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COT Reports & Weekly Market Calendar – September 18th, 2015

COT Reports: If you are not familiar, the Commitments of Traders (COT) reports provide a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions. In other words, it gives us a preview of what commercial interests are buying or selling. As the theory goes, we want to be on the same side of the trade as the big guys.

While not a good timing tool, currencies, commodities and the stock market (to a lesser extent) tend to move in the direction of the bets made by the commercial players. Not always, but often enough.

Latest data, as of September 8th, 2015

Currencies: 

  • USD:  1K Long Vs. 68K Short – Slight increase in net short position. Substantial short interest remains.
  • Canadian Dollar: 70K Long Vs. 4K Short – Slight net decrease in commercials net long position. Significant long interest remains.
  • British Pound: 84K Long Vs. 8K Short – Slight increase in net long interest. British pound is now bullish.
  • Japanese Yen: 125K Long Vs. 101K Short – Substantial net increase in short interest. Japanese Yen is now neutral.
  • Euro: 134K Long Vs. 55K Short – Slight increase in net long exposure. Significant long position remains. No changes.
  • Australian Dollar: 140K Long Vs. 1K Short-  Slight increase in net long position. Significant long position remains.

Conclusion: Based on the information above, commercial interests expect the US Dollar to decline while Canadian Dollar, British Pound, Euro and Australian Dollar rally. Japanese Yen is now net neutral. 

Markets/Commodities/Volatility: 

  • E-Mini S&P 500: 596K Long Vs. 485K Short – Net neutral position remains. Commercials took profit after later August sell-off.
  • VIX: 49K Long Vs. 87K Short – Slight increase in net short position. Still net neutral.  Commercials took profit after late August sell-off.
  • Gold: 69K Long Vs. 65K Short – Slight increase in net long exposure. Still neutral.

Conclusion: Based on the information above, commercial interests are now net neutral. This is consistent with the market remaining in a tight, relatively speaking, trading range. Gold is likely to remain within its trading range. 

Next Week’s Market Calendar: 

  • Tuesday: Retail Sales
  • Wednesday: Consumer Price Index
  • Thursday: FED Interest Rate Decision 

Z30

COT Reports & Weekly Market Calendar – September 8th, 2015 Google

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Which Way Will The Market Flow?

Daily Chart September 10 InvestWithAlex

9/10/2015 – A positive day with the Dow Jones up 78 points (+0.48%) and the Nasdaq up 40 points (+0.84%) 

Billionaire hedge fund manager David Tepper has quite a few things to say about the market. To watch the video, Click Here 

Tepper: Every dip should be bought, but that is no longer happening. If the market has reversed, then every rally should be sold. I am not sure which way the river is flowing right now. Nobody knows, hence the volatility.

My Comment: I did my best to outline on this blog, over the last 12 months, exactly where this river is flowing. Things like NYSE, largest index by capitalization, distributing for over a year. Us being stuck in a tight trading range on the Dow. The 5 year bull market cycle terminating. Interest rates, QE, the FED, etc…. The fact that all secular bear markets, including this one of 2000-2017, terminate in a 2-3 bear market. I don’t know about you, but I think its fairly clear where the river is flowing.

Tepper: I am not a bull, but I can’t call myself a bear. I have problems with earnings growth and problems with multiples.  Take cash off the table.

My Comment: That’s quite a statement from a permabull like David Tepper. If he is starting to turn bearish, it won’t be long before a 10% correction turns into 20….30….40% correction as most bulls begin to sell everything in sight. Most likely at a fairly fast pace.

And as Tepper, I have quite a few problems with growth and multiples. Particularly, that most of the growth (or speculation) has been driven by zero interest rates and QE. All while valuation are at historic bubble level highs. They will come crashing down together, just as they perpetuated each other on the way up.

Tepper: Market should correct, but no one is talking about a crash here. No one knows what that level of correction might be….10-20% corrections should be normal and I would probably be a buyer.

My comment: Maybe they should. That is, talk about the possibility of a crash here. I am certainly talking about it. There were only a few times in our history that we have been as mispriced as we are today. To be exact, in 1929 and 2000 (more so on the Nasdaq). We all know what happened. Why is it impossible to believe that the market readjusts itself in a violent fashion once again? Did you see what has transpired just three weeks ago?

If you have already forgotten, 2.5 years worth of capital gains (on the Dow) were wiped out in 7 trading hours. Beware, this could continue on a much bigger scale.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 10th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Which Way Will The Market Flow? Google

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Is Russia About To Annihilate ISIS?

putin-plane

My mother lives in a very nice and safe suburban neighborhood in San Diego. Yet, she is terrified of terrorists and ISIS. Thanks Fox News!!! I mostly laugh, but it is indicative of how insane most things are in this day and age.

