Thursday, February 22, 2018

All One Panic Collapse

Recession stocks are pointing to recession. So gamblers have been exiting dividend-paying stocks to seek the safety of companies with no revenue. Why? Because what has been MIA from the casino for two years straight is the slightest amount of fear or panic:

Most people don't believe that Social Mood drives markets. Which is the reason it works. The same people get conned over and over again - selling at the lows and buying at the highs. Someone should figure out why that keeps happening, because Wall Street thinks they're an ATM machine.

I wasn't going to write today since today was an exact replica of the past three days - gap and run higher, close on the lows.

In other words, multiple daily key reversals in a row. Which is called "three black crows". And it's not generally considered bullish. The 50 day is key resistance:

Getting back to Social Mood, what was missing from the recent mini crash was any sense of panic. Quite the opposite, gamblers took the opportunity to sell the highest quality stocks to rotate into their favourite junk names. 

Think rotation from Johnson & Johnson into Netflix. JnJ used to be a very reliable indicator that the party was over. I suggest that it still is:

Here is where it gets interesting. I noticed that BitCasino is now lined up with the S&P 500. As we see it peaked before the S&P, cratered, rallied, up down all around. Until now, they are both aligned. To the downside.

This is what Prechter means when he says that "Risk is all one market". Social Mood entices gamblers into any risk asset or Ponzi fraud that will take their money. Which means that on the way up, risk assets have low correlation - each has its own cycle of slow, medium, fast melt-up. However, on the way down, they have a correlation of one. Apparently margin clerks are not that discriminating when it comes to liquidating accounts into a down market. This last leg down in Bitcoin was correlated to the S&P, as was the counter-trend rally:

All of which is the long way of saying that the impending "retest" won't be a retest at all, it will be a panic out of junk by overleveraged speculators. The last junk that happens to be holding up the casino.

The fake reflation trade is imploding deja vu of last March and more importantly December 2015:

These are the riskiest stocks in the casino. And yet, the latest "correction" didn't even break the uptrend:

There is no momentum in momentum anymore