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Perishabull

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Everything posted by Perishabull

  1. Did US equity markets top on 24th July? (from my blog) US equity market comparison There is a very clear disconnect between the NASDAQ 100 and the Russell 2000 spanning July. This next chart is S&P500, with Australian dollar, Euro, and AUD/JPY (futures markets); [/ Very clear divergence between these markets with a top made on the 24th July. The NASDAQ 100 looks like the candidate to short.
  2. John Hussman article from Zerohedge; "John Hussman: "Make No Mistake - This Is An Equity Bubble, And A Highly Advanced One" In case someone needs a beyond idiotic op-ed on the state of the market, we urge them to read the following stunner from USA Today (which is simply a syndicated piece from the Motley Fool, complete with Batman style graphics). Beyond idiotic because in addition to quoting the perpetually amusing Stony Brook assistant professor, Noah Smith, who has never held a job outside of academia and is thus a credible source on all things markety (to wit: "The value of a financial asset is the discounted present value of its future payoffs, and when the discount rate -- of which the Fed interest rate is a component -- goes down, the true fundamental value of risky assets goes up mechanically and automatically. That's rational price appreciation, not a bubble." And by that logic under NIRP the value of an asset is... what? +??) it says this: "Stock prices correct all the time. But what's important to remember is that a correction isn't a bubble." Yes, a correction is not a bubble: it is the result of one, and usually transforms into something far worse once the bubble pops. Entertaining propaganda aside, for some actually astute observations on the state of the market bubble we go to John Hussman, someone whose opinion on such issues does matter. Selected excerpts from:Yes, This Is An Equity Bubble http://www.zerohedge.com/news/2014-07-27/john-hussman-make-no-mistake-equity-bubble-and-highly-advanced-one Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is diffused across all sectors in a way that makes valuations for most stocks actually worse than in 2000. The median price/revenue ratio of S&P 500 components is already far above the 2000 level, and the average across S&P 500 components is nearly the same as in 2000. The extent of this bubble is also partially obscured by record high profit margins that make P/E ratios on single-year measures seem less extreme (though the forward operating P/E of the S&P 500 is already beyond its 2007 peak even without accounting for margins). Recall also that the ratio of nonfinancial market capitalization to GDP is presently about 1.35, versus a pre-bubble historical norm of about 0.55 and an extreme at the 2000 peak of 1.54. This measure is better correlated with actual subsequent market returns than nearly any alternative, as Warren Buffett also observed in a 2001 Fortune interview. So if one wishes to use the 2000 bubble peak as an objective, we suggest that it would take another 15% market advance to match that highest valuation extreme in history – a point that was predictably followed by a decade of negative returns for the S&P 500, averaging a nominal total return, including dividends, of just 3.7% annually in the more than 14 years since that peak, and even then only because valuations have again approached those previous bubble extremes. The blue line on the chart below shows market cap / GDP on an inverted left (log) scale, the red line shows the actual subsequent 10-year annual nominal total return of the S&P 500. All of that said, the simple fact is that the primary driver of the market here is not valuation, or even fundamentals, but perception. The perception is that somehow the Federal Reserve has the power to keep the stock market in suspended and even diagonally advancing animation, and that zero interest rates offer “no choice” but to hold equities. Be careful here. What’s actually true is that the Fed has now created $4 trillion of idle currency and bank reserves that must be held by someone, and because investors perceive risky assets as having no risk, they have been willing to hold them in search of any near-term return greater than zero. What is actually true is that even an additional year of zero interest rates beyond present expectations would only be worth a roughly 4% bump to market valuations. Given the current perceptions of investors, the Federal Reserve can certainly postpone the collapse of this bubble, but only by making the eventual outcome that much worse. Remember how these things unwound after 1929 (even before the add-on policy mistakes that created the Depression), 1972, 1987, 2000 and 2007 – all market peaks that uniquely shared the same extreme overvalued, overbought, overbullish syndromes that have been sustained even longer in the present half-cycle. These speculative episodes don’t unwind slowly once risk perceptions change. The shift in risk perceptions is often accompanied by deteriorating market internals and widening credit spreads slightly before the major indices are in full retreat, but not always. Sometimes the shift comes in response to an unexpected shock, and other times for no apparent reason at all. Ultimately though, investors treat risky assets as risky assets. At that point, investors become increasingly eager to hold truly risk-free securities regardless of their yield. That’s when the music stops. At that point, there is suddenly no bidder left for risky and overvalued securities anywhere near prevailing levels. History suggests that when that moment comes, the first losses come quickly. Many trend-followers who promised themselves to sell on the “break” suddenly can’t imagine selling the market 10-20% below its high, especially after a long bull market where every dip was a buying opportunity. This is why many investors who think they can get out actually don’t get out. Still, some do sell, and when those trend-following sell signals occur at widely-followed threshholds (as they did in 1987), the follow-through can be swift."
  3. Perishabull

