Weekend update

REVIEW

The week started at SPX 2707. After a dip to SPX 2699 on Monday the market rallied to an uptrend high of SPX 2725. On Tuesday a quiet open led to another uptrend high at SPX 2739. After that the market started to pullback. After dipping to SPX 2724 on Wednesday, it declined to 2687 on Thursday, and 2682 on Friday. Then the market rallied to SPX 2708 in the afternoon. For the week the SPX/DOW gained 0.15%, and the NDX/NAZ gained 0.55%. On the economic front the sparse reports were mostly negative. On the downtick: factory orders, ISM services, and consumer credit. On the uptick: both the trade deficit and weekly jobless claims improved. Next weeks reports will be highlighted by the CPI/PPI, industrial production and retail sales. The ECRI continues to rebound after hit a low of -6.5% about a month ago.

LONG TERM: uptrend 80% probability

We have been tracking and commenting about the foreign markets for the past several months. This week most made new uptrend highs before getting caught up in the US pullback. The Nifty (India) joined BVSP (Brazil) in its third wave up from their 2018 low. They are obviously slightly ahead of the rest of the financial world having bottomed early.

In the US the long term count remains unchanged. Super cycle SC2 low March 2009. Primary I high May 2015, and Primary II low February 2016. Major wave 1 high October 2018, Major wave 2 low December 2018. Intermediate wave i of Major 3 should be underway now.

MEDIUM TERM: uptrend

We have also been tracking five criteria to determine if this uptrend is a B wave rally, with a retest of the December low to follow. Or, the December low ended the bear market and this uptrend is the first of a new bull market. The five criteria we have been tracking: length of rally, wave structure SPX/DOW, wave structure NDX/NAZ, the percentage gain of the advance, and the NYSE percentage level of stocks above their 200 dma. Over the past few weeks 4 of the 5 have turned positive. The reason we have a long-term 80% uptrend (bull market) probability.

We are still waiting on the SPX/DOW to quantify five waves up from the December low. We now have four waves and a possible fifth wave rally underway from Friday’s low. Should the market continue to rally, and make new uptrend highs, that would seal the deal. If the SPX instead drops below 2520 before making new uptrend highs, the uptrend would be considered a three wave zigzag, and a retest of the lows would eventually follow.

SHORT TERM

For the past few weeks we have been posting what we have called a squiggle chart. It displays all the quantified smaller waves of this uptrend. It ran into a little turbulence on Friday, and in its place we post a simplified hourly chart of the SPX. This represents our quantified short term count. A rally above SPX 2708 would be a positive.

With the three day decline into the end of the week SPX 2739 now looks like it ended Minute iii right in the OEW 2731 pivot range. We had reported on that pivot being a potential short term top on Wednesday. The Thursday/Friday decline has quantified as a Minute wave iv. Now all the market has to do is get back to SPX 2739 and we have a quantified impulse wave. We noted the importance of SPX 2520 in the previous section.

Short term support is at SPX 2682 and the 2656 pivot, with resistance at the 2731 and 2780 pivots. Short term momentum formed a positive divergence at today’s low then ended the day nearly overbought. Best to your trading!

FOREIGN MARKETS

Asian markets were mixed on the week and gained 0.2%.

European markets were mixed as well but lost 0.8%.

The DJ World index lost 0.5%, and the NYSE lost 0.3%.

COMMODITIES

Bonds remain in an uptrend and gained 0.4%.

Crude remains in an uptrend as well but lost 4.6%.

Gold is also in an uptrend but lost 0.3%.

Bitcoin is in a downtrend and lost 0.7%.

The USD may be back in an uptrend and gained 1.2%.

NEXT WEEK

Wednesday: the CPI and budget deficit. Thursday: weekly jobless claims, retail sales, the PPI, and business inventories. Friday: industrial production, export/import prices, the NY FED, and business inventories.

CHARTS: https://stockcharts.com/public/1269446/tenpp

Added the DJ Utilities to the Charts, and moved the VIX to the last page.

About tony caldaro

Investor
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665 Responses to Weekend update

  1. Lee x says:

    Hey Tony
    Almost 80 handles since your cheap long.
    Nice job sir !

