Ironically, when futures are 'Perilously close to backwardation' were the best times to short, after the crash in 2011.
It looks like so far VXX $23 or $24 may be the threshold to tip over to the other side. I don't think we would see crash like 2011 without foreign event. Anyway, I would start to get worried when we see 60 point down in S&P like 2011 or continuous days of sizable decline without bounce.
Folks, so trade based on your bet whether the market will crash, gradual decline, going sideways or recover. 3 out of the 4 scenarios are on my side.
Today for me it seems like the old cartoon where the coyote has run out over the cliff and his legs are spinning madly while he appears to be running in place just before whoosh . . . .
My tell right now is bank loan funds and short duration medium to low quality credit, which have collapsed to levels seen when the SPY was at 1150. Either credit is going to bounce back or equities are going sharply lower IMHO.
Yes things are very ominous now. To me it really has that 2007-08 feel. You have some people rumbling about possible concerns, but by and large the market has chugged along and kept going higher regardless of what seem to be obvious red flags (China, Europe, weak US economy). I guess everyone is expecting to be able to get out at once.
Another scary thing is that a lot of people I know are now planning their retirements and expenditures around the market now- just assuming it "must" go up 15-20% every single year and they can just count on that forever. Complacency is remarkable right now. It's true this is on track to be the 5th straight big up year in a row, but have people really forgotten the 3 crashes in the past 15 years? The risk of a fourth is incredibly high imo.
Now the trick is what to do with whatever money one has. My mom is retirement age and going to be hurt by ZIRP. Ben wants her and everyone else to just buy stocks but she got burned in 2008-09 and can't take the risk. Probably will just have to buy TIPS and get a job to supplement Social Security. It's really sad we've gotten to where you can't even make 2% on your savings. Thanks Bernanke!