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6.11.13 futes


Yes, that headline is a bit tongue in cheek. I doubt very much that the unrest in Turkey is a driver of equity prices globally.

If you are looking for an after-the-fact rationalization as to why stocks are off about 1-2% worldwide, your culprit is more likely the Yen than anything else. It strengthened after Bank of Japan Governor Haruhiko Kuroda failed to discuss more stimulus, leading junkies everywhere to fear that their supply of that good shit was not going to find its way into their veins. No dopamine rush this morning, kids.

Also worth noting: There are less than three weeks left in Q2, and pre-announcement season is upon us. Look for an uptick in negative warnings as the impact of the Sequester is felt.

There are other signs of the ongoing slow recovery. The general economics data is mixed, with no imminent stall seen but no ignition of animal spirits either. (At least, outside of equity markets). Hence, with the focus on risk assets and speculation, the market moves seem to have an outsized mindshare of what’s covered in the media versus their relative size and import — versus what really matters — these days.

Regardless, our context remains a market that has simply run too far too fast not to not be overdue for a pullback. Consider that 16% YTD to the peak in May (38.4% annualized) and 2.3% (w/divs) in with May (~27% annualized) is not what a 2% GDP typically produces (though there is minimal correlation most of the time between economics and equities). These are obviously unsustainable paces, and at the very least require some digestion. The tone of the market has changed, and the straight up silliness is likely put back in its box until next season. Anyone who is surprised by the backing & filling after the past 6 months hasn’t really paying attention.

At this point, most traders (and even many investors) are trying to discern whether this is a mere refractory period or the end of the bull cycle. Its still too early to make either claim decisively. I find it to be helpful to hunt for various signs of confirmation or divergence in market internals, various sectors, and even classic Dow Theory plays out.  There is enough meat in those areas that its worthy of its own post, coming some time in the near future.


Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “Look Out Below, Turkish Style”

  1. PeterR says:

    A rejection here at SPY MA(20) during “Real Options Week” could accelerate to the next support at 160-161. The week before Options Week has contained more options-related trading in recent years IMO.

    The question would be whether yesterday’s high was the first “lower high” in a series?

  2. peterkrause says:

    Somewhere between common sense and artful dowsing (pun intended) there is a path to tread. I’m thankful to all the people who post and explicate the gorgeous charts even though I dont understand most of it. Unless a line goes vertically asymptotic, I can’t find reliable indicators for myself. Its all fun. And for the now, when I get carsick staring too closely at data, I recall what my Dad advised: just keep your focus on a point in the distance and youll enjoy the ride again.

  3. Ted Kavadas says:

    Yes, I would agree that many factors are causing today’s selloff in markets and various other recent weaknesses.

    One factor that I think lacks recognition is various “deflationary pressures” that are being exhibited. Definitely something that bears close scrutiny, in my opinion. For those interested, I wrote a blog post on it yesterday, which can be found here:

  4. ironman says:

    To find how much weighting one should give the U.S. budget sequester-related negative warnings in their investing considerations, see here.

  5. catman says:

    For what it’s worth the recent new low list isn’t quite so littered with gold and silver names as it was a month ago.

  6. Concerned Neighbour says:

    Remember that wise line from the matrix: “There is no down.” Or was that “there is no spoon”?

    I’m cheered to see fundamentals have improved so dramatically in the last couple hours.

    It’s a clown show. I’m sure everyone has noticed all the market pundits talking about “how to spot the bottom”. Yes, this “selloff” knocked a whole few percent off record-high stocks. Now they can resume their deliberate (programmed?) march to DOW 36K.