End-of-World or Options?

You’d be an idiot to use this morning’s drop at the open to claim victory for the doom and loon crowd.

But then again, no shortage of doomers on the net trying to cash in and make a buck on the same quirk of human nature that will back a freeway up for 20-miles over a fender-bender.

Yeah, that’s right:  lookers and gawkers, loose-lip talker and doom stalkers all have this quirk and it’s part of the programming of Americans who watch too much television, have allowed high information density to substitute for clear thinking, and all the rest.

If you’re not spending at least two hours a day, completely media-free, you are snagged in their great psychological experiment as an unwitting victim.  Turn off the noise.  Center.  Think.  Quiet the mind.

That said, yes the market may decline from sometime late this month to after the September Fed meeting, but the reason for the drop-kick out of the bucket this morning will comes down to two simple economic realities.

1.  The Calendar

You no doubt have already bookmarked the Options Clearing website’s calendar over here, but in case not, it explains a lot of market monkey-motion.

Go ahead, take a look:  Today is index option expiration and tomorrow will be equities option expiration.

Now, suppose you are a big trader and need a little summer scratch to rent a joint in The Hamptons for a couple of weeks.  You know – like that little $100,000 for two week rental that the mindless wiper got.  How would you go about it?

Well, you would collapse index options as far as you could (say down 100-150 on the Dow, or more) today.

Then, tomorrow, when you actually need to deliver the equities (in the index) you would run things back up, pocket the spread, and maybe go up to the park at Montauk as long as you’re that close, anyway.

So much for reality #1.  It’s note quite that simple (more people are involved, but that’s how the mechanics distill down in simplified terms, the only kind I can deal with at this god-awful hour.

2.  Doomsayers have large market shares.

Being a realist, and working both sides of the street , doesn’t make anyone a pile of money (except they do OK in their own accounts).  But the doomsayers do really well, though most of them make more money scaring subscriptions out of people than they make trading.

Still, here are two reality checks that I use to get a sense of where markets are.

The first is a chart of the gold ETF GLD compared with the S&P 500.  As you can see by the chart, either a) gold has more downside ahead or b) the S&P could rise a fair bit.

Second is the price of Bitcoins is back down to $235 this morning and I have yet to read any doomster apologizing for poor advice when they were screaming “to the moon” for Bitcoins when they were at $800.  I will match my February 2014 analysis of Bitcoin (and the follow-on in September of last year where I explained “demand crumple”) with any of the Bitcoin hype that was wasted your personal bandwidth.

Sure, the doom promoters will tell you how Bitcoing ATMs are going into Greece.  It’s all true. 

But how many of them will tell you (as Paul Harvey used to say) The Rest of the Story?

The rest is that Greeks (with an Onassis exception or two) aren’t particularly good at finance.  The Greeks have just been scammed out of owning their own central bank by the megalomaniacs of the ECB for a paltry $10-billion and some paper.  A country dumb enough to sell its financial autonomy down the road that cheap will put in anything including Pachinko machines, if it will put a meal on the table.

The deal for the ECB is roll-ups of central banks and if this means bringing in hordes of Muslim immigrants from Africa to pad and distract, well, WTF?  Right.  Jeez people are blind.

When I tell you that “End of the World” is not coming until the end of 2016 at the very earliest and more likely 2017 mid year more likely, I am deadly serious.

A long-time reader who’s a  real deal fixed income trader sent me a note yesterday explaining in some detail how I might be wrong on the Fed raising in September and how QE4 could be the real plan instead.

Bingo!  I love smart readers!

But later on this morning (when I acknowledge he’s right and the bonds do tend to lead and the TNX ain’t exactly heading skyward yet, which does hint more toward QE-4) the trading fact of the matter is that QE4 or Hike (sounds like a football huddle, doesn’t it?) we hard core realists will likely skin a few more shekels from the doom-screamers.

I should be thanking them, I ‘spose.

imageOh, they might be right.  As asteroid could land in the Pacific in the next 2 1/2 minutes and we get a global coastal event, and the brightly colored charts may become real, but in my work, there is a semi-cyclical pulse to the market that we don’t talk about outside of Peoplenomics.com very often.

So while we expect the Big German Bank Blowup to be a major story at the end of 2016, the end of the world seems more likely after we complete an irregular high flat IV and finish super cycle V up.   

That final up thrust may turn out to be a truncated V…but the doomers who pointed out x-teen Hindenburg Omens wrong and have failed to mention the Baltic Dry Index is holding over 1,000 may be guilty of cherry-picking the bad news in order to sell something.  We don’t do that.

Singular aberrations is not what matters in markets like this.  What matters most is the holistic approach.  And I’ve been in cash now for what, seven weeks, is it? It’s all about the numbers and the preponderance of those those, not a cherry-picked number of the day. I get one for scare-mail from a ‘former CIA analyst” and I’m gonna puke.

Come 2016 (late) or 2017 and maybe as late as 2018, if you want to come view the dust bunnies under the bed, the rest of us who try get things right ahead of time will see if there’s room for you.

