The Calm Before The Shitting Of Bricks

We are in the eye of the hurricanes

The monkeys got hammered last week. Since then they've been buying more stocks for the next leg down. Faith in Central Banks is complete. Moral hazard is rampant i.e. the assumption that the Fed and ECB will step in and magically start buying "stocks" (junk bonds, sovereign bonds, municipal bonds, futures, options, currencies, oil, real estate, commodities), despite having no legal mandate or authority to do so. This could only end with trapped gamblers all believing they'll be bailed out again.  

Last week's Flash Crash cracked the foundations, but this next leg down is going to break shit all over the place. There is ZERO margin of error now.

Here is another buying opportunity...

Global Dow

Bounced now stair-stepping lower again...

The Dow is back in 2013 aka. almost 2 years of gains lost, with the average stock lingering at Lehman levels, waiting for the next leg down...

Junk bonds:

Emerging Market currencies and bonds

The Thai Bhat single-handedly pole-axed global markets in 1997 but today the entire Emerging Market complex going into meltdown is a buying opportunity...

EM stocks and Oil stocks have bounced and are ready for the Elliot Straight Down Wave:

European carry trade is ready to break:

Aussie / Japan Yen Carry is in total free-fall, putting an ever stronger bid under Yen...

Here in the U.S., Momentum/Beta has been monkey hammered:

Canadian stocks back-tested the neckline...

Everything will break at the exact same time

The Kardashian Rally Is Over: Buyers Have Left The Building

The Kardashian Rally:
Sexy, fake, phony, and takes all of your money at the end. 

Skynet does all of its buying and selling off hours now, taking volumes down as much as possible during the day, so institutions can't escape the Hotel Californication...

Trapped buyers visualized:

The Flash Crash retest sequence is right on track relative to 2010...

Yen / S&P retracement

The Yen (/dollar) doesn't so much go down, as collapse, although the same can be said of the S&P...

This shows the 24 hour range...

Nested S&P fractals: showing massive downside (unfilled) gaps (green) due to overnight selling:

Trapped gamblers are praying for more stimulus from the ECB tomorrow, so they can get out at a higher level.

It's a question of whether or not this shit show goes down again, soon, sooner, or when futures re-open in a few hours.

The Idiocracy Inconveniently Consumed The Future Down To "Now"

Shit happens man...One minute zombies were monetizing poverty at 0%, and the next minute they got monetized.

Under Globalization, the developed world faced the choice to wind down the unsustainable and unscalable consumption-oriented lifestyle slowly, or to prop it up by every fabrication imaginable, and just have it end instantly...

"We were decoupled from reality, and then the brick wall appeared out of nowhere..."

Those of us NOT excited about monetizing our children, can now look forward to creating something sustainable, once the debris settles. In other words, taking "responsibility" - a concept that has absolutely zero meaning to desperate consumption-addicted zombies. 

Another absolutely foreign word is "sustainability"...
Harvard psychopaths have invented every gimmick imaginable to keep this shit show running: Multi-decade trade deficits, Ponzi borrowing, bailing out serial psychopaths, currency manipulation, negative interest rates, buying stocks with printed money. If Bernie Madoff was at Harvard, he would be the President. But instead it's Larry Summers who said this in 2012 about the waning impact of never-ending Ponzi stimulus:

"With the past week’s dismal US jobs data, signs of increasing financial strain in Europe and discouraging news from China, the proposition that the global economy is returning to a path of healthy growth looks highly implausible...So, what is to be done? Rather than focusing on lowering already epically low rates, governments that enjoy such low borrowing costs can improve their creditworthiness by borrowing more not less." 

You see, you become more creditworthy the more you borrow. We've been doing this all wrong. We're not borrowing too much, we're borrowing too little. But it took the President of Harvard to figure that out for us. Because none of us would think of that idea on our own. 

Fortunately, all of this dumbfuck chicanery is coming to its predictable instantaneous "totally unforeseeable", Black Swan dive into pavement, ending. 

Printing Money: The Idiocracy's Secret To Effortless Wealth

"We've stumbled upon the new El Dorado"

Printing money to buy stocks is just euthanasia for the sheeple, so they maintain silence while being bent over the log...

ZH: Sept. 2, 2015
"The Almighty Dow Casino Is Too Big To Fail"
"By turning the health of the economy into a reflection of the stock market, the Status Quo has made the stock market into the one bellwether that matters...The Federal Reserve will have to prop it up at all cost"


Bernie Madoff is wondering why he's the one in jail
The fantasy of the day, and the one that gamblers will take to their grave, is that the almighty Fed can bail out the stock market any time they want. It didn't work during Lehman mind you, despite myriad interventions, but this time it's always "different". For a generation that squandered its own savings and now relies upon Netflix call options for their retirement, we can understand where this fantasy derives from. And as long as they cling to this fantasy, they will remain fully invested until they lose everything.

"What stocks should I buy in a meltdown?"
The real question on the table is not whether or not the Fed can buy everyone's stocks. The relevant questions are - can the Fed prevent a global recession. Can the Fed prevent the multi-trillion global carry trade unwind that is RIGHT NOW blowing up Emerging Markets. Can the Fed prevent $200 trillion in risk assets from getting "re-priced" overnight. Can the Fed create a sustainable economy that doesn't require non-stop borrowing and printing money. 

Of course not. And to believe so is the height of asinine - It's double or dog food for a generation that squandered its savings and now believes that Netflix is the "only bellwether that matters". 

