Tuesday, January 8, 2019

Last Chance To Buy The Fucking Crash

By far the biggest widely ignored global risk, is horrific Forrest Management. But don't take my word for it. Straight from the Fucktard-In-Chief:

This RISK ON rally started on December 26th, compliments of the Casino-Bankrupter-In-Chief. The NYSE is now decade overbought. Because instead of seeing it for what it was - the last chance to get out - gamblers were told this was the last chance to get in. After all, everyone knows that government shutdown is a buying opportunity, right up there with trade wars, rate hikes, and impeachment:

As we see, "someone" took his advice. Note the difference between 2015/2016 and now in the amount of selling pressure:

It appears that gamblers are group fantasizing about another Central Bank bailout deja vu of 2016. Which is the other mass delusion that makes this selloff different from prior ones over the past decade - no Central Bank bailout. In fact, Central Banks are moving in the exact opposite direction. Talk about the power of delusion.

What is interesting is that Europe is bouncing back to the same level it reached in early 2016. The only difference is that back then the ECB was just beginning to add stimulus and now they are just ending stimulus.

In Idiocratic terms, it's the same, but the exact opposite:

Speaking of denial, gamblers took it as great news last Friday that the Fed finally mentioned their balance sheet with respect to recent market volatility. The fact that Powell denied any relationship between the two is a minor detail:

"We don't believe that our issuance is an important part of the story of the market turbulence that began in the fourth quarter of last year"

In other words, they expanded the balance sheet by over $4 trillion over the course of six years in order to support risk assets, but shrinking the balance sheet has no impact on markets. Holy fuck. With logic like that, who needs enemies?

To date, the Fed has rolled off ~$450 billion. In 2019 they are set to roll off an additional $600 billion ($50 billion/month).

IQ Test for stoned zombies (see below): Will volatility rise or fall over the course of 2019?

Bet everything accordingly.

The Fed expanded their balance sheet rolloff to the full run rate of $50 billion/month in October. When did U.S. stocks peak?


By the way, the NYSE is now decade overbought.

Minor detail:

Also deja vu of 2016, the U.S. oil market has corrected in a three wave retracement:

I don't have a clear wave count for the decline yet, but I suggest that December's low was the first leg down, making this is a three wave retracement, now massively overbought.

Which means that what comes next will make that decline seem like a picnic. As opposed to a buying opportunity.