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Old 02-06-2018, 05:01 AM   #46
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Originally Posted by Parkview_Pirate View Post
Plenty of factors at work, including the rate hikes which still probably aren't priced in. Yesterday's sell off reminds me a bit of the market tantrums back in 2012 when rate hikes were discussed - perhaps a message for the new Fed Chair Powell?

Definitely had to be some margin calls too, and now some speculators will be left high and dry by their brokerages. If the dollar actually strengthens during the next big flush, things could crash pretty quickly. It only moved up a buck the last three trading days from 88.44 to 89.48. What's the market do if it goes back to 100?
Another factor I use from Martin Zweig is called "Installment Debt Non-Seasonally Adjusted".

You buy when it is falling and drops below 9%.

You sell when it is rising and exceeds 9%.

It jumped from 7% to 12% last November. That might have been a foreshadowing of what was ahead.

With the rate hikes it is now getting more expensive to service the debt. Think about all the people who have adjustable rate mortgages. Their mortgage payments are increasing.

Some people may need to sell stocks in order to have cash to pay bills. Or they are just taking some profits and will use it to pay down debt.
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Old 02-06-2018, 08:54 AM   #47
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It jumped from 7% to 12% last November. That might have been a foreshadowing of what was ahead.
If you started selling last November, you'd still be way under water, even after the moves of recent days...
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Old 02-06-2018, 09:48 AM   #48
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Monster bounce again on the open after a head fake lower. 16 mins in, and S&P up 39, and looking to go higher. Very thin stack. Would be ballsy to be in now, short or long. VIX falling to 24.

More thoughts from KD. In short, he says this is not the crash, but the setup for it. His thoughts on bitcoin - it's a zero.

http://market-ticker.org/cgi-ticker/...ww?post=232925
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Old 02-06-2018, 09:59 AM   #49
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Another factor I use from Martin Zweig is called "Installment Debt Non-Seasonally Adjusted".

You buy when it is falling and drops below 9%.

You sell when it is rising and exceeds 9%.

It jumped from 7% to 12% last November. That might have been a foreshadowing of what was ahead.

With the rate hikes it is now getting more expensive to service the debt. Think about all the people who have adjustable rate mortgages. Their mortgage payments are increasing.

Some people may need to sell stocks in order to have cash to pay bills. Or they are just taking some profits and will use it to pay down debt.
The massive amount of 'bad' debt is beyond comprehension. Bad in the sense it will never get paid. It's really hard to get a handle on how much there is, since the mark-to-market rules are so lax.

Wow. Quite the pop to 2680, but already 20 points off that. Dollar is up sharply, so wouldn't be too surprised to see the S&P settle back near 2620. But I ain't tradin' that. So thin right now.

Looks like it'll be jumpy for a while yet.
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Old 02-06-2018, 10:16 AM   #50
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People who aren't used to this kind of action must be bug-eyed right about now.

30 point S&P moves in 5 minutes...love this stuff...just wish I would get a trading signal one of these days...
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Old 02-06-2018, 10:21 AM   #51
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People who aren't used to this kind of action must be bug-eyed right about now.

30 point S&P moves in 5 minutes...love this stuff...just wish I would get a trading signal one of these days...
The only signal I'm seeing is "STAY AWAY". Vix spiking above 32 now.
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Old 02-06-2018, 10:56 AM   #52
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Some XIV fund (i.e., a fund for people short volatility) folded up its tent and closed shop. Basically lost 85% of its value in 3 days.
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Old 02-06-2018, 11:00 AM   #53
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Some XIV fund (i.e., a fund for people short volatility) folded up its tent and closed shop. Basically lost 85% of its value in 3 days.
I saw that...pretty shocking...it was at around $100 at the close yesterday....then after hours it dropped to around $16...and now it's pretty much dead.

This wasn't traded on some third-world-market exchange.

This was something that was traded on the NASDAQ....

Mind...blown...

https://www.cnbc.com/2018/02/06/the-...nt-plunge.html

And they say things like this can only happen in racing with the CRW teams wreaking havoc...

