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TNA 60/70 for April is good R/R spread. DO your own D/D.
When everyone is looking for correction it seldom happens, I think we might go bit lower than my target in this expiry (monthly).
They need people to believe in correction is over, which might be true. I follow the trend I could not make prediction. My estimates are just estimate they may not become true, so please do your own D/D.
Farooq
Question, So how you get real data?
It is at sell, if we close here with target of 356.90 on QQQ.
Closing below 59.13 will generate Sell.
They know it too.
If OE occur above 65 target for six weeks could be 89$.
Do your own D/D.
Farooq
Money on sideline and early shorts will start filling gaps. Stocks which were trading on astronomical valuation will correct. Market always makes money on fears. With all wars ending, manufacturing coming back to USA, Multi Trillion dollars spending economy will be strong companies will make more money. Only issue is Feds becoming too aggressive and taking us to deflation like Japan. Just my 2 Cents.
SPY closed on buy so is SPXL on Friday. Pre market it tested low and move strongly in buy territory. At this writing stop is at 443.12
Good luck and happy trading.
QQQ closed on buy so is TQQQ on Friday. Pre market it tested low and move strongly in buy territory. At this writing stop is at 355.40 On QQQ.
Good luck and happy trading.
IWM closed on buy so is TNA on Friday. Pre market it tested low and move strongly in buy territory. At this writing stop is at 56.66.
Good luck and happy trading.
True but that will increase profit margin for companies so market should go up, 1% increase in interest rate does not effect bottom line more than 2-3% in profit. So this is all smoke to bring market down and get rid of novice and margin traders. We will be spending a lot on infra structure. Real danger is if we increase 5 to 6 time we may put economy on brakes, consumer will spend less and that is the engine of our propulsion. We may go in deflationary mode and suffer like Japan for 12 to 15 years.
Look at them yo-yos, that’s the way you do it, trade the market down and then up on Monday, and then do it all again on Tuesday. It’s almost as if people can make money for nothing. At one point, the U.S. stock market was heading for a perfect repeat, with the S&P 500 dropping 2% before coming all the way back to positive territory by mid-afternoon. By the close, the symmetry had dissipated, as the market took another dive. The intraday volatility remains extreme, and alarming, ahead of Wednesday’s announcements from the Bank of Canada (to which the market ascribes a 70% chance of a rate hike) and the Federal Reserve.
Step back only a little, however, and some clear patterns emerge. This leg of the selloff has been led by the largest stocks which had previously proved immune, particularly the internet platform groups still generally known by the FANG moniker. As this chart shows, the Russell 2000 index of smaller companies has escaped damage over the last three days. Larger companies haven’t been so lucky, and the NYSE Fang+ index has had the worst of it:
Bigger companies have had by far the worst of the turbulence
Viewed in terms of investment factors or styles, there is also a clear direction. Figures from the U.S. from the Bloomberg Factors That Work show a huge shift toward value for the year so far, with the value factor gaining 14.4% while growth drops 5%. Investors are getting out of big growth stocks that had previously had the momentum (such as the FANGs), and putting money to work in value and income-producing stocks. This is exactly what might be predicted to follow a rate shock.
2022: Year of Value (So Far)
Beneath the turbulence, there has been a strong rotation to value
Bloomberg Factors that Work
This, then, is a drastic shift away from predicting growth. As I’ve mentioned often, stocks in the U.S. look hugely expensive by any metric that doesn’t take into account historically low interest rates, so it’s logical that stocks will fall as rates rise. Those high valuations also mean that there’s potentially a long way to go down. What can we rely on to halt the decline?
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Monday and Tuesday showed that there’s still a phalanx of investors ready to “buy the dip” at all times — but in aggregate they haven’t yet been able to stop a substantial drop and now seem to be ranged against “sell the bump” traders. When trying to explain some very strange behavior, target-dated funds need to enter the equation. Much money is directed into equities these days as part of portfolios that are programmed to rebalance regularly. If stocks have risen more than bonds, then there will be big rebalancing flows at the end of quarter as these funds sell stocks and reallocate to bonds. For any given individual, rebalancing is a sensible and disciplined way to ensure buying when things are relatively cheap, and taking some profits when they are relatively expensive.
