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David Rosenberg: "The New Normal Is Seeing A Year's Worth Of Volatility Bunched Into 6 ½ Hours!"
Dramamine market got you down? You are not alone. David Rosenberg explains: "Yesterday's trade was rather telling. The Nasdaq dropped 2% and not only did volume rise but the breadth was awful with losers beating winners by a 5-to-2 margin (9-to-2 on the NYSE). The fact that the Nasdaq sliced below support of 2,600 and dipped below its 50-day moving average for the first time in six weeks is a bit ominous to say the least; while the S&P 500 undercut its lows of the past four weeks (even though it has managed to hold above the 50-day m.a. of 1,205). But between the slide in equities, commodities, oil and gold, coupled with the rally in Treasuries, yesterday had a certain eerie 2008 feel to it. And did you see the huge 70 point rally in the Dow just in the last couple of minutes? The volatility is incredible. Look at the charts below — they look the same, but one is the Dow's closing level each day this year and the other is the minute to minute ticker on any random session (we chose October 7th out of the hat). The new normal is seeing a year's worth of volatility bunched into 6 ½ hours!"
And concluding with Rosie's take on the yellow metal:
Just a word on gold, which has not been trading well at all in recent weeks. Strong demand will continue to bump against an inelastic supply curve, in our view, and keep the secular bull market intact. Focus on the forest past the trees. Global central banks, especially those in emerging market countries, are emerging as very buy buyers (along with Chinese billionaires) - coming off their largest purchase in more than four decades (adding 148.4 tons to their holdings in Q3 - see the story on page 13 of the FT).
Not to mention that with everyone expecting the ECB to print, should Germany actually relent (which it won't as long as it is being pressured to do so), there will be almost no places to hide from virtually infinite fiat dilution. With some golden exceptions of course.
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The MF Global story of fraud and corruption has disturbed the delicate confidence of professional money managers and traders. The bastardization of the haloed ’segregated’ account has rocked market professionals to the core. The COMMON SENSE reaction to this disturbance in the force is to withdraw liquidity.
http://rosenthalcapital.com/blog/2011/11/precious-metals-update-germanys-gold-hoard-and-the-mark-up-epiphany/
They used to feed on the local yokels of mom and pop investors, now they are going after broker accounts and their own clients money and saying nobody did anything wrong it was just a "mistake". When the system start feeding on itself (damn the consequences) then it's almost done.
Yea its all screwed due to the world flooded with these fake dollars with 3 years of out of control printing and monetizing...but dont worry, everyones hoping there will be more of that as a solution.
Well said mate.
I don't think you'll ever top your "tongue punch to the fart box" comment.. I laugh every time I see commercials now.
cheers!
The scale of the left chart goes from 10,000 to 13,000, the right from 11,000 to 11,250. Nothing to see here, move along.
I still think that a breakup of the Euro is the more likely outcome. Put simply, 70% plus of the German population do not support further bailouts of Greece so that Greek civil servants (Which appears to be most of the "working" population?!!) can retire at 50-55 on a EUR 150K pension. I wonder why hard working Northern Europeans (Excluding the French, of course) would take any exception to this? Unfortunately, this pesky democracy stuff gets in the way because the German Constitution and the EU Treaty have to be changed before the ECB can print, neither of which can be achieved without going to the people of Germany/Europe, who would reject the changes.
The politicians continue to look for ways around the democratic process (Following the US model) but it doesn't look good for the Euro.
http://www.youtube.com/watch?feature=player_detailpage&v=RAKsMnAM8vk
To paraphrase one of Jim Rickards' recent observations - this is not fuhqing surprising at all - currency and bond markets are controlled in narrow ranges by the new world government, leaving all the volatility in stocks.
volatility + low liquidity + cupidity = sty000pidity
The new New Math at the end of the world.
What do you call it when a pattern on a micro scale repeats itself on the macro scale .... a fractal, right?
barliman
Fractals.
Jan - Nov scale is 10500 - 13000. October 7th scale is 11000 - 11250.
That is not the same. One year compressed into one day would be Oct 7th going up and down 2500 points instead of 150.
