12/16/2016 Live Update

[Junior Buffett]

Its strange that for so many days VIX was going up along with S & P and now it's going down when S & P is in red!

Has VIX started following S & P?? what a game....

[JFR]

Ouch

[chickencoop]

Happy Holidays! Always enjoyed your posts and best wishes to next year and beyond

BachNut is done for the year.

The NYMO cycle appears to be down.
However, I do not have precedent for the NYMO action we have seen since the election.
This sawtoothing between the upper turn zone and the zero line every few days is not something I have seen.
What it implies for the time ahead is anybody's guess.
I know I don't have a clue in general, but my cluelessness is going to a new level here.

On the price side, things are a bit easier.
Previous punches through the upper keltner like we have seen have generally anticipated either
a) an important high, or
b) a period of trending (smooth or bumpy) that pulls the upper keltner steadily higher.
If we are to get (b), we should see a sequence of higher lows.
So, if Wednesday's low of SPX 2248.44 gets broken (or a subsequent low like it), caution is advisable.
Otherwise, a long bias (NYMO not withstanding) may be the way to go.

I am flat and have pretty much closed up shop for the holidays.
I have some long dollar positions that are in good shape and some long commodity positions that are hanging tough but could get the axe at any time.
Resting stops will take care of business from here.

Cheers everybody! Merry Christmas or whatever you do, blessings to all.
I hope you all enjoy the holidays, and I look forward to checking in here from time to time in the new year.
I think 2017 is going to be kick ass awesome for trading! Absolutely BachNutty!

[Trades with cats]

As I asked a day or two ago what is the source of the money piling into the market?
Assuming the past is a guide I would guess at two primary sources. First the major source of funds the last couple of years has been corporate borrowings added to cash flow to repurchase stock when it is at new highs. Right now we have this huge run up in Goldman, as an example. Plus the number two guy gets to sell all his shares tax free because of his government job.

So the second the cut off date is hit for calculating the CEO performance bonus, or the 3 week quiet period before reporting 4 quarter earnings is hit that money dries up, as we have seen.

The second source of funds this time of year, according to the media every single year, is the hedge funds. We could all write the generic story, you know, fund managers all in desperate gamble to make year end bonus. To me part of the tell on that is that the cash is hitting the index funds because all we read about is how the hedgers buy baskets.

What annoys me is the fund inflows will be spun to imply that Ma and Pa Kettle have dug deep into the cookie jar to buy equities and you and I should join the crowd as well. My limited understanding is that hedge fund bonus is based on cash in the bank, not mark to market performance, so if that is still the case then the flows will be reversing.

[Al_Dente]

As I asked a day or two ago what is the source of the money piling into the market?....

Here’s another source for flow, but it should be in the bear-equity direction!
REBALANCING:
Over the next two weeks, managed portfolios (rich people and institutions) face a well-documented, mandatory “Quarterly Portfolio Rebalancing,” wherein the managers under contract to maintain a fixed percentage in stocks/bonds (often 65/35 but it varies), must re-align their portfolios to satisfy their contractual mandate.
Since stocks have vastly outperformed bonds this quarter, these managed portfolios will be selling stocks and buying bonds to regain their mandated balance. This will be happening until end-of-quarter 12/30/16, although many managers wait until the last minute (12/30) to accomplish this.
(This is different from “window dressing,” which is optional. This is contractual rebalancing, which is mandatory).

[Trades with cats]

New to me oil guy I found on Twitter, Tomas Saal @NatGasFutures
Baker Hughes rig count at 1 usually causes a market twitch.

[Trades with cats]

Mornings action in the ES must have the time cycle people excited, what with all the nice round top arches taking a half hour.

[flrtrader]

BREAKING: China's navy has seized an unmanned, underwater U.S. Navy vehicle in international waters of South China Sea.

Rut

[Al_Dente]

As far as window dressing: as usual, funds want to report at quarter-end and year-end that they own all the hot sexy stuff, so if they haven’t already, they will want to show ownership of the stuff powering the PEOTUS rally, some of which which are shown at the link below.
("Window Dressing" can also wait until the last minute)
https://stockcharts.com/freecharts/cand ... YT,UUP|M|0

[Cobra]

some support here. maybe range low?

[Trades with cats]

So Pasta Boss, weekly put options for Dec 30? I mean it should be a ripper based on that chart!

[Trades with cats]

Also, with last several years of bond bull is this a big part of Santa Rally stats?

[Al_Dente]

So Pasta Boss, weekly put options for Dec 30? I mean it should be a ripper based on that chart!

theoretically yes, but if there is still bull buying, and it is stronger than the contractual selling ... well you know... supply and demand...
here's what happens when the bull runs loose ...
https://www.youtube.com/watch?v=kfnMAbbgzqo

[Trades with cats]

Everything dropping into the european close.

[Trades with cats]

My sons in law would love to go run with the bulls, but my daughter's would kill me if I suggested it as a family vacation.

[Trades with cats]

ES Yesterday low/S1 support 49.25 next lower target. Starting to look like last December quad witch (down day)

[Trades with cats]

BREAKING: China's navy has seized an unmanned, underwater U.S. Navy vehicle in international waters of South China Sea.

Rut

Zerohedge saying this is reason for selloff. Xi Dada sending clear message to Donald?

[Al_Dente]

What I mean is that the portfolio managers will be selling stocks to the raging bulls, and I don’t know any of those numbers.
Watch zh for details, some years they publish GS or BACML data that quantifies exactly how much in dollars that contractual selling would represent.
We know that mgrs are “all in” from the NAAIM (100+, now 96%) sentiment numbers, but these bulls can be relentless...

[DellGriffith]

Our seller showed up again and hammered SPY down another buck. Only been showing up once per day tho so we might float up from here.

[Trades with cats]

Thanks for that! I like last year as a guide, and watching these year end maneuvers can keep you from getting faked out by a sudden move that is mechanical policy.

NY Fed just downgraded economy, high dollar kills large cap earnings, higher rates kill small cap growth. Market at new all time oversold and at mostly record high price value metrics. January has been the death of these December bulls before, seems reasonable that it could happen again. Will let you know for sure in Feb