A Key Reversal of Fortune aka. Third Wave Down

The last legs of the stool are breaking...

JPY:

Yesterday I said that Exxon was at a critical junture, today it's having a blow-off based upon its earnings release this morning. Whereas the other largest oil stock Chevron failed to meet expectations. All of which means that only one oil stock is now holding up the entire Energy sector...

What could go wrong?

Another leg of the stool goes bye bye...

Oil is jumping the shark...aka. overthrow mode...

And of course Amazon is in its own blow-off mode...on lower than expected 450 P/E ratio...

Amazon just traded half a day's volume in :10 minutes, more selling by Wall Street @ Strong Buy...

Apple is heading into Third Wave no man's land...

Rotating To the Free-Fall Zone aka. "Sumamabitch!!!"

Today's late day "surprise" selloff indicates that the S&P 500 is entering Third Wave...

The simultaneous rollover of small cap value and defensive stocks indicates that the implosion sequence has been initiated...

Aside from parabolic junk there were three laggard groups holding up the market: Small caps, Cyclicals and Energy which all have the same rising wedges, that are now breaking...

Small Cap Value

Rising wedge reversal...

Key reversal today on the Buffett trade (cyclicals):

Exxon at critical juncture

Oil's rising wedge is losing mojo

Once again, Facebook peaked at a key market juncture...

The Emperor Has No Brain

The definition of an Idiocracy is attempting the exact same failed policies, and trusting the same buffoons, over and over again, each time expecting a different result...

After seven years of non-stop bullshit, George Bush's 1% recovery collapsed with extreme dislocation. To "fix" all that, today's ultra-dunces lowered interest rates to 0% for seven years straight. In other words, nothing changed, except the clown in the White House...

I take pride in my 0% recovery and borrowing 3.3% of GDP for a .5% growth rate...
"Looking back on his economic legacy, President Barack Obama disputes the conclusion in “The Big Short” movie that nothing changed on Wall Street after the 2008 economic meltdown and maintains that his policies have helped stabilize the financial sector."

“One of the constants that I’ve had to deal with over the last few years is folks on Wall Street complaining even as the stock market went from in the 6,000s to 16,000 or 17,000,”

"one of the things that I’ve consistently tried to remind myself during the course of my presidency is that the economy is not an abstraction,” Obama said."

"If you fake it long enough you will see the economy"

Zuckerberg Shrugged

Facebook had a key reversal today on 3x daily volume - opening at its highs and closing at its lows of the day...In other words, stoned gamblers bought the top on 3x volume and took home a -4% loss. The last time this happened, (January), the stock was down -20% in a matter of days...

Amazon is spiking after hours in celebration of its 450 P/E ratio after 20 years as a public company...

Billunaire Carl Icahn just announced that he dumped all of his Apple shares, so despite Fadebook's best efforts, Apple and the Nasdaq are resuming Third Wave down:

Google

MonopolySoft

Nasdaq 

The Freaks Come Out At Night

We interrupt this low volume circle jerk to remind gamblers that the sellers are all BELOW this market. And the BOJ no longer has its finger in the dike...

NO LIQUIDITY: Skynet Is Getting Desperate

Let's see, pump and dump every sector. Check.
Squeeze most-shorted stocks vertical. Check.
Squeeze oil. Check.
Pump and dump Facebook. Check.

What's left?

Moonshots of parabolic junk. What else...

This stock went parabolic on news that it's NOT making a scheduled debt payment:

Up 1,000% on 100x volume

Another shipper

And another...

One more

For the road...

Coal I believe...

Nothing Matters Until It Collapses Entirely

No half measures will suffice...

"and so our wisdom, too, is a cheerful and a homely, not a noble and kingly wisdom; and this, observing the numerous misfortunes that attend all conditions, forbids us to grow insolent upon our present enjoyments, or to admire any man's happiness that may yet, in course of time, suffer change. For the uncertain future has yet to come, with every possible variety of fortune;" - Plutarch's Lives

Today the bullshit market becomes the longest in history...second longest if you count real bull markets...

Average stock with Treasury yields aka. "Economy":

Small cap value with Consumer Staples:

Earnings Yield (E/P):

Russell 2000 Small Cap (Growth and value):

RSI (Measures relative strength of recent momentum versus prior):

Price / Volume

Total Volume (Distribution):

Home builders

Junk bonds

The Land of the Setting Sun

Japan has reached the limits of dumbfuck-o-nomics. There's no way to reinflate a collapsed bubble, so Kuroda's atttempts to reflate the carry trade are a fool's errand. His biggest enemy is himself and three years of free gambling money which has suffered tremendous losses...

Now that the Fed's circle jerk is out of the way, and the ECB dog and pony show was last week, all eyes are on the Bank of Japan tonight (Thursday in Tokyo). Into this event, USDJPY has rallied because Kuroda is expected to unleash the fury again. Unfortunately to date his efforts to weaken the currency have failed. Why have they failed? Because Kuroda is now literally fighting himself in the form of three years of $3 trillion in stimulus that was lent out globally. Now that money is coming back to Japan, and he is trying to stem the tide. 

A Mega circle jerk...
There's nothing quite as special as a moron having to contend with his own prior asinine policies, and failing miserably.

"Let's see, we buried them with $3 trillion of hot money, so let's see if they'll take some more..."
BOJ balance sheet (black) with USDJPY:

The Doors Are Closed On The Hotel Californication

It's all fun and games until someone loses an everything...

Casino volumes continue to implode. The lack of liquidity is only overlooked because stocks are at all time highs. Zero liquidity won't be as much fun on the way down...

As the Chinese learned the hard way, banning selling only works on the way up. As we see below, the only way Skynet can keep this shit show levitated is by banning selling via minimal volumes.

S&P ETF (SPY) 30 day average volume:

The 1987 Set-Up aka. Silence of the Dumbfucks

Extreme risk and extreme complacency at an all time high, counter-trend rally failure, third wave down,  accelerated by equity over-exposure (panic), program trading, and off-hours selling...

"No one saw it coming", because they were ALL IN at the time, like now: Fear of Missing Out Is Driving This Stock Rally...

In other words, my base case scenario:
Complacency was extreme on the counter-trend rally, until it wasn't...

Black Monday:

"The crash began in Hong Kong and spread west to Europe, hitting the United States after other markets had already declined by a significant margin"

"financial uncertainty may have resulted from the collapse of OPEC in early 1986, which led to crude oil price decreasing by more than 50% by mid-1986."

"As computer technology became more available, the use of program trading grew dramatically within Wall Street firms. After the crash, many blamed program trading strategies for blindly selling stocks as markets fell, exacerbating the decline"

"Also, the futures market in Chicago was even lower than the stock market, and people tried to arbitrage that"

"Some economists theorized the speculative boom leading up to October was caused by program trading"

Equity exposure:

JnJ has called two crashes already (2002, 2008), roll the dice bitchez...