You will tell your grandchildren how Dr. Klumps outsmarted Goldman Sachs and made predictions by the hour on a 1,000 point swing day in the DOW. Three days in a row, I will be remembered in the HISTORICAL ARCHIVES of Yahoo as the Greatest Stock Market Forecaster of all time.
I predicted this last week, 500-1,000 point swing days in the DOW. Totally natural at market tops. Professionals are very passionate to raise cash and get out of stocks at the top. It is the Ma and Pop investors who keep buying the dip like this morning, I did not see hardly any pro's buying this morning, all momentum traders and amateurs. They are being slaughtered before our very eyes. 401K's are getting butchered. Rates have to go up now big time to earn enough money for boomers to retire on.
On a scale of 1 - 10, I am a 10 Goldman is a 5. I was telling you guys we entered a bear market in July, the stock prices were 20% higher.
This afternoons action is very disturbing, enormous order imbalance across all industries and 15-20% sell offs in Utility Stocks. Looks like a huge fleeing from risk assets of all kinds.
Putting yourself in the same league as Goldman is laughable. That's like a flea on an elephants axes. You are a joke. This is a normal correction. It's too bad you are as blind as you are a dolt.
I have been accused of using too much verbage, but I am a professor, I have to talk. Its my job. Recently, I declared the start of a bear market in July, since then markets are down 15-20%. I predicted 500 point down days would come back in style. They did. I said quite directly SELL SELL SELL INTO ANY STRENGTH the markets are very vulnerable and still are.
Goldman Sachs sent a letter to the high valued net worth folks, here is there last paragraph from the many pages they sent to their best clients.
'In our view, this months volatility is a reminder of the importance of several principles of portfolio contruction, diversified sources of return matter. While we believe selloffs may create stock specific buying opportunities, an overreliance on equity markets may create vulnerabilities in vulnerable environments. INVESTORS SHOULD, IN OUR VIEW, CONSIDER STRATEGIES WHICH SEEK TO LIMIT DOWNSIDE EXPOSURE.
The last sentence was the punch line of multiple pages of verbage. I will translate it with what I have been saying for two months, SELL INTO ANY STRENGTH, cash limits your downside exposure 100%.
Buy this in the 40's anytime it plummets on vertical drop days in the markets, it is easy money.
Example: Buy at $40.75 yesterday, current price $43.75 = $3.00 gain in one day. This is better that an overprice mortgage reit.
The disillusioned "buy the dip" fools that always buy after a vertical drop in a broken market are out too lunch celebrating. The professionals who are still trying to raise cash by selling at good prices will come in. I believe the non-professional yield seekers in m-reits should do the same. Overpaying for yield in a new bear market is not a very sound strategy. SELL INTO ANY RALLIES FAST. Progressive vertical declines are forecast as order imbalances are quite apparent.
There are hundreds of reasons why the stock market should be crashing, but we shouldn't forget that powers in charge will try to continue the distortion to keep overvaluation high and shift reality to the backs of our minds hidden by the illusive sound of the financial media "The Markets Have Stabilized" "Stocks are Recovering". For now, the air pocket down or sharp aversion to risk this past week is an important indicator that the most well informed professional investors sold their stocks and raised cash with a passion. With no improvement in market internals that have become even worse, very similar to the environment seen before other major stock market crashed of 1987, 2000, 2009. After this vertical descent and a reflex rally of disillusioned fools will follow on any positive news or anything the press can paint as positive, like China's 1/4 pt. cut in its interest rates. If you really look at this factually, China stepped in and stopped the stock decline by closing the markets and hindered sell orders, devaluated its currency three times in 4 weeks, cut the interest rate yesterday, yet oil prices continue to slide, metals continue to slide to record lows, commodities continue to slide. All the vertical drops from major tops in the markets for the past 5 decades occurred with a vertical drop of 4-5 days followed by a very strong rally recovering 1/4 to 1/2 the drop. This time will be no different. It is typical behavior and is expected. I don't encourage anyone to sell against their beliefs, as long a you are aware of your risk exposure and happy with the resultant losses that can be tolerated. . If stocks continue to fall it will dampen investors appetite for risk and more vertical progressive down days along with Soc. Sec./ medicare near bankruptcy, public and private pension underfunded by $150 Trillion, trillion $ bubble in auto and student loans all we need is one more vertical drop to crush our illusions laying bare the man behind the curtain.
Are you looking for something to make money. I am in process of getting a list of asset managers (mutual fund managers) to short, these guys go down 90-95% in price at start of bear markets because they loose a lot of assets under management from people selling and going to cash and from stock prices crashing, so that assets under management drop faster than oil prices. I will then buy these after they are down 90%. This group always falls in Phase I of a bear market and go down 75-90%.
