Jump to content
Sign in to follow this  
drbubb

The BIG MELTDOWN - Possible END of Long Bull Market

Recommended Posts

The BIG MELTDOWN - Possible END of Long Bull Market

DJIA-16.png?itok=3Da7gFq8

2020 Crash - Complacency Came Before The Fall

Everything was ignored and markets and stocks were relentless chased higher into some of the highest market valuations ever. Even the coronavirus was ignored. A dip to buy in January they said. AAPL warning? Let’s ignore it and buy AAPL to new all time highs again.

Nothing mattered until it did.

Then markets crashed last week. Perhaps not in percentage terms, but in terms of vertical velocity to the downside it was unmatched in history. The fastest 15% correction off of all time highs ever and by far.

Worse, months of buyers of stocks and markets at high valuations suddenly found themselves trapped as the bottom fell out inside of a few days:

NYSE-5_0.png

$NYSE, the broader index dropping below the January 2018 highs and closing below the summer 2019 lows now showing an index that has gone nowhere in 2 years and the recent highs being a complete mirage.

The big message: It was not different this time. Bears were right. Full stop.

> https://www.zerohedge.com/markets/2020-crash-complacency-came-fall

Share this post


Link to post
Share on other sites

Some Accurate Predictions of a TOP... including Here on GEI

The Market was highly Vulnerable & Over-valued, and approaching a Big Turning Point

(as I signaled ahead of time)

BULLSEYE ! - on my IWM -170 Peak Target, from before Christmas 2019.

MY TARGETS were, Late Dec. & Jan. -  - - / Actual Highs ! :

IWM / Russell 2000 : target was 170-171  /170.36- on 1.17.2020

Initially, SPX-3,300, later raised to: 3,350 / 3,393 - on 2.19.2020

INDU: 29,128.  Maybe 29.000 or 30,000.   / 29,600- on 2.12.2020

XLF / Financials etf : target not given.       / $31.38- on 2.12.2020

TOPS - chart updated in 2020, period starts in Late 2017:

lPCBXcA.gif

===== ( follow was posted before Christmas 2019):

"Discrete Targets for US stock indices?" - I wrote in my 2020 TIPS thread, at the end of 2019

Looks like the record IWM high of 170.07 may be a good target - that's 2.4% above Friday's close of 166

That's 37.0% over the IWM-124 Low. +38.2% above the 124 Low would be: 171.4.  So I am targeting: 170-171 for IWM.

IWM vs. SPY, XLF ... update / Last: 165.97, 320.73, 30.68 / INDU: 28,445

olmVNK8.gif

2.4% over the SPX Close of 3,221 would be: 3,298, Call it SPX-3,300

2.4% over the INDU Close of 28,445 would be: 29,128.  Maybe 29.000 or 30,000 as a round number target

/ 2 /

HOPES For Fed Rescue - 4 CUTS to Come?

The very central banks that have led them into another liquidity trap. By printing, cutting rates, adding to the balance sheet at a record clip and even producing new record holdings of treasury bills the Fed has created a stock buying frenzy. In denial of its actions and the historic valuations that were created in the process the Fed caused a massive melt up in stocks and markets and now investors have paid the price as the Fed lost control:

And now everybody is in hopes that the Fed can print even more to rescue markets once again.

Sure enough on Friday Jay Powell came out and tried to “sooth” markets.

It was oh so predictable:

And here we are, the market now pricing in a 100% probability of a rate cut by March and Powell sending the signal it will come. Indeed markets are now pricing in nearly 4 rate cuts by early 2021 and there’s chatter about an emergency rate cut coming or global coordinated central bank intervention.

They will react for certain and this reaction may well an drive aggressive counter rally in coming weeks from now extreme oversold conditions in markets.

But the bigger issue now is that central banks are very much at risk of losing final control here, having left themselves vulnerable, intervening always at the first sign of trouble, and now they have precious little ammunition to deal with a real emergency if coronavirus is turning into something much more serious.