People will never learn.
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Old 02-06-2018, 11:30 AM   #54
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I saw that...pretty shocking...it was at around $100 at the close yesterday....then after hours it dropped to around $16...and now it's pretty much dead.

This wasn't traded on some third-world-market exchange.

This was something that was traded on the NASDAQ....

Mind...blown...

https://www.cnbc.com/2018/02/06/the-...nt-plunge.html

And they say things like this can only happen in racing with the CRW teams wreaking havoc...

People will never learn.
Truer words never spoken.
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Old 02-06-2018, 01:35 PM   #55
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Some XIV fund (i.e., a fund for people short volatility) folded up its tent and closed shop. Basically lost 85% of its value in 3 days.

you're too kind, more like 90% in 45 minutes AFTER HOURS no less. 2 billion gone.

and there were others too.

actually not a fund per se, but a leveraged bet on futures
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Old 02-06-2018, 02:10 PM   #56
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Thanks for the correction, Alton. Makes cryptocurrency speculation look conservative by comparison, not to mention playing the ponies.
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Old 02-06-2018, 06:34 PM   #57
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If you started selling last November, you'd still be way under water, even after the moves of recent days...
Good point. It is difficult to get the timing right.

Personally, I have been in a holding pattern for the past several months. That probably wasn't optimal. I probably missed some of the gains on the way up to the top, but I have 50% cash in reserve and can sleep well at night while I wait for a correction.
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Old 02-07-2018, 12:42 PM   #58
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I saw that...pretty shocking...it was at around $100 at the close yesterday....then after hours it dropped to around $16...and now it's pretty much dead.

This wasn't traded on some third-world-market exchange.

This was something that was traded on the NASDAQ....

Mind...blown...

https://www.cnbc.com/2018/02/06/the-...nt-plunge.html

And they say things like this can only happen in racing with the CRW teams wreaking havoc...

People will never learn.
The scary part of this story is thinking about all the other leveraged instruments now in play versus 2008. We thought it was bad enough with derivatives and CDOs, but now some of those "innovative" snow jobs are disguised as legitimate stocks/ETFs.

Just ask this guy what he thinks, with 2.5YRs and almost $4M down the drain:

https://www.zerohedge.com/news/2018-...digging-deeper

At least he owned up to it. That's what being greedy can do.

The thing I learned about this week's plunge was that liquidity dries up quickly, and you can't rely on brokerages. Somehow got my S&P 2500 put sold yesterday at the open on OptionsHouse for $77, while watching the bid fall and fall as the bounce took off - but the confirmation was delayed 5 minutes allowing me to panic and curse. That put closed yesterday around $26, and is half that today. Gotta be quick, and it probably pays to put the order in off hours when things aren't so jammed....

I've come full circle now on the market. Back in 2008 I thought it would crash and end the world, by 2013 I thought the FED had enough salt to see a slower grind down on a useful pullback. Now I'm convinced a crash is what we'll see, and the aftermath won't be pretty.
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Old 02-07-2018, 08:22 PM   #59
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The Credit Suisse ETN that folded had returned 46% annually since 2010 before imploding Monday. Both Barron’s and Seeking Alpha had articles over the last several months noting how crowded the “short volatility” trade had become and how many retail investors had been lulled by 8 years of steadily lowering volatility into thinking this was easy money.

One of the authors had described the trade as “picking up pennies in front of a bulldozer”.
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Old 02-07-2018, 11:53 PM   #60
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EVERYONE knew the low volatility trade would blow up at some point.

Exactly when is always the issue. I'm sure there were quite a few false starts , that if you put on a bet, you would have lost big money.

And by the time it really hits the fan , everyone except a very few are gun shy.

No one said it was easy.


That said, those that got carried out, are no better than the guy who runs $2 to $20,000 and then blows it all on the last race.

They may even be worse. In one day at the track, you can get caught up in the excitement of the moment, "vol" sellers had YEARS to get smart. I assume many did and only a few greedy types blew up.

So much for Yahoo Finance who has this as the XIV data two days later

Net Assets 1.86B
NAV 123.93


Todays close is 5.95, give or take a dime

Last edited by AltonKelsey; 02-07-2018 at 11:57 PM.
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