Posts Tagged ‘perfect storm’

Did a Big Bet Help Trigger ‘Black Swan’ Stock Swoon?

I wouldn’t call this a "black swan" event any more than Jon Stewart would call it a "perfect storm." Felix Salmon - it’s a silly theory – Nassim Taleb Didn’t Cause the Crash makes a better argument below. – Ilene  

Did a Big Bet Help Trigger ‘Black Swan’ Stock Swoon?

Red Bull Air Race Perth - Training Day

By SCOTT PATTERSON And TOM LAURICELLAWSJ

Shortly after 2:15 p.m. Eastern time on Thursday, hedge fund Universa Investments LP placed a big bet in the Chicago options trading pits that stocks would continue their sharp declines.

On any other day, this $7.5 million trade for 50,000 options contracts might have briefly hurt stock prices, though not caused much of a ripple. But coming on a day when all varieties of financial markets were deeply unsettled, the trade may have played a key role in the stock-market collapse just 20 minutes later.

The trade by Universa, a hedge fund advised by Nassim Taleb, author of "Black Swan: The Impact of the Highly Improbable," led traders on the other side of the transaction—including Barclays Capital, the brokerage arm of British bank Barclays PLC—to do their own selling to offset some of the risk, according to traders in Chicago.

Then, as the market fell, those declines are likely to have forced even more "hedging" sales, creating a tsunami of pressure that spread to nearly all parts of the market.

The tidal wave of selling fed into a market already on edge about the economy in Europe. As the selling spread, a blast of orders appears to have jarred the flow of data going into brokerage firms, such as Barclays Capital, according to people familiar with the matter…

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Nassim Taleb Didn’t Cause the Crash

By Felix Salmon

Of all the silly theories about the cause of Thursday’s stock-market plunge, I’m not entirely sure why the WSJ has decided to give particular credence to the idea that it can all be traced back to a single $7.5 million trade for 50,000 options contracts. Lots of options trades of that size take place every day, and just because this one happened just before the market fell doesn’t mean it was the cause of the crash.

It’s becoming increasingly clear that the crash was fundamentally the fault of weak market structures, especially in the smaller electronic exchanges. It wasn’t a fat finger, it wasn’t cyberterrorism, it wasn’t the sale of 16 billion


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Jon Stewart on the Flash Crash

Jon Stewart on the Flash Crash

Courtesy of Josh M. Brown, The Reformed Broker 

The market plunged because of a "Perfect Storm"…one that happens about every two weeks.

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
A Nightmare on Wall Street
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

 


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Fed Watch: The Debate Continues

Fed Watch: The Debate Continues

Courtesy of Mark Thoma, referencing Tim Duy’s Fed Watch at Economist’s View

the debate continuesTim Duy looks at the shape of things to come:

The debate over the shape of the  recovery continues unabated.  Equities, at least this week, are voting in favor of the V-shaped recovery, with the Dow pushing past the 9,000 mark for the first time since January.  Never one to accept good news at face value, Nouriel Roubini predictably took the opposite position:

A “perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labor market could “blow the recovering world economy back into a double-dip recession,” he wrote in a research note today. “It is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented.”

 

Roubini, chairman of Roubini Global Economics and a professor at NYU’s Stern School of Business, predicted that the global economy will begin recovering near the end of 2009. The U.S. economy is likely to grow about 1 percent in the next two years, less than the 3 percent “trend,” he said.

 

Roubini based his short-term outlook on the worsening condition of the U.S. housing and labor markets, which he called “inextricably linked.” He said a “weak” job market will contribute to another 13 percent to 18 percent drop in house prices, bringing total declines nationally to as much as 45 percent from their peak.

I would add to Roubini’s pessimism that  bond market investors as of yet do not share the optimism of their brethren in the equity side of the industry.  The run up in yields that brought a 4-handle to the 10 year Treasury appears to have been stopped dead in its tracks, and that maturity has pulled back to the mid threes.  If the run-up in yields foreshadowed a burst of optimism in equities, the pull back would suggest that this rally has nearly run its


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Zero Hedge

Nomi Prins Warns Financial Crash From Epic Debt, Asset Bubbles "Possible In Last Quarter 2017"

Courtesy of ZeroHedge. View original post here.

Submitted by Mac Slavo via SHTFPlan.com,

Could there be a crash coming in 2017? Will increasing interest rates at the Federal Reserve trigger the beginning of the end?

It is possible, but not certain.

It will fall, perhaps, ...



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ValueWalk

Reading Capital 2016 Letter - Up 23%, Details Favorite Israeli Stocks

By VWArticles. Originally published at ValueWalk.

Reading Capital letter to investors for the year ended December 31, 2016.

