Sunday, August 23, 2015
8/23/15 The Night They Drove Down the Renminbi
Momentum is likely to carry global indexes lower next week. 40/40 odds on the following:
(a) Snapback, followed by lower lows.
(b) Lower lows, followed by a snapback.
20% odds we've already seen the low.
Much of the recent decline in the SPX occurred 'overnight.' Note the number of 'gap down' opens in the past two weeks: http://finance.yahoo.com/q/hp?s=SPY+Historical+Prices Note also that the series of gaps down began the night China drove down the renminbi ('by August the tenth, the yuan had fell, it was a time we'll remember oh so well!'). The devaluation met with a low-volume 'so what' the remainder of the week, followed by last week's high-volume second-guessing.
The question now is whether US indexes follow global markets down, or are instead (given positive trends in both employment [up] and household debt [down]) able to keep singing.
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Hussman is gloating right now, walking around like Rocky in anticipation of a precipitous drop. No one tell him about the performance of his funds, though...
ReplyDeleteMy god - look at that chart and he still manages $700 million
DeleteWeak markets in the middle east as the sell off continues:
ReplyDeletehttp://www.bbc.com/news/business-34032776
Not that I would expect the markets to bottom on a Sunday in small markets
I forgot that I created a sample portfolio in Google Finance in August 2007, just as the market was about to peak. The stocks I chose at the time were:
ReplyDeleteBIDU
NTES
JOBS
SIGM
CAKE
WFM
I was a pretty naive investor at that time, but the ones I picked have done really well...up 261.88% including dividends. Might be a good exercise to build a sample long term portfolio again. Probably would do worse now given I follow the markets a lot closer.
DJIA futures -109 points.
ReplyDeletehttp://money.cnn.com/data/premarket/
I would now place odds of a gap down/gap up at 37/43.
So true. Futures have meant absolutely squat this whole year.
DeleteSunday night wash out, Monday morning gap up.
DeleteHave seen the futures market panic bottom in the middle of the night a number of times this year.
DeleteBut unless we are in crash mode or a sever bear market like 1987, 2002, 2008 (and I really don't think we are) things look pretty good looking forward:
https://www.bespokepremium.com/think-big-blog/sp-500-weekly-drops-of-5/
Didn't realize just how much debt some tech companies have been taking on in the past few years:
ReplyDelete(billions)
Debt
BIDU 5.4
GOOGL 2.2
BABA 8.1
MSFT 27.8
AAPL 47.4
CSCO 20.4
INTC 12.1
TSM 6.8
AMZN 12.5
NFLX 2.4
PCLN 5.4
Wouldn't you have?
DeleteJust tuned into CNBC on Sirius. Man they are desperate for ratings.
ReplyDelete-109 to -172 to -106. I like the volatility.
ReplyDeleteJust three random numbers I happened to catch. Looks like the intra-session low print was -183.
DeleteNikkei opens off another -372.
ReplyDelete-417. We know an 18k-handle is in the cards.
Delete18957.
Delete18928 at the low, bouncing back >9k.
DeleteJust had a thought. One reason never to go 'all in' on a leverage fund-> what if markets in fact crash on Monday? -25% would result in a -50% loss for a 2x fund, or -75% for a 3x. What if markets decline -40%? What would happen to a 3x fund?
ReplyDeleteCRAP! There is a fing 'market in turmoil' on right now. Toooooo freaking funny.
ReplyDeleteI'm going to check what Schwab says my yearly return is.
Delete3m....2.01%
DeleteYTD...8.85%
1yr......4.25%
3yr.......15.38%
5yer......30.3%
inception...23.67%
annualized.
Wow. I remember sitting across from you at 21st Amendment In February 2010 discussing targets like that. Amazing, bro.
DeleteShould have handed my portfolio over to you.
DeleteCNBC? An Imodium commercial would seal it.
ReplyDeleteShanghai futures -4%.
ReplyDeleteNumber of husbands and wives not talking to each other in China?
DeleteLet's limit the above to households with money in stocks.
DeleteHang Seng -3.71% (-830 points). Ouch!
DeleteShanghai -6% and about to dip below 3300.
DeleteRichard Suttmeier targets a break of 3364 as a 'problem' for global markets. Assume he's referring to a 'close.'
DeleteHanglower -964 points.
ReplyDeleteWhere's David when everything's going his way?
ReplyDeleteTaipei down another -2.56%.
ReplyDeleteOnly Seoul is spared a -2% selloff this evening. Probably too busy preparing for war with Pyongyang.
