• Comments for May 9, 2017

     
    2 Comments Comments
    Yesterday, Treasuries dropped as US rates increased.






    Buffett dragged more institutional buyers into AAPL.



    Below is the Mammoth sector. The top panel is the Money Flow without AAPL, while the second panel shows the same but with AAPL.



    On top of that, Indexers continued chasing SPY/QQQ,





    feeding on a weak Yen to get access to cheap money.



    This resulted in a flat S&P500, which is an indication that the whole market is riding a gigantic bubble pulled by AAPL and fed by a cheap Yen.

    Small caps continue to underperform and can be shorted on spikes.



    Here are a few short ideas.



    Conclusions:

    When the whole market follows Warren and I read that AAPL will be a 1T$ company by year end, then I know that sheeps are probably being guided to the forever green pastures.
    Comments 2 Comments
    1. NickCivit's Avatar
      Great analogy Pascal I think it's time to start tightening stops.
      Reply
    1. Pascal's Avatar
      I believe that the major issue of this market is the indiscriminate buying, which makes price discovery a thing of the deep past.

      You can see below that the daily price changes on the S&P500 are now about 0.3% (on an average base for the past 50 days.) This is because of index investing and probably buying from the BOJ. In other words: money printing. This 0.3% is lower than any past period.

      This tells us that money printing finds it hard to push assets higher, most probably because high valuations attract selling. In such a condition, the strategy that makes sense is either to be in cash or to be short using long dated index puts.



      Pascal

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