• Sprott Money
    05/26/2016 - 05:58
    How many “emergency” “secret” meetings do the central planners around the world need to have before the citizens of the respective countries begin to fully understand and take notice that something...

Where Last Week's Selloff Pain Was Most Acute?

Tyler Durden's picture


While 2014 has not quite panned out (so far) as the traveling-strategist-roadshow would have hoped, the last few days have been outright perilous for the record high numbers with bullish sentiment sucked into a world of central-bank-suppressed volatility and jawboned utopia. The following charts show where the pain has been (e.g. Greece, Spain, Argentina, European banks) and where it has not been (e.g. gold miners, China, Philipinnes, and Egypt) with the US indices sitting squarely in the middle with some of their biggest losses in months. For now, the BTFATH'ers are absent - even though the drooling mouths of asset-gatherers are demanding the 'cash on the sidelines' use this 2-3-4% drop from the all-time highs to load the boat for retirement heaven... However, some have increasing concerns...


The last 5 days...


But the names change notably for the year so far...


And as a bonus chart (h/t @M_McDonough) here is an interactive chart with the entire dataset described...




As John Hussman notes - Increasing Concerns and Systemic Instability



Increasing our concern is also a very well-defined log-periodic bubble running from 2010 to the beginning of this year, which we estimate is now past its “finite-time singularity” (see A Textbook Pre-Crash Bubble).



Increasing our concern is the shift to increased short-interval volatility just at the point of that singularity (which we estimate as January 13 – when 2-10 minute fluctuations began looking like the p-wave on a seismogram). Increasing our concern is the highest level of option “skewness” in history as option prices reflect extreme "tail risk" as they did prior to the 1987 crash (the 30-day average of skewness reached a record high on Friday - see Estimating the Risk of a Market Crash).


Increasing our concern is a 10-week average of advisory bulls at 57.7% versus just 14.8% bears – the most lopsided bullish sentiment in decades. Add the record pace of speculation on borrowed money, with NYSE margin debt now at 2.5% of GDP – an amount equivalent to 26% of all commercial and industrial loans in the U.S. banking system.


Add the currency collapses in Argentina and Venezuela, as well as fresh credit strains and industrial shortfall in China, and one has any number of factors that could be viewed in hindsight as a “catalyst” (as the German trade gap was viewed after the 1987 crash, in the absence of other observable triggers).


Against all of these concerns is the recognition that the market doesn’t move in a straight line, and that the risks that concern us here have concerned us – though at less extreme levels – too long for many investors to give them much immediate credibility. Immediacy wasn’t really our strong suit in 2000 or 2007 either, but by the time our concerns played out, we still found ourselves far ahead over the complete cycle, with far less pain than speculators endured. Despite the challenges of an unusual but also unfinished half-cycle, and despite our awkward stress-testing transition, I'm comfortable that the tools we've developed and the benefits of discipline will be evident enough over the completion of this cycle and throughout future ones. But as Kierkegaard wrote, “patience is necessary, and one cannot reap immediately where one has sown.”

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Sun, 01/26/2014 - 16:50 | 4369019 Jack Sheet
Jack Sheet's picture

Long the Phillipinis !

Sun, 01/26/2014 - 16:58 | 4369023 qqqqtrader
qqqqtrader's picture

You don't know Jack Sheet!, it's just a bunch of lines and squares.

Sun, 01/26/2014 - 20:05 | 4369470 Lewshine
Lewshine's picture

Nikkei down 300 points on the open, Yen still strengthening against the dollar - S&P better get a liquidity pump OR this pig is about to reveal a wave of lies exposed!

Sun, 01/26/2014 - 16:55 | 4369031 One And Only
One And Only's picture

Wait a minute.

Central banks and governments said bitcoin was too volatile and not a good store of value?


Sun, 01/26/2014 - 17:01 | 4369048 Renewable Life
Renewable Life's picture

I wonder if those poor schmucks in the EM Countries, who have seen their purchasing power cut in half the last 6 months, still think BTC is "not a good storer of value"?????