Money printing does not start production chains or cause airlines to fly. So the risk of a global recession unfolding is a clear and present danger and then futures rallies would continue to get sold and markets may embark on a multi year bear market. That’s the risk they tried to avoid in 2019.

We can’t know how any of this plays out of course and hopes are the virus will calm down in the next month or two and then this current shock to the system can recover and pent up demand can rescue the economy and markets into the second half. It’s possible, but it may also not be possible depending on the severity. Because frankly, we are watching a historic experiment unfold:

 

repeat: Nobody can know how this will play out. However we can let the technicals guide us, the very technicals that told us this rally was unsustainable, that it had massive issues, and that a reversion was coming.

 

> https://www.zerohedge.com/markets/2020-crash-complacency-came-fall

Share this post


Link to post
Share on other sites

MONDAY MELTDOWN

Traders Are Flying Blind in S&P Futures After CME Limits Are Hit

Sarah Ponczek, Lu Wang and Gregor Stuart Hunter
View photos
 

(Bloomberg) -- Circuit breakers put a limit on a harrowing plunge in U.S. stock futures, but they’re also leaving traders in the dark as to how big losses may eventually get. Trading in other index price proxies suggested American stocks are at risk of the worst plunge since 2011.

In the midst of financial-market spasms as the day began in Asia Monday, trading in some of the world’s most popular equity contracts went quiet when declines reached 5%, setting off Chicago Mercantile Exchange limits that keep prices from falling further.

“These things are all designed to stop a market panic and cause a bit of a pause in trading,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors. “It can have the perverse effect of increasing the downward pressure on other markets, particularly until the U.S. market opens.”

E-mini futures on the S&P 500 Index sank 5% to 2,819 by 9:05 a.m. in Tokyo. After briefly rallying, they slipped back to the limit-down level and held there for much of the Asian trading day. The curb means the contract can’t trade at a lower price for the remainder of the overnight session, although transactions at or above the threshold are allowed. An exchange-traded fund tracking the S&P 500 that isn’t subject to trading curbs was down 6.3% at 5:52 p.m. in Tokyo.

“Most of these down opens have seen dip buyers come in -- we should know in the first 90 minutes of trading” if they are out of ammunition, saidMichael O’Rourke, chief market strategist at JonesTrading. “If we don’t bounce quickly in those first 90 minutes, it sets up to be a long and likely ugly day.”

Contracts on indexes such as the S&P 500 and Nasdaq 100 are crucial elements of the global price discovery system, giving traders a price proxy and instruments to speculate on the world’s biggest stock market when regular exchanges are closed. Other options exist, including exchange-traded funds tied to the indexes, which begin trading when the premarket session opens in New York at 4 a.m. New York time.

Nasdaq 100 futures stopped falling when the contract reached 8,093.25, while the Dow contracts cannot trade below 24,534.

“It allows cooler heads to prevail,” JJ Kinahan, chief market strategist at TD Ameritrade, said by phone. “Particularly in the overnight sessions it’s a good thing to have because you just don’t have as many products at work. This is one rule that it’s been so long since we have seen it, but it’s proved effective over time.”

Share this post


Link to post
Share on other sites

how can the markets be overvalued if interest rates are cut further or go negative?

Where else can money looking for a return go?

Share this post


Link to post
Share on other sites

LOCKDOWN WORKS: 

Only 4 new cases in China, No new deaths there yesterday. 

Active Chinese cases are down to 17,505, that's just 35% of the Global active of 49,526.  China has reported 68% of total cases.  New Cases rose +4,356  globaly. The Non-china cases load rose 13% yesterday.  More countries are "going green" with all cases recovered.  But these are small countries.  Italy is now #2 with over 10,000 cases

/ 2 /

Investors Prepare to Ride Resumed Economic Boom After Coronavirus Fears Subside

Share this post


Link to post
Share on other sites

====

Dow Plunges 10% Amid Coronavirus Panic — Worst Day Since Market Crash of 1987

 

Share this post


Link to post
Share on other sites

He called for the CRASH

"Corona situation is just a trigger"

Charles Nenner - No Way to Avoid Coming Depression

==

" Big guys are in Gold, and Small guys are into Silver.  Silver should outperform Gold"

" Stock market bottom is not likely before the end of 2021.  Even then, it may not be a V bottom.

