Holiday

Given the grim start to the year, Macro Man thought that everyone could use a little cheering up, with apologies to Madonna:

Holiday!
Celebrate!
Holiday!
Celebrate!

S&P's are closed today
Take some time to celebrate
Just one day out of life
With no loss, it just feels so nice!

Everybody spread the word
We're gonna have a celebration
Forget about the world
Leave oil out' the equation
It's time for the good times
Forget about the bad times, oh yeah
One day to close the market
To release the pressure
We need a holiday

Holiday!
Celebrate!
Holiday!
Celebrate!

You can turn this world around
And bring back all those happy days
Turn your chart upside down
It's time to celebrate
Go offline
And we will find
It feels just like December
Your P/L feels better
We need a holiday

Holiday!
Celebrate!
Holiday!
Celebrate!

Holiday, celebration
Close the market in every nation


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42 comments

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Nico G
admin
January 18, 2016 at 7:13 AM ×

the cat is away the mice might play - Europe could go on a rip today in the absence of US equities sellers. Am calling a 3% bounce

on another note you guys remember the Scotland independence movement that concluded in a referendum last year?

"There can be little doubt that Scotland is moving into a second oil boom. Even with a cautious estimate of prices remaining at $113 a barrel being used, it's clear that Scottish oil and gas could generate more revenues than has previously been assumed."

Alex Salmond, SNP Leader and First Minister

fascinating.

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Anonymous
admin
January 18, 2016 at 7:27 AM ×

With no real follow through from Asia, makes sense for remaining shorts to cover into ECB. Momentum should take care of the rest.

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Nico G
admin
January 18, 2016 at 8:25 AM ×

not nice to push pension funds into the (world) equity snakepit

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Anonymous
admin
January 18, 2016 at 8:35 AM ×

Yep Japanese are on the bid today... selling Yen buying equities ahead of this legislation (which they have no doubt been told will be passed).

Let's just hope that later this year equities crash 50%+ and wipe out GPIF.

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Anonymous
admin
January 18, 2016 at 9:38 AM ×

Equities now flat on the day...positive sentiment lasted a whole hr and 15 mins!

Not quite a 3% gain ;)

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Anonymous
admin
January 18, 2016 at 9:45 AM ×

Something goign on with Europeanbanksthis morning. Sector trading out Fri lows. Italians not lookingpretty.

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Nico G
admin
January 18, 2016 at 10:00 AM ×

has to be their balance shit

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CV
admin
January 18, 2016 at 10:12 AM ×

Sinking without a trace across Europe here. Bears still in charge. Oil will have a face ripper here very soon obviously, but not sure it can change the underlying picture for equities, which is starting to look more and more like a bear market.

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Nico G
admin
January 18, 2016 at 10:22 AM ×

It is definetely a bear market. As i wrote for years there is never a whistle or telegraph just before wave 1 begins. And wave 1 started the worst possible mind fucking way - last two trading days of the year followed by gap and go (down) at January open which is normally the most bullish set up of the year. So there was not one bear in the elevator down (besides Bruce haha). Which adds to the lack of bids, bears are always mocked and loathed but they provide a bid to the market.

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Nico G
admin
January 18, 2016 at 10:26 AM ×

Regarding today market action it's been pretty lame to see Friday entry level revisited after a 2% bounce petered out. It meant stress over the week end was not rewarded by the gap and go.. Having said that i suspect folks who were to shy to buy on Friday enjoyed being given another chance for it has bounced pretty nicely.

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Eddie
admin
January 18, 2016 at 10:29 AM ×

Nico,

so far the pension fund entrusted *coughcough* its equity investments to outside managers. So much easier if you can directly tell those guys what to buy...

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CV
admin
January 18, 2016 at 10:31 AM ×

"bears are always mocked and loathed but they provide a bid to the market."

Right, and bulls are never mocked, always confident, loved, and never questioned ;). This bull market, if it is indeed over, has been the most hated ever, while it seems to me that the bear market will be sung in praises from many a roof-top. Plus ca change I guess ;) ...

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Eddie
admin
January 18, 2016 at 11:00 AM ×

"It is definetely a bear market."

+1

"the bear market will be sung in praises from many a roof-top"

At least from mine :). Never waste a good crisis.

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Anonymous
admin
January 18, 2016 at 12:41 PM ×

"This bull market, if it is indeed over, has been the most hated ever, ..."

Reflecting the inorganic nature of the beast, fed as it was on ZIRP, QE and lower effective corporate tax rates. Real money, yes, but that will carry you only so far. The spice must flow, because withdrawal is fatal.

