This page has been archived and commenting is disabled.

Bears Beware, JPM's Head Quant Just Flipped To Bullish: "The Technical Buying Begins"

Tyler Durden's picture




 

In late August, and early September, a previously unknown name, JPM's head quant Marko Kolanovic, emerged from relative obscurity, after he successfully called imminent market moves with uncanny precision, to wit:

So after punishing the bulls like clockwork, many were wondering when will Kolanovic flip bullish and dole out some overdue pain for the bears.

The answer: moments ago, when in a note providing an "Update on Technical Buying/Selling" he concludes that the technical selling is now officially over and the same technical sellers, among which the much maligned risk parity funds that pushed stocks in late August and early September, are now "expected to buy Equities."

Incidentally, the market started rallying the note was sent out just after 1:40pm Eastern.

The key excerpt from his note:

Update On Technical Selling

 

We wanted to provide updated scenario analysis of potential technical flows due to Volatility Targeting, CTAs and Risk Parity funds. We have estimated selling flows from these strategies in our previous research. Many investors are asking us under which conditions and when these strategies would start re-levering (i.e. buying equities). We have analyzed these scenarios based on the hypothetical models and assumptions discussed in our previous research.

 

The most likely candidate for near term buying of equities is Volatility Targeting strategies (Figure 7). Given that they follow short term volatility signals, and the fact that the 8/21 and 8/24 return observations are falling out of 1-month averages, these strategies are expected to buy Equities. Under various realized volatility assumptions (shown in the figure below) they are likely to buy ~$10bn over the next few days. CTA strategy flows are highly dependent on the future market returns (Figure 8). If the market stays at or below current levels, according to our models CTAs are not likely to buy or sell equities. Should equities increase by ~2-3%, CTAs may start buying in the coming days. There is also a large upside convexity in CTA signals that could result in significant buying should the market increase by 3-5% from current levels.

 

Risk Parity strategies represented the smallest part of technical selling in August (less than derivatives hedging, Volatility Targeting and CTAs). They often follow slower signals and hence would be slower to re-lever. Figure 9 shows estimated Risk Parity equity holdings, and simulated holdings under various assumptions of realized equity volatility going forward. Under reasonable forward volatility assumptions, we would expect limited flows from RP portfolios in coming weeks. Please note that our definition of RP assets includes in-house managed pension assets, as well as non-US Risk Parity assets.

 

 

In summary, technical selling pressure from VT, CTAs, and RP strategies sould be largely completed, and in the coming days/weeks flows may be skewed towards buying.

 

Finally, we wanted to address the much-talked about quarterly pension fund rebalances. Various analyses that we came across assume that pension funds rebalance at quarter-end according to a fixed weight asset allocation. This would imply buying assets that underperformed and selling assets that outperformed. Our view is that less and less assets are rebalanced according to this methodology (quarter end, fixed weights). Increasingly, funds are rebalancing based on risk-based prescriptions and rebalances are staggered/spread over various time intervals. This is also confirmed by various analyses showing a weakening of the quarter-end (reversion) effect.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 09/24/2015 - 14:49 | 6589606 jomama
jomama's picture

I couldn't give a shit, I haven't owned a single stock in over a decade.

Thu, 09/24/2015 - 14:50 | 6589612 coinhead
coinhead's picture

Technicals my a$$.... ever wonder why they always focus on teh daily or 2min charts?  Long way to teh bottom from here....

Thu, 09/24/2015 - 15:00 | 6589664 Looney
Looney's picture

JPM Quant = JPM Cunt ;-)

Looney

Thu, 09/24/2015 - 15:23 | 6589780 Save_America1st
Save_America1st's picture

IT'S A TRAP!!!

 

- Admiral Akbar

Thu, 09/24/2015 - 15:35 | 6589822 greenskeeper carl
greenskeeper carl's picture

They are really trying with the 330 ramp, started a little early, now I know why. S&P is almost in the green now. What a clownshow.

Thu, 09/24/2015 - 17:43 | 6590389 SoilMyselfRotten
SoilMyselfRotten's picture

are now "expected to buy Equities."

 

Some lil birdie whisper 'QE4' in your ear?

