“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Tuesday, April 23, 2013

Hacked Twitter Feed for AP sends Markets Careening

I view this incident as further evidence that the US equity markets are floating higher and higher on nothing but a bubble of air. Those who continue to chase stocks higher based on nothing but liquidity injections are playing a fool's game.

I look at today's one minute collapse in prices as a warning of what will happen to this market when all of these hedge funds who keep jamming these markets higher decide to stop buying. At some point, who in the hell are they going to sell to when the bell is rung???
Following is a 5 minute chart of the emini S&P 500 futures. If you happened to have gone to the bathroom just before the sharp selloff began, and came back and sat down in your chair in front of your quote screen, you would have seen prices pretty much right back where they were when you left. "Oh well, not much happening at this point" would have been your response. Boy howdy would you have been wrong.



Can you imagine how much money was lost today by traders on the long side of this market when those computers started selling and picked off every single downside sell stop?

Already you are hearing voices condemning the computers. Why is it that we only hear these voices when prices move sharply lower but the same voices are eerily silent while the same computers are busy buying everything in sight and shoving prices into the stratosphere? I only pose that question to point out the hypocrisy of those who seem to think that there is an ELEVENTH AMENDMENT to the US Constitution noting a God-given right to a permanently rising stock market.

My contention is that this madness we are witnessing in these markets, every single damned bit of it, can be attributed directly to the Fed and this incredibly stupidly short-sighted QE crap. A balance sheet of over $3 TRILLION and rising...

There is nothing fundamental behind this rise in stock prices - nothing - not when commodity prices continue moving lower and lower. Yet, someone keeps pushing it higher even as volume continues to shrink. This tells me that there is no sponsorship in this rally other than those who are AFRAID to SELL IT. That is leaving the air pocket overhead which can be hit by comparatively small buy programs.



Today, the reason cited for the move higher in the first place is that the news out of the Eurozone is so pathetic, that traders are just convinced Draghi is going to LOWER RATES and start their own version of the Fed and BOJ liquidity party. In other words, more funny money creation. This generation of stock investors/traders is collectively punch drunk.

Meanwhile, the markets bubble higher and higher - where they stop nobody knows. Place your bets ladies and gentlemen but you had damned well be first to pull the trigger on the sells if you expect to have much of anything left when this party stops. It is a TRADER's Market and not an INVESTOR's MARKET. Just remember that and you will be okay.

 

5 comments:

  1. "It is a TRADER's Market and not an INVESTOR's MARKET. Just remember that and you will be okay."

    Again, you're right on the money there, Dan.

    The fact that HFT is still allowed/encouraged is the perfect illustration of how the Fed is an eager partner with Wall Street in the ongoing to strategy to ruin retail investors.

    ReplyDelete
    Replies
    1. total insanity:
      Macro data sucks as we all know.
      NFLX has $1 billion in quarterly revenue + .3% net margin and moves the entire stock market. per Zero Hedge huge off book debt. Ironic that NFLX's original programming is called "House of Cards."
      CAT misses top & bottom line + lowers (already massaged) guidance and still ends up a few percent

      The one good thing I saw in today's baby-flash crash is that the pressure was taken off gold for a few minutes. IMO, the retail interest in gold & silver is directly related to Cyprus & the unveiling of the global banking blueprint for depositor assets.

      Delete
  2. In this market it will be looked at as the "Trampoline Effect", good for the market. ?????????????????????????????????????????????????????
    In the new Bizzro World which keeps leaving me more and more speechless every day.

    ReplyDelete
  3. If the DOW tanks, then Gold and Silver will seem stupidly "expensive" at their current "cheap/sale" prices!!!

    King dollar will reign, which seems absurd, but that's where you go when you sell anything and wait to buy it again at a quarter of the price it was before!

    ReplyDelete
  4. Hi Dan

    Can you give a strategy to ear money with a flash crash?
    What do you think about put options?
    The thing is to earn we need to be positioned before it happens.
    I believe maybe the DAX will rise a bit again but if they do not keep printing to infinity it will soon or later fall apart.
    the fundamentel data turns out more and more worse.

    For me this is like the story of the emperor´s new clothes.
    there is no recovery expect from rising food stamps.

    what can happen when the computers take over can also be seen at the last gold takedown.

    also it would be nice to hear your opionion on goldman sachs close of the gold short recommendation.

    ReplyDelete