It’s not just another day in investing-land as bad news rocks around the planet. Monday’s featured players were in Europe as banks were clobbered.
The center of the problems was in Germany featuring Deutsche Bank. The strange thing about it today was a problem already known—leverage. But most experts knew all about this stuff for a long time. Only now is a light shown on it. Below is a table that really doesn’t need an explanation.
That displayed, even the proletariat “gets it” that western countries and financial institutions are being run by a bunch of morons. That’s why we have political populists dominating the electorate. They understand something is terribly wrong as voters gravitate to them.
So we also move to Asia where in China the opaque economic fantasy is reaching its end-game.
This spills over to Japan where central bank experiments continue full speed ahead, and now with negative interest rates. This I might add is without the cooperation of most Japanese housewives who run the family’s budgets. That is, don’t save, spend which runs against their cultural traditions.
So we have a world now awash in debt fueled by central banks and trickling down through the system to private banks, corporations, mortgages, selective home prices and so forth. A pox on their houses and policies! Nothing’s been fixed, just papered over.
But, let’s not move too far off where financial markets have descended or the few that rose Monday. Stocks were able to cut a could chunk of their losses before the closing bell aided by that pesky 2:15 PM Sell Program Express. In other words, the machines took over.
Market sectors moving higher included: Treasury Bonds (TLT), Gold (GLD), Gold Stocks (GDX), Silver (SLV), Euro (FXE) and little else.
Market sectors moving lower included: Everything else.
Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).
Volume was once again heavy and breadth per the WSJ was negative. The worrisome trading trend is the HFTs/Machines might actually prevent a sell-off completion given these late day reversal operations which are only designed for day trades.
It may be the late day buy programs may just delay the inevitable collapse drawing out the process. On the other hand, we’ve seen plenty of Turnaround Tuesday’s from the action we’re seeing now.
I’m not keen on markets for the plain reasons I’ve described in the first section. But then what I think probably doesn’t matter.
Let’s see what happens.
Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001.
Top 50 Investing Blogs.
Top 25 Best ETF Newslettersin 2015.
ETF Digestwas awarded one of the most informative ETF websites in the10th Annual Global ETF Awards.
Disclaimer: The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell only any security. Market sectors and related ETF's are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotation's aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com