I am signing out today.
For the 20% plus yield. They just declared their dividend which is in tact and the stock was down 40% in the morning. I was riding the wave of positive news after the early morning sell off. There are opportunities galore where panic selling is done with positive news being released, all I had to do was wait for the percolator to warm up and the stock was back up. This is really really fun for me. But deep down inside I am praying for all the yield seekers who are getting hurt today, especially high yield bonds and bond like shares, which m-reits are in. Beward of m-reits, the bear hedge funds are looking for sectors that did not participate in the decline and they will bring these down in a determinant fashion. This is not about stochastic processes, we are in deterministic processes, prices will be determined by natural law or dogma of the great billionaire value group. Prices will drop until these folks with cash decide there is value there. Some of the stocks out there are toast, like Amazon, Twitter, social media, etc. Price to book, average low PE's in bear markets will determine the bottom.
Do not rule out "Progressive Losses" or straight lines down on the charts. The markets are so over valued, trust me this is the greatest overvaluation in history, worst the 1920's. This time we had 0% interest rates, back then is was 2-3% interest rates. This time we suspended "Mark to Market" asset values. In 1920's they had strict accounting standards. We now have "Enron Accounting" permeated through 40-60% of the economy, maybe even higher, the Social Security, Medicare, unfunded pension, trillions in student loans for students with no job prospects, trillions in car loans for workers with minimal jobs, $150 Trillion in unfunded pension. 50-75% price drop before these value investors come in and then that may not be enough, these guys may demand 90% haircuts because of the financials. I am going to put decision tree in for 50% and 75% and 90% off and do a laddered buy trigger for my portfolio's.
It just makes sense, market is really still way over prices. I would like to see a -1,110 today, which is still light compare to other global markets.
Right now I am not sure what to think.
Except for that program trading so-called 'flash crash'__I know of no crash in any market that did not precipitate in October. Even the Dutch Tulip Bulb crash.
The last hour? Circuit breakers will not be in effect after approx. 3:25pm Eastern. Considering the upswing off the; as of now low__I cannot believe profits will not be taken.
I question any actual fills at the print lows today on many of the ETPs. So far I can find fills in the futures. But those print ETP lows may just be pricing of forced basket dissolution.
No matter what__anyone who does asset allocation in a portfolio would be compelled to buy/re-balance today__unless fear has just overrun them.
I do not believe people are going to stop smoking, stop buying grain products, quit drinking alcohol, refineries are not going to stop refining and utilities are not going to stop distributing electricity etc.
I have had a higher than normal cash percentage since April. I have some non- trading equity portfolios that are based on asset allocation. Whether those lows are real or not__I will put in orders near those print(s); looking for a re-test.
Recall Oct 1987__the big downswing happened the Monday following the previous Friday rout. Many individual investors did not know about the Friday rout until after they got out of work or checked their accounts over the wkend. Sell orders mounted in mutual funds all wkend.
Many individual's trades would be not be executed until closing of mutual funds and what about 401K/403Bs etc.
With major market averages plummeting through support levels indicates the selling is just starting. I believe the market actions this morning now establish at May 2015 as the Cyclical High of the bull market and we have entered the " Right" half of the bell curve or the second half of the cycle, which is a downward slope, it is the Downward Slope of Hope. There will be rallies, but remember significant damage has been done to market internal, there was a record amount of one-side trade (bullish) and many many late recent long positions were bought in the past 6 months.
I would sell the "Hope" rallies, everything is in down mode. The determinants of a bottom is this, it is very simple, what prices will the Billionaires who went to cash the past year and half will buy at. Watch those guys and watch the Congressional investors like Paul Ryan and Nancy Pelosi when they are bullish. The Congressional Washington DC has been raising cash the past two years.
This is a bear market. Don't even think it is small or temporary. A cyclical top was made in May 2015. I know it is hard to believe but the past 6 years the markets were living in an imaginary world of well being despite Soc. Security and medicare are hurling toward BK, unfunded liability in governments and corporations soaring, estimated at $150 Trillion shortage. Baby Boomers have little save for retirement, with social security they need 8-10% on a passbook account or money market account to stay above poverty level. High end homes soared to record prices in 2015. A trillion dollar bubble in car loans. $1.2 trillion dollar in student loans. Record stock buybacks by corporations at Cyclical high prices. What we are setup for is a Thermo-Pukular Decline of Biblical Proportions.