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2018-02-10 07:00 by Karl Denninger
in Market Musings , 196 references
[Comments enabled]  

Right on the 200, and with the oversold indicator I watch flashing bright red, the market bounced.

And bounced pretty good too.

Of course we had to taste that 200DMA, even though last night we were well into the oversold range.  Just to screw the most people who were shorting the hole yesterday morning and right into noon, at which point you got your faced ripped off with a 70ish handle SPX rally and roughly 700 points on the DOW.

Am I surprised?  Not a bit.  As I noted very early in the morning on Friday, with a post written Thursday, this was expected.  And it's probably not over either.  I fully expect there will be some more of this, and in fact if you're a trader there's probably plenty more money to be made on the upside in the next couple of weeks.  It's going to be tough to do with leveraged instruments though because option vol will collapse and so will premiums, which means if you buy them now you're overpaying compared against what they'll look like in a week or two.

With that said as I also noted I'm absolutely certain that critical damage was done somewhere in market structure, in financial firms, and in actual broad economic factors.  As in 2000 and 2007 I'm not sure where it has happened, but that it has happened is something you can take to the bank.

You can also take to the bank the fact that all the market "crooners" will not tell you where the damage is -- if they know -- and in fact everyone who got gangraped are going to do their level best to not tell you that their businesses are about to collapse.

It will take weeks or even months before that damage becomes impossible to hide and cascades through those impacted by their failures.  I suspect the most-serious of these problems is in both instruments and firms that cannot survive even a modest rise in interest rates or a withdrawal of additional central bank liquidity adds -- never mind drains.

Well, you're going to get drains.  I'm sure of it.  I'm also sure rates are going to continue to go up with the US Government "choosing" to spend another $200 billion this year alone last night, cranking deficits into a long-in-the-tooth "recovery" where we ought to be running a material, even if only on paper (without the Social Security fund thefts) surplus.

The "all clear" will soon be sounded, and the people who bought into the ramp in late January, only to lose 5% or more immediately, literally within days, and then who sold into the bottom, are going to cry.  A lot.  Then they will rush back in, just in time for the 50, 60, 70 or even 80% collapse.

Can the larger blowup be avoided?  Yes, just as it could have been in 2007, when I wrote and faxed to Congress exactly where they were headed with their profligate policies.  While the dollar did not collapse the asset markets sure did.  The dollar will not collapse this time either -- but the asset markets sure will.

How did I know this wasn't "the big one"?  Because there are certain asset families that barely moved or even went up a bit, and they went to hell in 2008.  Further, this move down was extraordinarily ugly in that liquidity just disappeared outright as all the robot traders were shut off, exposing the nasty truth: There are damn few actual people left in the markets; they've all been driven out by robots trading against robots.  In other words there is no "value" measurement performed in the market any more; it is all an algorithmic game of hot potato and has driven prices dramatically higher.

But the same sort of warning signs that were in the market in '07 are here right now, and as a result in another few months.....

Don't bother asking "where do I hide" (other than in cash, of course), because there is no answer to that question that will work well, where "well" is a positive rate of return.  Being short things might work, if you get the timing right, but that's tricky.

As in 2007 the answer is political; the people of this country need to find their pitchfork and torch, and demand a stop to the scams and frauds that are destroying the federal and state balance sheets and therefore forcing the deficit higher which, when coupled with a Fed that cannot turn the spigot back on will ultimately force a re-rating of leverage down by a factor of several times.

When that happens asset prices will fall to meet that new baseline -- which is way below where they are now.

Like by half on average -- which means, in many cases, more.

Just as in 2007 nobody will lift a damn finger or get off their ass this time either, and as such I fully expect that in a relatively short period of time I'm going to be hoisting this sign once again:


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2018-02-09 18:42 by Karl Denninger
in Small Business , 81 references
[Comments enabled]  

The freeware version has been updated to 4.0.0

There are no major user-visible changes in this freeware release; the "full" version has the license server connectivity in it, but that's disabled in the freeware release since there is no encryption at all included in those builds, and they're required for the license server to talk to it (for obvious reasons.)

The documentation has also been updated.

The Raspberry Pi2 version is still available if people want it, but since the "2" is considered obsolete by most people, and the current model is and has been the "3" for quite some time, that's the only one I updated -- and have pulled down the Pi2 firmware image.

Feel free to check it out at -- and as a reminder, the entire package, including source and all rights, is for sale.  Look to the right to inquire or use the email link on the HomeDaemon-MCP page.

Bring a decent-sized checkbook smiley

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2018-02-09 13:59 by Karl Denninger
in Market Musings , 209 references
[Comments enabled]  

The 200MA and oversold indicator I watch, which I warned about here, appears to be legitimately in play.

That's quite a bounce off the low.  There will probably be some fade off that, but don't be surprised if we close green today.

Lots of people rolled down PUTs in the NDX in particular.  If you did that this morning after the fall started you may be in for a very rude surprise.

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2018-02-09 12:28 by Karl Denninger
in POTD , 133 references

Email for pricing and details; currently on gallery display.

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2018-02-09 10:35 by Karl Denninger
in POTD , 57 references

Click the icons on the right for more!

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