In the bleak midwinter
In the bleak midwinter, investors gripe and moan,
Oil and stocks and yield sank, faster than a stone;
Ruble had fallen, low upon low, how far can it go?
In the bleak midwinter, only losses show.
Dear God, CBs cannot hold them, nor growth sustain,
Buyers bids shall flee away, I can't bear the pain.
In the bleak midwinter. a stable price sufficed
But no, oh God Almighty, Jesus Christ.
Enough for they, who calls things down, screaming night and day,
“Just look at all the technicals, It's going all the way"
Enough for they, who missed all the longs before
Who mock the bull and disaster adore.
Bears and shorts and doomsters, all have gathered there,
Emerging Market chaos poisons the air;
And a madman only, would dare to buy this
As like into a gale, is taking a piss.
Yet I want to buy here, poor as I be.
After stop loss dumping, oversold is all I see
If I were a Wise Man, I would not take part
Yet I’m about to go long, it is in my heart.
We have had a nigh on 10% fall in the FTSE over as many days, a 5% fall in SPX, Oil has continued down its mad Cresta Run of descent and emerging markets are finishing the year much as they began, with the whole world convinced that all the EM chickens have come home to roost. It is probably worth noting that if there was a winning model to trade the EM FX by this year it was simply a ‘coffee price in a local cafe’ PPP as demonstrated aptly by TRY and RUB. On that basis it is debatable as to whether RUB has actually reached fair value yet.
But price falls been notable, so notable that they are the news. 'Price is News' is amongst us. Positions have been tested to the extreme and the falls that we have been looking for with respect to stresses on vulnerable year-end positions have occured. The level of screaming would now suggest that the worst is over after the ‘That shouldn’t have happened, that never happens in December’ rout has run its course and leveraged runs for the finish line have been right royally tripped up.
But apart from prices in the falling knife department, other news isn’t that bad. EU data was strong this morning and there isn’t any EM news to make me think their world is about to end despite the mood today being similar to early February. Before anyone mentions that growth in China might fall to 7.1% please remember that it's 7.1%. What would you give to have 7.1% growth in your portfolio?
So having got out of my European equities and most of my US on 'ECB/Putin Thursday' 12 days ago and having nursed various entry/ tight stops on oil related things to some pain, it is probably time to look at buying back some of these falls. It being a Tuesday as well makes it all the more tempting to call this a 'Turnaround Tuesday’. With most fast money portfolio year-end positions now forced out, it would be amusing if we now close the year at stock levels last seen 2 weeks ago.
And if you think that is all too much on sentiment and not enough fact then read my friend @GMacTrading 's great quant look at it here at https://globalmacrotrading.wordpress.com/2014/12/15/recap-2014-12-15-time-to-btd
So at the height of this bleak midwinter, I’m in.
Added 17.00 GMT
And, your honour, I call upon the following witnesses as 'spikes du jour' in the case of a Turnaround Tuesday