Late-Day Reality Check On Dramatic Risk Off Day

Tyler Durden's picture

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imsaul0968's picture

For those of you who invest in an IRA or for long term goals, theres a better approach than buy,hold,hope. Stocks follow the economy so analyzing the economy, specifically the factors that are "leading indicators" and having exposure to equities only when the economy is headed in the right direction and avoiding equities in favor of safe haven baskets is a much more logical approach. And missing the major drawdowns is the only way to help ensure meeting your goals.  If you are interested in investing in a portfolio that tactically invests in equity and safe haven baskets via ETF's automatically, please email me at:

eclark@breakaway-partners.com

and I'll add you to the weekly market commentary & portfolio update distribution list.  Its free to add you and you can follow along our model and our views.  We have been RISK-OFF since 6/30 so have missed all this wicked volatility. Currently invested in short duration treasury baskets as flight to safety drives interest in our debt. 

BeerGoggles's picture

Ray Dalio says commodities will sell of as the Fed tightens in this deleveraging so what's the point in being in PMs?

rumblefish's picture

did i miss the fed tigtening?

I tought they committed to ZIRP well beyond 2013.

qussl3's picture

Sounds like Ray wants to buy.

rumblefish's picture

can some explain the risk off/ risk on comments that permiate the financial blogosphere?  I've  seen it used in so many different contexts i'm convinced I don't know what it means.

Zero Govt's picture

"risk off" means the arse has fallen outta the market... Credit Ratings Agencies use this term 36 hours after their AAA rated toxic junk gets torched while you're still holding it (you won't forget this term after you've experienced 'the burn' of being flamed by CRA's)

"risk on" means dump your dosh on the exchange anywhere you can, fast as you can, because Benny is out in his Helly that afternoon dropping cash bombs and you want in on the ride when the walking dead markets get pumped with fresh junk money.

Welcome to zombie investing on zombie markets

The Fonz's picture

Being a trader isn't so much about making money, it is about managing risk.  When you see risk on it means that everyone is taking risk... for returns.  When you see risk off it means people are ditching risk. The market tends to move more or less as one, so when they say risk, they mean the markets, all of them.

mynhair's picture

Wait for tomorrow, when the Stupor Committee failure is news.  Lots of rumor buying today, and 201K funds of course.

e-man's picture

In case the market melts up tomorrow, here is a list of the current applicable rumors: 

  •         China will bail out Europe (in exchange for all of Europe’s gold). Rumor value: 23 minutes
  •          Brazil will bail out Europe (in exchange for keys to WTO). Rumor value: 11 minutes
  •          Russia will bail out Europe (in exchange for keys to NATO). Rumor value: 4 minutes
  •          India will bail out Europe (in exchange for keys to Pakistan). Rumor value: 3 weeks 7 minutes
  •         EFSF will borrow $3 Trillion from ECB, using borrowed CMBS on defaulted loans as collateral. Rumor value: 4 hours 23 minutes
  •          Accounting Error: [Insert name here] found an extra $3 Trillion in the couch. Rumor value: 3 minutes
  •           Warren Buffett will bail out Europe after strategic economic summit conference with Mr. Rubber Ducky and Mr. Bubbles. Rumor value: 2 days, 11 minutes
  •          Maria Bartiromo and Erin Burnett will team up in Davos and use proceeds of charity event to bail out Europe. (Get your mind out of the gutter!  What were YOU thinking?) Rumor value: 3.7 femtoseconds
  •          Belgium will sell peripheral European nation electoral votes on eBay. Rumor value: 4 weeks  31 minutes
  •          Belgium will sell peripheral European nations on eBay. Rumor value: 5 weeks  7 minutes
  •         Mario Draghi will announce a voluntary 450% haircut on European debt, and allow 24 hours to settle ensuing margin calls. Rumor value: 3 weeks, 11 seconds
  •          In a little less than half an hour, Wesley, Inigo and Fezzik will get in the castle, break up the wedding between Buttercup and Humperdinck, steal the princess, kill Count Rugen, make their escape, and then rescue Europe. Rumor value: this one could actually work if you close your eyes really tight and believe

 

Mugatu's picture

e-man,

 

What's a femtosecond?  Is that the time between when your girlfriend's period starts and when she starts bitching at you?

e-man's picture

Hmmm, I don't think it means what the ECB thinks it means!

freshkapital85's picture

rumblefish.......risk on=bullish sentiment risk off=bearish sentiment

chump666's picture

I'd be careful here, looks like a bear trap.  Our major sell off is due in December on the European or China doomsday news kicks in.  I am betting on China credit bubble crash end/early next yr.  Last session sell off was pre-curser to a bigger liquidation trade.  But not just yet.