Thu, 09/24/2015 - 15:44 | 6589853 OpTwoMistic
OpTwoMistic's picture

It will not matter. Pushing on a string.

Thu, 09/24/2015 - 15:08 | 6589709 KnuckleDragger-X
KnuckleDragger-X's picture

Market rigging for fun and profit with JPM in the middle, getting their cut no matter what......

Thu, 09/24/2015 - 15:13 | 6589736 Klemens
Klemens's picture

JPM is part of the Synagogue. The Synagoge do not need Technicals they rule the game! http://www.synagoguerising.com/

So they allways winning, does not matter how are these technicals.....

Thu, 09/24/2015 - 15:25 | 6589785 terry44
terry44's picture

Whatever happened to fundamentals?

Thu, 09/24/2015 - 14:51 | 6589613 Ataxic Press
Ataxic Press's picture

Now might be a great time to get back in.

Thu, 09/24/2015 - 15:17 | 6589756 saints51
saints51's picture

Didnt down vote you but I think Mr. JPM fag toy is using his recent call of the market crash to show you can trust him. This is a branch of the squid afterall so I would expect these clowns are selling the rip. Remember they have to get in or out in small chunks of orders over time.

Thu, 09/24/2015 - 15:21 | 6589775 Ataxic Press
Ataxic Press's picture

Good point.

To my knowledge, Obama also hasn't said anything about now being a good time to buy, so I should probably temper my enthusiasm.

Thu, 09/24/2015 - 15:40 | 6589843 Tall Tom
Tall Tom's picture

I just junked him.

 

You never participate in a FRAUD.

 

This chart demonstrates that JP Morgan is acting as Plunge Protection and are using its coffers to elevate the prices.

 

This analyst was instructing his minions, his agents, to buy.

 

They are using YOUR DOLLARS, YOUR DEPOSITS, because when this little move FAILS, then they will expect that the Government will bail them out...again...or that their depositors will be Bailed In to bail them out.

 

The entire Market is rigged and fake. There is NO INVESTMENT. This is just outright fleecing of the plebs by this corrupt and fraudulent organization.

 

Anyone who encourages that one participates so that they can get fleeced is nothing more than a Dim Witted, Willing Dupe or a Corporate Shill.

 

So I just junked his post....and rightfully so.

Thu, 09/24/2015 - 16:05 | 6589904 saints51
saints51's picture

Tom

Do you currently pay any tax like sales,fed,state?

Have you ever paid any tax like sales,fed,state?

Are you accepting their dollars for payment of services rendered?

Have you ever accepted their dollars for services rendered?

Have you ever collected social security,military pay,income tax check, or any other form of government assistance courtesy of the dumb plebs?

If you answer yes to any of the above then you have participated in the fraud UNITED STATES CORP.

If you answer yes to any of the above, does this make you a Dim Witted, Willing Dupe or a Corporate Shill who participated in fraud?

The whole point is participation of fraud is on Wall street to the farmer. Another example, you take a loan and accept usury. That is a form of fraud and to some who may be religious is a sin from the WORD of God.

If we are going to call out mother fuckers then lets call it out for all to see and understand.

My comment is not all directed towards you. I believe we need to call it how it is. Every single person in this country participates one way or another because the system is fraud and people unwillingly participate. The whole system is bullshit would be my comment after 4 beers. It starts with the squid which I agree 100% with you. We just need to show people it is everywhere and thats why we need a reset or divine intervention.

 

Thu, 09/24/2015 - 15:17 | 6589754 SilverMoneyBags
SilverMoneyBags's picture

Then you are an idiot. This is the easiest money you'll ever make in your life.

Thu, 09/24/2015 - 15:54 | 6589886 Skiprrrdog
Skiprrrdog's picture

And thats what its all about, right? *Easy money*... like taking candy from babies. Damn, I never get tried of watching this shit. Its like someone took a bunch of methamphetamine crazed monkees and put them in a round room...

Thu, 09/24/2015 - 14:52 | 6589619 slaughterer
slaughterer's picture

The market started rallying soon after this note was released.  Too bad if you were not on the Kolanovic mailing list.  

