Yellen, Asia, Europe

Mkts reacted positively after Yellen’s speech of raising rates in 2015. This is a reversal of spooking the mkts after last Thursday’s directionless FMOC show.

Nikkei +1.7%, Shanghai -1.6% (divergent), Hang Seng +0.4%

FTSE +2.5%, DAX +3.0% VW drag on German mkts are over.

ZBs deflated from 157’16 to¬† 155’16. Flight to safety is over.

VX deflated from 23.35 to 20.75, risk on.

NKE crushed earnings. AAPL launching 6S sales.

VLKAY cheated on their diesel emissions. There should be a government mandate to help Volkswagen avoid jail time plus heavy punishments and push electric vehicles forward by converting all sold and unsold diesel VW cars to full electric. A win/win for clear air and the image of VW as they would be forced to put in resources to unseat TSLA as the current king of electric cars.


VX Higher

While crash mode is off the table, the VX spiked from 19.5 to 22.60 (bad) with indexes losing close to 2% across the board until a late afternoon rally.

ZBs spiked to 156 (bad) early on due to flight to safety

CL 46 trading within 49-44 range

DX 96.5 moving higher is putting pressure on commodities priced in dollars

Gold 1123, silver 14.735, copper 2.308 (bad) traded lower

EDZ 49.12 5% spike (bad)

FXI 36.17 -2% (bad)

Many of the indicators are pointing more bad than good. The overnight action of US futures are now following Asia and European markets. It can no longer stand alone without being affected by the contracting global economy.

Fed Day, Short Every Rally

The markets reacted violently to the Fed meeting minutes. It was no surprise that rates were not going up. However, Yellen’s speech confirmed the doom and gloom of the world economy bringing on an intraday reversal of the indexes. Welcome to the new normal of the S&P 500 never seeing its levels at 2000 again.

The play is to short every rally going forward.

VX 20, off the lows of 17.65

Context Of The Markets Have Changed

The doom and gloom outlook has changed. While the indexes are still below its previous highs, strong companies have recovered a majority of their losses. AAPL 114 (low 92), AMZN 529 (low 450), FB 92 (low 72), GOOGL 655 (low 590), TSLA 250 (low 195). It is a stock pickers mkt with indexes chopping going forward until FED Thursday is over (FedWatch at 23% for September rate hike).

VX trading below 25, the risk of a market crash is off the table.

GC has steadily decreased from its 8/24 highs of 1170, an indication of less flight to safety.

6A recovering, a proxy to the RMB.

CL stabilized at 45 range.

HG off its extreme low.

EDZ inverse emerging mkts in decline.


Manipulated Markets

It is nice to see the turn around rally, but a big rally happening after the G20 meeting is no coincidence. Did everyone just ignore the fact that it was declared that the Asia bubble was bursting at the meeting? Let’s see how much government money they can continue putting into the mkts to buy shares that have no value, when that money could have gone to providing jobs and building infrastructure.

Only a matter of time.

Global 09/06/2015

  1. US unable to lift rates. Job numbers not good. Surrounded by global slow down.
  2. China bubble bursting, slowing economy
  3. Japan economy contracted due to lower overseas demands for Japanese exports
  4. Germany slowing export growth, but managed a small plus
  5. UK limited exposure to china. upbeat growth remains for the 2nd half of year.

Brazil – recession

Canada – Alberta oil recession. 2 quarters in recession.

Greece – mkts even worst than during EU loan crisis

India – growing, one of the few bright spots

Puerto Rico – can’t make interest payments on bond obligations

Russia – recession

Syria – civil war affecting the middle east region. 12 million civilians displaced.

Biggest fear is the competitive currency devaluations as seen by China devaluing its RMB 4 times in a short period of time. IMF warns US not to raise rates.

The new global economy - CNNMoney

Higher VX

China mkts closed for 2 trading days to celebrate 70th anniversary of WWII. The expected calm did not occur for the US mkts, instead SP 500 minis gave up 60 pts (1970 – 1910) from Thursday high to Friday low.

VX remains at the high range of 28 into the weekend. There’s talk at the G-20 meeting of China’s bubble bursting. US August job growth numbers came in lower than the 2013 and 2014. CME FedWatch has a probability of 18% for September rate hike. A September Fed rate hike is good as nil.

