Moving Averages

A Fully Automated Stock Market Blow-Off?

About one month ago we read that risk parity and volatility targeting funds had record exposure to US equities. It seems unlikely that this has changed – what is likely though is that the exposure of CTAs has in the meantime increased as well, as the recent breakout to new highs should be delivering the required technical signals. All these strategies are more or less automated (essentially they are simply quantitative and/or technical strategies relying on inter-market correlations, volatility measures, and/or momentum). We believe this is an inherently very dangerous situation.

"The Market's In Conflict" - 11 Red Flags In A Sea Of Green

Having tagged last Thursday's intraday highs, S&P futures are fading this morning (for now), as Bloomberg notes, U.S. stock-market internals are exhibiting conflicting signs as the rally in the S&P 500 Index approaches 10% from the low reached after Brexit.

Today’s Trading Is All About Blinking First

The voting has begun to decide Britain’s EU referendum. It’s raining hard and it’s hot, which makes it fortunate that the British are a hardy lot. They’ve had to be to endure a campaign where the hyperbole has been worthy of a U.S. election.  Banks left and right are warning their clients in advance that they may not have the liquidity or risk appetite to execute trades on their behalf tomorrow. I’m not sure why they’re also advising what trades to do on the outcome.

Goldman's Internal Tracker Of The Economy Just Dropped To The Lowest Since 2009

Goldman's internal economic tracker, the Current Acticity Indicator, just dropped for one more month, from May's 1.3% print, to 1.2%, and contrary to expectations of a GDP rebound in Q2, this is the lowest economic "expansion" print since 2009. Perhaps not surprising is that this series has been declining in virtually a straight line since the end of QE3.

Still Looks Like A Trap

“If the weather forecast suggests it might rain, wouldn’t you carry an umbrella?

Standing At The Crossroads

The market is standing at the proverbial “crossroads” of bull and bear. From a “fundamental” perspective there is not much good news. The past week we saw numerous companies beating extremely beaten down estimates. However, while JPM and C got a boost to their stock price, the actual earnings, revenue and profits trends were clearly negative. But that is the new normal. We live in an environment where Central Banking has taken control of financial markets by leaving investors “no option” for a return on cash. Therefore, the “hope” remains that asset prices can remain detached from underlying fundamentals long enough for them to catch up.

"Feeding The Monster" - The Complete Bear Case, In Charts

In Greek mythology there was a monster called Cerberus, the hound of Hades, a monstrous multi-headed dog who guarded the gates of the underworld, preventing the dead from leaving. Today central banks have taken on the role of feeding our own modern version of Cerberus to keep all the troubles away. This hound of Hades has 3 heads that are named debt, deflation and demographics. Together they make a deadly combination that will result in a massive reset of asset prices...and central bankers are running out of food to feed the monster.

Sell In March And Go Away? There's Something About April During Election Years

"We transition from the best 6 month stretch for the S&P since 1950 into the worst 6 month stretch which commences in May. Moreover, while April has been the best month for the Dow over the past 65 years (+2.0%) during Presidential Election Year's April falls from a 1 seed to an 11 seed with an average loss of .9% according to the Stock Trader's Almanac"

The Next Critical Level For The S&P: Stay Above 2,028 Or Channel Support Is Broken

The S&P 500 is stalling below 2085 as daily momentum for price action and especially market breadth is waning. Similar to early November, confirmation of a near-term S&P 500 peak could come on a close below rising channel support near 2028 with daily Williams %R moving out of overbought. This would place the focus on the 200 and 100- day MAs near 2017 and 1997, respectively, which are ahead of chart support at 1969- 1947.

Only 4% From Record Highs?

“There have been three great inventions since the beginning of time: fire, the wheel, and Central Banking. – Will Rogers