Posts Tagged ‘ S&P 500 valuation ’

Complacent Market; Fraught with Risk

October 28, 2016
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Complacent Market; Fraught with Risk

In a shockingly flat stretch, noteworthy for the lack of volatility, and an incredibly tight range, the market has gone absolutely NOWHERE from July to October. 20-30 basis point moves feel outsized, even though they are not, in any sort of historical context. On days when the market goes up, the VIX falls to a 12-handle. Almost each and every session, the tape is “heavy” for some sort of “reason”, at some point in the morning, only to “rip” violently, for no apparent reason, undoing any meaningful move down. It’s been torturous for traders, the market is very expensive, the economy is late-cycle, yet the market can’t go down meaningfully for any reason. CJF believes that in a period of light volumes, algorithmic trading is increasingly dominating market action,...

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No Man’s Land

October 5, 2016
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No Man’s Land

an anomalous, ambiguous, or indefinite area especially of operation, application, or jurisdiction definition two: financial market direction over the 2015-2016 period The meandering, low-volatility, sine wave oscillations of the tape continue. How did markets arrive at a point where a 3% pull-back is petrifying, and a 5% pull-back feels like a crash? The Brexit pull-back in June, was just about 5% on the nose, but it lasted only 2-days. Policy maker support of markets , vis-a-vis central bank actions, and ultra-low interest rates, stumble upon the end of the rainbow. Now what? The pressure on the Fed to assert its independence from politics, specifically the democratic party, is rising. Last week, Janet Yellen short circuited (in this clip) when confronted by Representative Scott Garrett of New Jersey. Donald Trump,...

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Big in Japan; Can the Fed trump the BOJ?

September 21, 2016
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Big in Japan; Can the Fed trump the BOJ?

VIX back to the 15 range ahead of a consequential Fed meeting, deep into the economic cycle. Volatility crush continues into actual central bank announcements. Zombie US markets can’t go down but can’t rally either. After recent, underwhelming ECB announcements, markets sense more to come from the Fed, yet a gasping sense reigns omnipresent. What, actually, can the Fed do? After a litany of hawkish babble, commentary, from Fed governors this month, indicating the potential for two rate hikes. Can the expectation fall all the way to zero hikes in 2016? Just on an employment report that missed by 20,000 jobs? It seems that getting expectations down to no hikes in 2016 is the only way to deliver a “dovish surprise”. In this context, market action will be difficult to predict at 2:00...

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