DeleteI hope we're witnessing capitulation in Asia tonight. If not, gets much worse.
ReplyDeleteShanghai 3275.
ReplyDeletePots and pans are flying.
DeleteThe odds of a crash are now 23%. The fact that I'm typing this cuts it back to 22%.
ReplyDeleteIntraday low for Nikkei 18878.
ReplyDeleteCrude off -2% to 39.57.
ReplyDeleteMay be a matter of minutes before we start saying 'spared a -[3]% selloff' instead.
ReplyDeleteStarting to get Seoul's attention. -1%.
DeleteAre we setting up for the buying opp of a lifetime in Asia?
ReplyDeleteOil?
DeleteCommodities.
DeleteTaipei -3.5%.
ReplyDeleteEWT was 17 in April. Closed Friday @ 12.45. An 11-handle (or less) on Monday would do it for me.
DeleteShanghai 3225 (-8%).
ReplyDeleteAnd gold is...up a buck.
ReplyDeleteTaiwan down 5%, China down 7%.
ReplyDeleteI have 12% in RUSS...had 20% but cut it. Could open up +20% if this sticks. Dang
This is like watching a tennis match.
ReplyDeleteI'm practicing for a play-by-play position.
Delete-3% may have been an understatement. Shanghai Composite -8%, Taipei and Hong Kong -4%, Sydney -2.7%.
ReplyDeleteOK, I peeked. Surprised the US is still only down 1%.
ReplyDelete2nd- That was fun fun dinner even if the wine sucked...but that's what I deserve ordering wine in a brew pub.
ReplyDeleteNo worries. When I wake up in a few hours, it will all be green.
ReplyDeleteLooked away for a MINUTE, and Taiwan is now -5.6%. And I thought tof was exaggerating.
ReplyDeleteAt some point, it becomes impossible to recover quickly. Can Taipei bounce back from a -30% hit in less than three months? I don't think 'bounce' is the word to use.
ReplyDeleteWhat do you say, Mark? Does Taipei come up with a 'Hail Mary' play in the second half to put 600 points on the board?
DeleteOk crash scenario is now on.
ReplyDeleteDow futures -363
ReplyDelete-400
DeletePrescient. And an understatement.
DeleteNo tweets from Hussman?
DeleteHussman is sitting with laptop in hand, compiling a crash scenario on his spreadsheet whereby his investors get back to even.
Delete'Even' won't cut it, but it's a start.
DeleteGold acting like it's another day in the park. Spot silver actually down a bit.
ReplyDeleteGold will collapse in 3....2...1...
DeleteNo. David nailed August with TZA/GDX results in the can.
DeleteOK, I think we've seen the lows in Asia. The real fun begins when ex-Asia markets open.
ReplyDeleteHmmm...2% now. How lucky would be to get a 20% crash tomorrow??!!
ReplyDeleteHave they had their lunch break yet?
DeleteDude- I have small positions in RYWVX and RYCVX. Can we tone it down a bit? How about -5% to -10%?
DeleteFunniest tweet I've read is 'Chinese sellers on a cigarette break, i.e, breathing the Beijing air.'
DeleteMark - I would love nothing more than to see that kind of a selloff, but doubt it gets worse than 4-5%.
Delete2nd's right thought. There will so SO many trapped longs it could take forever to recover.
DeleteKass just stopped out of an ES long opened at 1960.
ReplyDeleteRound two of selling coming up in 3...2...1...
ReplyDeleteOK, gold traders now turning away from the turmoil in Asia and back at their desks. +$3.
ReplyDeleteI would be very surprised if gold holds up.
DeleteDamn, 3.5% now in the NDX.
ReplyDeleteOdds on a 'gap up' open no longer 43%. Not even 40%. It's been relocated to the 'prop bets' section of the table.
ReplyDeleteYep. That is off the table now. Europe will add more fuel to the fire.
DeleteHmmm...the angle of the decline is similar to the 2008 period.
ReplyDelete'Fear The Walking Dead' is on at 9 tonight. AMC.
ReplyDeletecan u get it on streaming? i only have netflix now
DeleteNope. Season premier. Shoot, even season 5 and 6 of the original arent on NFLX yet.
DeleteAre the futures 'halted'? VIX uo 45%
sorry, scratch the VIX thing. Something was wrong with my computer.
DeleteI can't tell you how nice it is to be 75% cash with 12% RUSS, even if I have a 12% holding in AAPL. Had I followed thru with the biotech crash scenario I planned for this spring then this would be a most glorious day. Best laid plans often go awry.