Dow futures are down 125 but like I said, the deal today is options, and if we bounce tomorrow (or a bigger drop, depending on how commercials play it) then gee, don’t look surprised.

The facts of the day are simple as ever:

  • The Democrats not longer have a leading candidate, not when SHE ain’t fessing up on the emails and phones and is off at a $50,000/week vacation home.  Of the people my butt.  Aristos at play.
  • The economy is flat lined (more details in Peoplenomics this weekend, but retail sales data doesn’t discount for the huge increase in Fed money printing)
  • And The Don looks like he’s getting more traction and as this becomes apparent (that he really might turn America around) then business confidence will grow and the lefty/socialists who call the shots through the mind-control “foundations net works” will get afraid that America might rediscover her greatness.

So look for lots of demonstrations and distractions while the battle writ large is played out.

From out in the East Texas Outback, the world still looks as insane as ever this morning, but if you’d be more comfortable with distractions, we will go back to that old crap tomorrow.

This morning, just some hard reality over the third cup.  It may not be what you want but it may be what you need.

Comments

End-of-World or Options? — 10 Comments

  1. If the FED is going to be the catalyst, then the banks will be the ones to watch. First week of October for market blast off, so says some simple channel work on the XLF. I would expect a large one or two day capitulation move down first. However, the rest of my work puts it towards the end of December.

  2. “we hard core realists will likely skin a few more shekels from the doom-screamers.” Those few more shekels you get will be as worthless as mine at the end of 2016/mid 17.

    • And THAT is exactly why Elaine and I moved to the sticks in 2003, have tight neighborhood relations, self sufficiency gear, bit the bullet on solar and share a ton of it all on the Peoplenomics.com site, the old UrbanSurvival site, and even a bit, though not recently on our http://www.ruralpioneers.com website. People we have to rerural and get real about total debtload vs. income – which is a whole big area no one else is talking about and then walking the talk. We been living the downscale ahead of time so the market going to 50% will not impact us much – if any. It really is gonna be worse than 1929, but I’ve written about it till I’m blue in the fingers since 1997 and now the “new kids” are playing like it’s their invention and gee aren’t they smart.
      ViseGrip me, bro I doubt any of them own a tractor, have pounded T-post, or all the real part of living rural away from the madness of crowds. 358 points is a hiccup. 3-thousand a day gets here (and it seems likely) then we will be talking about the neighborhood self defense and all the rest of what really matters. And how are people going to live when the social security bennies get whacked in half?>

  3. I just don’t believe the donald will actually make it to a primary. We have a second house near Atlantic City. The donald reminds me of the Tah Mehal, pretty and enourmous front, and a dirty, cluttered rear end.

  4. George: Your suggestion to spend at least two hours daily devoid of external programming [ie: media] is an excellent one. Unless, of course you spend even one single minute of that time pondering the importance of money – as I’m sure you do. Of course, since one of your life vocations centers around fiduciary prognostications it’s probably just a matter of your own personal conditioning to do so; however, in the process you have merely enslaved yourself to a different master. And, one that is illusory in the extreme.

    • Believe me, in my down time, I’m not worshipping the money god. If I did, I’d have a lot more of it, lol

  5. “Democrats not longer have a leading candidate”(SIC)…Hmmm, you don’t have a lot of faith in the propaganda unit do you? Being the ‘money queen’, I wouldn’t count her down and out quite yet. Bushco lied and was caught at it how many times? He and his were re-elected…same for ObamaCorp, and he’s still got a following.
    “The economy is flat lined”…true enough, but the propaganda machine has people believing it’s hale and getting hardier…regardless the price of chicken now.
    “lefty/socialists who call the shots”…Ahhh yes, the evil ‘socialists’..the enemy of capitalism. I guess if all ones’ focus on is Soros, one could offer said assessment…at least from a neocon/Fox perspective. How that assessment works with his backing fascists in Ukraine and the likes of Koch Bros ‘foundations’, I have no idea. Personally, I equate them with the Zionist/PNAC agenda of privatization and writing of Corpgov policy/law to the detriment of all, except them of course. How that equates to socialism and not fascism, ???? Of course the Don, “he really might turn America around” myth…yeah, over his(and anyone else’)dead body…unless he’s just another Trojan Horse whose usefulness they figure has finally come. If Perot could be buffaloed, then where does that put ‘the hair’? Sorry, but he just doesn’t strike me as someone of great personal courage. I think he’d fold up like a cardboard box.

    • I know too many people who have made serious money in real estate – they don’t fold on nothing

  6. worth $4 of my $40 subscription alone!
    Being a realist, and working both sides of the street , doesn’t make anyone a pile of money (except they do OK in their own accounts). But the doomsayers do really well, though most of them make more money scaring subscriptions out of people than they make trading.

  7. George, alful testy this morning.most of us are with you. This change were going through is like a woman having child birth. The pain starts out slowing and then increases until birth..unless someone steps on the gas and gives her pitocin.