Poised to pop *again*......SPX edition.

[punisher]

Damn, man! You timed the turn *perfectly*.
Hope you made out okay.

That's what it looked like, one after another were gunning for ATH stops, and wouldn't let go till there, though my call was more of a "hope" since I have 2 ES longer timeframe shorts in the red and can't stand looking at these ATH. Could have exited them at BE at the days lows... but it's history now.

On my DT I ended with a loss. Picking the tops I tried small stabs short twice that got blown (violating my own stop on the 2nd and of course was stopped at the top tick of the day), the third stab short worked out (and halved my losses) but I was out at 38.50. Who would expect that the strong trend up turns into a good sell off? Later in the day I played from the long side, 2 losses and 1 win so ended up increasing my total loss, but I should be happy overall that I was nimble (or scared) enough to flatten my longs there quickly (instead of holding on to them stubbornly as I often do) as that sell off was strange enough to me (after strong push up and seemingly no news/catalyst for subsequent sell off of that size) that I was worried about the flush that may come below 22 handle, and it did.

While seeing that recovery at the end of the day makes me wanna puke and it doesn't bode well for my longer time ES shorts from PA perspective, if there is anything "positive" I can take from yesterday's action is the psychological aspect of it that at least "they" (as Bush Jr would say: We don't know who "they" are, but we sure know that "they" are there...) they started talking about the fact that some valuations are based on momentum not logic which, perhaps, will make some folks now think twice before stupidly buying. I also "hope" that some fund managers have a weekend to think about it and come next weeks decide it is the time to take some chips off the table, but as Paul Tudor Jones would say, you don't want to be "wishing/hoping" when in the markets...

 

[punisher]

Actually, the opposite in Japan -- and again, no rampant or totally uncontrolled printing of money. I wonder where it is that you think you're going with this...

they have been printing now for what 20 years or so? First 15 years did nothing. Now they print and buy everything they can, they own almost entire bond market and even buy stocks if I'm not mistaken...

QE might (and I mean "might", not "will") work when you're the only CB in the world doing it. That's why for 15 years it didn't hurt Japan. But now it is truly a race to zero worldwide. Printing get's you nowhere, ZIRP gets you nowhere, so the last resort is to devalue currency and guess what, everyone is trying to do that too... CBs are supposed to worry about price/currency stability, but it starts looking like they want hyperinflation, as strange as it may sound, as it is the only thing that could undo what they've been doing for a while.

 

[tommcginnis]

"Blah blah blah, inflation and growth not as strong as expected, continue to monitor changes, etc." SPX++ from there.

It'd be even more awesome if they didn't actually hike, completely throwing everything off expectation wise.

That's a scarrrrrry, scary prospect. I'll admit I haven't studied up on the balance between Fed policy goals and realized data this time around, but I'm light light on Jun16th only, and for Jun30 (the next SPX expiry that meets my own criteria), have targets for up-jumps and down-drafts. I'll have a light finger on Wednesday, I'll tell ya. (Til I know more, I guess.)

 

[tommcginnis]

they have been printing now for what 20 years or so? First 15 years did nothing. Now they print and buy everything they can, they own almost entire bond market and even buy stocks if I'm not mistaken...

QE might (and I mean "might", not "will") work when you're the only CB in the world doing it. That's why for 15 years it didn't hurt Japan. But now it is truly a race to zero worldwide. Printing get's you nowhere, ZIRP gets you nowhere, so the last resort is to devalue currency and guess what, everyone is trying to do that too... CBs are supposed to worry about price/currency stability, but it starts looking like they want hyperinflation, as strange as it may sound, as it is the only thing that could undo what they've been doing for a while.

Not so much for Japan, but the USA and EU have turned the policy uncertainty from "How much more will they do?" to "How much less?" Greece, FWIW, still lingers out there for the EU, while Portugal, Italy, and Spain, have taken strides in stability -- The US is looking pretty good. The EU has found their PIGS have lost PIS...... And banking/finance globally... look better all the time. (I'm not saying *good* -- but "better" all the time.)

