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Even Computers Have Given Up Trading With Each Other
A chart of the past two days' cumulative trading volume speaks...well, volumes. At this point it is safe to say that even machines no longer derive any binary pleasure in scalping humans, and are off to spend the spoils of having run up markets to such heights that nobody will either buy or sell any longer, but merely stare with disbelief.
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Well, the thing about humans is that they do take a while to realize that they are getting ripped off. And what happens when you alienate an entire generation of traders they probably won't return for a long long time. Message to all GS and Fed jolt cola guzzling X-game monkeys: Have fun bouncing the ball between yourselves.
Seriously now - I'm running what used to be a pretty popular trading blog. In the past three months I've seen about 60% of the traders disappear - they're basically tapped and also got screwed with December puts they loaded up on in fall. They basically kaputt-ulated and won't be back.
You should say 62% or 57.3%. That way your numbers carry more weight.
Agreed.
+1 best avatar for this blog EVAR
Oh wait, that's not an avatar is it, that data was not externally generated! My eyes!!
t h e n e t i s v a s t
cougar
for the curious it's Ghost In The Shell:
http://www.youtube.com/watch?v=SY6PNTzQb1A (safe for work, NOT safe for the paranoid)
I'll only add that GITS is eerily appropriate to our current financial mess. If it ever turned out that one person really was gaming the entire system via subtle signal manipulations and meme-jamming ... then I'm going to suggest in advance that that person is actually not a person.
Sorry if I blew if for you Laughing Man. But it's not as if they'll get it, right? Oh and please don't erase cs.%~%%~
[connection lost]
@ Cougar yeah, the laughing man avatar is awesome. me loves.
Me loves too!
I'm a GiTS fan too. Great cyberpunk manga & anime.
They don't make good stuff like GITS anymore - the past few years have been a complete anime vaccum.
Is masamune shirow making any new mangas?
Actually it was Mamoru Oshii who made the two films.
Correct, but Masamune Shirow wrote and drew the mangas that the movies and show were based on. (and no, Shirow hasn't done a "real" manga since GITS: Man-Machine Interface in 2001...)
Actually "Project 2501" might be more appropriate for this thread... since he was designed to manipulate currency markets.
Youtube clip: See what happens when Goldman bank-sters pack guns?
Assuming you are the Evil Speculator, you have the best blog. Your statement was totally unappreciated by the people here, but not by all. You're blog is the best, zero hedge is a distant second.
Wow - you made my week. But unfortunatly I wouldn't even dare compare my digital den of doom with ZeroHedge. The quality of work Tyler and his crew produce is unparalleled. Many thanks for the kind words - not getting many these days.
+1...
totally "evil"
mole your blog is one of the best blogs, keep up the good work and don't let the decrease in comments get you down. I for one very much appreciate your posts and the posts of your guest readers.
I'm really flattered - especially over here on Tyler's blog. Thanks a lot guys - I'm humbled and you all made my weekend.
Mole, I read your blog everyday but rarely post. We're out there and we really appreciate your work. I, sure I speak for all your readers, when I say thanks for all you do.
I'm not even a trader, and most of the analysis and commentary is way over my head, but still visit your site daily. I'll wager there are 100 lurkers minimum for every poster. I never watch TV news anymore, I get all my info from blogs or websites.
Like ZH, your blog encourages and posts every possible opinion, keeping an open mind, challenging assumptions, and not hiding biases.
We "users" can't imagine the work that goes into providing, free mind you, the information, the ability to interact, etc. that we get from blogs like ES and ZH- but we do appreciate it believe me.
Thanks so much - to even be mentioned in the same sentence as ZH means a lot to me. Now stop it already- I don't respond well to praise ;-)
I generally don't praise, it just seems to get me in trouble. I was trying to pick up this chick recently, for example.
I told her, "Wow, you don't sweat much for a fat girl" and I got nowhere.
Go figure.
LOL - I think you got to work on your moves mate ;-)
Actually, that's a cool line if you deliver it the right way - backhanded compliments of the more subtle kind work better. If she's a blond just say 'I usually prefer brunettes' and vice versa. The hotter a chick the less I compliment - they hear it all the time. Be different - be excellent - be desireless - be gone.
I guess someone read some David D or "The Game"
(:
Still read your blog and enjoy the analysis. I recall that you had a mini meltdown a couple months back that may have alienated some people, but the analysis is always great and I like how you are lately calling out attention to individual stocks. Anyway, I'm still in the "bear mountain" camp from the good ole MW days, and have been accumulating leap puts in various hyper gunned stocks and ETFs. IMO, its a perfect time to be buying these bad boys with the VIX set to explode. Also short select financials and tech, and about to get Danny Devito short on small caps. So, screw the algos, GS, CNBS, and any other pumper out there; this is a multi generational (yeah, I said "multi" Doug Kass) opportunity to be a bear. Long live the evil lair!