The issue is that what makes sense for any one individual doesn’t necessarily make sense for the entire market. And managers of target-dated funds have few ways to distinguish themselves apart from, perhaps, getting ahead of other rebalancing flows. Much hope is circulating that there will be a target-date “put” by the end of the quarter, as stocks have fallen much more than bonds lately. A resumed rise in bond yields would mess this up, but at present it looks like some rebalancing flows will be heading into stocks, and as though some traders have been trying to “front-run” or get ahead of them by buying early. This is how the Vanguard Group’s biggest ETFs covering stocks and bonds have fared since the beginning of November:
Target-dated funds may need to buy stocks at the quarter's end
If we don’t get a put from the target-dated funds industry, what about the Fed? It has no mandate to prop up the stock market — but it does want to maintain financial conditions at a level where the economy can function properly. Sharp falls in equities make it harder to raise equity capital and have the effect of tightening financial conditions. This leads to the hope that the stock market has already done some of the Fed’s job, so there will be less need for higher fed funds rates — and also that the Fed might have to act at some point if the stock market fall tightens conditions too much.
So far, this selloff has perceptibly tightened conditions, as the following chart from Goldman Sachs demonstrates. This is mostly due to equities. But there is quite a long way to go before the Fed would feel any great need to come to their rescue:
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
All this means that Jerome Powell and his colleagues will have a difficult job as they try to thread the needle. The sentiment has become quite strong in the last few days that the selloff, along with some data showing hints of omicron-induced economic weakness, will probably be enough to persuade the Federal Open Market Committee to try to walk back its hawkishness a little. Backtracking on raising rates in March isn’t going to happen, and the Powell Fed would lose credibility if it did. But predictions of an instant hike, or an instant reduction to the Fed balance sheet, are now being withdrawn. Both hawkish and dovish surprises are plenty possible. The FOMC may yet preside over another yo-yo session.
You Just Haven’t Earned It Yet, Baby
I get some charming feedback sometimes. This is a missive I received over the weekend:
I wish someone, someday would note that for the great bear market you and hundreds of others keep calling for to occur you need for companies to miss forecasts en masse. This is what happened in 2000, 2008, 2020. If you want to make that call, feel free… If this isn’t the “big one” that you and so many are calling for, we are looking at 1994, 1998, 2014, 2018, not 2000, 1973 or 1929 as many like to say. However, if you and the cohort of those exhorting everyone to sell or at least regret ever owning stocks would at least admit that underlying cause, it would give your argument more credibility.
He ended by saying he doubted this would matter because “everyone has an agenda these days.” Such is the breakdown of trust in our society. Let me take this seriously.
First, when you buy a stock you are buying a claim on its future stream of earnings, so there’s no doubt that earnings forecasts should and do matter.
But, second, whether an earnings miss compared to expectation is a cause of big selloffs or a symptom of them is a trickier call. Charles Kindleberger, in what is still regarded as the definitive book on bubbles and manias, argued that the universal trigger for the bursting of a bubble, the necessary condition, was the withdrawal of cheap money. When stock valuations have reached excessive levels, this makes sense. It would also make sense that earnings forecasts would tend to come down in an environment of rising rates.
That said, what does the earnings season now unfolding suggest about the outlook for the market? Unfortunately, it’s not great. It’s hard to attribute the dramatic selloff of early 2022 primarily to earnings, when the Fed has dominated attention, but earnings have failed conspicuously to thwart it. If some degree of earnings disappointment is a necessary condition for a selloff, it looks so far as though it will be fulfilled.
