Markets Are In The "Eye Of The Storm", Trader Warns

Tyler Durden's picture

Traders on the NYSE clapped and cheered when the closing bell sounded on Friday as though a couple of green closes somehow made up for the outright chaos that’s reigned throughout the month.

Oil may technically have entered a new “bull” market and the yuan may have momentarily stabilized, but a quick look at the fundamentals for crude and the backdrop for the global economy suggests any respite will be fleeting.

Echoing that sentiment is FX trader Mark Cudmore who is out this morning warning that while the blizzard of 2016 may have come and gone, markets are likely just in the “eye of the storm.”

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From Mark Cudmore, writing for Bloomberg

While the worst of the U.S.’s epic winter blizzard has officially passed, it’s less likely that the storm in financial markets can also be said to have ended.

  • Thursday’s rally continued strongly into the weekend close, resulting in most global assets recording a positive week. But once analyzed in the broader context, it seems likely this may only be a bear-market bounce
  • Bear-markets often provide the most extreme moves in both directions because lower risk-appetite reduces liquidity on both sides of the market. Also, technicals gain supremacy over fundamentals which loosens anchors to “value” and encourages out-sized reactions to any changes in sentiment
  • Technically, there is little out there for bulls to cling to. While oil may now officially be in a “bull” market after its biggest two-day rally in seven years, it is still down 12% year-to-date and firmly in a medium-term downtrend. That applies even more clearly to other important commodities, such as copper
  • Likewise, across longer-term charts for stock markets, emerging-market currencies and high-yield credit, the recent bounce is barely noticeable. And the risk-barometer that is EUR/JPY closed below the critical 200-week moving average for a second straight week
  • Fundamentals didn’t drive this year’s weakness, so it will be harder for positive fundamentals to prompt a recovery’’
  • Perhaps the two most significant supports for the market have been that the Chinese yuan stabilized and the European Central Bank indicated that further monetary easing is imminent. But both of these are arguably reactions to negatives rather than genuinely new positive drivers
  • The relief rally probably has more to run but it’s hard to believe the worst of 2016 is behind us. And there are even reports that Storm Jonas may crop up again in a couple of days – on the other side of the Atlantic

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As a reminder, this is still the 2nd worst start to a year ever...

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Father Thyme's picture

<--Hurricane

<--Himmicane

Take Shelter.

BandGap's picture

Sell into any rally is the word.

Death by a thousand cuts.

agstacks's picture

I added that one to my "scrapbook".

Occident Mortal's picture

Can we stop repeating the "worst start the year eva" stuff please??

 

It's boring and every day of 2016 that passes, the scale of the sell off is diluted by A.N. Other trading day.

 

 

The first week of Jan was wild, since then... not so wild.

El Oregonian's picture

"that sentiment is FX trader Mark Crudmore"

Fixed. Perfect.

herkomilchen's picture

So the question is whether this rip is over and time to sell now, or better to wait until Wednesday when some word parsing of the Fed statement will send markets higher, and sell after that.

_ConanTheLibertarian_'s picture

Two up days for oil and already calling it in a bull market is really desperate.

R.R.Raskolnikov's picture

and people believe it. The blind following the blind as Robert J. Schiller wrote in his book irrational exuberance. Michael Lewis wrote in The Big Short something like that the prominent economists are either lying or delusional. Any way no problem. It gives me the opportunity to buy those put options more cheaply.

buzzsaw99's picture

calling it the eye of the storm means it's half over. um, no, it will NEVER be over.

Winston Churchill's picture

We have been in the eye of the storm for the last seven years.

Theres that number 7 again.

The back eye wall is usually far worse than the leading edge.

Beowulf55's picture

Where is the monkey hammer?  Gold and silver are up this morning.  I demand the monkey hammer!  Turn off those machines!

buzzsaw99's picture

epic winter blizzard, :roll:

a foot of snow, no wind, totally epic. a nation of pussies and retards. they got dumped on, like a german wading pool, that's pretty much it.

EscapeKey's picture

nah, it's an epic excuse when it comes to missing quarterly results

buzzsaw99's picture

it is currently 31F in nyc, they are expecting it to be sunny and 37 for a high today. totally epic. /s

SillySalesmanQuestion's picture

Fanning the momo flames of the read-only algos...Oil Bull Market!
Buy, buy, buy...

The best Sun's picture

Is it really a blizzard when you can walk outside in your sweatpants drinking beer and not die?
Yet it will later be blamed for January's financial bed shitting.
Go figure. Those stawks sure are a mystical beast.

toady's picture

And on a weekend no less, when no major business is being conducted. The only deals being obstructed are the odd retail adventure, and all the panic buying and hoarding before hand will more than make up for that. But I'm sure there will "massive economic repercussions" reported.

buzzsaw99's picture

we got a foot of snow a few years back. winter storm "maggot" i think they called it.

Dr Freckles's picture

"The Wreck of the Edmund Fitzgerald"

http://iamsully.com/?p=15707

gcjohns1971's picture

I remember passing through the rockies during a storm about 25 years ago.  It was memorable because conditions got so bad I had to stop.

Now, I am the kind of driver who doesn't stop for much of anything.

But I stopped for that storm.   The whiteout grew so bad that visibility was maybe a dozen feet on the freeway.  

I slowed until all the other cars pulled over...and then kept going.

The the snow build became so deep that I could not tell where the road was.  The trees on either side of the road blocked the light, and the afternoon more resembled midnight.

Luckily I managed to latch onto an intrepid Truck Driver who plowed the way before me.   I was too close to stop if he braked suddenly (and didn't slide)...but even so I could bareley see his tail lights.  I clung to them like life itself.

Finally made it to a tiny town.  It was memorable because I stayed in the only lodging in the place, and was stuck there for two days.  The freeways were so deep in snow it would take a long time to dig them out.

It was also memorable because of the extreme cold... -50F!!!  -70F with wind chill.   Oil froze, and I opened the radiator & disconnected its hoses to keep the anti-freeze from cracking the block.  Gotta give expanding water somewhere to go.

But two days later, with the help of an old-time gas station (used to be called "Service Stations") I got on the road again.

When I arrived to the city I found construction and mining equipment repurposed to moving all the snow.  They had had 52 inches...literally chest height EVERYWHERE.  There were many roof collapses from the weight.  And a cottage industry popped up literally overnight in 30-40 foot long "rakes" made from PVC piping to allow homeowners to pull snow off their roof from a position safely on the ground.

I stayed with friends' in their 4th floor apartment.

The piled snow from the repurposed mining and construction equipment was level with the apartment's balcony.

THAT WAS A WINTER STORM!!!!

This?

Meh.