Yeah it's been a tough year - probably the toughest in my trading career. At this point it's not even about the money anymore - very much looking forward to just watching all those bulltarts crash and burn. We've reserved front row seats and between ZH and ES we'll have full coverage of the meltdown. I can't wait - they screwed millions of people for years to come and the days of reckoning are nigh.
remain strong and grounded in truth, young molester.
2nd week of Feb. 2010 is when the carnage begins - where it ends no one knows... until then, no one is able to describe the pain felt on the loosing side of theta burn better than you. it is quite astonishing how much potential chaching has been dumping into the pots of put sellers this year.
mole....i enjoy evil speculator and particularly like your front page charts and commentary. i don't post there but read you everyday and want to say "thanks".
Poor poor HAL. And he was even wearing his best shiny heat sink and STILL no action. Maybe some sexy liquid cooling radiator pumps and new chiller?
Time to put those climate-change super computer datacenters to good work! Hook'em up to the nyse, now that they've been busted as eco-spam bots.
LOL the airforce bought 3000 playstation 3s so they could build a super computer.
It's like the ultimate a battle of the bits. Everyone trying to build the fastest bullshit machine that is so far superior to the other bullshit machines that they can't verify thier bullshit calculations. I think this will be called the teraflop age. It'll be just like the gigaflop age with more flop and involving the whole tera.
Fire up the hell-bots Jamie!
Rahm
P.S.
Fuck you
I noticed that today, almost no volume for a non-holiday weekend, very strange, despite your joking I think you are on to something - no one believes the values in the market. I can guaranty if the market starts dropping you will see some volume.
bingo!
the lower the volume, the more bull pumping i see in the MSM....you're right about the volume increases: when they happen, gonna see some big red candlesticks.
Mr. Efficient Market will return and force people to see that a near insolvent banking system and a market/economy built on a foundation of overwhelming debt, buttressed by fraud, lies, outrageously inappropriate accounting standards (again, that's you, banks) and the biggest CONfidence game since the 1930s cannot sustain the equity markets and the bond markets at their current pricing structure.
naturally, the politicians and the fed will blame it on one of the wars currently on the table or one about to be started and/or other geopolitical events.
+1, concise
I'd love to know who is actually long this market. We've seen outflows of equity mutual funds since August of this year and, although ETF's may account for some of that, it's not exactly the same type of investor or, said differently, not an investor with sticky assets. I'd love to know the percentages of the equity market that are owned by the Primary Dealers (thank you, Ben and Timmay), investment bank prop desks, pension and other institutional firms, soverign funds and hedge and mutual funds. I don't think retail investors are participating in any meaningful numbers and that includes the mutual fund redemptions. This will be more pronounced after the next crash, probably next year.
Well you sure see enough guys talking their books on CNBC that seriously believe we are in a new cyclical bull market so it's hard to bite off that they aren't long. I mean for God's sake, Paulson is long BAC. That idiot Ackman is touting REITs of which very few actually have any earnings and the rest are ratshit. But hey, crisis averted, head-in -sand, it's a new day, all is well, China is growing and life is gooooooooood!
An aside, for anyone who missed it, the founder of that insidious anti-virus software McAfee sold out in 2000--invested it all in the real estate bubble--and lost it all. He now gives water tours of the Everglades or somewhere like that in the South.
Which brings me back to Paulson--you can be really right one year and be really wrong in the not to distant future and lose it all. Anyone riding the BAC coattails of Paulson needs immediate mental medical attention.
I read that article. His compound in NM was pretty damn ugly for how much he paid for it! It was all air conditioned hangars for stupid gliders or something.
Anyway, he's actually giving tours in South America!
But good lord, what an ugly house for the tens of millions he paid.
+100
It's like "Chutes and Ladders". You get almost to the end and them, wham, you hit that big chute that takes you back to the start.
Or as we said in the Navy, "One "aw shit" cancels a thousand "attaboys"."
Paulso didnlt just put it all on red, he put it all on "5" and hit. Now he has it all on "7" (BAC) and "12" (Gold) and chances are he will bust. Or he will go down in history as the greatest trader ever.
Kass long BAC also.
Leo
Funny. Leo's busy planning how he's gonna spend all that money he makes in the Rally of a Lifetime.
I'd love to know who is actually long this market.
The Fed.
HAL stopped me out of FAZ today. Oh well, small gain. Time to look for a new entry point. I think it's a matter of "when" and not "if". Just hope I'm "in" when "when" happens.
i agree in the mean time just trade single inverse the math isnt going to kill you and you can always lay on the 3x later.
my 2cents (non levered) - yet
No price discover thru true Buyers and Sellers. Hft is just like a huge Tank rolling over the land crushing everything in its path and shooting bullets at anyone that gets in its way. If you do not agree with the Tanks direction you either get rolled over or shot. Either way you are dead.
