Sell The Top Day

I have designated Thursday, October 31 as "Sell the Top Day".  It just happens to fall on Halloween and there are some ghoulish data elements to the big hump in stocks.

1.  While stock ownership is at a record low, speculative money is now pouring into stocks at the fastest rate since 2000.  The first tells you the boomers are done with growing stock portfolios.  The second tells you risk aversion is gone and the selected public would now rather seek a gain than avoid a loss.  Bad news.

2. The rich are tearing down homes at a record pace across the nation to build bigger ones.  This was Ben Bernanke's main wealth effect strategy.  His ideas was that if he pumped asset prices, primarily stocks, the rich would buy your house if you lived in their neighborhood and they would take it in foreclosure if you lived in your neighborhood.  Its working.

3. It takes Fed intervention of 85 billion a month and the treasury's already trillion plus to keep stocks higher.  It takes one word in a Fed statement to crash it all.  Now this may sound scarey but no one remembers what down looks like.  Scarey down.

Driving Air

The only distraction for investors now will continue to be the increasing high pitched sound of air being forced into the only opening of the equities balloon chamber.  The noise is distracting  but can be removed by wearing an Equity Manager's Headset manufactured by the Fed and sold at any business cable news outlet.  The headsets are constructed of two ten year notes held together with Wall Street's and Washington's favorite material, Ivy.  Though the material is considered not safe by previous users, it continues to be popular and is especially worn to major financial events.   The headsets can also be used when driving while texting at high speed, downhill, in heavy traffic.  

No Matter What Happens, Managers Will Still Be Clueless

Where the markets ride on the road through good news/bad news is only important to managers who  do not have a clue on how markets work.  A collapse or a surge higher in equities will be a short term opportunity.  The fact that managers cannot consistently deliver alpha no matter their pedigree is proof that most of them are accidental winners and perennial flat liners.   Up has always been the favorite of most successful macro equity managers and volatility with front running solutions has been the HF's bank.   Big Data momentum prop houses will be the next mediocre performers as short term momentum strategies will end up chasing their own tail as tightening latency solutions will deny any price separation opportunities between good news / bad news. 

Budget /Debt Ceiling struggles have gripped hard on upside hopes as congressional true believers bleed to promote a form of government servicing the privileged at the expense of those of lesser means.    But all governments in their evolution struggle with factions of extremism, adopting a tiny portion of their ideas but letting the bulk of it destroy the extremists who promote it.  

The problem in this particular market construct is the world has become accustomed to asset intervention and the belief it will always be delivered and will always work.   A default would be certainly bring significant flight to cash not seen since 2008.   A solution would put the bears on the bottom yet again.