DeleteSure makes tomorrow more interesting!
DeleteAbout to go thru the floorboards here.
DeleteMeant to add the question mark to the end of that. Taipei is holding up ok, better than before. Could be seeing the beginnings of a bottom???
DeleteIt will probably be our luck the markets will open down about .75% leaving us right fing nowhere.
DeleteYeah, it's beginning to look that way. I bet it is what happens.
DeleteTime to go watch dead people eat people.
ReplyDeleteThe 1998 market drop (about 20%) was caused by a Russian debt default. If I look at the size of the relevant economies, it makes this China potential currency crisis much much larger in scale:
ReplyDelete1998 Russian GDP: 405 Billion
1998 USA GDP: $8.6 Trillion
~4.7% of USA GDP
2014 China GDP: $10.4 Trillion
2014 USA GDP: $17.4 Trillion
~59.5% of USA GDP
On the flip side, the crash in Japanese stocks in 1989 coincided with a recession in the USA around the same time (also resulted in a 20% correction) and Japan had a $3.0 Trillion GDP vs $5.3 Trillion for USA (about same high 50's %).
Ultimately, we're probably in store for a 20% or so correction here.
Who knows, though. At this point it's only a 10% correction, which isn't that big of a deal in the bigger picture.
DeleteBest scenario for a real market bottom is a morning plunge followed by a green finish. Almost No one saying buy this morning, but I wonder if that's not the right move.
ReplyDeleteAnd Mark, nice year from you. How are you making money? Just ENPH trades?
Dow Futures now down 625, going to be a very weak open.
ReplyDeleteAgreed that a quick drop is the most bullish scenario possible here. Having lived through 1987, however, the ultimate lows may not be hit today.
ReplyDeleteDJIA futures -660 points. Crude -4% to 38.84. EEM (Emerging Markets) -5%. XLE (energy) and OIH (oil services) both off around -5%.
ReplyDeleteI closed AAPL at 101-and-change at the open of extended-hours trading. Now bidding 99.
The two bright spots are GDX (miners) and TLT (bonds).
Difficult to envision a 'bounce' off these levels given the overwhelming supply likely to be offered by trapped longs.
Tough morning for the FANG gang.
ReplyDelete----, even miners now headed down.
ReplyDeleteThe question is whether to close the Rydex positions, or add.
ReplyDeleteRYCVX (2x DJIA) and RYWVX (2x EM)->I have 3.125% of the portfolio invested in each. RYPMX (Precious Metals)-> I have 6.25% invested. Even with the Kevlar offered by position sizing, it's going to hurt.
DeleteKind of a good hurt, though.
DeleteSold aapl at 100.7. May buy back.
ReplyDeleteDebating when to sell russ
Nice. I like your dilemma more than mine!
DeleteDow -852. wow.
DeleteF---in' A.
DeletePut a sell order in for RUSS at $66. Maybe I get lucky. Smart thing is prob to hold this for a few more days for a massive 30% spike day.
ReplyDeleteActually, I pulled the order. Willing to let it ride a little. Oil at $38 is a very ominous sign for Russia.
DeleteFing A boys. I got out of bed early for this one.
ReplyDeleteI had a 20% position in YANG at $89, sold at $89. Set to open at $148
ReplyDeleteHere we go...
ReplyDeleteSEDG!!!
ReplyDeleteMy XBI lottos hit pay dirt.
ReplyDeleteWhat was the opening low? DJIA -1400 points?
ReplyDeleteHoly shit. JPM hit $50 and AAPL hit $92. why didn't we put stink bids in?
ReplyDeleteMarkets starting first attempt at a bounce - let's see if this has any staying power.
ReplyDeleteENPH
ReplyDeleteReopened a partial position in AAPL @ 93.
ReplyDeleteWell, TD AMeritrade isn't taking any orders online.
ReplyDelete"
DeleteService unavailable
We're sorry, it appears something is temporarily wrong with our servers. Our tech team has been notified and is working on it.
If you continue to experience problems or have questions, give us a call at 800-669-3900 or send us an email.
"
I'm hearing Merrill Lynch and Schwab are slow/down too. Could see a flood of sell orders throughout the day if this is the case
DeleteI'm able to place orders, not sure if they'll fill. Can't cancel orders though.
DeleteThat sux.
DeleteFCAU - Yeah, was thinking this would fall under $13..... Not surprising at all.