Entering this week, expected earnings for the fourth quarter of 2021 (in cyan in the chart below, from Jim Bianco of Bianco Research), and for the current quarter (in green) have been flat, after a succession of quarters in which the recovery from the pandemic drove big positive surprises:
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
Earnings “momentum” — looking at the proportion of upgrades among all forecast revisions — is also appearing weak, although far from disastrous. Both globally and for the U.S., upgrades have dropped but remain above 50% of all revisions. This chart is from Andrew Lapthorne, chief quantitative strategist of Societe Generale SA. More intriguingly, hopes for 2022 were beginning to develop strong momentum until the beginning of last month (when both omicron hit the headlines and markets grasped that the Fed was taking a hawkish turn) :
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
Momentum within the market is also very different, and influenced by the inflationary environment. Sectors that might benefit from inflation, such as commodities, are seeing earnings estimates rise, while sectors that have led over the last couple of years are experiencing outright downgrades:
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
As for surprises, corporate investor-relations departments continue to play the game of expectations well and set a bar that they can beat when it comes to the announcement. But after the first full week of earnings, the S&P 500 excluding financials (buoyed by the investment banks' great trading revenues) was only 0.7%. Revenues came in at only 0.4% ahead of expectation. The following chart is from the equity and quant strategy group at Bank of America:
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
It’s early days in the reporting season, but so far it doesn’t look as though profits are going to help arrest the market’s fall. And there’s also some fundamental basis for the way that the selloff is now being led by the big technology groups that had previously dominated. This is BofA’s account of Nasdaq 100 earnings revisions as a proportion of S&P 500 revisions:
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
Some companies have still enjoyed a big bump from earnings season, generally because of bullish predictions for the future. Procter & Gamble Co. and American Express Co. are cases in point. Three-quarters of the S&P 500 is yet to report. But as it stands, corporate earnings are not posing a significant barrier to further market declines. That is my best attempt to be fair; I hope I don’t have an agenda.
The January Effect: 2022 Edition
In stock markets, the January Effect generally means a great bump as investors deploy cash for the new year, often having taken gains for tax reasons at the end of the previous one. That phenomenon isn’t at work this time. But another effect, currently playing out largely away from the spotlight, promises to be vital.
Jan Hatzius, chief economist at Goldman Sachs Group Inc., points out that January is by far the most important month for wage settlements in the service sectors. A year ago, wages were negotiated against a non-inflationary background, and unemployment was still high. This time, workers have a tight labor market to help them, and 7% inflation over the last 12 months is a big incentive to push for more. Much of last year’s inflation was undeniably transitory, driven by supply effects that should dissipate over time. If inflationary psychology is really to take hold this year, it will be through the mechanism of the labor market. And that makes this month critical:
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
Much of the expansion of the last decade, and the growth of inequality that accompanied it, was driven by very low pay rises for temporary workers in service sectors such as retailing. Wage data toward the end of last year, as featured in Points of Return, showed that these were now the workers securing the best raises as employers struggled to fill vacancies. And it turns out that a massive 80% of wage growth in retailing takes place in January.
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
What will happen? The latest consumer sentiment survey from the Conference Board suggests that the workforce is feeling bearish. It asks a question on whether people expect their income to increase, and the diffusion index built from the results is falling. The following chart, compiled by Steve Blitz, chief U.S. economist for T.S. Lombard, shows that income index proves to be a very good leading indicator for subsequent wage growth, as tracked by the Atlanta Fed:
relates to Will the Fed Snap Back the Market Yo-Yo a Bit?
Nothing is set in stone, then. It’s reasonable to expect heavy upward pressure on wages, but it’s not a done deal. This could be 2022’s critical January Effect. And it will still be several weeks before we can get evidence of how wage settlements are going. There’s plenty of scope for surprises in either direction.
Survival Tips
Some things are just wonderful. One of them is baseball’s Hall of Fame. In the middle of winter it gives everyone the chance to have heated arguments over who belongs, citing ever more complicated baseball statistics. (And baseball statistics are, of course, much more interesting than financial data.) And occasionally they give us moments of joy.
John Authers' Points of Return
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Personally, I would have voted for Roger Clemens and Barry Bonds, on the basis that the evidence is that they had already amassed careers worthy of the Hall before they started enhancing their performance with drugs. I would also have voted for Curt Schilling, despite some very unpleasant behavior since his retirement, on the basis that his performance plainly make him worthier than other pitchers of his generation who have already been enshrined (such as Mike Mussina). Schilling and Clemens both gave me much pleasure when they wore Red Sox uniforms. But if only one player could be elected, as has happened this year, I am glad beyond telling that it was David Ortiz. There’s nothing rational about following sports; we do it because, ultimately, it makes us happy. The risk of disappointment makes the great moment all the better when they happen. And, outside of people I’ve actually met personally, I don’t think any human being has made me happier than David Ortiz. That baseball writers voted him in at the first attempt is almost enough to restore my faith in democracy. Gracias Papi.
