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Thursday, December 17, 2020
AdBlock custom settings for Zero Hedge
Tuesday, December 15, 2020
DIA report pending
Thursday, November 19, 2020
Now we cross the rally channel
Support is at about 2960 on the low edge of the rally channel, at the Full Moon at the end of November.
1970s State Street, Chicago |
The next panic phase comes around the December 8th "Safe Harbor" deadline, ending when the Fed meets mid-month and is friendly again. Trump will win; actually, he already has.
Q1 2021 is an epic disaster as all the idled mortgages and rents are due again, and the can can't be kicked. We can easily reach a 3-digit S&P 500 by the end of February.
S&P 500 crossing the megaphone |
Monday, November 9, 2020
Worst-case scenario
The worst-case scenario for the equity markets is a full-blown Constitutional crisis, keying off the Electoral College meeting 14 December. It is a real crisis, sure, made exponentially worse by all the leverage and insolvency loosed upon the world.
Titanic vs modern cruise liner |
This will only end when the Fed announces ambitious monetization and purchases of index ETFs at the January FOMC.
IMO this is the severe but brief deflationary shock that everyone on Real Vision expects to happen one of these days. But who will catch it?
S&P 500 worst-case |
Sunday, November 8, 2020
The future is knowable
Friday, November 6, 2020
Saturday, October 17, 2020
Black swan alert
It appears that the Biden campaign is about to implode, and take the Democratic Party with it.
Gee, that's too bad.
I guess we'll know if The Market takes this seriously if the /ES goes limit-down Sunday night. If it does, then I expect it to close 10% down at the 200DMA and burn 40% on the week.
If you've been in a coma or off smoking crystal with Hunter Biden, I'll let Rudy catch you up.
/pol/ seems to be a good place for timely coverage as well. And, of course, there is Alex Jones.
Donald Trump has just racked up another superlative! Best October Surprise ever ...
Thursday, October 8, 2020
Tomorrow rather important
It looks like we finally retest the underside of the rally channel up from the March lows tomorrow. Madame Speaker Pelosi (D, CA) has a press conference early in the session, and I'm excited to see what news she has to share.
This fellow has an interesting analogue to the 1987 crash. Make of it what you will.
I guess this would presage a dive into the election, followed by a Trump win and a monster bounce. But reality will maul us by the All-Star Game.
Such fun in 2021 |
Tuesday, September 22, 2020
Insanely dangerous tape
The whole idea and effort to predict emergent characteristics from a complex system -- prices! -- is hard and sketchy enough. I think it's fooling everyone atm, but it is actually struggling to stay afloat.
I think the tape is hiding the very real dangers from us, we're so complacent now, no one has any idea just how close we are to a market event. Does Pelosi break off stimulus negotiations with the Administration? Will that be our spark, or a surprise piece of macro data? There is massive EOQ rotation ahead -- forced selling, lads.
SPX hourly |
You can see on the daily that we are kissing-back the old rally channel. Well ... good-bye to you.
SPX daily |
GLTA
Monday, September 21, 2020
Danger is here
It looks like we're just getting started with a big, hairy C wave down to the depths -- how low will it go? Once we test and lose the 200 DMA, it ought to accelerate and get very frightening in the short-term.
SPX RTH 1-hour |
So let's go visit the 200 DMA, like, tomorrow.
/ES 1-hour |
Big picture, first job is to cross the megaphone at breakneck speed. Volatility looks completely confused at this point as OTM calls are rolling off and I'm not sure if anyone is hedging, because "correction".
Good luck with that.
SPX 1-hour Sturm und Drang |
Wednesday, September 16, 2020
Danger is near
There is nothing but air supporting the market if we drop out of the rally channel around the 3300 level. JP Morgan is warning you ...
Thursday, September 3, 2020
85% off the top
An equity crash so vicious and destructive, almost no one catches it. With only one solid buyable dip (on the September FOMC), wave after wave of Fed sycophants and buy-side grifters are ripped to pieces and then eaten.
Over in 9 weeks when the Fed announces a formal policy of buying ETFs like $SPY and $QQQ to support equity valuations and keep the deflation monster from devouring the world.
S&P 500 daily |
Friday, August 7, 2020
Stimulus, please!
I'm going to be out in the bush next week, but the pols ought to settle their differences soon enough and write some more checks from the Future.
Tuesday, July 28, 2020
If we lose this channel
Chicago 1979 |
Here's the channel; we closed outside it today, with a Fed meeting tomorrow to keep things interesting.
S&P 500 hourly, LOG scale |
Once we are back inside the giant pink megaphone, I don't think it will take much to trip us up and drop us back to 2140 on the S&P 500 for 1 of C down.
S&P 500 suggesting C is close |
3 of C is a September-October affair, targeting the 1000 level, kicking off right after Labor Day.
Thursday, June 4, 2020
Halfway home
It is a very exciting moment, if a 5-wave C impulse lower is due.
SPX C down, log indexes |
SPX C down, linear |
Thursday, May 14, 2020
Has C down begun?
Market crashes proceed in three waves -- ABC. The question now is whether "A" and "B" are in, and we are beginning a destructive 5-wave impulse "C" to new lows.
Channel break? A plausible "B" wave triplet complete?
S&P 500 hourly + channel break OMG |
Let us propose this scenario:
- "C" down has begun, selling into EOM, support ~2075 from prior lows
- Bounce into June FOMC is on "hope" that the Fed will buy equities - 2460?
- Fed declines to buy equities
- A real market crash to ~1040 S&P after June FOMC, 3 of "C"
- Late June to July opex on EOQ2 fund rebalancing and new "hope"
- By late July CMBS, CLOs, RRE all imploding, market follows down
- Shocking new historic lows - 520 on the S&P 500?
- Fed announces direct purchases of $SPY, $QQQ at the EOM July meeting
- BEAR MARKET OVER
- MMT and start of the final collapse of global credit monetary system
S&P 500 hourly "C" wave to 520 |
Good luck to all friendlies.
Wednesday, April 29, 2020
What would it take ...
I bet a mid-May oil crisis could do it.
The June /CL contract settlement is hanging out there waiting to wreck the fake US shale oil industry, the worthless paper underwriting the mess, and the financial infrastructure that started it all. Oil was up 30% today at one point, in a crazy act of denial of what is inevitable.
The Saudis have sent an armada of oil tankers to our shores, and we cannot not receive them, or they will go somewhere else, to be paid with something else (non-$USD). So, short of sinking these ships in the Atlantic, we are trapped now.
S&P 500 hourly May crisis and collapse |
What if we don't visit the 200 DMA now? What if we finally have a proper reaction to these disastrous unemployment reports tomorrow morning? Any rollover into "C" should be as shocking to us as the initial panic waves off the 3393 bubble top. The floor just drops out.
The heart of the oil crisis, the chaos into the 5/19 end of trading for 5/20 delivery, becomes the 3rd wave down of such a crash. The final waves of stock liquidation, probably the little people at this point with their 401(k)s, take us to the FOMC in early June, to beg for Fed pesos to keep the S&P afloat.
So it's June at the earliest, because the fair value of the S&P 500 is still 520.
Wednesday, April 8, 2020
Rollover ahead
Wednesday, March 25, 2020
No, Peter Schiff, this is not hyperinflation
They are both wrong. A lot of people scrapping for gold at $1600/oz are going to sell this stuff in frustrated desperation for $1000, maybe less, because they prefer to have dollars again.
Today is not hyperinflation, nor is it next week. The economy has come to a full stop. This is a deflationary apocalypse.
Does anyone seriously believe in a wage-price spiral at this juncture? The Fed is shoveling cash into a black hole, desperate to stave off cascading debt defaults and complete chaos. They will shovel a lot more, so that we may survive this crisis. They simply have no choice.
Daniel Sullivan says it's a "bank holiday", and he may be onto something. Enough of this was in motion or telegraphed ahead of time, such that the Wuhan coronavirus provided the trigger for the crisis. There was even a great topping wave count on the S&P 500.
The Fed is desperately trying to keep our economy and society from imploding. They and Congress will create a huge mass of "money" as quickly as possible, buy anything, prop up whatever, because we still have the world reserve currency, and so we can do this. It's a feature. And the rest of the world is counting on us to do it.
Let's review where we are again on the long-term chart, with annotations added to indicate whether we are at risk of hyperinflation.
As we are screeching south towards a low of maybe 520 on the S&P 500, this indicates that we are not at risk of hyperinflation. Money is scared and scarce! The flows are all broken. We are in a crisis, it will be vicious, and maybe also brief (over as soon as August?).
