Status Update: As of [August 1st, 2014]
A "Confluence of factors"
The headlines scream ever-rising risk in every direction, now with the potential prospect of a global Ebola epidemic. When H1N1 flu broke out a few years ago, people assiduously (over) prepared, spawning a Hollywood dramatization of the entire affair. This time around, at the prospect of the world's deadliest virus going global epidemic, the masses are making beach plans. Therefore this de rigueur insanity of viewing each issue in isolation, is strictly to maintain the all important plausible deniability that systemic risk is low. As we know, systemic risk has never been higher, far higher than in the Fall of 2008 when hedging was commonplace and risk-off selling had been taking place since mid-2007. Today, not so much. Clearly, the risk of a "Minksy Moment" transcends the economic and financial aspects of such an event. This debased society veering towards ever-greater violence, will explode in anarchy at the prospect of another financial meltdown. So there's more than one type of "preparation" that needs to be considered. The markets themselves are far weaker than the lamestream would ever admit. The Risk Off selling began in earnest this week, however, the underlying components have been weakening for months, neatly obscured by HFT bots working their rotational magic of keeping indices pinned to all time highs. I would describe this week's "action" as more of a high volume controlled asset re-allocation from risk assets to "cash" (aka. money markets). Nevertheless, that re-allocation coincided with the Argentine default and the Portuguese bank default. Overall however, the rotation to safety has been "orderly", with no sign of major panic. An orderly march towards oblivion. Therefore, it's only a matter of time until the "Minsky Moment" and the high volume orderly sell-off breaks something big.
The "Minsky Cycle" (also called commonsense i.e. borrow money to gamble - blow yourself up...)
THE WEEK IN RISK:
- Global "out of control" Ebola epidemic
- Argentina default
- Portuguese bank default (Espirito Santo)
- Fitch warning on high yield debt default rates
- Gaza escalation
- Ukraine escalation
- Sanctions against Russia boomeranged back onto Western multinationals (see charts below)
- Dueling Fed governors debating whether interest rates should be raised soon or sooner
- "Peak GDP" concerns aka. 2008 Deja Vu
- California's drought goes from bad to "catastrophic"
- S&P 500 below 50 DMA
- Russell 2000 below 200 DMA
- Dow now negative in 2014
- Double normal stock trading volume, the last two days
- WTI crude oil below $100
HALO Crash Visualized
Fast moves come from failed moves:
7 months of Dow gains wiped out in one week
The blue dashed line below is the four month plateau. Then the overthrow high which was taken back in one week. Now back below the plateau aka. "false breakout". The Dow is back to a level it first reached in December.
Volume lower pane
S&P 500 suffers biggest weekly loss in two years
SPY (ETF) with volume - this "correction" is just getting started...
A "stealth" collapse in broad daylight
The Dow is merely catching down to the average stock
We've never seen this much of a disconnect before - thanks to HFT. All designed to keep Etraders throwing money at the Dow, right up to the main "event"
S&P with Russell 2000 (red):
Canary in the Coalmine: Relative strength indicator
J&J peaked just slightly before the market rolled over, as it did in 2008, circa Lehman. It also peaked late in July 2011 right before that 20% "correction".
"Fuck Putin"
The West sanctioned Russia and now Globalized Corporations are getting monkey hammered...
ADIDAS
Portuguese Stock Market
It only took about 8 years of EWI bullshit, but I've decided that the a-b-c retracement pattern is the only Elliot Wave form that I trust in real-time. Any other pattern can be form fitted, after-the-fact. I know, I learn fast...
Which gets us back to...
"Stage 1: Global Dow"
Dumbest headline of the week, coinciding with today's McJobs report
You know you're cynical when you can rationalize government jobs propaganda, instead of calling it what it is, complete and total bullshit:
Collapse Sequence:
Stage 1: Global stocks
Stage 2: The Euro and Euro Ponzi Bonds
Spanish bonds recently yielded less than U.S. 10Y treasuries. This line (yields) will reverse upward:
Stage 3: Carry Trade Currencies and Emerging Market Ponzi Bonds
Stage 4: Financial Deathstar 2.0 and Globalization
- leveraged loans, million dollar crack shacks, quarter billion dollar penthouse apartments, ghost cities, *special* dividends
- Junk bonds
- Municipal bonds
- Corporate bonds
- TBTF banks
- Wall Street
- Mass consumption
A "Confluence of factors"
The headlines scream ever-rising risk in every direction, now with the potential prospect of a global Ebola epidemic. When H1N1 flu broke out a few years ago, people assiduously (over) prepared, spawning a Hollywood dramatization of the entire affair. This time around, at the prospect of the world's deadliest virus going global epidemic, the masses are making beach plans. Therefore this de rigueur insanity of viewing each issue in isolation, is strictly to maintain the all important plausible deniability that systemic risk is low. As we know, systemic risk has never been higher, far higher than in the Fall of 2008 when hedging was commonplace and risk-off selling had been taking place since mid-2007. Today, not so much. Clearly, the risk of a "Minksy Moment" transcends the economic and financial aspects of such an event. This debased society veering towards ever-greater violence, will explode in anarchy at the prospect of another financial meltdown. So there's more than one type of "preparation" that needs to be considered. The markets themselves are far weaker than the lamestream would ever admit. The Risk Off selling began in earnest this week, however, the underlying components have been weakening for months, neatly obscured by HFT bots working their rotational magic of keeping indices pinned to all time highs. I would describe this week's "action" as more of a high volume controlled asset re-allocation from risk assets to "cash" (aka. money markets). Nevertheless, that re-allocation coincided with the Argentine default and the Portuguese bank default. Overall however, the rotation to safety has been "orderly", with no sign of major panic. An orderly march towards oblivion. Therefore, it's only a matter of time until the "Minsky Moment" and the high volume orderly sell-off breaks something big.
The "Minsky Cycle" (also called commonsense i.e. borrow money to gamble - blow yourself up...)
THE WEEK IN RISK:
- Global "out of control" Ebola epidemic
- Argentina default
- Portuguese bank default (Espirito Santo)
- Fitch warning on high yield debt default rates
- Gaza escalation
- Ukraine escalation
- Sanctions against Russia boomeranged back onto Western multinationals (see charts below)
- Dueling Fed governors debating whether interest rates should be raised soon or sooner
- "Peak GDP" concerns aka. 2008 Deja Vu
- California's drought goes from bad to "catastrophic"
- S&P 500 below 50 DMA
- Russell 2000 below 200 DMA
- Dow now negative in 2014
- Double normal stock trading volume, the last two days
- WTI crude oil below $100
HALO Crash Visualized
Fast moves come from failed moves:
7 months of Dow gains wiped out in one week
The blue dashed line below is the four month plateau. Then the overthrow high which was taken back in one week. Now back below the plateau aka. "false breakout". The Dow is back to a level it first reached in December.
Volume lower pane
S&P 500 suffers biggest weekly loss in two years
SPY (ETF) with volume - this "correction" is just getting started...
A "stealth" collapse in broad daylight
The Dow is merely catching down to the average stock
We've never seen this much of a disconnect before - thanks to HFT. All designed to keep Etraders throwing money at the Dow, right up to the main "event"
S&P with Russell 2000 (red):
J&J peaked just slightly before the market rolled over, as it did in 2008, circa Lehman. It also peaked late in July 2011 right before that 20% "correction".
"Fuck Putin"
The West sanctioned Russia and now Globalized Corporations are getting monkey hammered...
ADIDAS
Portuguese Stock Market
It only took about 8 years of EWI bullshit, but I've decided that the a-b-c retracement pattern is the only Elliot Wave form that I trust in real-time. Any other pattern can be form fitted, after-the-fact. I know, I learn fast...
Which gets us back to...
"Stage 1: Global Dow"
Dumbest headline of the week, coinciding with today's McJobs report
You know you're cynical when you can rationalize government jobs propaganda, instead of calling it what it is, complete and total bullshit:
Collapse Sequence:
Stage 1: Global stocks
Stage 2: The Euro and Euro Ponzi Bonds
Stage 3: Carry Trade Currencies and Emerging Market Ponzi Bonds
Stage 4: Financial Deathstar 2.0 and Globalization
- leveraged loans, million dollar crack shacks, quarter billion dollar penthouse apartments, ghost cities, *special* dividends
- Junk bonds
- Municipal bonds
- Corporate bonds
- TBTF banks
- Wall Street
- Mass consumption
