Is there a Historic 13%+ Bloodbath brewing for Monday?
A lot of investors probably cheered a day like today but in reality, the underlying issues with this market are growing more concerning each and every day. While many likely think this is the bottom and its smooth sailing from here, the reality is, this bounce today likely sets up for a massive blood bath at some point next week in what could be the worst percentage and point loss days in stock market history.
For those who study margin calls, today was one of the most fierce coverings in the markets history - and also, a market that brought about a 7% SPX rise in 20 minutes. Moreover, some of the most fiercest rallies in history have come in bear markets (i.e. 2008).
The bear market has only begun. The day of new highs will be many years away. There is a high probability this will turn into a 50% retracement from the top (3400) down to roughly the 1600-1700 level in due time.
Several things to note:
1) VIX simply closed the 55.2 gap and didn't go any lower.
2) Markets dropped after 4:00PM back below 2700.
3) Virtually every stock closed a huge gap all at the same time. Too much similarity around the markets is due to massive algo buying.
4) Shorts had record volume in the last half hour. SQQQ had 100 million volume for example; a 40-50% increase in under 30 minutes.
5) More generally, Gold and mining stocks collapsed. This only happens in equity bear markets.
6) We just entered a bear market. Virtually no chance the bear market is 'over already'. Bear markets last at-least 12-18 months and no, its not "different" this time.
7) This was likely a massive gap close for algos to soak up cheap shorts for the bloodbath to come.
8) The world economy is at a stand-still and going into recession; makes no sense to see a sustained and "real" rally.
9) No, QE and fiscal policy cannot save the markets in the near-term. Its short term noise for algos to buy low and sell the rally and stockpile shorts.
10) Governments around the world are at a stand-still.
11) Bond volatility is historically voracious. No, the fact that yields are rising does NOT mean the equity market is bullish. The end goal is the bursting of the bond bubble (the biggest bubble of them all), where yields rise alongside inflation as people give-up on the governments ability to pay down debt.
- zSplit
For those who study margin calls, today was one of the most fierce coverings in the markets history - and also, a market that brought about a 7% SPX rise in 20 minutes. Moreover, some of the most fiercest rallies in history have come in bear markets (i.e. 2008).
The bear market has only begun. The day of new highs will be many years away. There is a high probability this will turn into a 50% retracement from the top (3400) down to roughly the 1600-1700 level in due time.
Several things to note:
1) VIX simply closed the 55.2 gap and didn't go any lower.
2) Markets dropped after 4:00PM back below 2700.
3) Virtually every stock closed a huge gap all at the same time. Too much similarity around the markets is due to massive algo buying.
4) Shorts had record volume in the last half hour. SQQQ had 100 million volume for example; a 40-50% increase in under 30 minutes.
5) More generally, Gold and mining stocks collapsed. This only happens in equity bear markets.
6) We just entered a bear market. Virtually no chance the bear market is 'over already'. Bear markets last at-least 12-18 months and no, its not "different" this time.
7) This was likely a massive gap close for algos to soak up cheap shorts for the bloodbath to come.
8) The world economy is at a stand-still and going into recession; makes no sense to see a sustained and "real" rally.
9) No, QE and fiscal policy cannot save the markets in the near-term. Its short term noise for algos to buy low and sell the rally and stockpile shorts.
10) Governments around the world are at a stand-still.
11) Bond volatility is historically voracious. No, the fact that yields are rising does NOT mean the equity market is bullish. The end goal is the bursting of the bond bubble (the biggest bubble of them all), where yields rise alongside inflation as people give-up on the governments ability to pay down debt.
- zSplit
Comment:
The big US banks have stated they have completely halted buybacks until at-least Q2. This is EXTREMELY bad for US equities as US banks are huge buyers of their own stocks and this has been the main support band-aid for the US markets for the last decade. This could lead to an underlying liquidity issue that I have been hinting at.
I have stated many times that this will be a humanitarian crisis that will turn into a financial crisis and act a a double whammy for a historic and prolonged crash. It is likely we won't see a new SPX high for at the very very least, 5+ years.
This is a great time to get out of the market and refrain from buying any stocks for at-least 6+ months, ESPECIALLY if you are near retirement.
Don't try to time the bottom as the bottom will take several years of malaise to find, however, stay out of the markets except for shorting, scalping and of course, cash.
- zSplit
I have stated many times that this will be a humanitarian crisis that will turn into a financial crisis and act a a double whammy for a historic and prolonged crash. It is likely we won't see a new SPX high for at the very very least, 5+ years.
This is a great time to get out of the market and refrain from buying any stocks for at-least 6+ months, ESPECIALLY if you are near retirement.
Don't try to time the bottom as the bottom will take several years of malaise to find, however, stay out of the markets except for shorting, scalping and of course, cash.
- zSplit
Comment:
Today went as planned. :-)
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- zSplit