Chartporn is less sexy when you zoom in or out too far. You gotta get the view just right. Proper lighting, good angles, oh and the money shot at the end.
+1 I'm confused as to how this gets posted at all.
Got a feeling the last half hour might be a doozy today.
i think rosie can relax, here
it looks like the FED and the PPT are trying out a new trading program whereby 80% of the ww.stock.indices and the major commodity contracts close @ exactly the same price as the prior day
That would be shocking actually.
I should say so. Nobody at the top will make any bucks that way.
Boy,Gold sure got bitch slapped today AGAIN,...twice.
Check Kitco's gold chart for the day.
Twice it tried to climb,and got wacked twice.
FUCK YOU's Benny and Timmy.
Thats funny, I make about a years worth of profits about every 6.5 hours too.
of course the charts look qualitatively similar - they're fractals - that is what fractals do
but the vertical scales are completely different
we are not seeing a years worth of volatility in 6.5 hours
I could think of other words besides rally,for the last couple minutes of the Dow's close yesterday.
Anyone else feeling the sudden urge to get some EFFEN VODKA... i wonder what it could be
Does no one but me see not see the that the 2 graphs shown don't have even close to the same y axis?!?!?! The axis on the left has a range of 3000 pts. The one on the right has 250. Garbage. Let's be honest about things...Between the title and the graph this is something that isn't far off MSNBC quality.
6 sigmas is the new 1 sigma.
Adjust your HFT algo accordingly.
That is all.
although the charts don't exactly match you can only guess what went on behind the scenes in HFT to wind up at the two minute point value. Who knows, based on the microsecond timetable perhaps the day chart did see thousand point moves. I talked about the theory a few months ago. The markets make sense if you look at them through the principle of time dilaton. To the computers we are barely moving, they exist on a completely different time scale. One day is like one year to a HFT program. To the computers a recession began in August of this year and lasted an incredibly long time to October. HTFs priced in an etire economic cycle before it bagan to affect us poor saps in the real world. How else do you explain a century's worth of normal growth priced into some stocks in less than a year. A 1000 p/e doesn't make sense until you realise the computer already thinks it's 2250ad.
This is the Dick Handler rally.
"there will be almost no places to hide from virtually infinite fiat dilution. With some golden exceptions of course."
Unfortunately the majority might very well hide under the golden showers, confusing them with the physical stuff just because of the color.
The gold safety trade is dead. Technology killed it.
Whereas historically you had no place to shelter your wealth from inflation today you can effortlessly transfer US $ into Euro, Swiss Francs, Japenese Yen, Australian Dollars, Oil futures, etc if you fear the Fed. Or you can easily roll into a low leverage divesified real estate fund or even buy property directly overseas with far less effort that previous decades. Low leveraged property is a great inflation hedge and it pays a return.
Gold has little use anymore unless you subscribe to some sort of Armagedden theory in which case heavy yellow bricks won't help you much either.
The gold safety trade is dead. Technology killed it.
Whereas historically you had no place to shelter your wealth from inflation today you can effortlessly transfer US $ into Euro, Swiss Francs, Japenese Yen, Australian Dollars, Oil futures, etc if you fear the Fed. Or you can easily roll into a low leverage divesified real estate fund or even buy property directly overseas with far less effort that previous decades. Low leveraged property is a great inflation hedge and it pays a return.
Gold has little use anymore unless you subscribe to some sort of Armagedden theory in which case heavy yellow bricks won't help you much either.
******************
Gold is not an Inflation hedge and never has been-
Of course real-estate is likely the best Inflation hedge-
Gold is a hedge for "credit default risk" which started in 2001-
Do you see any signs of Inflation coming or an easing of default risk anywhere?
http://en.wikipedia.org/wiki/File:GermanyHyperChart.jpg
It can happen pretty quick as history notes.
..tell that to the MF clients..
you can hold paper currencies if you want, i prefer pm's ( held in MY possession).
hopefully, we'll both be right.
to each, their own, i suppose. it's just sad that this is a relevant discussion.
yup...fight this volatility ....bUY PUTs at good resistance levels and HOLD on to ur seats