  2. A Young says:

    What’s the target of Intermediate wave ii of Major 3?

  3. phil1247 says:

    i need to see a burst thru 2765 es target
    and 2767 upper boll band
    to prove that this is 3 of 3 straight up
    and not nearing the end of any wave

    thats my story and i m stickin to it

  4. phil1247 says:

    ZB

    bonds remain a short but near potential bounce area

    tight leash on bond shorts now

  5. Sticking with the simple count til it’s not. This is wave 3 of 5 to finish minute 5 . 2760 is the 1.618 of wave 1. Over that then 2x wave 1 at 2778. Then a small pull back and then up to 2789 to finish minute 5. Looking to finish minute 5 this week or Monday. Then down we go.
    Good luck all

    • Trying…that is what I am looking at as well. Maybe a disappointing statement out of China on Friday China time zone, with a pullback on Friday our time, for a micro wave 4 pullback and one last hurrah rally next week.

    • xEVAx says:

      IF a BULL I think we are still in 3 and this is only 5 of 3 with 4 to come and 5 UP to 2835-2875 or even new ATH’s…. I’ve been waiting to get here and we’ve arrived =) My original forecast was 2777 last week but things took longer…. Still think we see it today/tomorrow then down to 2656 and fill the gap…. Then up in the blow off, gotta scam it up high enough to hold 2675 (was 2575) for wave 2 down then start 3-3 of 5 of major 1 of PV….. 2763-2777 is the upside target by the end of the week, GL

      • xEVAx says:

        This is the scenario I’ve been watching, the labeling isn’t perfect but you get the idea….. It’s the gov gone wild, Venezuela count….

  6. phil1247 says:

    Asa

    RE : why use this extension

    this is why i re bought near 41 ….. the 38 special of agg ext long…
    as described i was afraid it would run away
    and not trade to the lower levels

    • gary61b says:

      Morning traders, Still looking for the spx to give me a nano iv of micro 1 of min.V? The ES overnight pb does not look as its going to be down at the open.. plus 2739 or 2735 would not be enough for the spx to count as a nano iv. So higher we go then possible a pb for spx and ES that is near 15 points?

      • phil1247 says:

        gary

        i asked prudence what i should do here….

        she said ….

        take profits at 2753 es
        and wait for the open
        when you can put in a stop 😉

      • phil1247 says:

        gary .
        there was tremendous potential support at es 2747

        and you see that there was … nice bounce there
        that is my key focus for straight up or not

      • So Gary, your looking for a monster minute 4 then. Wow. Could be. Round numbers for that would be.
        Micro 1 2782 100 points
        Micro 2 2732 .50 retrace
        Micro 3 2882 1.5 of wave 1
        Micro 4 2807 .50 retrace
        Micro 5 2907 1 eauals 5
        That’s a monster. I know I’m being repetitive but this to me is all buy the rumor of a govt shut down deal and a China tarif deal and sell the actual news on Friday or one last ramp on Friday. We shall see.

    • Yes you were right…I was going to mention your 38 special….you mentioned that last night. I did stare I had a bullish bias……I think the news of Xi joining the talks is very bullish for stocks until Friday, when our team is scheduled to come home. There should be some type of announcement/ statement on the status of their meetings.

    • Phil, today’s gap and your 38 special are on top of each other…that could be a magnet. Gary, does your “volume charts” support this level? Also, Phil, this 3 point rally off the overnight low, could be wave “b” with another leg down, wave “c” to test your 38 special and fill the gap..nice and neat just what the market likes to see.

      • phil1247 says:

        asa
        are you talking about 38 special at es 2741 ? on this old chart

        that was last nite and has changed
        i have a new chart now
        if we go down to there now
        there is no way i want to buy

        it needs to go straight up now

        • Talking about my/DH chart I posted. Your 38 special would line up with the gap. /ES had a nice run a pullback to 2744 doesn’t invalidate a larger extension long. Especially /ES trades that level and /VX continues to decline to it’s profit target.