 

[punisher]

Not so much for Japan, but the USA and EU have turned the policy uncertainty from "How much more will they do?" to "How much less?" Greece, FWIW, still lingers out there for the EU, while Portugal, Italy, and Spain, have taken strides in stability -- The US is looking pretty good. The EU has found their PIGS have lost PIS...... And banking/finance globally... look better all the time. (I'm not saying *good* -- but "better" all the time.)

I respectfully disagree. Nobody talks about PIGS as it is an old news.
Greece is a long term problem that needs to undergo structural and cultural change (from do nothing and consume EU funds to work hard to make a living). Italy is one big mess, not only their banking system is shot (they need to capitalize their banks and the state is about to do so) but worse, the political system needs to be torn down and fully rebuild and the deal to do so just collapsed about two days ago. Spain, let's just simply say that with 20% unemployment you can't expect anything positive there.

While some CBs talk or think about taking off the stimulus it is not because it worked or did any good. Quite contrary. It didn't work so they need to wind it down to have some dry powder. Look beneath the surface and tell me where do you have improvement in US? At 4.2% unemployment rate you don't have any inflation, consumer's spending is weak despite record consumer debt levels. OK, it is better than a few years ago but it simply can't get any better from now on. If there was 7-8% unemployment and lower consumer debt then yes, there would be some potential. Now the Fed can't do anything else than (at least slowly) remove stimulus hoping that it will convince others everything is getting better. That way they can buy some time (couple of years at the most) before everyone realizes there is no improvement. If they were to stop "normalization" that would be admitting to failure and would spook the markets. Then their only possible weapon would become helicopter money.

Some people would say, that if it wasn't for what Fed did in 08/09 we would be much worse. Yeah, right. That's the bankster's favorite explanation for bailing them out, that we would be in stone age otherwise. I say we would be exactly where we are today or better by now.

Of course CB's can't be blamed for everything, globalization and technology implies changes in wealth and economic/social structures. But their policies haven't achieved anything positive.

I'm not saying that stocks can't go any higher. After all Google, Amazon, Uber... whatever can keep taking over business from others (increasing the valuations) but that means that their gain is other's loss. Economy wise it is worse. Just like when rich becomes more rich at the expense of others, there is only so many goods, services they can and will consume.

 

[i960]

Some people would say, that if it wasn't for what Fed did in 08/09 we would be much worse. Yeah, right. That's the bankster's favorite explanation for bailing them out, that we would be in stone age otherwise. I say we would be exactly where we are today or better by now.

We'd undoubtedly be better off. As of now, growth exported from the future into the present, can kicked down the road, and real growth slow if any.

 

[punisher]

Exactly. Bakers would continue to bake the bread, carpenters would fix your house, mechanics would fix your car, farmers would work on their land and so on. And we would have an army of unemployed banksters that nobody needs. Instead they got bailed out so they could pick up all the assets cheaply and multiply their wealth.

 

[tommcginnis]

Two seemingly random but actually directly inter-related thoughts:
1) I need a beer. Doing 10,000 little chores in the hot shade of the front porch. Been waiting to give in to this thirst all day long, full of gluing, cleaning, scrubbing, re-assembling, fixing, sorting.....
2) You guys (Punisher, i960) make good arguments. I don't agree with each and every item, but at this point, the differences do not amount to enough to separate me from my beer. I'll get one for you guys, too, and meet you on the porch.

 

[punisher]

My point was that the invisible hand of the market was allowed to punishing those that deserved it the most, clearing way for a healthier system. Instead they've got rewarded twice, by keeping those ill gotten profits in the run up then again by picking up assets dirt cheap afterwards.

The biggest insult though is claiming that we would be in stone age if it wasn't for Fed's actions. I say that the dust would settle quickly and business would resume. Slowly but surely it would become normal within 3 months top.

If there was anything remotely close to getting us back to stone age that would be taking down entire worldwide IT network or better yet taking down power grid. We've got to rely on those so much that we would be bust without them.

 

[i960]

Hank fucking Paulson - what else needs to be said? The whole crisis was a criminal smash and grab and it worked out quite well for them.