The bears den

[DukeCS33]

FAANGs & Nasdaq has fallen quite a bit. It looks like utilities and defensives is supporting this market now. So headline S&P500 index looks still strong at 2750, the composition of the market now is very different from how it was in Oct 2018, I think. It would be interesting to analyse how different sectors have done in this downmove.

https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/sectors_in_market.jhtml

Use this:

https://www.barchart.com/stocks/sectors/rankings?timeFrame=1m

 

[revhappy]

 

[revhappy]

https://www.bloomberg.com/news/arti...les-into-treasuries-on-possible-fed-rate-drop

Legendary investor went from 93% invested to net flat, he said

 

[hindsight]

https://www.bloomberg.com/news/arti...les-into-treasuries-on-possible-fed-rate-drop

Legendary investor went from 93% invested to net flat, he said

To go to zero is quite shocking, and I'm not even sure if treasuries is the correct way to play it if the US is indeed going into a recession next year. The fiscal deficit is certain to explode (from already very high levels) if the economy falters, who is going to fund that deficit? From investors selling out of stocks?

One thing is certain though and that is the dollar is going to fall thru the floor if rates get cut to zero again. The yield gap was the only reason for the dollar's relative strength in the past few years, and it really wasn't even that strong.

 

[coolhead]

Won't dabble into uvxy today and possibly tomorrow. Selling pressure was quite weak yesterday.

Sent from HMD Global TA-1004 using GAGT

 

[coolhead]

I do not see yield curve inversion - not when the 2s 10s are still positive. Also, I am viewing inversions with a big dose of scepticism for now.... if there is inversion, it was manufactured by the Fed's recent switch to buy 10y UST instead of MBS. There has not been that high an intervention in the curves historically and so I would temper my read of yield curve inversion being a predictor of recession.
I also find it hard to believe in a recession scenario when employment is high.

I also view this yield curve skeptically. By all accounts if this were a healthy US economy, the fed rate should be about 4% now and that is the main reason why this yield curve hasn't inverted yet. Hence, there is some fed intervention into existing yield curve and has resulted in 2yr 10yr rates not inverting yet. But what about semiconductor sales as a leading indicator of economic growth? I think that's quite telling and almost impossible to skew/fake such sales data.

Sent from HMD Global TA-1004 using GAGT

 

[DukeCS33]

I also view this yield curve skeptically. By all accounts if this were a healthy US economy, the fed rate should be about 4% now and that is the main reason why this yield curve hasn't inverted yet. Hence, there is some fed intervention into existing yield curve and has resulted in 2yr 10yr rates not inverting yet. But what about semiconductor sales as a leading indicator of economic growth? I think that's quite telling and almost impossible to skew/fake such sales data.

Sent from HMD Global TA-1004 using GAGT

The reason why Fed rate is not higher is because there is a lack of inflationary pressure. From a long term perspective, technology is driving cost efficiencies, China is also exporting its cheap prices out to the rest of the world and coupled with an exchange rate that is relatively weak, there is hardly any inflation. And on that, I think the Fed is also watching the 2s 10s and may intervene to prevent it from inverting.... else it becomes a self fulfilling prophecy.

Yeah about some 1 or 2 months ago, I was asking about the semi con sector. The prices were running up but I did not see any fundamental catalyst other than an expectation of the IOT and 5G being a secular growth driver that everyone is focussed on. That is going to be some time away and hence I was quite puzzled as to why that space started to out perform. Guess the Market got ahead of itself.

 

[DukeCS33]

From what i read, we should look at 10yr-3M yield curve, not 10yr-2yr yield curve.

The media would need a story and they would focus on the part that inverts first... it can be 3m-10yr or 6m - 10yr or 5s 10s etc... use whatever floats your boat but does this 3m - 10 yr whip around more than the 2s 10s? If I trade the rate curves and believe that there is an anomaly to exploit, I would receive and pay different part of the curves in expectation that it would normalise. This has happened before and is common in the EM NDFs curves.