          • phil1247 says:

            i see asa
            this is where i disagree with davids way ………..
            there is too much risk for me
            thats why i use the most aggressive draws…….
            to get me out fast
            below 2747 es and i lose interest in longs
            below 2744.5 ………no interest at all

    • travis01 says:

      I agree with you, but since not held overnight and SNP looks to open at 2751 I am sitting out until I see something. 61.8% is just 2-3 points above expected open.

  7. I should note that /VX supports my bullish analysis for /ES and equities in general. In the overnight session, /VX tested and defended, like a brick wall, it’s 61.8% SHORT at $15.81 which is bullish for equities. Note the inverse relationship between the two index’s. The profit target of the /VX short is $15.26. If /VX trades to it’s profit target that would be a new lower low which would rally equities to a new higher high. Note, DH chart and his analysis.

  8. Good morning all. As a follow up to last nights post, /ES rallied beyond the profit target I mentioned last night. Therefore, /ES continues to trade in extensions..rally. If you look at last nights post, the low anchor remains unchanged and the high anchor is the overnight high.

    I expect /ES to decline into a new 50% long at 2739.25. Last night I projected the 50% long at 2740, off by only 3 ticks, close enough….and rally off that level (high probability). If /ES trades below the 61.8% long at 2735.06 I expect additional decline (low probability). My analysis calls for additional rally before micro wave 3 completes, therefore, I continue to trade with a bullish bias. Note DH chart..

    BTW, IMHO, if 2735.06 breaks, there is a good chance that Micro wave 3 completed at the overnight high and SPX is trading in micro wave 4 of minute wave V of minor wave 1. Don’t want to get ahead of myself here because the chart is trading bullishly and it’s a long way down from current levels to break the 61.8% long at 2735.06.

    • Hard to say, I know, but ASA/Phil, do you believe that the risk:reward is more to the upside or downside?
      Or do you position long above /es 2753.50 and maybe short bias below that?

      In a bull market, it is hard to go against the trend, but those falls from grace can be swift (especially if topside is limited).

      • Stock…I plan to stay in cash and day trade until we get close to completing minor wave 2, then I start scaling in (perhaps starting around phils 38 special ..that would be 38% retrace of minor wave 1). Don’t mind taking heat at that point if, on deck is minor wave 3. I have enough gains this year to offset and heat I might take waiting for minor 2 to complete.

  9. xpto31 says:

    Good morning Tony, according to the count of the graphs we are finishing the wave minute V and minor 1 ??

  10. Uncle Sam says:

    S&P Futures Update – 02/12/2019
    https://mktcycles.blogspot.com/

  11. vipulm555 (buy the fear) - Risk On says:

    Not able to post, not sure why

  12. torehund says:

    Ssec starting to squeeze, good sign to say the least….

  13. fionamargaret says:

    https://northmantrader.com/2019/02/12/macro-frost/

    https://www.iris.xyz/

    Thanks Northman Trader and JPM……no Kimble or RJ.

    Thanks Tony

  14. Good evening all. As I write this post, /ES futures are trading at +8.50 at 2752.25. It’s fairly obvious that /ES will rally to the profit target at 2754.25 in the overnight session. The open question is, will /ES trade above the profit target by more than 4 ticks, if yes, ES will trade in extensions….bullish as/ES will continue to rally. If /ES trades to the profit target but does not exceed it, I expect /ES to have a pullback and test a yet to be determined, a 50% long at approx 2740 (need to see the top before calculating the 50% long). As always., in full disclosure…DH chart and my analysis.

    Bottom line…conservatively…./ES 2736 bullish above and “bearish” below.

  15. lunker1 says:

    Tony did the 14 point drop on Monday quantify as a wave?

  16. NYSE A/D line is about a net 2,000 advances from making a New High.

    As posted two weeks ago, the SPX A/D line already has made a New High.
    At the time, the SPX was about 100 points lower.

    Price is now simply following.

  17. rd3777 says:

    7 waves up went short at close with stop at 2754

  18. my 2 cents on the spx

    • the angle is expected to be consistent…but last low was way lower than previous lows….thats while angle+timebox=measured move is to be expected to finish below ath

      • fionamargaret says:

        I am glad you stayed Alexey….if you want someone else to discuss variables, or basically anything with, Joseph is your man. x

  19. So, the unemployment rate has dropped from 10% in 2010 to 4% today…. and yet the NY Fed said today that there are a million more “troubled borrowers”…. a record 7 Million Americans who are 90 days or more behind in their auto loan payments.