    PositiveDev's trading journey

    Did US equity markets top on 24th July? US equity market comparison There is a very clear disconnect between the NASDAQ 100 and the Russell 2000 spanning across July. This next chart is S&P500, with Australian dollar, Euro, and AUD/JPY (futures markets); [/ Very clear divergence between these markets with a top made on the 24th July. The NASDAQ 100 looks like the candidate to short.
  4. Perishabull

    PositiveDev's trading journey

    E-Mini Dow Jones futures 1 trade yesterday, breakeven
  5. Perishabull

    GOLD

    Great video Bubb, salient points and concise too
  6. Perishabull

    PositiveDev's trading journey

    I've been away a few days so to update trading since 21st July; 23rd July E-Mini Dow Jones futures 1 trade, 1 win 24th July E-Mini Dow Jones futures 1 trade, 1 win 25th July E-Mini Dow Jones futures 1 trade, 1 loss 28th July E-Mini Dow Jones futures 2 trades, 1 win, 1 loss 29th July E-Mini Dow Jones futures 1 trade, 1 loss
  7. Perishabull

    SILVER

    You should check out the '$50-ish Peak in Silver Coming? Hunting the Top' thread http://www.greenenergyinvestors.com/index.php?showtopic=14696&p=212977 The current silver value contained in the coins is £6.77 (0.55 ounce per coin) so I would expect to see a large expansion in premium and demand for these coins as silver approaches £36.36 per ounce. That's the point where the value of the silver in the coin approaches the fiat value.
  8. Perishabull

    PositiveDev's trading journey

    E-Mini Dow Jones futures 3 trades yesterday, 2 wins and 1 loss
  9. Perishabull

    PositiveDev's trading journey

    No trades yesterday.
  10. Perishabull

    PositiveDev's trading journey

    E-Mini Dow Jones Futures 2 trades today, 2 wins
  11. Perishabull

    PositiveDev's trading journey

    E- Mini Dow Jones Futures 4 trades yesterday, 4 losses
  12. Perishabull

    SILVER

    What's interesting is that if sufficient people did what you are doing, and actually spent them, it would generate quite a bit more press interest too. It would be interesting to know what the banks do when a Tesco or a pub drops off their takings for the evening. Do they put the coin back into circulation? If the opposite situation happened, ie someone paid for goods with a £50 note and part of their change included one of these coins I think 99% would not accept it (thinking it was fake). The absurdity is that it's really of more value given the dual fiat / commodity aspect.
  13. Perishabull

    GOLD

    Zerohedge are sensationalising the drop yesterday There were two large volume spikes in the August Gold futures contract, one of over 4800 after 7am, and another over 10,000 at 2pm Zerohedge are painting this as significant however when it's the other way round do they write about it? Here's August Gold futures on 5th June A huge volume spike of over 10,000 contracts before the open sending the price shooting higher 'Upward' manipulation doesn't make such a good story though does it.
  14. Perishabull

