Market Observations and Places You Should See
Ok, this week has been brutal for market watchers. For the folks at home that do not follow the market (you are better off, lol) it has been hard for everyone. A few quick thoughts:
-I am not closing my positions in SH and PSQ until the S&P 500 closes over 1300, or under 1190. Makes this trade easy and non-emotional, a planned trade.
-The candles say today was a spinning top or indecision day. To me, indecision goes AGAINST the prior trend so tomorrow (which is options expiration!) should be a solid bull day. Be on watch for any "spike the market" rumors.
-For all the bears out there (where?) Barry Ritholtz has a great catch from Jim Bianco:
“In both normalized measurements, the present VIX reading is just over its trend curve. This is a market simply unwilling to acknowledge anything unusual might be underway.Hate to snip that much, but very important.
As the spate of negative economic news and the largest one-day selloff since August 2010 have not been kept secret, we have to conclude one of two things: Either the options market is correct or option buyers have been blinded by, well, blind faith. It is quite possible the latest spate of negative news is simply one in a series of crises since March 2009 that have generated a great deal of excitement and then were buried in the next rally. For more than two years, the the bears have made the headlines and the bulls have made the money, much to the consternation of the bears.
Still, as noted in March, it would be better to see a rising VIX in such a situation. What never has changed and never can change are the mechanics of market-making; each purchase of protection in the put options market or in floating-rate receiving on variance swaps demands market makers sell ever-greater quantities of stock at ever lower prices to hedge. If the present complacence is incorrect, the subsequent adjustment will be harder and more violent than it would have been otherwise.”
-More on that angle? I talked about the margin debt vs. AAII bearish % last night and called baloney. Just makes no sense. Macro Story, who you should be stopping in on, went further in the discussion and had this post printed at Zero Hedge:
Guest Post: Sentiment Surveys Or Margin Debt Who Is Smarter?
Great item and here is the graph:
Author Tony notes:
The chart of debit margin balances versus the five week moving average of the AAII bullish sentiment readings. Notice how bullish views peaked five months before margin levels peaked in 2007. Similarly bullish views peaked in December 2010 (the moving average peaked in February 2011) while margin levels continue to rise through April. Considering the May 1,370 high subsequent margin data when available may very well show May as the peak in margin debt.
There is at least one possible explanation for this divergence. As sellers move out of the market, this historically contrarian indicator entices leveraged longs to increase the use of margin thus supporting prices. A negative feedback loop is in fact created causing markets to resist selling pressure.
Very interesting! Think about this.
-Favorite quote of the day, again via Zero Hedge re the Philly Fed index biggest collapse in some time:
And make no mistake: the downside 3 month momentum in the series at -51.10 is the worst ever: all those buying stocks in advance of more easing are completely forgetting that they will take major losses before the market is low enough to allow actual easing to proceed.It has to get bad, and not in a wimpy relative sense, before the help arrives.
Ok, enough of all of that. A little relief rally of our own, a Friday night prelude?
A while back I posted a camera capture picture of the deer that has been eating all the stuff in the birdfeeder, and in the background you could make out another creature that was hard to identify. Well this week I caught it!! Here is a somewhat iffy picture:
Removing all doubt, it is a COYOTE!:
Beat that Encyclopedia Brown!
Somehow Josh Brown's site is relevant search terms wise for Decepticons. I don't get it, I write about robots like the Decepticons all the time. I have featured the Decepticon insignia many times. I have even included the epic battle between Optimus Prime and Decepticon leader Megatron:
Making it Happen
My friend Jennifer Hillier is going BIG TIME with a all new HARDCOVER novel, titled "Creep". Early reviews are fabulous (any doubt?) and you can see the author open her own novel here:
Ain't nothing like the real thing, baby!
For a person that harbors inspiration to write, this is so cool! What is better is that I will have 6 (six) copies that will be up for free in a contest when the book launches in July. No affiliation other than Jen is the bomb, I paid in full for all books.
Best Substitute Lines EVER!
My man Mark of Illusion of Prosperity pens this cover of legendary Dio's "Holy Diver":
Holy fish heads!
They've been left too long in the sun midweek
Smell what's beginning to reek
Taste the salmon
You can touch the scales that they tried to clean
You don't want to eat what's green
Gotta sell today
Holy fish heads!
There are salmon eyes in the fish head stew
Something they brewed just for you
Race for the toilet
You can stay on the pot 'til the morning light
Oh we will pray you're all right
Gotta sell today, sell today
Click over for the rest!
Funny Until I thought About It
From the new site The Echo Boom Blog, comes this snippet that was funny until I thought about it:
According to a study, younger Echo Boomers seem to perceive debt as a positive circumstance:Funny until you figure out nothing could be further from the truth.
Researchers found that the more credit card and college loan debt held by young adults aged 18 to 27, the higher their self-esteem and the more they felt like they were in control of their lives. The effect was strongest among those in the lowest economic class.
Only the oldest of those studied -- those aged 28 to 34 -- began showing signs of stress about the money they owed.
Have a good night.