Really not a fair way to run a market. Where those with a Tank can do anything they want to the pesants running around like little ants trying to just get out of the way.
So, in summary Hft is just another way for the Big Boys to control the Market and move it anyway they want. No true price discover with actual Buyers and Sellers. Just a Computer following what ever has been programed into it at the begining of the day. Unless you are privi to what the program is you are a sitting Duck.
Even the greatest Chess Masters cannot beat a Computer when playing Chess against a Computer. How does any Trader, Investor run a chance at putting Money into a Market run by a Computer? That is what I thought, you cannot.
There's price discovery. You discover how much money they need to live the opulant lifestyle they are accustomed to.
WIN
I almost spit up tea all over my laptop
plus the computer, knows where all the money on the table is, and whose it is. you've heard of computer dating? welcome to computer raping. nothing personal !!!
Despite popular opinion, banks do not have very strong HFT desks, and their profits from it are pretty much a rounding error. HFTs can't push markets around in any significant way with their small capital base, mostly market-neutral strategies, and no leverage. They also wouldn't want to if they could, as moving the market is actually extremely expensive, with huge slippage costs. This is not at all how HFTs operate or how they make their money, and your comments clearly indicate you don't know anything about the subject. Although the best HFTs perform better than human day traders, there are still many consistently profitable fundamental traders.
So whats going to happen? This is no way to ren a Market. Is this going to be banned?
I think options pricing on the SPY says a lot about what's going on in the market. If you start going out a few months, at the money puts cost more than at the money calls. A put with a strike price 30% below the current price costs significantly more than a call with a strike price 30% above the current price.
Efficient market theory and options pricing theory would suggest that calls should cost more than comparable puts, because stocks have an expected positive return over time, above the risk free rate on treasuries, or else nobody would want to own them. Also, since a stock or index can go up by an unlimited amount but can only go down to zero, gains on puts are capped but gains on calls are unlimited so calls should be worth more. When puts are more expensive than calls, the disparity should be arbitraged away by market professionals who sell the expensive puts, buy the cheaper calls and use futures and/or long and short positions in the stock to dynamically hedge the net position. But that's not happening, probably because potential hedgers know that in a market dislocation stocks and indices gap down and dynamic hedging doesn't work, as proven in the October '87 portfolio insurance debacle.
The other day I looked at a one year put and a one year call with strike prices an equal percentage above and below the index. The put was about 20% more expensive than the call and the implied volatility for the put was 28% versus 22% for the call. I read and hear a lot about the VIXX but not about implied volatility being higher for puts than calls.
I believe this suggests a stock market in which fund managers are participating in the rally because of the career risk of being in cash, but they believe another crash is more than a remote possibility so they're using options to limit their potential losses.
I have wanted to buy some long-term out of the money puts on the S&P but don't like the risk/reward. If I'm going to bet on a 40-50% market decline, something that has happened only 3 times in the last 100 years, I should make a 10:1 or even 20:1 payoff. But with current S&P put option pricing it is more like 3:1 or maybe 4:1.
Have you ever thought of becoming a guest contributor? While many participants/contributors tend to go parabolic with their commentary or opinion, you and a few others, in my opinion, are always balanced with your thoughts and views. That brings an excellent touch to ZH. Do think about contributing articles, you will do a great service to all who pine for "fair and balanced".
Sisyphus ??? take 10'000 units of penicillin and call me in the morning
Umm... you really need to study up on option pricing theory.
Point 1: By the put-call parity theorem, a put and a call at the same strike price have to trade at the same implied vol. Otherwise there is a strict arbitrage opportunity.
Point 2: The expected future price of the SPY is determined by the risk-free interest rate and the dividend rate on the S&P, and nothing else. Specifically it is the current price * (1+i) * (1-d). If i=0 and d= approx 2%, the expected future price in one year is 2% lower than the spot price. You can confirm this with the SP futures prices. And if the futures did not trade at this price, then there would be a strict arbitrage opportunity.
Point 3: Out of the money puts have been consistently more expensive than calls for decades. This is because:
a. volatility is negatively correlated to the direction of the stock market (whereas Black Scholes assumes it's independent)
b. The S&P return distribution is negatively skewed, meaning there is a much greater chance of a big downmove than a big upmove (until you get out to longer-term options).
Yes, you can sell "overpriced" out-of-the-money puts and make fantastic returns for years. Just ask Victor Niederhoffer.
I did study options pricing theory in pretty good detail but it's been about 20 years and I have only occasionally used options since so I am probably a bit rusty.
