High Frequency Swanning – The Crash Camp Takes Over The Reformed Broker

High Frequency Swanning – The Crash Camp Takes Over

Here a Swan, there a Swan, everywhere a Black Swan…

Newsletter writers, hedge fund managers, journalists, bloggers, technicians, fundamental analysts, economists and strategists are joining the crash camp left and right.  Not the bear camp…the crash camp.

I’ve been running around Manhattan all day taking care of business, meeting clients etc.  After scanning today’s articles and blog posts, I can honestly say that I’ve never heard more chatter about an imminent market crash, all at once, in my life.  It’s like the May 6th Flash Crash got everyone in the mood to talk cataclysm all of a sudden.

I’m not one of those guys who takes everything as a contrarian signal.  I abhor knee-jerk contrarianism.  Samuel Lord once said “Do not choose to be wrong for the sake of being different,” and I think that’s kind of apropos here.

As avowed contrarian Dougie Kass likes to remind us, the crowd usually outsmarts the remnant when herd mentality takes over.  So what is the herd hearing/ seeing?

* First of all, the macro guys are disturbed by the Euro Zone’s crisis and its ripple effect/ contagion risk.  This isn’t new but it is more pervasive.  And the possibility of a China collapse scares the hell out of almost everyone.

* The technicians and Dow Theorists are grossed out and have dusted off all the 1937 charts again.  Specifically, they are looking at the highly distinct pattern of a big drop (May 6th) followed by a failed rally (euro bailout day’s 4% gap open) followed by another fast sell-off.  Richard Russell‘s latest missive, in which he tells us that we won’t recognize America by year’s end, will make you want to kill yourself.

* Equity analysts are all pointing to year-over-year comps which will start getting harder now.  They may feel OK about the “E” but they’re shaky about the “P” – will the tax hikes and regulatory headwinds we now face really allow for a high-teens multiple on whatever the earnings turn out to be?

* Bond guys are freaking out about sovereign stuff, obviously.  We’ve transferred corporate risks onto government balance sheets with bailouts, the Piper still awaits his payment in many cases.

* Eddie Elfenbein posted the results of a CNBC poll yesterday in which 40% of respondents predicted a 50% haircut for the Dow.  Seriously, almost half the respondents predicted Dow 5000 by the end of this year.

* The hedgies are vocally bearish again as well.  Seth Klarman‘s got some cautious commentary out today and Jeremy Grantham‘s “sell everything” stuff is being quoted everywhere.  Raoul Pal put out a newsletter this week with a 2 day-to-2 week crash prediction.

We’re not talking garden variety bearishness here.  We’re talking about ubiquitous crash predictions.  My comment is that I’ve never seen so much certainty in so many places of a coming crash.  Will it be self-fulfilling or are we talking major contrarian signal?

Worth noting no matter what.


Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

Showing 5 comments

  • 1 person liked this.

    hey Josh. most excellent work as always. This one had me chuckling at

    “Richard Russell’s latest missive, in which he tells us that we won’t recognize America by year’s end, will make you want to kill yourself”

    With such strong vocals on crashing isn’t that when it will do exactly the opposite and place the hydraulic vice on the bears head once again? Don’t get me wrong, I am of the belief that there remains significant downside coming – timing being the key – but I cannot get past the mountainous debt across the globe, the complete lack of any reasonable and practical debt-credit-value relationship.

    Keep up the awesome work! Tomorrow is another trading day.

    Like Reply Reply

  • tamelarich 20 minutes ago
    I’m a fan of Buddhist monk Pema Chodron’s book “When Things Fall Apart” and think her work provides a useful frame of reference for the dread we feel about the changes now upon us. “We think that the point is to pass the test or to overcome the problem, but the truth is that things don’t really get solved. They come together and they fall apart. Then they come together again and fall apart again.”

    Things fell apart during the Depression, so we implemented entitlement programs and erected new regulatory bodies. Things came together. I argue that the only reason we’re not in another Great Depression today is the post-Depression social safety nets that now provide unemployment insurance and a baseline of health insurance to our elderly and most financially vulnerable citizens. But since we essentially dismantled Glass-Steagall, and financial mathematicians developed products that were unforeseen by jazz era regulators anyway, we produced fake wealth and things fell apart again.

    When we can accept the falling apart and coming together of all things in life, we can look at the work before us as an opportunity to build something stronger and better for the next iteration — until it inevitably falls apart again.

