Fatigued Stocks Flirt with the Big One

The suspicion grows that the stock market has been carving out a broad top, by turns bringing sufficient deviousness, pain, tedium, exhilaration, temptation, and most of all false hope, to the process that even those who have been preparing for it are likely to be caught off guard when the inevitable plunge comes. Further evidence of a market suffering from terminal fatigue would have been apparent to anyone who tried to cash in on the last gasp of put and call options that were due to expire on Friday. We’ve been using this tactic ourselves with a weekly “Jackpot Bet” designed to take advantage of the enormous leverage in options that have shed nearly all of their time premium shortly before they die. Stripped bare for action, they can increase in value tenfold if the underlying stock exhibits just a little bit of Friday craziness. Unfortunately, Friday nuttiness has been nowhere in sight for weeks, requiring us to scramble just to break even on the relatively feeble moves that have occurred.

Last week, for instance, a bullish play in Google caught our attention, and we bought calls with a 565 strike price to take advantage of a fall in the stock to 559 in the early going. At that point, a mere $6 rally in five hours was all it would have taken to push calls we’d bought for 0.30 into-the-money. Google can easily do that in mere minutes when it catches fire, and if it had happened this time, our bet would have tripled with each $1 move above 565. Alas, the stock spent the entire session unable to levitate itself above 565. Actually, it finally did pop above the “jackpot threshold,” but it happened literally at the final bell, when it was too late to reap the kind of bonanza we’d sought.

Our Calls Only Doubled

A similar anticlimax played out on Friday. As the stock ratcheted down to what turned out to be its intraday low, we bought out-of-the-money calls in Netflix for 0.30 that had sold for 1.49 when the day began. And although the calls had doubled in price 20 minute later, allowing subscribers to sell half their stake and recoup the initial outlay, the failed rally turned out to be NFLX’s last hurrah. The calls subsequently went to zero, and the best we could have done was break even.

Until relatively recently, expiration Fridays provided perfect conditions for bull traders. After feinting lower on the opening bar, stocks often took such powerful leaps that they would blow past multiple strikes, triggering buying panics that fed on themselves. Now, it would seem, the rallies have grown so faint that buyers can barely push a stock to the closest strike, let alone impale it. Despite this, we sense that there is still a short-squeeze panic or two left in this market before it plummets to well-deserved hell. Or maybe not. Whatever cataclysm awaits, its destructive power can only come from one source: surprise. And what is it, you ask, that could possibly surprise us all? Each of us has a different idea about this, suggesting that what we are about to see might represent nothing less than the sum of all fears.

  • EVIL VLAD July 7, 2014, 1:05 am

    ackerman,
    I think I have a blog for you to publish a week from now. mostly quotes from others.
    historical quotes, said right before, the end of manias.

    and mario’s question above, directed to myself, triggered it.

    “Really V, why the need to be a Nostradamus doom predictor? We know there’s big problems, broad predictions are just foolish ventings and musings,”

    because I still can’t understand, why those like mario, can’t see the obvious.

    prechter’s theory is this— denial.
    because those like mario, simply, do not want to hear it.

    and the bigger the lie is, the bigger the denial.

    until, of course, the tidalwave reality hits.

    and by then, it does not matter, what anyone said. previously.

    so let me know if this theme interests you, to publish as your week’s blog, one week from now.

  • EVIL VLAD July 7, 2014, 12:50 am

    I finally caught you at a whopper of a lie, commie orifice leibowitz.

    since leibowitz says—
    “Germans for instance have no debt to speak of. They have always been a frugal society.”

    BECAUSE, MODERN GERMANY IS LOADED WITH NATIONAL DEBT.
    and do look it up, you ever-whinning communistic moron.

    however, percentage-wise to gdp, yes, krauts have less debt, than rest of south eu piig states.
    also, do look up, even wealthy netherlands. for even they, are loaded up, with national debt.

    the entire world, all governments, are fully corrupt and laden, in national debt. period.
    even the albeit ‘hero’, that will supposedly ‘save all.’ china. because china’s debt,
    has risen, in only 6 years, from 14 trillion, to 25 tril. yep. as always, prechter records all.

    THE ENTIRE HUMAN WORLD IS DYING, FROM ONLY 1 THING— ‘SOCIALISM.’

    the most corrupt evil system ever created, to feed off the greed of those, that don’t deserve it.
    those that want to live off, milking someone else’s nickel. so, human nature is ‘good’?
    WRONG. human ‘nature’ is NOT good. not even remotely.
    for humans are born a blank slate. tabula rasa.
    ergo, they ‘learn’. thus, are a product of their time, geography, and circumstances.

    and today’s most prevalent circumstances, are, that if you ‘don’t care for your neigbor,’
    and you don’t subsidize them, then, you are ‘evil,’ and so, to be expendably rubbed out.
    hahaha. I tell you, shakespeare never wrote,
    truer words than, ‘lord, what fools these mortals be.’
    but, that should be, ‘indoctrinated socialistic fools since birth,’ IMO. haha.

    so, retribution. where are you. I’m still waiting.

    reminds of me of bogart 1947 movie ‘key largo,’ huston directing.
    where wheelchaired old barrymore talks to the sky, and says (re ‘rico,’ played by e.g. robinson):
    ‘lord, I don’t care what you do to me, but destroy him, destroy him… (paraphrased). haha.
    for that is exactly how I feel about the world today. As I don’t care what happens to me,
    because I want to see you all burn, before I go. since at least dinosaurs, are more honest.

  • Andy Gutterman July 4, 2014, 1:21 pm

    Mario,

    Care to comment?

    http://www.salientpartners.com/epsilontheory/notes/The_Dude_Abides.html

    I quote:

    “Today, however, the Chinese State faces two existential threats, each stemming from or accelerated by the Great Recession and Western policy responses to that crisis of market confidence. ”

    “First, QE and other “emergency” Western monetary policies of the past five years threaten the grand political unification of Deng Xiaoping from without. ”

    “Second, massive wealth inequality and concentration driven largely by those same monetary policies threaten it from within.”

    Read the article, another Ben Hunt special. He never disappoints.

    Andy

    • mario Cavolo July 5, 2014, 2:34 am

      Fascinating, insightful must read article. he is quite well schooled in Chinese “thinking”.

      He’s way off one core premise related to his 2nd main point; he doesn’t recognize how strong the Chinese domestic economy is, the wealth gap is not as egregious as he indicates. Eg., 21 million cars purchased last year, 80% of them cash ya know. That, along with zero credit card debt and a host of other similar points, unthinkable to an American middle class citizen. That said his look at the macro is far wiser than most of,the mainstream media drivel on China.

      Cheers, Mario

      • gary leibowitz July 6, 2014, 5:55 pm

        Mario, I would not agree that China isn’t a caste system. In fact the political connections are needed to get ahead since they control all aspects of life. As for debt I think that’s more of a long culture phenomenon than the current Chinese System. Germans for instance have no debt to speak of. They have always been a frugal society. They have in fact been the backbone of the EU bailout. It might bite them in the ass in the long run.

  • mava July 4, 2014, 6:16 am

    Hi Mario!

    I don’t see this as burning down the house. Fiat is an evil idea, as I have explained. If the government wants to waste more money, they can do it openly, by taxing violently. That way it will be in everyone’s eye and on everyone’s mind, and the hate towards the government would increase.

    Do you see anything positive in fiat? Do you see anything negative in honesty? If not, I don’t know why you are so negative towards the coming changes.

    I know what you mean by the reverse robinhood scenario. This may seem as a ‘solution’. But, it is not. There should be no robinhood at all. Btw, I did not ever wanted the straight robinhood either. But the way it is right now, I don’t feel any benefits from the fiat, at all. They are NOT sharing it with me. I only see fat, overpaid, underworked government people riding around in tinted SUVs and bombing people across the globe. May-be your situation is different.

  • mava July 3, 2014, 7:47 pm

    Here is why I think that the China would do us all a service by ruining the fiat:

    Going back to honest money, among all the other benefits, has this one gem: it ruins the prospect for a government to just suck our juice unnoticed. They can continue to exploit everyone, but now only visibly, extorting by force.

    I think the possibility of silent extortion by inflation that the fiat system provides the issuer is the greatest evil of all evils, because it can not be seen.

    • mario July 4, 2014, 3:03 am

      Hi Mava,

      Well, good musings and the reverse robinhood scenario we have is the core problem, but I don’t see how destroying the fiat is going to lead to better things. That will lead to even worse tidings in the societies across the globe, so I can’t buy it. As the forefathers feared and predicted, today’s world seems to be the interest of the bankers and their assets vs. everyone else. But then if we go down one level to the corporate structures, they’re doing the same thing. Overpaying the top people and underpaying the lower level employees while sitting on record earnings and cash on hand. These are the collective conscious business choices of human beings. I don’t see making a radical move as doing anything other than creating more destruction. LOTS of reforms and rules could be implemented, even as Gary noted, that they would be by the political will. That political will will never arrive. So then go radical and burn down the house, burn the fiat? Nah, another bad idea. But then again, a look at shifting historical borders on a map, (there’s a really cool .gif of that on the web), the rise and fall of powers shows this pattern.

      Cheers, Mario

      • mario Cavolo July 5, 2014, 2:13 am

        Hi Mava, you’re starting with the premise that fiat is evil and building from there? Fiat is just convenient system to replace direct trade and create a way to buy n sell n keep score. So I want to,suggest fiat,isn’t the problem, everything else is; the bankers, politicians, oligarchs. Can’t be blaming fiat.
        I like reading your posts, you think in ways and of things I don’t, I’m not fishing for an argument.

        My uncle always loved the flat tax idea, seems the most fair, eh?
        Cheers, Mari

  • ricka July 2, 2014, 7:37 pm

    Vlad, I know you’ve been hung up on my DJIA target at 17622, but there’s another at 17209 too fetching to ignore. I first published it seven weeks ago, but it wasn’t until today that it was confirmed in a way that leaves me all but certain that it will be precisely achieved. (Note: All bets are off if nuclear war breaks out, or the Martians attack Earth, or a tsunami destroys California, since any such event could easily send the stock market screaming toward 20,000.)

    • VILE VLAD July 3, 2014, 3:56 am

      used to think, 2 yrs ago, that germany pulling out of the eu, since they were being raped,
      would crash world markets.
      4 years ago, used to think, that PIIGS utter corruption, would crash markets.
      yet both, were results. not an initiate. results.

      therefore, lately, I have looked for initiates. those that trigger, on purpose.
      and russia is my favorite, but– they don’t have the teeth. however, china– does.
      so, I am now looking for china, to trigger, and on purpose, world financial debacle.
      UNavoidable world financial debacle. ZERO chance it can be ducked. so, look at china.

      • mario July 4, 2014, 2:54 am

        V, there’s a lovely country song lyric “Looking for love in all the wrong places…” Rhetorical musing V…

        China does not ever take that approach, they are not fools. Their way of gaining is careful, pragmatic, strategic response; quiet, hidden, end around moves that inexorably tilt situations to their favor. They will quietly position themselves for when the other guy shoots himself in the foot first, not instigate, not be the catalyst to calamity. That’s not their style.

  • mario July 2, 2014, 3:47 pm

    Boom! Perfect call on the Dollar Rick!

