IMO, if someone already bought ASHR they should hold (it’s way below NAV). Personally I buy fear so am waiting for another bloodbath before getting more.
so is everything closed in china for the next 4 days?
Yeah, everything shut down till Monday. But people will keep speculating on ASHR in NY of course.
http://www.hkex.com.hk/eng/market/sec_tradinfra/chinaconnect/Documents/2015_calendar.pdf
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anyone think that Sept 14 could be a black Monday?
I don’t think so as much. Rate hike / delay odds are split around 50/50. Nobody wants to get killed if things panic on a cut, but you’ve got equal chance things may take off if things hold steady. At this point I think people are sitting very carefully, a little unsure and just waiting to see. I alsowonder if China may have a package in the wings to support demand if the US raises rates and we see some form of demand response.
Of course it could. probly won’t, but it could.
It’s a FOMO market. People are scared crapless but even more scared of missing the bottom. I think this is going to continue for a while. There is no trend either way and the market remains very expensive. Everyone is waiting for the music to stop before unloading 6 years of gains all at once. But you can’t really sell here because the music might start up again and then you’ll look like an idiot. So whiplash. Expect mass herd stupidity to be the new normal.
This is one of those markets where people are going to look back and think, “I can’t believe how stupid that s–t was, what was everyone thinking?” after they lose a lot of money. That’s not a call for a collapse. There are pockets of the market that are wildly detached from reality circa 2007 and 1999 and yes, you can be certain that some people are going to lose vast fortunes. The market doesn’t need to fall much more from here for that to happen. It is a very lopsided and dysfunctional market where people were skating by with trend following algo strategies buying momentum garbage (Cyber security! Biotech! Loss making fast casual restaurants!) and that’s over now. Value has been broken for the last 3 years. Now no strategy is working well. Except my short book, that’s created widows and orphans.
Of course it could also be 1998 and this crap could go on for another year or two, but based on capital markets activity in the IPO and SEO markets, it’s probably close to over if not over already.
Oh, that’s good.
While some retail investors are clueless, I would think big money understands the situation, but they need to keep up with the benchmark (S&P500 for many). I’ve certainly bought the dip a couple times this year, but I try to keep my holding window very narrow, because it’s a game of hot potato. Thus lots of people going long volatility as a hedge when things get nasty, then they rush out and leverage into equities to catch the bounce, and VIX crashes at record speed.
People were caught off guard, but they will be ready for Sept17. So there will not be the surprise factor triggering stop loss orders and stuff, but nobody knows what they will do if it’s a rate hike.
… so we agree, everyone is guessing, no one knows, and the “buy the dip” crowd lacks any fundamental or technical justification for doing so, other than fear of missing out if the benchmark rips.
Agree, buy the dip “analysis” is as simple as “well, it used to be up there guys, and there must have been fairly valued, since this event has blown over, it must now go back up!”.
Thing is, those valuations were driven mostly by QE/ZIRP, so as that game ends, what is the new fair value?
Their new value is QE4. I’m going to run low net until the Fed announces it, and then it’s time to get 100% net long 3x levered noob grinder ETFs like the other guy.
^ LMAO, yeah that sounds like a plan…I think IB will give me 20X leverage on SPY.
Isn’t it the subsequent rates increase that is more concerning rather than the first one?
Well that is what one of our traders said this morning.
This summarized it well for me, Tepper is probably the only person I’ve heard that I agree with. You can’t be really net long. You can’t be net short. I’m running close to zero as well. If you look at it bottom up, the market is vastly more broken than people are discussing. About a 5th of the Russell has lost over 25% of its value this year and the majority of them are still not cheap IMO. Meanwhile, many of the top 10% performers are anywhere from 50-100% overvalued and are untouchable unless you are a swing trader or something (most of which are also getting killed these days). People seem to be missing the magnitude of how expensive this market is.
the stock market is very simple. i know my history and i know enough stats. so for me the key organ isnt the brain, its the stomach. everyone is fearful. everyone has a ton of cash. and everyone is expecting weak growth rates. so the surprise is to the upside.
infinity, your trader is right. i’ve seen stats on that. usually market goes up after a rate hike at least for the first 18 months. btw, rates have not even risen yet.
No matter how expensive a market is, there are always a bunch of people in expensive suits arguing that it’s actually just a new normal.
And yes, a single interest rate hike is unlikely to do all that much (though it’s likely to be more effective than the same bump elsewhere, given how close we are to 0). It’s more the sense that more hikes are really coming… she really pulled the trigger. And that will change how many people think and act.
With subprime, we didn’t wait for all the ARM loan defaults to happen, after the first batch we priced in all the rest.
The difference here, when we price in ‘all the rest’, we don’t think Yellen can really go that high right? Say 1%, maybe 1.5% peak?? For fixed income I can run a rate shock using duration, and take a guess where things might land. With equities, I’ve got no clue. Lower I would think!
great point Bro. The breadth of stocks trending upward has been decimated of late.
And the VIX term structure is still pointing to higher volatility in the future. (This is based on my very retail research method of comparing $VIX to $VXX and $VXZ, am I wrong?) This supports my thesis for another major down day. I still think Sept 14 is setting up for that