2016 Hedge Fund Letters Q3 2016 Hedge Fund Letters

Dear Partners,

We have completed four full years of Reading Capital, and I must point out that I have not enjoyed my work so much, since I was an ice-cream salesman (and an avid taster) at the Penguin legendary creamery when I was sixteen. I thank you all for your partnership and trust. For 2016 Reading Capital produced an annual return of 22.5% (net of fees), against a decline of -2.5% in the Tel Aviv 100 index.

...



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Phil's Favorites

Trump's inaugural speech: Is it morning or mourning in America?

 

Trump's inaugural speech: Is it morning or mourning in America?

Courtesy of Christian Lundberg, University of North Carolina – Chapel Hill and Joshua Gunn, University of Texas at Austin

President Donald Trump’s inaugural speech – a brief address, which, at 1,433 words, was the shortest since President Carter’s – combined his trademark combative populism with shades of Ronald Reagan.

Though sprinkled with calls for unity, it also relied upon creating a sharp divide between his self-declared &ldq...



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Chart School

Can the latest rally in the Dow Jones be trusted?

Courtesy of Read the Ticker.

After all 'bull traps', are called 'traps' for a reason! Just because price is higher does not mean it will be there for very long!

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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote...

..“The market always tells you what to do. It tells you: Get in. Get out. Move your stop. Close out. Stay neutral. Wait for a better chance. All these things the market is continua...



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Digital Currencies

Why A Bitcoin ETF May Not Be Coming Any Time Soon

Courtesy of ZeroHedge. View original post here.

When it comes to the future of bitcoin, the "holy grail" has emerged as becoming the first to have a bitcoin ETF approved by the SEC.

Over three years ago, in 2013, the company of the Winklevoss twins, Cameron and Tyler, Winklevoss Capital Management LLC, launched the first proposed bitcoin ETF, the Winklevoss Investment Trust, looking to trade on the HFT-dominated BATS exchange. The SEC is expected to make a decision on it by March. A second group, SolidX Partners followed last July seeking SEC approval for its bitcoin ETF, SolidX Bitcoin Trust, which also would be listed on the NYSE....



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Big Oil May Finally Get to Drill in the Arctic, But Is It Worth It? (Bloomberg)

Far above the Arctic Circle, one of the longest-running controversies in U.S. oil drilling is about to reignite.

Bouyed by Donald Trump’s election, Republicans are pushing to allow oil exploration in the Arctic National Wildlife Refuge, the frigid wilderness in northern Alaska that’s been a political battleground for drillers and conservationists for decades.

...



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Kimble Charting Solutions

Mr. President you want this to hold, says Joe Friday

Courtesy of Chris Kimble.

Consumer Confidence of late has continued to move higher, now reaching above the highs hit back in 2007. Long-Term S&P 500 returns are far below historical norms, when confidence is this high. We are not saying that high consumer confidence means the market is at a top!

Below is a look at the Advance/Decline line on a short-term basis.

CLICK ON CHART TO ENLARGE

Joe Friday Just The Facts; It could be important for support to hold, of this bearish rising wedge above.

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Members' Corner

How To Poop At Work?

Courtesy of Nattering Naybob.

Once again it's "in the Toilet Thursday" or "Thursday's in the Loo". 

In our last episode, How to Poop On A Date? we were graced with a delicate shituation: what ever to do when your finally back at her place, snuggling in for a little "brown chicken brown cow" and you get hit with "Love Potion #2".

This week in How to Poop At Work? ,what to do when your at a big fancy pants meeting, when out of nowhere, you need to download a brown load?



...

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OpTrader

Swing trading portfolio - week of January 16th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Mapping The Market

If we try it enough, it will work.

Via Jean-Luc

Brownback wants Trump to emulate what he did in Kansas because it worked so well:

Sam Brownback Calls on Donald Trump to Mimic His Kansas Tax Plan

By RICHARD RUBIN and  WILL CONNORS

Sam Brownback, the Kansas governor whose tax cuts brought him political turmoil, recurring budget holes and sparse evidence of economic success, has a message for President-elect Donald Trump: Do what I did.

In 2013, Mr. Brownback set out to create a lean, business-friendly government in his state that other Republicans could replicate. He now faces a $350 million deficit when the Kansas legislature convenes in January and projections of a larger one in 2018. The state’s economy is flat and his party is fractured...

...

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Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

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Promotions

Phil's Stock World's Las Vegas Conference!

 

Come join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017.            

Beginning Time:  8:00 am Sunday morning

Location: Caesar's Palace in Las Vegas

Notes

Caesar's has tentatively offered us rooms for $189 on Saturday night and $129 for Sunday night. However, we have to sign the contract ASAP. We need at least 10 people to pay me via Paypal or we may lose the best rate for the rooms. (Once we are guaranteed ten attendees, I will put up instructions to call the hotel for individual rooms.)

The more people who sign up,...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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