Home » Posts tagged 'market breadth'
Tag Archives: market breadth
China Has A “Colossal Credit Bubble” And No One Knows How It Will Unwind, Marc Faber Warns
China Has A “Colossal Credit Bubble” And No One Knows How It Will Unwind, Marc Faber Warns
A little over a week ago, Marc Faber dialed in from Thailand to chat with Bloomberg TV about the outlook for US equities, the American economy, and USTs in the new year.
The US is “already in a recession,” the incorrigible doomsayer said.
Stocks will head lower in 2016, Faber continued, taking the opportunity to mock the sellside penguin brigade for adopting a universally bullish take on markets going forward. “Well, I don’t think that the U.S. will continue to increase interest rates,” he concluded, before predicting what we’ve been saying for years, namely that in the end, the Fed may be forced to do an embarrassing about-face and return to ZIRP and eventually to QE. “In fact, given the weakness in the global economy and the deceleration of growth in the U.S., I would imagine that by next year the Fed will cut rates once again and launch QE4.”
On Wednesday, Faber was back on Skype with Bloomberg to chat more about his outlook for 2016.
Asked why he believes the US is already in a recession, Faber says all one need do is “look at exports, look at industrial production and the slowdown in credit growth.”
As for what’s likely to work as an investment now that central banks have created bubbles everywhere you look, Faber says the following:
“With the exception of those that held Bitcoins, the performance of all asset classes has been poor. The Fed has created an atmosphere where the future return on assets whether it’s stocks or bonds or art will be poorer.”
Next, he bemoans the lack of market breadth, and warns that although the “indices are holding up well, the majority of market is already down 20% or more.” The S&P, he says, peaked in May and will fall 20-40%.
…click on the above link to read the rest of the article…
The Market’s “Other” Panic Indicator Just Went Off The Charts
The Market’s “Other” Panic Indicator Just Went Off The Charts
With indicators from macro-fundamentals (e.g. retail sales, core capex, inventory-to-sales) to market-oriented measures (VIX levels and backwardation, HY credit spreads, commodity prices) all flashing various colors of dead canary in the coal-mine red, we thought today’s colossal spike in the Arms (TRIN) Index was a notable addition.
An Arms Index value above one is bearish, a value below one is bullish and a value of one indicates a balanced market. Traders look not only at the value of the index, but also at how it changes throughout the day. Traders look for extremes in the index value for signs that the market may soon change directions. The Arm’s Index was invented by Richard W. Arms, Jr. in 1967. In essence, a sudden surge in the TRIN indicates a jump in trader lack of confidence, as everyone scrambles to either go long the 2-3 rising stocks, or to sell or short the biggest decliners, ignoring the bulk of the market..
Today’s move was far greater than “Black Monday’s market-halting crash:
In longer context:
As we noted previously, the Arms index is an indicator of market breadth essentially tracks lemming like momentum-chasing behavior with respect to volume… meaning today saw panic-buying volumes which given that it was dip-buyers at the close, we suspect won’t end well…
…click on the above link to read the rest of the article…