It could stay down for a long time."

" I dont know where to put the money" (if I sell Real Estate... maybe Gold)

"I dont trust the banks anymore"

Share this post


Link to post
Share on other sites

How long before the SHTF for the banks and the bail-ins start ?... There are millions of people that are going to be in financial difficulty as a consequence of these lockdowns.

Share this post


Link to post
Share on other sites

Yes. Here are some comments from a Viber chat I am on - Philippines based, a location under Lockdown

"Isnt suspending stock market similar (in a small degree) suspending banking?"

"No.  No money, no food"

"(banks) booked vans to get its employees to work today, with normal transport shut down.  They know that many customers are highly reliant on those money transfers etc

"If banks start selectively shutting branches, that is when the bank runs will start"

"Banks are open until 3pm"

"long queues at ATMs here in makati, I am hearing"

Share this post


Link to post
Share on other sites

Sharing this from a Viber group -

Just got off a Goldman Sachs Investee call where 1500 of their investee companies dialed in. The key takeaways were:

- Over the next 6-8 weeks we are going to see a global health based and economic collapse.

- 50% of Americans will contract it (150M people)

- 70% of Germany will contract it (58M people)

- Of those impacted 80% will be early stage, 15% mid stage and 5% critical stage.

- Mortality rate of an average of 2% and hence do the math on the lives it will take in the above markets. It’s in millions...

- Europe is pretty screwed and so is the US. Need both of them to effectively control the pandemic (like several Asian countries like Taiwan and Singapore) to ensure that the global economy does not collapse further. However they don’t seem well equipped at all.

- China’s economy will be largely impacted and all exports, imports to and fro China will be hit impacting raw material and the global supply chain.

- Global GDP growth rate will be the lowest in 30 years under 2%

- S&P 500’will see a negative growth rate of -15 to -20%

- Stock markets will collapse only to hopefully recover in the 2nd half of the year

- Social Distancing for the right period of time is the only way to control this and if it’s for too short a period there can be a relapse

Really really depressing call.

Share this post


Link to post
Share on other sites

I stopped work and went into self isolation two weeks ago not because I was sick but because I could see what was coming. At the time I wondered if I was over- reacting however I am semi retired anyway so the pros outweighed the cons. I don't have to worry about paying the bills my work simply allows me to lead a better lifestyle...I generally spend 3 or 4 months a year in Asia....Don't think that will happen this year ..so I will actually probably end up better off despite not going to work as I like to live well when I am away.

There are currently only a couple of cases where I live , however, I am well aware of the exponential growth of this thing..ie...case ..case ..case..cluster cluster.. BOOM !...and you become a statistic.

I go shopping in the middle of the night when there is hardly anyone else around to get enough fresh food for the week. I still go out for walks. I don't see too many hazards in that but of course the virus is airborne so it's always possible if someone gets too close but I need to get out for an hour so I think that's important.

I'm lucky my work will still be waiting for me when I am ready to go back whenever that is although it will cost me a significant amount to maintain my position so this year will be a write off.

I have a feeling I would shrug it off pretty damn quick if I did get it but there is enough fearporn out there to leave a nagging doubt in the back of my mind so I am erring on the side of caution until there is more information to go on.

Maybe I should buy a Playstation to pass the time but I really prefer strategy type games like Rome total war or civilization on the pc.

I have to admit to feeling a sense of guilt about being able to do this when there are so many who are not able to and so many health workers risking their lives to help others...I do feel it's a little selfish of me...but we'll see I have a feeling there are going to be many twists and turns before this thing is over. At least if I can prevent myself from being infected or spreading it..that is a contribution.