For close to two years I have maintained that the New Cold War has started and that Russia will retaliate for Ukraine. It appears that Mr. Putin is finally ready to make his move.

U.S. warns Russia on military buildup in Syria

John Kerry was overheard saying: “God damn commies, who do they think they are? Only the US is allowed to destabilize the region and bomb the crap out of a sovereign nation without the declaration of war”.

On a more serious note, if they really go after them, Russia will be able to wipe out ISIS and all associated terrorist parties (American backed “freedom fighters” on Monday and just regular terrorist by Friday) within a few months. That should stabilize the region and stop the humanitarian/refugee disaster we are all witnessing today.

And the downside?

The profitability of American Industrial Military complex is likely to decline. There is no money in dropping expensive bombs in the middle of nowhere if there is no “perceived” threat. At least not until the next hot spot is re-ignited. Your move Mr. Obama. Tell us all again how Russia will destabilize that region, if that is even possible, and up the ante on our path to war with Russia.

z32

Is Russia About To Annihilate ISIS?  Google

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I’ll Have What They Are Having

EconomistsMessedUp

You know that a bear market is just getting started when you see something like this…..The U.S. Economy Is Just Starting to Tap Into a Big Source of Dry Powder

There’s a big reason to believe that the U.S. economy will be able to withstand the start of the Fed tightening cycle: There’s still plenty of pent up activity in the housing sector. And it’s hard to see the U.S. economy running out of steam with this much upside left in residential investment, according to some economists and analysts.  Going back to the 1940s, the U.S. central bank has never embarked upon a tightening phase with housing having so much room to run to the upside.

Room to the upside? Have they heard the phrase “blow off top” and/or “dead cat bounce”. That is exactly where real estate is today. The primary top was reached in 2006, we are now putting in a secondary top. There is nothing fundamentally good with housing being unaffordable. Which is the situation today.

“Business cycle expansions are likely when residential investment is low as a share of GDP,” wrote Doyle. “Recessions typically only transpire when residential investment becomes elevated as a share of GDP.”

What? First, this is utter nonsense. Second, someone forgot to tell this guy that most of the FED’s stimulus went into the stock market and share buybacks this time around. Not towards any sort of productive GDP growth.

“What is interesting about this is that the housing market is accelerating at a time when the labor market is near full employment,” he said. He suggested that any shortage of construction workers could be remedied by displaced mining employees and higher wages to attract additional labor.

You see, anyway you twist it, it comes up roses. All of those displaced $100K+ oil patch workers can move to San Francisco to build houses for all of those Uber millionaires. That will surely cause our GDP growth to skyrocket.

Dutta concurred with the demographic support for construction activity, pointing out that children born in the 1980s, when the birth rate was climbing, will make up the next batch of first-time homebuyers. He also noted that cyclical forces, such as easing lending standards and rising homebuilder confidence, buoy the outlook for the sector. “Bad things do not happen to America when housing is moving up and to the right while Americans are finding jobs,” said Dutta.

There is only one response to that. People did not believe the stock market can go down in 1929,1937, 1946,1972,1987, 2000, 2007, etc….. If anything, primary economic indicators were surging at the above dates. Yet, the market/economy turned around and proceeded to collapse with stunning speed. So much so that Mr. Dutta would be better off studying blow off tops.

That is to say, I’ll have what they are having.

z33

I’ll Have What They Are Having  Google

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Silicon Valley’s Illiquid Bubble Cracks Begin To Widen

Daily Chart September 9 InvestWithAlex

9/9/2015 – A down day with the Dow Jones down 237 points (-1.44%) and the Nasdaq down 55 points (-1.15%) 

Today, most investors in the stock market subscribe to the “Buy The Dip” mentality. After all, it has worked for close to 7 years and there is no apparent need to change. Now, the same mentality is making an appearance in Silicon Valley.

Silicon Valley feels the aftershocks of Wall Street’s turbulence

“For venture capital investors, it’s a great opportunity to pick up some interesting assets on the startup side,” he said. “As an example, in 2008, 2009 downturn, we made investments in companies such as New Relic (NEWR), Zulily (ZU), T-Mobile (TMUS), all of whom have gone public and they were terrific investments for us, all made during the downturn.”

That sounds wonderful, but there is one big problem. Thus far, the Dow has corrected 16% off of its May 19th top. Between 2007-2009 the Dow declined 55%. Most of the high flying tech stocks and illiquid start-ups proceeded to collapse to the tune of 80-95% at the same time.