    Like Reply Reply

  • danandreas 11 hours ago
    great article! Taleb’s are surfacing all over the world! if our market does take a 5000 haircut i wouldn’t be surprised, but i’m not trading that way yet. it looks like our dollar has a long way to fall and cushion a crash or correction. we’ve yet to really experience inflation other than, in my opinion, production, quality and human resources. when our dollar starts reacting and losing value globally, and in relation to euro dollar recovery, then there may be more potential for the great black swan. for now our dollar is a big preinflated air bag. even if we crash because we can’t see(perhaps our navigator fell asleep) its not going hurt much
    http://finviz.com/futures_charts.ashx?t=DX&p=w1

    Like Reply Reply

  • interesting take, thx dan

    Like Reply Reply

  • The best time to buy crash insurance is before the crash predictions become ubiquitous.

    Like Reply Reply

  • Good read… I’m not quite as fatalistic but I do feel there could be another serious correction in the near future.

    Posted via web from The Inside Market

    Candidates for 05/13/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100512 BR 21.94 21.57 916513 1
    20100512 MFC 18.62 19.50 1851299 2
    20100512 TRAK 16.86 18.09 422400 2

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!

    Morgan Stanley falls in preopen on probe report – MarketWatch

    NEW YORK (MarketWatch)– Shares of Wall Street investment banking giant Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 27.00, -1.38, -4.85%) fell about 4% on Wednesday morning after the Wall Street Journal reported that federal prosecutors are conducting a preliminary investigation of the firm’s mortgage trading business. Morgan Stanley told the paper is has not been contacted by the government regarding a probe, and its Chief Executive James Gorman reiterated that point at a press conference on Wednesday in Tokyo, the paper said. Morgan Stanley shares fell 3.98% to $28.38 in preopen trading.

    After GS, it’s MS’ turn to go under the microscope.

    Posted via web from The Inside Market

    Candidates for 05/12/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100511 BR 22.01 21.55 908056 1
    20100511 DCP 16.73 15.19 1074572 1
    20100511 PETS 19.3 19.01 359970 1

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!

    Candidates for 05/11/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100510 BR 22.25 21.53 901531 1, 3, 4, 5
    20100510 CMCSA 18.03 16.47 20545627 1, 4, 5
    20100510 CMCSK 17.12 15.70 7348925 1, 5
    20100510 DCP 16.78 15.21 1062217 1
    20100510 EROC 6.03 5.17 297914 1
    20100510 PETS 19.93 19.00 358393 1, 3, 4, 5
    20100510 STSA .85 1.19 1763703 2

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!

    Candidates for 05/10/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100507 ACI 23.84 22.45 5914599 1, 3
    20100507 ANO 1.33 1.08 457730 1
    20100507 AVNR 2.56 2.12 961951 1
    20100507 BANR 4.94 3.36 313136 1
    20100507 BGG 20.78 19.11 557953 1
    20100507 BMRN 19.8 18.96 1243872 1
    20100507 BUCY 52.36 51.02 2993764 1, 5
    20100507 CAR 11.74 11.62 3593942 1
    20100507 CASY 36.18 31.24 646001 1, 3
    20100507 CHKP 31.93 31.74 2024487 1, 3, 4, 5
    20100507 CPE 4.95 2.78 1132872 1
    20100507 CRIS 2.91 2.55 552914 1, 3
    20100507 CRR 63.03 59.36 361675 1, 4, 5
    20100507 DCP 16.8 15.23 1050447 1
    20100507 DNR 16.78 15.42 7670120 1, 3, 4, 5
    20100507 DOX 29.81 27.65 833743 1, 3, 4, 5
    20100507 DRC 31.64 31.31 661767 1, 3
    20100507 EME 25.46 25.08 718231 1, 3, 4, 5
    20100507 ENT 2.35 1.88 394594 1
    20100507 FFBC 16.5 14.06 403884 1
    20100507 FMD 2.8 2.40 385597 1, 3, 5
    20100507 FMER 20.71 20.26 864457 1
    20100507 FRG 5.36 4.50 421987 1, 3, 5
    20100507 GCA 8.1 7.79 320391 1, 3, 4, 5
    20100507 GPRO 44.18 43.34 337568 1
    20100507 GSAT 1.54 1.01 485438 1
    20100507 HAFC 2.16 1.85 963636 1, 3, 4, 5
    20100507 HTZ 12.01 10.73 4593979 1
    20100507 IOC 56.32 55.53 1321589 1, 3
    20100507 ISR 1.28 1.02 263642 1
    20100507 ISSI 9.62 5.93 682358 1
    20100507 JMBA 2.59 1.86 826464 1, 3, 5
    20100507 KEY 7.88 6.71 20196844 1, 3, 5
    20100507 LH 75.23 72.21 1103861 1
    20100507 MEA 5.43 4.98 745002 1, 4, 5
    20100507 MR 33.98 33.86 847095 1, 3, 5
    20100507 NAK 8.12 8.11 287215 1
    20100507 NIHD 35.82 32.82 2202101 1, 3, 4, 5
    20100507 NU 25.53 25.11 1261082 1, 3, 4, 5
    20100507 OFG 13.39 12.38 539631 1
    20100507 PAL 3.94 3.49 2442343 1
    20100507 PETS 20.32 18.99 353173 1
    20100507 PHH 20.17 19.19 963287 1, 4, 5
    20100507 POZN 8.17 7.17 558179 1, 5
    20100507 PPDI 25.61 22.33 1592516 1
    20100507 RBCN 23.24 17.33 294428 1
    20100507 RUTH 4.36 3.77 542263 1
    20100507 SFLY 21.12 17.95 258598 1
    20100507 SKM 17.2 16.96 1369066 1, 3, 4, 5
    20100507 SMCI 13.05 11.57 262103 1
    20100507 TDW 48.44 46.51 737593 1, 3, 4, 5
    20100507 THOR 38.81 29.63 925337 1, 5
    20100507 TRMB 28.47 25.23 704073 1, 3
    20100507 V 82.29 80.94 6087871 1, 3, 4, 5
    20100507 VALE 27.19 26.87 25722118 1, 4, 5
    20100507 VFC 78.89 74.55 736669 1, 5
    20100507 WBMD 44.69 38.32 413314 1, 3, 4, 5
    20100507 WCN 33.71 31.84 369084 1, 3, 5
    20100507 XTEX 9.5 7.49 367496 1, 3, 4, 5
    20100507 XTO 44.51 44.24 13096238 1, 3, 4, 5

