Monday, November 20, 2017

Thanksgiving Week Sales Event aka. "Black Friday"

Way back in 2014/2015, Central Banksters spiked the punch bowl with too much dopium. The next thing you know gamblers were throwing their money away on Chinese internet stocks, junk IPOs, and various other "imagined realities". But then it all crashed. Nevertheless, since the ritalin-junkies and Alzheimer's patients have the attention span of a coked up flea, here we are again ready to give it another go...

Per my proprietary Efficient Crash hypothesis, at the behest of their trusted advisors, stoned zombies pile into passive index funds by way of reducing their risk through "diversification". Little do they know, that passive index funds don't diversify inflows, they concentrate them into the largest cap momentum stocks in the casino. This concentration continues until there are only a handful of vertical mega caps keeping the casino aloft, while every other stock is imploding. 

The next thing you know, Hindenburg Omens are going off all over the place and Art Cashin warns that this shit show can crash at any moment:

"We've been setting record new highs, and often the breadth has been negative. We've had more declines than advances"

"We're starting to get more new lows than new highs; 30 percent of the stocks in the S&P [500] are down for the year. Those are very unusual combinations with new record highs."

But zombies are diversified, so they don't notice that there is no more momentum in momentum. In other words, even the stocks that are supposed to be going up, are not going up. 

But there's always time to throw more money away at the casino, despite the fact that the S&P peaked two weeks ago...

Which gets us to this week, because conventional wisdom is that this is a good week to buy stocks and a bad week to hedge, due to option decay since there are only 3.5 trading days:

"The S&P 500 has averaged a gain of 0.6 percent during Thanksgiving week, and has been higher 75 percent of the time since 1945"

Herein lies the problem, all of the recent volatility has come overnight via the S&P futures. And of course the rest of the world is not on holiday and neither are the futures. Which is why it's just possible that there may be more Black Friday "deals" this week, than expected. 

Every USDJPY selloff has been a gap down for the S&P 500...

As long as no one sells cross-listed China tech in Hong Kong this week, should be no problem. I would make that bet if I was smoking crack...