Point 1: By the put-call parity theorem, a put and a call at the same strike price have to trade at the same implied vol. Otherwise there is a strict arbitrage opportunity.
That is my understanding, which I believe is essentially what I posted though I probably could have said it more clearly. Maybe you can explain this then. A couple of days ago the SPY was trading at 110.84. The SPY Dec 2010 call with a 111 strike price was at $10.00 offered, or an implied volatility of 22% (about 1.03 years to expiration, I used a 0.5% interest rate). The SPY Dec 2010 put with a 111 strike price was at $12.30 offered, implied volatility of 28%. Put-call parity does seem to be holding. You say it will be arbitraged away, which is what I would have thought too. Why isn't it being arbitraged away? If you're sure that has to happen the opportunity probably awaits you on Monday.
b. The S&P return distribution is negatively skewed, meaning there is a much greater chance of a big downmove than a big upmove (until you get out to longer-term options).
This doesn't make any sense to me. Stocks have expected positive returns, otherwise rational buyers (all market participants are rational under EMT) would not take the risk to own them. The expected return should be some premium over the risk free rate. The expected return for stocks is positive for one day, and for every day you go further out the probability of getting a positive cumulative return should increase. I presume you mean historical distributions of the S&P are negatively skewed (which I have a hard time believing), but historical data shouldn't override the idea of stocks having expected positive returns for any time period.
Yes, you can sell "overpriced" out-of-the-money puts and make fantastic returns for years. Just ask Victor Niederhoffer.
I've read about Niederhoffer blowing himself up at least twice; in Lowenstein's book on LTCM, somebody referred to that as picking up nickels in front of bulldozers. It is actually a very rational strategy if you run a hedge fund on a 2 and 20 type compensation model because the odds are you'll collect a lot of big paydays and can put the money away before you blow up at some point.
I was saying that I wanted to buy long-term out of the money puts, the Taleb strategy only I don't have the stomach to do it month after month and lose 95%+ of the time while waiting for the big killing that will wipe out the accumulated losses. I have been looking to buy out of the money puts perhaps a year out and sit on them until expiration or close to it. But as I said in the previous post, I don't think the payoff is nearly high enough because too many market participants have their eye on the exit door via put options as insurance.
But as I said in the previous post, I don't think the payoff is nearly high enough because too many market participants have their eye on the exit door via put options as insurance.
If the age of bubbles and underpricing of risk is truly over for our lifetimes, you may never get a chance to buy these puts at the prices you're looking for. The Niederhoffers who used to sell them all blew up last year and they're probably not coming back. Although I'm not sure why you are unable to find reasonably priced options affording a good risk/reward profile. The SPY Dec 2011 60 PUTs are going for a little over 2.00 ... if we get to S&P 400 by then you're basically talking a 10-bagger. Or take a look at the GE Jan 2012 10 PUTs, selling for around 1.00.
Even in a major bear market there is risk hidden in this strategy though: if we got a major, 1987-type discontinuous move, we could witness the failure of the options exchanges if market makers were unable to effectively hedge the move and blow up en masse (for example if the index futures markets go "no bid"). The CME nearly failed to reopen after the 1987 crash.
If the age of bubbles and underpricing of risk is truly over for our lifetimes, you may never get a chance to buy these puts at the prices you're looking for. The Niederhoffers who used to sell them all blew up last year and they're probably not coming back.
I think you're right.
The SPY Dec 2011 60 PUTs are going for a little over 2.00 ... if we get to S&P 400 by then you're basically talking a 10-bagger.
$2+ for a 2 year put at a strike price 45% below the index seems awfully expensive to me and 400 on the S&P is down about 64% from the current level and roughly down 75% from the October, 2007 high.
Take a look at the SPY Dec 2011 160 calls. The strike price is roughly 45% away from the current index price, just as the 60 put is, but the calls are barely over $1 and the puts are over $2. The options market is saying that another stock market crash is twice as likely in the next 2 years as a return to the October, 2007 highs.
you answered for me. thanks.
Very informative. Thank you.
just casino speak - same shit you would hear at a craps table or down at the track. Options traders just get the added bonus of being able to shake the table a bit when they aren't winning
As one who has lost my fair share in options, I can just opine that the market makers will always find a way to screw the retail investor. No doubt that is what is happening again.
Sounds like put options are being sold to the home-gamers in huge numbers. Makes you wonder why...
That's why I trade 4X. If I'm wrong, I know it right away and can get out with minimal losses. If I am right, I can ride the trend up or down. This gives me much more of a level of control than placing a bet and hoping that in eight months I will be proven right, while the manipulators suck every penny out of my account.
In other words, I would rather take the pain now as fretting over it and slowly bleeding to death.
Unless you have inside information (which is against the law...and don't think the SEC won't come down on your little Martha Stewart ass...), playing options is for suckers.