Apologies for posting this in the wrong thread.

Share this post


Link to post
Share on other sites

You are in the UK right?

Why do so many seem to be in denial there?

 

Share this post


Link to post
Share on other sites

A GOOD READ : On Testing Limits Of Society

Respiratory distress: gold nosedives - mother bailout discharged!

Testing Limits Of Society

Coronavirus is now, QUITE HONESTLY, one of the worst disasters to come upon the human race since WW2. The quantity of casualties worldwide is less than 7,000 – which, compared with the 50,000 deaths a day caused by malnutrition, the 400,000 deaths a year caused by smoking, and the hundreds of thousands of deaths every year caused by car accidents and alcoholism, is NOTHING, but the prevention of further spread comes at an unbearable cost to economies.

The real ISSUE in this matter is not that the virus has brought about untold tragedies, but that the LACK OF proper ways of containing the virus do not exist, without MASS-SCALE quarantines and OUTLAWING INTERACTIONS.

The trade-off to eradicating the virus and of limiting the death toll, when it comes to the price paid by the global economy, is that all of our major industries have FLICKED THEIR SWITCHES OFF.

Collectively, as societies, we are SUBJECTING OURSELVES to this crisis, in a financial sense, in order to potentially save many lives. The combination of public fear and of the medical professionals, who DO NOT wish to UNDERSTATE the lethality of Covid-19, has painted us into a corner, along with governors, U.S.-bound, and heads of state, globally, who just WILL NOT risk taking responsibility for this contagious outbreak happening under their watch.

As a global society, we have decided that in the field of pandemics, we hold authorities accountable for coming up with SOLUTIONS and the eyes of the world are on WASHINGTON.

wealth_0317_1.jpg

Courtesy: Zerohedge.com

The U.S. economy is, without a doubt, ENTERING an earnings recession with each passing hour. What the Federal Reserve has done, by cutting interest rates to ZERO in a full-on EMERGENCY manner, is allow credit markets to FUNCTION, since they were PUSHING THE ENVELOPE.

Literally, had the central bank not done this, yesterday we would have seen dollar shortages worldwide. We could have experienced market closures, a bank holiday, lines at the ATMs and curfews, with police patrolling the streets.

The Federal Reserve threw itself on a live grenade to save credit facilitation and bond liquidity, but TOOK ITSELF out of the game completely.

> more: https://www.kitco.com/commentaries/2020-03-17/Respiratory-distress-gold-nosedives-mother-bailout-discharged.html

Share this post


Link to post
Share on other sites

"DO NOT LET A HUGE CRISIS Go to waste "

The elites (with the anti-human, anti-freedom agenda) are ready to exploit this

It is ALL HANDS ON DECK,. to keep Freedom alive!

"Because the Federal Reserve is wounded and left on the sidelines, I expect the MOTHER OF ALL BAILOUTS to start being deployed by the government and by international organization, which are U.S.-centric, such as the IMF and the World Bank.

This is a global pandemic and, as many have feared, the response will be globally-coordinated, opening the DANGEROUS doors to a one-world currency and global governance STRUCTURE.

Don't think for a second that power-starved globalist key players aren't looking to FULLY capitalize on the suffering of others and become their heroes in this time of crisis.

Make no mistake about it: the levels of FEAR on the street are HUMUNGOUS. I surveyed several mentors of mine, who were so bearish that I nearly used it as a CONTRARIAN indicator that the worst is behind us."

> https://www.kitco.com/commentaries/2020-03-17/Respiratory-distress-gold-nosedives-mother-bailout-discharged.html

Share this post


Link to post
Share on other sites

10 year chart - suggests some important support at about 235

spy - 10yr : 10d / last: $238.  day low : $236

gXiixSb.gif

if it does not bounce from near here, the bear is truly vicious

: 10d /

la7y7Du.gif

 

Share this post


Link to post
Share on other sites
5 hours ago, drbubb said:

You are in the UK right?

Why do so many seem to be in denial there?

