GeoMade

@GeoMade

Everyone can pull up the German DAX, British FTSE and Japanese Nikkei. The one thing they all have in common is a debasement of their currencies and markets gravitating into deteriorating fundamentals.

Aka central bank generated bubbles.

We know what happens when currencies debase. We saw it after the US went off the Gold Standard when markets hit a next leg higher.

We saw it in Venezuela when inflation hit multiple digits and their stock market moonshot.

There is a trade off for debasing currencies. Reduction in purchasing power. That’s how we get an Arthur Burns 2.0 scenario in play. Just like the 1970s where inflation came in large and volatile waves.

Currency debasement hurts banks in the end. The banks need customer deposits to remain in place. Banks are already underwater on their securities holdings with many technically insolvent.

@Lawrence Fuller

Today’s statement by President Williams supports what I said above.

I did say I was nearly 100% accurate in forecasting the last 15 technical moves. Up, down, including VIX and Yields.

Position trading vs Daytrading. Night and day.

@Lord Gekko

Let’s see. I’m quite confident something very concerning occurred in the bond market with the Janet Yellen QRA that coincided with this amazing bounce.

Mechanically, this is the most rushed bounce without a pullback I’ve seen. Record flows continue to pour into short vol dispersion products. These are often Bank products and the banks get money from Fed.

After hearing from Powell, I think it’s safe to say that Janet Yellen and the administration is running the show.

They’re forcing Russell 2000 for a fourth retest of prior pivot highs. Very impressive leverage getting pumped in.

This is historic stuff. Literally, record option flows come in as the recession signals keep appearing.

Now 10 year below 4%. Gundlach calls that an emergency.

With elections next year, I would expect more games including on the reversal which I suspect will be a violent blow off top on longer frames.

@Lawrence Fuller We don’t need to wait 6-12 months. We can see it in the 30 year.

I would not ignore the consumer in favor of lagging (and often manipulated) data. Main Street leads Wall Street as it relates to price sensitivity. The consumer drives spending and many are living paycheck to paycheck.

The top 20% own roughly 90% of all stocks. So the vast majority of citizens have no say in now equities move day to day—-as opposed to say a majority rules democracy or polling.

We can all conflate a few days technical moves in the market to a narrative. Russell 2000 is telling us this cycle is near its end.

How many times have we read it was the last Fed rate hike and cuts were on the way?

Here we are again.

So how can we claim individuals such as Jamie Dimon are misguiding? If anything, Jamie can say it’s the bulls that have been misguided on the Fed and inflation.

There is plenty of issuances coming down the pike in the coming weeks. 10 year is sitting right at its trend line. This can easily reverse in the coming weeks alone.

As for panic buying. It’s also fueled by the bears as big money squeezes them out in intervals.

The mechanics behind the moves matter as much as the technical moves. IE derivatives. I don’t see a single Macro reason for Russell 2000 to bounce off its 52 week low and V back towards 200+.

I see Russell 2000 retesting those recent lows shortly as this cycle ends—-part of June forecast—-and taking the indices with it.

@Lawrence Fuller

Nixon also blamed currency speculators for abandoning the Gold Standard. It all goes back to government policy.

The CPI methodology changes over time. It also magically evolves to generally favor government in underestimating inflations real impact. 1970s - 1980s methodology vs today. Inflation would be higher today using older methodology.

@state_of_affairs

Michael Burry may be a financial genius but he’s not very good at timing entries with his Macro knowledge. His understanding of Technical Analysis is pretty basic.

Market Timing is -difficult- because there is a 1% big money cabal taking obligated opposite bets in options and protect their turfs along with growing short vol flows. Many associated with banks.

Bulls and bears are getting yo-yo’d as equites have gone basically nowhere for 2 years outside of rinse repeat Big 7 retracements. This is a business after all.

Mike is correct. We can see these big sizes come instantly in real time. Major 0dte blitzes. Record leverage. Russell 2000 just saw record OI in call options after it hit *new 52 week lows.* Just as forecasted here back in June. This is not how new bull markets begin with multiple gaps left behind.

Common sense and logic says these are further bearish sequences. Russell 2000 will continue to lead the indies as this cycle ends.

@Lawrence Fuller

It’s more than slowing. It’s recessionary signals. PPI negative MoM were at Covid lock down readings.

Slowing growth with persistent inflation leads to stagflation. Just like the stagflation 1970s, we are seeing disinflation / deflation of the goods or services consumers do not need and sustained / rising inflation for the necessities.

Inflation remains a global phenomena. Everything ties to supply vs demand as a growing global population continues to compete for earth’s finite resources with de globalization, war (inflationary) and continued debasement of global currencies as inflation eats away.

Here’s the real kicker. If rate hikes are over, where does the dollar go from here? The rising US dollar was a major factor in bringing down CPI reads. What will happen to purchasing power as the dollar retreats over the months ahead?

Market is trying to front run Fed for a reason. That’s how you can get up and down cycle legs in CPI as seen in the 1970s under Fed Chairman Arthur Burns. Better for the markets to capitulate (which is the next phase) versus drawing out the inevitable. Zombies must fail. Kicking the can only lasts for so long.

@Lawrence Fuller

It’s more than short covering. This is 1% big money rinse repeats in options. Business is business. Bulls and bears both getting yo-yo’d. Equities have gone nowhere for roughy 2 years. Particularly the 493 out of the 500. Rate of change breadth changes matter including the mechanics behind the technical moves.

Russell 2000 will continue to lead markets lower as this cycles comes to an end. Exactly forecasted back in June here. The Smart Money is months ahead of the news cycle.

@Dan Victor, CFA

There is a fine line. For example, today’s PPI print was not bullish. Extrapolate the negative MoM. The recent print is at Covid lockdown numbers. This is recessionary data. Arguably we are already in a recession. Slowing growth with sticky inflation is a recipe for stagflation.

Again, I point to my June Russell 2000 forecast hitting its recent 52 week lows while big money blasted the Big 7 to retest highs. This is quantitative Chess with front running. Very intelligent players that are moving markets and yo-yoing both bulls and bears using record daily 0dte which distorts technicals. It’s simply not possible to have these technical retracements in equities in record time frames without the growing use of derivatives leverage. And it’s growing. This is a major red flag if one uses common sense and logic.

Russell 2000 will continue to lead the indices. This move is more derivatives daily 0dte liquidity noise into a major Opex. Business is business. I’m expecting the big 7 to follow on its next leg down which follows my June forecast sequentially speaking.

@Bitzap

Powell indeeds moves markets. Delta hedging is in constant flux. The narratives behind the moves are often false. That’s the key takeaway here.

There is almost nothing the smart money doesn’t already know ahead of time. That’s one reason big money can *significantly* crush VIX using short vol dispersions with massive 0dte in late October ahead of Powell speaking.

The media news cycle explaining technical moves are often false with many market participants repeating what they read in the news.

@GeoMade

Technical Analysis - Price and Volume lead everything

Macro - the conditions for the moves

Flows - the mechanics of the moves

@wboz

Friday Opex flows into further dynamic hedging. Big money taking obligated opposite bets in the option makets. Technical. Pinned the higher strikes and collected all the put premiums sold below.

@GeoMade

The link doesn’t answer the question above.

“Can you list for us trillion dollar examples where US Treasury covered it’s debt without using the bond market? Where can we read about this method?”

Clearly this would a major loophole. If only we can do it without rattling the bond vigilantes driving up yields.

At this point, To go a different route and jeopardize the Good faith and credit of the US…

Where’s the implementations? The case studies for validity for government officials to review. There’s a very serious situation building in the credit markets at this moment.

I’m Elite at Technicals. It’s all in the history.

I wouldn’t read too much into this Opex move.

I forecasted this exact bounce off the former S&P SPX 4225 region well in advance in my posts. We can see that monster bounce right off that region in the charts.

This was a technical sequence for liquidity to pin the higher strokes and collect the put premium sold. Well played and Nice pay day for the option sellers.

@Lawrence Fuller

Two or more things can be true at the same time. It can both be true that Ackman pumps his holdings while also being correct in his thesis.

After all, this is not some fringe consensus. He’s not moving the bond market himself.

@Dirtooooo

Financial conditions eased after the global central bank interventions following the March global bank failures.

Credit spreads tightened, which changes IV. We had lots of shorts trapped when the banks failed in March. We saw IV crush of those puts including big money putting on short volatility dispersion trades which Mott talked about. This crushed VIX.

Crushing VIX also crushes option contracts including longer dated puts. This created a massive gamma squeeze(s) as big money intentionally pumped record 0dte calls to compound things over the days. Very rare stuff.

Some Bulls thought it was positive sentiment related. But this cycle was done when the banks failed without the global central bank interventions. Period. It became a trust / confidence in the banking system issue to the authorities. We saw evidence in the currencies as evidence of interventions.

We saw similar phenomena in 2008 after Bear Stearns failed. It allowed the option sellers to buy back their short positions which melted the markets higher for 6 months until the next volatility event (Lehman) with Sept Opex expiration arrived.

Very similar patterns with today vs 2008. Both times VIX was crushed until the next volatility driven events.

As I’ve been saying for months, I believe March was just a sample of what’s to come. I believe we are just in the early innings here with the banks.

My forecast for KRE to retest it’s lows by or around Otober 31 and ultimately breaking it is in play. Russell 2000 is testing its lows now as I forecasted here in June. XLF is breaking its key support. High yield and junk breaking support.

I’m confident we see VIX 20s+ into October as I mentioned weeks ago.

We should remain in “higher for longer” even if the data is a bit weak. The signs keep pointing to stagflation. Divergencies between dollar and yields vs crude. Leading data. It’s not only about inflation but the long term and increasing deficits. The 30 year continues to scream.

From my view, technicals remain very Bearish. As major individual tickers remain in bearish sequences. We are also in heavy negative gamma after the “window of weakness” opened up after the expiration of the major Sept OPEX into FOMC. Now dealers and MMs will continue to unwind.

As mentioned weeks ago, I see VIX 20’s in the coming weeks into October.