Friday’s steady negative mkt breath uvol-dvol trumped shorted term advn-decn, and positive ticks.

VX 28

VIX 27

ES -28

NQ -45

ZB 155’29, no September rate hike. Look to short at 160 161 levels

6A .6907, very weak as a proxy to RMB. Australia has China as its largest trading partner. China already devalued 4 times this year.

CL reversal stalling at 45 from 37 low. No interest until OPEC stops saturating the mkt with oversupply, or if there is a collapse of US shale oil production.

GC, SI lower. Not a confirming indicator to risk on in a down trending mkt.

HG 2.312 good range for entry

NG 2.652 playable

KC 119.50 near all time lows

EDZ continuing long term trend of bearish emerging mkts

FXI, ASHR continuing with free fall. China bubble burst is real



Day 2

Indexes snapped back, and finished 5% on the upside. The market volatility is insane, the movements percentage are reminiscent of the dot come days.

China devalued the RMB 4 times in less than 2 weeks. In addition, they are selling off their US treasury reserves to infuse capital into the Chinese mkts. This game is not going to end well bc mkts are artificially inflated by gaming the capital mkts instead of companies reinvesting capital into actual R&D, new products, manufacturing, and creating consumer demand.

US companies are playing the same game by borrowing money at zero percent, and buying back shares to prop up their mkt values even though they have not spent any money to create new products nor reinvest the capital back into the company.

The whipsaw action gives off an illusion that an extremely weak world economy can be recovered in a day. It needs several quarters to stabilize and recover. Welcome to the new norm of a downtrending mkt.

VX 23

VIX 30, still a lot of fear in the mkts

ES +15

NQ +42

Tf +5

YM +134

ZB 154’24, deflated due to China selling US treasuries.

6A hit an all time low

CL recovered a little, no interest until confirmed reversal

GC, SI trended lower as mkts recovered

HG traded lower, always a good play as it trades within a predictable range

FXI, ASHR stabalized from free fall


-5% Open, -5% Close

NQ futures were halted 3 times via LIMIT DOWN rules of 5% or more before the mkts opened. Ultimately opened at 3930 before trading lower to 3908. This is a 13% drop in the last 4 trading sessions.

Something continues to be seriously wrong with the mkts where some DOW components such as GE traded -20% prior to the opening bell.

VX futures traded as high as 27, when the current month VX future was only 15 after becoming the active contract.

VIX, the volatility index traded as high as 53, where it was averaging between 11-14 last week.

ES – 100

NQ – 200

TF – 55 (as low as -80)

YM – 700 (as low as -1000)

ZB continue to look above 161 – 161’15 and fail. The trade of the day was SHORT ZB every time above 160.

6E Euros trended higher as US dollars traded lower.

6J Yen trended higher as US dollars trader lower.

6A Aussie dollar lower bc it is a proxy to the Chinese RMB.

CL continues its downtrend as 38.06 as OPEC has not taken any action to slow down flooding the mkts with increased supply of crude oil. Go long only when uptrend is confirmed with 1) improvement of world economy, 2) OPEC decrease supply, 3) API + EIA reports on increase usage.

GC, SI gold and silver not a safety vehicle when mkts make extreme moves.

HG opened low at 2.20 worries of China’s decrease demand for copper.

NG, RB lows as the season rolls to more temperate Fall months.

KC coffee crushed to 120 level.

DX dovish FMOC meeting minutes last week started the selling off of the US dollar. Without higher rates, it becomes less desirable to hold US dollars as IOUs.

EDZ emerging markets very bearish.

FXI, ASHR – China ETFs continues to trade lower.




Mkts going lower

There are a few things that are certain.

US markets are going lower.

  1. China is deep in the hole with their economy.
  2. Greece is in the dumps with no money.
  3. Brazil protesting for impeachment of their president.
  4. Russian economy not recovering.

With such a big mess, Yellen cannot raise rates no matter how you slice it.

  1. Mkts are rattled to learn that external events are putting Fed’s planned actions against their heels.

Oil to 30.

  1. Too much supply, not enough demand.
  2. US rigs are not shutting down.
  3. Iran has plenty of oil stored in tankers.
  4. China not using up as much oil; its economy struggling, and shifting over to electric vehicles.