    &&&&&


    Quite possibly, Mario, but I’m not going to pat myself on the back, not yet.
    RA

    • mario July 3, 2014, 3:11 pm

      Zoom zoom goes the dollar…Ready for that pat yet? 🙂

  • mario July 2, 2014, 7:23 am

    From a good friend and savvy investment advisor Tony Noto here in Shanghai.

    “You won’t read about it in the newspapers, but the U.S. federal deficit has fallen from $1.4 trillion to around $400 billion in the space of one year. And the U.S. is now close to energy self-sufficiency, which means that the trade deficit (which has been largely driven by the cost of importing Middle Eastern oil) is shrinking dramatically vis a vis the rest of the world.”

    Any comments? Cheers, Mario

    • redwilldanaher July 2, 2014, 10:20 pm

      Yes, one.

      It wasn’t bad when it was bad but it will be good now that it’s good…

  • mario July 2, 2014, 7:18 am

    Meanwhile, GBP and EU and AUD coming off their squeezy peaky peaks yesterday while USD seems to be nicely forming that base Rick noted, while gold continues loligagging around (is that a word?). Let’s see if we’re marking a turn gents…Cheers, Mario

  • mario July 2, 2014, 7:15 am

    Hi V,

    Even Prechter’s broad view is myopic and nearsighted. The global economic model is nothing like it was before. Globally, GDP is expanding and will continue to do so with the MASSIVE rise of middle classes in Latin America and of course China/Asia. This is not a macro reality to be set aside as incidental, regardless of all the other nightmare issues which exist out there.

    There is a massive pool of massive wealth coming out of China being spread out far across the globe into the global economy, into investment, into business, into real estate, into markets. I am talking trillions. The middle class in China is sitting on $6 to $10 trillion in cash off the books that not one single revered analyst or banker is factoring into their view and forecasts. Idiots…

    Cheers, Mario

    • VILE VLAD July 4, 2014, 3:09 am

      I wish a most happy ‘freedom day’ celebration, to the rest of you acker regulars.
      so enjoy it. because the charade that you are ‘free’ will be wiped-out forever clean,
      before the next roll-around of this date comes about. because history, guarantees it.

      &&&&&

      Nothing like a fresh insight from you, Vlad. I’ve deleted your first paragraph because it talked only personally about Mario.
      RA

    • mario Cavolo July 5, 2014, 2:02 am

      Really V, why the need to be a Nostradamus doom predictor? We know there’s big problems, broad predictions are just foolish ventings and musings, your mind is alot sharper than that.

      Cheers, Mario

      • EVIL VLAD July 6, 2014, 2:18 am

        for the simple reason that it is obvious it will occur, and it never ceases to amaze me,
        that most of you don’t see it at all. ackerman sees it, though, and similar to myself.

  • VILE VLAD July 2, 2014, 2:48 am

    kids, I am the in-house expert on prechter’s life work.
    so screw dent, and whomever– except for vet russell.

    I have have read prechter for 30 years, off and on.
    started reading in early 80’s, when he was the ONLY BULL.

    plus, prechter was 100% right, in 2007. and he was also 100% right, in 2009’s rebound.
    ergo– in for those years, he called the top, and then, the bottom, of both big bear and bull.

    however, like myself– both forward-looking types– we sometimes look ahead, toooo far.
    so, disregard my own visions, yet let’s look at market’s ULTIMATE historian–prechter’s.
    because IMO, you are all, utter village idiots, at any that deny, his AMASSED knowledge,
    that encompasses, all that will be, no doubt whatever, and no matter how long, it takes to be.

    1,000 dow, dejavu all over again? INDUBITABLY. it’ll be all history, relived, again. no doubt.
    CURRENT MARKET IS INFLATED VIA BALLOON OF –BORROWED– FIATS, IDIOTS.
    CAN’T YOU SEE, YOU? first, HUGE DEflation. then, massive INflation.
    period. end of story.

    but, you are all so fixated, on the here and now, on this breath, this moment, that, you have
    no gauge al all, for–history. because humans, like all earthly things, log in, in fibonacci-wise.
    thus down, the proverbial drain.
    so forget religions, or nations. forget all things. except survival. as long as you can. that is all.

    for it’s near the end. and blather, won’t stop it.
    and it’s all been designed. no coincidence. or accident.

    all by design.

    &&&&&

    It almost makes me weep to think I’ve let this post stand with only minor edits. More on Prechter, rather than the usual end-is-nigh-and-you’re-all-idiots jeremiad, would have been appreciated. Perhaps you could comment on his two-volume opus on Socionomics, which I am sure you’ve read countless times. My copy is signed, by the way, which should tell you something about how I value Socionomics. RA

    • VILE VLAD July 3, 2014, 3:36 am

      I answered you, but you erased it.
      won’t bother to try again.

      however, there is one factor, prechter harps on, that I did not list earlier.
      division, dislike, emnity, outright hatred. between inbred groups.
      ergo– fought secessions. worldwide.
      and not just in european union, but within their countries, themselves. regions.
      and even in the ussa. far out states, wanting to seceded, and fighting for it.

      all that is required, is trigger, to start it off. because all the ducks, already in a row.
      and I think china knows this. and they are the only ones in the saddle, to start it.

      • VILE VLAD July 4, 2014, 3:18 am

        recalling now, you brought up this theme, several years ago, in battle within families,
        of conservative vs. liberal natures, creating deep emnity, even between families.

        it is not going away. it is gaining further strength.
        division.
        countries, religions, politics, regions, neighborhoods, families.

        that is the nature, historically proven nature,
        of darker societal mood.
        due to hard financial survival times.
        long term bad news.

  • mario July 1, 2014, 3:36 pm

    Nastiest opening short squeeze I’ve seen in awhile !