    Not a good data point, especially since your car is what gets you to and from work in most areas of the Country and in some cases, is usually a higher-priority than a home mortgage payment or rent.

  20. cj32 says:

    Cr. to CBZ

  21. Dex T says:

    Ok Blueh, I’m back.

    Saudi Arabia says has ‘nothing to do’ with Bezos-AMI dispute

    “In a blog post, he alluded to Saudi Arabia’s displeasure at the Bezos-owned Washington Post’s coverage of the murder of its columnist and Saudi journalist ”

    https://www.reuters.com/article/us-people-bezos-saudi/saudi-arabia-says-has-nothing-to-do-with-bezos-ami-dispute-idUSKCN1PZ0BG

    • Dex T says:

      So will the Saudis take down Bezos?? Will there be a Jihadist team sent to Seattle in t the near future?

      • gary leibowitz says:

        If we condone murdering the press, or should i say chopping them up, we can certainly accept getting rid of the owner of most hated newspaper of all. The ease at which this country accepts such crimes should be startling in it’s conclusions. BUT today we are numbed by it and treat it as normal. I guess I am just an alarmist.

        We have till end of week till Mr. Chaos strikes again.

      • fionamargaret says:

        It is a dangerous game and Bezos is laying himself bare….

        • No Bezos is doing the only thing he can do, fight back. Did you expect him to force the Wash.post to back off of story? You either believe in a free press or live like the Russians, accepting brutal behavior and keeping your mouth shut. The Russians had a short window to convert during Gorbachev reign. Instead they decided democracy was too hard. We are now doing the exact opposite, finding it too hard to fight government corruption.

          Perversely the only thing people will revolt against is lying about getting more from your tax returns. The great revolt will only be from failure to reward financially. Converting our democracy into a dictatorship was never a problem. Just Keep the Masses happy.

  22. wonder if the 1:30 buying frenzy can take SP up to 2760 today

    • gary61b says:

      I was thinking ES wave 3, 2746 down for 15/20 then up to 2776 to end wave 1 of V?

      • IDK. I was thinking this this minute 5 wave would be short. Minute 1 was like 5 days. So im thinking 2760-2738-2776 and thats it for minute 5. then down to 2550 area. will see. looking to short 2760 either way. Good luck Gary

      • I guess we’ll find out tomorrow in Tony’s update. IMHO, not that, that matters, I think we are trading in micro wave 3 of minute wave V of minor wave 1.

        • phil1247 says:

          exit at es 2747
          target hit
          what wave is it ?

          dont have a clue asa

        • Minute 1 was like 5 days 174 points. 5th waves are typically the weakest. they get all the bears to switch expecting the 5th wave to extend like wave 3., but it doesn’t. So we shall see. again Im simply comparing it to minute 1 which was just 5 waves up.. No micro or pico waves. still expecting 2760 before any pull back.
          See ya all tomorrow

          • trying….to add some color to your call….common relationships between wave v and wave i are 50%, 61.8% and 100%. Wave i was a PWG/PPT ramp, it counts but was it distorted? I am looking at the 61.8% and Tony’s pivots at 2780 – 2798…in the same area.

            • So, .618 of minute 1 is 107 points.
              2682 plus 107 is 2789

              Wave 1 of this up move was 38. Wave 2 to 2602. So if this wave 3 is .618 that’s 2760. If it’s 2x then that’s 2778. With wave 4 down and 5 up to 2789 Tony’s pivot and end minor 1. Think we still go higher tomorrow, but the end is coming sooner than later for minor 1.
              Will see, it’s just how I’m looking at it. I don’t see this lasting weeks and subdividing, but yes it could, just can’t see it.
              Have a good night

              • Conceptually that is how I am playing it. But I will let the market tell me/ give me clues as to it’s true intentions, meaning a subdivided third wave or a 23.6% – 38.1% pullback of micro wave 3 for wave…then I know the SPX might be close to forming a top for micro eave 5 of minute wave V.

  23. vipulm555 (buy the fear) - Risk On says:

    Needs CPR

    Cheers!

  24. Tony is looking for SPX/DJI to make new uptrend highs to confirm a new bull market. Well, the SPX got it done this morning. DJI needs to exceed 25439 – 70 Dow points to the upside from here.

  25. A Young says:

    Negative divergence in RSI and MACD as S&P is climbing higher.

  26. lml25 says:

    LML25:Lots of theories why the markets are rallying today.One,from ZH is this headline:
    “Stocks Surge As Senate Intel Committee Confirms “No Collusion” ”
    Other possibilities,traders front running China talks,PPT going full throttle to prevent the chance of any kind of pullback.
    But the ZH story would eliminate an impeachment scenario,if Mueller agrees.
    Meanwhile,Brooks says,”We’ve never had 7 straight weeks up in the past 20 years.I’ve bought puts,for the same reason I bought calls at the end of December–stretched markets.”
    He’s still looking for a lower close Friday than Monday’s open.
    Later all.

  27. stockwaves says:

    BA states global stock allocation in February is lowest since 2016. Also, the most crowded trades are being long emerging markets, long U.S. dollar and long FAANG + BAT stocks.

    https://www.bloomberg.com/news/articles/2019-02-12/traders-with-515-billion-boycott-stocks-for-cash-despite-rally

    • No idea where BA gets their data. Its hard for me to believe that BAT or China trades are crowded. Hardly. People are scared and waiting for an all-clear sign.

      Global asset allocation small, and cash big? Seems to me that is exactly what you want to see if you want taller markets. Who will push things up if every chimp from Alabama to Shanghai is already in?

  28. Lee x says:

    pla·gia·rism
    /ˈplājəˌrizəm/Submit
    noun
    the practice of taking someone else’s work or ideas and passing them off as one’s own.

  29. Q1-2019 earnings growth consensus is now in slightly negative territory at -0.2%
    Last April, the estimate for Q1 was over 10.0%

    The same thing with Q2, having started out at over 10.0% growth and now at +3.6%

    Q3 is currently at +3.1% and Q4 at +9.5%. The comps to last year are obviously quite dramatic. (+26.6, +24.9, +28.4, and currently Q4 estimated at +16.5%). – – – Hence, the earnings “recession” that I was posting about several months ago.

    In terms of forward guidance, Companies lowering guidance for 2019 have outnumbered companies raising guidance by 2.6 to 1. – – – The worry is that the downgrades to forward earnings growth estimates is not finished… and will continue.

    What makes the above “tricky” is that negative guidance is not necessarily a market negative, given that there is historical evidence that this type of negative guidance set up can be bullish for the stock market in the near-tern, once earnings season comes to an end.

    But here’s the rub…. If you look back in history when earnings went from positive to negative, even if only for a quarter…. the performance of the market has been quite weak.

    Since 1969 there have been 14 prior periods when earnings inflected from positive to negative. And in all cases except one (1984), there was a fairly meaningful drawdown by the S&P 500 in the 5 quarters spanning from the quarter prior to the inflection quarter to 4 quarters after the inflection.

    9 of the periods occurred around economic recessions, with the avg. max drawdown being – 25%. The other 5 were not associated with economic recessions, and the avg. max drawdown was less, at – 15%.

    Was last quarter’s near Bear Market sufficient to price in the possible dip into earnings negativity this quarter?

    Depends on if we are heading into a Recession in the next year.

    Going all the way back to NBER data from the 1850’s…. the current economic expansion is #2 on the books for being the longest, with it becoming a record expansion if it can get to July of this year.

  30. elmer510 says:

    Above 2738 and a quantified 4th wave for Tony.

    That’s great cause now we are on track towards higher highs and a lasting bullmarket .

  31. FWIW I posted this Alternate Irregular Bear Cycle ABC chart two weekends ago in my service. Starting to take shape that 2018 was an ABC Bear cycle culminating with final lows in December obviously… we shall see

  32. gary61b says:

    /CL anyone else have 54.20 as a top in crude before a drop to 50?