For me, I would still stick to the 2s 10s as convention. The 2s would have expectations of short term growth and inflation reflected in it. The 3 mths is basically dictated by the Central Bank and reflect the more immediate liquidity rather than growth / inflation expectations for the short term. So I would rather use a measure that compares the outlook of the growth / inflation in the short run to the longer run.

 

[theMKR]

Did you sell OTM Calls?

Nope, i think TSLA will fall further. now my options are TSLA Put option @ 180 by 14 jun
which i think got chance to exercise (hopefully)

the other one is basically useless, SPY Put option @ 268 14 jun

 

[theMKR]

conclusion for using pets to trade.

pet sucks at trading, basically they dun care about stocks, they just want to eat, asap. so they will make u pay a lot of comms and lose money

and they always eat tsla and aapl only

 

[coolhead]

conclusion for using pets to trade.

pet sucks at trading, basically they dun care about stocks, they just want to eat, asap. so they will make u pay a lot of comms and lose money

and they always eat tsla and aapl only

I tot it's a known that they will eat aapl, but tsla?

Sent from HMD Global TA-1004 using GAGT

 

[coolhead]

Conspiracy: is the fed deliberately holding onto rates so that US enters a soft recession and force trump out of presidency?

In any case, 10yr treasury bond yield at 2.085%, the drop is pretty alarming, never seen such a big drop so fast for a long time.

Sent from HMD Global TA-1004 using GAGT

 

[theMKR]

I tot it's a known that they will eat aapl, but tsla?

Sent from HMD Global TA-1004 using GAGT

yeah, aapl was the first one my cat ate.

tsla later.

subsequently the cat only eat this 2. maybe becos it already has his saliva on it.

but the buy and sell was quite random

edited: actually tsla was the first one the cat ate. but i skipped his 1st advise

 

[Trader11]

yeah, aapl was the first one my cat ate.

tsla later.

subsequently the cat only eat this 2. maybe becos it already has his saliva on it.

but the buy and sell was quite random

edited: actually tsla was the first one the cat ate. but i skipped his 1st advise

Your cat can choose 4D number?

 

[theMKR]

Your cat can choose 4D number?

cannot.

my fish choose 4d number

but they suck at choosing.

 

[SBC]

https://www.bloomberg.com/news/arti...les-into-treasuries-on-possible-fed-rate-drop

Legendary investor went from 93% invested to net flat, he said

Wonder how will affect mortgage rate in SG?

 

[coolhead]

Can anyone advise what do u call this trend? Higher high and lower low together...

Sent from HMD Global TA-1004 using GAGT

 

[churnmaster]

I maintain that stock market forces do not cause the fed to cut rates.

Sent from HMD Global TA-1004 using GAGT

I fully agree with you. You need massive job cuts and bankruptcies for rate cuts to happen. In 2008, the economy was losing close to 800K jobs every month and unemployment rate surged to 10%. Now, the economy is adding about 200K jobs while the unemployment rate is less than 4%, where's the need for rate cut at this point.

In fact, the rate hike was to start once unemployment rate dropped below 5%, as per the original Fed plan but Janet Yellen just maintained statuesque till her very last Fed meet as Chairperson. Powell had to speed up the rate hike cycle.

May be Trump, as a businessman with lot of borrowings, is feeling the heat with all these rate hikes and thus wanting the Fed to cut rates. His personal agenda.

 

[kingboonz]

Too good to be true.

 

[churnmaster]

Not sure about that seasonality factor. I am approaching this from a short term trading mentality. I see stocks getting oversold and based on the factors I consider, I think it is poised to test topside resistance at 2800.

A countertrend rally may be coming.... this would be an opportunity for a 3 to 5 day swing long trade on stocks that are still maintaining strength, outperforming the SP index and still hugging their longer term uptrend.

I think the same. Waiting for index to rally close to 2800 before going short. As you mentioned earlier, the market internals too indicating some retracement.