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Leftback
admin
January 18, 2016 at 12:55 PM ×

I think that we have probably entered a bear market. On the whole it would be healthier if this were the case, and many technical signs suggest that we have begun a Bear (the behavior of the Russell, and the so-called Death Cross on Spoos, etc..) and yet... the fact is this bull market was fed by low rates, and it is not yet clear that the Fed's liftoff will be sustainable. For this reason we would not be shocked to see one more leg on the ugly old bull after a 10% correction and a return to a softer dollar after more dovish utterings by La Paloma Blanca, but this is our case B. But for now we are playing for a sizable oversold bounce within an ongoing bear market and that is case A. Of course there is also case C where the bottom really drops out of this thing.

Regarding crude, the driver from here will be revisions to future projections of supply, so in that context, we have been waiting for this kind of announcement to appear.

Oman Prepared to Slash Oil Output

Now if the demand side were to adopt a slightly less apocalyptic view of global economic activity, we might get to see one of the more memorable squeezes in the oil market. $40 is not out of the question here. We had a 30% up move last summer.

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Bruce in Tennessee
admin
January 18, 2016 at 1:13 PM ×

"bears are always mocked and loathed but they provide a bid to the market."

...'Tis but a flesh wound....but I must carry on somehow...

...besides, it is always better to be lucky than smart!

It reminds me of the old New Yorker comic where two crusty old gentlemen are seated in plush elegance at their club surrounded by finery and drinking a highball. One turns to the other and says, "If you're so rich, how come you're not smart?"

...If I only had an arm like Aaron Rogers...



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Leftback
admin
January 18, 2016 at 1:40 PM ×

Here is a very quick example of one of the arguments why this is not 2008; just take a look at the chart for T (or ED, or SO). If you own T for income (as we do here at the Hammock since 2010), then it's a case of Crisis, What Crisis? Long T/ED/SO and short FANG would have worked well so far in 2016. We are looking for the bloodied and battered mREITs to enjoy a revival also as punters embrace income and reject "growth" this year as we enter another period of Slower And Lower.

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Anonymous
admin
January 18, 2016 at 2:00 PM ×

LB, it may not be 2008 but this time we have ETF's and HFT as the dominant players with reduced participants in the market. Unwinds could be even fast than 2008 because of these two players.

You want negative oil, you've got negative oil:
http://www.bloomberg.com/news/articles/2016-01-18/the-north-dakota-crude-oil-that-s-worth-less-than-nothing

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washedup
admin
January 18, 2016 at 2:22 PM ×

Left - I don't think the oil market would care if opec announced production cuts, supply increases, or dressed up in paper bags and chanted 'death to renewables' - at this point in the cycle oil will be driven only by economic data and policy pronouncements coming out of China - that said, sentiment is so negative now that it won't take much to set off some fireworks.
I was leaning towards your scenario A as well, but the magnitude is hard to forecast - there will be a LOT of shorting now, which means we may never go up and continue to fall in a straight line, or even a slight crossing of upside thresholds could set off a short squeeze that makes oct 2014 seem like a picnic (think q1 2000) - either way, at 1880 spx I feel like the best course of action is to do absolutely nothing and wait for something insane to happen.

As for the bear market call, check out the '3 small observations' comment from this old post (I know, its either pathetic or freakish that I happened to remember it):
https://www.blogger.com/comment.g?blogID=34323687&postID=3858638826228458742&bpli=1

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CV
admin
January 18, 2016 at 3:47 PM ×

The easy question to ask is simply; what's the pain trade? Honestly, I think it's still down ... hard(!). Why, well it always is at inflection points at tops, and while the shorts will certainly have piled in, I still get the feeling that the MAIN sentiment in one or two.

1) It will bounce soon, and rip in usual 'sell in May, go away' style.

2) It will have a quick rebound, allowing me to raise some cash at better levels or short some of my favourite candidates.

Neither of which will be fun to "wait for" if it just takes deep plunge. I mainly look at the FTSE and S&P 500, and both charts look ugly all day.

Note here, that a further downtrade wouldn't really do me any good, but then I don't really do much on the short side. Cash on the other hand; we like cash ;).

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adamantic
admin
January 18, 2016 at 3:51 PM ×

Good 3 observations ... Coincidentally there's three companies on the front webpage of the FT for sacking workers.

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Leftback
admin
January 18, 2016 at 3:59 PM ×

Thanks for the reminder, washed... that eerie feeling that began in Feb and continued into April was the origin of the Hammock philosophy that served us well in 2015 after we dumped a lot of our equities and bonds and went to .... cash.