    • Jason S July 1, 2014, 4:25 pm

      Yep. Gotta love all this money; it has to be coming from somewhere. Equities up, bonds up, commodities up. Well, paycheck isnt up but 3 outa 4 aint bad.

      Still, where is all the money coming from?

      • ricka July 1, 2014, 8:17 pm

        It’s happening globally, Jason, and it’s quite rare for stocks, bonds AND gold to be moving up simultaneously. As to where the money comes from, we’ve known the answer all along: It grows on trees.

  • Andy Gutterman July 1, 2014, 2:35 pm

    The market will go down when its done chewing up all the “experts”. Its the way its always been.

    Prechter has been calling the top for I don’t know how long. Years and years and years. Every week I get some missive from him and his ilk about how we are doomed, yet the market relentlessly marches upward.

    Harry Dent is another. Although he is certainly correct about the demographics, even though he keeps adjusting them for new information his market calls have fallen flat.

    And the list goes on. There is a bull market in doom and gloom:

    http://www.caseyresearch.com/articles/good-reason-for-doom-and-gloom-1

    “Economist and financial newsletter writer Harry Dent predicted the DJIA would crash to 3,000 and told investors to bail out between early 2012 and late 2013. Some people likely took him up on it. In July 2010, Robert Prechter of Elliott Wave fame predicted the DJIA would fall to well below 1,000 over the ensuing five or six years.”

    “I’m saying: ‘Winter is coming. Buy a coat,’” Prechter told the New York Times. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.”

    “While Prechter sees massive deflation on the horizon, Marc Faber, editor of the Gloom, Boom & Doom Report, says Zimbabwe-style hyperinflation is on the way. Gold calls this “the single worst prediction of the past five years.” Gold calls Faber wacky for telling Bloomberg in 2009:

    I am 100% sure that the U.S. will go into hyperinflation. Not tomorrow, but the problem with the government debt growing so much is that when the time will come and the Fed should increase interest rates, they’ll be very reluctant to do so and so inflation will start to accelerate.”

    “Peter Schiff’s call for $5,000/oz gold also has Mr. Gold laughing. Schiff sees the Fed printing more to stimulate the economy, which will send the yellow metal soaring.”

    “Back in the real world,” sneers Gold, “new Fed Chairwoman Janet Yellen is actually winding down the Fed’s extra bond buying (quantitative easing, or QE), and she’s on pace to finish by fall.”

    *****

    By the way, the FED does not and never has, controlled interest rates. The market does this. The FED just follows the market. The ONLY rate the FED controls is the discount rate

    Andy

    • mario July 2, 2014, 7:10 am

      How can inflation accelerate whileconsidering broadly flat wages?

      Cheers, Mario

      • gary leibowitz July 3, 2014, 5:08 pm

        Mario, domestically it can’t with that scenario. External forces are causing such things as commodities to rise. China and its advancement into the modern era is raising domestic wages and will in turn cause higher export prices.

        With minimum wages all but a foregone conclusion of rising, and employment picking up at a much faster pace, it is inevitable that wages rise. Not sure when the tipping point will be. So far wages are flat which is the prime reason earnings are so high.
        How long this balancing act can continue?

    • EVIL VLAD July 6, 2014, 2:14 am

      gutterman says–
      “In July 2010, Robert Prechter of Elliott Wave fame predicted the DJIA would fall to well below 1,000 over the ensuing five or six years.”

      it’s now july 2014.
      still 2 more years, for the end of this prediction.

      and I still don’t see it as difficult to occur, despite prechter being early, as usual.
      that tends to happen to visionaries, that are extremely well documented,
      in their visions.

      myself, I see, without doubt, that the first leg crater drop down, will occur in 1 week.
      in just 1 week, uss stockmarket will be cut in half. and that is what I see.
      8k dji, in just 1 week.
      then, a sharp rebound, to 10k, over a few weeks, and then— 4k is next level.
      over a few months.
      then a sharp rebound to 6k over a few weeks, and then—
      over next months,
      taking world to july 2016,
      more or less 1,000 dji bottom.

      so I think prechter is still, right on target.

      and of course, by then, there will be dictators running, almost all countries on earth.
      including ussa.
      hitllary is my own preferred pick, if I had to bet in macau, or vegas.
      however, it is possible, I think a new leader will come out, of the resurgent ussa group,
      ‘take over wall street.’
      and funded, of course, by the ultimate top minority insiders, since they always win.
      no matter what.

  • EVIL VLAD July 1, 2014, 12:40 am

    I think Chinese have a master plan to tie yuan to something solid, thus crash ussa fiats.
    cyber silver plated panda coins, gold plated panda coins; better than worthless cyber bitcoins,
    and even more worthy, than even the ever more worthless, ussa scrapmetal coins.

    and it’s not just the chinese stockpile of gold and silver, which they have not revealed since 2009.
    it’s all the mines they buy, or control, worlwide, of gold, silver, and base metals, for future supply.

    I guarantee the chinese will run world within 10 years, MAX. with ruskies, as their pitbulls.
    and utilizing orwellian ‘animal farm’ model, for damned sure, to forever crush, ussa fiats.

  • dk July 1, 2014, 12:26 am

    Close friends of mine usually follow the advice of their broker and the Big 4, broker being Wells Fargo (had them go all cash recently).
    BOA was recently calling for a dollar reversal amidst its 2 month plunge.

    Who knows what the final straw will be, but certainly the camels back was affected by the quadrillion other straws already weighing it down.