 

Yes that's right.

I think there may be sections of the population who feel it's not their problem mainly the young who have been repeatedly told it's not going to affect them.

However, I think a lot are taking it very seriously...I had to go to the Post Office today and while I stood at the parcel counter I overheard a snippet of someone talking to the cashier..." they are going to be spread it everywhere...anyway I am in self isolation "...and I think there are a lot of people quietly going into their own self imposed lockdown. On my walk the local pub was open although they have restricted the hours slightly and plenty of people walking their dogs and going about their everyday business. As a matter of fact I thought it was refreshing after watching tv footage of European cities in lockdown and Police patrolling the streets

I went to the supermarket...The shelves were being stripped bare again at 10 am...never seen anything like it in my life many of the shelves were completely empty so they obviously are preparing for the worst. The freezers and fridges of Britain must be filled to the brim.

They say London is ahead of the rest of the country in terms of the spread of the virus but in my area outside London...population about 200,000...we had 2 cases 2 weeks ago and now according to NHS england there are 3 so the lid is on for now but there is a kind of electricity in the air...It's like waiting for a thunderclap...you know it's coming but you're not sure how loud it will be.

Share this post


Link to post
Share on other sites
9 hours ago, drbubb said:

You are in the UK right?

Why do so many seem to be in denial there?

 

"went to the supermarket...The shelves were being stripped bare again at 10 am...never seen anything like it in my life many of the shelves were completely empty so they obviously are preparing for the worst."

Finally!: but HOW SERIOUS are they in the UK?  

London shutting down... (or is it?)

Britain is braced for an unprecedented coronavirus lockdown – with ministers preparing to close London as early as this week.

Emergency legislation will be used to restrict tube networks, close schools, and ban large public gatherings.

THAT is Lockdown???

LOCKDOWN IN PH - is taken Seriously - Technically, after yesterday's edict: I CANNOT GET MORE FOOD

Only One Person per household is allowed out during two windows in time. That person must be UNDER 60 y.o.

(I am older than that, so I cannot go out,  If they check my ID I could get sent home immediately, or even arrested.)

My GF can go out, but she is required to work during those resupply times. 

By law, we should wait until her day off, that's just one day per week. Next one is Monday.

I am sure we will find a way around this... I may post here our solution.

 

Share this post


Link to post
Share on other sites
9 hours ago, drbubb said:

You are in the UK right?

Why do so many seem to be in denial there?

 

Because politicians are self serving idiots. As for the wider public, many are bored of the doom and gloom media and get sick (bad pun) of msn news telling us how to group think. You remember how the Brexit vote was supposed to go and yet went the other way fortunately. People don’t like being told what to do here Dr B.

Now fear, well some are made of stern stuff, some plain stupid sheep, others think well I’m fit, able and life goes on. What you’re picking up is London or main city soundbites. 

My local city and rural towns were busy all weekend. Did you see almost record crowds at the Cheltenham festival? Frequented by country folk, many who have gone through swine flu and other such types so understand virus spreading; albeit cattle. Yet there was little panic until Boris ratcheted it up on Monday. Aside from hand gels, then loo rolls and followed by pasta dish ingredients, I really didn’t see shortages.

Kid you not, it’s still busy out there, outside London, only now is lockdown starting to happen and last 2 days more home working, yet rural pubs are still busy, other business is still happening for now. Life is going on, albeit the black cloud is growing.

Maybe it’s a British stubbornness?

Share this post


Link to post
Share on other sites

"People don’t like being told what to do here Dr B" (in the UK)

Sure.  I am the same. And I lived over 20 years in the UK, so I know the character of people, very different from Pinoys.

But this seems like Pure Denial to me.

How valuable are those social activities, to risk picking up a virus you might pass on?

The young may feel invulnerable ('tho they are not!), but they can also pick up an illness as a carrier & pass it on with knowing it.

This virus is spreading through social contact.

I really woke up when some people on social chats in which I participate started posting messages about relatives who had died.

 

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×