Equities Slapped, Dax Warned and Other Market Commentary

We highlighted the potential equity warning signs last week in our “Dax Breaking Down” post where we highlighted this chart:

Here is the December futures and we have to admit, this set up although possible to see a stick save, seems like its certainly poised to continue toward the path of least resistance:

The Dow is getting hit pretty hard today -2.5%

Nasdaq is holding up vs the other indexes and is down 1.94%

SP500 hit the 50eMA and is holding there:

We looked at the US Govt 10Y last week as it hit the .786 fib target/reversal and we are seeing a continuation of that reversal today:

Here is the overall bond market currently with yields falling 3 and 4 basis points across the board (tradingview.com data):

In FX land the US Dollar Index is back above the 93-00 pivot:

Energies and Metals down a bit with the exception of Nat Gas as colder weather hits the Domestic US. Gold holding up vs the other metals we follow:

In Equity land the QTFAANGMs are all lower:

Couple of interesting articles out today on Zhedge, CMBS turning in keys, Home Prices hit new all time high. Links, New Homes Sales Here and CMBS Here

Its a tail of two risks given those two articles, on one hand you have defaults coming and on the other you have solid demand driving up home pricing. History tells us the combination of the two most likely means we need to consolidate and that the CMBS land is warning the retail housing sector you’ve gone to far, at least that is how we see it.

Real economic factors and organic processes take time to play out, but buying and paying up in today’s markets doesn’t make sense against the fundamental back drop, those that can and will take risk, will always do so, those that are fighting it and paying up just because they don’t see any other option, in the long run will be disappointed.

See investing, trading, life, its all about calculated risks, some have the belly for it, some have the pocket book for it, but generally the normal distribution just plays along.

Human sentiment, human psychology is generally very predictable, they move in herd mentalities, they don’t want to miss out, they don’t want to be the odd man out, this is why group mentality is so necessary for some, and others, well they would just rather act via their own volition.

If today’s economic situation and the current equity level aren’t looked at properly one might assume that things aren’t so bad, yet the reality is and our readers know that under all of it is nothing more than more and more debt, more and more central bank propping and in the end, unintended consequences will cause massive asymmetrical risks that many will be caught by because they have been lulled to sleep one QE bond buying operation at a time.

With the CDS and CMBS markets waking up the the cov-lite reality of 1% recovery rates and defaults assuredly on the rise, let’s just say things have to go very very right in order for it not to come cascading down uncontrollably.

Yes the Federal Reserve has done a good job, we are critical of them for their machinations as Austrians, but the reality is, they don’t have a choice, the alternative solution in our monetary world, wouldn’t be able to handle it. So where we do we go from here? Well the election will tell us a lot and that’s only a few days away! Also tonight we have the senate confirmation of Justice Barrett, so things should be interesting as the United States transitions its SC sentiment to the conservative right.

That’s it hope you learned something, hope you did something today to make yourself and or someone else smile and we hope you continue to share our work we can only keep doing this with your support!

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-Magnelibra Econemotions

DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options on neither commodity futures. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of, or from the author Michael Agne owner of Magnelibra Capital Advisors. All rights are reserved. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed.