For five years straight, Central Banks have been trying to convince everyone that lower interest rates and more debt can solve a financial crisis that was caused by lower interest rates and more debt. Clearly, they've done a good job of converting skeptics:
Unfortunately, by definition, risk asset correlations of 1:1 means there will be no warning prior to crash. It's a game of musical chairs where all of the chairs get taken away at the same time...
Choose the HFT Illusion
Continuous sector rotation means that HFT can constantly rotate funds among stocks to keep the indexes pinned to all time highs, despite ever-deteriorating breadth and new highs.
This is market breadth (NYSE Momentum Oscillator):
NYSE New Highs (weekly):
Nasdaq New Highs
Sector Correlations Have Been Driven to 1:1 by HFT + Central Banks
Semiconductors and Energy are normally two of the least correlated sectors
Semis usually peak early and energy peaks late in the business cycle. Not this time:
Someone left the party
As we can see top right above, the energy sector is breaking down while Semis are still at all time highs - totally inverse to all past cycles including 2008 above:
Close-up view of Semiconductors and Energy:
The Gambling Index (Casino stocks):
Relative to the current melt-down of Atlantic City, we have yet another clear-cut indicator of Social Mood having turned down.
Utilities the latest sector to peak:
Wall Street still in a longer-term bear market
Financials:
UNHEDGED FUNDS
What extreme incentive to ignore risk looks like:
Everyone thinks they'll be the one who gets out at the top
Index Put/Call Ratio
Skydiving without a parachute:
The Lies Just Get Bigger
Nothing is allowed to change, so nothing does:
.PNG)
Nothing is allowed to change, so nothing does:
Sadly, as it was in 2007, the majority have been conned into believing that a liquidity-driven debt party is real.
Clearly, proving to a stoned Idiocracy that the impossible is not possible, is a fool's errand of the highest order.