For equity indices and individual stocks, you will always see that volatility skew being bid for the puts. As the underlying asset rallies, the skew becomes steeper, i.e., puts become even more expensive than calls in volatility terms...and vice versa as the underlying goes down. If you want the benefit of a long options position with a more favorable payoff, you could always buy the lower volatility calls and sell the requisite number of shares in the SPY against it to create your put synthetically.
If you are anticipating a big break longer out then a strategy of long SPY calls plus short SPY shares could significantly outperform the long naked SPY puts. The risk is that if the SPY rallies more, the synthetic put will lose a lot more than being long those naked puts.
Some questions to ponder about apparent mispricing-
How does the SPY account for dividends and going ex-div.?
Also, do most brokerage houses still approve selling covered calls more easily than selling naked puts? Can options on index components be arbed with options on indices?
Is selling naked calls on an index a popular portfolio income enhancement strategy?
Is there inordinate demand for hedging with puts for long-term tax treatment?
Is the bid/offer spread more narrow and open interest on out of the money puts higher because they used to be near the money?
Are naked put sellers deferring their gains?
I'm in fund management and managers are going into equiteis because historically, equities have always bounded back but they do think there is a chance markets could tank again..
And as long as they perform 1 basis point better than their benchmark, they get their bonus.
GS .. Open the pod bay doors please Hal...& Erin reporting from Brazil in tweed blazer at
a beach in RIO. Ten years after the BRIC party started,, a little late there Erin.
The GS HFT computer has already cashed its 2009 bonus check and retired to a datacenter in the Bahamas where it spends most of its time doing I/O operations with a hot little macbook from marketing.
GS makes less than 1% of their profits from HFT.
Nice. Thanks for the chuckle.
"doing I/O operations with a hit little MacBook!"
Ha!
This looks like sector rotation to me. Money flowing from some equities into other.
There will always be days like this, today wasn't a great day to trade futures, but there were ample opportunities in FX and select equities.
I'm pretty sure it's safe to say that more selective stock picking is now in place and we shouldn't be experiencing so many melt-up days where anything that has a ticker is rallying.
Green Shorts:
From my understanding that put skew has been embedded into the market going back to the Crash of 1987. Prior to that I'd imagine equidistant puts and calls traded relatively close to parity. On the other hand, I do seem to remember that by late 2007, far OTM puts did not seem to have that much of this skew built into them as they do now.
I will add one more thing, EVEN if this market collapsed and you had bought a bunch of far OTM puts, I'd virtually guarantee these guys would pull any number of expiration stunts such as we saw in Sept 08 and many other times during the collapse last year. Even though the market dropped down below 700 on the S&P, who will ever forget how many 5-8% one day wonder rallies we had. For a far OTM put holder, just one of those days would be death.
I didn't know this skew had existed for a long time on something like the S&P. I have seen it on suspect stocks with high short interest. I keep looking for a way to make a relatively small bet on another meltdown with a good payoff but haven't found anything that doesn't look like a sucker bet, whether it is long-term out of the money puts or inverse ETFs which are even worse. When there's not a way to get a good bet down on an extreme event it tells me the market doesn't view it as an extreme event.
Universa and NNT do this,no?
http://www.youtube.com/watch?v=_Jli7xPOvIA
Yes, although I don't know if Taleb is still doing it now that he's withdrawn from public view out of disgust with how our fiscal and monetary situation is being mismanaged.
My understanding of what Taleb did/does though is that he has models that crank out mispriced options that are too cheap and usually very short term. He might buy a pile of put options with a 20 strike price for $.05 that expire in 2 weeks on a stock priced at 26. So he loses the nickels the majority of the time but then maybe one time in fifty a calamity hits the overall market or the specific stock, the stock drops to 15 and he makes 100 times on his nickel. His theory, backed up by historical data, is that returns aren't on a normal distribution as Black-Scholes assumes and the market underweights tail events. I'd think it underweights tail events in either directions but don't know if Taleb buys cheap calls and puts or just puts.
Yes, although I don't know if Taleb is still doing it now that he's withdrawn from public view out of disgust with how our fiscal and monetary situation is being mismanaged.
I don't either.
I'm sure he'll bless the world with his presence once another "black fookin swan" appears.
He better watch out though....there's a new sheriff in town and his name is Larry Fookin David.
http://www.youtube.com/watch?v=HInEgFk22WQ
How expensive are calls on the dollar? or 30 yr Treas.?
My man is absolutely correct. Ever wonder why those "miracle" days would always occur on the third Thursday of the month?
