SPX is Shaking and Rolling
Stock-Markets / Stock Markets 2016 Jul 29, 2016 - 11:48 AM GMT
I don’t believe that I have seen anything quite like this before. I am certain that Citadel and the central banks are doing their utmost to keep equity values at their elevated levels. It appears to be the only thing left to do to validate their existence.
Nonetheless, there appear to be cracks in the structure leading to a possible breakdown. All of this reminds me of the Tacoma Narrows bridge, otherwise known as “Galloping Gertie.”
Deutsche Bank is complaining about the FOMC cycle and their inability to pull the trigger.
ZeroHedge reports, “In his latest Global Equity Strategy update piece, Credit Suisse strategist Andrew Garthwaite takes a random walk across Wall Street's trading desks, and confirms what many know: namely, that nobody actually knows anything.
Garthwaite writes that "his team has come across almost no one who seems to have outperformed or made decent returns this year." He cites data from Morningstar according to which in the year to July 1st, just 29 out of 242 funds in the Investment Association UK All Companies sector beat the performance of the FTSE All Share. Moreover, the Dow Jones Credit Suisse Long/Short equity index, which tracks hedge fund performance, fell by 5% year-to-date.”
VIX has been flat through all of this back-and-forth in the market. That is likely because the central banks cannot control the behavior in the options market.
However, on the retail side, the VIX ETFs are getting hammered. This does not look like some trigger-happy investors piling on the short side. It appears to be a concerted effort to keep investors away from hedging their portfolios. In addition, today is day 269 in the current Master Cycle for the VIX ETFs. In my opinion, normal human behavior works in 258 day cycles. The decline should have ended a week ago. Could a turn be imminent?
Meanwhile, the USD is attempting to rally above its mid-Cycle resistance at 96.65. this is giving the computers the liquidity to buy up the equities market, at least until the close.
However, the markets are waiting for the BOJ announcement that may solidify the short-term direction of the markets.
Will Kuroda underwhelm?
Regards,
Tony
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