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5 Things To Ponder: Is This "THE" Correction?
Submitted by Lance Roberts of STA Wealth Management,
On Tuesday of this past week I posted an article entitled "No One Rings A Bell At The Top" wherein I stated:
"The current levels of investor complacency are more usually associated with late stage bull markets rather than the beginning of new ones. Of course, if you think about it, this only makes sense if you refer back to the investor psychology chart above.
The point here is simple. The combined levels of bullish optimism, lack of concern about a possible market correction (don't worry the Fed has the markets back), and rising levels of leverage in markets provide the "ingredients" for a more severe market correction. However, it is important to understand that these ingredients by themselves are inert. It is because they are inert that they are quickly dismissed under the guise that'this time is different.'
Like a thermite reaction, when these relatively inert ingredients are ignited by a catalyst they will burn extremely hot. Unfortunately, there is no way to know exactly what that catalyst will be or when it will occur. The problem for individuals is that they are trapped by the combustion an unable to extract themselves in time."
Of course, what I didn't realize at the time was that, on Thursday, the markets would plunge like a stone sending investors running for cover and the media scrambling for answers. What caused it? Is this THE correction? What happens now?
This weekend's edition of "things to ponder" is a collection of thoughts as to whether the current correction is just a buying opportunity, or whether this is Redd Foxx's "It's The Big One."
1) 5 Reasons Why The Sell-Off Spells Caution by Adam Shell via USA Today
"The biggest downward driver today is the formerly high-flying biotech sector. The iShares Nasdaq Biotechnology ETF is down a whopping 5.5%. Other so-called momentum stocks, such as social-media darling Facebook (down nearly 5% today), video-streaming play Netflix (off 4.3%) and electric car maker Tesla (down 4.5%).
Ouch.
Why the sell-off, and why now? Some theories: The stocks got too overheated; the stocks were over-loved; the stocks got too pricey and had to come crashing down to earth."
2) Don't Let These Stock Market Gyrations Scare You by Howard Gold via WSJ MarketWatch
"But the main causes of a genuine bear market — impending recession or deflation, ultra-high stock price-to-earnings ratios or rapidly rising interest rates — are not on the horizon.
So unless you’ve borrowed to the hilt to buy Twitter or the biotech ETF, you should stay invested and not lose a minute’s sleep. As far as market shocks go, this looks like a mild tremor, not the big earthquake everybody fears. "
3) Is This The Beginning Of The Crash via Josh Brown, Reformed Broker
"Not every sell-off is 1929 or 2008. There’ve been 27 corrections since World War II for US stocks in which the market sold off between 10 and 20%. There’ve been only 11 instances in which stocks dropped by more than 35 percent. That’s almost a three-to-one probability that this doesn’t snowball into catastrophe."
4) Deutsche Bank: Bull Market Running Out Of Oxygen via ZeroHedge
"We can't help thinking that as it becomes ever clearer that the Fed is pretty much fixed in its determination to stop QE late this year, the oxygen that has fuelled the 5 year bull market is slowly draining out of the market. Clearly the Fed is still buying a significant amount of bonds and thus providing a lot of liquidity but clearly only for a few more months."
5) Carl Icahn: Fed Saved The Economy But A Correction Is Coming via CNBC
"I'm even talking somewhat against myself but we have a lot of hedges on. as I told you, shorts. I do believe that this market -- you know, everybody loves this market. You go talk to your barber shop and everybody is buying this, buying that and talking about it. That's the time to be cautious."
That's not the only reason to be cautious. I think that a lot of the earnings are sort of artificial because, you know, the Fed did a great job in saving this country. But right now with these low interest rates it's easy to make earnings and I don't think that can continue forever...I've said that before and i continue to say it, I think that there will be a major correction, but i don't know when. It could be three years. It could be three days."
Bonus: Revisiting Price Compression by Cullen Roche via PragCap
“Price compression is when market participants price in many years worth of future performance into the current price. They are, in effect, buying today with the expectation that future earnings will justify current prices. When you combine this concept with an understanding of behavioral finance and the understanding that market expectations can become irrational, you can build some understanding behind the concept of market bubbles. As I’ve described before, A bubble is an environment in which the market price of an asset has deviated from the underlying asset’s fundamentals to an extent that renders the current market price unstable relative to the underlying asset’s ability to deliver the expected result.”
