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Priced for Perfection after Powell's Put


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#1 dTraderB

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Posted 30 January 2019 - 06:51 PM

The last shoe to drop for a 100% Priced-for-Perfection market is "good progress" in the China Trade war negotiations. 

 

After that, the market will be extremely vulnerable. 

 

But, there is still some fuel in the bulls' tanks to take SPX to the 200ma (I hope!).

 

Holger Zschaepitz @Schuldensuehner
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The Powell put is born: Fed Chair surrenders to Wall Street. FOMC issued separate statement on balance sheet. Committee willing to alter size & composition of balance sheet if warranted by fin conditions (Wall St). It looks like kowtow to Trump. https://www.welt.de/wirtschaft/article188002637/Fed-Chef-Jerome-Powell-kapituliert-vor-their-maechtigen-Wall-Street.html?wtmc=socialmedia.twitter.shared.web  via @welt

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2:22 PM - 30 Jan 2019

 



#2 dTraderB

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Posted 30 January 2019 - 07:01 PM

F&G indicator now says it is now in GREED mode

LOL

https://money.cnn.co...fear-and-greed/

 

 

NAIM has soared above 70, good times again!

 

This week’s NAAIM Exposure Index number is:
72.84

Last Quarter Average
53.76

Download CSV file with data since inception »

http://www.naaim.org...exposure-index/

 

McClellan Oscillator has busted the lower panel and invaded the upper pane!

McClellanOsc_468.gif

https://www.mcoscill...t_breadth_data/



#3 dTraderB

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Posted 30 January 2019 - 07:12 PM

Incidentally: The last 3 times the Fed was forced to stop its rate hike cycle a recession soon followed.

Jesse Colombo Retweeted Jesse Colombo

"The Fed is officially at the market's mercy now" My translation: "the Fed is at the mercy of a massive bubble that IT CREATED and now cannot unwind without throwing the economy into a full-blown depression."

Soon the market will ask why such an abrupt change... Maybe it was the market, maybe it was Trump's tweets, maybe it was the Fed shareholders (large banks) telling them what to do, but... maybe they are scared of something that should be scaring investors as well.

 



#4 dTraderB

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Posted 30 January 2019 - 07:18 PM

And there it is. 10 days ago the put/call ratio for the VIX was 20% (too many betting on higher VIX). Today's ratio: 113%.

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Bob P worries that everything is priced in. Thinks the market is very pricey.

 

The Fed is officially at the market's mercy now https://bloom.bg/2DLy7XP  via @bopinion

 

In January 2019 the Fed went full capitulation dovish. And still $SPX is below its 200MA.

 

 

Urban Carmel @ukarlewitz
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$NDX equal weight (which normalizes FAANG from 40% to 5% weighting) back at its 200-d, which has been weirdly consequential recently (circles)

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3:45 PM - 30 Jan 2019


#5 dTraderB

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Posted 31 January 2019 - 10:02 AM

Busy!

 

Will be building  a BIG position in QQQ puts as this rally continues.

This is similar to what I did in January and July/September 2018

 

It seems as if was only last week, when it was a few weeks ago, that I was worried about not buying more CALLS when the market was trading in the SPX 2350/2450 range; now, I am worried I may not have more PUTS than I should as the market climaxes in the SPX 2700 region.

 

This is high risk trade but my risk capital has been sitting there doing nothing and I have to hedge my LT portfolio - that is also not fully invested. It has been a strange & unusual last 4 months



#6 redfoliage2

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Posted 31 January 2019 - 10:37 AM

There is a minor resistance at SPX 2700 and let's see how it will be worked out or fail there...................


Edited by redfoliage2, 31 January 2019 - 10:37 AM.


#7 dTraderB

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Posted 31 January 2019 - 11:01 AM

If POWELL caved then that is bad for the markets

 

if POWELL is justified because of pending economic weakness etc then that is also bad for the markets

 

I am paying thru my nose for JUNE 2019 QQQ puts.... deep in the money. 

