- The current state of the market
- “We think that the current macroeconomic environment has a number of significant similarities with the 1930s” ~ Chetan Ahya, Morgan Stanley
- The Bearish argument: There is already Earnings recession and now the Jobs recession has started. Stock market collapse is inevitable?
- Too much Fear: Cash positions have risen to 5.7% in June from 5.5% in May, the highest level since November 2001, as fund managers have become increasingly bearish, according to a Bank of America Merrill Lynch
- The scared money is chasing Govt Bonds, Yen and Gold. Gold rally now looks really amazing. Here's Gold Miners ETF in 2016
- Yen - Safe Haven trade. Ridiculous rally in Yen, now trading below 200 week ma. Here's USDJPY weekly chart
- The most crowded trade: Investors chasing Govt bonds like crazy, leading to complete collapse in Yields. (Bond prices and Yields are inversely related)
- Why would somebody invest in a bond that gives negative yield? The reason: Traders believe that fear will only accelerate and people will pay more for the Govt bond. Absolute nonsense and crazy.
- US 10 year treasury yields now trading near 2008 panic lows.
- Ten-year U.S. government notes now yield less than stocks pay in dividends. Is this the reason - S&P 500 made a solid comeback from lows and closed in green.
- The sector responsible for market comeback: Finanicals. Here's XLF ETF
- Bullish Argument for equities: There is “TINA” (There Is No Alternative) factor.
- The US Federal Open Market Committee on Wednesday left interest rates unchanged at 0.5 percent. The committee still has plans for two rate hikes this year
- In December 2015, the Fed raised interest rates for the first time in almost 10 years and indicated more hikes in 2016. Six months over...and no rate hike.
- The Good News for India - Crude Oil prices cooling off. The $50-55 ceiling for crude seems to be real
- Pakistan is now part of MSCI EEM. China fails to make to that list. Reason: Liquidity and Ownership restrictions in China
- China continues to be a problem market
- The more you obsess about your mistakes and try to avoid past mistakes, the more you make new mistakes. ~ Aswath Damodran
- Twitter wisdom.
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"We are quite uncertain about where rates are headed in the longer run." - #FederalReserve Chair Janet Yellen
— Pedro da Costa (@pdacosta) June 15, 2016
A major mistake most traders make is using their own fear as an exit signal and their own greed as an entry plan.
— Steve Burns (@SJosephBurns) June 15, 2016
Read June 14 2016 Observations: Global Cues: Sinking Yields and Rising Anxiety
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers