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Get The Hell Out
93

Get The Hell Out

by The MoleJuly 1, 2011

Actually the title of this post has a double meaning. First – and of course it’s trading related: We’ve had a lot of fun with the chumps lately but it’s time to go into cash and spend our ill gotten gains on floozy women and cheap booze. Let me show you why:

That’s right – volatility has dropped like a rock and unless some EOD super drop occurs chances are we are going to close outside the 2.0 BB on Mr. VIX. And you know what that means by now (I hope) – that’s right, odds are high we may be getting a VIX sell signal sometime next week. So get out while the getting is still good and the chumps are being short squeezed.

UPDATE @ the closing bell: Despite more upside we closed INSIDE the 2.0 BB. That was one nasty play by the MMs and keeps the door open for further upside.

Second: It’s the Friday before America celebrates its independence (which in the past few decades has been sold to the highest bidder), and it’s time to get out of dodge and forget all about trading for a few days. Squeeze your expanding waist line into your favorite speedo and spend some time in the sun with your friends and loved ones. Or do whatever gives you the most kicks, relabel your stamp collection, go fly fishing, spend some quality time at the nudie bar – as long as it has nothing to do with trading it has Mole’s seal of approval. Trust me – your little rodent brains will thank you later and you’ll be more energized to deal with whatever the tape throws at us next week.

Which brings me to a few more short term charts for my subs:
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Charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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First runner up – bonds: Boy that was a long ride down and whatever open short positions you have should be closed now. Yes, we could drop a bit further toward 119 but why take the chance?

Gold – we are basically at target right as we drop through the NLSL here. The odds are iffy and I maintain that PMs are a slow trade these days.

Similar picture in Silver – we are at the NLSL and the best trade I see here is to be long unless we close below 33.38.

Boy that copper trade is really kicking ass now – I would take partial profits but keep a lottery ticket or two for the 4.5 mark.

Finally, EUR/USD – We are pushing toward our first target although I have an inkling we’re going to get a retest here – so I would take profits here and now as the upside potential is not in line with the risk. Too much can happen over the long weekend.
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Okay, before I run one bonus chart for everyone:

Now I do not trade the grains but Volar does. Which is why I very much would appreciate his input on this huge move in the corn futures. Now, technically speaking we are way outside both BBs here and a long position may be worth a lottery ticket or two.

And that’s all I have for now – but that doesn’t mean I’m already cracking open a few Hefeweizen – no sirree! I’m working on a post 4th of July surprise for all of you and I’m sure you going to like it. More about it next week.

See You Next Tuesday! 😉

Cheers,

Mole


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://practicalt.blogspot.com/ Gold_Gerb

    Let the fireworks commence!

  • http://pulse.yahoo.com/_N2BRXG3E35GXBXZTEBSXLUSDCM B

    No technical reason to go short other than the completely improbable week, but I did. Only slightly net short, my single long being KOG (+20% in the week I’ve owned it!) and that is more a medium term investment, not trade. I’ll sell that when everyone and their Gramma is buying Bakken oil players, or they get a buyout offer from a major.

  • volar

    on grains.

    really only a couple of comments. We had the JUNE Crop report and that sets the trend for the summer.

    Here is a look at historical actual vol and the june crop report.

    http://content.screencast.com/users/wprosser/folders/Jing/media/b026824a-0ba3-4f9a-99a6-dd2a03395b23/2011-07-01_1303.png

    So that means sell VEGA in that market if you ask me…. So maybe a bull put spread (or something more creative if yo like) would work on that play??

    Oh and NEVER trade any contract but DECEMBER. Number 1 rule for Volar and Grains. Only only only only only December corn.

  • raised_by_wolves

    Regarding SPX long vega, long gamma: I got my puts now too. The probability is extremely low that this will work though given that I’m so far out of the money. This probably isn’t what you had in mind, was it?

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/2b530d62-ba03-4794-8357-46efcc011de9/00003509.png

  • volar

    I think so, what I am saying is that one should not have a bear put spread if they are planning on shorting this…

    Or I guess owning OTM puts works… 

  • Anonymous

    Thanks for the update Mole, and man that VIX buy signal worked like a charm. Can not resist a few 43 FAZ (july 16) calls here. I may live to regret it, but I figure I need to make some so come tuesday I can contribute to RBW’s bail money fund. Hey it’s a long weekend and he has a lotta time to get in trouble.

    Happy 4th all, see you on the 5th.

  • Anonymous

    Supply and demand?
    Simultaneously more corn planted than expected and the removal of ethanol subsidies.
    http://theenergycollective.com/nrdcswitchboard/59573/senate-votes-overwhelmingly-end-corn-ethanol-subsidies
    http://abcnews.go.com/Business/wireStory?id=13970201

  • raised_by_wolves

    That’s my flash crash / flash melt up insurance right there. It costs $10 per week.

  • http://evilspeculator.com molecool

    Well, as you know the news really don’t matter to me – charts is where the meat is.

  • http://evilspeculator.com molecool

    Attention evil mart shoppers – we closed INSIDE the 2.0 BB. That was one nasty play by the MMs and keeps the door open for further upside.

  • http://evilspeculator.com molecool

    Did you guys see what those fucks just did. Wow that was insidious – raising the VIX just above the lower BB border despite more upside. The bears got squeezed in a big way here, folks and yet we will retain potential for more upside.

    Next week will be fascinating – but now it’s time to crack open a cool Hefeweizen 😉

  • volar
  • http://evilspeculator.com molecool

    What’s the date of this chart? If that’s against the SPX it looks a bit too low.

  • volar

    the data is thru TUESDAY so i did not want to mislead the rats.

    Net spec is net short ~ 30K cars or 10% of OI… nuts

  • Anonymous

    Hey RBW,

    From your reply on the last thread, I’m curious as to why Gold and Silver hasn’t rocked with this SPX Rally.  Hmmmmm?

    Anyhow, I probably shouldn’t get involved with the metals right now as I’m finally beginning to show some consistency just trading the S&P, through SPY Options, SSO Stock, and SDS Stock.  

    Gamma has been saving my ass.  When I’m hedged properly, I’ve been  beginning the day with a fairly Neutral Delta.  But with enough Gamma held in reserve, the Market will point my Delta in the right direction.  

    This means that there will be stuff that’s going to lose value as well.  However, The Weeklies are loaded with Gamma and have less Vega and  I’ve been purchasing them in the direction of the current MO MO.  In the mean time, any longer term Options have time to ferment a little.  I just sold some profitable August Calls just before the close and my Account Delta is now back down to as close as 0 as I could get it.   

    BTW, there is no way I could do this without using the TOS Analyzer.  I wish I could plug in hypothetical changes to the VIX.  But if the VIX takes a bounce upward then my Vega could make my present projection look a little better.

    In any event, it is nice to go into the long weekend neutral but to still be in the Game come Tuesday AM BEFORE they screw around with the Futures. 🙂

    Have a great Long and Well Deserved Weekend Everyone.   

  • volar

    BOBBY I have an option model that does that. I will  get with you next week and I can send it to you .

    I run VIX drops and VIX spikes to  my p&L all the time for my swing trades.

  • volar

    New high in Cum. ADV- DEC

    cheers

  • http://evilspeculator.com molecool

    Question – if it’s net short how come it’s only 10% of OI. Please elaborate… not sure I read that chart properly.

  • volar

    well there are

    Commercial longs

    Commercial shorts

    So we have (Spec long- spec short)/ (spec long+spec short+ com. long + com short)

    Or there may have been 4K long, 7K short and 30K outstanding= -3/30K= -10%

    So I am saying of the total OI a net position is negative or there are more shorts than longs speculatively?

  • Anonymous

    Thanks Volar, I’ll look forward to it.   🙂

  • http://practicalt.blogspot.com/ Gold_Gerb
  • http://practicalt.blogspot.com/ Gold_Gerb

    not sure.
    but the relationship (ratio) is back to 50week norms.
    http://stockcharts.com/h-sc/ui?s=$SPX:GLD&p=W&yr=3&mn=0&dy=0&id=p52471403844

  • Anonymous

    just got back after an afternoon prepping for the w’end. 
    wild week, 
    looking forward to another, 
    Cheers!

  • http://pulse.yahoo.com/_KHKP4JFHMDCA2TT4W5X3ZYVZ7Q Ying

    it’s 5 straight up day. Should it be a meaningful pullback in the working?

  • Anonymous

    How about government intervention matters?
     *cough* POMO *cough*

  • Anonymous

    In excel no doubt.

  • bisq

    I have to think this market is going to grind out anyone still holding short now. A few weeks of chop then a pop to the highs before carnage. Without QE3 i cant see how we break the highs without a miracle. Errr when are the assholes meeting at Jackson Hole?

  • Anonymous

    If we carry on like this it is the return snap of the rubber band that will be fascinating. Reminds me of the volatility during Fall 2008.

    Anyway,have a great 4th of July and thanks for the tips.

  • Anonymous

    Jackson Hole is in end of August. Still a long time from now.

  • http://practicalt.blogspot.com/ Gold_Gerb

    Certainly.
    i’m going to stick with a lagging but certain indicator.
    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=0&mn=9&dy=0&id=p13581972212

  • http://practicalt.blogspot.com/ Gold_Gerb

    watch the dollar.
    if it drops, all things are possible

    http://stockcharts.com/h-sc/ui?s=UUP&p=W&yr=3&mn=0&dy=0&id=p00119390404

  • http://practicalt.blogspot.com/ Gold_Gerb
  • http://practicalt.blogspot.com/ Gold_Gerb

    Hard not to read ZH sometimes..


    I got anihillated this week. My DXD bloc of options just got blown out of the fucking water. So bad that I’m not going to try to salvage the pennies on the dollar that they’re worth. I figure it’s “pray for a miracle time”, hoping that a retracement will bring up their delta value enough where I can settle with a 40-50% loss. I never in my wildest dreams expected the market to wipe out 2 months worth of losses (or gains for my situation) in a mere 5 days. Someone riddle me this: Why is the market taking the stairs down and the nitro powered elevator up? This defies the history of the markets. Why are folks blowing their loads over shitty economic news? I am the pigeon that I rail against. I truly thought that having the fundementals on my side would result in a winning trade. I’m done. This retail trader is out.

    Mole/Scott/Volar – many thanks for your contributions.
    knowledge is more valuable than riches.
    -GG

  • http://practicalt.blogspot.com/ Gold_Gerb

    I need to read this..
    http://www.hussman.net/rsi/rallyvolume.htm

    Conversly, in a bear market, declines are accompanied by increasing volume and advances show diminishing volume.

    Hmmmm..
    http://stockcharts.com/h-sc/ui?s=SPY&p=W&yr=0&mn=2&dy=0&id=p30519265297

    Safe 4th!!!

  • http://evilspeculator.com molecool

    One of my favorites actually 🙂

  • http://evilspeculator.com molecool

    A fate I am trying to spare my stainless steel rats. So far I think I have kept you guys out of a few nasty bear traps, which ain’t bad for 29 bucks a month 😉

  • Anonymous

     Those bankers are tainting one of my favorite ski areas.

  • 99er

    Ruby Tuesday

    Three views of the Total US Stock Market Index (DWCF)–Weekly, Daily and Hourly.

    1. http://99ercharts.blogspot.com/2011/07/dwcf-1.html
    2. http://99ercharts.blogspot.com/2011/07/dwcf-2.html
    3. http://99ercharts.blogspot.com/2011/07/dwcf-3.html

    Happy Fourth!

  • volar

    yes sir, but most is VBA

  • volar

    volume tells much, and many choose to ignore it.

    Thats why I love watching put call volume, COT, Short interest.. etc etc

    makes one even-keel 

  • http://marketmanipulations.blogspot.com/ Ben_Bernanke

    Print Watch has added before and after images of all
    false prints which definitely proves not only how the prints are used
    but that the market is clearly being manipulated. Let’s how the SEC
    acts.

    http://marketmanipulations.blogspot.com/

  • Anonymous

    just for entertainment:

    i can’t find a weekly bullish NDX candle so tall as this last one in the last 5 years:

    http://finviz.com/futures_charts.ashx?t=NQ&p=w1

    what about similarly strong bullish candles in this last 5 years and price action that followed?
    one came just before the 2008 crash. it reversed and the rest was history.
    there are similar one at the 2009 March bottom. then twice when the bullish trend resumed in July 2009 and maybe Sept 2009. But all of these were smaller.

    A strong, natural trend has small candles, these big spikes smell of reversal (usually).

    Bottom line: I can’t wait to see further price action. If it reverses here… recent history says watch out bellow. If we break out – say hello maybe to retest of old SPX or even NDX highs. This week’s candle will give as a clue about further price action and might serve as a signal bar for a longer trade (a month or two maybe).

    one more chart, just showing DAX daily trendline overshoot:

    http://www.uploadgeek.com/share-17BB_4E0FA001.html

  • Anonymous

    Does it ‘do’ calendars? Do the legs have independant vol?

  • Anonymous

    Google: Bulkowski’s pipe tops.
    IF: this week happens as you say, the candle probabilities are high, of further downside.

  • http://practicalt.blogspot.com/ Gold_Gerb
  • Anonymous

    Parker Binion on the T Theory forum mentioned–Up volume outpaced down volume by 11.3to 1 on the NYSE, Martin Zweig wrote 9+ to 1 volume days (both up and down) inhis book Winning on Wall Street.  9+ to 1 up volume signifies ;
    A:  The start of a new uptrend and a sign that the change in direction has
    a lot of “fuel” behind it.  Or, B:  a short-term overbought condition
    that will start to reverse next week. For now as long as the SPX 10 and 20 day
    MA are below the 50…. to me, we are still in a down trend.

  • volar

    A +B means bear market rally just as likely as bull market rally if u ask me 😉

  • Anonymous

    Volar, Probably right we will see in the next few days.

  • volar

    Does not do calendars- aka DEC ES vs SEP ES

    But it runs time scenarios.. aka it charts the decay, the decay of greeks, the decay +/- change in price and volatility etc etc

    **As for independent VOL, yes, but a caveat.

    What I do is i statistically derive a volatility smile, I then model each option based on that unique volatility curve. The problem is when i shift vol up/down it shifts the curve equally. Or that means my model gets the big picture correct (especially delta/vega), but if one is really really picky and wants to change the volatility smile curvature, (say before and after a jobs report in the bond market) that is kindoff hard for my model to do…

  • volar

    true, i guess if it is a bear market rally, prob not much more upside … time will tell, tricky market right now

  • Anonymous

    I’m beginning to think this will not be a low volatility summer, despite your (excellent) seasonality research.

  • volar

    i think the low vol seasonality is actually mostly over with. In my last post, i show how the VIX generally makes a low in JULY.  The vix is utterly low and JULY/ AUG have mixed seasonality if you ask me, not a good idea to be truly bullish for JULY or AUG if the VIX is already this low

  • 99er

    Sunday Musing

    NQ sports a possible H&S targeting 1921.
    http://99ercharts.blogspot.com/2011/07/nq.html

    Market open later today until 10:30am tomorrow. Happy Fourth!

  • Anonymous

    Sorry for delay .. watching the Tour de France…. I agree, starting July with the VIX this low could prove to be a little different from most summers.

  • http://thebhbgroup.com TheBHBgroup

    are you always bearish?  Curious because from what I have noticed the past week your lines on your charts never hold and the market kept moving above them without a comment about it.  cheers!

  • 99er

    I have a bearish bias because I think we are in a secular bear market. Regarding the ramp last week (particularly on Friday), I certainly never expected such an extension. Friday’s daily candle may well have been an exhaustion bar (and a buying climax); I think the reversion to the mean begins tonight.

    There used to be more charts at this site but comments of late have simply been opinions. That’s too bad. Perhaps you could provide a chart or two? Thanks in advance.

    Edit:

    Doug Short on Mean Reversion

    “The mean-adjusted charts above indicate that the market remains significantly overvalued by historical standards — by about 48% in the arithmetic-adjusted version and 61% in the geometric-adjusted version.”

    http://advisorperspectives.com/dshort/updates/Q-Ratio-and-Market-Valuation.php

    Good luck, mate.

  • 99er

    EURUSD
    Target 1.38.
    http://99ercharts.blogspot.com/2011/07/eurusd_02.html

    Perhaps the gentleman below could provide an alternative view (and a price target)…with a chart.

  • http://www.patternstocks.com/ marketlines

    How good are you with stock charts? Play the game and find out without losing real money:

    http://www.patternstocks.com/stockgamr

     

  • Anonymous

    I am actually bullish for the next two or three years.

    The reason: Sovereign debt crisis will move money out of bonds in a lot of the western world, and these money will chase investments that yield more than you can expect from the low rate environment we now are into. Because the global bond markets are a lot bigger than the stock markets (and specially many times bigger than the free float), even a fraction of the bond money going into stock markets will push prices upwards.

    This actually happened in 1931 when investors were afraid of debt, and I think we will see the same now.

    I also think that as prices of the stocks increase, the supply of stocks will start to increas as banks and other companies with troubled assets will use the better stock prices to collect capital, so they will be less vulnerable.

    Then we will have build the biggest bubble ever, ready to burst in 2014-2015.

    It will be interesting times.

    The big risk is that interest rates spiral out of control too fast.

    And the bailouts in Europe will give the insurance companies and the banks the opportunities to transfer their bad debts to the ECB, IMF etc, so they can invest in other assets, like stocks.

  • http://thebhbgroup.com TheBHBgroup

    my comment was more of a question than an attack on your views.  I am happy you share your views but I do notice some bias in those charts….i will post some charts here for everyone to see but to tell you the truth I think this week will explain a lot.  Especially how we react Friday at the close.

  • bisq

    Viva Le Tour!
    Vol is surely mispriced once again. Of course, theta is a bitch.

  • 99er

    Looking forward to your charts. In any case, the futures will open shortly and we will see soon enough. Good luck!

  • Anonymous

    The evidence simply cannot support the idea that we are in a bear market. If we were in a secular bear market you’d know about it.

    There are two ways to look at Fridays (overwhelmingly bullish) price action.

    1) Higher high, higher low, trend day, increasing range…. the move to the upside is accellerating not running out of steam
    2) The big move up represents exhaustion

    Pull up a daily chart of $spx going back 20 years or so. NOT ONCE, NOT ONCE SINGLE TIME, will you find a day like Friday being the climax of a move.

    Given that a day like Friday has never been the end of an upmove, why would it be this time?

    If you continually hang your hat on the most slender of slender bearish threads you will never survive in the market

  • 99er

    Thanks for your input, Scott. We simply disagree and we can both say that it takes both Bulls and Bears to make a market. Good luck to you.

  • http://thebhbgroup.com TheBHBgroup

    so far not one thing is bearish other than good old dx_f. 

  • http://practicalt.blogspot.com/ Gold_Gerb

    SPAM!
    get thee behind me Satan.

    http://chartgame.com/

  • 99er
  • Anonymous

    99er its more than that. I dont take exception with this particular call (personally I have never had a week without a losing trade) Its that you *never* contemplate the bullish side of the equation. 

    I’m not a bull, I’m not a bear, I bank coin.

  • 99er

    I’m a “beartard” I guess. Sorry. And “banking coin” isn’t the only reason I look at charts; there’s an intellectual aspect to the markets which I am trying to understand. I’ve been posting regularly throughout the day at another site and learning from the many charts posted there. I miss the many good TA commentators here; they were very good.

  • Anonymous

     well as long as all the shorts over at ZH are selling…

  • http://practicalt.blogspot.com/ Gold_Gerb

    http://4urpets.files.wordpress.com/2008/07/4th-of-july-dogs.jpg

    This market is for the dogs.
    But I won’t fight the trend indicator. laggard that it is.
    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=1&mn=0&dy=0&id=p52912134816

  • Anonymous

    Being a beartard (or bulltard) is an account killer. As you say there is nearly always a bullish and a bearish case. What we do is weigh the probabilities and place our bets when either the odds or the risk/reward ratio favor us.

    When you start out looking for bearish evidence, thats all you see.

    As an intellectual exercise, why not try making a bullish case for eurusd and $spx

  • Anonymous

    Its still too close to call IMO. Before last Friday I would have said 65/35 counter trend bear market rally…. after Friday I think its 50/50.

    We are getting awful close to the high of the monthly hammer on $spx 

  • 99er
  • Anonymous

    i concur. my possibilities: 1.) reverses hard here. 2.) makes maybe a higher high and reverses (i would expect another leg up after a brief and shallow correction here with such a strong momentum) and 3.) goes up to the clouds and beyond.

  • Anonymous

    Wow Scott what a statement. We cannot be in a bear market? I dont understand why we can be in a bull market. Did someone in the US discover something I havent heard about? What is going to drive the next bull market? Alternate energy? Bernankes Printing press? When you pull up last 20 yrs of S&P kindly tell me when was the last time we had such massive money priting? Is it a fair comparison? In 2008 the US reached its Minsky moment. It will be difficult for Bernanke to encourage the Americans to borrow like before.
    There has been some increase in student loans and auto loans. These will also head down when the students will find themselves unable to get jobs and pay down the debt.
    http://4.bp.blogspot.com/-R4bWbpgPfog/TgiPU-mLhNI/AAAAAAAAEp8/PLRFGXBmcQo/s1600/Screen+shot+2011-06-27+at+21.47.38.png

    Maybe you need to look further back than 20 yrs mate. Our ponzi financial system is based on debt. Lets try to figure out who can go into more debt. Australians?
    http://www.debtdeflation.com/blogs/2011/05/09/land-of-the-tweedles/http://www.debtdeflation.com/blogs/2011/05/09/land-of-the-tweedles/
    Fig 1. Mortgage debt as percentage of GDP. Chinese? Is the chinese stock market headed up or down? Is the Chinese real estate prices headed up or down?The Japanese? They will be lucky if the yen doesnt blow up in their faces soon.Europe? Can Europeans go into more debt? I doubt it the way things are unravelling over there.Canadians? Maybe a bit more but not much.
    http://www.theeconomicanalyst.com/content/owe-canada-look-our-total-outstanding-debt-nation

    Maybe the Canadians can take their debt to 350% of GDP like the US? Possible but with a weak US and slowing China it will be difficult.
    http://www.bloomberg.com/markets/rates-bonds/government-bonds/brazil/

    India and Brazil have their yield curve inverting. A few more months and they are headed on the way down. Other than QE3 what is going to propel this market up? As far as I can see commodities are at 200 yr high and headed down. Corporate profits will follow. I understand news doesnt mean much you should trade the tape etc etc. At some point the fundamentals will matter. The tape cannot run higher against fundamentals without more liquidity. What do you suggest will lead us higher in the face of less liquidity ie end of QE2?

  • 99er
  • volar
  • http://evilspeculator.com molecool

    We have been consistently on the right side of the trade. So I’m not sure what you’re ‘missing’ mate. And I don’t give a rat’s rectum about wasting my time on mental masturbation like this – my sole focus is on banking coin.

    If you want drama go to ZH – if you want bearish charts go to SOH.

  • Anonymous

    LMAO!

  • 99er

    Mole: I wasn’t referring to your blog posts but rather the comments from the readers. This site had far more intra-day charts before from good TA types but now seems to have more opinions than charts. I will stop posting here; as your headline says, “Get The Hell Out.” Thanks.

  • http://evilspeculator.com molecool

    Look – whether or not you post here doesn’t make any difference in the face of reality. Does a worm’s fart in the woods affect what the SPX is going to do tomorrow? We all have opinions and charts and in the end credence should be given to whoever winds up navigating the path with coin in their pockets. Unfortunately the mind of the retail trader is wired in mysterious ways.

    The problem with financial blogging is that people’s egos get involved and they think they have to prove something to either themselves or others. Look, none of that matters. I also think you may be suffering from Casandra syndrome – you enjoy the role of warning others of impending doom and even if you are proven wrong ten times you will continue to do so. Of course one day – maybe tomorrow – you will be proven right. And then everyone will point at you and say – hey, he told us, we should listen to him!

    And that is how Prechter suckers folks into paying expensive subscription fees 😉

  • volar

    there is a few trillion in bonds. Global rates are 0%, everyone and their mom is bearish… sounds like a potential for some kind of equity rally to me- just saying.

  • Anonymous

    Temporarily yes. New bull market? Whats that all about?
    http://evilspeculator.com/?p=18529
    Liquidity lifts all spirits and markets! Rates are different for different countries. Short term rates are higher in Brazil than long term hence the inverted curve. Show me where the liquidity is going to come from and I will side with you. Bond buying is going to slow down drastically. At least check the headline of this post. That should be warning enough. Evil genius is telling me to get the F out of the market.

  • Anonymous

    Just wanted to show some numbers and see how they relate to eachother:

    Global bond markets are valued at between 80 and 90 trillion dollar. A huge part of these bonds are bonds of sovereign nations with a mature low growth econonomy that has record low interest rates (the low interest rates are actually the key here, as it is not sustainable when taking inflation risk and default risk into consideration).

    The stock market party from March 2009 to now has been highly affected by QE1 (1.3 trillion dollar) and QE2 (0.6 trillion dollar).

    What do you think might happen when dumb money (insurance companies and banks) finally finds out that there will rising interest rates in sovereign debt due to risk of default in several western countries and start to chase other investments than these bonds? When you see how much a small amount of 2 trillion dollar moves the stock market, it makes me think what can happen when larger numbers of dumb money start to run away from falling bond prices and rising yields and into the blue chip stock?

    Add in the fact that some of the money providers in the bond markets will not have the available cash to invest in bonds (China must invest more at home, Japan will have to reduce overseas exposure etc), then I see a pretty strong case for some good returns in the global stock markets in the next years.

  • Anonymous

    Hmmm. Interesting argument. I dont see that happening. Interest rates will rise in some peripheral Europe nations yes. Interest rates will rise in Japan? If that happens Japan is toast and I dont see that yet. Interest rates will not rise in USA. They will fall further before they rise. Interest rates will fall in all hot economies as they battle to hoist housing back up like Australia. I really have a hard time seeing a multi year rally with commodities at these levels. Interesting times ahead.
    maybe you are right. I have a feeling its not going to be all easy times ahead. I see commodities headed down, profits headed down, rates cut in hot economies as they stumble than rate hikes, lower US interest rates for a long time.

  • Anonymous

    Casandra syndrome – you enjoy the role of warning others of impending
    doom and even if you are proven wrong ten times you will continue to do
    so.

    from “Die Biene Maja”? 🙂

  • 99er

    Thanks for your comment. As you know, I have never made any claim regarding my TA acumen; I have posted charts here since before I knew what a Bear Flag was. Your site provided me and other newbies with a forum to exchange views and, more importantly, to learn. Indeed, your frequent charts taught me much about TA. I learned even more from your readers. In any case, I find that the site has lost many former posters and that you restrict your stuff to subscribers. Reading someone’s opinion doesn’t really help me. So… last post. Thank you for hosting this site!

  • Anonymous

    Mate I’m neither a bull nor a bear and I dont make predictions. But a market that keeps going up, past potential turning points again and again, is a bull market. If you are a buy and hold bulltard you made money over the last few years. If you are a “bet on p3” beartard you are broke.

    The results are in, bears lost. Sorry, but thats the way it worked out ;-(Its not really open to debate. Despite the criminal money printing, etc etc… the market keeps going up. Fear is decreasing (complacency increasing) not increasing (like it would in a bear market).I lost some money betting on p3 a year ago… the evidence just doesnt support it at this stage. IMO the highest probability is that we are in the later (possibly endgame) stages of this bull market.Put simply, we cannot be in a bear market because prices are going up easier than they go down. 

  • Anonymous

    There you go 🙂 Seeing both potentialities lets you work out which is more likely.

  • Anonymous
  • http://evilspeculator.com molecool

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  • Anonymous

    http://evilspeculator.com/?p=18529

    Understood. Thx. After the end of QE1 didnt the markets go down? Why are you so bullish now with end of QE2. Should we not suffer the same fate and then Bernanke comes out with QE3 for the next leg up? The 2003-2007 rally was created by keeping rates low encouraging people to go into debt. That mechanism seems broken and the Fed is now pushing on a string. Only direct liquidity seems to be working. Fed buys bonds from say GS and GS buys oil futures pushing oil prices up. Am I missing something?