The Giant Squeeze On All Edges

Market topping action continues with Bears pushing hard to get the S&P500 action below 1650 to begin the journey back to 1550 for starters.
 
Tough year again for the general mass of fund managers who year after year continue to have lousy returns.  The HFT shops have found themselves lost without the ability to meaningfully front run any other HFT as Big Data looks like is will also be a big waste of time.  Every other proprietary firm is now either pimping services as a sell side vendor or working on the next big staff reduction.
  
Many of the desperate are pinning their hopes on the fixed income  death dive tsunami which now has been greatly anticipated each of the last three years.  This may be it but it probably isn't.  
 
The giant squeeze on all edges is upon the world.  Over employment has been replaced with falling work force participation but oddly creating falling unemployment rates.  Great trading performances have fallen victim to the great regression where what was once thought of a shop after shop and firm after firm of trading talent is now revealed guys looking more like the clueless they always were or even worse, as dumb as bankers.  Just showing up is out of business. 

Markets are more concerned about who the next Fed Chairman will be than war in Syria or the US budget deadline.  Obama looks like he has given the edge to Summers who knows less about markets and more about opportunism created by being a repeat offender creating personal wealth through public service and Ivy League circle jerks.   Markets don't like him because he is unpredictable.  Most don't like him because he is a jerk.  

QRiskValue

QRiskValue continues to bring the best of decision/analytics to its principals.  BaseOp2 relies on QRV data.

QRiskValue Ratings

Bernanke mixed signals on stimulus is a nod to the hawks as to the eventual winding down of stimulus.  And while it is clear  the Fed has managed to pump up a variety of top driven elements of the economy, some large financial institutions remain deceptively vulnerable.  Bernanke seems to realize there may be a grave danger in cutting help too early.

QRiskValue builds trading decision models and market analytic strategies on derivatives and a select number of stocks. The firm measures whether or not there a significant enough opportunity to take the risk of buying or shorting something.  So QRiskValue does not provide price targets but measures the overall quality of the risk being considered. According to QRiskValue, as of Friday's close, only MSFT is the only stock it covers with a highest riskvalue, on the buyside.  The highest QRiskValue on the sellside was BAC.  

Bend Like Bernanke

Bernanke took a page from Greenspan's playbook and played to the market bulls as he backed down yesterday from previous comments on his attempt to trim what Greenspan once called stock market "irrational exuberance".  Greenspan was great a looking responsible, but at any sign of stock market downside momentum, Greenspan would shamelessly wimp to Wall Street.   Ultimately it will not make any difference in avoiding the correction to the massive over reach of the last two years.  Upside rationale always seems infallible inside the glory of the rally.

End of Jubilee Days

Markets had a bad week with Bernanke deciding on Wednesday to speed up the  end of jubilee days after being virtually fired by President Obama Tuesday.  DJIA and SP500 dropped back to the idiots only break out level of April and now are poised to see whether they continue to slide now or wait till fall.  At the least,  DJIA will test the 14350 area with SP500 coming into 1550.

Bears Running Out of Room In AAPL

AAPL has now come into a value area where establishing long positions is a better option than being short.  It will now begin to retrace some of the declines made over the last several months but will be disappoint the koolaid bulls and have to become a great stock fairly priced.  Buyers will be able to establish longs between 385 and 420.  Having been bearish for sometime, those late to the party may trot out the 300 target, but they should have sold it long ago.

Good Luck. Again

S&P500 closed at a record high with every indication the great rally will never end.  Now the valuations of market indexes such as the 500 are rarely wrong.  Well except almost always.  Back in September and October of 2007 when I called the bubble then, same dopes were chiding me for evidence of any breaks.  This time the markets are in a unique position of having a fund raiser rooting from the Fed instead of the usual retail buyers who usually take the professionals positions from them at record highs; the position the pros bought long ago.  This time however the pros will have to sell back to their own kind as the generational risk averse stance of the boomers will be unyielding in their rejection of this market.  Their view; better to avoid a loss and than seek a gain.

This market is bubble time.  Good luck again.

When Padding Becomes Pudding

Both the ECB and U.S. Congress believe the markets have enough padding in gains that the policy makers can be uncompromising in their stands on debt relief for the former and debt ceilings for the latter.  This is a serious miscalculation as any savvy market professional can tell you the velocity of the downside is significantly greater than any upside move.  The meandering of the upside's relentless grind is easily eclipsed by the fall.

The old saying on the trading floor;  Eat like a  bird,  s__t like an elephant.

Overbought/ AAPL or GOOG?

It would seem GOOG would be the obvious choice here given it is up 15% YTD and AAPL is down 15% YTD.  But data from QRiskValue would still say it is AAPL on a percentage basis of current value.

QRiskValue's metric supposes there is a premium one would be willing to receive to give up on the upside prospects for a stock.  Conversely one would have to paid a monetary incentive to purchase a stock in order to protect oneself on the downside. 

As for AAPL and GOOG, while the dollar amount would be higher for GOOG to give up your upside; ($260), the percentage is roughly about 36% of current value.  On the other hand it would take about $189 to give up on the AAPL's upside or about a 41% of current value.  However it does tell you the koolaid test is held by GOOG where sentiment about the prospects for new highs are strong, while the AAPL prospects, adding payout premium, is shy of record price of over $700. 

What you would have to be paid to get out of your love position and how incentive protection it would take to get one to buy a stock tells much about the riskvalue of the market. 

Truth in Selling

The underlying truth about value is always being distorted by those wishing to benefit from the disinformation.  S&P rating agency knew packaged mortgages were of substandard grade when giving them top ratings because they new the truth about what it took to perpetuate their own business model.  The Fed new the world banking system had run out of money essentially funding a growth model the Fed itself had endorsed through its governance and guidance.  So much money had been put into play on debt that there was no where to turn when the big bet failed.  To fund the next leg and possible the last leg of US/world growth required taking the future savings of a nation to inflate the paper assets of banks and their clients.  The truth is those paper assets are worth substantially less than the size of the obligations required to settle accounts on world debt given the markets trading those assets have act as a liquidator to claim them.  The truth is markets act as a pricing tool to transact a sale and selling is the end game.