$ES_F MOC SELL $650mil $$
$ES_F SPX moc implied imbal $1.3B for SALE $$
$ES_F 02:34:26 TRADINGDATA2: (bshepard) ESM moving the the favored direction of the imbalalce meter ... down $$
$ES_F 81% sell side $$
John_Monaco (13:41:50): 75% sell side on the close
1. October 16: "Buyers beware, the bear market has begun":
The selloff in global markets is set to continue as a bear market takes hold "for a long period of time," according to widely followed investor Dennis Gartman, who warned investors not to go long on stocks.
"This is the start of a bear market," Gartman, the founder of the closely watched Gartman Letter, told CNBC Europe's "Squawk Box" on Thursday. "You stay in cash and you stay in short term bonds and you don't move out, this is a very difficult period of time and I'm afraid - and
I don't like to think about it – but this might be the very beginnings of a bear market that could last some period of time," he warned.
2. October 21: "Failure here suggest that a fully-fledged bear market has begun"(sic)
As noted in the chart of the S&P at the upper left of p.1 this morning we were swiftly approaching the bottom of “The Box” that marks the 50-62% retracement of the recent sharp decline from the interim highs forged earlier this month. Given the manner in which stock index futures are trading rather briskly lower this morning as we write, it does not appear that we shall see the S&P futures trade into “The Box,” and that makes us all the more suspicious of share prices generally, for a market than cannot even retrace 50-62% of its previous weakness is a market that is weaker, internally, than it might at first appear. Worse, failure here suggest that a fully-fledged bear market has begun, for this would be a clear failure well below the highs of the last interim rally, with the lows of the last interim break having already been taken out to the downside.
3. October 22: Bear market called off
... in retrospect, having gone effectively to the sidelines two weeks we should have embraced last week’s weakness enthusiastically; we should have considered ourselves fortunate to have decided stand down from our modestly bullish perspective and we should have “margined up” as everyone else was being forced to “margin down;” however, we are not that wise nor are we that lucky… nor shall we ever be. We play the “Great Game” as we have been taught and as we have learned, being reticent about following inordinate strength and/or inordinate weakness; holding as best we can to major trends and always remembering that in a bull market… and this does still remain a global bull market… there are but three positions one may have: Aggressively long of equities; “pleasantly” long of equities, and neutral of them.
And in chart format:
Finally, in virtual money world, being "market neutral" also means being long beta: "For those who care, for the year-to-date in our retirement funds we are up 8.4%, having gained 0.6% yesterday, even as we were… and still are… effectively market neutral."
Win win for everyone, but most of all: comedy.
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
I am thinking about the similarities between a financial crisis and for instance a family crisis, the death of a loved one or close friend, a divorce, or a personal bankruptcy.
And I wonder why in the case of our recent (aka current) financial crisis, we allow nothing to enter our communications, and our train of thought, but the idea of recovery and a return to growth. Has everyone always reacted that way after earlier financial crises – history is full of them -, or is something else going on?
Why do we insist on returning to something we once had, even if we have no way of knowing whether we can ever return? Why don’t we focus – more – on what lies ahead, instead of what is behind us? Is it because we loved what we had so much? Or is something else going on?
Even if we do love what once was so much, there’s a time to move on after every disaster, every death in the family, every bankruptcy. And deep down we know that very well. Life will never be the same, but it’ll still be life. It seems safe to say that in general, life is about turning, not returning. Life changes, we change, every day, every minute, every millisecond.
This refusal to turn a new leaf and find out what’s on the other side of the hill has enormous consequences. We are actively digging ourselves so deep into debt that it’s preposterous to claim this debt is ours only, because it’s painfully clear, though we would never admit it (too painful perhaps?), that we can never pay it back. We leave that honor to our children, and to the generations after them.
We should undoubtedly have protected us from ourselves, by making it illegal and punishable by law to engage in such behavior (something along the lines of Child Protection Services). We chose instead to be blind to it. We still could – should – write such legislation, but it looks as if present politics and economic ‘thinking’ will only exacerbate a situation that is already far worse than we care to know.
The overruling ‘wisdom’ looks to be that we miraculously freed ourselves from the yoke of a balanced budget, an idea seemingly justified by the fact that a return to growth has been elevated to the status of a law, of either physics or a deity of our choice, growth that will subsequently make all debts melt like the snow on the Kilimanjaro.
That overruling wisdom, as should be obvious, is at best wishful thinking, but far more likely pure fantasy. Which has become our main, make that only, approach of the crisis we find ourselves in. If only we believe, our leaders will deliver us to growth heaven.
But what if this is the end of the growth story? What if it’s already behind us? It’s not as if growth has been a constant factor in the lives of our ancestors. And it’s not as if the laws of physics put no limits on everlasting growth. Growth is a passing thing, it’s a phase.
Most of us have heard of the seven stages of grief. Shock, Denial, Anger, Bargaining, Guilt, Depression, Acceptance. Where are we in our journey through these stages when it come to the financial crisis, and to growth? There’s only one stage that even remotely sounds right: Denial. We’re not even close to Anger yet, not when it comes to the larger population.
We simply deny that something has really changed. And even if you wish to claim that it hasn’t, no-one can deny the possibility that it has. Still, that is exactly what happens. Denial, everywhere you look.
The something else that is going on is that our brains have been kidnapped by those who (probably not even always consciously) seek to strengthen their – power – political and financial positions by making us believe in the growth story long after it has – for all we can see – died. That’s why we listen only to the growth story, to the exclusion of any and all other stories.
It’s a form of progress, though not a benign one. Freud’s ideas are (ab)used to hide reality from us (to ‘sell’ the message), while Keynes’ ideas are abused to hide the reality that you can’t buy growth with debt your children will have to pay back. Pretty simple, when you think about it.
If you know how to sell people detergents and presidents, abstract ideas is easy. And if those ideas are about economics, that nobody knows much about and all the trusted experts and press have the same message about 24/7, the circle is pretty much closed. All that’s left then is places like the Automatic Earth and others to get your alternative stories, but that’s no match for full blown propaganda.
Still we’re seeing, we’re living in, the last days of the growth story. And when the master class decides to drop that story, watch out. The emperor is one ugly wrinkled old duckling when he’s naked. You don’t want your kids to see that.
While some pointed north to the aweful events in Ottowa, it appears the bigger driver of weakness in stocks today (aside from a sudden absence of broken VIX markets, a lack of Fed Speakers, and the truth about ECB bond-buying being exposed) was the plunge in crude oil. WTI tumbled from over $83 to a low $80 handle after inventories surged more than expected and that appeared the catalyst for equities to catch down to credit weakness. Treasury yields closed the day unchanged but sold off notably in the EU session (like yesterday). The USDollar strengthened for the 2nd day in a row (now up 0.55% on the week) on EUR weakness (CAD volatile around shootings), weighing on commodities. Silver was monkey-hammered early, copper and gold slid, then oil plunged (down 2% on the week). Yesterday's big winner Trannies tumbled the most today (-2%) as stocks gave up half the week's gains today.
Stocks broadly gave back half the week's gains today...
With Trannies tumbling the most on the day...
The turn in oil coincided with weakness in Stocks today...
As Oil and stocks decouple...
The drop in stocks caught then down to credit's early weakness...
The Dollar rallied once again - led by EUR weakness. CAD was very volatile around macro data and the shootings
and USD strength weighed on all commodities...
2nd day in a row, Treasuries sold off during the EU session... but closed unchanged on the day.