ReplyDeleteI tried like hell to get into SEDG, but just couldn't. I guess if I used Market orders, but that's crazy.
ReplyDeleteSome really lucky buyers this morning.
ReplyDeleteYep. Lot's of charts ruined now too.
Delete25% odds we close green end of day.
ReplyDeleteLooking good
DeleteIdeal scenario for a bottom.
DeleteMy bad investor friend called today to ask if I was afraid of the market.
RSP - equal weighted S&P 500 ETF, sold down almost 50% today and now halted - guess the sell orders overwhelmed and people couldn't get out.
ReplyDeleteGoing to mess up the charts
DeleteNYSE had 98% down volume as of a couple of minutes ago.
ReplyDeleteFunny, but stocks like KTHN which trade on the OTC Markets not affected at all and actually up from last week,
My only concern with the dip buying here is nothing in China / Russia has been resolved.
ReplyDeleteYeah, but very likely the sell-off was almost certainly too big relative to the issues.
DeleteIBB bouncing nicely - short trade still could well be setting up for next month.
ReplyDeleteALDW
ReplyDeleteGiven the choice to close positions in RYWVX (Rydex 2x Emerging Markets) + RYCVX (Rydex 2x DJIA) at the 1030 est window, or to add, I'm opting to close. I was prepared for a crash scenario, but even having sized down I was surprised at the intensity of selling. There is now a fairly good chance we retest the morning lows. DJIA currently off -400 points (-2.45%), EEM -4%. A far cry from morning lows of -6% and -8%. I had 3.125% of the portfolio invested in each, which seemed pretty small until EEM hit -8%!
ReplyDeleteClosing AAPL @ 104.
With the exception of a position in RYPMX (Precious Metals), back to cash.
MMYT - Pretty happy with the way this turned around.
ReplyDeleteJust looking through some of the day charts for stocks and some pretty amazing trading ranges. In hindsight, the obvious thing to do was go very long into the early morning selloff.
ReplyDeleteMRE.TO, my only stock in the green now, is up 17% from the morning lows.
I'm really annoyed that I wasn't able to get any orders in this morning. It's almost as if the selloff never even occurred.
ReplyDeleteGranted I was only looking to do a day trade, but when I saw things like BIDU down to $110, it was a no brainer trade. I still suspect we see lower prices over time but who knows? I think the momentum lower due to lower oil is a significant weight on countries like Russia and Brazil.
DeleteI see prices have recovered smartly as bounce players jumped in but many are back to the same rate of decline.
ReplyDeleteStill holding RUSS but again, annoyed I couldn't log in to sell that when it hit $63. Without a bounce in oil, I doubt we have seen anything close to the lows for RSX. But RUSS is a leveraged ETF so the key is getting out before a bounce.
ReplyDeleteThe thing that pisses me off most is the small trade in puts I had on XBI. Those were up over 20x at the lows but trading was completely locked up on my side.
DeleteBrutal - days like today are when you need your broker to work. Can cost you a lot of money.
DeleteHoly shit. SEDG went from down 25% to up 6%. Unreal.
ReplyDeleteTBT - With all the troubles, this still hasn't reached the previous low of ~$38, decay and all..... Seems TOG may be in play? Not sure though if miners really can participate though, nobody pulling stuff out of the ground seems to.
ReplyDelete“Ford Motor (F) got as low as $10.44 per share. The stock was actually suspended not because of the drop but because of its bounce back. “
ReplyDeleteI sold RUSS at $59. Probably a mistake but with AAPL up I have no interest in holding a short right now.
ReplyDeleteRe-entered RUSS at $57. Stop below today's lows. Small position. Just staying with cash mostly as I see no real reason to engage in this market driven by computers.
DeleteStop hit. Oh well.
DeleteI ended up re-entering this at $56.2 and $55.7.
DeleteBXMT - Wish I'd caught that one. My daily PSEC stink bid wasn't entered yet either..... Crap!
ReplyDeleteENPH - How about that, what to think of this.... Trust it or fake?
ReplyDeleteOZM - Another dividend payer coulda had a great entry with plenty of room for stops.
ReplyDeleteALDW - Now I've got a nice capital gain and a sweet dividend at bargain prices. Scream at you guys later.
ReplyDeleteTried a trade in UWTI at $.8135
ReplyDeleteSold it at $.80. Oh well, these day trades aren't worth it. Up a little for the day and just gonna sit on the sidelines and wait for lower prices.