Cash, yes, indeed CV - that's the Hammock investor's instrument of choice. But we have left the Hammock to venture on to the bloodied battlefield, CV. We think it is seriously sentiment extreme time. I mean, look at oil. EVERYONE knows prices are going to fall further. Even your NYC taxi driver will tell you that, so it must be true.

http://www.bloomberg.com/news/articles/2016-01-18/oil-speculators-raise-bets-on-falling-prices-to-all-time-high

Oil and gas are going to get cheaper and cheaper. I kno, right? [As my ex-girlfriend would say, scrunching her nose slightly]. She wasn't the greatest market timer, though, and she could be wrong....

I have read the arguments about supply cuts being irrelevant. Oman has made noises. What if Russia joined in, now that's a big player. Maybe the crude curve starts to steepen a little bit b/c of movement at the long end, then suddenly there are a lot of leveraged clowns playing the front months and of course they are all short. Light the blue touch paper and stand back...

C'mon, its commodities. Small markets make for crowded exits. Once it turns it's Crazy Town. We've all seen it happen, and the victims are usually the hedge fund tourists, notably the late arriving momos. I would love to see them all get incinerated. There is nothing like a vicious squeeze. It's by far the most entertaining thing about the capital markets.





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Anonymous
admin
January 18, 2016 at 4:25 PM ×

Agree w LB that a vicious squeeze is highly entertaining, however it's the longs that are gonna get further squeezed. The pain trade is on, and it's far from over.

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Belektron
admin
January 18, 2016 at 5:34 PM ×

LB - despite all the wishful thinking of punters trying to call oil price bottom the strongest driver is still intact as global inventories keep rising from already record levels. Positioning is indeed slowly turning but spec is still net long in f/o. And there is USO etf with 93mb holding...
Producers all over the world are hurting indeed but production cuts wont happen without Saudi support. And they wont blink until they succeed in their goals - remember they want to hamper US shale production. If they agreed to a cut now all the pain from last 1.5 years would be in vain. They want to see bankruptcies in some big US oil names. And that will be the sign to go long if you ask me.
Until then if slowly down grinding price wont test the longs convictions carry cost of 3.5% per month surely will

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AL
admin
January 18, 2016 at 5:53 PM ×

So we have today Goldman joining the bandwagon and calling a further 10% decline in equities before we bottom out; Morgan Stanley saying that MSCI Europe will have a further 12% or so to fall in order to trade with multiples at historical averages.
Sentiment is clearly very bearish and price action continues to confirm that .... so a further fall is definitely in the cards. I think Chinese GDP in the next hours will be highly important and determine price action in the next 48 hours ... And then the ECB: will Dr. Aghi be able to build rapidly a consensus within the board for further action? Will it matter actually?

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Anonymous
admin
January 18, 2016 at 5:58 PM ×

lol, everyone is an expert on oil now. SMDH

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Leftback
admin
January 18, 2016 at 6:10 PM ×

Just to present the other side of the argument, China GDP is whatever they decide it is, and market reaction to it depends on positioning, so anything could happen. As far as crude oil is concerned, I agree that the bottom in that market might indeed be lower yet, but it's rare for a bottom to be reached without a few screaming face-rippers.

The lack of weekend catastrophes (unless you are long Qatari/Saudi stocks) and the relatively calm action in Shanghai, Tokyo and on European bourses might well lead some of those who took risk off on Friday to reverse course. It doesn't take a great deal to reverse the momentum of equity markets, and the absence of overnight panic is often the first step. First the bears stop making money hand over fist, then they lose some of the money they made last week, and then before you know it they start to feel the Cold Steel and soon they are out of the garbage cans and back into the woods just in time before the Park Rangers show up with the tranquilizer darts.

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Anonymous
admin
January 18, 2016 at 6:49 PM ×

Seeing talking heads and banks calling for another 10% lower makes me call it another 25%.see their performance in oil and equities on the way down. What they will bring is additional sellers to rallies.

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Anonymous
admin
January 18, 2016 at 7:00 PM ×

@anon 6:49pm

The additional sellers motivated by talking heads and banks usually are the dumb money who are often 2 steps behind the curve.

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Anonymous
admin
January 18, 2016 at 8:12 PM ×

interesting to see most houses calling for another 10% drop in equity prices- where were these dipsticks 10% higher!
just shows for these guys price is news...i have no idea where we go-i am medium term bearish -but at these levels I'm am buying ,
could we go lower?of course , but trading is all about odds and they looks pretty good for a rip from where i sit.
(speaking of pain trades- almost everybody is going to be selling the first pop- a straight line up is whats going to fark up most minds- ecb this week with no expectations but looks out for a dovish draghi especially post dec "disappointment"
good luck all....

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MrBeach
admin
January 18, 2016 at 9:50 PM ×

I see neither panic nor forced selling quite yet. That doesn't mean that equities can't keep grinding down. In 2008, we had multiple events to cause panic: the shutdown of Bear's hedge funds, Bear's sale @ $2/share, Lehman, CDS markets were blowing out.

