Thursday, February 11, 2016

Stock Markets Everywhere Are Getting Crushed............. HERE WE GO AGAIN!

Stock Markets Everywhere Are Getting Crushed

The S&P 500 is headed much lower Thursday, the fifth straight down day. February is looking to be as bad or worse than January was. THE DOW IS DOWN ALMOST 360 POINTS AS I SEND THIS AND NEAR VERY CRITICAL SUPPORT ON THE S&P, SEE MORE BELOW!

There's a whiff of panic in the air. Watch the banks closely.

The headline of the day from Bloomberg seems very appropriate:

There is a big difference between "having enormous influence on the markets and the economy" and "having control over them". No-one controls the laws of economics or truly controls the markets. The market is coming to this realization after deluding itself otherwise for a long time. Human beings do not always act rationally.This could be a very painful unwind as years of stupidity come unwound. A period of "stealth deterioration" in market internals has been replaced by a more obvious, general deterioration in global markets. In other words, crash risk remains very elevated.

The broad US money supply TMS-2 has expanded by 119% since 2008 and by precisely 300% since 2000, we need not discuss whether or not it is a bubble – it most definitely is a very large one. We have a long way to fall if the market decides that this period was nothing but a fairy tale.

After a very ugly week last week, the US and Europe are finishing out this week with a rout.

Last week in the US was particularly ugly for momentum stocks, and for companies that had announced lousy earnings or given squishy forecasts, and even for startups with recent IPOs that were once highfliers and have now crashed. Not even the promise of share buybacks works anymore. Financial engineering has lost its effectiveness. Central-Bank imposed negative interest rates aren't propping up stocks anymore. None of these tricks works anymore. That's what markets are learning and they are not happy.

Europe's big banks are seriously listing. Italian banks, weighed down by immense amounts of non-performing loans, are undergoing a bailout of sorts at the moment. Shares of Deutsche Bank and Credit Suisse are getting crushed. Credit default swaps are blowing out. The Stoxx Europe 600 banking index, after declining six weeks in a row, the longest weekly loosing spree since 2008 when the sky was falling on the banks (and when it declined 10 weeks in a row), fell another 5.6% on Monday. It has plunged 39% since its peak at the end of July.

JPMorgan: "It's Hard To Imagine An Uglier Morning." THEY DON'T HAVE A VERY GOOD IMAGINATION BECAUSE MUCH WORSE LIES AHEAD. THIS IS JUST THE BEGINNING OF WHAT PORTENDS TO BE A VERY NASTY MARKET ROUT. ALL THE DELUSION, LIES, FALSE HOPES, EMPTY PROMISES AND JUST PLAIN BULLSHIT MUST BE WRUNG OUT BEFORE THIS CAN OR WILL BE OVER.   

What investors need to be most aware of is this; even though markets have been very soft this year, "5-year trends are JUST NOW breaking support!" This would suggest that a new round of selling pressure could come forward and things will get much uglier.

So is the S&P 500 due for much more selling pressure? 

Two levels EVERYONE needs to watch: first, if the index sees a weekly close below 1,816 and then if rising channel support around 1,786, drawn off the 2011 low, also gives way. The market is currently just above the first level mentioned above. These are important times for markets, please respect what sellers might due, since 5-year bull trend support is giving way, and this is a FIRST in 5-years. IF THESE TWO LEVELS ARE TAKEN OUT WITH ANY CONVICTION, WATCH OUT BELOW!  I WOULD EXPECT 1815 TO 1825 TO HOLD ON THE LOW SIDE TODAY, IF IT DOES NOT, THIS MARKET IS WEAKER THAN EVEN THE MOST ARDENT BEARS THINK IT IS. WE COULD ALSO BOUNCE FROM THIS LEVEL OVER THE NEXT FEW DAYS TO A WEEK. THAT WILL NOT MEAN THIS IS OVER, FAR FROM IT. 

Gold is surging. Overnight buying has the precious metal higher by 3.3% at $1,236 an ounce.Thursday's gain has gold sitting at its best level in a year. Gold has gained about 17% since it hit a six-year low of $1,051 an ounce on December 17.

European Sovereign Risk Soars As Systemic Fears Mount

"Whatever it takes" is not enough, it would appear as the fragility and interconnectedness forced upon the European banking/sovereign finance ponzi has rapidly come home to roost for Draghi and his followers. Peripheral bond risk has flipped from "hold your nose" buys to panic sells with Portugal risk exploding 200bps in the last week. As the European banking system's credit risk rises fast, it seems belief in the bigger bazooka is fading fast.

Deutsche Bank Is Back: 5 Year Sub CDS Soar To Record High

"Worse than Lehman" is how one European bond market trader described the carnage this week as the brief respite that ECB monetization and debt-buyback rumors provided yesterday have morphed into utter destruction this morning. European (and US) banks are a sea of contagious red with Deutsche Bank the tip of the collapse spear. Credit risk on Deutsche has exploded this morning with Sub CDS trading up 85bps to a record high 540bps... eerily reminiscent of the pre-Lehman bankruptcy week in 2008.

We've seen some epic swings in crude oil prices to start 2016.

Trading has  taken place in 2016 on 26 days so far.

There have been 24 days in 2016 during which oil prices have moved by more than 5% intra-day.  NOW THAT'S VOLATILITY!

In the few years before oil prices crashed last year, a move this big was a rare occurrence and in 2013 there was no day with a trading range this wide.

This year, crude oil is down more than 25%, after peaking just above $38 on the first trading day of the year, under $27 now.

REMEMBER MARKETS DON'T MOVE IN A LINEAR FASHION FOR VERY LONG. THE TREND IS NOW DOWN HARD BUT WE CAN AND WILL BOUNCE ALONG THE WAY, UNLESS THIS IS A TOTAL COLLAPSE. CAPITULATION BY THE MAJORITY WILL TAKE TIME AND INVOLVE BACK AND FORTH IN A FALLING TREND. MOST IMPORTANTLY, PEOPLE HAVE SEEN BEHIND THE CURTAIN NOW AND THE WIZARDS HAVE BEEN EXPOSED AS FRAUDS. PERCEPTION HAS SHIFTED AND A LOT OF FAITH IN OUR MONEY MASTERS HAS BEEN LOST. IT WILL BE HARD IF NOT IMPOSSIBLE TO REPAIR THIS OVER THE SHORT TO INTERMEDIATE TERM. THERE IS NO EASY ANSWER, REAL SOLUTIONS WILL BE PAINFUL AND TAKE TIME.

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