But...to see commodities sell like they did, hmmm

Mike2756's picture

Looks like they are trying to front run a year end rally. Silver did close above the open and fill the gap. Grains and energy were not down too much, value buyers stepping into forced liquidation? Someone came in big around 1:30 in oil and gasoline.

slewie the pi-rat's picture

if i understand tyler, yes, value buying and "squaring" after what seems to have been liquidation-like selling during the europe open

are you talking about a rally in commodities or stocks, or maybe both? 

remember tyler's old "buy cheap straddles" call?  well, i do!  and it's alive and probably well-er than most, about now.  those cheap puts we bought over that last rally are now getting fat as the holiday bird, and it might be a good idea to look at  some cheap calls to nibble with w/ the cranberries...

chump666's picture

Watching Asia, the thing is, commodities are getting hit hard again.  FT ran article on how the China property bubble is now crashing (it was a wire report).  if Asia consolidates on their open, should lift into Europe open etc.  Looking at a top range to buy mini shorts on indexes.  I think the market will be hit hard end/early next yr.  The Santa rally doesn't really make sense with the Chinese.

The selling has less to do with Europe now.  The region is a zombie.

slewie the pi-rat's picture

yep!

i agree with you about the commodities, chump_63 but i wasn't sure what he meant

and, there is a point where if certain commodities get cheap, it helps certain stocks

this last rally, as we followed it, here, seemed much ado about short-covering b/c of a strong EUR caused by repatriation to france and others who were liquidating around dexia and other balance-sheet-challenged banks holding sovereign IOUskies

the landscape is covered with zombies and bullshit;  earnings are suspect;  growth is highly suspect;

  1. peter is now robbing paul so he can pay paul back for robbing peter
  2. nobody feels like working
  3. panama red is back in town
  4. BiCheZ!
chump666's picture

slewie,  this is what is flipping commodity markets out  at the moment.  Also risk trades ala AUD

0046 GMT [Dow Jones] Upside for the yuan against the dollar is declining, with October data showing net outflows of foreign exchange for the first time since 2007, Credit Agricole says in a report. The figures suggest that the People's Bank of China "probably intervened to support its currency" in October, as market pressures pushed it down

 

Mike2756's picture

Wtf just happened to the yen? Reality catching up?

Mike2756's picture

Market is holding up very well so far, aussie is up a bit. Not much volume, though (short covering?). No doubt there are some banking on a good resolution to the Europe problem.

Motorhead's picture

DOCTOR, MY BRAIN HURTS!

Mark123's picture

After the close we get this headline:

 

"HP reports revenue above Street estimates"

 

When you read the details:

 

"For fiscal 2012, HP is projecting earnings of at least $4 per share, excluding items.

Wall Street analysts on average expect the company to earn $4.54 for the full year, according to Thomson Reuters I/B/E/S."

sabra1's picture

where is all the thanksgiving hype? hardly any news on hopeful sales, travel plans! it's not 'cause they're planning another kind of holiday on friday, like maybe, a BANK HOLIDAY!!!!

quacker's picture

The largest gap between the msm and blogosphere I've seen yet. Around the blogosphere: massive liquidity crisis and dumping of soverign debt, yield spreads, China popping, Europe recession, more MF Globals - all coming together for perfect storm.

Bloomberg and CNBC: Shock that the market would react this way - Super Committee should have already been priced in and ALL domestic data 100% roses for the US, so what's the fuss all about?

Completely and totally living on different planets at this point.

Rainman's picture

Poets and pimps view the world differently, I guess.

michaelsmith_9's picture

SPX looking for support, GC signals bearish price action to continue, and EURUSD continues to stall.  http://bit.ly/tk4sny