"The most important assets that you need to take good care of are you and your family.”

“I will repeat my overarching perspective, which is that I don’t like to take bets on things that I don’t feel I have a big edge on, I don’t like to make any one bet really big, and I’d rather seek how to neutralize myself against big unknowns than how to bet on them. That applies to the coronavirus.  Still, there’s no getting around having to figure out what this situation is likely to mean and how we should deal with it, so here are my thoughts for you to take or leave. In reading them please realize that I’m a 'dumb sh!t' when it comes to viruses, though I do get to triangulate with some of the world’s best experts…As I see it there are three different things going on that are related yet are very different and shouldn’t be confused: 1) the virus, 2) the economic impact of reactions to the virus, and 3) the market action…The virus itself will almost certainly a) come and go and b) have a big emotional impact, which will most likely produce a big whipsaw…Reactions to the virus (e.g., 'social distancing') will probably cause a big short-term economic decline followed by a rebound, which probably will not leave a big sustained economic impact…The world is now leveraged long with a lot of cash still on the sidelines…The actions taken to curtail business activities will certainly cut revenues until the virus and business activity reverse which will lead to a rebound in revenue. That should (but won’t certainly) lead to V- or U-shaped financials for most companies…My guess is that the markets will probably not distinguish well between those which can and cannot withstand well the temporary shock and will focus more on their temporary hit to revenues than they should and underweight the credit impact… Additionally, it seems to me that this is one of those once in 100 years catastrophic events that annihilates those who provide insurance against it and those who don’t take insurance to protect themselves against it because they treat it as the exposed bet that they can take because it virtually never happens…The markets are being, and will continue to be, affected by these sorts of market players getting squeezed and forced to make market moves because of cash-flow issues rather than because of thoughtful fundamental analysis…what’s interesting is how attractive some companies with good cash yields have become…As far as central bank policies are concerned, interest-rate cuts and increased liquidity won’t lead to any material pickup in buying and activity from people who don’t want to go out and buy, though they can goose risky asset prices a bit at the cost of bringing rates closer to hitting ground zero…The most important assets that you need to take good care of are you and your family.” 

The current market could be compered to the August-October 2011 European debt crises market, when an 18% decline was followed by a series of wild swings in both direction.

“Trading without a stop-loss is like driving a car without brakes. Those who trade without stops, eventually stop trading. "

"In summary, there is total panic in the markets right now, as technical support levels mean nothing. These massive oversold conditions will eventually lead to buy signals. The last time we had anything close to this many oversold conditions was on December 24th, 2018. The rally from there was a strong one. There has been more damage done now, and this is perhaps a medical crisis, not a financial one, so things could be different. But eventually, there will be buying. It is a matter of remaining patient and waiting for confirmed buy signals."

The two support areas are very important. The first is at approximately 3330. If that is violated, then that could then target the next support area, which is at 3210 / 3220.

/ 

A sell signal in $VIX is to be noted, and if it were accompanied by a breakdown below $SPX support at 3330, that would be a potentially powerful bearish combination. For now, though, the bulls can still rescue upward motion, but they are running out of room.

Canada liked the oil and metals rally.

How Much is Enough?

             listen & learn

"As the chart below points out, Lost Decades have happened with alarming and surprising frequency, all preceded by expensive stocks or expensive bonds. Today, both are expensive."

                                                      click on the chart to enlarge

"The currency markets have never been so calm. That’s according to the J.P. Morgan Global FX Volatility Index, which touched an all-time low on Jan. 17 and remains near that record level going back to its inception in 1989."

                                                     The calm before the storm.

"In summary, the most bullish indicator is the chart of $SPX. When that is the case, one is best served by sticking with the upward momentum and remaining bullish."

The S&P 500 Index ($SPX) broke out to new all-time highs again this past week, and now has closed at a new all-time high or traded at a new intraday all-time high on six of the last seven trading days. That keeps the $SPX chart bullish. There should be some support near the 3340 area, which was the old highs that were exceeded this week.

Support level that matters -- 3210 on $SPX held and the bulls are back.