They will stuff all the channels, they will feed all the geese, they will buy all the paper at par, and it won't be fair, and you won't like it. But it may just work, for now, and that is all that matters.
The hyperinflation comes later.
The hyperinflation comes on the heels of one of two reactions to surviving this crisis. Either we gain a new confidence in our ability to print money at will and to buy all the things, so we keep doing it as formal policy (MMT), thinking we can "manage" it; or we find ourselves tragically stuck here, unable to recover to a new normal. The built-in $1T Federal deficit will become $2T annually, eventually $3T, and we no longer believe in the worth of this debt or of our money.
Hyperinflation arrives when we have to print money to pay the interest on all of this debt.
The rest of the world will suffer comparably, as we apparently bounce back from this, while they are still hurting, because we create the money. Hyperinflation arrives when the envy and resentment for this privilege drives them to end the system.
Hyperinflation arrives when the tens of millions of New Americans either feel no obligation to pay for these ancient obligations, or they are just not productive enough to support them.
Hyperinflation arrives when we have even dumber scams than crypto-currency and $900 $TSLA, that we cease to give any credence to any supposed values.
This could happen next year or a decade from now. The current crisis sets the stage for us to bounce back and evolve into that new normal, where we finally exhaust the US dollar as the world reserve currency.
Current wave count, I think we finished W4 today and are headed down in W5 of A, which should undercut the topping megaphone a bit, reaching 2015 or so at the end of March.
SPX hourly |
April is the relief rally. We will get positive news on the Wuhan coronavirus front, have a lot of free, fresh new money circulating in the system, and we might even get back into the office.
Saturday, March 21, 2020
When you can no longer hedge risk
Do you see what I see?
With the quad-witch opex Friday, a great mass of financial insurance just came off the table. The market bounced off resistance mid-session, and sold hard into the close.
The $SPY made new crash lows in after-hours trading.
Here is the problem. With a sustained sky-high $VIX, hedge funds and other players are no longer able to hedge long positions in the markets. Say you are a fund with 1 million shares of $SPY, optimistic for the long-term growth and progress of the America, but worried about the risks posed by an uncertain event, like Brexit or a "trade deal" negotiation.
With volatility at normal levels, with $VIX below 20, you can always buy put options to insure the value of your holdings against an unexpected drop in prices. If you're clever enough, you might even cash out your puts green, rolling them into buying the dip on the indexes to make even greater returns, because the market, after all, she only goes up.
The $VIX is now pegged above 60, spreads are blown out, and put options as portfolio insurance are no longer possible -- with any duration, they are outrageously expensive. The existing risk models and approaches no longer work.
March options have now expired. You cannot insure your positions. But you can sell them.
The S&P 500 closed at 2304.92 Friday. If the /ES futures are limit down Sunday night, then we have the following circuit-breaker bands for Monday:
- 7% - 2143 SPX, 15-minute pause
- 13% - 2005 SPX, 15-minute pause
- 20% - 1843 SPX, all markets closed for the day
S&P 500 hourly zig-zag crash to 520 |
A sharp relief rally on the lunar cycle can then take us back to overhead resistance from the original move and base channel off the top. We may see a slowing of the Chinese virus throughout the world, a leveling off of new cases and casualties, maybe even the welcome news of effective treatments for it. These are good things, yes, but this pause and rally is just the eye of the storm.
We then meet the C-wave of the decline, as the economic impact of the virus arrives, like the second half of a hurricane beyond the eye-wall. Now we get the mass-layoffs, destroyed earnings, collateral damage (on actual collateral) in real estate, commercial and residential, as well as all of the consequences from that.
The long-long term channel support for the markets is at about 520 on the S&P 500, which we could see as early as the June FOMC meeting. This level also is the trendline between the 2002 and 2009 market lows. The Fed will go full Bernanke helicopter-money on this one, maybe they can print up $50K or even $100K per American household. The Federal quarantine shutdown bonus coming soon is a trial run of this mechanism.
long-long-term S&P 500 chart |
We should know on Sunday night. Good luck to friendlies.
Edit:
If we get a dump tomorrow that is comparable to the dive to 2854 in wave 1, then maybe we visit 1940 on the S&P 500 tomorrow. Congress is bickering about fiscal stimulus package details, so the equity markets may help them resolve their differences. This would trigger 2 halts tomorrow.
capitulation selling to end each leg down |