Monday, March 21, 2016

Bagholder Time: Corporate Profits Are Collapsing

The bag has been passed to the usual bagholders. Institutions have left the building. All of the hard work preceding collapse has already taken place, sector by sector, stock by stock. This current phase is called shaking out the weak shorts prior to total meltdown. The final insult to injury. 

"If the stock market rally is going to continue the next couple of months, it will have to do so against an aggressively worsening profit backdrop."

The market has lost all sponsorship, held up merely by the Skynet short crushing algorithm which works until it doesn't...

Central Banks
Carry Trades
Stock Buybacks
Hedge Funds
Momentum Traders

As usual the main indices hide the carnage under the surface. The Nasdaq ("growth") and Financials were the last major sectors to peak and now they are lagging badly. When 3x overvalued "defensive" stocks plummet straight line out of their rising wedge, there will be no sector left to halt the collapse...

The Nasdaq %of stocks above 200 day moving average

Nasdaq 100 (large cap tech) %200dma:


Banks w/Fed Funds rate

JP Morgan

This was the "bag holding" rally

Skynet short-crushing algorithm: take volume and volatility down to zero at the top, see who gets a sex change...