DeleteWow, BB, you intuition on Friday was amazing -- a crash open on Monday followed by a powerful snap back!
ReplyDeleteI think the market will keep dropping for a few days to get close to this morning's lows, and if they hold, THEN the bottom will be in...
ReplyDeleteSold half of RUSS that I re-entered around $56. Tempted to hold but risk is really high in general given the volatility
ReplyDeleteSold rest at $58.x
DeleteBB- Mostly short swing trades. Did very well in EYES, MMYT, ENPH, etc.
ReplyDeleteRe-bought RUSS a little bit ago at $58.09. No idea if I would have been better off just holding this but this is quite a good day trading etf right now.
ReplyDeleteSold RUSS at $58.7. Might re-enter after its spiking lower
DeleteBought back at $57.9 and sold again at $58.6. This is nuts.
DeleteRebought at $58.7.
DeleteJust when I thought I had seen everything:
ReplyDeletehttps://instagram.com/p/6xtw6ZK-zF/
I just noticed that I got stopped out of my GDX position, since I placed a stop at August 14 lows. Made only a tiny profit there. Will re-enter if GDX rebounds back above those lows.
ReplyDeleteSuch volatility spikes don't come too often. Just purchased a couple of January 2016 puts on VXX at $7.90, strike 25.
ReplyDeleteSure an interesting day.
ReplyDeleteNice morning bounce, but then started heading lower at 1:00 - margin call time. Now a bounce starting at 3:30 when the margin calls are done and the "smart money" moving in.
That's a possible scenario anyhow.
DeleteRough close but I doubt we can read anything into how it traded after bouncing. Today's bottom could hold for a little while I think, assuming oil doesn't continue to plunge.
DeleteI can't quite figure out why the dollar fell vs the Euro. My guess is this has something to do with the carry trade. I'd think the dollar continues to rise over time. This and oil (which I guess trade inversely together) are major indicators.
DeleteWould have liked the bounce to hold better into the close, but kind of fell apart.
DeleteGood news is stocks are getting cheaper, if nothing else.
I was talking to a friend of mine that is a pretty good investor. We were talking about how there's a chance housing could have peaked for a few reasons:
ReplyDelete(1) Overseas investors - there was a decent amt of demand coming from Russia and China and with both markets / currencies there in major turmoil the odds of those buyers stepping in are diminished
(2) Stock market downturn here could cause buyers to pause.
Odds probably favor a bit of a temporary slowdown in housing as we work through this, which could cause bulls like David Rosenberg (bad timing again?) etc to be focusing too much on rear view type metrics when looking at the valuation of the market.
This Bill McBride usually has a good read on housing and he expects "expect several years of increasing single family starts and completions." Housing starts are still near the lowest rates since the 1960's:
DeleteRead more at http://www.calculatedriskblog.com/#4yMBPzAIQ5MGo2D8.99"
Closing RYWVX/ RYCVX at the 1030 window was the right move.
ReplyDelete(a) RYCVX (Rydex 2x DJIA). Closed off -4.71% at 1030 (est). Closed down -7.24% end of day.
(b) RYWVX (Rydex 2x EM). Closed off -8.36% at 1030. Closed down -9.25% end of day.
Sounds brutal, but note that position sizes were quite small ('crash-proofed,' if you will), and overseas markets did in fact crash.
I elected to hold another small position in RYPMX (Rydex Precious Metals), which closed down -7.66%. Miners are the one sector in which I have a modicum of faith.
Portfolio off -0.7% versus an average of -3% to -4% for even conservative funds.
DeleteTough day, sorry to hear that. Sounds like most of us traders had prepped for this somewhat at least by coming in with a good amount of cash. Lots of sell signals were going off last week and having cash helps you see the picture clearer until a new base is formed and stability comes back to the market, even if its at higher levels. The key is staying alive as a trader during volatility / down markets so that you can hit home runs during new up trends.
DeleteI wouldn't say it was a tough day. Having sized positions to withstand even a -25% to -30% drop left me free to trade without much emotional involvement. In fact, had markets dropped that much (or more), I would have been more than happy to exchange a -3%+ loss for the opportunity to size up on the long side.
Deletegotcha. good to hear.
DeleteSeems like we should bounce between today's lows and highs for a little bit. That's my best guess.
ReplyDeleteI bet we get a retest of 2000 to 2040 again, though, before the year is up.
DeleteTook my RUSS off after hours at $60 and $59. Flat going into tomorrow. Probably should have taken a stab on a SPY long but liking being in cash now.
ReplyDelete