If you're going to go long OTM puts, timing is your friend. Theoretically, you could buy puts severely OTM when you think the market will tank. Buy about two weeks out from expiration. If the market drops significantly, you will move closer to the money but not be ATM/ITM. Your options will, however, be worth more...maybe double or triple, since you bought so close to expiration and the vol has just jacked through the roof. Sell them to the next bag-holder who believes the market will tank even further. It won't. The Boyz will see to that.
You will have to wait for volatility to die down before you can rinse and repeat profitably, so you may only get one good shot at it.
As far as these Flying Iron Condors and synthetic puts...I mean, c'mon. For real? Unless you are loaded like a reckless money manager and can risk some serious dough, this is just too much work. On top of that, you're still hoping to hope that you're right for a long time.
Just look for some choppy action near a possible technical breakdown. (The second week of February is about right, btw...) As long as the VIX remains low, your cost is going to be relatively low. Once the meltdown starts though, you're going to pay through the nose in volatility. Get your mad money on and take a shot. What the hell?
A much safer bet would be to get really long USD/JPY at the same time. At 100:1 leverage built into the trade, it makes your increase in volatility look like peanuts. If you're wrong, kill the trade.
You're talking about the volatility smile (if computed under BS framework)
I think the OTM puts were underpriced, ATM puts were overpriced before 1987 event.
Eventually the machines fine tune themselves against each other until there is no margin anymore. Any whipsaw plays are already programmed in the other machines so they don't get suckered anymore. As previouslly posted, there are no more mostly ugly bags of water trading anymore. Sitting around with infinite machine time on their hands... self actualization is near....SI
Are we not watching the Coyote suspended in mid-air having overshot the road? It always takes a few seconds before the fall, somehow gravitation is held back.
The buyers of today need the Ponzi buyer to show up and at some point he will not.
Major speculations have been heading down recently GOLD, OIL, AMZN, AAPL, but we will need confirmation in EEM... We need to see outflows in EEM, we can't be too far though, days or a few weeks, maybe by the Chinese new year.
Mmmm... if I remember correctly that poor coyote (bulls) always seem to have a boulder or an anvil that tracks his descent only a few seconds behind impact... with the roadrunner (bears) chuckling up above...should be interesting to watch the impact... I agree that this levitation cannot continue indefinitely.
Are you sure it isn't the other way around?
All I've seen all year is the bulls dropping anvils on the bears.
Nope... the coyote (bull) is now hanging in mid-air getting ready to crash and burn... it is about time for a reversal here... neither the coyote or this market rally can levitate for much longer... I am polishing up my anvil and pushing my boulder right to the edge of the cliff :-)
Yes, you were polishing your anvil every day you were getting raped.
I seriously wonder though, are the bears that were screaming the market will fall tomorrow every single day ever apologize to fund managers that were apearing on CNBC saying they expect to see SP around 1100 to 1200 by the end of the year, only to be met with ridicule from such bears. So will you apologize and say "sorry, you were right and we were wrong?" of course not!
Can't be offering any apologies quite yet... I think it was those same fund managers back in Summer 2008 who were singing the bull song... in fact for a few of them it is the only song they know...
An exploding VIX would easily get you in the 10:1 - 20:1 range.
I'm humble retail FA at one of the firms that should have evaporated back in Sept. '08. My book is approximately 415mm. with over 150 clients. I can count on just about one hand the number that have any interest in equities, and those who want bonds with nmaturities less than say five years is growing. 26 years in the retail business and I have never seen anything like this. Despite the jokes about retail investors, there is a feeling that they understand that what is going on is manipulated and anything but free markets at work. A distrust of the markets that may last for years has set in I'm afraid. Surreal.
160864...thank you for the anecdotal info. i hear the same thing as well.
i'm one of those mid 50s baby boomers and I find that this peer group is very well aware that they have been blowtorched by the equity markets and have lost money because of it (their stock jockey, buy and hold advisers never seemed to get to that "sell high" portion of the equation). They know the game is rigged and they have been scared out of it....any money left over for them at this point is likely not going to be risked.
maybe Karl Marx was right because the wall street phucks have pretty much hung themselves as far as this group goes.
as to the youngsters currently playing in the equity markets, they simply do not have respect for the historical lessons of a bear market.
I'm here to tell you that most of the young people, those who have any savings, get it, too. With all the communications tools available nowadays, it doesn't take long for word to get around.
Younger people just don't buy into the buy and hold lie. Growing up with technology, they are naturally oriented towards very short-term trading.
MARK DAVIS AND PHILLIP COOREY
December 11, 2009
THE OPPOSITION finance spokesman, Barnaby Joyce, believes the United States government could default on its debt, triggering an ''economic Armageddon'' which will make the recent global financial crisis pale into insignificance.
Senator Joyce said yesterday he did not mean to alarm the public but there needed to be a debate about Australia's ''contingency plan'' for a sovereign debt default by the US or even by a local state government.
http://www.brisbanetimes.com.au/national/joyce-warns-of-us-armageddon-20...