    This isn’t exactly “news,” but…
    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/6/27_Celente_-_West_Desperate_To_Keep_Ponzi_Alive_As_Gold_Is_Gone.html

    • VILE VLAD July 2, 2014, 3:33 am

      dk, if wells fargo, and garbage bofa, and big 4 (used to be big 5, recall?) are all
      going bigtime conservative, then
      THAT MEANS TIRED OLD FRAUDULENT BULL HAS MUCH FURTHER TO RUN.
      hey, maybe at least to even, the good ol’ chuckwagon boy’s target, haha, rick’s 17622 dji.

  • EVIL VLAD July 1, 2014, 12:16 am

    ackerman, what you wrote me in prior blog, has made me think some, in several directions.

    have you considered that the stockmarket guru business, is 100% dead. for all gurus.
    and this includes, even prechter. whom has been preaching for years, that this would be.
    even if it included him. because there is no stopping, the coming avalanche, of destruction.
    and he said all markets would be dead, for at least 1 generation, but probably 2, or more.

    ‘dah boyz’ hft computers today, run what, 2/3 of ALL daily market trades?
    all pre-programmed to ‘x’ parameters? that, who knows, what they’re truly for?
    are they designed for profit? or, are they designed to just destroy– on purpose?
    so, is their purpose, to profit? or just, to destroy?
    because by destruction, there could be– permanent ultimate profits, for 1%’er ubers?

    and this is the kind of stuff your potential subscribers are considering, that EVERYTHING,
    in the shtthole known as the 21st century ussa,
    is SO RIGGED, that there is ZERO chance, of ANY market guru, figurig tilt of rigged wheel.

    hey, I’ve long stated, what’s is playing now, is
    an ENDgame.
    however, now I see, that I was wrong in the details– thus I paid the price for it.
    for I is broke, have just enough to feed face and restock liquor supply. since I always, bet short.

    yet, this is an ENDgame, and I have zero doubt about that.
    so, all that’s left is to live through, is how it’ll be played out.

    therefore, IMO, it’s best to concentrate on family survival– beyond the ENDgame–
    than how to revive, stockmarket guru business. ’cause that, just ain’t gonna happen.

    but hey, prechter’s ‘holding the fort’ in georgia. and you in colorado. so goood luck. haha.
    for most other smart market gurus, have gotten the hell out of epicenter ussa dodge, long ago.
    but you, are a ‘go down with the ship’ type. so ok. haha. your choice.
    hey, as ‘little big man’ said: ‘grandfather, today is a good day to die.’

    • mario July 1, 2014, 6:47 am

      V, I think many of us agree with you and appreciate your expectations of a nasty endgame destruction of some sort. The only little offset is the matter of timing and a look at the the bigger macro picture. Maybe you should more attention to these other big macro factors too, that are holding up the house of cards. Eg, we have an expanding asia/china bloc, and ussa is not ussa anymore, it is globally tied in to all international UPS and downs. The market knows all of it, the whole story, built into price, right? Rome took 400 years to collapse…

      HFT’s programmed for one thing only, profit on trades, yes? So even if an asset is going down, the hfts are programmed to trade the analysis and profit from it.

      Cheers, Mario

    • Troll July 3, 2014, 4:23 am

      Vlad, you need to learn the difference between “who” and “whom.”

      Seriously.

      • Maumaj July 4, 2014, 5:49 pm

        Use “who” where you would use “he” and “whom” where you would use “him”.

        “Who” is the subject of the verb (the doer of the verb) and “whom” is NEVER the subject, because it’s the objective case (the object version) of “who”.

        So “Whom should I vote for?” is correct because I is the subject of vote, whereas whom is the object being voted.

        “Who should I say is calling?” is correct because who is calling, the subject of the verb.

      • mario Cavolo July 5, 2014, 1:56 am

        Thx for the tips?

      • mario Cavolo July 5, 2014, 1:58 am

        Thx for the tips!

        “Whoms on first?!” Abbott did not ask Costello 🙂

  • Wayne July 1, 2014, 12:09 am

    Funny enough, the futures indexes probably won’t die and plunge until all the bears are dead. I am under the opinion that short covering, squeezing, and running buy stops has been a major portion of what drives ES and YM higher. Among earnings, profits, and a low interest rate environment.

    Can they keep up the earnings, profits, and low rates in a deflationary depression? Maybe, the multi-nationals have been doing well in an economic depression so far, especially since the tax and regulatory codes give them a competitive advantage.

    One thing I do hope for is the inability of the institutions to pass their gas bags and old maid cards off to retail. Could you imagine a man or woman about to retire and putting their money into NFLX at 450 and watching it crash to 100 or less! I think I am going to throw up. ;’(

  • Jason S June 30, 2014, 7:33 pm

    I don’t know what to make of this action. Transports have now pushed to a new high on rising volume and the industrials are not too far away so from a Dow Theory perspective, I would be very reluctant to short this market at the moment.

    I also read an interesting article somewhere that pointed out that the third-year presidential term is the most likely to provide positive market gains; primarily from October through May (good six months of the year). So if the market does come down here, it may only be the 10%-12% correction that is long over due. So if you do short this craziness, be nimble because the action could be over with quickly and TPTB use the down side to buy the dips one last time.

    I unfortunately, don’t have the time available to try and trade this nuttiness. Invariably I will head out to play with the dog for five minutes and miss my window. I really wonder if Da Boyz have access to my webcam…

  • John Jay June 30, 2014, 7:18 pm

    Rick,

    I think Uncle Sam has no choice but to keep the stock and bond markets elevated to save all the bankrupt pension funds and annuities as well as SS, SSDI et cetera.
    At least temporarily.
    As well as to enrich the Oligarchs and to keep themselves in power.

    We have drifted into the South American model of endless grinding inflation with an ever depreciating currency.
    The Fed has helped them avoid the big reset that should have happened back when Nixon shut the gold window in 1971, 43 years ago this coming August 15th.