    SILVER

    Maximum is 5 coins and it's £20 if you want them sent to HK
  15. Perishabull

    PositiveDev's trading journey

    Shorts get trapped in the CYNK An horrific story about a pump and dump with a nasty twist, from Seeking Alpha; "Cynk Technology Is The New Scheme In Town Summary Cynk Technology is an abomination and a clear short sell which will drop 99.9% with 100% certainty. However, it's also an example of a new kind of scheme built to extract money from the market. This article explains the scheme. You've probably never heard of Cynk Technology (OTCPK:CYNK). Unless you've been following Twitter the last couple of days, that is (Source for chart: Interactive Brokers). CYNK now has nearly $6 billion in market capitalization. Which isn't bad for a company you've never heard of. That has 1 employee, no website and nearly no cash to its name. $6 billion for a company which doesn't exist, basically. It's even worse than Cannabis Capital (OTCQB:CBCA) and it will obviously fall 99.9% at some point. However, CYNK also heralds a new age. It heralds the appearance of a new type of scheme engineered to take money from the market. A scheme which will naturally prevail until the SEC shuts it down. How does this new scheme work In the most simple of forms, the scheme goes like this: A tight group of insiders controlling 100% of the stock of a company, trades between themselves until the stock is at an obviously unsustainable valuation; Then, this group of insiders lets there be some shares available for selling short; Naturally, some valuation-driven short sellers cannot believe their luck and short sell the stock at what's a clearly unsustainable valuation - like, say, $2 for a company like CYNK; Here, the fun starts. The insiders once again shut down the availability of stock to sell short, thus shutting down the supply of stock, and at the same time drive the stock powerfully up. Up 100%, 500%, 1000% as with CYNK; At this point, even reasonable short sellers who only sold 5% of their portfolio have a problem. The position compounds against them and becomes huge. Even a 5% position turns into a 50% position that wipes out half of their portfolio; Here, two things can happen: either the short sellers cover, thus closing out the insiders at a gain, or they try to hold onto the position - certain that it will, at some point, go down 99.9%. But this is where the scheme gets really creative. Since insiders control the shares being lent and sold short, they also control the pricing short sellers need to pay just to keep their positions open. This pricing is the so-called "short rebate". And this is what happens in a stock like CYNK (Source: Interactive Brokers, red and green highlights are mine): Notice how 7 days ago, there was stock to be borrowed. Notice also how the short rebate shoot up into the sky and now stands at 120%. The problem is not just that the position now needs to pay a fee at an annualized 120%. It's also that this 120% applies to the current stock quote, so in effect the position will be paying 1200% on the short seller's cost basis! And therein lies the scheme. Either the short sellers quit or they pay through their nose at such a clip that even if they don't quit, they lose. Unless the SEC shuts it down or until someone in the insider circle breaks loose and makes more supply available to the general market, at which point this will, indeed, drop 99.9% with 100% certainty. Conclusion Beware of CYNK. It's a scam that's been driven to a $6 billion market capitalization. Yet, there is a rational scheme behind it which should allow its promoters to profit even if the stock ultimately drops 99.9% with 100% certainty. The scheme involves both a traditional short squeeze, and the racking up of massive short borrowing fees. The stock will drop 99.9%, but those driving it up will probably make out like bandits, unless the SEC does something about it. Editor's Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks." http://seekingalpha.com/article/2309115-cynk-technology-is-the-new-scheme-in-town
  16. Perishabull

    PositiveDev's trading journey

    No trades today.
  17. Perishabull

    PositiveDev's trading journey

    E-Mini Dow Jones futures Two trades today, 2 wins Risk reward ratio of 1 : 2.5
  18. Perishabull

    SILVER

    Just ordered 10 - exchanging £ for £, getting a free call on silver and coins with an automatic premium due to their relative rarity. It's a no brainer isn't it. Buyers on ebay have been happily snapping up the previously released coins, paying premiums from 25% to 62.5% above their legal tender value.
  19. Perishabull

    PositiveDev's trading journey

    E-Mini Dow Jones futures Three trades today, 1 win and 2 losses Risk reward ratio of 1 : 2.5 on the winning trade
  20. Perishabull

    PositiveDev's trading journey

    The macro picture from John Thomas http://www.greenenergyinvestors.com/index.php?showtopic=12704&do=findComment&comment=297044
  21. Perishabull

    PositiveDev's trading journey

    E-Mini Dow Futures 1 trade today, 1 win Risk reward ratio 1 : 2.5
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