 

 

I am leaning towards this stance on the FED:

However, while the markets are celebrating the very clear confirmation that the "Fed Put" is alive and well, it should be remembered these "emergency measures" are coming at a time when we are told the economy is booming.

As Dalio noted, one of the biggest issues facing global Central Banks is the ongoing effectiveness of "Quantitative Easing" programs.

As noted by Michael Lebowitz yesterday afternoon at RIA PRO

 

"In our opinion, the Fed's new warm and cuddly tone is all about supporting the stock market. The market fell nearly 20% from record highs in the fourth quarter and fear set in. There is no doubt President Trump's tweets along with strong advisement from the shareholders of the Fed, the large banks, certainly played an influential role in persuading Powell to pivot.

Speaking on CNBC shortly after the Powell press conference, James Grant stated the current situation well.

"Jerome Powell is a prisoner of the institutions and the history that he has inherited. Among this inheritance is a $4 trillion balance sheet under which the Fed has $39 billion of capital representing 100-to-1 leverage. That's a symptom of the overstretched state of our debts and the dollar as an institution."

 

As Mike correctly notes, all it took for Jerome Powell to completely abandon any facsimile of "independence" was a rough December, pressure from Wall Street's member banks, and a disgruntled White House to completely flip their thinking.

In other words, the Federal Reserve is now the "market's b*tch."

However, while the markets are celebrating the very clear confirmation that the "Fed Put" is alive and well, it should be remembered these "emergency measures" are coming at a time when we are told the economy is booming.

 

"We're the hottest economy in the world. Trillions of dollars are flowing here and building new plants and equipment. Almost every other data point suggests, that the economy is very strong. We will beat 3% economic growth in the fourth quarter when the Commerce Department reopens.

We are seeing very strong chain sales. We don't get the retail sales report right now and we see very strong manufacturing production. And in particular, this is my favorite with our corporate tax cuts and deregulation, we're seeing a seven-month run-up of the production of business equipment, which is, you know, one way of saying business investment, which is another way of saying the kind of competitive business boom we expected to happen is happening." - Larry Kudlow, Jan 24, 2019.

Of course, the reality is that while he is certainly "spinning the yarn" for the media, the Fed is likely more concerned about "reality" which, as the data through the end of December shows, the U.S. economy is beginning to slow.

"As shown, over the last six months, the decline in the LEI has actually been sharper than originally anticipated. Importantly, there is a strong historical correlation between the 6-month rate of change in the LEI and the EOCI index. As shown, the downturn in the LEI predicted the current economic weakness and suggests the data is likely to continue to weaken in the months ahead."

 

https://seekingalpha...ely-understated

 



#8 dTraderB

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Posted 31 January 2019 - 11:04 AM

There is a minor resistance at SPX 2700 and let's see how it will be worked out or fail there...................

 

SPX 200 ma ahead

 

and also a possible pop after AMAZON's earnings.

 

BIG earnings day

 

However, the bull needs fuel, every session..

 

I am watching closely how the market will react after a pullback of more than 20 SPX points; that is really important for me; I could go bullish after that, depending on the reaction of buyers on that pullback.


Edited by dTraderB, 31 January 2019 - 11:04 AM.


#9 redfoliage2

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Posted 31 January 2019 - 04:05 PM

Now it's unavoidable for the market to test SPX 200 dma around 2740.


Edited by redfoliage2, 31 January 2019 - 04:10 PM.


#10 dTraderB

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Posted 31 January 2019 - 04:46 PM

Now it's unavoidable for the market to test SPX 200 dma around 2740.

 

That's the key, always has been since it moved above the 50ma. 

 

basically, this test will determine how high we go.

 

It is possible for a 30 to 40 SPX point pullback and then zoom ahead to SPX 2800/20, another strong resistance zone

 

The reaction to the pullback will be very important

 

I don't really trade ascribe much importance to the 50 and 200 ma levels but I have to watch it because most of the traders do ....