But I don't know what we're talking about, in CA milk and cheese has doubled in price over the last 6 months and red meat has tripled!!!!! I guess the difference is, we have EBT and they don't!!

Sun, 01/26/2014 - 18:35 | 4369247 BTFDemocracy
BTFDemocracy's picture

I hear people saying EXACTLY same thing about 'milk and cheese' + 'red meat' yesterday. People are taking notice.

Compare BTC or even Dogecoin with Argentine Peso... puts cryptocash in perspective.

Sun, 01/26/2014 - 16:59 | 4369043 syntaxterror
syntaxterror's picture

Who cares about last week? Tell us where the sell off will be THIS week.

Sun, 01/26/2014 - 18:02 | 4369165 Peter Pan
Peter Pan's picture

Don't tell me what to buy, just tell me when to sell.

Sun, 01/26/2014 - 18:52 | 4369288 SuperRay
SuperRay's picture

I'll tell you.  Now!

sell equities, magic derivatives, anything that can't be palpated.  Buy physical anything, after gold and silver.

Sun, 01/26/2014 - 17:00 | 4369045 disabledvet
disabledvet's picture

the alpha dogs generally hold up the best...even... if not especially... the ones "without earnings."

in other words they have solid business fundamentals and have "growth numbers."

the GDX play says "dead cat bounce" to me...but obviously i hope i'm wrong.
who doesn't need more economic activity right now?

I think Government is now re-tooling for "War on Terror, Version 3"....so I would be very wary of getting too excited about "going off the deep end" here.

We'll see who's been stuffing the channel a little too hard I think.
"Just in time manufacturing" is only necessary going into Christmas.

Sun, 01/26/2014 - 17:21 | 4369071 buzzsaw99
buzzsaw99's picture

anyone who thinks the fed will ever allow the market to operate freely raise your hand. thought not. the only real question is at what level does yellen step in and buy twtr.

Sun, 01/26/2014 - 17:22 | 4369083 Caviar Emptor
Caviar Emptor's picture

Look, this rally has been based entirely on fundamentals:

When stocks go up, people feel giddy. 

When people feel giddy, they spend money on flashy clothes

When people wear flashy clothes they get laid more often

When they get laid more often they become more productive at work and demand less pay

So you see, it's a virtuous cycle. 


Sun, 01/26/2014 - 17:28 | 4369103 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Man! That S&P 500 chart looks scary!! There's only one way this can go (hint: not up).

I'd say another one for the record books is coming to a stock market near you.

Sun, 01/26/2014 - 17:32 | 4369110 syntaxterror
syntaxterror's picture

Don't fight the Fed, because the markets climb a wall of worry!

Sun, 01/26/2014 - 17:59 | 4369158 Midas
Midas's picture

Buy high and sell higher?

Sun, 01/26/2014 - 18:00 | 4369159 endorush
endorush's picture

the markets will be back at all time highs in a week or two. put all this negativity to sleep.

yall never learn do u

Sun, 01/26/2014 - 18:32 | 4369236 Professorlocknload
Professorlocknload's picture

Yup. The Fed has too much into it to let it go now.

Higher lows and higher highs are here to stay for a while.

Sun, 01/26/2014 - 18:11 | 4369181 q99x2
q99x2's picture


Sun, 01/26/2014 - 18:33 | 4369238 Goldilocks
Goldilocks's picture

Fire sale

A fire sale is the sale of goods at extremely discounted prices, typically when the seller faces bankruptcy or other impending distress. The term originated in reference to the sale of goods at a heavy discount due to fire damage. A fire sale may or may not be a closeout, the final sale of goods to zero inventory. Fire sales are said to occur in the financial markets when bidders who value assets highly are prevented from bidding on them, depressing the average selling price below what it otherwise would be. This lowering of the price can cause even further issues because it may be inaccurately perceived as signaling negative information.[1]

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