Have a great weekend.
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Lance, you're not getting it. Just BTFD you F***ing idiot. ;-)
https://www.youtube.com/watch?v=jllJ-HeErjU
< This is the correction we are looking for
< This is not the correction we are looking for
This is not 'THE' correction. Panic, fear induced, not just getting out a position until its BTFD time, has yet to be the motive behind these moves. An adverse event - not a stock market event - will induce it. A butterfly moment - one too many beats of the wings - will probably be the cause of 'the event.'
Correction? Nope. Not even close. Remeber you were up 30% last year and it was free thanks to the FED. The action shows that this pullback is very very controlled.
If we have to ask, it isnt.
I'll pencil you in for ""Correction" will be like standing on a trap door with the bottom suddenly falling out"...
Delbert Grady: Perhaps they need a good talking to, if you don't mind my saying so. Perhaps a bit more. My girls, sir, they didn't care for the Overlook at first. One of them actually stole a pack of matches, and tried to burn it down. But I "corrected" them sir. And when my wife tried to prevent me from doing my duty, I "corrected" her.
Joe Public will be the last to know and the hardest hit.
But stock prices never drop.
Oh, wait. That's house prices.
i like crimea + sanctions for catalyst, equity capitalization X margin debt vs. gdp for vulnerability.
What do the financial geeks call it? Whipsaw?
I just stopped in to watch the Redd Foxx (Sanford and Son) clip.
If you like that, here's a classic clip from his "you got to wash your ass" standup routine. Check out what he's drinking from in the clip.
http://www.youtube.com/watch?v=uldt6Y-CE3s
If we can take the time to ask, it isn't.
I suppose the "right answer" is actually the following:
(1) Rebalance your portfolio often - even when you don't want to.
and
(2) Remember that cash is also an asset. ... and so is Canned Food. Always have those available.
is there a way to correct that which
is just dead wrong? if there is, this is not
it. the end of the fed would be just the first
step to the possibility of a "market". it wouldn't
be even a correction, merely a necessary first
action or act.
What correction? a 4%-off sale is a correction?
What is holding up finance? Economics. What is holding up economics? A bunch of over paid mathmaticians that think they have all the answers. What is holding up the PhDs? Their paychecks. What is holding up the paychecks? A lie that the dollar has value.
The dollar has no value and supports the whole system.
Well, not counting bullshit, true. But a "lie" is really just discovered bullshit, so as nothing is discovered yet (by most people) then, as we know from BullShit 101, bullshit has nearly infinite value.
What is holding up the paychecks? Bullshit that the dollar has value.
The dollar has nearly infinite value (aka bullshit) and supports the whole system.
See?
Really, a better question to ask is why that is even considered?
It's called self realization. If you have to ask that question, you already know the answer. If the premise before the answer is "yes" than you know what has to follow. Correct?
If not, don't ask this question.
Stocks will fall, rates will rise, the bottom will drop out of the dollar - all in the same move. Gold will stay flat or rise to $2k. Silver and oil will double. This all by next winter.
4% for market 20% for many stocks, that can hurt!
Some hedgies will be getting massive margin calls come Monday.
This whole scenaio reminds me of 1987. almost rhyming in my head.
Zero Hedgers...why all the concern??
Sh#t for brains Phil Orlando was on CNBC at the close saying this is all "weather related."
Really, is he on crack?
Markets will get ugly, but at the low, the HFT boyz will gun this in a way that old school short-sellers can't even imagine.
As long as The Fed, BOJ, BOE, et al, keep pumping liquidity, stock will eventually levitate back around where they were a month ago or so.
the key is with all the moaning on ZH will anyone buy it?
I changed the channel (which I'd been watching for about 1 minute) as soon as the word "weather" left that d-bag's pie hole.
DING DING DING DING! WE HAVE A WINNA!! + 1 Couldnt have spelled it better.
