WARNING!!! Markets Set to Collapse Next Week: Almost Everyone Is All In On Nearly Record Amounts of Leverage, Ron Paul On The Fiscal Cliff: “We Have Passed The Point Of No Return”… Negotiations Are Going Very Badly!!! Middle Class Tax Rates Might Have To Be Hiked Too!!!
December 29th, 2012
It could be fairly normal to have the markets down over the new year though generally this type of futures signal would end up being a 500 point drop…
Check out what happened with the DOW futures since Dec 21st 2012:
Margin Debt Soars To 2008 Levels As Everyone Is “All In”, Levered, And Selling Vol
There were some readers who took offense at our “bloodbath” recap of yesterday’s market action (modestly different from that provided by MarketWatch). And, all else equal, a modest 28 step drop in the E-Mini/SPX would hardly be earthshattering. However, all else was not equal, and based on peripheral facts, the reason for our qualifier is that as of last week virtually nobody was prepared for a move as violent and sharp as the one experienced in the last minutes of trading yesterday. In such a context a “mere” 1.5% drop in the futures market has a far more pronounced impact on participants than a 10% or even 5% drop would have had, had traders been positioned appropriately. They weren’t. So what was the context? Let’s find out.