For more confirmation, watch if $SPX can close above 3337 and $VIX can close below 15 again.

"Parabolic advances usually go further than you think, but they do not correct by going sideways."

                                 this is a good example of a "real" parabolic advance

"Focus is the art of knowing what to ignore."

"models...in times of crisis, the firm will pull back [risk] when they’re not sure, when they’re worried, and that’s part of that humility...they don’t have this arrogance...they get scared like you and I...in those kind of times [panic], [Simons] overruled his colleagues and he said, ‘Yes, we’ll probably make money here if we stick with our models, but I’m worried about surviving’

“The chart on the screen is the real market, not the one in our heads…”

The huge rally in stocks that began on October 4th, 2019, is in jeopardy. A couple of large down days have broken the steepness of the uptrend, but not the uptrend itself.

So, the $SPX chart is weakening, but hasn't completely capitulated to the bearish case yet. There is resistance at 3340 (the all-time highs) and there is support, as noted, at 3210. So if it continues to bounce around in that range, it would just be "re-generating," but a breakout in either direction should be significant.

Equity-only put-call ratios remain on sell signals.

Market breadth has been poor, and both breadfth oscillators are on sell signals.

$VIX closed above 16 on January 27th, and that gave us the sell signal. This establishes an intermediate- term uptrend in $VIX which will remain intact as long as $VIX continues to close above 15.

So, for the most part part our indicators are bearish, and a "core" bearish position is warranted. An $SPX close below 3200 would add fuel to the fire.

"In summary, it seems as if the market is slowing down, but the indicators are still overwhelmingly bullish, as the only sell signals right now are the put-call ratios and breadth. Thus, it is important to wait for $SPX and $VIX to confirm before attempting to take a strong bearish position."

SP chart is extended, overbought, as are many other indicators, but the bullish trend remains intact. Sell-off gives us a chance to see whether the underlying trend is still strong or not.

                           If VIX closes above 16, that would be a sell signal for stocks.

McClellan Oscillator poked below zero. This could mean a similar pullback to previous pullbacks within an uptrend or the beginning of something deeper.

In summary, the line of least resistance, the trend of the stock market is higher, and we do not have any confirmed sell signals at this time. For this reason, we remain bullish. But the overbought conditions are worrisome and so are the comparisons to January 2018.

When it come to an international crisis, throw your studies away, it will all mean nothing.

Hmm, puzzling non-confirmation of gold's gains Friday and today.

"I want to share this principle as I think it’s important to think about what your one big thing is when thinking about your New Years Resolutions. Everyone has at least one big thing that stands in the way of their success; find yours and deal with it. Write down what your one big thing is (such as identifying problems, designing solutions, pushing through to results) and why it exists (your emotions trip you up...you can’t visualize adequate possibilities). While you and most people probably have more than one major impediment, if you can remove or get around that one really big one, you will hugely improve your life.”

"Remember, your mental limitations are of your own making."

For years, athletes attempted to run a mile in four minutes but it seemed to be a barrier that no one could overcome. Then on May 6, 1954, a British runner named Roger Gilbert Bannister ran a mile in 3:59.4 minutes to establish a world record. Soon afterward, other runners broke Bannister’s record. Too often, we accept conventional wisdom as fact. Make sure you set your goals high enough. Don’t settle for less because of limitations you place upon yourself. Most of us never really reach the level of achievement of which we are capable because we don’t challenge ourselves to do so. Perhaps Robert Browning said it best: “A man’s reach should exceed his grasp, / Or what’s a heaven for?”

Welcome to 2020.

An extended period of geopolitical calm was shattered late Thursday when the U.S. conducted a military air strike in Baghdad, Iraq that killed a top Iranian general along with an Iraqi paramilitary leader. The U.S. said Iran was planning to kill Americans in the Middle East. The strike also comes after the major attack on a Saudi oil installation a few months ago, in which the U.S. blamed Iran. Iran promised harsh retaliation. The keen uncertainty regarding this situation, including how Iran will respond, is likely to keep the global marketplace on edge.