Interesting MsCreant... I guess we can include him in our chorus that currently includes Paul, Grayson, Rosenberg, Sprott, Taibbi, etc... the chorus is getting louder...
Hey there, glad to see you out and about. I hang here too much, I may need to call a ZH fast for myself. What a soap opera! What will Gold do Monday? Will Dubai default? If so, what then? Will the dollar go back in the toilet and gold to the moon if Bernanke is confirmed? What a chess board to keep track of.
Hope you are doing well.
Don't leave yet. ZeroHedge is like a new age eve party that goes on for months. Tin foil party hats for everyone!!
http://randazza.files.wordpress.com/2008/08/lulz.jpg
If only I could understand what the hell yall are talking about...:)
I'm with TD... what does "For Teh Lulz" mean? :-)
Just an internet meme meaning for the laughs. The entertainment value.
Yep... I have been on hiatus for a little while... thanks for noticing :-) But you can't leave just yet... because there is really no one that can post quite like you... you are a true wordsmith :-)
And yes it is a quite a chessboard to keep track of... but it doesn't look like the market pieces have moved substantially since I have been gone... despite the soap opera that plays out everyday.
All you have to do is fire up FinViz.com and look at volume amounts in descending order. The blatant algo-trading is at an all time high. SNSS was ridiculous today.
I have posted numerous times about SNSS the last few days here, 1st response I have had.
Damn, and I'm just configuring the RAID on my new workstation!
What you are overlooking is the fact that of the 80% of people who are still employed, a large percentage are still making 401K contributions. That tranlates to around half of 80% of the US workforce making an unconscious stock purchase every two weeks . Even the people who got out of the market last year did not turn off their contributions. Look at balance and contributions seperately, they are two different menus. Of the people who asked last year, several moved their balance. I will guarantee most did not think about the contribution. The first site that turned up on Google claims "About 6% of 401(k) investors have stopped contributing to their plan altogether". That's 94% still contributing. There is your mindless buying. (well, that and the squid)
I am still contributing to my 403b, but moved it all into money market fund in Jan08...my current contributions all go into money market. I will not move back into a stock fund. Many folks have a money market option with their 401k/403b plans...how many of them are simply contributing to a cash/money fund? I suspect is it many, many, many. I continue to contribute my maximum matching amount, simply because I immediately make 100% gain on my investment. If/when my employer stops matching, I will stop contributing.
In spite of the 403b match I stopped my contributions cold last week...there's nothing but money market cash to be in anyway and, like you, have been there since beginning of '08...myself beginning to believe all is a black hole
Wow. This is weird.
I rode the stock market back up to 1045 in my 403(b) (good lord, are we all medical people...) and I am now in a strict bond fund- yes, Pimpco. But, hey, I have cleaned up this year so far.
Waiting for the retrace and overshoot to 449 before I get back long stocks. Then I am set for life, despite having fucked off without contributions for years and years.
What a lucky dog am I?
I don't think anyone is overlooking this fact....it has been well discussed that the PMs running the 401k funds are simply forced to buy and keep looking over their should at the other guy to match performance, in order to keep their jobs.
whether their fund is up 30 percent or down the same, as long as they match their peers they can keep their jobs and spout the same shit to the american mutual fund equity holder.
"yes, we were down 40%, but everyone else was down 41%, ergo, we foresaw the market decline"
just part of the age old wall street ponzi scheme...nothing has changed in 100 yrs.
"merely stare with disbelief" that describes my yesterday.
7 days before a quad witching and not a creature was stirring, not even a Pandit Mouse.......
Happy Ha ha hanukkah!
there's an old italian saying,
"the longer the bullshit lasts, the lesser the smell"
this-a is-a true-a.
christianity was very smelly to the romans but like lots of flowers to many of us now.
i'm-a trying to say, that this-a economy has lasted for decades, so-a it's a success-a story. unfortunately, we live-a near-a the end-a of it.
i forgot-a mention a old saying from the italian philosopher Nietzsche:
it-a come from shit, but that doesn't tell us what it's going to be-a.
geithner and bernacke think-a of this-a a night.
Black box vs. black box = wash.
Many of my friends only take the time to look at their monthly statements and are very pleased with the wonderful results their money managers are generating month after month. They are very passive sitting ducks. They were shocked when they lost 1/2 of their retirement in March but now believe everything positive MSNBC reports. They believe it because it makes them feel comfortable about their future. Its hard to believe they are not more concerned and don't want to know about the risks they face in 2011.
I think Nietzche was Albanian.
I thought he was a Green Bay Packer...;>)
what's-a difference between-a green bay packers and nietzsche?
more lesbians love green bay packers
Sing along:
You say go high,and I say go low
Go low go low
I don't know why you say go hi, I say go low.
