Down goes the Dow

Ghost of Igloi wrote:

Speaking of rolling over, when do the markets start rolling over again? Level or reason?

it's going to be a reactive market now, as earning season starts. bam bam from one emotion to another.

I did see that the fall in the vix has been one of the steepest ever recorded - that says something, but what I'm not sure.

No doubt a lot of options guys got completely hammered - they may not be so willing to short the market anymore. They probably had worked into their models how fast the vix could fall...and then the vix falls faster than the models had.

Anyway, who knows. This is a volatile, emotional market.

agip, Macy's is down 15% in pre-market. American consumers are spending at record levels but it's not enough to save retail from having to guide lower.

Apple and Macy's both have problems unique to them, but there's no denying it I think : we're slowing down

Racket wrote:

agip, Macy's is down 15% in pre-market. American consumers are spending at record levels but it's not enough to save retail from having to guide lower.

Apple and Macy's both have problems unique to them, but there's no denying it I think : we're slowing down

maybe. Not enough data yet to know. This is the time companies pre-announce. You always get pre-announcements just before earnings season.

We aren't hearing from the thousands of companies which are doing just fine - they will announce on schedule.

and Macy's is a special case - it was a hedge fund darling but they all walked away. it's not a normal stock.

Short term high yield bonds flat today despite stocks down - that's what I'm looking for.

Using HYS as a proxy

One year returns:

HYG: Intermediate term junk bond ETF: +0.52%

HYS: 0-5 year junk bonds: +1.4%

VTI: US total stock market ETF: -4.3%

So junkies have done much better than stocks over the past year.

But maybe this suggests I'm late to an idea, as I usually am.

HYG has had insane short positions load up against it. I see it on heavy volume options chains from time to time. I think it was like 3rd most active ETF (or ETN whatever it is) like 2 weeks ago. Could be a huge hedge or a huge short, not sure. Doesn't make sense for it to be up with interest rates rising though. Doesn't that mean those junk bonds are riskier now?

Racket wrote:

HYG has had insane short positions load up against it. I see it on heavy volume options chains from time to time. I think it was like 3rd most active ETF (or ETN whatever it is) like 2 weeks ago. Could be a huge hedge or a huge short, not sure. Doesn't make sense for it to be up with interest rates rising though. Doesn't that mean those junk bonds are riskier now?

junk bonds aren't as sensitive to interest rate changes as investment grade bonds.

They act like low-vol, high dividend stocks. You get something like half the upside potential of stocks and half the downside. Not great in a tax sense obviously, with a high coupon.

But point is they react to the same stimuli as stocks - economic growth, profits, etc.

not to say they don't have ANY interest rate sensitivity - just less than bonds. And similar to stocks.

HYG was probably shorted when it was yielding only a percent or two more than treasuries. Those spreads blew out way wider, justifying the short.

Up c.11% in 11 days.

rock and roll, this market

Russell 2k is up c.14% in 11 days

Ghost of Igloi wrote:

https://mobile.twitter.com/TheBubbleBubble/status/1083031754330521600

have to laugh at thinking a thursday close at 2597 SPX is bearish but a friday close at 2620 SPX would be bullish.

I mean really.

Ghost of Igloi wrote:

Safe to say Santa left investors a lump of coal.

Up 10% since the Christmas Eve close. Thanks, Santa (and Igy)!

Contrarian indicator wrote:

Ghost of Igloi wrote:

Safe to say Santa left investors a lump of coal.

Up 10% since the Christmas Eve close. Thanks, Santa (and Igy)!

Yeah! but remember, all of the muppet investors got out at the bottom. Because he said they would.

agip wrote:

Ghost of Igloi wrote:

https://mobile.twitter.com/TheBubbleBubble/status/1083031754330521600

have to laugh at thinking a thursday close at 2597 SPX is bearish but a friday close at 2620 SPX would be bullish.

I mean really.

Today's rationalization that I'm repeating over and over feel better about my short position : LOW VOLUME

Just wait until big institutions DUMP EVERYTHING and we see a massive -10% day.

Seriously though, every company is gonna miss earnings this quarter.

Contrarian indicator wrote:

Ghost of Igloi wrote:

Safe to say Santa left investors a lump of coal.

Up 10% since the Christmas Eve close. Thanks, Santa (and Igy)!

Oh, you finally stuck your head out from under the covers.

Wait, you’ll be curled up at the bottom of your bed in a fetal position by Valentine’s Day. ??

mister wrote:

Contrarian indicator wrote:

Up 10% since the Christmas Eve close. Thanks, Santa (and Igy)!

Yeah! but remember, all of the muppet investors got out at the bottom. Because he said they would.

The read the post above. Have mommy warm up your quiltee.??

Racket wrote:

agip wrote:

have to laugh at thinking a thursday close at 2597 SPX is bearish but a friday close at 2620 SPX would be bullish.

I mean really.

Today's rationalization that I'm repeating over and over feel better about my short position : LOW VOLUME

Just wait until big institutions DUMP EVERYTHING and we see a massive -10% day.

Seriously though, every company is gonna miss earnings this quarter.

Probably nothing....

Racket wrote:

agip wrote:

have to laugh at thinking a thursday close at 2597 SPX is bearish but a friday close at 2620 SPX would be bullish.

I mean really.

Today's rationalization that I'm repeating over and over feel better about my short position : LOW VOLUME

Just wait until big institutions DUMP EVERYTHING and we see a massive -10% day.

Seriously though, every company is gonna miss earnings this quarter.

that's funny, because according the Factset, the earnings revisions for the 4Q are in line with historical norms. You really think companies are hiding all this from analysts? It doesn't work that way.

Take a look at page 2. Shows revisions for the upcoming earnings have come down 3.8%. That is larger in in recent quarters, but about what we tend to get, when we look past 2018. If every company was going to miss, that 3.8% number would be far larger. Companies can't legally hide bad news that much - they have to pre-announce if the quarter self destructed.

It is interesting to note that the bottom-up EPS estimate for CY 2019 decreased by 2.3% (to $173.94 from $178.05)

during the fourth quarter. This decline was larger than the 5-year average (-1.8%) decrease in the annual bottom-up

EPS estimate during the fourth quarter, but smaller than the 10-year (-3.6%), 15-year (-2.4%) and 20-year (-3.1%)

average decreases in the annual bottom-up EPS estimate during the fourth quarter.

and a 3.8% miss is already factored into the numbers. And stocks are down around 15%. So I'm not seeing your worry.

that was a crazy jumble of error-strewn cut and pastes but I have to go - hope it's understandable.