The last 2 days have seen enormous volatility in the Saudi Riyal exchange rate, purportedly oil-related FX hedging programs as the SAR dropped to its lowest sicne Dec 2008, but the most extreme 'moves' were left to The Kingdon's top Muslim cleric. As The BBC reports, Sheikh Abdul Aziz al-Sheikh, the Grand Mufti of Saudi Arabia, exclaimed that Twitter is "the source of all evil and devastation". As the 12th most influential Muslim in the world, it perhaps matters that he says users were using Twitter to "promote lies, backbite and gossip and to slander Islam," but citizens of Saudi Arabia, who are some of the heaviest users of Twitter, did not appreciate his remarks, summe dup by one tweet, "People need an outlet to express themselves, to start to disclose what's hidden and drop the masks, without fear or commands, or censorship from anyone."
according to Saudi Arabia's top Muslim cleric, Twitter is "the source of all evil and devastation".
Sheikh Abdul Aziz al-Sheikh, the Grand Mufti of Saudi Arabia, made the comments on his Fatwa television show earlier this week.
"If it were used correctly, it could be of real benefit, but unfortunately it's exploited for trivial matters," he said about the social networking site.
"People are rushing to it thinking, 'It's a source of credible information' but it's a source of lies and falsehood."
As the highest religious authority in the country, Sheikh Abdul Aziz al-Sheikh holds a senior government position, advising on the law and social affairs.
He was also voted the 12th most influential Muslim in the world in a recent poll.
According to Gulf News, he said: "These are not the high morals that Muslims should have and I call upon all people to contemplate seriously what they write before they post their tweets."
However, citizens of Saudi Arabia, who are some of the heaviest users of Twitter, did not appreciate his remarks.
One of the reasons Saudis say they like using Twitter is because it allows them to discuss what they really feel.
The hashtag #WhydidTwittersucceedinSaudiArabia began trending in January, with users sharing their reasons they liked the site.
One user tweeted: "People need an outlet to express themselves, to start to disclose what's hidden and drop the masks, without fear or commands, or censorship from anyone."
Another posted: "The reason is that none of the newspapers are concerned with your worries nor do any officials care about you."
As the Riyal slides notably away from its peg to the USD - to the weakest since Dec 2008...
Though we are sure Twitter had nothing to do with that.
the biggest jump in long-dated USD/SAR forwards in more than three years was partly driven by increased FX hedging trades after oil prices fell, two FX and rates traders in London said.
Given Saudi Arabia’s large FX reserves, traders see no fundamental justification for these moves, and instead are seizing the opportunity to sell the forwards at elevated levels.
* * *
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Those who actually create value as opposed to chasing yield with nearly-free money will actually have some traction once the swamp of excess liquidity drains.When those closest to the money spigots of the Federal Reserve can borrow billions for next to nothing, cash--laboriously saved from years of paychecks--is reduced to trash. What chance does a saver have in a bidding war for a house or other asset against a financier who can borrow essentially unlimited cash?
Answer: none. The saver can leverage his cash at best 4-to-1: a 20% down payment leverages a mortgage of 80% borrowed money. The financier can borrow as much he wants for next to nothing.The saver will lose every bidding war, thanks to the excess liquidity created by the Fed and other central banks. The reason given for this vast expansion of credit is that if credit is cheap enough, people and businesses will put that nearly-free money to work.
The problem with cheap credit is that it does not flow to productive investments--it flows to safe yields. Launching a new product or service is risky, especially in a stagnant economy, so the safe way to play unlimited credit (i.e. liquidity) is to chase assets that reliably generate returns.
Consider housing as an example. If a saver wants to buy a house to rent out as an investment, he is going to be paying 4.5% or so for the 80% of the money he is borrowing via a mortgage.
The rental income has to exceed his costs--the mortgage, property taxes, maintenance, etc.--by at least 3%. Otherwise he might as well buy a long-term Treasury bond and earn the 3% without the risk of vacancies, unexpected expenses like a new roof, etc.
Since his mortgage costs 4.5%, the yield has to be considerably higher than 5% to make buying the house a good investment. Let's say the rental has to generate a return of 10% to yield a net return (after paying the mortgage, property taxes, etc.) of 3%.
The financier paying less than 1% for his borrowed money has an entirely different calculus. Since the cost of his borrowed money is so cheap, he can bid the asset price up and still earn a return above 3%. Raising the price of the house quickly raises the costs of owning for the saver, as the interest costs of the bigger mortgage eat away at the yield.
