“Oh market Oracle, where did market liquidity go?!”
Have you ever seen a market … any market … go from absolute euphoria,
where no price is too high [Wednesday late afternoon], to absolute panic
selling [Friday morning into the P.M.], within 48 hours? And the dirty little
secret is, you ain’t seen nothing yet … the loss of NDX100 liquidity, meaning
the price change from one bid/offer price to the next one a fraction of a second
later, widened about 5X on Friday, from more normal daily liquidity.
And with Facebook losing $150 billion in market cap within 2 hours, the largest
in history for any company, the proverbial handwriting is on the wall for the
rest of the market when SHTF going forward. What you saw on Friday, will
pale in comparison to a true market meltdown, but the thing to focus on is not
the price change per se, but the loss of liquidity during the price decline
… “there won’t be any is the point, and you could see the bid/offer in NDX100,
plunge faster than you ever thought possible”.
On Friday, almost every long trade I made was up money at some point off a
bottom … and then, in an instantaneous blink of the eyes, I’ve just seen 5 - 10
index points lower change in the bid/offer, turning a winner into a loser, and
away we go to the downside ala “Thelma & Louise”. This is likely to get worse
over the next few months into the midterm elections … “the way I see it, the
‘deep state’ has no problem causing a market panic to the downside into the
midterms, in its effort to cause the House [and maybe the Senate] to change from
“R” to “CD” [Communist Democrat] … the FAANG stocks are so over owned
and held by ETF’s, ETN’s and hedge funds, the declines over the last couple of
days is simply the tip of the iceberg, and these 5 stocks represent over 50% of the
value of NDX100 … all of the good news on the economy is out, and global
growth going forward isn’t anything to cheer about … and then there is China
and their overt, out in plain sight and in your face, Yuan & Reminbi devaluations
… you want more trade war? … this is how you get MOAR!! … and all into the
chaos of the midterms, where everybody knows the insane ‘D’s will impeach
Trump given the chance if they get power in Congress … somebody explain to
me, with everything I’ve said so far, how this translates into FAANG stocks
powering upward and carrying the NDX100 [and by proxy the SP500] to ever
greater heights of price? Especially given the nature of the runup we’ve seen and
how over extended the market actually is on an historical basis”?
November 6, 2018 [about 100 days], we have the highest probability of some
kind of market meltdown on the order of 2008, where the NDX100 sees a 5 or
4 hande in front of it, maybe more, and an entire generation of people get
wiped out, and swear off stocks forever [“like they did after 1929, 1938, 1966,
1987, 2003, & 2008”]. To be sure, there will be insane rallies, as some will
perceive value after drops, but many more will be looking to STFR, rather
than BTFD … and I haven’t even factored in the redemption liquidations
from ETN’s & ETF’s that come every morning on the opening if things get
“messy” … remember, they don’t have a choice; if an investor redeems his
shares, they got to sell on the open, regardless if the NDX100 is gonna be 700
lower … in essence, they are their own worst enemy.
My update today is a special one in this regard; “In addition to attempting to
buy bottoms, and then scalping out on rallies, I’m looking for opportunities to
sell rallies in the NDX100, and position ourselves short for longer, massive
moves lower. Given the right circumstances, I’d be willing to hold profitable
short positions through rollover and into Asia and the next trading day, but
never over a weekend, where there is simply too much risk … I’ll start with
smaller positions off highs, where the “Explosion Algorithm” has the RSI above
the top red line [85.74], indicating an overbought short term top … if that bears
fruit, and the market moves lower, I’ll “position scale” the trade to a larger
volume by selling more … this way our position will always be up money. If the
price comes back we’ll get out with a small profit and start over. Until the
midterms, I think this is the way to trade, cuz the risks here are clearly to the
downside by a wide margin … quite frankly, since the financial crisis of ‘08, I
believe market valuations have gotten to the insane level, and tech stocks in
particular are the new “tulips” from 1636 … add up the economic, financial, and
especially the political calculus over the next 100 days or so, and there has never
been a time more fraught with danger for investors than this, to see massive
market drops that wipe people out … this is the highest risk time period I’ve ever
seen in my lifetime bar none”!
attempt to outperform the NDX100 index; what caught us on Friday was the
utter lack of liquidity when a small rally fizzled and then price turned lower
violently … fills were excellent, nothing but kudos to the LP’s in this market
… “winner, say hello to loser, and you got less than a second to decide if you
want the loss to be larger”! Even during February’s decline, the market was
somewhat sane to the downside … not this time, and Friday was the first
serious message the market is sending to trading professional across the globe
… “beware the long position Skippy, and don’t take a pee break, cuz you may
definitely not like what you see a few seconds later, as funds liquidate boatloads
of tech shares on rallies and price immediately adjusts sharply lower … and the
sicker the rally, the harder the subsequent next break will be”.
And, the PAMM on Friday did outperform the NDX100 from the NYSE open
… only not how I want to do it, obviously. My job is to outperform the passive
investment ETN’s & ETF’s investment schemes in tech via the NDX100, and I
intend to keep doing that. Going forward, I’m well aware of the fact that
liquidity has dried up in these so called trillion dollar markets … “it’s there
‘till it ain’t”, and on the downside if you get caught long, you pay the price.
“Yup, I got the message loud & clear, and our long positions going forward into
the midterms [maybe longer depending] will be to liquidate on the rally and dump
before price turns … if it goes higher, so be it, cuz I’m not gonna get caught like I
did on Friday, thinking liquidity would be there, and then it wasn’t”.
oil cuz of the logistics of the scumbag LP banks, who refuse to make a “fair &
honest” market … outside of that there is only tech … FX, metals, and
whatever other cat you drag into the equation is going nowhere … a literal
manipulated, bank run, stop hunt bonanza run by central banks. Tech runs
the SP500, and over the last 10 years it’s only Tech that has mattered … and
since it’s the only stock index where the Turnkey Forex LP’s, not only give us
the best spread in the biz, they execute your trade fairly with no slippage I’ve
seen or experienced … what you see on the screen is what you get on the
bid/offer fill. This is the reason the PAMM has its focus firmly on tech … it’s
the only place where there is consistent action and treats us fairly. And, I
might add, it’s where investors all over the world are piling money into on a
WEEKLY basis that almost exceeds $1 billion dollars … “it’s simple; you want
to invest in Campbell Soup or a tech company with a story to tell”? This is why
we’re here, and the only way to honestly judge my performance is to
benchmark it to the NDX100 index. So far, we’re beating the index since I’ve
started to exclusively focus on NDX100 trading, but from my perspective it’s
not good enough to “lose less” on down days … Friday was more the
exception than the rule, but knowing that market liquidity has dried up
considerably, gives me all the info I need to adjust my trading execution on
long positions. And, at least until the midterms, selling rallies should provide a
very big boost to returns.
So, tomorrow is another day, and it’s back in the saddle … don’t get
“spooked” by Friday … from here, we’re positioned well to face what the
market brings in the next 100 days and outperform. I’m not sayin’ this is
“doomsday”, but simply the probability of some really nasty down moves hasn’t
been higher than it is now, in a very long time. We’ll see what happens.
know what the problem is, but they won’t open … ‘Google Docs’, which I do
the blog on before transferring to the website, works fine. In any event, I’ll
have the PAMM Spreadsheet updated when it’s working again … until
tomorrow mi amigos … Onward & Upward!!
Have a great rest of your weekend everybody!!
-vegas
OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND
OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN
“DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN
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START YOUR JOURNEY FROM WHERE YOU ARE AT TO
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