Lance doesn't know but other people do. That's the nature of a rigged market.
price compression, i like that one;
an almost wet dream imposed on a tangentially
projected derivative
enforced on a slave population, telling the
populations via the "media" messengers,
proclaiming via hired ass mouth pieces,
"it is for the children".
(that we feed on them, having all but, no,
Having financialised mother's milk.)
this, where the neo cons
and neo liberals stand together to sing
their swan song in the big stadium in the sky
to the rousing applause and snickers of a collectively
amazed audience.
.
anyway poems*tm
this could go right here ...
John Prine : Jesus The Missing Years
https://www.youtube.com/watch?v=p9BRia7J9P4
.
.." Oh my god, what have I gotten myself into?
I'm a human corkscrew and all my wine is blood
They're gonna kill me mama. they don't like me bud.
So jesus went to heaven and he went there awful quick
All them people killed him and he wasn't even sick
So come and gather around me my contemporary peers
And I'll tell you all the story of
Jesus...the missing years ....
Chorus:
Charley bought some popcorn
Billy bought a car
Someone almost bought the farm
But they didn't go that far
Things shut down at midnight
At least around here they do
Cause we all reside down the block
Inside at ....23 skidoo." j. p.
I think the Fed plans to crash the market hard. All part of the plan. They need a massive crisis to bleed off excess and a pretext to come to 'our' aid and consolidate power. Besides they have massive amounts of T notes and bonds they need to sterilise.
Agreed. It's the plan. And the whole Ukraine thing fits into it nicely if looked at in this context.
It's coming down.
Yeah, but that would mean Putin's in on it... Wait a sec... Ben leaves and THEN the Ukraine stuff happens. Anybody seen Ben lately?
Gentle Ben (the Bear !) is probably with Aunt Yellen, cozy and warm.
Regarding the original topic....they need a Bankruptcy scene to unfold known as RESET.
Putin has seen the spinning fan for 15 years, and he NOW see's the shit starting to fly...and will NOW protect his assets to continue the payments.
Kinda like how every other G8 country has done it for a very long time.
P.S. Putin is trying to avoid it (the flying shit part).
"Regarding the original topic....they need a Bankruptcy scene to unfold known as RESET."
Yep. And I'm still not sure whether Putin is playing a part or if he's really gone Rogue. But if you think about it both will lead to the same outcome.
A financial reset.
I think you are right about the Fed creating a plan to crash the maket. They need to get the Muppets absolutely screaming for reinflation.
Then tens of trillions will quickly flow to the TBTF's and foreign CBs leaving the assets in the hands of the elite and the dollar in ashes...
And maybe the black swan will be a civil war started in Nevada over Senator Reid's attempt to illegally give US land to a Chinese solar energy company that he recruited and his lawyer son works with.
That situation has nothing to do with tortoises, thats for sure.
The Feds are stomping the living shit out of States rights.
As if they are seeing how far they can stick it in before anyone blinks.
Holy Shit! That makes sense! I was thinking about that situation last night and the whole tortise miem is just to friggin hard to believe! Even my wife said "that's bullshit".
Those fn BLM assholes all dressed up like SWAT, tasing people, this is just getting beyond ridiculous! When will we finally do something?
What I don't know, but I am certainly open to suggestions. Everyone I know still has their heads in the sand!
Wish the old fuck would die off. These treasonous elders have no conscious even with one foot on the banana peel.
This is NOT the "correction" you are looking for.
That's because it's collapse time!
In 6 months this should really 'heat up' as the Winter again sets into Europe, and all the other countries need their economies too.
Which G20 economy will survive the shark tank sponsored by Russia and China ?
There are enough tipping points to last a while.
2/7 (28.6%) of the week will be the setup for each Monday going forward.
the next correction will be the end all anyways. the system will be to broken after that the currency will be replaced.
The Western Central Banks sold all the Gold. Now the truth is surfacing.
Paper stocks, bonds and fiat are returning to their true value.
I think it is THE correction for the dollar but I don't think stocks will go down in dollar value.
You do realize bonds are rising in price?
When it's THE correction you will know it because there will be no time to ask anyone if this is THE correction.
when that big faux "money" on the sidelines and
elsewhere figures out how to enforce
global resource extraction from humans without
the u.s. taxpayer accepting the debt burden
for weapons and digital snooping, then they will "correct" and dump the
dollar. what a f...g corrupted use of the
word correct. correct-corrupt, same root
or core.
.
AKA Grafitti Man - John Trudell
https://www.youtube.com/watch?v=Qyk4HiGr3CM
.
like a "thief in the night" comes "correction".
history suggests the fascist does associate economic correction
with genocide of the "other/s".
.
they that are paid ( "deserve" ) less
than the chinese, bangladeshi etc.. labor
force , the billions of unwashed slave tribe
blooming from the waste of economic neglect and feeding
on the broken down particles of miseducation
and fractional reserve less birth debt.
.
anyway poems*tm
the "real" correction is the next world war.
this bullshit stock shit will be a foot note.
look at the history of footnoted financial mania/panic cycles prior to ww2. they had busted out all over the late 1920 in the western world and japan. by 10years later ---countries were iching for war.
2008 is about 10 years to 2018 or so. about 2 years into the next U.S. presidents term 4 to 5 years from now, you will some serious ass shit go down.
i'm sure mr fucking genius nostradumus martin armstrong has some similar sentiments.
I give it 12 months tops. It's so overextended with both lies and fraud that when this thing falls apart it will speed up and implode in on itself. By design.
The sad part is that a real implosion will both mask and cover up all the fraud. It'll be the equivalent to 'torching' the place.
Watch it happen.
This: mr fucking genius nostradumus if some fucking funny shit right there. +1 he he
well. One point is that we have 7 billion people on the planet now, so there may be many more meta-stable tipping-points than ever before.
So there may be much larger and many more forces at work than during any other time in human history.
So more and worse tipping points (from the greater complexity) than WWI or WWII.
Fuck the correction where's the goddamn reset? Dropping a couple k just to be bought up and brought right back to bullshit levels in a failing economy is fucking stupid. But fucking stupid is the US.
For the 100th time, there is no reset coming.
There is death and devastation coming, but a "reset" implies restoration of vibrancy after that death and devastation.
That's not coming. The decline will be permanent. The easy oil has been burnt up. Those tanks are not going to refill. There is no replacement and never will be.
The way to succeed in the descent is to descend slower than others.
Crash makes a good point.
is that like ...
should i hit the red arrow,
just slower, and that is
positive? a br(e)a-king
experience.
Grim, but true.
This world is hard, but it is the place of sunlight. -Chomina in Black Robe
I perfer to descend quickly and get it overwith
I don't think there's anyone on Wall St. who has seen a correction...I probably will have a better chance seeing a brontosaurus walk down the street....
A great deal of the slosh in the "markets" isn't due to investor complacency but the fact that their life savings are trapped in Pensions and 401K's/I.R.A.'s.
They are the rowers on a slave ship that is out to sea.
This is not "the big one". There's another 3 months of bouncing before it gets nasty. Plenty of time for the Fed to save the world again.
3 months. Feels better.
Hey does Aunt Yellen play the fiddle ?
https://www.google.com/search?q=nero+fiddle&es_sm=93&tbm=isch&imgil=Jv5u...
Soon enough, they'll have the masses begging to buy into MyRA.
<---Blythe Masters' new job
<---Jon Corzine's new job
MyRA Czar
Whether or not this is "The Correction" is a moot point. It will be spun as such so that when it levels out next week the retail muppets will "have a chance to get in at the bottom" once more.....
The biggest claim by the large investment houses was that we'd hit S&P 1900 this year. So, lets look at our list:
- S&P hit 1897.28 on 4/3
- 401K / IRA stuffing ends next week
- Sell in May is just around the corner
- Fed looks to be on track to maintain taper
So, where does that put us? I'd think the bulls could have a rough number of months ahead.
S&P 1897.28 was on 4/4...
I wonder how many folks took money out in the past two weeks to pay taxes or bills, versus putting mroe into the casino.
When I called to cash out some of my I.R.A. I was on hold for 15 minutes, and the Gal I talked to gave me the impression I wasn't alone.
And when I said if I get to where I have money to invest again it was going into the mattress or tangibles because I had no trust in the markets she said "I've been hearing that a lot lately."