This time around, outside of the oil complex, perhaps panic runs on local currencies forcing sovereign wealth funds to dump assets might be the catalyst.

Who else is running around with their hair on fire?

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Carry Trader
admin
January 18, 2016 at 9:52 PM ×

For those that are commodity included you know what fell off the radar? Iron Ore. Made a nice move overnight and shrugged off equity market sell off since the start of the year.

We prefer market bottoms where everyone forget about it and move on which seem like what happened with Iron Ore. Happened post crises where people stopped trying to pick bottom on the housing stocks and gave up.

Conflicted on oil as bearish sentiment is palpable but gut feeling is there is going to be a bounce but not sure if it will put in a bottom here. more likely it will bounce and come down again to test the lows as double bottom. Best thing for long term oil bulls is for oil to get off the front page.

Friday printed a really high put call ratio. We like to use this couple with MM favorite VIX indicator as lead indicator of market direction.

http://stockcharts.com/h-sc/ui?s=%24CPC

but as they say markets could always overshoot.

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Anonymous
admin
January 18, 2016 at 10:01 PM ×

Yahoo has DOW futures up 1000 points

http://imgur.com/8t2kDbn

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abee crombie
admin
January 18, 2016 at 10:10 PM ×

The chart certainly looks like the start of something ominous in US (spoos)equities, taking thier cue from other equity markets and different sectors (Russell, transports, EuroStoxx, EEM etc) but like LB said, to me I see the driving factor so far as commodities. Where I could be wrong is if worldwide growth really slows down more from here, which is why I think the market is still worried about a China deval, wheather I think it will happen or not is a different story but to dismiss the risk I think is too easy.

The move in credit and equities and FX have all been led more or less by the same thing, commodity producers (save for EM FX where there are some nice political problems). that is not to say that other sectors havent joined in, but lets remmeber where the problems began. So that is why i am more or less in agreement with LB. If you see a turn in commodities, get very bullish on equities, specifically stocks that have very little direct commodity exposure (mReits? US housing etc) But I am not bullish on commodities, so meh.

The biggest risk here is that if we tag 1700 or so in the Spoo's what happens to global PMI's, and then actual GDP? Sure a 2 quarter hiccup would be OK and typical of a mild hiccup. but if the numbers really shit the bag, then I worry about a reflexive cycle of selling. But I dont worry too much bc at 1700 i think every central banker will be in panic and they will just do a coordinated QE. Such is the world we live in.

Its not 2008. #1 Banks are having no problems in the intermarkt 2) VIX is barely above 30, we were trading sustainable in 2008 > 30 for months 3) Losses in credit markets for oil/commodities is more or less well known. The problem in 2008 is that no one knew who was holding what or what piece of paper was infected. I dont think that is the case today

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Macro Man
admin
January 18, 2016 at 11:17 PM ×

Bribed by one of the resident dip-buyers?

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washedup
admin
January 18, 2016 at 11:19 PM ×

Oh snap, markets in turmoil is back on CNBC - I just have one question, if we go down in a straight line will it become a permanent fixture?
Like Marlo Stanfield would have put it, markets be turmoiling poot - see u want it one way, but it be the other way.

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Nico G
admin
January 19, 2016 at 6:34 AM ×

ding dong copper is catching a bid

"soon they are out of the garbage cans and back into the woods just in time before the Park Rangers show up with the tranquilizer darts."

looooool

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Nico G
admin
January 19, 2016 at 7:15 AM ×

Eurostoxx opens on steroids 2% gap up let's see if they can build on it this time

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CV
admin
January 19, 2016 at 7:50 AM ×

19th of Jan ... the mythical date. Let's see indeed Nico whether it can hold for a more sustained bounced or whether this will all be over by the time LB wakes up ;).

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Nico G
admin
January 19, 2016 at 8:39 AM ×

a black widow spider is currently crawling up his hammock (this ain't Jerry Hall)

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Skyguy
admin
January 19, 2016 at 8:39 AM ×

Well, looks good to me. I'm still in the "sell the rally" camp, just glad to have a rally to sell (3%+ is my target). I hope my JNK follows spooz, I'm painfully close to my entry point, and that's my stupid big position.

Oil seems to be catching a bid too.

I'm liking BP at 8%+ yield, LB. I'm looking for some nice diversified yield in energy, some double digit paying transport MLP ETFs (AMLP?), is my first thought, though the damage in MLP space seems frighteningly severe. And I don't like the K1's.

Thinking of shorting a dollop of IWO to hedge, action in small cap seemed muted last week, we'll see how they do during the (Ahem) rally.

If we fade to red tomorrow, well, that would be bad (Tepid understatement).

Regards,

Skyguy

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