Divergence

A short one today.   Although it's always easy to warn about falling prices once prices start er....falling, Spooz clearly showed some negative divergence at the highs (i.e., higher high in prices, lower high in momentum.)


The last time this classic reversal signal happened, we dropped some 80 points from the highs.   Now, none of this is a guarantee that the Big Kahuna sell-off is coming....however, it does give Macro Man some comfort in his strategy of continuing to pare longs on strength.

Perhaps that impossible trinity really is impossible......
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Anonymous
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September 23, 2014 at 2:11 PM ×

Natixis Research: The depreciation of the yen under Abenomics will have a disastrous effect on Japan.

http://cib.natixis.com/flushdoc.aspx?id=78995

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Nico G
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September 23, 2014 at 2:12 PM ×

what if last week strength was the last you saw of it?

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Anonymous
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September 23, 2014 at 6:08 PM ×

Masters of the Universe are up the creek...

via Bloomberg:

As trading in dollar-denominated bonds declined 22 percent in the past five years to an average daily $809 billion, so have the jobs, leaving even some of the most senior traders and salesmen moving from firm to firm. Dozens of journeymen are populating an industry that used to attract the young in throngs, lured by money and prestige, according to Michael Maloney, president of fixed-income recruiting firm Michael P. Maloney Inc.

“The business model is broken and 50 percent of the people in our world who are in trading are stuck right now,” Maloney said in an interview in his New York office.

“For every 10 of them there’s going to be three or four left,” he said. “What’s the timeframe? Well, everybody I know is looking for a job -- not looking for a job, looking for a career.”

http://www.bloomberg.com/news/2014-09-22/shrinking-bond-desks-taken-by-journeymen-as-masters-fade.html

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abee crombie
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September 23, 2014 at 7:03 PM ×

Sell off started in EU, so lets watch there to see if we get a bounce. Looking on edge here. VIX and HYG arent confirming anything alarming, YET

RTY one to watch, along with consumer stocks.

Feels like a BABA bull trap, especailly as EM is trading weak.

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Leftback
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September 23, 2014 at 9:03 PM ×

Every bounce so far has been weak, and sold. We have a little way to go before the really significant support levels are tested. SPX 1975 is the 50 day, and that's the first chance for a decent bounce. We are not even looking at SPX, trading IWM which is looking very sick. SPX (cash not futures) closed at the low of the day, which isn't encouraging for bulls.

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Mr. T
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September 23, 2014 at 9:42 PM ×

Where is my EOY dash for trash? What the heck.

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Anonymous
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September 23, 2014 at 10:05 PM ×

30yr UST under 3 1/4% .... insanely cheap vs French 30yr @ 2.42% or Germany @ 1.92% or Holland @ 1.96% or Japan @ 1.66% or Austria @ 1.41%

Treasury 2-Year Auction Foreign Demand Matches Most Since 2011

I got a hunch there are ALOT of stop loss sell orders for $IWM @ $110

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Leftback
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September 24, 2014 at 6:17 PM ×

Anon, agreed, most punters will have IWM 110 on their radar. Some will have that marked as yet another JBTFD level, while others now view it as The Trap Door.

We are having a quick look around today to see if we have any longs that we don't fancy holding any more, and we are having a gander at TLT calls. As you pointed out, US 30s are by far the most attractive govies in the long bond universe, and there are all those shorts to be scorched as well.

DX breach of 85 today might be the Top for Bucky. For diverse reasons, tomorrow's Durable Goods orders number will be horrible. This is mainly going to be a "mean reversion" event, as last month was stuffed with enormous one-off Boeing aircraft orders.

This is likely to be a good excuse for a lot of punters to say, so long, and thanks for all the fish and finally sell USD. If and when the yen eventually catches a bid, we'll see more than a few lazy sunbathers getting a cold shower. Friday's third look at GDP is assumed irrelevant at this point.

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Mr. T
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September 24, 2014 at 6:26 PM ×

Speaking of divergence - high yield versus equities today? Yuck.

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Leftback
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September 24, 2014 at 9:06 PM ×

Counter-trend rally in EURUSD beginning any time? Nobody left to sell...

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Anonymous
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September 24, 2014 at 10:01 PM ×

30 day TBills @ negative 1bp ; 6mo TBills @ +3bps at 52 week lows

ECB & BOJ want DXY @ 100 .... i'm sure Brazil/Mexico/China would love it too . Fed might need to bring back QE just to stop DXY going there

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Polemic
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September 24, 2014 at 11:16 PM ×

Just found this very apt market commentary on the S+P

https://www.youtube.com/watch?v=6GRuzaMwvrA

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Anonymous
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September 25, 2014 at 1:08 AM ×

Thank you GATT, WTO, NAFTA plus 20 other free trade agreements...

http://imgur.com/083QDeH

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Anonymous
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September 25, 2014 at 10:08 AM ×

MM why aren't you assigning any probability to the case of spooz drifting twds 2100 and ascending in a bubble like fashion as the joes jump in. Might not be my base case but seems like a likely scenario of possible trinity

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Anonymous
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September 25, 2014 at 2:54 PM ×

Kyle Bass: the US wouldn't be able to afford normal rates. With every 100 bps rise, it costs us fiscally about $150 billion in interest.

+195 on 2-10yr ..... was +205 last week . Every bp lower is markets saying ' bye bye GDP growth '

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Nico G
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September 25, 2014 at 5:11 PM ×

forgot the link

http://blogs.wsj.com/moneybeat/2014/09/23/buyback-binge-takes-a-breather-2/

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