    They have used the endless growth of inflation and government/consumer debt to accomplish this.
    As well as Open Borders/Free Trade to strangle the wage inflation that would have spoiled their scam.
    As long as they can they will create more virtual currency to keep the con going.

    And the flood of “Children” from Central America proves we have reached a new level of “Open Borders”.
    Nancy Pelosi feels “There are no Borders”.
    Amazing.
    But that is Government Policy now.

    When will they stop?
    My guess is when the Oligarchs have enough global business in hand from a global Middle Class that they can see the US collapse without hurting their global bottom line.
    As someone has said, “There are no markets, only interventions. There are no solutions, only consequences”.
    All you can do is make some money!

    Mario,

    “US trade deficit at two year high in April”

    “America’s trade gap with China jumped 33.7 percent to $27.3 billion in April, the largest gap since January. The US deficit with China is the largest with any country, and this year’s imbalance is running ahead of last year’s record pace. That is putting pressure on the Obama administration to take a tougher stand on what critics see as unfair trade practices by China.”
    http://tinyurl.com/q4yx9rf

    Our trade deficit with China has gone no where but up for the past 30 years.
    It has gone from negative 6 billion dollars in 1985 to negative 318 billion dollars in 2013.
    That is a 5300% increase.
    We have been at about a 300% to 500% import/export imbalance with China for 30 years.
    https://www.census.gov/foreign-trade/balance/c5700.html
    And the Federal Government has allowed and encouraged this the entire time.
    It us our Governments plan and policy to make this happen.
    There is no “focus on selling” to China or to Korea or anyone else.
    Asian nations have 200 and 300 per cent tariffs on our autos, and Uncle Sam does nothing but talk about “getting tough”.
    Just go to that link to the US Census trade numbers and tell me if those lopsided numbers are an accident or policy.
    Thirty years is no “accident”.
    That’s policy.
    You can’t get a bottle of water on an aircraft if Uncle Sam doesn’t want you to.
    So thirty years of never ending trade deficits with China and the entire world tells me that is exactly what the Government/Oligarchs desire.
    It is not going to change, now or ever until we are at he favela level.

    • mario July 2, 2014, 2:37 am

      Hi JJ, nobody appreciates the big macro view more than me so I understand your point very well. When we start dropping down levels toward the micro though, we do find this sector now expanding and any expansion is a good thing.

      I feel it helps all of us to stop thinking of the U.S. as isolated, as “it” will grow or stagnate or collapse. Today’s world model simply isn’t of that form anymore. The U.S. is slowly but surely being absorbed into the global structure and standing alone as an economy less and less. The “U.S.” won’t collapse on its own. Heck, 50% of S&P earnings are overseas, the currency system is tied together by sovereign bank reserves of each other’s currencies and gold. So musings for example that China wants to crash the dollar are just silly. Nobody holding a trillion of those wants to crash them, though they probably do want to manipulate the game to their own advantage as much as possible. Nothing new there as we know…

      Cheers, Mario

      • gary leibowitz July 2, 2014, 5:49 pm

        Great point. Take off the blinders.

      • EVIL VLAD July 6, 2014, 1:20 am

        mickey, repeatedly you’ve said, chinkese have MANY trillions in cash, up the wazoo.
        thus, they control the world.
        but now you say, they won’t crash ussa fiats, because they hold, ONE measly tril of them.
        ergo, your logic is unsound, liberace.
        besides, I never said, they would crash the dollar. I said they could likely trigger
        the crash of the ussa fraudulent credit-bloated STOCKMARKET, by hinting at
        creation of a chinkese online currency, based on silver and gold PLATED, base metals;
        which is much better, than that online scam known as ‘bitcoin,’ based on only base metal.

        however, upon further review, I will just go back to basics–that it’s all a fake.
        and that the utterly fraudulent, ussa mega debt-based, credit-bloated stockmarket,
        will will be cut in HALF in less than a week, from that old stand and true–it’s own weight.

        from it’s fed pumped-steroids, computer-driven, and last-minute sucker leverage-laden,
        top absurd tulip mania, of all time.
        but hey, never fear, maybe the bullshit can still run up further from here. so, 20k dji?
        hear hear.
        haha.
        can’t wait.

  • mario June 30, 2014, 2:37 pm

    On a more specific note, keep your eyes on U.S. manufacturing and exports. Besides any other weakness, this area is strong and getting stronger for many underlying reasons; strong political will now to increase U.S. exports, especially to China and that program’s rubber has hit the road; strong alibaba related with fresh push to promote U.S. brands in China. The tide of interest has flipped…its now much more a focus on selling to China than buying from China…think about it. Hence, as I am otherwise never stupid enough to post a guru tout: a good Chicago PMI coming tonight…we’ll see.

    • gary leibowitz July 2, 2014, 5:45 pm

      Chicago PMI, Pending Home Sales, Dallas Fed Mfg Survey, Motor Vehicle Sales, ICSC Goldman Stores Sales, PMI Manuf. Index, ISM Manuf. Index, ADP Employment Report, Gallop US Job Creation, Gallop US Payroll to Population.

      Yes these are clear indications that the prior -3 GDP number will be followed by a very positive number in this quarter. How anyone can ignore the fact that the economy is now showing momentum is beyond me. Fight the Fed, the trillions poured into the economy, the fundamentals, and even technical. The good fight has been going on for years. Crash at every corner, never using any economic markers to guide you. Yet I am the naïve one. No matter how you twist the story the fact remains that this is one hell of a mega bull run.

      I am worried that the tame interest rates will soon spike. I am worried that valuations are way ahead of itself. I am worried that the current run historically should end soon. If the debt burden was too great today we would have seen a completely different picture.