  33. phil1247 says:

    detailed es futures analysis ( fundamentals based )

  34. phil1247 says:

    ZB …..

    bonds still a short until proven otherwise

  35. Anthony Saraniti says:

    Good morning all. With the overnight ramp in the futures, /ES is currently trading in extensions. In English, this means as long as /ES stays above the current futures 61.8% setup at 2720.11, /ES will continue to rally. Conversely, if /ES trades below a 61.8% setup, additional decline is expected, and will test a lower technical setup.

    In our current setup, if ES stays above 2720.11, additional rally is expected. There are 2 immediate targets on the chart, one is last weeks high.

    Bottom line /ES 2720.11… bullish above and “bearish” below.

    • schizo1688 says:

      thanks anthony,

    • lunker1 says:

      thx DH for chart

      • reminder to all…100% of these charts are from DH’s website. The analysis is based upon his work in trading one particular algorithm…which dozens of his disciples and rogue traders use. Phil and I can look at a chart make a video on the analysis and if would closely match DH’s wording. …that’s how straight forward…cut and dry…this analysis is. I have given DH credit many times in the past, thought that was crystal clear to all. I’ve mentioned this fact to all, at nausea.

        Lunker1…is this enough of a credit?..or should I expand upon this….please advise….

        • lunker1 says:

          Do as you see fit but convention is every time can you post someone else’s work you mention it where it came from.

          Chart and analysis from EminiAddict.com

          • aahmichael says:

            That would be a violation of Tony’s rules as he absolutely forbids anyone from coming here and promoting someone else’s subscription service. You, of all people, should know that.

    • Hey, ASA.

      I meant to ask you if you checked SPY or SPX yesterday for your 50% measured move long setup validation.
      Sometimes, due to overnight values, /ES could provide funky pivots that do not correlate to the SPY or SPX.

      Just curious.
      Thanks,
      TA

      • Stock…occasionally I do…. but I work off DH’s charts for /ES and /VX. IMHO, all the index’s follow /ES. I do my own work from there for QLD, SSO and SPXL. I incorporate EW into this analysis as well.

        I don’t day trade SPY, I use it as a swing long position only and SPX doesn’t really come into play for day trading purposes or at least I should say, I don’t use SPX as a day trading tool because the large traders use /VX and /ES.

        Hope this helps.

  36. $.87 Hamburger Fries 1953 $595 Down 4 bedroom home $10,500 Yikes ! Hyper inflation coming predicted by experts .. part 1 only

    1953 1954 = 2019 Today

    End of video show home prices Fresno Ca grew up there ..

  37. alexhartley1 says:

    Scottycj1 (and anyone else) – SPX still on track cycle wise moving up into the 14-15th for a short term top. Then down into the 22nd. Given what pre-market futures are doing looks like we’re now in a small wave 3 of Tony’s wave ‘v’ (I’d imagine these small waves 3, 4 and 5 of this wave ‘v’ will complete this Thur-Fri this week. It could always extend but doubt it).

    • alexhartley1 says:

      OPEX and some form of resolution to the ‘Border Wall’ issue (good or bad) around the 14-15th make it an interesting juncture for the wave ‘v’ to end perhaps before a reasonable drop.

    • scottycj1 says:

      Alex
      I thought when the 240 min Algo went sell it would take the whole market down….it usually turns it 80-90 % of the time. Not this time. These last few months have taught me to only trade of the daily Algo for direction. I was looking at the 15-18 as a low. Looks like im inverted.

      • alexhartley1 says:

        In this instance I think so. After a high on our around the 15th, cycles point down into the 22nd. I think we’ll almost certainly be lower than where we are right now.

        • alexhartley1 says:

          The 94 TD cycle tops today but it does have +/- 3 Ds around so could easily still continue up into the 14-15th. It has apparently been in the markets for around 4 years now.

  38. lml25 says:

    Ira and Brooks still bearish,for reasons stated before.We’ll see if they sell the rally in futures Tuesday.G’night all.

  39. Uncle Sam says:

    S&P Futures Update – 02/11/2019
    https://mktcycles.blogspot.com/

  40. purplember says:

    futures up 15 guessing due to budget deal looks promising but it still has many hurdles for approval

  41. stockwaves says:

    What do people think about futures being lower after market almost every day now.