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!

    Candidates for 05/07/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100506 ACI 24.17 22.41 5865572 1, 3
    20100506 AVNR 2.6 2.12 947463 1, 3, 4, 5
    20100506 AWI 38.07 36.35 358494 1, 3, 4, 5
    20100506 BANR 5.19 3.36 313634 1
    20100506 BAS 8.71 8.53 336646 1
    20100506 BGG 21.6 19.09 554113 1
    20100506 BMS 28.48 28.36 817878 1, 3, 4, 5
    20100506 BUCY 54.08 50.91 2954773 1, 3, 4, 5
    20100506 CAR 12.33 11.60 3574076 1, 5
    20100506 CASY 36.62 31.19 634806 1, 3, 5
    20100506 CBI 20.62 19.79 1028303 1, 3, 4, 5
    20100506 CERS 2.55 2.25 369127 1
    20100506 CHKP 32.34 31.70 1983114 1, 3, 4, 5
    20100506 CPE 5.12 2.76 1119370 1
    20100506 CQP 14.15 12.53 294655 1, 3, 4, 5
    20100506 CRIS 3.01 2.55 548997 1, 3, 4, 5
    20100506 CRR 66.18 59.24 355297 1, 4, 5
    20100506 CSE 4.85 4.60 3158331 1, 3, 4, 5
    20100506 DCP 17.02 15.24 1037535 1, 3, 5
    20100506 DOX 30.44 27.62 821924 1, 5
    20100506 EGY 4.83 4.64 426276 1, 3, 5
    20100506 EME 26.25 25.06 702690 1, 3, 4, 5
    20100506 ENT 2.48 1.88 392795 1, 3
    20100506 ETQ 7.84 7.07 358517 1
    20100506 EWY 46.74 46.49 3642713 1, 3, 4, 5
    20100506 FFBC 17 14.02 405695 1
    20100506 FMCN 14.84 13.79 1991015 1
    20100506 FMD 2.96 2.40 377642 1
    20100506 FMER 20.79 20.24 858191 1
    20100506 GCA 8.18 7.80 317022 1, 3, 4, 5
    20100506 GGN 16.66 16.25 348568 1, 3, 4, 5
    20100506 GPRO 45.2 43.32 336270 1
    20100506 GSAT 1.6 1.01 486751 1
    20100506 HAFC 2.42 1.84 944625 1
    20100506 HANS 42.54 37.58 740769 1, 3, 4, 5
    20100506 HEW 38.78 38.52 541554 1, 3, 4, 5
    20100506 HTZ 12.38 10.72 4531484 1
    20100506 HW 5.2 4.79 786244 1, 3, 4, 5
    20100506 IOC 58.54 55.40 1315559 1, 3, 5
    20100506 ISSI 9.99 5.90 670908 1
    20100506 LEE 3.29 3.21 277542 1, 3, 4, 5
    20100506 LH 76.26 72.18 1094747 1, 5
    20100506 LPNT 34.03 30.89 534940 1
    20100506 MEA 5.67 4.97 736012 1, 3, 4, 5
    20100506 MMR 11.07 10.87 3313203 1, 5
    20100506 MR 35.81 33.83 844041 1
    20100506 MTL 21 20.25 3074725 1, 3, 4, 5
    20100506 NAK 8.29 8.11 286049 1, 5
    20100506 NIHD 37.55 32.74 2169301 1, 3, 4, 5
    20100506 PAL 3.99 3.48 2422132 1, 3, 5
    20100506 PETS 20.54 18.98 350875 1
    20100506 PHH 21.14 19.18 949401 1
    20100506 POZN 8.88 7.17 541029 1, 5
    20100506 PPDI 26.37 22.29 1582165 1
    20100506 RBCN 23.84 17.26 291900 1
    20100506 RGA 48.24 47.26 438395 1, 4, 5
    20100506 RRR 7.79 7.48 480988 1
    20100506 RTI 23.92 23.35 663982 1, 3, 4, 5
    20100506 RUTH 4.61 3.76 538600 1
    20100506 SFLY 21.9 17.92 259017 1
    20100506 SLB 65.35 62.97 11545171 1
    20100506 SMCI 13.13 11.54 260379 1
    20100506 SMI 4.16 3.72 314223 1, 3
    20100506 TCK 34.76 34.08 5214303 1, 3, 4, 5
    20100506 V 82.92 80.87 6002878 1, 3, 4, 5
    20100506 VALE 27.41 26.83 25334634 1, 3, 4, 5
    20100506 VFC 80.48 74.47 728864 1, 3, 5
    20100506 WFSL 18.3 18.14 1049508 1, 5
    20100506 XTEX 10.06 7.46 363617 1, 3, 4, 5
    20100506 XTO 44.78 44.22 12935334 1, 3, 4, 5