      I call it like the world sees it. When I look in the mirror I see trillions of dollars flowing my way. When most of Rick’s bloggers look in the mirror they see skeletal remains. All life ends sometime. To beg for that ending to already be here is not a healthy way to live. Relax, your day will come.

      Bottom line: Overburdened debt will always show up in the economic numbers. To assume its already here you will have to continue to suspend reality. Use your understanding of Macro economics with the daily fundamental charts, like you do on the technical end.

      If this advise and presentation is just another narcissistic view than I must stop this discourse to admire my image. I “see” the logic of my arguments as just common sense. Perhaps wrong. I have been in one heck of a long dream if that is so.

      Expecting the “Big One” when debt levels don’t seem to put a dent in the economic trend is not logical. Does Not Compute.

      * Only one sermon for this edition *

      • allen42 July 3, 2014, 3:30 am

        More wisdom from the peanut gallery.

    • mario July 3, 2014, 12:59 am

      Gary, I agree with the macro points you are making, and my view isn’t so much on the U.S. but on the Asian expansion which has a lot of fuel to it and thankfully will support some of the U.S. economy. You seem to be preaching always about these things and giving very little credit, to say the least, to the other devastating things on the other side of the story, those things are very real too. They’re not paranoid, conspiratorial imaginings, they’re well founded…

      I think in a nutshell that’s the briefest accurate summary of the war on this board fighting your view. I’d have to also add your apparent respect for politics. How can anyone respect that, not all but most of it is horrifyingly self serving, eh? The social benefits which are out there help a lot of people, but those are people who have been mostly screwed by a known reverse robinhood scenario, giving billions to rich bankers at 0% interest so they can play with it. Are they investing it? Only in assets, only in profits, not in people, not in society, not in the country. Are they sharing it with the workers? No. It is a nightmare. I repeat. The unfairness and expanding gap of haves and have nots is a nightmare of epic, unprecedented proportions.

      Cheers, Mario

      • redwilldanaher July 3, 2014, 2:36 pm

        It’s not a dream that you’ve been in El Garo, it’s an illusion. There is a difference for most that insist on thinking for themselves but for fraud-loving fools and useful idiots that arrogantly cheer on their evil masters, it seems to matter little…

      • gary leibowitz July 3, 2014, 4:18 pm

        Mario, you have it in reverse. My views have matched very well to the reality of the situation. I have stated all along that I think the end result will be as bad as most here predict. I am a realist. I deal in hard core facts. You don’t simply collapse the economy simply because of moral indignation. People have a habit of wanting to hold onto their life style. The notion that we can’t revamp this economy simply because someone looks at the debt burden and concludes we reached the limit. No drawn red line. Not that simple. The 5 year global support, with trillions more in debt, has allowed us to crawl back. In fact it is not impossible that we start drawing down the national debt in the future. That will take political will knowing Wall Street can get impacted. I don’t believe we will reach that goal. As for politics, please give me a better system. We complain while we sit comfortably in our living room with all the amenities given the super rich. Have we not gone thru these situations before? Have the same politicians gone from total abandonment of the public to total support? All cycles result in balancing the imbalance. How do you blame our system when it has been the people that have allowed this process to develop thru apathy.

        Go back and look at any of my posts. Very consistent with where we are today. In every single article I see there is a disconnect between the real economic activity and the one everyone wishes already happened. Why the obsession? The crash point has been seen every single day according to this blog. Has the wage component broken down? Jobs, unemployment, service and manufacturing? Are we not getting traction after 5 years? The unanimous view here is that it’s all fake until the people wake up and we have that deep depression. Not fake. Common sense. The only question all along is when will the debt burden cause fear and contraction. Not yet.

        Just match up my outrageous views from any article in the past few years against the mainstream bloggers. Which one has consistently panned out. I get reamed for being right? How ludicrous is that.

        As for my slant on social issues, its based on my life experience. Without help my family would be devastated. My 2 sisters and I would never have a middle class life. My father even with 2 jobs would never have survived taking care of us. Even with government assistance my mothers older sister had to drop out of work to help raise us. So please bare me the soliloquy on how the lazy good for nothing are destroying our country. If we had true fair taxation the government could easily balance their spending. I have stated from day one that we need oversight on the politicians pocketbook, rigid but fair rules that are enforceable. Flat tax, consumption tax are good ideas. That will certainly bring back some fairness to the system. I was one of the first here to bring up the disparity between rich and poor. I was one of the first to push for restrictions we had after the first great depression.

        Easy to sit back and demand our governments disbandment. Not easy to discuss how to built or rebuild. To dismiss our huge advancement for mankind these last few centuries is dishonest.

        Every thing said here is in black and white, right and wrong, all or none phrasing. Life is never that simple. Nor is the solutions. Easiest route is to dismiss and pretend its that way. How has that gone for the last 5 years?

        Please give me solutions. How should this and all governments have reacted after the mortgage debacle? Even if you advance the notion of doing nothing, what would have been the repercussions? How do we rebuild? How much longer would it have taken? How much worse would the citizens be? Finally to rail against this government while propping up China as absurd and bizarre as it gets.

        &&&&&&

        682 words, if anyone cares. RA

      • mario July 4, 2014, 2:45 am

        Hi Gary,

        I’m reading your thoughts and my reaction is its a mix of some obviously correct points mixed with impractical idealism. Difference in what we might call philosophical approach. I’ve moved to duality. I see both sides. Any rational person knows the Chinese govt rules in various situations with an iron, oppressive no questions dictatorial hand as it wishes. On the other hand, they’ve done a superb job of building a massive, successful society. Their series of 5 year plans are clearly laid out, managed and implemented. Now they are doing a massive expansion of healthcare across the society, deep into the 2nd, 3rd and 4th tier cities. Those the facts on the table, both sides, no political sensibility about it.

