Does anyone know where $2.8 trillion of "free casino money" went over six years? Don't worry, it's all controlled by computers. Selling is automatic - buy on the way up, sell on the way down - Harvard PhDs really making the best of their education. Monday's massive sell-off was merely Skynet executing the "SELL" procedure which has never been triggered for six years straight. Momentum created this six year clusterfuck, and momentum will unwind it a tad bit faster...
I noticed that by "strange coincidence", ALL of the major trend down days in the past two weeks were initiated off hours via the futures and then continued lower during the day. Everyone attributed it to China, but China's been in meltdown for two months. Something else had to account for the massive futures sell-offs that seemed to come out of nowhere...
BBG: Aug. 25, 2015
"Yuan devaluation shock means carry trades are over"
“Across the board, carry has been under pressure,” said Kristjan Kasikov, a London-based quantitative analyst at Citigroup Inc., the world’s biggest currency dealer. “Weakness in commodity prices has hit some of the high-yielding currencies quite hard.”
"One of the most popular carry trades in recent months was borrowing yen to buy Australian dollars, according to CBA’s Capurso. Investors would pocket the difference between Japan’s near-zero borrowing costs and Australia’s main rate, which at the start of the year was 2.5 percent. The deals started to lose money, he said, as weaker growth in China and falling raw-materials prices sent the Aussie tumbling toward this week’s six-year low versus the dollar. Investors in the carry trades would have lost 6 percent in August, wiping out a 4 percent profit in the second quarter."
The Yuan devaluation created a tidal wave of deflation spreading shock waves globally. Killing EM currencies and forcing human history's largest carry trade to unwind...
S&P overnight Gap 'n Trap...
U.S. S&P:
Then I charted the Japanese Yen (inverted), black line, against the S&P:
This past ~2 week mega-sell off was all about the fashionably late Yen carry trade reversal...
Yen hourly
This clarifies my S&P wave count a bit...
S&P with the Nikkei which by no coincidence is also CYNK'd to the Yen:
From now on, there is only one chart we need to watch.
24 hours a day...
A strengthening Yen will serve to accelerate the unwind...
(Yen inverted):
It's Elliot Wave (Panic) AND Skynet versus Central Planning.
Stampede versus drip flow.
Trillions versus billions.
"We're decoupled from Asia"
