The collision of global markets and social mood

Tuesday, November 10, 2015

Tuesday -- Art Market Clues, Deflation & Easing, Gaming Higher

S&P E-mini Futures:

The art world is yielding some interesting social mood information.

Christie's most recent auction saw aggressive pricing and several unsold lots, but strong prices for top works. One person called it "a masterpiece market" that was fomenting "extraordinary competition."

Generally, bidding for quality is not suggestive of a peak in mood, while over bidding for second-rate items usually is.

However, the auction elicited some rather interesting commentary.

“Prices have reached the Promised Land,” billionaire collector Eli Broad said after the sale. “I can’t imagine it going much higher though. Can you?”

Attitudes like that can keep it going higher. Yet get a load of this one.

“The market has plateaued," said Guy Jennings, managing director of the Fine Art Fund in London and Christie’s former deputy chairman of Impressionist and modern art in New York. "It’s leveled off at a very high level.”

Sounds a lot like Yale economist Irving Fisher's infamous 1929 quote in the pages of the New York Times, “Stock prices have reached what looks like a permanently high plateau."

All in all, it seems to fit where we may be in the longer term wave count: in the middle of (or about to enter) a reboot, yet one that will resolve with higher prices.

Meanwhile, economists and journalists still don't get what deflation really means, which is a reduction in the amount of credit outstanding. More easing, therefore, only exacerbates it by pushing more credit just as demand for it is ebbing. Meanwhile, prices of all kinds become unhinged.

"The risk of deflation has accentuated," said Liu Li-Gang, the chief Greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. "This requires the PBOC to engage in more aggressive policy easing."

Even though they probably will get more easing, Asia had a rough night. Yet Europe has just swung into the green.

USD strength continues.

Trying to bounce, and perhaps with less volume.

WTI crude swings to positive, NG up.

Gold, silver, and copper all down with gold the current relative strength leader, hugging the flatline.

S&P Outlook:
So far, the gut feeling from Thursday and Friday has not been correct. Yet there may be more clarity.

Posted this chart intraday. The correction thus far is choppy and on low volume, so it is possible that the market has created only a first wave of an impulse higher with the current decline being a wave 2 correction before 3,4 and 5 up.

Having assembled a moderate TVIX position, I don't much care what the outcome is. If I'm wrong and the S&P has just completed a B-wave high (the original --and still possible -- scenario), TVIX will rally as the S&P targets the 1867 low.

A shallow correction would have me adding longs against TVIX, gaming for higher highs. Liking the 2023 and even 1965 areas for Fib levels, but not thinking that low just yet.

No comments:

Post a Comment