Thu, 09/24/2015 - 15:33 | 6589812 LawsofPhysics
LawsofPhysics's picture

one correction; margarine is often used as a lubricant for sex in Maine, so there may be an actual connnection to that divorce rate.

Thu, 09/24/2015 - 15:38 | 6589836 saints51
saints51's picture

I am not sure if I should ask the question because I am afraid of the answer.

Thu, 09/24/2015 - 15:31 | 6589802 Keltner Channel Surf
Keltner Channel Surf's picture

Actually, on on the index charts I'm watching (IWM, QQQ,SPY etc.) it started at 11:15, saw initial profit-taking at all the stops up near the open near 1:00, then the second leg up began with his note.  In fact, I believe the catalyst was the Daily Keltner channel bottom being hit simultaneously in all 4 major indices at once at 11:00, like a rare configuration of planets, mean reverters just couldn't resist.

Thu, 09/24/2015 - 15:06 | 6589626 BlueStreet
BlueStreet's picture

Another idiot who can't see the forest through the trees. He's wrong and will be sent back to obscurity in 3...2...1...  Take your 5 minute charts quant boy and crawl back under the rock from which you came from a month ago.  Adults are playing here. 

Thu, 09/24/2015 - 14:55 | 6589637 Puncher75
Puncher75's picture

Pardon me if I don't "buy" into that. 

Thu, 09/24/2015 - 14:55 | 6589639 slaughterer
slaughterer's picture

ES 1920 cannot be broken.  It cannot. Poor Gartman with his ES short at 1915  

Thu, 09/24/2015 - 14:56 | 6589643 Everybodys All ...
Everybodys All American's picture

That can only mean one thing and that is they have told Yellen what to say and it will undoubtedly involve more QE.

Thu, 09/24/2015 - 14:56 | 6589644 TN Jed
TN Jed's picture

Same stampede, different Mecca

Thu, 09/24/2015 - 15:43 | 6589848 Skiprrrdog
Skiprrrdog's picture

Yeah, except these fools about to get separated from their money are rushing towards satan, and not that other Guy. Damn...who needs watchable TV shows when you have this instead...

Thu, 09/24/2015 - 14:57 | 6589647 buzzsaw99
buzzsaw99's picture

transitory

Thu, 09/24/2015 - 14:57 | 6589648 zaphod42
zaphod42's picture

Can you say, "Signal," as in "signal the market?" 

 

Wonder who appointed this guy.

 

Thu, 09/24/2015 - 14:58 | 6589650 zeek
zeek's picture

so its settled... fundamentals aren't important... algos rule

Thu, 09/24/2015 - 14:59 | 6589658 Peak Finance
Peak Finance's picture

Fucking market is more of a joke today than normal.

 

What news got leaked at 2? Hints of QE4 in Janets talk today? NIRP? WTF?

 

Thu, 09/24/2015 - 15:16 | 6589748 Gambit
Gambit's picture

Seriously, I was having a fabulous day till that fucking ramp up. Fuck you Yellenke!

Thu, 09/24/2015 - 15:01 | 6589670 the grateful un...
the grateful unemployed's picture

anand here i thought technial analysis was a discredited science

Thu, 09/24/2015 - 15:01 | 6589671 arbwhore
arbwhore's picture

Just in time for Q3 window dressing.

Thu, 09/24/2015 - 15:03 | 6589676 slaughterer
slaughterer's picture

Oops, there goes Gold.  

Thu, 09/24/2015 - 15:28 | 6589794 Bay of Pigs
Bay of Pigs's picture

You were right, and it never even got to $1160.

The farce continues...

Thu, 09/24/2015 - 15:03 | 6589681 RawPawg
RawPawg's picture

PPT Wing-man,apparently

Thu, 09/24/2015 - 15:04 | 6589687 Chuck Knoblauch
Chuck Knoblauch's picture

daytrader alert

daytrader alert

Thu, 09/24/2015 - 15:16 | 6589688 MauritiusGold
MauritiusGold's picture

Come on DBank.... sort this market out...

Thu, 09/24/2015 - 15:05 | 6589694 Funn3r
Funn3r's picture

I am not a financial services professional but neither am I stupid nor live under a rock. I failed to understand most of that. 

