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gotta run the crash alert flag up

for better or worse.

 

Japan remains very rocky after a 75% runup in their stock market and US markets are pulling back and have a heavy load to carry with the largest margin debt ever- lots of very vulnerable positions there. Playing the "crucify all shorts" game was fun but might be time for the leveraged longs to make a blood donation.

 

Probably not the big crash, although it is worth mentioning that large landsldes always start with small ones, probably more like a violent 10-20% setback. That would, of course, be met with various central bank actions and interventions.

 

Actually a 10% pullback in a bull move of this magnitude would be very normal and hardly qualify as a crash. I'm thinking a bit more than that though, enough to scare Daddy Warbucks into coming through with more manna.

 

With that view I'm not generally interested in the long side of commodities right now.  CRB and a heck of a lot of the individual markets that make it up have heavy looking charts that seem to ask for a short posture.

 

Would potentially get more interested in the long side in general if there was a broad market risk shellout and some intervention by the cavalry.

 

 

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Veteran Advisor

Re: gotta run the crash alert flag up

over the last decade, was there a time when you wanted to go long commodities, Nox?

 

Sooner or later a stuck clock is gonna be right. Might be this year...might be next year, might be five more years from now.

 

I sure don't know.

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Senior Contributor

Re: gotta run the crash alert flag up

It seems odd, you were bearish stks 2k and 4k and 5 k points ago. fwiw, the valuaion of the mkt is at an all time high, composite earnings are at an all time high,  corp cash on hand is at an all time high, margin rates are very low historically,    why wouldn't margin be extra high?

 

Japan is working hard to reinflate,, that does NOT mean cpi,, but encoiutaging credit to expand, something  they have not done for 20Yrs, if up75% high or low ??

 

I hope this thing tanks,, but not sie or your interpretation. 

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Re: gotta run the crash alert flag up

The orthodox top of the secular commodity bull was struck in 2008.

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Re: gotta run the crash alert flag up

Leaving equities in 2007 remains a good move.

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Re: gotta run the crash alert flag up

Gotta agree with the zerohedge analysis. It is something I had considered as possible- that we'd surely need to frontrun Tuesday (20 of 20 Tuesdays have been up days because that is the Fed's big POMO day).

 

Could be that things run farther although in a healthy market a 10+ percent pullback would be healthy. Actually a continued meltup contains greater risk, sometime, somewhere.

 

 

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Senior Contributor

Re: gotta run the crash alert flag up

Sounds like you mist the boat.
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are they turned around yet?

Da boyz saved the stock market last Thursday by stuffing a billion- yes that's a B- high frequency quotes into the  S and P options market.

 

Now we'll see if da boyz have offloaded enough of their positions to widows and orphans that they'll let it go.  Feels to me like a freshman at his first kegger, the room is starting to spin and he's looking for something to puke into.

 

The thing that is always very interesting is how the recent intermarket relationships play- by recent experience you would have expected a dollar rally and commodity weakness but so far the other shirts are all dirtier and the dollar has been soft, keeping a bit of a bid under commodities.

 

I doubt that will continue if the US market follows Japan and the emerging markets into a waterfall decline. As to the $USD, I'm not sure.

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