        Yes obviously QE prevented ruin and helped prop up economies, but the vast majority of that benefit reached a far too limited space. Its impossible for me to share your sense that words like “fair” are on the political table. You seem to write as if there is anything “nice” in the system and I don’t see where there is. Its more than been proven to be a wicked, corrupt, self-serving political system fausting illusion on the society. Note that the decline of American empire hegemony is very, very real, very much happening and much of the reason is the political system. Countries all over the world look at the U.S. politicians with well deserved disdain and massive loss of previous respect and admiration. Those without blinders on could only come to that same conclusion. Have you read Thomas Friedman, by the way? He’s brilliant, has no ax to grind, I think you need to.

        Cheers, Mario

      • gary leibowitz July 4, 2014, 9:40 pm

        Mario, a few points. First Tito was considered a benign dictator that benefited his country. Me, I’ll take my chances with elections where we can actually vote them out. Second, the notion that QE only benefited the rich is totally absurd. Low mortgage rates, ability to renegotiate terms, low interest means low debt payment. in fact the proof is in the numbers. This economy is not strengthening from the rich. Sorry but the real data states unequivocally that the middle class has more money to spend, and lower debt payments. Every single time I bring this up I get answers like the EU is buying the homes and propping up this economy. You all give ZERO credit to the massive world policy to spend to support the economy. Spend they did. the other silly argument was that we would never be able to stop the QE program. What happened to that discussion? Third and most important point is simply that this evil political empire was here for hundreds of years and had dozens of equally disgusting behavior. Do you really think this time is different? You would have to in order to expect it never to reverse. It has been worse and we have recovered each time. How many times in history did we declare the four horseman, Nostradamus prophesies, and gods punishment? Are you really suggesting this time is worse?

        So your single most complaint about me is my lack of anger over the current situation? If I lived 1,000 years I would be a total emotional mess with the huge ups and downs. Sorry but I don’t believe its very constructive. In fact it is the exact opposite. Carrying a rigid defined emotional torch accomplishes nothing. Ever hear of the religious wars? need I say more?

        But lets pretend your outrage is greater than all of histories atrocities. How evil was this government to allow millions of Jews to be slaughtered? How evil was this country to us the atomic bomb on hundreds of thousands of women and children? Not once but twice. Not even out of self defense? Not even invading our soil. Where is your outrage? Everything can be justified. I am sure I will hear it good and plenty. that’s my point. But you go ahead and demonize everything this country stands for because greed and selfishness ran amok. After all its a Black and White issue.

        In the end though as Rick tallies my word count, not one person is answering my questions point by point. Perhaps that’s the single best reason why you are shocked we lasted so well these last 5 years. Debate and discuss. Mario has attempted that. Where are the others? I would love to be shown to be wrong to help me prepare for the immediate future. Any little bit helps.

      • Redwilldanaher July 5, 2014, 4:52 pm

        As the great Ted Knight once said: You’ll get nothing and like it.

        You’ve spent 5 years ignoring everything that dozens of people have provided to you. Now you complain that no one is addressing your “points”.

        Case closed.

      • EVIL VLAD July 6, 2014, 1:42 am

        I will seriously and quickly answer your communist ‘points,’ leibowitz.

        very simple.

        you are a communist. but the few regulars here–despite being divergently different–
        are ALL DIEHARD CAPITALISTS (with many of us few, being laissez-faire capitalists),
        that loath and detest communist re-distributional scumbag liberals, like yourself.

        So, bottomline, we each could not care less, what you think, or say, about anything.

        and 5 years of trying to reason with you, has only made you even more marginalized,
        that even ackerman has reduced his retorts to you, to only counting your lengthy words.

        NO ONE HERE CARES WHAT YOU THINK, ABOUT ANYTHING–when will it sink in.

        so now I leave it you to red, to tear you a new orifice, yet again. he seems to like it. ha.

      • gary leibowitz July 6, 2014, 5:46 pm

        Red you are correct that I have voiced these points from day one and I am still looking for a debate. From day one all I get is a droning monolog of fanatic visions of a barren landscape. This is a site that projects your own views of the world. You admire it, and dream of the day that you no longer have to use it. You also refuse to acknowledge that your assumptions have already been proven to be false. It takes a more complicated conspiracy theory to allow you that luxury of pretending your original views are correct. When I try to dissect these theories I get one liner answers or a whole diatribe of evil police state slogans. All I ask for is an honest debate without an emotional sidetrack. You can’t keep pretending your world view is correct when the rest of the world denied it these past 5 years. You must adapt. My view, at least on the surface, appears to have come to pass. Yours has failed. Our both views are that the debt situation is just too great to crawl out of. So please tell me why I am a pariah here? Perhaps I stand out as a naïve person of reason? Perhaps the world deception I live by these last 5 years can be explained? I have waited but all I get is one sided stats with one sided conclusions. 5 years and the singular shouted voice from this site can’t answer simple questions without reverting to a mysterious massive conspiracy with no real blue print. Show me the beef.

        A blog should be used to expand minds and ideas, not to solidify ones own view with repetition and bouncing echoes of ones own voice.

      • Redwilldanaher July 6, 2014, 8:33 pm

        As usual Rick’s word count will be more interesting and honest than anything you’ve ever written, especially the latest doozy…

  • mario June 30, 2014, 2:02 pm

    Just know that whatever nasty surprise is coming is not coming in the form of nasty Chinese economic weakness. Take that one off your “top 5” list. And so what’s left?

    I still say that “something” is limited to a meaningful rise in interest rates, the key disaster catalyst in a world of insane debt, caused by that “something” we don’t know. Until then, the status quo including the unquestionable shift in economic balance of power from west to east, could linger and linger and linger…

    Cheers, Mario