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Re: HOW ONE iTuliper IS INVESTED?
Nice commentary, jacek. Are you quoting some source with the II and AAII comments above, or are they from your own data? If the latter, are you willing to provide me, free of charge, with the AA and II data as far back as you have it?
Based on some deep sense of gloom that has pervaded my being in the past week, I am NOT so sure "this has to be close to the end" of the current down blast. We are into to a place that I have certainly not been before, and my attitude is if blow offs in parabolic moves up can occur, and they definitely happen, why should it be any different on the downside?
Here is a snippet I got this weekend from jk that came from Jesses crossroads, sorry I don't have the link, and I don't know exactly what day it was written--really piss poor of me to put up such tripe.
I don't know who wrote that quote, and I don't know if the writer actually knows shit from shinola about what he wrote. It seems to me that there is critically important information in that quote, and were it true and capable of making it onto some website, why wouldn't it make it somewhere into the mainstream financial news?
Originally posted by friendly_jacek
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I hurt a lot too as my TA and sentiment analysis failed me in the last several weeks.
Regarding AA and II sentiments, the AAII bullratio 4-weak average (0.28) is lowest since 1990. The II bull ratio is lowest since 1995 (0.33). The AAII stock allocation is near 50%, comparable to second half of 2002, and cash allocation is over 35%, again, comparable with 2002 lows. The CBOE PC ratios are high as expected in market extremes. Also, VIX was the highest since 1987, Rydex sentiment lowest in 8 years. The could be a few more days of selling, but this has to be close to the end.
The last several days of heavy selling were most likely caused by margin calls and failing hedge funds liquidating leveraged positions in a hurry. The rumor has it that several large funds folded recently.
The below chart showing high correlation between oil and stock index shows it well, normally those show inverse correlation:
I'm not saying that this is THE bottom in general equities, but likely an immediate low. It could be possible THE bottom in miners and energy stocks as those suffered a double blow from falling stocks and commodities at the same time. This where I'm currently invested for the record, but obviously started buiding positions a few weeks early. I also started some positions in nasdaq, small US stocks, and emerging markets and phased out most gold (except for some physical holdings). I hope that gold will go down to rebuild positions at some point.
Regarding AA and II sentiments, the AAII bullratio 4-weak average (0.28) is lowest since 1990. The II bull ratio is lowest since 1995 (0.33). The AAII stock allocation is near 50%, comparable to second half of 2002, and cash allocation is over 35%, again, comparable with 2002 lows. The CBOE PC ratios are high as expected in market extremes. Also, VIX was the highest since 1987, Rydex sentiment lowest in 8 years. The could be a few more days of selling, but this has to be close to the end.
The last several days of heavy selling were most likely caused by margin calls and failing hedge funds liquidating leveraged positions in a hurry. The rumor has it that several large funds folded recently.
The below chart showing high correlation between oil and stock index shows it well, normally those show inverse correlation:
I'm not saying that this is THE bottom in general equities, but likely an immediate low. It could be possible THE bottom in miners and energy stocks as those suffered a double blow from falling stocks and commodities at the same time. This where I'm currently invested for the record, but obviously started buiding positions a few weeks early. I also started some positions in nasdaq, small US stocks, and emerging markets and phased out most gold (except for some physical holdings). I hope that gold will go down to rebuild positions at some point.
Based on some deep sense of gloom that has pervaded my being in the past week, I am NOT so sure "this has to be close to the end" of the current down blast. We are into to a place that I have certainly not been before, and my attitude is if blow offs in parabolic moves up can occur, and they definitely happen, why should it be any different on the downside?
Here is a snippet I got this weekend from jk that came from Jesses crossroads, sorry I don't have the link, and I don't know exactly what day it was written--really piss poor of me to put up such tripe.
This is something going around the trading desks. Suddenly tightening margin credit is a precipitant to artificially steep market declines as those students of the Crash of 1929 will well remember. That is something one does on the upside of a potential asset bubble, not in the decline.
If this is true, then there is an obvious need for the Fed to step in and provide credit relief even if on high rates, moreso than propping up a few banks by buying their worthless assets at above market prices.
Forced margin selling because of arbitrary private bank policies is going to create a major problem in the financial markets, leading to a greater concentration of wealth.
If this is true, then there is an obvious need for the Fed to step in and provide credit relief even if on high rates, moreso than propping up a few banks by buying their worthless assets at above market prices.
Forced margin selling because of arbitrary private bank policies is going to create a major problem in the financial markets, leading to a greater concentration of wealth.
The selling has reached historic proportions. There literally is a "run on the market," as investors worldwide are dumping stocks.
It seems that the major catalyst for this selling is the fact that the newest large banks primarily J. P. Morgan, Goldman Sachs, and possibly Morgan Stanley as well -- have issued massive margin calls to hedge funds and other professional traders who use these banks as prime brokers.
These calls were not issued because of market losses, but more because the banks arbitrarily decided that they wanted their customers to use less leverage. Margin rates as low as 15% for broker dealers were raised to 35%; hedge funds who had been used to operating on high leverage were told that they had to bring accounts up to a much larger percentage of equity.
In this illiquid environment, where all manor of exotic securities literally have no bids, the only place to raise the cash to meet margin calls was to sell stock. That is what really set this market over the edge -- as the first notice of these calls were issued on October 2nd and 3rd.
There was something of a grace period to meet the calls, but funds realized they weren't going to be able to meet them other than by selling stock. There are rumors that the most massive of the calls are due Monday (October 13th). If so, this market could continue to decline through then.
It seems that the major catalyst for this selling is the fact that the newest large banks primarily J. P. Morgan, Goldman Sachs, and possibly Morgan Stanley as well -- have issued massive margin calls to hedge funds and other professional traders who use these banks as prime brokers.
These calls were not issued because of market losses, but more because the banks arbitrarily decided that they wanted their customers to use less leverage. Margin rates as low as 15% for broker dealers were raised to 35%; hedge funds who had been used to operating on high leverage were told that they had to bring accounts up to a much larger percentage of equity.
In this illiquid environment, where all manor of exotic securities literally have no bids, the only place to raise the cash to meet margin calls was to sell stock. That is what really set this market over the edge -- as the first notice of these calls were issued on October 2nd and 3rd.
There was something of a grace period to meet the calls, but funds realized they weren't going to be able to meet them other than by selling stock. There are rumors that the most massive of the calls are due Monday (October 13th). If so, this market could continue to decline through then.
). This part of portfolio is to be invested in a mix of foreign shorts.
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