IBB
297.64
+1.12
+0.38%
 
AAPL
143.65
-0.14
-0.10%
 
TVIX
30.91
-9.97
-24.39%
 
XIV
75.09
0.00
0.00%
 
TNA
108.69
-4.4
-3.89%
 
TZA
17.27
+0.64
+3.85%
 
UVXY
14.18
-0.02
-0.14%
 
NASDAQ
6047.61
-1.33
-0.02%
 
S&P500
2384.2
-4.57
-0.19%
 
NYSE
11536.08
-42.44
-0.37%
 
IBB
297.64
+1.12
+0.38%
 
AAPL
143.65
-0.14
-0.10%
 
TVIX
30.91
-9.97
-24.39%
 
XIV
75.09
0.00
0.00%
 
TNA
108.69
-4.4
-3.89%
 
TZA
17.27
+0.64
+3.85%
 
UVXY
14.18
-0.02
-0.14%
 
NASDAQ
6047.61
-1.33
-0.02%
 
S&P500
2384.2
-4.57
-0.19%
 
NYSE
11536.08
-42.44
-0.37%
 
Carry Trades & the Shanghai Accord

Carry Trades & the Shanghai Accord 

The ECB and BOJ should be asking themselves was the Shanghai Accord really worth it? Post-Feb, EURO and YEN have appreciated levels which are concerning t0 their respected governments and central banks. Also, the leverage in each of these trades carried to another financial vehicle yielding higher return is immense. The unwinding of these so called carry trades has put stress on global financial markets in a time of conditional liquidity. We compare SPX in particular.


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(Update) Bloomberg has picked up on the story, as their headline states: ” YEN Strength Trips UP US Stocks” 

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Liquidity vs. Conditional Liquidity

QE provided constant liquidity in 2009- 4Q14. We measure the liquidity by determining the average premium above the 200sma. Post-QE conditional liquidity has set in with price at a discount to 200sma forcing the moving average to print at a negative slope. We believe without expanding the money base, the markets at serious risk for a reversion. Monetary tightening started in Dec’15 in conjunction with an earnings recession. Screen Shot 2016-04-05 at 9.11.24 PM

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AAPL 30% Downside

Tech Deflation 

AAPL has 30% downside to the 1/1 GANN, as the market is in a controlled liquidation. The pattern is known as a flag, and will be locked in until a violation outside the pattern is sustained.

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30 Years of Bubbles: DOW Industrials

30 Years of Bubbles: DOW Industrials 

3 noticeable bubbles the FED has inflated, along with deflated. Price tends to revert to a mean started in 1984. Currently, price sits an an unfair high ready for a reversion back to the mean Screen Shot 2016-04-05 at 8.32.50 PM

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API Report

American Petroleum Institute (API) crude oil inventory data

  • Oil inventory drawdown of 4.3 mln barrels
  • Cushing build 620K barrels
  • Gasoline draw 116K  bbls
  • Distillate build 2.7mln bbls

Largest (forecasted) draw in FY’16, but market is watching the Cushing Build, as well as Distillate build. Demand for distillates are at recessionary levels.

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An Excellent Rendition of Symmetry

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SPX Growth Baselines adapting to Cycles

Monetary accommodations throughout the US bull cycle have generated artificial demand in growth of the SPX. As we migrate into a tightening cycle, we use time vs. price tool called the GANN to visualize the migration of a lower baseline of growth developing. Rule of Angles will migrate SPX to lower levels, which the next target is the 3×1 in the 1700-1800. 
Screen Shot 2016-04-05 at 11.41.33 AM

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Dissemination Curve of “Earning Recession”

Dissemination Curve of “Earning Recession”

As we near 1Q EARNINGS Session, we expect the general masses to be subject to either an earnings recession or a spin of earnings recession. It will be up to the financial media in how the spin will be manufactured. Plain and simple, the FED isn’t expanding the money base, and to continue to narrative of bad= good is irresponsible at this point in time. Companies are overvalued in an earnings recession, which is partially due to FED verbal commands not letting the market clear past 1800 to reset valuations. Current fair value market is 23-24x PE GAAP multiple. Below, we expect the symmetrical triangle to break upside in disrupting dissemination, as of right now the narratives are being constructed.

2016-04-05_11-11-45

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Dome Update: SPX

Dome Update: SPX 

FED Heads continue to construct a topping structure via commentary of dove vs. hawk. The blatant manipulation of verbal commands at critical junctures of the chart uncovers a sad truth of policy error and the fear to imbalance from the dome. Imbalance upside the market will continued to overvalued; imbalance downside and the great reversion has started. This equilibrium of overvalued markets, deteriorating fundamentals, and pure manipulation cannot be maintained in a market of conditional liquidity.

Screen Shot 2016-04-05 at 9.56.01 AM

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Friendly Reminder, Earnings Recession is here

We’re about to embark on 1Q16 Earnings in the coming weeks. Forecast by FACTSET shows the deepening earnings recession.

 

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