Did the ludicrously named "People's Bank of China" prevent the meltdown in Chinese stocks?
Let's see, optical refraction would suggest it didn't work, despite dozens and dozens of interventions, including buying stocks directly, prohibiting short selling, prohibiting ANY selling, halting trading, etc. etc...

The ongoing obsession with the casino is what allows everything else to fall apart in broad daylight.

And the unfounded belief in the omnipotence of Central Banksters is what keeps the sheeple from selling, while institutions liquidate with both hands. 

The casino is not a "barometer of the status quo", it's what diverts attention, while the status quo ends.

It's euthanasia for deep fried zombies...
Dow with Fed balance sheet (red) and 0%

2015 Flash Crash: Trapped In The Hotel Californication

Everyone thinks that THEY alone will get out ahead of everyone else, at the top. But unfortunately no one did. 

HALO Crash: The fastest decline from an all time high EVER

MW: Sept. 2, 2015
How The Largest Five Day Rise In The VIX EVER Trapped Stunned Bulltards

The Hotel Californication Visualized

The red line shows volatility inversion (backwardation). Blue line is VIX futures which always peaks AFTER the inversion event i.e. due to volatility short squeeze.

Lower pane, we see that the VIX had the fastest 5 day rate of change EVER as bulltards were caught napping. 

"It was a bad time for a third wave down at all degrees of trend. And Yen carry trade reversal. And global meltdown..."

aka. "Buying opportunity"

"Which Stocks Should I Buy In a Global Meltdown?"

The sheeple have no one to tell them they're swan diving into pavement. They don't trust anyone who can be trusted.

Sheeple running off a cliff visualized:

Beyond asinine...

No one was looking for "buy" recommendations during Lehman, but right now it's the order of the day...

The shitting of bricks is only a matter of time...
Volatility (S&P 100)

The Euro carry trade unwind is just now starting to gain "attention"...

Global Dow starting the next leg down i.e. the one that wakes up the deep fried zombies

China is on the verge of total fucking meltdown - financial and economic

The Yen-driven Flash Crash. Was A Mild Preview Of Wave 3

Yen Hourly:
Most of the downside (and upside) has been off-hours U.S., causing the multiple "gap and trap" openings.

What's not shown on these charts is that off hours the Flash Crash broke the neckline down to 116, giving an idea of the velocity of decline...

It's a long way down...

Stampede Time: Heaviest Liquidation In Four Years

Skynet is front-running institutions out the door. Overnight. Institutions are front-running the sheeple...

"Who will tell me when to sell? Joe Kernen? Jim Cramer?"
CNBS? C Non-Stop Bullshit?

BBG: August 23, 2015

[Large] Investors Are Selling At The Fastest Rate Ever

Down volume / Total Volume:

Selling intensity is the highest in 4 years...
TRIN Daily

The Yen and the S&P: One and the same...

ZH: September 1, 2015
Volatility Short Squeeze In Progress
Volatility begets volatility as hedging costs increase, necessitating selling to remain hedged.


"Get in line, bitchez. Someone has to buy"

I smell deep fried zombie

DHL Risk. Overnight Delivery. Guaranteed

Unprecedented overnight futures selling continues in size. Almost all of today's losses occurred last night by 9:30pm EDT...

Gap 'n Trap Visualized
S&P ETF with daily gaps indicating massive overnight futures sell-off

Those holding overnight are what's known as the "bag holders". Apparently they haven't figured it out yet. 

Skynet keeps this shit show together during the day and then sells down at night. 

The Reality Skeptics Have Identified Another Buying Opportunity

The main drawback to being a reality skeptic is you never know when you're about to be clubbed like a baby seal. Again. 

A triple hurricane is bearing down on the markets and the straw hut CasinoConomy. The reality skeptics have identified a fantastic buying opportunity...

The peak in ALL risk assets has ALREADY occurred over the past weeks, months and years. An event that passed totally unnoticed by stoned zombies. The only risk asset yet to peak are machine guns which always peak last. (As always, invest at your own risk). 

The initial slow stair-step lower was to keep the sheeple from panicking. The first sign of acceleration came with the Yuan devaluation, August 11th. Momentum is building to the downside with each passing moment. All risk assets had a dead cat bounce last week, meaning that everything is in synch to the downside...

Aside from the straw hut economy - albeit the most important factor - the gathering storms weighing on stocks right now are:

1. Extreme divergences in breadth

"Buy the fucking dip"

Which equates to this asinine Skynet chicanery:

2. Declining Social Mood aka. Risk aversion...
Rydex asset allocation bull:bear

3. Yen Carry Trade Unwind
The Yuan devaluation hammered commodity currencies, forcing the Yen carry trade to reverse for the first time since Lehman. And before that the Asian currency crisis. 

Yen and S&P are tracking 1:1:

The third Aussie / Yen Carry Unwind in 15 years: 
There hasn't been a reversal like this since Lehman. The Yen is strengthening against all commodity currencies...

4. Volatility short squeeze
Last week's spike in the spot VIX inverted the futures curve. Now those who shorted volatility are getting squeezed harder with each passing day as front month futures converge with the higher spot VIX...

Black line is the spot VIX 10 DMA, Red line is the ratio of spot/futures i.e. the spike that caused the curve to invert...

5. Totally Ignored Flash Crash last week aka. "buying opportunity"

Nasdaq 100 -15% in 1 minute

6. Decoupling from reality

The greatest risk faced, is that the fantasy narrative of the U.S. being "decoupled" from Emerging Markets, is a fantasy narrative, and there's no one around to warn the sheeple...

Dow with Shanghai Comp: