two years ago almost to the exact day that Dalio proclaimed smooth sailing for the stock market ahead and that was actually, comically, the exact top in the stock market. It will be humorous to see what happens in the days ahead. Dalio is not the only bull. Everybody and his brother is bullish. There are no bears. Tudor Jones says the stock market has a "long way to go" despite its behavior being similar to 1999. He said back then during the dotcom bubble, huge gains in stocks were realized before stocks completely topped out, and he says we are not there yet. Tudor Jones stands on a soapbox and proclaims, "The (stock market) top is a long way from now." CS strategist Jonathan Golub jumps into the middle of the bull party filling everyone's glasses with more Fed wine, pumping the Credit Suisse SPX year-end target from 3425 up to 3600. The bomp-bomp-bomp of the techno music becomes louder and louder as the bulls keep buying stocks with both fists in a party-like atmosphere. Invesco strategist Brian Levitt is next to cheerlead the stock market. Levitt says that euphoric bullishness is not in the market as yet so stocks will continue higher. He pooh-pooh's any comparison of the stock market behavior now to the activity into the January 2018 top (that ended in a crash). The bears have all left town swearing to never short a stock again as long as they live. The bulls keep buying stocks and ignore the naysayers. The bulls are dancing and singing, swigging down Fed wine and buying any stock with a heartbeat. Making money in the stock market, on the long side, is effortless. Uncle Phil is at the financial manager's office in town, you know, the new place between the post office and Mario's Pizza. Phil took his entire life savings into town and is buying AAPL and AMZN stock like the nice young man in a suit and tie suggested on television.
Note Added Tuesday Morning, at 9:46 AM EST: The US trading week is underway after the MLK Day holiday yesterday. All 11 S&P 500 sectors are lower. The SPX slips 10 points, -0.3%, to 3119. VIX 12.74. The day is off to a quiet start. Bears got nothing unless the VIX moves above 13.58 (latest number from Keybot) which will send stocks steadily lower. The stock market will fall apart if the VIX moves above 14.93. Bulls are not worried about anything if the VIX remains below 13.58.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.