Jim Cramer

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Trading Made Simple





As stocks once again flip-flop from manic depressive to manic impressive; heading into the last few hours of the day, we thought we would simplify the art of trading a little with the following flowchart...

 


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Will Terrific Tuesday Hold Once Again?





For the 11th week this year, US stocks are higher on the most fundamentally bullish combination possible in today's markets... a Tuesday open... Absent the exuberance of Turnaround Tuesday (which appears to have been discounted into Manic Monday yesterday afternoon), the S&P would in correction territory (down over 10% in 2014). The question is... will today be any different?

 


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Flashing Red Warning: Q1 Earnings Growth Plunges To Lowest Since 2012





While the so-called "experts" were adamant in repeating that one must ignore all Q1 economic data (because of harsh weather you know), one thing the same "experts" pounded the table on was the earnings growth in 2014 which confirmed that the Fed was correct in tapering and that the corporate sector was well on its way to achieving "escape velocity" and a stable recovery. And then this happened...

 


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Tapering Is Tightening





Still unconvinced? Even Jim Bullard told investors that 'tapering' is tightening  - but don't take his (or our) word for it... the following chart says it all...

 


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Peak "Hope"





The gap between current Q1 reality and forward-looking, hope-stuffed, unicorn-tear-fueled expectations for US economic growth has reached a new peak of Keynesian 'faith'. This week saw "economists" downgrade Q1 GDP expectations once again to a mere 1.6% growth (from 2.6% in January) - meaning that cold weather is responsible for a 46% collapse in US economic growth expectation. As the chart below 'hints' at, it appears we have reached "peak hope."

 


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Back By Popular Demand - The CNBC Talking Head Guide





We suspect this will come in handy tonight...

 


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10 Year Breakdown To 2.4% Possible BofA Warns





As one well-known trader noted - referring to the current move in the US Treasury complex - "rubber, meet road."With the death cross (50DMA crossing below the 200DMA) for bond yields and a crucial trendline having been tested now numerous times (building up its importance), it seems we are about to find out just how much "growth" stocks really do reflect the reality of 'ungrowth' in bonds and vice versa. A break of 2.64% in 10Y yield could be a critical floodgate the Fed does not want opened. As BofAML's Macneil Curry warns, 10Y Treasury bears beware, a break below this level opens up a drop to 2.399%.

 


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Stocks Close At Record High Following China, Japan, And US Data Misses





Japanese data (double) miss, check! Chinese data miss, check! US data miss, check! Investor trust in US equity at record lows, check! All-time record highs for US equities - you betcha! Stocks broadly pumped and dumped once again today but the start-of-the-month exuberance over April's seasonality was enough to leave gains that accelerated into the close as the long-bond sold off and short-end rallied (biggest 2-day steepening in 5 months). USDJPY was in charge for much of the day but when it went limp in the last hour, it was VIX-clubbing time (to 10-week lows ahead of the ECB and NFP?)  Oil prices slumped intraday (back below $100) as gold slipped but copper and silver flatlined. Wondering what fueled today's panic buying spree? "Most shorted" stocks tripled the market's performance on the day...

 


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Headlines From April 2016: Dow Jones-30 Suspended Due To Lack Of Interest





Though many blame the Global Crash of 2015 for the loss of faith in stocks, others say the erosion dated back to at least 2014...

 


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Picturing Our Dystopian World - Where Less Is More





The economic growth expectations for the world in 2014 just plunged to fresh lows at a mere 2.78% - that is 15% "less" growth than was expected a year ago. The world's equity markets are up 25% "more" than at the start of 2013. Thus, our dysfunctional dystopian world where 'less' economic growth is 'more' wealth-creating. Long live the central bank utopia...

 


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The Uncomfortable Truth (In 2 Charts)





Presented with little comment aside to ask... if 'weather' can do this much damage to the US economy and 'faith' in the wealth effect-building benefits of the US equity market are this weak, then there are a few uncomfortable truths about to punch some talking heads in the mouth...

 


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VIX Slam Fails But Blue Chips Pop As High-Beta Drops





Pre-open gold dump, USDJPY pump, check. Opening dump in USDJPY and stocks led by Momos and Biotechs, check. European close marks the bottom, check. EURJPY takes over and ramps stocks back up to highs, check. Fade into close, check. Today was an almost perfect echo of yesterday's market action with blue-chips benefitting from the weakness in Nasdaq and Russell high-beta honeys. Bonds were quite with very modest steepening. Gold and silver bounced off earlier lows but their losses mirror Copper's 1.7% rise on the week. The USD lost ground as Draghi's failed jawboning sparked EUR strength. VIX fell 1 vol to its lowest close in 2 weeks as a late-day VIX -slam failed to get SPX green post-FOMC.

 


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What Happens To America's Long-Term Unemployed (Spoiler Alert: Nothing Good)





The number of people unemployed for 27 weeks or longer in the US rose by 203,000 in February to 3.8 million. As we noted previously, this is the desperate shadow hanging over the so-called recovery. What is more problematic is the stunning findings of a new study that only 11% of the long-term unemployed in any given month found full-time work a year later.

 


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Despite Late-Day Ramp, Stocks Slide As Yield Curve Flattens To 2009 Lows





Despite dismal PMIs from China and USA, stocks managed a miraculous 'pump' into the US open only to be unceremoniously dumped very soon after as MoMos and Biotechs had the rug pulled out. Weakness continued down to Nasdaq's 50DMA (and Biotech's 100DMA) and stabilized into the European close when soon after, via the magic of EURJPY, stock rebounded back to VWAP. Alas, it was not be the day for the bulls as VWAP-selling hit hard in the last hour... until the good fairy 330RAMP CAPITAL came along, and punched VIX in the mouth in a desperate attempt to regain green and get the Dow positive post-FOMC. Unlike many fairy tales though, this one ended sadly ever after. Stocks down, USD down, Gold down, VIX up, Yield Curve down to 2009 levels.

 

 


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What History Says About Fed Rate Hikes





Each time the Fed has lowered the overnight lending rate, the next set of increases have never exceeded the previous peak.  This is due to the fact, that over the last 35 years, economic growth has been on a continued decline. Increases in interest rates are not kind to the markets either.  Each time the Fed has started increasing the overnight lending rates.  Each time has seen either market stagnation, declines, or crashes.  Furthermore, it is currently implied that the Fed funds rate will increase to 3% in the future, yet the current downtrend suggests that an increase to 2% is likely all that can be withstood. According to Jim Cramer last night, he said the idea of rising interest rates shocked the markets, however, in the long-term it's a positive sign. Rates rise as the economy does better. The assumption he makes is that as the economy "catches fire" and corporate profits increase, then it is natural for interest rates to rise also.  If a growing economy is a function of expanding profitability, then what is wrong with the chart below...

 


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