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!

    Candidates for 05/06/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100505 ACI 24.98 22.37 5815741 1
    20100505 BANR 5.37 3.34 312549 1
    20100505 BLL 52.19 51.32 694774 1
    20100505 BTU 43.52 42.69 5952853 1
    20100505 BWP 27.65 27.53 399463 1, 3, 4, 5
    20100505 CPE 5.5 2.74 1105276 1
    20100505 CQP 16.25 12.51 282405 1, 3, 5
    20100505 CRR 68.54 59.11 349568 1, 3, 4, 5
    20100505 DCP 17.1 15.26 1016390 1, 3
    20100505 FMCN 15.14 13.75 2031147 1, 3, 4, 5
    20100505 HL 5.53 5.07 11582678 1
    20100505 ISSI 10.76 5.86 659748 1
    20100505 LEE 3.39 3.20 281640 1
    20100505 MMR 11.64 10.85 3279634 1
    20100505 MR 37.24 33.80 850019 1
    20100505 MTL 22.81 20.19 3020958 1, 3, 4, 5
    20100505 NAK 8.4 8.10 285543 1, 3, 4, 5
    20100505 POWI 36.71 35.08 300071 1
    20100505 QSFT 17.26 17.24 924726 1, 3, 4, 5
    20100505 RBCN 24.51 17.20 289336 1, 3, 4, 5
    20100505 SFLY 22.14 17.88 263342 1
    20100505 SMI 4.87 3.71 318309 1
    20100505 SWSI 13.2 13.01 519382 1
    20100505 TCK 36.35 34.02 5182730 1, 3, 4, 5
    20100505 V 86.43 80.79 5879443 1, 3, 4, 5
    20100505 XTEX 10.84 7.43 356438 1, 3, 4, 5
    20100505 XTO 46.45 44.19 12832810 1

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!

    Candidates for 05/05/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100504 BANR 5.45 3.33 312309 1
    20100504 CQP 17.18 12.47 278211 1
    20100504 FMCN 15.89 13.72 2079767 1, 3, 4, 5
    20100504 GRAN 1.61 1.24 305395 1
    20100504 NAK 8.83 8.10 285117 1, 3, 4, 5
    20100504 OREX 7.04 7.35 597847 2
    20100504 QSFT 17.45 17.23 916219 1, 3, 4, 5
    20100504 RBCN 24.77 17.13 282841 1, 5
    20100504 TGB 5.04 3.79 2585938 1, 3, 4, 5
    20100504 WAL 8.53 5.67 581813 1

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!

    Candidates for 05/04/2010

    Here is the list of my candidates for today. I will not trade all of those but will start watching them for short-term reversals.

    Date Sym L/S Close MA(200) Vol MA(100) Reason
    20100503 BANR 5.59 3.32 315370 1
    20100503 CQP 17.77 12.42 276165 1, 3, 5
    20100503 FMCN 16.65 13.68 2085115 1
    20100503 NAK 9.22 8.09 282208 1
    20100503 QSFT 17.5 17.21 908553 1
    20100503 RBCN 26.08 17.06 278065 1
    20100503 TGB 5.44 3.77 2573061 1, 3, 4, 5

    1. 5 Consecutive down days.
    2. 5 Consecutive up days.
    3. Volume is 30% over the 10-day moving average.
    4. Volume is 70% over the 30-day moving average.
    5. Volume is 50% over the 50-day moving average.

    Happy Trading!