Thu, 09/24/2015 - 15:06 | 6589697 bnbdnb
bnbdnb's picture

Its just the BOJ again.

Thu, 09/24/2015 - 15:08 | 6589698 SheepDog-One
SheepDog-One's picture

JPM saying you should buy....that means they've got some shit to sell.

Thu, 09/24/2015 - 15:06 | 6589701 arbwhore
arbwhore's picture

So that's the algo's taken care of. All we need now is a Gartman sell note and new highs are assured.

Thu, 09/24/2015 - 15:10 | 6589719 MauritiusGold
MauritiusGold's picture

Has he just turned bearish again?

Thu, 09/24/2015 - 15:11 | 6589726 firstdivision
firstdivision's picture

This is nice and all, but what is Gartman doing?

Thu, 09/24/2015 - 15:11 | 6589727 wmbz
wmbz's picture

There is no "market" and the bandits on the inside at the controls love the fact that people still believe and use the term.

It's not even a casino, it is a venue for robbery in plain sight.

Of course P.T. Barnum was right back then and still right today!

Thu, 09/24/2015 - 15:38 | 6589833 Skiprrrdog
Skiprrrdog's picture

Thats right, and at least at a Casino I might get free drinks, comped room, and even laid...OR I could get ass raped by some lying homoGeek Euro Trash.... hmmm... LV here I come.

Thu, 09/24/2015 - 15:11 | 6589729 razorthin
razorthin's picture

Wrong.  Remember - it's advertised, and biggies need to get the fuck out.

Thu, 09/24/2015 - 15:13 | 6589738 antonina2
antonina2's picture

And once again confusion ensues!

Thu, 09/24/2015 - 15:18 | 6589757 SilverMoneyBags
SilverMoneyBags's picture

Technicals do look like they are poised to move higher. Todays huge tail looks like tomorrow will be a big up day.

Thu, 09/24/2015 - 16:22 | 6590001 HardlyZero
HardlyZero's picture

Its a day-to-day thing.  Keep dry powder...for your next move (long or short).

Thu, 09/24/2015 - 15:22 | 6589765 Scooby Dooby Doo
Scooby Dooby Doo's picture

Oh, this rally looks so tempting.

I want to buy into a market that represents an economy that the FED said just days ago: "Sucks so bad that were not raising interest rates for the 55 consecutive time".

Tempting. Let me sleep on it. Maybe they can send some microwave signals out tonight.

Thu, 09/24/2015 - 15:20 | 6589771 lasvegaspersona
lasvegaspersona's picture

because fun da mentals...don't matter. ...decreased revenues...don't matter...just 'technicals'...

Thu, 09/24/2015 - 15:24 | 6589776 Hilroy
Hilroy's picture

Half of the clients get this 'note' - the other half get the opposite if this 'note'. Hedging baby.

Thu, 09/24/2015 - 15:23 | 6589777 Bill of Rights
Bill of Rights's picture

Again you do the opposite of what these banker scum preach...go short.

Thu, 09/24/2015 - 15:23 | 6589778 Thisisbullishright
Thisisbullishright's picture

And who could have IMAGINED, the market is only down 60 points from being down 200+ earlier.

I'm shocked! Shocked I tell ya!

 

 

Thu, 09/24/2015 - 15:26 | 6589787 Argenta
Argenta's picture

I had something very odd happen to me recently.  My company opened up a brokerage account for us through our New York Life 401(k) plan w/ TD Ameritrade, with the only caveat that we couldn't buy stocks, only funds and ETF's.  For years I've been putting money into PSLV, then suddenly I couldn't because as I found out PSLV was now classified as a stock, not an ETF.  Anybody have any idea why that is?  Same holds for PHYS.  These are the Sprott Physical Silver and Gold Trusts, respectively.

-Argenta

Thu, 09/24/2015 - 15:29 | 6589801 Ban KKiller
Ban KKiller's picture

Simple answer? Banks are lying. Good luck. 

Thu, 09/24/2015 - 15:31 | 6589805 LawsofPhysics
LawsofPhysics's picture

Same thing happened to my brother.  the short answer is that you are being rail-roaded.  All paper promises wil be worthless, period.