The financier can raise his bid by 25% and the additional interest on the nearly-free money is trivial.
The systemic result of excess liquidity (cheap credit) is bubbles in every asset class that yields a low-risk return. Buying low-yield assets is still profitable if you can borrow money for next to nothing.
Though the timing of the collapse of excess liquidity is unknown, we can safely predict excess liquidity will collapse because all extremes eventually revert to the mean. At some point assets reach such heights that even free money isn't earning a real (i.e. adjusted for inflation) return.
At that point, participants lose faith in the easy-money policies that have issued cheap credit as the cure-all for stagnation. The excess liquidity is still gushing out of central banks, but even financiers don't want any more as there's no way left to earn a return even with nearly-free money.
As correspondent Jay F. observed, the collapse of excess liquidity will be a positive development, as it will restore the equilibrium between cash that is saved and the real returns on assets."A worthy subject for your attention and treatment is how the collapse of credit liquidity is actually a very helpful thing for individuals who are real creators of real value-- as they now get to compete on a much more level playing field. I see this phenomenon unfolding all around us as overvalued assets and professions go on the chopping block to maintain the status quo. It's actually a very good thing."Well said, Jay. Those who actually create value as opposed to chasing yield with nearly-free money will actually have some traction once the swamp of excess liquidity drains.
The Trading Pub is always on the lookout for experienced, professional traders that are willing to share their ideas and techniques with our members, and yesterday’s event with Adam Mesh and Todd “Bubba” Horwitz did not disappoint. Adam and Todd have more than 50 years of combined experience trading stocks and options, and are regular […]
At the Trading Pub we are committed to connecting you to some great educators so you can see an impact in your knowledge and trading right away. In today’s trading education our own Cam White shares more about the North American Derivatives Exchange (Nadex) where traders can trade directly with each other once they become […]
Our friends at Nadex are opening the doors for registration for the inaugural World Cup Championship of Binary Options Trading ®, which will be debuting for a one-month run from November 2nd-28th, 2014. This event is being co-sponsored by Nadex and requires a minimum opening balance of just $500 to participate! Enter now or during the competition […]
At the Trading Pub, our main objective is to connect our members with the top trading professionals in the industry, and yesterday’s webinar with Hubert Senters was an excellent example of how we continue to meet this commitment. Hubert is one of the most active and diverse traders in the world, and shared his techniques […]
The concept behind the TradingPub is simple. We serve as an environment that connects successful professional traders with retail traders like you. The trading education provided by these pros will hopefully help you to build a more solid foundation that may improve your trading consistency and confidence. That is why we started our Trade-A-Thons. We wanted an event where trading […]
The process of becoming a more consistent and confident trader requires investing first and foremost in your trading education. That’s why we at the TradingPub are committed to connecting you to professional traders who can help you take a step closer towards becoming the trader you want top be. The September edition of the TradingPub Trading Sprint did not […]
Learning how to read and interpret charts is an essential step in order to understand price behavior. Among the various charts available in trading, Japanese candlesticks are the most popular. This section of our trading education is dedicated on covering some of the history behind this very popular tool. Candlestick charting first appeared sometime after 1850. […]
At the TradingPub we are committed to connecting you to professionals who share their trading education, so you can pick up great tips on your way to becoming consistent and successful traders. Yesterday’s class with Steven Primo did not fall short of our commitment and almost 500 of you peaked in for a session packed […]
At TradingPub we are committed to providing you, the active trader, with free access to some of the greatest trading education available. We do this by hosting multi-speaker events that connect you with top professionals who share their methods and techniques for trading markets, and how they manage their trading businesses. That is why we […]
Trying to call a market top or bottom can be disastrous for traders. Typically, when trading a market top or bottom, traders enter the trade and then move the stop, adversely or altogether, because they are convinced they are right and the market will go up, after this “one last move.” Then when the trade […]