I'm sure a lot have taken or are taking their money out. But, the last of those who want to put it in will end next week. So, you won't have those people either going forward.
What I'm seeing develop is an "almost surreal" feeling of indifference towards reality. Companies have already ushered saving from interest paid on debt into the earning column and a major reason inflation remains low is they are sitting on a hoard of cash this has lowered the velocity of money. We must remember the artificially low FED controlled interest rates are a massive onetime tailwind that is mainly behind us.
When rates stop going lower or reverse the positive effect will ebb and become a major headwind. With massive government debt in many countries and the economy still weak this headwind has the potential to become devastating. The collision of MMT, social unrest over inequality, and other destabilizing factors have the potential to create the perfect storm. More below questioning if after years of easy money many investors have become far to complacent.
http://brucewilds.blogspot.com/2014/01/have-we-been-lulled-into-complace...
There will never be a "correction" so long as the FED is around. It might look like a correction, maybe feel like a correction, maybe even smell like a correction. But so long as the FED and the PPT are around....nuu uhh. Just another day - and this one just happens to be down - not even 20 handles on the SnP. A "get the fuck out of Dodge" kind of day would have taken the SnP somewheres around 1780. This is just an ordinary sell and buy rotation circle jerk, with a whole lot of news making a whole lot of noise. It was a whole ot of nothing, other than some banks and some no earnings names taking it on the chin. woop de doo. Dow down $600+ and closing on the lows (and on large volume), with a 6 pt. move in the VIX and an SnP down around 50 handles and the COMP down a buck and change. - that would make me think a little. But nope......just another day in the rigged casino.
This one? No. spx will go above 1885 afterwards. Bigger desasters will be seen after 1950 has been reached, several crashes included like it's 2008/2010.
What you say was correct before January. In early January there was a realization there is a great risk going forward. In February and March the Ukrain erupted. And now in April Russia is 'in control' of Ukraine and Europe.
Now that Russia is running Europe, and controlling the European energy diet, how long will the EU stock markets really start diving ? One of these days, or in just a week or two, China may start to erupt over the South China Sea and issues.
These recent eruptions, in cluding the collapse of smaller Emerging Markets, is significantly increasing the meta-stability in the system.
Expect more turmoil as all the smaller EM countries 'dissolve' or merge with their Sugar Daddy's, and then resources are controlled or obtained through other means.
By this time next year there will be fewer borders and many higher costs for doing business (rates, cost of energy, cost of food, taxes, laws, captial controls, etc.).
correction is where the inside front runners
skim and steal a large percentage of the retirement
"savings" without wiping out their own investments.
they need another workforce and techno-base to replace
the current paradigm, a new group to bleed. on.....
.
The Rolling Stones - Let It Bleed - Live OFFICIAL
https://www.youtube.com/watch?v=6xoCaVKfRPw
.
I'm not complacent, I'm just resting my eyes.
It's "a" correction possibly, but not "the" correction...needs more panic.
...and a hot chick on CNBC screaming who Runs this town ?
http://www.youtube.com/watch?v=_Xetonjc3M8
Master Blaster Putin ?
Maybe...more likely a RESET, a la 2011 mid-year's end of QE which got the market back to buyable levels, reduced interest rates due to the safety rotation into bonds, and paved the way for the next QE. This market WILL go up...after it goes down.
Kill the pig, kill the pig, bonk bonk on the head bonk bonk on the head
kill the pig, kill the pig, bonk bonk on the head bonk bonk on the head
bonk bonk
This time is different! We just hit the top boundry of the giant expanding diagonal triangle last December. You remember? the one that began in 2000.
The market has corrected every 6.5 to 7 years for at least 30% over the last 55 years, the exception being 1993 when it only corrected 12%. This being 7 years from the 2007 top... Id be careful
It will be interesting to see. I have a feeling there are a great number of "algos" that haven't been designed to handle a bear market as they've never had to. Could get interesting.
What I really want to find out is can a stockmarket go negative? Not negative growth. Real negative.
Since it is no longer related to anything real, why not? Not that they will stop the printing presses to ever get to that level, but seeing a S&P at 200 would be nice.....