Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Today's downmove went through
2246.50
which had been support.
The o/n session and tomorrow morning early trade will show what is next.
We had a low of 2338.00
and a close of 2342.25
at 10 percent of today's range.
(temp.png)
Price has to move above the 2246.50 tomorrow RTH and close above it for the bulls.
Failing this, (unless their is strong FED/USgovt buying) the chart suggests moves to the next supports.
Next possible supports are
2291.00 and 2270.75
(see chart -temp1.png)
..........
peace, love and joy to you
.........
Can you help answer these questions from other members on NexusFi?
"The question investors need to ask themselves is what will happen if China's issues start to manifest themselves in global markets (remember August 2015? Me too. We're all in this together). The combination of large risk-parity funds and CTAs being quite long equities at the exact moment that China's credit bubble is starting to show signs of stress could end quite badly. The pension funds that have hired CTAs to sell into the next selloff will exacerbate what would have in the past been a normal correction."
Bloomberg’s Stephen Spratt calculates that the balance sheet’s Treasury holdings longer than 20-years maturity represents a full three years worth of long-bond supply. Not even mentioning all the MBS.
Just as portfolio insurance caused the 1987 rout, he says, the new danger zone is the half-trillion dollars in risk parity funds. These funds aim to systematically spread risk equally across different asset classes by putting more money in lower volatility securities and less in those whose prices move more dramatically. Because risk-parity funds have been scooping up equities of late as volatility hit historic lows, some market participants, Jones included, believe they’ll be forced to dump them quickly in a stock tumble, exacerbating any decline.
“Risk parity,” Jones told the Goldman audience, “will be the hammer on the downside.”
Having read Cullen Roche's article I noticed that he seems unaware to the leverage of the risk parity funds and therefore his analysis appears to be flawed.
I have cut and paste what I felt were relevant clips
------------------ clips from two articles :
A far more immediate problem as a result of China's housing bubble may be the acceleration of Yuan outflows. According to Cui, a major driver of China's capital outflow is high asset prices.
In another word, the local rich may prefer NY condos to Shanghai apartments for better value, for example. From this perspective, for the outflow pressure to ease, either housing price in Rmb terms has to decline or Rmb devalues. This assumes that the government cannot control capital outflow effectively in the long run, a reasonable assumption in our view given how open the Chinese economy is.
How will the government react? BofA predicts that "if it comes down to it, we expect the government to choose Rmb devaluation over asset price deflation" aka a housing hard landing. " Arguably the biggest driver behind high asset prices in China is leverage in our opinion. As a result, any major asset price decline may quickly trigger a debt deflation spiral and financial system instability."
If it is too aggressive, a hard landing is in store, coupled with what a crash in the country's financial system, where the bulk of the banks' $35 trillion in assets is collateralized by housing values.
In his latest weekend notes, One River Asset Management CIO, Eric Peters, picks up where BofA's Mike Hartnett left off on Friday when he said that the "QE Monster" will only end when "the Wall Street bubble" finally shocks the Fed.
...as Beijing cracks down on shadow banking, . . . will certainly have a dramatic impact on China's cost of funding, which in turn would unleash the next deflationary shockwave around the globe
“By closing the capital account, the Chinese once again have complete dominion over their domestic credit machine,” continued the same CIO. “When they were actively opening up the capital account, China relinquished control over their interest rates to the Fed.” The volatility of Jan/Feb 2016 was one of many consequences; a lesson not soon forgotten.
1. China has a closed capital account giving it control over its domestic credit machine.
2. much of local govt revenues are linked to China's housing bubble (which has created a large "wealth effect" among participants ie house buyers)
3. prices have become very high even by global standards and some Chinese buyers are now viewing other real estate (e.g NY city apt) as better value one of the causes capital outflows from China.
4. China is tightening on shadow banking (which will cause rates to rise)
5. China would prefer RmB devaluation to crashing its housing bubble.
My conclusion:
This situation may cause the Chinese govt to have a surprise weekend devaluation in the Rmb. Given the priced to perfection USA equity market bubble, this could easily cause a overnight 10% fall in the S&P as we experienced before.
