As Stock And Sector Correlation Hits Fresh 20 Year Highs, Here Is Who Is Benefiting

Tyler Durden's picture

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CrashisOptimistic's picture

When cross correlations go to 1.0, this is a rather loud noting of the obvious: there is nowhere to hide, sector-wise.

It's not a market anymore.  It's an exercise in predicting government intervention.

gwar5's picture

Exactly. It's an exercise in predicting government intervention. And getting harder to distinguish from economic fascism.



narapoiddyslexia's picture

Don't the massive cross-correlations across thousands of distinct, individual invstments necessarily imply that the robots are running the insane asylum?

Bay of Pigs's picture

You can hide in the PM sector. Gov't intervention is gasoline on the fire.

Stuck on Zero's picture

All the shorts are getting scared out of the market by massive interventions.  That leaves only bulls. 

Implicit simplicit's picture

Machines have no emotions. They are visual stop chasing predators that go in any direction.

unununium's picture

Being short simply takes confidence, and risk management.  I've been net short equities since October 2009 and, believe it or not, have not gotten killed.

You think the market is artificially supported?  That is an excellent argument for shorting it.

Implicit simplicit's picture

Wall street is a bunch of frightened investors that collude for short term profits by creating squeezes and trend momentum, They are frightened because they realize it is the end game, and they will do anything in an attempt to keep the status quo. Anything. The more dour the economy becomes, the more colluded corrupotion that will occur. It is the fight or flight theory for survival in action. It is a code of silence which the SEC realizes. The SEC, wall street and the  banks need the Ponzi to continue for as long as possible. Help them by becoming their prey.

Captain Benny's picture

Well said.   I've heard people "in the know" comment on how traders are shitting bricks just worrying about their jobs and hoping the ponzi continues long enough for them to make a new bonus.

The volume has dried up and there is nothing but manipulation pushing the indexes higher.  Its disgusting.  Doesn't need to be said, but you and I and everyone we know needs to get out if we're still in.  The "shocking" wave of deflation is coming and then quickly we're going to see that its hyperinflation that we've got to be worrying about.  Anyone storing dollar denominated assets is in trouble.... the only good place to be is holding your own personal debts in dollars and holding your assets in the tried and true currencies of gold & silver.

I expect a TBTF bank failing within two months... probably by late Sept.

gwar5's picture

Without QE3, what else is a poor boy on Wall Street to do except go a little short the market? I agree with ZHer below, CrashisOPtimistic -- "It's an excercise in predicting government intervention."



disabledvet's picture

Intervention has come in rhe form of state and local governments. All else is simply a bald faced short selling "i got fired for cause" lie. There has never been any intervention in this market nor will there be as it corrects. There could be a massive MILITARY intervention in say "the failed state of Mexico" but i fail to see how that would solve the problem of a major credit event in say...Ohio...let alone...Germany.

Jovil's picture
John Exter’s Inverted Pyramid of Assets

We should move Government Bonds to a less secure classification closer to credit default swaps.

John Exter’s inverted pyramid. The idea is that things high on the pyramid are derivatives of asset classes further down the pyramid.

greased up deaf guy's picture

yet gold is up about 30% ytd. i'm not gonna lie... it feels good being right.

janus's picture

it is easy to grin/

when your ship comes in/

and you've got the stock market beat/

but the man worth while/

is the man who can smile/

when his pants are too tight in the seat

The Deleuzian's picture

broken market, broken political body translates into misery for zounds!!

self reliance, common sense, confidence in self and those close to you is the only antidote!!

janus's picture

Mr. Durden,

thought i'd take a break from digesting all this and share something with you:

i googled the following words (without quotes): stock correlation.

a ZH article was third on the list...i've been noticing that a lot more lately; and it seems to be gathering quickly. 

maybe just a coinicidence; thought this may be of interest.

janus's picture

fellow neophytes,

this may be of help if, like janus, you are stupid but insist on knowing in spite of yourself.

why didn't TD tell me about these things when i started this trek months ago?

now i've got to go back and regigger my whole plan for the upcomming week; this pretend trading is tons of work.  actually, these correlation numbers seem to work better for developing an overarching strategy...i guess the way i see them is as an indication of a market's future secular state...or, on second thought:

okay, i just went back and studied some more.  wanna know what jumps out like a spring-loaded jack in the box with an electrified stinger? oil.  something particularly anomolous about a commodity that has positive correlation with EVERY fucking asset class. 

you know, gentlemen, this manipulation racket isn't so tough to figure out; just beware excessive leverage -- and don't get too cocky about timing.  let them keep giving us money.

okay, oil market, brace yourself -- janus is going to pretend play you starting this week.  i mean, am i missing something here -- or is this stuff a lot easier than i was thinking in the beginning. 

but, on the REAL real, janus bought bunches of silver last week in the low 39s...i was just sitting there, watching the market, thinkin, 'it would be mighty nice to buy some under 40 one last time'; and, as if from my mouth to God's ears, BOOM, three dollar drop in like an hour (not afraid of a falling knife when were talkin silver under 40).  i'm looking forward to the day when i reach the first stage of my silver sell strategy and can start hikin skirts all over wall street.  i know i don't have paulson's billions; but, the way i see it, it's far preferable to be a very small skirt hiker than to be a giant caught helpless with a micro-mini sans panties (eh? paulson).