Archive for February, 2016

Stock Market

The market recovered a lot and there is still an upside bias, but everything can turn on a dime.

The issues are several. Technically, the market can resume an uptrend only if the SP 500 goes 2,100.

SP500 2,100 is quite far away considering all the tremors in the market (including Brexit now). So the chance that this is nothing else that the last moment to exit are quite high.

Also last week big rally has seen very low participation (volumes were -13% in respect the normal 2016 average, including a rise in the Goldman Sachs Short Most Shorted Shares and increase of Short Interest Cover -Font Bloomberg.


Also in the real economy we just see OK data, . The G20 was as usual inconclusive (expected since President Obama is now in a “lame duck” situation) and the Reserve Banks interventions are following a pattern of diminishing returns.

So apart some short term up bias – not much good news. Sorry!

Greece, the German colony

Posted: February 26, 2016 in Uncategorized

Last year I was very disappointed to the kneeling of the Greeks. They resisted more to Nazi Germany than Merkel.

Now the outcome: Austria with the ex Yugoslavia state had a meeting considering to block the immigrant passage. Athens got so angry they recalled the ambassador.

So Turkey is not stopping the boats and the Balcan states are blocking the flow. The NATO  patrols are to save lives (not turn the boat) and the Turkey deal*  is still far.

The German colony will become easily the immigrant warehouse of German Europe.

The UK should take note.

*Turkey is using the immigration issue to force Europe to accept Turkey, a Muslim and undemocratic nation) as EU state.

In 4 months there will be the Brexit referendum. Europe and PM Cameron will use the fearmongering strategy successfully used with Scotland and Greece. Already the military paint a scary picture and soon after currency volatility and credit spreads went on overdrive.
Historically the Brexit feelings and the economic status of Europe that go hand in hand…which means a Brexit is more probable than other times.

Moreover specially what happened with Greece exposed the fact that Europe is a benevolent Fourth German Reicht.

As people realize that the famous words of Winston Churchill come into my mind. We will fight on the seas, we will fight on the beaches, we will fight on the hills…we will never surrender!

This is the Battle of Britain reloaded. Britain already defeated Germany once under enormous duress. Now we see if they have still the guts.

The market data say Yes. 

Funny enough the referendum is the 23 June…the Battle of Britain started the 10 July 1940. As Churchill said…never so much by so many to so few

At the end of 2014 i a post I wrote…a Tom DeMark signal…the index will stay bound range and then crash.

Quite a foresight. Now a mini DeMark indicator (first of three confirmation points in this week) went off …if confirmed¬†indicates a bottom of the market at least between SP 1,786 – 1,736.

Seat belts on, please.

26 February UPDATE: The signal has NOT been confirmed

A new terror phase in Turkey

Posted: February 23, 2016 in Uncategorized

Last week attack in Turkey represents a new evolution of terror attack.

It uses a more sophisticated technic similar to IS, but it was probably carried by some independent Kurds terror cell as retaliation to the Turkish massacres in Southern Turkey and Syria.

I will not bother you with details, but it could really be the start of something similar to the Italian Years of Lead in the 70s.

The US Lybian bombing

Posted: February 23, 2016 in Uncategorized

Scouring my fonts I found the real motivation of the new US bombing in Syria as the attack location did not make much sense.

In effect it was a training camp, but  the target of the IS operatives was a Mumbai style mass attack in Tunisia in order to start a civil war. And that is why the collateral damage of 2 Serbian Embassy personnel was acceptable for the US.

I always tell you that the last two years crowded trades (the trades where the majority of people agree upon) are not working.

I found a nice study, apart my own, from UBS that shows what I mean and where the dangers lurk.

The main crowded trades are LONG USD, US Healthcare (unwinding since August 15), Japan Telecom, Asian IT.

Another is Short Energy, Short Gold and Commodities in general (and commodities countries such Brazil, Russia and naturally Australia and Canada)

A big one yet to materialize is the current LONG Developed Market Short Emerging Markets (will have to see the USD strenght to see…but hard to pick) and Large Cap vs Small Cap.

Another big trade is Indexing…with everybody going towards Exchange Traded Funds.

What does it mean? Let’s see years to date (local currency):

ASX -6.1%

ASX Financials -10%

ASX Energy -4.6% (surprise!)

US SP500  -6.6%

Gold +16%

Oil -20%

Iron Ore +9.6% (surprise!)