I am confused, did Uber’s valuation collapse over the last few weeks? 

And since the answer is no, I continue to maintain my view. Mark Cuban is dead on in identifying Silicon Valley’s Tech Bubble 2.0: Why This Tech Bubble is Worse Than the Tech Bubble of 2000.  At the end of the day, Silicon Valley has about as mush liquidity as California’s dried up reservoirs. Something that Angel investors, venture capitalists and stock option millionaires are about to find out.

How big is this bubble? Consider the following. Uber’s valuation went from $60 Million in 2011 to $50 Billion today(not a typo).  They must be making a ton of money…..right?WRONG. Bloomberg estimates that Uber showed $470 million in operating losses with $415 million in revenue last year. Plus, the company was set a major legal blow in California by requiring their drivers to be classified as employees. And as far as I am concerned, it is just a matter of time before other states and countries regulate Uber out of business to protect taxi drivers.

In other words, the valuation above is not only outrageous, it is, how should I put it, retardedly outrageous.

Back to Mark Cuban. It is now evident that most market pundits out there are dismissing Mark’s view. And while Mark talks about Angel Investors and illiquidity in that market, his analysis can just as easily be applied to today’s stock market. More about that in a second.

First, here is what most people don’t realize about Mark Cuban. After selling his first business Mark became a heck of a trader and investor in the 1990’s. His returns were so good at the time that Goldman Sachs tried to bring him in order to figure out what he was doing. This same ability helped him unload Broadcast.com for $5.7 Billion to Yahoo right at the top of the tech bubble. Here is what he thinks.

I have absolutely not doubt in my mind that most of these individual Angels and crowd funders are currently under water in their investments. Absolutely none. I say most. The percentage could be higher. Why? Because there is ZERO liquidity for any of those investments. None. Zero. Zip.

So why is this bubble far worse than the tech bubble of 2000 ?

Because the only thing worse than a market with collapsing valuations is a market with no valuations and no liquidity. If stock in a company is worth what somebody will pay for it, what is the stock of a company worth when there is no place to sell it ?

We often talk about the stock market, but we rarely look at this side of the equation. Mark is absolutely right. If you are an Angel Investors, good luck getting your money out. Especially when today’s Silicon Valley’s bubble bursts. Plus, the chances of hitting a good exit in tech are about as good as winning a lottery.

What’s more, the bubble Mark Cuban has identified in the tech industry is the same bubble I see in the stock market. The drivers behind both are the same. The only difference is the amount of liquidity available.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. September 9th, 2015  InvestWithAlex.com

Did you enjoy this article? If so, please share our blog with your friends as we try to get traction. Gratitude!!!

Silicon Valley’s Illiquid Bubble Cracks Begin To Widen  Google

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An Interesting Market Fact

1-b

I am following this development with great interest as I have never seen anything like this before. At the very least, I don’t recall seeing this before.  The market has opened with either a massive up or down gap, 9 out of the last 10 trading days.

Further, we have had a substantial gap, up or down, in all of the last 7 trading days. In 6 of those instances, the market completed 75-80% of its entire daily move in the aftermarket. And unless you trade futures, it is very difficult to take a position.

What does any of that mean?

A few things. First, we are definitely operating at a higher energy level. Second, this is a very dangerous market. And whether you are long or short, your profitable position can be very easily retraced by the time we open the following day. Finally, short-term trading positions are unlikely to work if such an environment continues. In other words, it would be wise to pick a long-term directional move here and stick with it.

Just make sure you get the direction right.

Z31

An Interesting Market Fact  Google

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Is A Bear Market Impossible Without The FED Tightening?

At lease that is the argument made by the fellow in the video below. And he is right. Most of the previous bear markets have been ushered in by the FED tightening. For instance, 2000 and 2007 bear legs are a good example.

With that in mind, it is really different this time. The stakes are much higher. The FED has maxed out its capability to wage war on recession through QE and keeping interest rates at zero over the last 8 years. We now live in the world where a fear of a laughable 25 bps rate hike can send the Dow down 2,000 points in 2 trading days. Plus, when the economists begin to warn that the health of the World Economy is dependent on the FED not raising interest rates, Fed should wait with raising rates: World Bank economist, we are in trouble. Bit time.

In other words, don’t for a second think that we are in a normal business cycle or macro environment here. We are not. The FED went all in. The only question is……will the bet pay off or will this house of cards come crashing down……fast? We should know soon.

Z30

Is A Bear Market Impossible Without FED Tightening? Google