Sunday, March 27, 2016

"We Won't Get Fooled Again. And Again. And Again"

The biggest short-covering rally in 2008 occurred on the third S&P lower it did this time...

Complacency in August, Hammered. Complacency in December, Hammered. Complacency Now...

"on Monday, the VIX closed below 14 for the first time since Aug. 18. That's the day before the start of the August swoon."

Momentum reversal. Check.
Oil rollover. Check
Carry trade divergence. Check
Treasury divergence. Check
Growth/Nasdaq underperformance. Check
Defensive stocks overthrow. Check.
Third wave down at all degrees of trend. Check. 
Mass complacency. Check.
Shorts covered. Check.

The Berkshire portfolio underperformed during the October-December rally because it holds no growth/momentum stocks which peaked at that time...the portfolio is overweight value stocks which are now outperforming...

The 'Conomy Short-covering Rally
Warren Buffett's diversified portfolio with S&P downside gaps (> 25 S&P points):
Berkshire's largest holdings (IBM, Coke, Kraft, Wells Fargo, Wal Mart, American Express, U.S. Bancorp, Deere, GM, Goldman Sachs, P&G, Phillips 66) aka. The 'Conomy...

TRIN > 5 Selling Pressure (lack thereof)

Big cap Tech right at the 200 day...

"We won't get fooled again"

Not much...