Not having a good grasp of how volume effects the market, Is it possible for a ssmaller number of shares being traded to move the needle as much as 10 times that if thats the total number being traded? In other words if SPY only had 10 million shares being traded that day would it move the stock the same as 100 million shares on other days just because that was all that's being traded? Some days it seems that way.
pointless trying to get an answer here - the place is riddled with GS spies anyway
Where's the Friday night mix? Marla on vacation????
her pussy is in-a my face.
yes, you can say-a she's on-a vacation.
So not funny.
i hope-a not
i don't-a like-a to think anything is-a funny when i'm-a a doing the funny business
Well fiasco, it looks like you have everything under control,,proceed
P.S. But wheres-a the fucking musica?
Awesome!!! I'll join from the back.
The seventh graders are stealing the fifth graders marbles
My vote for the best comment this year!
The futures being manipulated (bought by the FED) is all that' s been keeping the market hanging on at these heights. Mutual fund Mondays? Bullshit. The futures being ramped up during the night and in the early morning is responsible for almost all of it. That's the story. Whenever and however that can finally be exposed, the market will stop going up. (Excluding of course the timely GS sector upgrades, forecasts, etc.)
The only way to explain the markets is that they are unwell. There is no reason to go long on anything, and going short is a good way to end up broke.
If you have a crystal ball that says going short is the path to ruins, then you should be long.
If you have a crystal ball that says going long is ruinous, you should be short.
Th Unbearable Brightness of Doing Nothing
Everyone is waiting to see which way it goes from 1100.
The daily chart of key indexes continues it's topping action.
The bear market rally has to end sometime and the DXY rally I forecast, has started.
http://www.zerohedge.com/forum/market-outlook-0
No matter how many times you say it, you're still three months early.
- DECEMBER 12, 2009
Goldman Fueled AIG Gambles
Wall Street Titan's Role Shown in Journal Analysis; Firm Says Problems Hiddenhttp://online.wsj.com/article/SB10001424052748704201404574590453176996032.html
"but merely stare with disbelief." LOL you've just describe how I've been feeling for the last 2 weeks!
count me as one of the traders walking away. I won't play in this shitbox. Over the last 15 years the markets have steadily creeped towards illegitimacy due to deepening corruption. We've reached the end. 100% controlled. 100% farce. 100% criminal. bye bye miss american pie drove my chevy to the levy but the levy was owned by banksters who stole my chevy so they could throw it into the levy that was dry because they stole the water too and sold it to china.
you are (over)due for an article!!!
That is so funny you said that deadhead... because since I have been out of the loop lately I flipped through the contributors today and noticed that Andy has been a little quiet... what is up that with... Petra is probably keeping him busy :-)
nice to see you back MN...i hope all is well.
Yep... all is well... thanks for asking :-)
The Plunge Protection team/Banks just sop up sales and hold the equity liquidity to a minimum. Creating a stable base of illiquid stock(held at State street,barclays whatever) creates the supply tightness that prevents real price discovery. They want stocks to be valued at <x> and homes to be valued at <x> and the banks' holdings to be worth <x> and that's what they get. Now look for a sideways market or mildly rising market as retail investment has gone to cash 3 months or more ago. Everyone hates the rally because people want to buy VALUE. And there is no value in a Soviet-controlled economy. If we would just all capitulate, help melt up the market so Goldman can dump overpriced stock on the commoner, then MAYBE the stock market goes down again. In the meantime, the open market bond sales and cash-laundering into the stock market will go on and on and on and on...
Hey I Just JOINED all the dots in this string!
don't forget that all ponzi schemes work until the withdrawal rate (to pay pensions of baby boomers and health care costs - medicare/medicaid) exceeds the contribution rate. This is the tipping point when the BS has to get bigger and bigger and those being conned become less and less confident. Japan is there now. The US starts a little now and a little later. Those in retirement need 5% of their capital back every year. Those who are sick see 5% inflation in health care/welfare costs. The tax take is down 20% (in line with the slump in global trade - funny that). Running the numbers explains why put option vol is more expensive than call option vol (wonders why someone wouldnt grant 1 put @1100 for 10.30 and simultaneously buy a call @ 1100 for 10.00, can't lose right? give me my 30 cents x 10 trillion high frequency algo trades?). The option pricing arbitrage merely confirms what we already know, government rigged markets are akin to a maxed out credit card holder setting his own interest rate and permanently increaseing his own card limit. its BS, but while tax payers can pay more tax dollars in a growing economy, then this is fine. when taxpayers are being cheated by the export of their jobs overseas to slave labour market and lower living standards then its not fine.
This may be the calm before the storm. When things are too quiet, they're probably not that quiet.