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Why Carl Icahn & I think the market is dangerous & overleveraged


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#1 dTraderB

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Posted 06 February 2018 - 01:21 PM

Forget all that crap about the decline was "technical" or because of the Short Volatility trade that blew up

 

Major reasons were rising bond yields, alarming leverage with risky margin levels, threat of inflation, and imbecilic Trump plan to add trillions in debt to stimulate an economy that is operating on full cylinders (or at least 90%).

 

Minor reasons are political, budget deadlock with no signs of any agreement, possible trade war, and childish & clueless  international diplomacy, and the other madman - N Korea's Kim.  

 

Carl Icahn Interview on CNBC  (264.81 +0.84)
  • Carl Icahn says there are too many derivatives.
  • He said he does believe the market will bounce back, but market is over-leveraged.
  • He was critical of triple leveraged ETFS that are similar to 1929; Icahn is supportive of regulation of certain types of leveraged products.
  • He says one day market will implode because of too much leverage, but this is 'not an explosive time'
  • Says market is trying to tell you something; says market has become a much more dangerous place (in context of unregulated products).
  • Carl Icahn says he would not touch Bitcoin (BTC); says bitcoin is 'ridiculous'. 

Edited by dTraderB, 06 February 2018 - 01:22 PM.


#2 kaiser soze

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Posted 06 February 2018 - 03:18 PM

As I type, VXN (NDX spot volatility) is at 28 and RVX (Russell 2000 volatility) is at 27 while VIX (SPX volatility) is at 35 and VXD (volatility of the Dow30) is at 30. Crude Oil volatility (OVX) is at 26 and gold volatility (GVZ) is at 14.  This volatility divergence also gets to the heart of why this sell-off occurred/is occurring.

 

Here are some "possibilities" I thought of to explain the strange market action.  Lets remember the big honcho algorithms are ridiculously "smart" and even track things like the electricity consumption in China through satellite photographs. They always know way more.

 

1.  Tech and small caps are the new safe haven. Large cap and old economy stocks (industrials, banks, retail, energy) predominantly listed in the NYSE, are broken for reasons related to interest rates and peak earnings. Nasdaq stocks are fine and have excellent growth prospects. Volatility divergence is here to stay.  

 

2. This volatility divergence between traditional high beta indices and the more senior indices is a quirk of the market mechanics related to the unwinding of short volatility positions, mostly in the S&P500.  In other words, this volatility divergence is a transient phenomenon.

 

3. The liquidation of over-leveraged positions took its maximum toll on the most liquid large cap names in the Dow and the S&P.  In other words, this volatility divergence is a transient phenomenon.

 

4. CHINA is imploding behind the scenes.  Dow 30 multinationals have maximum exposure to China and are being hit the hardest while some tech names don't even operate in China (GOOGL, AMZN) and small caps are only exposed to the US domestic economy.

 

5. All of it is a DECEPTION.  A capitulation was engineered in the NYSE stocks just so that they can rocket higher in the next few months.  Nasdaq stocks and small-caps will be punished in the coming weeks and months through multiple compression due to rising interest rates.

 

Which of these reasons do you favor ?  Are there other reasons I left out ? Please do chime in with your thoughts.


Edited by kaiser soze, 06 February 2018 - 03:18 PM.


#3 da_cheif

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Posted 06 February 2018 - 04:56 PM

so how bout kiss analysis like ewave......kiss



#4 da_cheif

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Posted 06 February 2018 - 05:00 PM

thinking the market is dangerous...... more mortar in the wall of worry.....to educate ur self....   its all here   makes good reading

 

http://www.siliconinvestor.com/subject.aspx?subjectid=52296     take ur time if you really want to be a great student of the markets



#5 dTraderB

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Posted 06 February 2018 - 09:30 PM

How was the vacation, chief?
Welcome back!



#6 da_cheif

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Posted 06 February 2018 - 10:25 PM

How was the vacation, chief?
Welcome back!

u missed me eh....i was very busy recently with the hotline......fast markets require extra effort for my subs   they loved every minute of it...covfefe    ...the effort paid off    new worried subs came out of the woodwork.........nothing like fear to make everyone come to the master.......snort    im the greatest handholder on the planet...thats a quote from one of them.......gawd how i love this stuff.....just had a gin   toasted myself.......snort