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What Taleb Gets Wrong - and Right - About Bitcoin: Aaron Brown
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I am buying a bit here.
These are group of traders trained by Dennis Richard. They push the trend to limit before changing there directions. Still a trend following system group of traders.
Turtles are pushing it down, but it is way over sold, 7% rebound is coming near you.
They are turtles who keep selling this market. Market could drop more but I think TNA need breather here. It is from 114 to 52.25 today.
We hope to make revisit low and than move up nightly session taking care of it. So we are doing it in night session. Signal still on sell. We could close higher tomorrow or by end of the day. We are way over sold.
With current drop and going back up MM could show 16 to 32 % depending what Index they are comparing with. So signal is still on sell.
We hope to make revisit previous low and than move up. Doing it in nightly session.
We hope to make revisit low and than move up. With current drop and going back up MM could show 16 to 32 % depending what Index they are comparing with. So signal is still on sell.
Still long signal with all volatility.
Signal still long.
Short term still long.
Inflation is not easy money related it is supply related, Fed Chair has admitted it in his testimony in front of Senate hearing.
Supply will come back after March, so is inflation will start declining.
Rate hike could bring economy to slow down and that is the reason market is dropping.
Tomorrow Fed meeting is non event will be an excuse to run it after dropping it to Yesterday level or more.
Rate hike give tools to Fed so they could decrease rate again in 2023-2024. If they really wanted to curtail than they should have stopped QE, It shows they know it is not the culprit. Pundits don't want to say real danger is bringing recession.
This increase will put last nail in Democratic party rule. Biden should open USA for business otherwise he is losing both houses.
Omicron is non issue for vaccinated, people who dying are 92% are non vaccinated and mostly dying because of Delta virus. It is unfortunate but if SC is in favor than he should let it go like UK.
Just my 2 Cents.
SPY short term signal is go long, target is 462 and if taken than 467.
We clean up most of the longs, Now goal is 367, Short term signal is long now.
Short term signal becoming alive, Long term has some distance to cover. 78.27 is intended target.
Good luck and happy trading.
In a bear market grind is slow at end , rallies last only one to three days. In bull market pull back is fast and resume trend, this is 70 days old bear market. We will have fast and furious pull back rally due, my thinking is 451 area on SPY is support. I do not know future and I will never, so all I am saying is projections.
Markets makes money by going up and down, real move is very minor comparing to trading.
I think they would like to cross 70 at least on TNA before option expiration.
Good trade. You could use same money to buy max time call I do some time.
Well it hit my intended low, 451.46. Let's if we have any desire to go up here. There are only sellers no buyers. Imbalance was 1 Billion shares at closing.
Could it be capitulation?
Farooq
Today TNA filled old Gap but no rebound.
Buy puts and hold common or buy calls and sell out common, it is little insurance but worth every Penney.
Signal solid on sell , they are slaughtering small caps, may be due to some meme stocks getting punished.
I bought some but not happy so far. Tomorrow can be very bad day with last minute selling of 1 Billion shares imbalance.
You are welcome.
For what price?
Move calculation was for GDXU, based on weekly.
Thanks for sharing your thoughts and work.
Next SPY move could pull back at 461.85 if today is the low, but low inflation number could take it to 470.35 by First week of February. Low was supposed to be 451.50 area and in this case high would be 461.88. for current OE.
Just sharing my thoughts and projections.
I was wrong many times and I will be in future also so take it with grain of salt.
Both attacking upper BB, Could break out for 20% gain, it could be last hurrah also, in higher interest rate environment gold usually don't shine.
Nothing drop straight so it should be zigzag keeping hope indicator alive. So bag holders do not panic. Follow the trend.
It is in bear market stay in QID. 310 area in QQQ is in play about 15 % more drop.
Signal for today totally proven to be wrong with 9% Loss.
Except that bear market in Tech and Russell 2000 has started I could not figure out any other thing for drop. Fed is not supporting market so they think people will spend less but that can cause recession. It is supply based inflation so they should not interfere as they have no tools to correct this problem and they admit it in testimony.
Market has no liquidity, big player are step aside.
Selling at close is 90% bad omen for next days.
Signal is short but I am on sideline.
When market need to attract new buyers it often cross bullish averages only to drop more in few days. Yes it could be used but one need to be on toes to run out if things don't pan out.