Equities Waffle, On the Brink
Settles, Charts and 911
We aren’t sure what it is about market tops, but we know one thing is certain, they only come about once a decade, 2001, 2009 and can we call Feb 2020 the mini top? For all intents and purposes the Nasdaq Bubble hit on the highs up at 12465 was 2,702 points above the Feb High or 27.6% higher. So that brings us to today and the mini market top for now that has formed. We have pointed out that the long term trend channel is still intact, but the 50eMA and the base of that channel may not hold the line next test down:
Not to mention Magnelibra’s NQvsR2k2x chart looks like its about to do something it hasn’t done in very often, climb above the 50dMA:
Looking at the SP500 this to stinks of something larger in the offing:
Google isn’t helping the equities case as it is now below the 50eMA and in danger of causing all sorts of repositioning of risk if this keeps up:
Moving right along, we have the Crude Oil market as well, slow dripping itself back below $30 it seems like:
Here are the settlements for Thursday Sept. 10th 2020. Note we have rolled all the FX and Equities from September to December contracts:
OK we know bear equity markets are difficult, because they run counter-intuitive to a QE regime led system. We know this all to well, so we must be careful to navigate this because despite the overwhelming support of evidence for the bears case, fighting against a continued bull move higher has been a death nail in the coffin for many. It’s why guys like Dave Portnoy flaunt the fact that markets always rise, because in a QE world they do and rise in inexplicable fashion. So selling is anathema to the QE monetary policy and thus we must tread very very lightly.
We must be patient and sell rallies and be willing to hedge things out, so they don’t get out of control. Because right when you think you have it pegged, everything looks like crap, BOOM! Nasdaq is up 400 and you gotta put your tail between your legs and bail! We get it. So we will do our best to narrate this move. For now, we are cautiously short, i.e. utilizing options as opposed to outrights. Its a much easier play to navigate and a whole lot less risky!
That’s it guys, oh we had a couple of subs request some reading materials, here you go:
William Poundstone Fortune's Formula,
Liaquat Ahamed Lords of Finance
Nomi Prins Collusion
Murray Rothbard The Mystery of Banking
Michael Lewis Liars Poker
Michael Lewis Flash Boys
Guy Lawson Octopus
Hayek The Road to Serfdom
Bruce Mesquita The Predictioneer’s Game
I can’t promise you these will make you trade or invest any better, but they will enlighten your mind to think well outside the box. Hope this helps!
We would also like to recognize all those that fell on this fateful day 19 years ago. We used Cantor Fitzgerald everyday as they were our voice brokers for US Treasury Cash and as an arb, you basically sat on the squawk all day waiting for opportunities. The planes hit, the phones went dead and the rest is history, we can’t help but remember that cold, crisp bright sunny Chicago day as we departed the CBOT as everyone was told to evacuate, because we just didn’t know what was next. Time doesn’t really change the feelings that you felt and on days like that, those feelings will never fade. We hope for peace and pray for all those directly affected on that fateful day in American history.
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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.