The collision of global markets and social mood

Tuesday, November 22, 2016

Tuesday -- Peaking Together

S&P E-mini Futures:
Strong rally overnight yet off its best levels.

The way sentiment looked at yesterday's close:

The party lasted into the night. Asia and Europe continued the giddy sentiment.

“The market is a lot more sure of itself now,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn, Germany. “We can move on to pricing in the improving outlook.”

Deutsche Bank’s chief equity strategist David Bianco noted they are “more confident now.”

So are Chinese developers.

$100 Billion Chinese-Made City Near Singapore 'Scares the Hell Out of Everybody'

Juicy quotes galore:

“God only knows who is going to buy all these units, and when it’s completed, the bigger question is, who is going to stay in them?”

“If the developers stop building today, I think it would take 10 years for the condos to fill up the current supply. But they won’t stop.”

-- Siva Shanker, head of investments at Axis-REIT Managers Bhd. and a former president of the Malaysian Institute of Estate Agents.

The article is about just one -- the biggest -- of about 60 projects in the Iskandar Malaysia zone around Johor Bahru, known as JB, which have contributed to a drop of almost one-third in the value of residential sales in the state last year. Meanwhile:

-- Malaysian investment growth is slowing

-- Profit margins on real estate projects are falling

-- Developers are offering discounts of 20 percent or more

-- Average resale prices per square foot for high-rise flats in JB fell 10 percent last year

-- The value of residential sales in Malaysia fell almost 11 percent last year, while in Johor the drop was 32 percent, according to government data

Sound familiar?

Seems the entire globe is peaking together . . . on acid.

Quiet, mixed day thus far. GBP hit.

Bottoming tails turned to dojis (indecision). Look for any follow through upside.

WTI crude and NG off their best overnight rally levels.

Modest rally in gold overshadowed by stronger rallies in silver, platinum, palladium, and copper.

S&P Outlook:
The 2200 area is target rich. Multiple Fib projections. A strong close above 2222.37 would shift the odds from a B-wave scenario back to the previously-proposed ending diagonal pattern (and we'd be somewhere in wave 3).

The way the current wave is subdividing it already seems that could be the case, but confirmation is key.

Those SPY 218 puts are more than fully paid for but will likely expire worthless barring an extreme event. Closing below the 2182 area would likely be the early warning.

It is up to the market to give the next signal. Bulls are on parade -- the same bulls that were bears pre-election based on the current outcome. Now they're wild-eyed bullish.

Not very stable.


  1. Reflecting on your Monday post pondering the idea of some possible changes…

    I want to say that it really brought home the realization that I’ve been remiss in not extending a big THANK YOU for your generosity in writing and sharing this blog these past few years. I added it to my morning trading “pre-flight” quite some time ago, and can probably speak for thousands of other devoted readers who genuinely look forward to savoring your excellent insight on the markets, along with that unique and educational perspective on the social mood that so often drives them.

    But I’ll also be the first to say that I totally understand the need to occasionally stretch one’s creative limits and move on down the road to the next adventure. So, if you do decide to decommission this blog at some point I can’t say I won’t miss it, and I’ll certainly be supportive of however the cosmic “next” manifests for you. But of course I also feel the need here and now to make the pitch that maybe at least some kind of weekly sharing of “Bonfire thoughts” will live on to allow your followers to sip a little of the good stuff now and then :-).

    All the best, Dave

    1. Wow Dave, thank you so much for your kind and terrific comments. I would surely make any new endeavor open to current readers who would be grandfathered into any new form the blog might take, including a newsletter, even a paid one. That would be my thanks for being there along the journey. Even a social mood focus would revert back to the markets (much like the current format) as that what will probably always drive those observations. Again, thank you so much. Happy Thanksgiving to you.