Ping!
Well, we survived all those dates, but they were not as scary as 4 years of Carter.......
We're almost to Tax Day.
And the "New Bull Market" callers are out in force.
Just as they were last year.
Let's look at reality here folks:
- There is a major liquidity disruption under way right now in the markets. Zerohedge put forward a rather esoteric diagram of this; I don't need one, as it is trivial to observe this in the form of real-time time-and-sales data. Volume has been thin and declining while machine-driven ("quant") trading as a percentage of total volume has been flying higher.
- There have been a series of overnight 'gap higher' moves in sequence followed by days that fail to follow through strongly (that is, larger than the overnight gaps.) This is abnormal and points to "at the margin" price changes. The key point here is that this is unsupportable over the longer term as the actual base of equity trading; "long-term" owners such as individuals and pension funds are NOT following through during market hours and those holders are not trading /ES futures overnight on Globex!
The effect of (1) and (2) is what is known in the investing marketplace as "distribution" - that is, you, the retail bag-holder, wind up with the shares at the end of the day, and the institutional and quant-driven "fast money" departs with your cash. When they stop their high-frequency "pass across the table" game, and they will, you find yourself with some very expensive shares as the floor disappears.
Distribution marks tops, usually very significant ones.
A month or so back I was warning of a potential credit-market dislocation and imminent collapse in the stock market. It was "saved" to a large degree by these quants and other "high frequency" guys, all of whom have a vested interest in seeing that happen (think of the name of any big investment bank; there you will find one of those parties.)
But their firepower and willingness to play this role is not unlimited. Buying and selling between these firms is a nice way to book some profits, but these folks understand the rubber-band problem when markets get stretched, and exactly when their liquidity disappears is a matter of time, not supposition.
The imbalance that is presented here has led to the recent rally, but do not be deceived - this is not a new bull market.
Bull markets don't feature this sort of distorted move. Rather, they are measured, reasonable advances with most of the buying being real and taking place during market hours.
If you got "stuck" in positions either last fall or over the winter months, you've been given a gift. Exactly how far this gift will extend your ability to recover some part of your losses is unknown, but the fact that so long as this pattern persists one must keep a wary finger on the "sell" button is not at issue.
Ignore this warning at your peril.
Do you invest with these guys?
Appreciate you posting this, I was trading the finnies in pre-market for most of the month, but I was stunned to the point I pulled out of the market by 9AM on Thursday. The WFC execs on the TV were outright scumbags on parade.
In our post, in the comments section, I found another good blog post by the renowned and reviled Martin Armstrong:
Reading that sutff reminds me that the bulls and the bears are chasing concepts and strategies not fully understood in a market with this level of volatility. With that in mind it’s hard to see how some of TD’s assertions are justified.
Tyler Durden the author of that blog gets completely ripped apart for his lack of knowledge in that blog entry’s comments section.
The guy doesn’t know what he’s writing about so I implore all Freepers to take that blog with a huge grain of salt.
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And thank you.
Mark for later reference.