  42. Good evening all. As a follow up to my posts last night and this morning, My analysis calls for /ES to test it’s 50% measured move long at 2701.13 before it rallies in minute wave iii. Today’s low was 2702.75. One might think I am splitting hairs…. this algorithm only allows for 2 ticks to be considered filled. So we did not test the 50% long today.

    If you look at the chart closely, there were 2 micro 15 minute shorts that traded today @ 2712.13 that should have lead /ES to 2700.13, it did not, at least not yet. I expect a/ES will test 2701.13 in the overnight session and rally off that level. This analysis is invalidated if /ES trades below 2696.32 (/ES will decline further) or above /ES 2725.43 (will rally to a first target at 2731).

    Bottom line /ES 2696.32…bullish above and bearish below.

  43. chrisk44342 says:

    It is interesting, but the one thing this article and the many similar ones i have read is the concept behind the fed doing it in perpetuity. On one hand they identify the possibility, then ignore it in the rest of the article. I understand the rant and frustration, but if you see the obvious conclusion, why for God’s sake are you not playing the game? Sitting around 10 years and watching the market fly by is not going to help your peace of mind, that’s for sure.

    • mcgcapital says:

      I think it comes down to what price is doing.. when liquidity is plentiful, risk premia are falling and markets are rising then balance sheets being expanded and debt being accumulated in the background doesn’t matter so much. When that changes and momentum is lost, it can be very dangerous. That’s where we’re at for me.. I’ve not liked how this all looks for about the last 5 years, but went with the flow until things changed last year and it became obvious momentum was being lost. At the moment central banks are caught between wanting to normalise and pull away, and not letting the system collapse. Whilst more intervention is possible, they aren’t making solid plans for that yet which suggests markets would have to fall more to bring QE4 in as an option. Then on top of that you have most people acknowledging that intervention has distorted things and increased wealth inequality, which is driving populism and some of these wacky ideas from the left that are coming into the mainstream. I’d prefer it if they stepped away completely as I fear that if they don’t, capitalism won’t survive. It would be better to have a proper credit default cycle and all that goes with it than constant intervention until the time when the left control everything and the system implodes anyway

    • christ-
      Right, buy the dip.
      Problem is, if the FED is so afraid of raising rates, maybe investors should be somewhat afraid as well?

      Like maybe there’s a flash crash if the offing, some stinky landmine out there, somewhere.

      Here’s one glaring example of a problem.
      Raw material values are not keeping pace with stock values.
      Meaning that, many leveraged loans collateralized with raw materials are probably well underneath coverage levels stated in the covenants.

      Also, I recently applied for a new Construction Mortgage for residential property.
      I was surprised to find that 90% loans (10% down) are the norm again.
      I thought that stopped in 2008 … because … that’s what caused the 2008 crash.
      Hmmm.

      I have no idea where this is going, except I know that the FED is in the business of alternating happy-talk with ambiguity.

      Caviat Emptor..

  44. purplember says:

    mcg interesting read

    • purplember says:

      mcg interesting read

    • I wonder how true it is…(yeah, I know; just a TV show, but one has to wonder)”
      On Mr. Robot, it was commented that during the Great Depression, FDR had “Stress Tests” done to reassure the populous and economy. All that was fake.

      Weren’t “stress tests” done in 2009-2010?

      On a side note:
      QE was easy money, low risk for banks.
      If there’s QE where you can invest in the market vs. people, why not?
      It became habit forming and the low risk led to more speculation.
      Wonder how many of these banks are leveraged on this free money where any market drop is killing them. Therefore, the whining that QT and market correction/recession (which is always needed to normalize things) is no good.

      IMO, they should have let it all fail to begin with!
      Too big to fail = sloppy and risky business practices and poor management/R&D, etc.
      Where is TBTF for Sears? for Woolworths? for Circuit City? for Sports Authority? for any other countless number of failed businesses/models?

    • fionamargaret says:

      ..it certainly lends credence to my having TLT quite a bit higher…143 in fact…I know….
      BUT when I suggested TLT going much higher previously (and wondered why) it went up to 134.
      Funny about numbers…same… but different order.

    • scottycj1 says:

      Maybe the only way out is thru “JUBILEE”

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