So what is one to do?  Be sure to have the following;

1) physical

2) contracts for work

3) real assets that generate income

4) a dependable tribe to help manage and defend all of the above.

That is all..

Thu, 09/24/2015 - 16:04 | 6589927 Argenta
Argenta's picture

Well, yes I agree paper will be worthless, but until then I tend to think the reason this happened is that there is a concerted effort to keep people out of metals, yet I can still buy SLV.  It's a little odd to me.  Could it be also that they're Canadian held entities?

Thu, 09/24/2015 - 16:21 | 6589962 HardlyZero
HardlyZero's picture

I'm at Schwab with 401K and they allow everything (except short options and short futures, and no leverage).

Schwab 401K allows all stocks (PSLV, PHYS), and shorting style ETFs (e.g. SRTY) too.

You might be able to complain, or get others at your company to get a better setup at TDA, or get your company to switch to Schwab 401K management.

 

Thu, 09/24/2015 - 15:28 | 6589796 Ban KKiller
Ban KKiller's picture

Hold still, this won't hurt a bit. Won't hurt US a bit, of course. That is the banksters sham! 

Why do folks still listen to these continuing criminal enterprises, aka, banksters? Have you not read their non-prosecution agreements and their numerous Consent Orders? Does ANYONE remember Enron and which bank/broker was pushing it right up to the day it died? 

Accounting is dead. Lies are king. People are the serfs. 

Plutocracy/Oligarchy 2016     2+2=5              War is Peace    

Thu, 09/24/2015 - 15:31 | 6589807 Skiprrrdog
Skiprrrdog's picture

"are now expected to buy Equities"...  huh... guess that means I have to. What if they gave a *butt-rapin* and no one showed up....

Thu, 09/24/2015 - 15:34 | 6589818 MFL8240
MFL8240's picture

This has become a disguting fraud on the public.

Thu, 09/24/2015 - 15:37 | 6589830 kotfare17
kotfare17's picture

Stocks are in a managed decline by 50-70% just like crude oil was

Thu, 09/24/2015 - 15:43 | 6589849 surf0766
surf0766's picture

QE4

Dollar 0

Thu, 09/24/2015 - 15:46 | 6589862 viator
viator's picture

That guy's got a big jawbone.

Thu, 09/24/2015 - 15:47 | 6589866 falak pema
falak pema's picture

So JPM quant imitates the Mona Lisa smile and the world gets ignited into a bull run?

Thu, 09/24/2015 - 15:52 | 6589884 q99x2
q99x2's picture

Bitcoin $236 and climbing.

Thu, 09/24/2015 - 15:53 | 6589887 Yen Cross
Yen Cross's picture

  This guy has got to be fucking joking... Yeah, buy the shitty stock because your model says so, but the company's earnings are in the shitter, and it's trading near ATH.

 This 10% correction whoopla is a buch of shit. These markets have a long way down to go still. It's going to be a slow agonizing trip to the bottom.

Thu, 09/24/2015 - 16:06 | 6589929 SSRI Junkie
SSRI Junkie's picture

nothing has changed with the fed buying stocks except the numbers (if you believe them)..15 billion in september dropping to 10 billion in october

 

http://www.newyorkfed.org/markets/tot_operation_schedule.html

Thu, 09/24/2015 - 16:19 | 6589981 HardlyZero
HardlyZero's picture

If "nothing else changes" maybe the markets will get fix-ated on the "new normal".

Just wait for commodities to drop out or Germany or China...then BAM !  next leg down.

Timing, but keep an eye on Oil, and copper futures, seems like they go down first before the market re-sets down.

Thu, 09/24/2015 - 16:38 | 6590080 Youri Carma
Youri Carma's picture

Insider Trading.

Thu, 09/24/2015 - 21:10 | 6591306 Chad_the_short_...
Chad_the_short_seller's picture

When we get rallies, which we will, just short the vix. UVXY, VXX, TVIX or go long XIV. 

Thu, 09/24/2015 - 22:29 | 6591548 venturen
venturen's picture

in the real world...another store closed in town

Do NOT follow this link or you will be banned from the site!