Thursday, January 21, 2016

Waterfall Crash: Global Margin Call In Progress...

We're not owed any more warning. 

Failure to hold this level (the 2014 closing low), sets up a waterfall cascade lower. The stair-step lower is ending. Short-covering time is over...

Wall Street's denouement has been written. Team Groupthink views global market collapse as a buying opportunity:

"Net buying was chiefly due to hedge funds, who bought stocks for the fourth week in a row. Buying by this group was the largest since September 2010,"

The global margin call is well underway. Volume is running at 200% of average and yet sources of Skynet liquidity are all running out at the same time:

Yen carry trade
Momentum/FANG stocks
Apple (aka. world's largest brick)
Oil stocks
Small caps/breadth
Short-covering/volatility compression

Bulls are trapped.
Team Groupthink also covered yesterday ahead of today's ECB dopium meeting which just ended. Likely a bad idea...

"What about January?"

The Idiocracy has been warned many times, but it will still come as a massive surprise...
Equal weight S&P with two Flash Crashes:

The biggest monthly decline since Lehman, the worst start to a year ever, and yet, the past two weeks has seen no urgent selling:

Volume is heavy and rising aka. liquidation mode

The average S&P stock is back at Lehman crash levels:

Oil is in crash mode and highly correlated to stocks

Nasdaq count

This crash will make Lehman seem like a picnic. Volatility will exceed 1987 levels...
Implied options volatility (S&P 100) w/Wilshire total market index