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March 28, 2016

March Momo Madness

I looked at equities this morning and had to pause a while in awe pondering the veracity of the recent advance in all its glory. Let’s not forget that about six weeks ago we were preparing ourselves for what seemed to be an inevitable awakening of the bear. Even though we never fully discarded the potential for a bullish reversal the odds seemed rather dim down there near the 1800 mark.

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January 14, 2016

The Whites Of Their Eyes

The famous order “Don’t fire until you see the whites of their eyes” is a battle cry which became known in stories about the battle at Bunker Hill which was fought on June 17, 1775, during the Siege of Boston in the early stages of the American Revolutionary War.

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January 11, 2016

You Ain’t Seen Nothin’ Yet

I seriously doubt that the average market participant realizes the magnitude of the devastation that lays ahead. It is our human nature to project forward based on recent events – a common cognitive bias which can easily lead to painful losses during regular market conditions. But what we are facing over the coming weeks and months will register several standard deviations beyond current worst case scenarios, at least based on activity/pricing I’m currently seeing in the option chains.

We have a lot of material to cover this morning. So grab a cup of your favorite morning brew and pay close attention. Yes, there will be a test.

Let’s start with [...]

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December 11, 2015

Scaring The Children

The fear is literally oozing out of my charts right now. Hedge fund redemptions are on the increase, various funds are closing, banks are allegedly buying puts on other banks. Retail has been heading to the exits a long time ago, even here in the comment section it’s been suspiciously quiet in the past few weeks.

And who could blame you guys? After all we’ve got Mr. VIX slowly creeping higher and momo divergences are popping up everywhere. The Dollar is taking it up the rear and the Euro is back with a vengeance squeezing the shorts.

Here for example is the NYA50/NYA200 ratio. Boy, that is one scary chart!

VXV:VIX ratio – [...]

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Cognitive Bias Carousel
  • Sunk Cost EffectSunk Cost Effect
    The tendency to treat money that has already been committed or spent as more valuable than money that may be spent or acquired. Also known … more
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