# (Bull) Market 2021



## ducati916 (3 January 2021)

Just a continuation of the thread. When the markets re-open on Monday (Tuesday our time) the Christmas/New Year low volume period will be over. It will be back to business as usual.

Last year saw:











The dominance of growth over value. This is likely to continue as it is a function of interest rates. As interest rates are not going to be allowed to rise too high, so value will continue to lag.

Last year's big gainers:






Proving the growth thesis.

US spending.






And across Europe. 






All major central banks are playing the same game. Europe even more so. Currencies will (I think) come more into focus of those that normally would not pay too much attention to currencies.






Europe, US, all in the same boat, keeping zombies alive. This is highly deflationary as these zombies will provide some level of supply even if it is at a loss. If policy or circumstances change and these are allowed to fail/receivership, there could then be supply issues in the short-term creating inflationary pressure of the CPI version.














Still the (new) cold war continues. Congress just vetoed POTUS and defence spending cuts.

Mr flippe-floppe-flye is still on holiday.

When markets re-open, the bulls will remain in charge. 

jog on
duc


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## ducati916 (4 January 2021)

So without a doubt, the BTC mania is back. I have recovered an article from 2018, which while being an extremely long read, does offer a very different perspective on BTC.

First however, from @noirua and a link provided:










The ETFs are clearly a significant buyer of a broad array of coins, which in a universe of limited supply, result in big price changes to the upside. Given that the total value of BTC is only $400B +/-, this has not yet attracted the forces of institutional short sellers, for example Gold and the Bullion Banks. Along with some large speculators buying in, this has resulted in price rocketing higher.










Wow.






It however mirrors (correlates with) the SOXX ETF. So a way of analysing the internals of BTC is to take a peek under the hood of SOXX. So SOXX correlates with the QQQ:






Therefore, peeking under the hood of QQQ gives (a best guess) of where BTC is likely to go:






Which is in the short term, lower. 

Now the loooooooong read:



> layer innocent nothing argue pottery winner cotton menu task slim merge maid



The sequence of words is meaningless: a random array strung together by an algorithm let loose in an English dictionary. What makes them valuable is that they’ve been generated exclusively for me, by a software tool called MetaMask. In the lingo of cryptography, they’re known as my seed phrase. They might read like an incoherent stream of consciousness, but these words can be transformed into a key that unlocks a digital bank account, or even an online identity. It just takes a few more steps.

On the screen, I’m instructed to keep my seed phrase secure: Write it down, or keep it in a secure place on your computer. I scribble the 12 words onto a notepad, click a button and my seed phrase is transformed into a string of 64 seemingly patternless characters:


> 1b0be2162cedb2744d016943bb14e71de6af95a63af3790d6b41b1e719dc5c66



This is what’s called a “private key” in the world of cryptography: a way of proving identity, in the same, limited way that real-world keys attest to your identity when you unlock your front door. My seed phrase will generate that exact sequence of characters every time, but there’s no known way to reverse-engineer the original phrase from the key, which is why it is so important to keep the seed phrase in a safe location.

That private key number is then run through two additional transformations, creating a new string:


> 0x6c2ecd6388c550e8d99ada34a1cd55bedd052ad9



That string is my address on the Ethereum blockchain.

Ethereum belongs to the same family as the cryptocurrency Bitcoin, whose value has increased more than 1,000 percent in just the past year. Ethereum has its own currencies, most notably Ether, but the platform has a wider scope than just money. You can think of my Ethereum address as having elements of a bank account, an email address and a Social Security number. For now, it exists only on my computer as an inert string of nonsense, but the second I try to perform any kind of transaction — say, contributing to a crowdfunding campaign or voting in an online referendum — that address is broadcast out to an improvised worldwide network of computers that tries to verify the transaction. The results of that verification are then broadcast to the wider network again, where more machines enter into a kind of competition to perform complex mathematical calculations, the winner of which gets to record that transaction in the single, canonical record of every transaction ever made in the history of Ethereum. Because those transactions are registered in a sequence of “blocks” of data, that record is called the blockchain.

The whole exchange takes no more than a few minutes to complete. From my perspective, the experience barely differs from the usual routines of online life. But on a technical level, something miraculous is happening — something that would have been unimaginable just a decade ago. I’ve managed to complete a secure transaction without any of the traditional institutions that we rely on to establish trust. No intermediary brokered the deal; no social-media network captured the data from my transaction to better target its advertising; no credit bureau tracked the activity to build a portrait of my financial trustworthiness


And the platform that makes all this possible? No one owns it. There are no venture investors backing Ethereum Inc., because there is no Ethereum Inc. As an organizational form, Ethereum is far closer to a democracy than a private corporation. No imperial chief executive calls the shots. You earn the privilege of helping to steer Ethereum’s ship of state by joining the community and doing the work. Like Bitcoin and most other blockchain platforms, Ethereum is more a swarm than a formal entity. Its borders are porous; its hierarchy is deliberately flattened.

Oh, one other thing: Some members of that swarm have already accumulated a paper net worth in the billions from their labors, as the value of one “coin” of Ether rose from $8 on Jan. 1, 2017, to $843 exactly one year later.

You may be inclined to dismiss these transformations. After all, Bitcoin and Ether’s runaway valuation looks like a case study in irrational exuberance. And why should you care about an arcane technical breakthrough that right now doesn’t feel all that different from signing in to a website to make a credit card payment?

‘The Bitcoin bubble may ultimately turn out to be a distraction from the true significance of the blockchain.’
But that dismissal would be shortsighted. If there’s one thing we’ve learned from the recent history of the internet, it’s that seemingly esoteric decisions about software architecture can unleash profound global forces once the technology moves into wider circulation. If the email standards adopted in the 1970s had included public-private key cryptography as a default setting, we might have avoided the cataclysmic email hacks that have afflicted everyone from Sony to John Podesta, and millions of ordinary consumers might be spared routinized identity theft. If Tim Berners-Lee, the inventor of the World Wide Web, had included a protocol for mapping our social identity in his original specs, we might not have Facebook.

The true believers behind blockchain platforms like Ethereum argue that a network of distributed trust is one of those advances in software architecture that will prove, in the long run, to have historic significance. That promise has helped fuel the huge jump in cryptocurrency valuations. But in a way, the Bitcoin bubble may ultimately turn out to be a distraction from the true significance of the blockchain. The real promise of these new technologies, many of their evangelists believe, lies not in displacing our currencies but in replacing much of what we now think of as the internet, while at the same time returning the online world to a more decentralized and egalitarian system. If you believe the evangelists, the blockchain is the future. But it is also a way of getting back to the internet’s roots.
*Once the inspiration* for utopian dreams of infinite libraries and global connectivity, the internet has seemingly become, over the past year, a universal scapegoat: the cause of almost every social ill that confronts us. Russian trolls destroy the democratic system with fake news on Facebook; hate speech flourishes on Twitter and Reddit; the vast fortunes of the geek elite worsen income equality. For many of us who participated in the early days of the web, the last few years have felt almost postlapsarian. The web had promised a new kind of egalitarian media, populated by small magazines, bloggers and self-organizing encyclopedias; the information titans that dominated mass culture in the 20th century would give way to a more decentralized system, defined by collaborative networks, not hierarchies and broadcast channels. The wider culture would come to mirror the peer-to-peer architecture of the internet itself. The web in those days was hardly a utopia — there were financial bubbles and spammers and a thousand other problems — but beneath those flaws, we assumed, there was an underlying story of progress.

Last year marked the point at which that narrative finally collapsed. The existence of internet skeptics is nothing new, of course; the difference now is that the critical voices increasingly belong to former enthusiasts. “We have to fix the internet,” Walter Isaacson, Steve Jobs’s biographer, wrote in an essay published a few weeks after Donald Trump was elected president. “After 40 years, it has begun to corrode, both itself and us.” The former Google strategist James Williams told The Guardian: “The dynamics of the attention economy are structurally set up to undermine the human will.” In a blog post, Brad Burnham, a managing partner at Union Square Ventures, a top New York venture-capital firm, bemoaned the collateral damage from the quasi monopolies of the digital age: “Publishers find themselves becoming commodity content suppliers in a sea of undifferentiated content in the Facebook news feed. Websites see their fortunes upended by small changes in Google’s search algorithms. And manufacturers watch helplessly as sales dwindle when Amazon decides to source products directly in China and redirect demand to their own products.” (Full disclosure: Burnham’s firm invested in a company I started in 2006; we have had no financial relationship since it sold in 2011.) Even Berners-Lee, the inventor of the web itself, wrote a blog post voicing his concerns that the advertising-based model of social media and search engines creates a climate where “misinformation, or ‘fake news,’ which is surprising, shocking or designed to appeal to our biases, can spread like wildfire.”

For most critics, the solution to these immense structural issues has been to propose either a new mindfulness about the dangers of these tools — turning off our smartphones, keeping kids off social media — or the strong arm of regulation and antitrust: making the tech giants subject to the same scrutiny as other industries that are vital to the public interest, like the railroads or telephone networks of an earlier age. Both those ideas are commendable: We probably should develop a new set of habits governing how we interact with social media, and it seems entirely sensible that companies as powerful as Google and Facebook should face the same regulatory scrutiny as, say, television networks. But those interventions are unlikely to fix the core problems that the online world confronts. After all, it was not just the antitrust division of the Department of Justice that challenged Microsoft’s monopoly power in the 1990s; it was also the emergence of new software and hardware — the web, open-source software and Apple products — that helped undermine Microsoft’s dominant position.

The blockchain evangelists behind platforms like Ethereum believe that a comparable array of advances in software, cryptography and distributed systems has the ability to tackle today’s digital problems: the corrosive incentives of online advertising; the quasi monopolies of Facebook, Google and Amazon; Russian misinformation campaigns. If they succeed, their creations may challenge the hegemony of the tech giants far more effectively than any antitrust regulation. They even claim to offer an alternative to the winner-take-all model of capitalism than has driven wealth inequality to heights not seen since the age of the robber barons.

That remedy is not yet visible in any product that would be intelligible to an ordinary tech consumer. The only blockchain project that has crossed over into mainstream recognition so far is Bitcoin, which is in the middle of a speculative bubble that makes the 1990s internet I.P.O. frenzy look like a neighborhood garage sale. And herein lies the cognitive dissonance that confronts anyone trying to make sense of the blockchain: the potential power of this would-be revolution is being actively undercut by the crowd it is attracting, a veritable goon squad of charlatans, false prophets and mercenaries. Not for the first time, technologists pursuing a vision of an open and decentralized network have found themselves surrounded by a wave of opportunists looking to make an overnight fortune. The question is whether, after the bubble has burst, the very real promise of the blockchain can endure.

*To some students* of modern technological history, the internet’s fall from grace follows an inevitable historical script. As Tim Wu argued in his 2010 book, “The Master Switch,” all the major information technologies of the 20th century adhered to a similar developmental pattern, starting out as the playthings of hobbyists and researchers motivated by curiosity and community, and ending up in the hands of multinational corporations fixated on maximizing shareholder value. Wu calls this pattern the Cycle, and on the surface at least, the internet has followed the Cycle with convincing fidelity. The internet began as a hodgepodge of government-funded academic research projects and side-hustle hobbies. But 20 years after the web first crested into the popular imagination, it has produced in Google, Facebook and Amazon — and indirectly, Apple — what may well be the most powerful and valuable corporations in the history of capitalism.

Blockchain advocates don’t accept the inevitability of the Cycle. The roots of the internet were in fact more radically open and decentralized than previous information technologies, they argue, and had we managed to stay true to those roots, it could have remained that way. The online world would not be dominated by a handful of information-age titans; our news platforms would be less vulnerable to manipulation and fraud; identity theft would be far less common; advertising dollars would be distributed across a wider range of media properties.

To understand why, it helps to think of the internet as two fundamentally different kinds of systems stacked on top of each other, like layers in an archaeological dig. One layer is composed of the software protocols that were developed in the 1970s and 1980s and hit critical mass, at least in terms of audience, in the 1990s. (A protocol is the software version of a lingua franca, a way that multiple computers agree to communicate with one another. There are protocols that govern the flow of the internet’s raw data, and protocols for sending email messages, and protocols that define the addresses of web pages.) And then above them, a second layer of web-based services — Facebook, Google, Amazon, Twitter — that largely came to power in the following decade.

The first layer — call it InternetOne — was founded on open protocols, which in turn were defined and maintained by academic researchers and international-standards bodies, owned by no one. In fact, that original openness continues to be all around us, in ways we probably don’t appreciate enough. Email is still based on the open protocols POP, SMTP and IMAP; websites are still served up using the open protocol HTTP; bits are still circulated via the original open protocols of the internet, TCP/IP. You don’t need to understand anything about how these software conventions work on a technical level to enjoy their benefits. The key characteristic they all share is that anyone can use them, free of charge. You don’t need to pay a licensing fee to some corporation that owns HTTP if you want to put up a web page; you don’t have to sell a part of your identity to advertisers if you want to send an email using SMTP. Along with Wikipedia, the open protocols of the internet constitute the most impressive example of commons-based production in human history.

To see how enormous but also invisible the benefits of such protocols have been, imagine that one of those key standards had not been developed: for instance, the open standard we use for defining our geographic location, GPS. Originally developed by the United States military, the Global Positioning System was first made available for civilian use during the Reagan administration. For about a decade, it was largely used by the aviation industry, until individual consumers began to use it in car navigation systems. And now we have smartphones that can pick up a signal from GPS satellites orbiting above us, and we use that extraordinary power to do everything from locating nearby restaurants to playing Pokémon Go to coordinating disaster-relief efforts.

But what if the military had kept GPS out of the public domain? Presumably, sometime in the 1990s, a market signal would have gone out to the innovators of Silicon Valley and other tech hubs, suggesting that consumers were interested in establishing their exact geographic coordinates so that those locations could be projected onto digital maps. There would have been a few years of furious competition among rival companies, who would toss their own proprietary satellites into orbit and advance their own unique protocols, but eventually the market would have settled on one dominant model, given all the efficiencies that result from a single, common way of verifying location. Call that imaginary firm GeoBook. Initially, the embrace of GeoBook would have been a leap forward for consumers and other companies trying to build location awareness into their hardware and software. But slowly, a darker narrative would have emerged: a single private corporation, tracking the movements of billions of people around the planet, building an advertising behemoth based on our shifting locations. Any start-up trying to build a geo-aware application would have been vulnerable to the whims of mighty GeoBook. Appropriately angry polemics would have been written denouncing the public menace of this Big Brother in the sky.

But none of that happened, for a simple reason. Geolocation, like the location of web pages and email addresses and domain names, is a problem we solved with an open protocol. And because it’s a problem we don’t have, we rarely think about how beautifully GPS does work and how many different applications have been built on its foundation.

The open, decentralized web turns out to be alive and well on the InternetOne layer. But since we settled on the World Wide Web in the mid-’90s, we’ve adopted very few new open-standard protocols. The biggest problems that technologists tackled after 1995 — many of which revolved around identity, community and payment mechanisms — were left to the private sector to solve. This is what led, in the early 2000s, to a powerful new layer of internet services, which we might call InternetTwo.

For all their brilliance, the inventors of the open protocols that shaped the internet failed to include some key elements that would later prove critical to the future of online culture. Perhaps most important, they did not create a secure open standard that established human identity on the network. Units of information could be defined — pages, links, messages — but _people_ did not have their own protocol: no way to define and share your real name, your location, your interests or (perhaps most crucial) your relationships to other people online.
This turns out to have been a major oversight, because identity is the sort of problem that benefits from one universally recognized solution. It’s what Vitalik Buterin, a founder of Ethereum, describes as “base-layer” infrastructure: things like language, roads and postal services, platforms where commerce and competition are actually assisted by having an underlying layer in the public domain. Offline, we don’t have an open market for physical passports or Social Security numbers; we have a few reputable authorities — most of them backed by the power of the state — that we use to confirm to others that we are who we say we are. But online, the private sector swooped in to fill that vacuum, and because identity had that characteristic of being a universal problem, the market was heavily incentivized to settle on one common standard for defining yourself and the people you know.

The self-reinforcing feedback loops that economists call “increasing returns” or “network effects” kicked in, and after a period of experimentation in which we dabbled in social-media start-ups like Myspace and Friendster, the market settled on what is essentially a proprietary standard for establishing who you are and whom you know. That standard is Facebook. With more than two billion users, Facebook is far larger than the entire internet at the peak of the dot-com bubble in the late 1990s. And that user growth has made it the world’s sixth-most-valuable corporation, just 14 years after it was founded. Facebook is the ultimate embodiment of the chasm that divides InternetOne and InternetTwo economies. No private company owned the protocols that defined email or GPS or the open web. But one single corporation owns the data that define social identity for two billion people today — and one single person, Mark Zuckerberg, holds the majority of the voting power in that corporation.

If you see the rise of the centralized web as an inevitable turn of the Cycle, and the open-protocol idealism of the early web as a kind of adolescent false consciousness, then there’s less reason to fret about all the ways we’ve abandoned the vision of InternetOne. Either we’re living in a fallen state today and there’s no way to get back to Eden, or Eden itself was a kind of fantasy that was always going to be corrupted by concentrated power. In either case, there’s no point in trying to restore the architecture of InternetOne; our only hope is to use the power of the state to rein in these corporate giants, through regulation and antitrust action. It’s a variation of the old Audre Lorde maxim: “The master’s tools will never dismantle the master’s house.” You can’t fix the problems technology has created for us by throwing more technological solutions at it. You need forces outside the domain of software and servers to break up cartels with this much power.
But the thing about the master’s house, in this analogy, is that it’s a duplex. The upper floor has indeed been built with tools that cannot be used to dismantle it. But the open protocols beneath them still have the potential to build something better.

*One of the most* persuasive advocates of an open-protocol revival is Juan Benet, a Mexican-born programmer now living on a suburban side street in Palo Alto, Calif., in a three-bedroom rental that he shares with his girlfriend and another programmer, plus a rotating cast of guests, some of whom belong to Benet’s organization, Protocol Labs. On a warm day in September, Benet greeted me at his door wearing a black Protocol Labs hoodie. The interior of the space brought to mind the incubator/frat house of HBO’s “Silicon Valley,” its living room commandeered by an array of black computer monitors. In the entrance hallway, the words “Welcome to Rivendell” were scrawled out on a whiteboard, a nod to the Elven city from “Lord of the Rings.” “We call this house Rivendell,” Benet said sheepishly. “It’s not a very good Rivendell. It doesn’t have enough books, or waterfalls, or elves.”

Benet, who is 29, considers himself a child of the first peer-to-peer revolution that briefly flourished in the late 1990s and early 2000s, driven in large part by networks like BitTorrent that distributed media files, often illegally. That initial flowering was in many ways a logical outgrowth of the internet’s decentralized, open-protocol roots. The web had shown that you could publish documents reliably in a commons-based network. Services like BitTorrent or Skype took that logic to the next level, allowing ordinary users to add new functionality to the internet: creating a distributed library of (largely pirated) media, as with BitTorrent, or helping people make phone calls over the internet, as with Skype.

‘We’re not trying to replace the U.S. government. It’s not meant to be a real currency; it’s meant to be a pseudo-currency inside this world.’
Sitting in the living room/office at Rivendell, Benet told me that he thinks of the early 2000s, with the ascent of Skype and BitTorrent, as “the ‘summer’ of peer-to-peer” — its salad days. “But then peer-to-peer hit a wall, because people started to prefer centralized architectures,” he said. “And partly because the peer-to-peer business models were piracy-driven.” A graduate of Stanford’s computer-science program, Benet talks in a manner reminiscent of Elon Musk: As he speaks, his eyes dart across an empty space above your head, almost as though he’s reading an invisible teleprompter to find the words. He is passionate about the technology Protocol Labs is developing, but also keen to put it in a wider context. For Benet, the shift from distributed systems to more centralized approaches set in motion changes that few could have predicted. “The rules of the game, the rules that govern all of this technology, matter a lot,” he said. “The structure of what we build now will paint a very different picture of the way things will be five or 10 years in the future.” He continued: “It was clear to me then that peer-to-peer was this extraordinary thing. What was not clear to me then was how at risk it is. It was not clear to me that you had to take up the baton, that it’s now your turn to protect it.”

Protocol Labs is Benet’s attempt to take up that baton, and its first project is a radical overhaul of the internet’s file system, including the basic scheme we use to address the location of pages on the web. Benet calls his system IPFS, short for InterPlanetary File System. The current protocol — HTTP — pulls down web pages from a single location at a time and has no built-in mechanism for archiving the online pages. IPFS allows users to download a page simultaneously from multiple locations and includes what programmers call “historic versioning,” so that past iterations do not vanish from the historical record. To support the protocol, Benet is also creating a system called Filecoin that will allow users to effectively rent out unused hard-drive space. (Think of it as a sort of Airbnb for data.) “Right now there are tons of hard drives around the planet that are doing nothing, or close to nothing, to the point where their owners are just losing money,” Benet said. “So you can bring online a massive amount of supply, which will bring down the costs of storage.” But as its name suggests, Protocol Labs has an ambition that extends beyond these projects; Benet’s larger mission is to support many new open-source protocols in the years to come.

Why did the internet follow the path from open to closed? One part of the explanation lies in sins of omission: By the time a new generation of coders began to tackle the problems that InternetOne left unsolved, there were near-limitless sources of capital to invest in those efforts, so long as the coders kept their systems closed. The secret to the success of the open protocols of InternetOne is that they were developed in an age when most people didn’t care about online networks, so they were able to stealthily reach critical mass without having to contend with wealthy conglomerates and venture capitalists. By the mid-2000s, though, a promising new start-up like Facebook could attract millions of dollars in financing even before it became a household brand. And that private-sector money ensured that the company’s key software would remain closed, in order to capture as much value as possible for shareholders.

And yet — as the venture capitalist Chris Dixon points out — there was another factor, too, one that was more technical than financial in nature. “Let’s say you’re trying to build an open Twitter,” Dixon explained while sitting in a conference room at the New York offices of Andreessen Horowitz, where he is a general partner. “I’m @cdixon at Twitter. Where do you store that? You need a database.” A closed architecture like Facebook’s or Twitter’s puts all the information about its users — their handles, their likes and photos, the map of connections they have to other individuals on the network — into a private database that is maintained by the company. Whenever you look at your Facebook newsfeed, you are granted access to some infinitesimally small section of that database, seeing only the information that is relevant to you.

Running Facebook’s database is an unimaginably complex operation, relying on hundreds of thousands of servers scattered around the world, overseen by some of the most brilliant engineers on the planet. From Facebook’s point of view, they’re providing a valuable service to humanity: creating a common social graph for almost everyone on earth. The fact that they have to sell ads to pay the bills for that service — and the fact that the scale of their network gives them staggering power over the minds of two billion people around the world — is an unfortunate, but inevitable, price to pay for a shared social graph. And that trade-off did in fact make sense in the mid-2000s; creating a single database capable of tracking the interactions of hundreds of millions of people — much less two billion — was the kind of problem that could be tackled only by a single organization. But as Benet and his fellow blockchain evangelists are eager to prove, that might not be true anymore.

So how can you get meaningful adoption of base-layer protocols in an age when the big tech companies have already attracted billions of users and collectively sit on hundreds of billions of dollars in cash? If you happen to believe that the internet, in its current incarnation, is causing significant and growing harm to society, then this seemingly esoteric problem — the difficulty of getting people to adopt new open-source technology standards — turns out to have momentous consequences. If we can’t figure out a way to introduce new, rival base-layer infrastructure, then we’re stuck with the internet we have today. The best we can hope for is government interventions to scale back the power of Facebook or Google, or some kind of consumer revolt that encourages that marketplace to shift to less hegemonic online services, the digital equivalent of forswearing big agriculture for local farmers’ markets. Neither approach would upend the underlying dynamics of InternetTwo.

*The first hint* of a meaningful challenge to the closed-protocol era arrived in 2008, not long after Zuckerberg opened the first international headquarters for his growing company. A mysterious programmer (or group of programmers) going by the name Satoshi Nakamoto circulated a paper on a cryptography mailing list. The paper was called “Bitcoin: A Peer-to-Peer Electronic Cash System,” and in it, Nakamoto outlined an ingenious system for a digital currency that did not require a centralized trusted authority to verify transactions. At the time, Facebook and Bitcoin seemed to belong to entirely different spheres — one was a booming venture-backed social-media start-up that let you share birthday greetings and connect with old friends, while the other was a byzantine scheme for cryptographic currency from an obscure email list. But 10 years later, the ideas that Nakamoto unleashed with that paper now pose the most significant challenge to the hegemony of InternetTwo giants like Facebook.

The paradox about Bitcoin is that it may well turn out to be a genuinely revolutionary breakthrough and at the same time a colossal failure as a currency. As I write, Bitcoin has increased in value by nearly 100,000 percent over the past five years, making a fortune for its early investors but also branding it as a spectacularly unstable payment mechanism. The process for creating new Bitcoins has also turned out to be a staggering energy drain.

History is replete with stories of new technologies whose initial applications end up having little to do with their eventual use. All the focus on Bitcoin as a payment system may similarly prove to be a distraction, a technological red herring. Nakamoto pitched Bitcoin as a “peer-to-peer electronic-cash system” in the initial manifesto, but at its heart, the innovation he (or she or they) was proposing had a more general structure, with two key features.

First, Bitcoin offered a kind of proof that you could create a secure database — the blockchain — scattered across hundreds or thousands of computers, with no single authority controlling and verifying the authenticity of the data.

Second, Nakamoto designed Bitcoin so that the work of maintaining that distributed ledger was itself rewarded with small, increasingly scarce Bitcoin payments. If you dedicated half your computer’s processing cycles to helping the Bitcoin network get its math right — and thus fend off the hackers and scam artists — you received a small sliver of the currency. Nakamoto designed the system so that Bitcoins would grow increasingly difficult to earn over time, ensuring a certain amount of scarcity in the system. If you helped Bitcoin keep that database secure in the early days, you would earn more Bitcoin than later arrivals. This process has come to be called “mining.”
For our purposes, forget everything else about the Bitcoin frenzy, and just keep these two things in mind: What Nakamoto ushered into the world was a way of agreeing on the contents of a database without anyone being “in charge” of the database, and a way of compensating people for helping make that database more valuable, without those people being on an official payroll or owning shares in a corporate entity. Together, those two ideas solved the distributed-database problem and the funding problem. Suddenly there was a way of supporting open protocols that wasn’t available during the infancy of Facebook and Twitter.

These two features have now been replicated in dozens of new systems inspired by Bitcoin. One of those systems is Ethereum, proposed in a white paper by Vitalik Buterin when he was just 19. Ethereum does have its currencies, but at its heart Ethereum was designed less to facilitate electronic payments than to allow people to run applications on top of the Ethereum blockchain. There are currently hundreds of Ethereum apps in development, ranging from prediction markets to Facebook clones to crowdfunding services. Almost all of them are in pre-alpha stage, not ready for consumer adoption. Despite the embryonic state of the applications, the Ether currency has seen its own miniature version of the Bitcoin bubble, most likely making Buterin an immense fortune.

These currencies can be used in clever ways. Juan Benet’s Filecoin system will rely on Ethereum technology and reward users and developers who adopt its IPFS protocol or help maintain the shared database it requires. Protocol Labs is creating its own cryptocurrency, also called Filecoin, and has plans to sell some of those coins on the open market in the coming months. (In the summer of 2017, the company raised $135 million in the first 60 minutes of what Benet calls a “presale” of the tokens to accredited investors.) Many cryptocurrencies are first made available to the public through a process known as an initial coin offering, or I.C.O.

The I.C.O. abbreviation is a deliberate echo of the initial public offering that so defined the first internet bubble in the 1990s. But there is a crucial difference between the two. Speculators can buy in during an I.C.O., but they are not buying an ownership stake in a private company and its proprietary software, the way they might in a traditional I.P.O. Afterward, the coins will continue to be created in exchange for labor — in the case of Filecoin, by anyone who helps maintain the Filecoin network. Developers who help refine the software can earn the coins, as can ordinary users who lend out spare hard-drive space to expand the network’s storage capacity. The Filecoin is a way of signaling that someone, somewhere, has added value to the network.

Advocates like Chris Dixon have started referring to the compensation side of the equation in terms of “tokens,” not coins, to emphasize that the technology here isn’t necessarily aiming to disrupt existing currency systems. “I like the metaphor of a token because it makes it very clear that it’s like an arcade,” he says. “You go to the arcade, and in the arcade you can use these tokens. But we’re not trying to replace the U.S. government. It’s not meant to be a real currency; it’s meant to be a pseudo-currency inside this world.” Dan Finlay, a creator of MetaMask, echoes Dixon’s argument. “To me, what’s interesting about this is that we get to program new value systems,” he says. “They don’t have to resemble money.”

Pseudo or not, the idea of an I.C.O. has already inspired a host of shady offerings, some of them endorsed by celebrities who would seem to be unlikely blockchain enthusiasts, like DJ Khaled, Paris Hilton and Floyd Mayweather. In a blog post published in October 2017, Fred Wilson, a founder of Union Square Ventures and an early advocate of the blockchain revolution, thundered against the spread of I.C.O.s. “I hate it,” Wilson wrote, adding that most I.C.O.s “are scams. And the celebrities and others who promote them on their social-media channels in an effort to enrich themselves are behaving badly and possibly violating securities laws.” Arguably the most striking thing about the surge of interest in I.C.O.s — and in existing currencies like Bitcoin or Ether — is how much financial speculation has already gravitated to platforms that have effectively zero adoption among ordinary consumers. At least during the internet bubble of late 1990s, ordinary people were buying books on Amazon or reading newspapers online; there was clear evidence that the web was going to become a mainstream platform. Today, the hype cycles are so accelerated that billions of dollars are chasing a technology that almost no one outside the cryptocommunity understands, much less uses.

*Let’s say,* for the sake of argument, that the hype is warranted, and blockchain platforms like Ethereum become a fundamental part of our digital infrastructure. How would a distributed ledger and a token economy somehow challenge one of the tech giants? One of Fred Wilson’s partners at Union Square Ventures, Brad Burnham, suggests a scenario revolving around another tech giant that has run afoul of regulators and public opinion in the last year: Uber. “Uber is basically just a coordination platform between drivers and passengers,” Burnham says. “Yes, it was really innovative, and there were a bunch of things in the beginning about reducing the anxiety of whether the driver was coming or not, and the map — and a whole bunch of things that you should give them a lot of credit for.” But when a new service like Uber starts to take off, there’s a strong incentive for the marketplace to consolidate around a single leader. The fact that more passengers are starting to use the Uber app attracts more drivers to the service, which in turn attracts more passengers. People have their credit cards stored with Uber; they have the app installed already; there are far more Uber drivers on the road. And so the switching costs of trying out some other rival service eventually become prohibitive, even if the chief executive seems to be a jerk or if consumers would, in the abstract, prefer a competitive marketplace with a dozen Ubers. “At some point, the innovation around the coordination becomes less and less innovative,” Burnham says.

The blockchain world proposes something different. Imagine some group like Protocol Labs decides there’s a case to be made for adding another “basic layer” to the stack. Just as GPS gave us a way of discovering and sharing our location, this new protocol would define a simple request: I am here and would like to go there. A distributed ledger might record all its users’ past trips, credit cards, favorite locations — all the metadata that services like Uber or Amazon use to encourage lock-in. Call it, for the sake of argument, the Transit protocol. The standards for sending a Transit request out onto the internet would be entirely open; anyone who wanted to build an app to respond to that request would be free to do so. Cities could build Transit apps that allowed taxi drivers to field requests. But so could bike-share collectives, or rickshaw drivers. Developers could create shared marketplace apps where all the potential vehicles using Transit could vie for your business. When you walked out on the sidewalk and tried to get a ride, you wouldn’t have to place your allegiance with a single provider before hailing. You would simply announce that you were standing at 67th and Madison and needed to get to Union Square. And then you’d get a flurry of competing offers. You could even theoretically get an offer from the M.T.A., which could build a service to remind Transit users that it might be much cheaper and faster just to jump on the 6 train.

How would Transit reach critical mass when Uber and Lyft already dominate the ride-sharing market? This is where the tokens come in. Early adopters of Transit would be rewarded with Transit tokens, which could themselves be used to purchase Transit services or be traded on exchanges for traditional currency. As in the Bitcoin model, tokens would be doled out less generously as Transit grew more popular. In the early days, a developer who built an iPhone app that uses Transit might see a windfall of tokens; Uber drivers who started using Transit as a second option for finding passengers could collect tokens as a reward for embracing the system; adventurous consumers would be rewarded with tokens for using Transit in its early days, when there are fewer drivers available compared with the existing proprietary networks like Uber or Lyft.

As Transit began to take off, it would attract speculators, who would put a monetary price on the token and drive even more interest in the protocol by inflating its value, which in turn would attract more developers, drivers and customers. If the whole system ends up working as its advocates believe, the result is a more competitive but at the same time more equitable marketplace. Instead of all the economic value being captured by the shareholders of one or two large corporations that dominate the market, the economic value is distributed across a much wider group: the early developers of Transit, the app creators who make the protocol work in a consumer-friendly form, the early-adopter drivers and passengers, the first wave of speculators. Token economies introduce a strange new set of elements that do not fit the traditional models: instead of creating value by owning something, as in the shareholder equity model, people create value by improving the underlying protocol, either by helping to maintain the ledger (as in Bitcoin mining), or by writing apps atop it, or simply by using the service. The lines between founders, investors and customers are far blurrier than in traditional corporate models; all the incentives are explicitly designed to steer away from winner-take-all outcomes. And yet at the same time, the whole system depends on an initial speculative phase in which outsiders are betting on the token to rise in value.

“You think about the ’90s internet bubble and all the great infrastructure we got out of that,” Dixon says. “You’re basically taking that effect and shrinking it down to the size of an application.”

‘Bitcoin is now a nine-year-old multibillion-dollar bug bounty, and no one’s hacked it. It feels like pretty good proof.’
*Even decentralized cryptomovements* have their key nodes. For Ethereum, one of those nodes is the Brooklyn headquarters of an organization called ConsenSys, founded by Joseph Lubin, an early Ethereum pioneer. In November, Amanda Gutterman, the 26-year-old chief marketing officer for ConsenSys, gave me a tour of the space. In our first few minutes together, she offered the obligatory cup of coffee, only to discover that the drip-coffee machine in the kitchen was bone dry. “How can we fix the internet if we can’t even make coffee?” she said with a laugh.

Planted in industrial Bushwick, a stone’s throw from the pizza mecca Roberta’s, “headquarters” seemed an unlikely word. The front door was festooned with graffiti and stickers; inside, the stairwells of the space appeared to have been last renovated during the Coolidge administration. Just about three years old, the ConsenSys network now includes more than 550 employees in 28 countries, and the operation has never raised a dime of venture capital. As an organization, ConsenSys does not quite fit any of the usual categories: It is technically a corporation, but it has elements that also resemble nonprofits and workers’ collectives. The shared goal of ConsenSys members is strengthening and expanding the Ethereum blockchain. They support developers creating new apps and tools for the platform, one of which is MetaMask, the software that generated my Ethereum address. But they also offer consulting-style services for companies, nonprofits or governments looking for ways to integrate Ethereum’s smart contracts into their own systems.

The true test of the blockchain will revolve — like so many of the online crises of the past few years — around the problem of identity. Today your digital identity is scattered across dozens, or even hundreds, of different sites: Amazon has your credit-card information and your purchase history; Facebook knows your friends and family; Equifax maintains your credit history. When you use any of those services, you are effectively asking for permission to borrow some of that information about yourself in order perform a task: ordering a Christmas present for your uncle, checking Instagram to see pictures from the office party last night. But all these different fragments of your identity don’t belong to you; they belong to Facebook and Amazon and Google, who are free to sell bits of that information about you to advertisers without consulting you. You, of course, are free to delete those accounts if you choose, and if you stop checking Facebook, Zuckerberg and the Facebook shareholders will stop making money by renting out your attention to their true customers. But your Facebook or Google identity isn’t portable. If you want to join another promising social network that is maybe a little less infected with Russian bots, you can’t extract your social network from Twitter and deposit it in the new service. You have to build the network again from scratch (and persuade all your friends to do the same).

The blockchain evangelists think this entire approach is backward. You should own your digital identity — which could include everything from your date of birth to your friend networks to your purchasing history — and you should be free to lend parts of that identity out to services as you see fit. Given that identity was not baked into the original internet protocols, and given the difficulty of managing a distributed database in the days before Bitcoin, this form of “self-sovereign” identity — as the parlance has it — was a practical impossibility. Now it is an attainable goal. A number of blockchain-based services are trying to tackle this problem, including a new identity system called uPort that has been spun out of ConsenSys and another one called Blockstack that is currently based on the Bitcoin platform. (Tim Berners-Lee is leading the development of a comparable system, called Solid, that would also give users control over their own data.) These rival protocols all have slightly different frameworks, but they all share a general vision of how identity should work on a truly decentralized internet.

What would prevent a new blockchain-based identity standard from following Tim Wu’s Cycle, the same one that brought Facebook to such a dominant position? Perhaps nothing. But imagine how that sequence would play out in practice. Someone creates a new protocol to define your social network via Ethereum. It might be as simple as a list of other Ethereum addresses; in other words, _Here are the public addresses of people I like and trust._ That way of defining your social network might well take off and ultimately supplant the closed systems that define your network on Facebook. Perhaps someday, every single person on the planet might use that standard to map their social connections, just as every single person on the internet uses TCP/IP to share data. But even if this new form of identity became ubiquitous, it wouldn’t present the same opportunities for abuse and manipulation that you find in the closed systems that have become de facto standards. I might allow a Facebook-style service to use my social map to filter news or gossip or music for me, based on the activity of my friends, but if that service annoyed me, I’d be free to sample other alternatives without the switching costs. An open identity standard would give ordinary people the opportunity to sell their attention to the highest bidder, or choose to keep it out of the marketplace altogether.

Gutterman suggests that the same kind of system could be applied to even more critical forms of identity, like health care data. Instead of storing, say, your genome on servers belonging to a private corporation, the information would instead be stored inside a personal data archive. “There may be many corporate entities that I don’t want seeing that data, but maybe I’d like to donate that data to a medical study,” she says. “I could use my blockchain-based self-sovereign ID to [allow] one group to use it and not another. Or I could sell it over here and give it away over there.”

The token architecture would give a blockchain-based identity standard an additional edge over closed standards like Facebook’s. As many critics have observed, ordinary users on social-media platforms create almost all the content without compensation, while the companies capture all the economic value from that content through advertising sales. A token-based social network would at least give early adopters a piece of the action, rewarding them for their labors in making the new platform appealing. “If someone can really figure out a version of Facebook that lets users own a piece of the network and get paid,” Dixon says, “that could be pretty compelling.”

Would that information be more secure in a distributed blockchain than behind the elaborate firewalls of giant corporations like Google or Facebook? In this one respect, the Bitcoin story is actually instructive: It may never be stable enough to function as a currency, but it does offer convincing proof of just how secure a distributed ledger can be. “Look at the market cap of Bitcoin or Ethereum: $80 billion, $25 billion, whatever,” Dixon says. “That means if you successfully attack that system, you could walk away with more than a billion dollars. You know what a ‘bug bounty’ is? Someone says, ‘If you hack my system, I’ll give you a million dollars.’ So Bitcoin is now a nine-year-old multibillion-dollar bug bounty, and no one’s hacked it. It feels like pretty good proof.”

Additional security would come from the decentralized nature of these new identity protocols. In the identity system proposed by Blockstack, the actual information about your identity — your social connections, your purchasing history — could be stored anywhere online. The blockchain would simply provide cryptographically secure keys to unlock that information and share it with other trusted providers. A system with a centralized repository with data for hundreds of millions of users — what security experts call “honey pots” — is far more appealing to hackers. Which would you rather do: steal a hundred million credit histories by hacking into a hundred million separate personal computers and sniﬃng around until you found the right data on each machine? Or just hack into one honey pot at Equifax and walk away with the same amount of data in a matter of hours? As Gutterman puts it, “It’s the difference between robbing a house versus robbing the entire village.”

*So much of* the blockchain’s architecture is shaped by predictions about how that architecture might be abused once it finds a wider audience. That is part of its charm and its power. The blockchain channels the energy of speculative bubbles by allowing tokens to be shared widely among true supporters of the platform. It safeguards against any individual or small group gaining control of the entire database. Its cryptography is designed to protect against surveillance states or identity thieves. In this, the blockchain displays a familial resemblance to political constitutions: Its rules are designed with one eye on how those rules might be exploited down the line.
Much has been made of the anarcho-libertarian streak in Bitcoin and other nonfiat currencies; the community is rife with words and phrases (“self-sovereign”) that sound as if they could be slogans for some militia compound in Montana. And yet in its potential to break up large concentrations of power and explore less-proprietary models of ownership, the blockchain idea offers a tantalizing possibility for those who would like to distribute wealth more equitably and break up the cartels of the digital age.

The blockchain worldview can also sound libertarian in the sense that it proposes nonstate solutions to capitalist excesses like information monopolies. But to believe in the blockchain is not necessarily to oppose regulation, if that regulation is designed with complementary aims. Brad Burnham, for instance, suggests that regulators should insist that everyone have “a right to a private data store,” where all the various facets of their online identity would be maintained. But governments wouldn’t be required to design those identity protocols. They would be developed on the blockchain, open source. Ideologically speaking, that private data store would be a true team effort: built as an intellectual commons, funded by token speculators, supported by the regulatory state.

Like the original internet itself, the blockchain is an idea with radical — almost communitarian — possibilities that at the same time has attracted some of the most frivolous and regressive appetites of capitalism. We spent our first years online in a world defined by open protocols and intellectual commons; we spent the second phase in a world increasingly dominated by closed architectures and proprietary databases. We have learned enough from this history to support the hypothesis that open works better than closed, at least where base-layer issues are concerned. But we don’t have an easy route back to the open-protocol era. Some messianic next-generation internet protocol is not likely to emerge out of Department of Defense research, the way the first-generation internet did nearly 50 years ago.
Yes, the blockchain may seem like the very worst of speculative capitalism right now, and yes, it is demonically challenging to understand. But the beautiful thing about open protocols is that they can be steered in surprising new directions by the people who discover and champion them in their infancy. Right now, the only real hope for a revival of the open-protocol ethos lies in the blockchain. Whether it eventually lives up to its egalitarian promise will in large part depend on the people who embrace the platform, who take up the baton, as Juan Benet puts it, from those early online pioneers. If you think the internet is not working in its current incarnation, you can’t change the system through think-pieces and F.C.C. regulations alone. You need new code.


So congrats if you made it all-the-way-through. That was a 3 cups of coffee read for me.

jog on
duc


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## ducati916 (4 January 2021)

Some more charts:






Wow!

Back on planet earth: Gold not looking super strong atm. Which makes me really question what exactly (other than a pure speculative bubble) people are buying in the crypto space. If you love crypto, you should love gold. I haven't seen anything in the crypto space, as an argument for holding that does not apply to gold. The 1 difference is volume of supply/availability. BTC will be 21M coins. Full stop. If crypto (BTC) is going to be an equivalent store of value re. gold, then a higher price/coin is definitely on the cards.

But therein lies the seed of its own destruction: one of the functions of money (and this is what it is being touted as) is that there has to be enough of it to be in common usage. At 21M coins, BTC is not 'money'. 











The great (1982-2020) Bull market is over (assuming ZIRP and no moves to NIRP). Therefore as a long term hold, short treasuries via an ETF. Obviously if you are short, you pay the holding costs (yield). Not really an attractive proposition.

All of the below are defensive positions in a stock based bear market. None are even hinting at a 'top' in the SPY.





Financials looking to break out.






Dow Theory confirmation:






jog on
duc


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## qldfrog (4 January 2021)

Can not say i read it, went thru in fast read mode: it is true that there isa quasi evangetical view of that technology.
Sadly that anarchist ideal is far from being realistic and you see blockchain at all sauces, going thru very slow and archaic loops to do things like tracing slabs of meat or counting trees in forests.
The argument being that blockchain is incorruptible..which is mostly true but how many people write their own code to exploit this?
Blockchain is mostly safe but the tools using it or pretending to are mostly uncontrolled and corruptible

Similar as telling you can not have fraud unless you use forged money
So blockchain as a technology has few real world usages, a niche indeed..yet in a world where facts do not matter and narrative is the truth...i might be surprised

Back to crypto currencies, yes it can be. A wealth store, maybe even a currency ..but BTC too slow or limited numbers for that last part.
A lot of scams, some making money..after all ETFs will want to invest in more than BTC and Ethereum so we see exotic rubbish jumping higher and higher.
My view is that both BTC and Ethereum as a machine currency could have a future, a bright one as long as governments do not take umbrage and just ban it.
So my limited exposure...
Hope it adds to the debate


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## barney (4 January 2021)

ducati916 said:


> That was a 3 cups of coffee read for me.   jog on   duc




Lol.  And possibly a candidate for the longest Post on ASF Mr Duc. 🤓   When do you find time to sleep!


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## ducati916 (5 January 2021)

So the first real trading day of 2021 and we have a vol. spike:

We had a couple of 'warnings' during the Santa Rally and lead up: they didn't trigger any sort of decline. The hints were also in the tepid moves higher. The issue is: is this spike moving higher (a buy the dip) or are there going to be further declines?






Leading into the 2021 market: lots of insider selling. The Market Data post details the worst offenders which includes (my hated) ZM.








The hyper activity in Options this year has had its impact on equity markets: the bulls being highly active.











Not sure how you classify one from t'other.





Now this is interesting: the OTC (Over the Counter) market has been red hot. I would have been interested to see how that compared to the 2000 market.






This has been touched on. The difference is that at least this time they (IPOs) have some actual earnings rather than the eyeball metric.






Schiller et al. have just completed 'new research' that makes this metric redundant. Now that is 'typical' of market tops.











How January goes, goes the rest of the year. Therefore we would want to see January recover.






Probably not a big deal. Then again?

From Mr flippe-floppe-flye:









I would expect the 'buy-the-dip' brigade to be out in force. This is a jump in vol. but the fundamental underpinning of the Bull (ultra-low interest rates) are still in place and are not going anywhere anytime soon. Whether the dip continues, is anybody's guess currently, however I would venture that tomorrow will see the peak in the VIX and then gradually receding vol. I would wait until tomorrow before buying-the-dip.

jog on
duc


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## ducati916 (5 January 2021)

So looking now at some EOD charts:

So first from 28 Dec. 2020, Bulls were buying the market, but not with a great deal of conviction.






Today, the Bears stepped in. This could continue and I think early trading tomorrow will see initial weakness. However, I don't think it continues much past lunch/close of the market.






Now this is the SPY. There is (next set of charts) a divergence between SPY and QQQ. The cubes are more over extended than the SPY. Continued weakness in SPY will be likely due to higher vol. in QQQ.














SPY has a short-term support. QQQ is still in free-fall.

Margin is high. A fall in value of stock collateral, of course creates a margin call. Just how much too high, possibly we may find out.






Mutual Funds have low cash positions also: they are unlikely to be dip buyers.











Not the greatest start.

jog on
duc


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## investtrader (5 January 2021)

That 'smart money' cliche always makes me laugh. Look at the performance of the smart money funds - not too smart.


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## ducati916 (6 January 2021)

The buy-the-dip brigade came out early. I was expecting a far weaker open.

I wouldn't quite sound the all clear. We have a pause. I would expect vol. to recede. However something spooked the herd. Possibly the elections in Georgia, possibly C19 news, whatever. Everything that jumped: Gold, Bonds, has calmed down. So for the moment all is well.







Some data on that '1'st trading day of the year':






Nothing much in it.

Gold:

Mr @rederob chart (and who was very right the last time around) is bullish again. So I have a sizeable gold position currently and gold therefore is of great interest currently. Now I am not overly concerned re. direction overall, but I am interested (very) in turning points (fluctuations), as my strategy revolves around turning points in trends, rather than outright directional trends. My opening of the position was about 20 days ago, well actually 9 Dec. 2020.

So if gold is breaking out in a new bull cycle higher, I'm very interested and even more interested when it takes a retrace. So my chart after.













As you can see, possibility of a breakout higher, but still very open to argument (Miners as opposed to gold).

My other big market neutral position, Natural Gas:






Some fundamentals (not that I have the slightest interest in them as they change with the weather):









So essentially we can see (a) there is a low(er) supply currently than in previous years, and (b) there still seems to be ample production (time delay in supplying market?). There is weather data suggesting colder temperatures for the US. which has been driving the price higher.

Now I almost re-balanced at the recent lows, but didn't, thinking price would go lower. It didn't. It bounced. So this is a super twitchy market.

Mr flippe-floppe-flye:










Inflation: we are in agreement on the meme of inflation. The inflation theory is out there (obviously the market is paying attention) but it is not embraced by all. There are still many sitting in the dis-inflationary camp and to be fair, there are still significant dis-inflationary forces present, never mind the bete noir risk of an outright deflation (although the Fed. is leaning with all of its weight against that risk).















So overall I expect more vol. in commodities, less vol. (to the upside) in stocks, blunting their returns (slow grind higher) with obvious risks to BS type events with concurrent fast jumps in vol. due to (extreme) valuations. Also clearly the Options market has become an area that can influence short term fluctuations in the market. Because PUT/CALL data is EOD, difficult to catch intra-day moves caused by big volume in the Options market, so it can be as much of a hinderance as help.

jog on
duc


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## ducati916 (6 January 2021)

News:

*Market Movers*

-    *Suncor Energy (NYSE: SU)* says it will record a C$425 million impairment charge for the fourth quarter on its White Rose project.

-   * Royal Dutch Shell (NYSE: RDS.A) *will lay off 700 workers following the shutdown of its Convent refinery.

-   * Ivanhoe Capital Acquisition Corp*., the special purpose acquisition company led by billionaire mining investor Robert Friedland, is raising $200 million to invest in industries key to the global energy transition.

*Tuesday, January 5, 2021 *

Oil prices shot up more than 3% in early trading on Tuesday on news that OPEC+ would push off an expected production increase next month. Risks remain, but investors and traders see more restraint as bullish for oil. 

*OPEC+ leans towards no change.* Oil prices rallied on Tuesday morning, following reports that Russia—the OPEC+ producer that was insisting on a 500,000-bpd production increase in February—has agreed that there would not be another rise in the pact's production next month.

*OPEC+ sees downside risk. *Oil prices have rallied, but OPEC Secretary-General warned of downside risks ahead of the group’s meeting on Monday. “Amid the hopeful signs, the outlook for the first half of 2021 is very mixed and there are still many downside risks to juggle,” said OPEC Secretary-General Mohammad Barkindo.

*U.S. shale could recover. *EIA estimates point to U.S. oil production staying at around 11 million bpd for at least another year, as production rates from existing wells in the U.S. shale patch will fall faster than production gains from fewer newly drilled wells. But some analysts say that the market has been too quick to write off U.S. shale again, and will be surprised by the rebound in American oil production in 2021.

*South Korea tanker seized by Iran.* Iran seized a South Korean vessel in the Persian Gulf. The move comes as Seoul has frozen Iranian funds in Korean banks due to U.S. sanctions. 

_*China struggles to keep lights on. *_China’s rapid recovery has strained power supplies, forcing power cuts to some industrial and commercial users. Electricity demand in November was up 9.4% from a year earlier. 

_*The megatrend in solar. *_The solar sector’s sole pure-play solar fund, *Invesco Solar Portfolio ETF (TAN)*, is up 234% over the past 52 weeks, with a good chunk of those returns having come after Joe Biden was declared the winner of the U.S. presidential elections a month-and-half ago. That incredible momentum is certainly beginning to look like a big bubble in the making, but Wall Street remains bullish. And one secular trend is looking to completely redefine the solar sector.

_*EPA finalizes science rule. *_The U.S. EPA finalized a rule to limit what scientific research can be used in regulations, a move critics say is aimed at crippling the agency’s ability to regulate air and water pollution.

_*Interior finalizes NPR-A plans. *_The Trump administration on Monday finalized plans to open more than 80 percent of Alaska’s National Petroleum Reserve (NPR-A) to oil drilling. The NPR-A is adjacent to the Arctic National Wildlife Refuge.

_*Russia’s oil production falls for the first time. *_Oil production in Russia declined in 2020 for the first time since 2008.

_*Iraq struggles to pay debts.*_ The New York Times looked at the brewing financial crisis in Iraq from the steep drop in oil revenues. 

_*Permian showing signs of life.*_ On the ground in the Permian basin, there are visible signs of an uptick in activity. More traffic, higher production, and better-than-expected revenues for the New Mexico state government. New Mexico’s oil production increased by 5.5% in the third quarter.

_*Dallas Fed: Shale returning. *_The quarterly Dallas Fed survey showed a positive reading for its oil and gas index, the first positive reading since the first quarter of 2019. Multiple readings in the survey – capex, drilling activity, employment, oilfield services activity – showed improvement.

_*CNOOC could be delisted from NYSE. *_China’s state-owned oil firm CNOOC could be removed from the New York Stock Exchange after the Pentagon deemed the company as controlled by the Chinese military. PetroChina Co. and China Petroleum and Chemical Corp., also known as Sinopec, may also be under threat.

_*Biden as $40 billion loan fund to use for clean energy.*_ The Department of Energy has a $40 billion fund for loan guarantees for clean energy that has been largely unused by the Trump administration. Politico reports that the Biden administration will likely tap it to accelerate renewables research and deployment.

_*China’s EV automakers see a surge in sales. *_Chinese electric car start-ups Nio, Li Auto, and Xpeng each announced in the last few days that vehicle deliveries surged last year.

_*Tesla narrowly misses 500,000 sale target.*_ Tesla delivered 499,550 vehicles throughout 2020, falling just short of the company’s goal of shipping 500,000, the company announced on Saturday.

_*Massachusetts to ban gasoline vehicles by 2035.*_ Massachusetts Governor Charlie Baker released a plan on Monday that calls for mandating electric vehicle sales by 2035. The plan also calls for scaling up offshore wind and retrofitting 1 million homes. Gov. Baker is a Republican.

_*U.S. increases Nord Stream 2 sanctions. *_As part of a Pentagon funding bill that the U.S. Congress approved over a presidential veto, the U.S. widened sanctions on the Nord Stream 2 pipeline. The pipeline is more than 90% completed but has been delayed for a year. Russia aims to use its own vessels to complete the project, but new sanctions could pose more delays.

_*Total remove staff from Mozambique over unrest. *_*Total (NYSE: TOT)* removed staff from its Mozambique LNG project due to militant attacks and unrest.

Interesting article on BTC mining:

Two things that seem futuristic: Bitcoin and energy efficiency. Two things that are diametrically opposed: Bitcoin and energy efficiency. Mining Bitcoin might not sound like a resource-intensive process, but in fact it requires almost unbelievably vast amounts of energy. In order to track the shocking energy footprint of Bitcoin mining, the University of Cambridge’s Centre for Alternative Finance created an online tool that measures this consumption to its best ability and compares it to the energy consumption of other entities to put the shocking quantities into perspective.

Thanks to the climbing price of Bitcoin, this week the cryptocurrency’s energy consumption topped that of Pakistan--a nation of more than 200 million people.

This spike in Bitcoin mining is thanks to an explosion in Bitcoin prices. The cryptocurrency’s value has jumped 276% this year alone, trading around $27,000 on Tuesday with a total market value near $500 billion. As MarketWatch points out, this could make Bitcoin not only more energy intensive, but less energy efficient, as the price spike “has made it more profitable to use less-efficient equipment.”

It’s not just Bitcoin’s energy footprint and market value that are gargantuan--its carbon footprint is worryingly large as well. Last year, however, Bitcoin defenders rallied around a new study by cryptocurrency investment products and research firm CoinShares that found nearly 75% of Bitcoins were mined using clean energy. Unfortunately, that report has now come under great scrutiny by other researchers, who have found that estimate to be greatly exaggerated. After all, two thirds of all Bitcoin mining in the world takes place in China, where more than half of the nation’s power is coal-fired.

*Related: Russia Looks To Become Leader In Hydrogen Tech*

In recent months however, this dependence on coal has become a major issue for Bitcoin mining operations in China. As China has experienced an energy shortage in recent months, in large part thanks to Beijing’s decision to blacklist Australian coal imports, domestic Bitcoin mining has come under siege. While China is still far and away the world’s largest trader of Bitcoin, energy shortages and the increased production of other countries are quickly closing that cap.

As of now, two thirds of bitcoin production happens in China, followed by the United States which represents just 7% of all bitcoin production. The U.S. is closely followed by Russia and Kazakhstan. But that ranking could soon change as Russia makes a power play to ramp up its mining operations in a venture led by Gazpromneft, the petro-based subsidiary of Russia’s state-owned natural gas giant Gazprom, the 10th biggest oil producer in the world.

Gazpromneft recently began a cryptocurrency mining operation based in one of its Siberian oil drilling sites, “unlocking the power of Russia’s oil and gas resources for the needs of bitcoin mining,” Yahoo! Finance reported this week. In slightly better news for Bitcoin’s carbon footprint, Russia’s new mining operation will be powered by natural gas from the oil field, located in the Khanty-Mansiysk region of northwestern Siberia, which has its own power plant to convert the gas into electricity for Bitcoin production. And there is another silver (and green) lining to this model: “The CO2 that gets freed during the oil drilling is normally a liability for oil companies as they have to burn it into the atmosphere, which results in fines. However, there are ways to utilize it instead of wasting it, and electricity generation is one of them,” Yahoo! Finance reports.

The location of the new Russian Bitcoin farm also means that the costs of the operation will be relatively low. Instead of paying a premium to use energy from the grid, locating the cryptocurrency mining on-site at an oil field means that a steady supply of natural gas is virtually free. All this is to say that China and the U.S. had better get ready for some stiff competition. 






With a different look:

So the BO occurred 15 Dec. +/- (see short term chart)











Now I haven't drawn the resistance line (longer term chart) but that could be an important inflection point. A BO through that and it is blue sky. 

Gold:

Correlated to the inverse of TIPS: ready to turn higher again?






M1 supply:






Little behind on the data, but with those stimulus cheques coming out, moving higher.

So support seems to have held. We will now test that resistance (line not drawn) above. So whenever I come across a market commentary on a market that I am interested in, I will, time permitting, read/watch their analysis. Most are bullish (vast majority) currently, based on the inflation meme. Does that fill you with confidence or concern?

At the market nadir in March, most were bearish. They were mostly wrong. Now gold/BTC are not the same trade, but they share some of the same arguments re. inflation. BTC has already gone stratospheric. Gold had a good run, then sold off. I think BTC goes higher, at least to test that resistance point, I think gold follows. What happens after that, anybodies guess.








Meanwhile, Mr flippe-floppe-flye had issues into the market close.






jog on
duc


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## Knobby22 (6 January 2021)

Looks, at this time, that the Dems are to win Senate. 

Also Trump is leaning on Pence to disrupt handover. 

All this uncertainty should create a market shock tomorrow. I have the cash ready from my recent sales to take advantage on the ASX.


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## ducati916 (7 January 2021)

So I agree with @Knobby22 above, it looks as if the Dems. will control the Senate after Georgia. That means increased fiscal stimulus for the man in the street, which the market is taking as inflationary.










Other markets (except crypto) are taking their lead from Bonds:

Stocks are up, but 'value' stocks more than Tech (Tech/growth are valued on low yields making growth more valuable) and Banks are having another big move. DPST up 20%+






Stocks also have a very positive catalyst moving forward: lots of cash and low equity issuance levels (especially compared to Europe and EEM). Thus when stock purchases start back in earnest, a bid will sit under the market:






Gold however, not doing so well: Gold hates rising yield. While Fed. policy may move to capping, there is currently no capping in place. Therefore with yields rising, gold is declining.











And a shorter time frame:






Crypto:






Still looking strong. Crypto is currently a Religion. Never short a religion.

Currently nothing from Mr flippe-floppe-flye, very quiet.

jog on
duc


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## Knobby22 (7 January 2021)

Good comments duc  The market is up in the USA. Doesn't seem to be a short term fall as I hoped.

Perhaps I should have seen this.  The Trump die-hards/true believers who post in the general thread don't own shares directly and are into holding actual gold.


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## qldfrog (7 January 2021)

Well, the market shot up!!;
About


ducati916 said:


> As China has experienced an energy shortage in recent months, in large part thanks to Beijing’s decision to blacklist Australian coal imports



This is pure BS, in Australia, we do export a minute part of China thermal coal.
These are facts so electricity issues have not much and probably nothing at all to do with the boycott.
Once again, narrative over facts.repeat BS over and over again and it becomes truth.
But this lies not to say fake news is more comforting for the West than the fact that the economy in China is booming so much that even their hundreds of coal power stations being built are not enough.
While our economies are self destroyed by our own leaders..
Sadly, we can not leverage this knowledge as all the Chinese shares and ETFs in Wall Street are under legislative threat...


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## ducati916 (7 January 2021)

So (another longer read):

*Executive Summary*
The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.

These great bubbles are where fortunes are made and lost – and where investors truly prove their mettle. For positioning a portfolio to avoid the worst pain of a major bubble breaking is likely the most difficult part. Every career incentive in the industry and every fault of individual human psychology will work toward sucking investors in.

But this bubble will burst in due time, no matter how hard the Fed tries to support it, with consequent damaging effects on the economy and on portfolios. Make no mistake – for the majority of investors today, this could very well be the most important event of your investing lives. Speaking as an old student and historian of markets, it is intellectually exciting and terrifying at the same time. It is a privilege to ride through a market like this one more time.

*“The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can’t have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both – and the price we pay for having this market go higher and higher is a lower 10-year return from the peak.”1*
Most of the time, perhaps three-quarters of the time, major asset classes are reasonably priced relative to one another. The correct response is to make modest bets on those assets that measure as being cheaper and hope that the measurements are correct. With reasonable skill at evaluating assets the valuation-based allocator can expect to survive these phases intact with some small outperformance. “Small” because the opportunities themselves are small. If you wanted to be unfriendly you could say that asset allocation in this phase is unlikely to be very important. It would certainly help in these periods if the manager could also add value in the implementation, from the effective selection of countries, sectors, industries, and individual securities as well as major asset classes.

The real trouble with asset allocation, though, is in the remaining times when asset prices move far away from fair value. This is not so bad in bear markets because important bear markets tend to be short and brutal. The initial response of clients is usually to be shocked into inaction during which phase the manager has time to reposition both portfolio and arguments to retain the business. The real problem is in major bull markets that last for years. Long, slow-burning bull markets can spend many years above fair value and even two, three, or four years far above. These events can easily outlast the patience of most clients. And when price rises are very rapid, typically toward the end of a bull market, impatience is followed by anxiety and envy. As I like to say, there is nothing more supremely irritating than watching your neighbors get rich.

How are clients to tell the difference between extreme market behavior and a manager who has lost his way? The usual evidence of talent is past success, but the long cycles of the market are few and far between. Winning two out of two events or three out of three is not as convincing as a larger sample size would be. Even worse the earlier major market breaks are already long gone: 2008, 2000, or 1989 in Japan are practically in the history books. Most of the players will have changed. Certainly, the satisfaction felt by others who eventually won long ago is no solace for current pain experienced by you personally. A simpler way of saying this may be that if Keynes really had said, “The market can stay irrational longer than the investor can stay solvent,” he would have been right.

I am long retired from the job of portfolio management but I am happy to give my opinion here: it is highly probable that we are in a major bubble event in the U.S. market, of the type we typically have every several decades and last had in the late 1990s. It will very probably end badly, although nothing is certain. I will also tell you my definition of success for a bear market call. It is simply that sooner or later there will come a time when an investor is pleased to have been out of the market. That is to say, he will have saved money by being out, and also have reduced risk or volatility on the round trip. This definition of success absolutely does not include precise timing. (Predicting when a bubble breaks is not about valuation. All prior bubble markets have been extremely overvalued, as is this one. Overvaluation is a necessary but not sufficient condition for their bursting.) Calling the week, month, or quarter of the top is all but impossible.

I came fairly close to calling one bull market peak in 2008 and nailed a bear market low in early 2009 when I wrote “Reinvesting When Terrified.” That’s far more luck than I could hope for even over a 50-year career. Far more typically, I was three years too early in the Japan bubble. We at GMO got entirely out of Japan in 1987, when it was over 40% of the EAFE benchmark and selling at over 40x earnings, against a previous all-time high of 25x. It seemed prudent to exit at the time, but for three years we underperformed painfully as the Japanese market went to 65x earnings on its way to becoming over 60% of the benchmark! But we also stayed completely out for three years after the top and ultimately made good money on the round trip.

Similarly, in late 1997, as the S&P 500 passed its previous 1929 peak of 21x earnings, we rapidly sold down our discretionary U.S. equity positions then watched in horror as the market went to 35x on rising earnings. We lost half our Asset Allocation book of business but in the ensuing decline we much more than made up our losses.

Believe me, I know these are old stories. But they are directly relevant. For this current market event is indeed the same old story. This summer, I said it was likely that we were in the later stages of a bubble, with some doubt created by the unique features of the COVID crash. The single most dependable feature of the late stages of the great bubbles of history has been really crazy investor behavior, especially on the part of individuals. For the first 10 years of this bull market, which is the longest in history, we lacked such wild speculation. But now we have it. In record amounts. My colleagues Ben Inker and John Pease have written about some of these examples of mania in the most recent GMO Quarterly Letter, including Hertz, Kodak, Nikola, and, especially, Tesla. As a Model 3 owner, my personal favorite Tesla tidbit is that its market cap, now over $600 billion, amounts to over $1.25 million per car sold each year versus $9,000 per car for GM. What has 1929 got to equal that? Any of these tidbits could perhaps be dismissed as isolated cases (trust me: they are not), but big-picture metrics look even worse.

The "Buffett indicator," total stock market capitalization to GDP, broke through its all-time-high 2000 record. In 2020, there were 480 IPOs (including an incredible 248 SPACs2) – more new listings than the 406 IPOs in 2000. There are 150 non-micro-cap companies (that is, with market capitalization of over $250 million) that have more than tripled in the year, which is over 3 times as many as any year in the previous decade. The volume of small retail purchases, of less than 10 contracts, of call options on U.S. equities has increased 8-fold compared to 2019, and 2019 was already well above long-run average. Perhaps most troubling of all: Nobel laureate and long-time bear Robert Shiller – who correctly and bravely called the 2000 and 2007 bubbles and who is one of the very few economists I respect – is hedging his bets this time, recently making the point that his legendary CAPE asset-pricing indicator (which suggests stocks are nearly as overpriced as at the 2000 bubble peak) shows less impressive overvaluation when compared to bonds. Bonds, however, are even more spectacularly expensive by historical comparison than stocks. Oh my!

So, I am not at all surprised that since the summer the market has advanced at an accelerating rate and with increasing speculative excesses. It is precisely what you should expect from a late-stage bubble: an accelerating, nearly vertical stage of unknowable length – but typically short. Even if it is short, this stage at the end of a bubble is shockingly painful and full of career risk for bears.

I am doubling down, because as prices move further away from trend, at accelerating speed and with growing speculative fervor, of course my confidence as a market historian increases that this is indeed the late stage of a bubble. A bubble that is beginning to look like a real humdinger.

The strangest feature of this bull market is how unlike every previous great bubble it is in one respect. Previous bubbles have combined accommodative monetary conditions with economic conditions that are perceived at the time, rightly or wrongly, as near perfect, which perfection is extrapolated into the indefinite future. The state of economic excellence of any previous bubble of course did not last long, but if it could have lasted, then the market would justifiably have sold at a huge multiple of book. But today’s wounded economy is totally different: only partly recovered, possibly facing a double-dip, probably facing a slowdown, and certainly facing a very high degree of uncertainty. Yet the market is much higher today than it was last fall when the economy looked fine and unemployment was at a historic low. Today the P/E ratio of the market is in the top few percent of the historical range and the economy is in the worst few percent. This is completely without precedent and may even be a better measure of speculative intensity than any SPAC.

This time, more than in any previous bubble, investors are relying on accommodative monetary conditions and zero real rates extrapolated indefinitely. This has in theory a similar effect to assuming peak economic performance forever: it can be used to justify much lower yields on all assets and therefore correspondingly higher asset prices. But neither perfect economic conditions nor perfect financial conditions can last forever, and there’s the rub.

All bubbles end with near universal acceptance that the current one will not end yet…because. Because in 1929 the economy had clicked into “a permanently high plateau”; because Greenspan’s Fed in 2000 was predicting an enduring improvement in productivity and was pledging its loyalty (or moral hazard) to the stock market; because Bernanke believed in 2006 that “U.S. house prices merely reflect a strong U.S. economy” as he perpetuated the moral hazard: if you win you’re on your own, but if you lose you can count on our support. Yellen, and now Powell, maintained this approach. All three of Powell’s predecessors claimed that the asset prices they helped inflate in turn aided the economy through the wealth effect. Which effect we all admit is real. But all three avoided claiming credit for the ensuing market breaks that inevitably followed: the equity bust of 2000 and the housing bust of 2008, each replete with the accompanying anti-wealth effect that came when we least needed it, exaggerating the already guaranteed weakness in the economy. This game surely is the ultimate deal with the devil.

Now once again the high prices this time will hold because…interest rates will be kept around nil forever, in the ultimate statement of moral hazard – the asymmetrical market risk we have come to know and depend on. The mantra of late 2020 was that engineered low rates can prevent a decline in asset prices. Forever! But of course, it was a fallacy in 2000 and it is a fallacy now. In the end, moral hazard did not stop the Tech bubble decline, with the NASDAQ falling 82%. Yes, 82%! Nor, in 2008, did it stop U.S. housing prices declining all the way back to trend and below – which in turn guaranteed first, a shocking loss of over eight trillion dollars of perceived value in housing; second, an ensuing weakness in the economy; and third, a broad rise in risk premia and a broad decline in global asset prices (see Exhibit 1). All the promises were in the end worth nothing, except for one; the Fed did what it could to pick up the pieces and help the markets get into stride for the next round of enhanced prices and ensuing decline. And here we are again, waiting for the last dance and, eventually, for the music to stop.

*EXHIBIT 1: BUBBLES – GREAT WHILE THEY LAST*





*Housing bubble as of 11/30/2011, Tech bubble as of 2/28/2003
Source: S&P 500 (Tech bubble); National Association of Realtors, U.S. Census Bureau (Housing bubble)*
Nothing in investing perfectly repeats. Certainly not investment bubbles. Each form of irrational exuberance is different; we are just looking for what you might call spiritual similarities. Even now, I know that this market can soar upwards for a few more weeks or even months – it feels like we could be anywhere between July 1999 and February 2000. Which is to say it is entitled to break any day, having checked all the boxes, but could keep roaring upwards for a few months longer. My best guess as to the longest this bubble might survive is the late spring or early summer, coinciding with the broad rollout of the COVID vaccine. At that moment, the most pressing issue facing the world economy will have been solved. Market participants will breathe a sigh of relief, look around, and immediately realize that the economy is still in poor shape, stimulus will shortly be cut back with the end of the COVID crisis, and valuations are absurd. “Buy the rumor, sell the news.” But remember that timing the bursting of bubbles has a long history of disappointment.

Even with hindsight, it is seldom easy to point to the pin that burst the bubble. The main reason for this lack of clarity is that the great bull markets did not break when they were presented with a major unexpected negative. Those events, like the portfolio insurance fiasco of 1987, tend to give sharp down legs and quick recoveries. They are in the larger scheme of things unique and technical and are not part of the ebb and flow of the great bubbles. The great bull markets typically turn down when the market conditions are very favorable, just subtly less favorable than they were yesterday. And that is why they are always missed.

Either way, the market is now checking off all the touchy-feely characteristics of a major bubble. The most impressive features are the intensity and enthusiasm of bulls, the breadth of coverage of stocks and the market, and, above all, the rising hostility toward bears. In 1929, to be a bear was to risk physical attack and guarantee character assassination. For us, 1999 was the only experience we have had of clients reacting as if we were deliberately and maliciously depriving them of gains. In comparison, 2008 was nothing. But in the last few months the hostile tone has been rapidly ratcheting up. The irony for bears though is that it’s exactly what we want to hear. It’s a classic precursor of the ultimate break; together with stocks rising, not for their fundamentals, but simply because they are rising.

Another more measurable feature of a late-stage bull, from the South Sea bubble to the Tech bubble of 1999, has been an acceleration3 of the final leg, which in recent cases has been over 60% in the last 21 months to the peak, a rate well over twice the normal rate of bull market ascents. This time, the U.S. indices have advanced from +69% for the S&P 500 to +100% for the Russell 2000 in just 9 months. Not bad! And there may still be more climbing to come. But it has already met this necessary test of a late-stage bubble.

It is a privilege as a market historian to experience a major stock bubble once again. Japan in 1989, the 2000 Tech bubble, the 2008 housing and mortgage crisis, and now the current bubble – these are the four most significant and gripping investment events of my life. Most of the time in more normal markets you show up for work and do your job. Ho hum. And then, once in a long while, the market spirals away from fair value and reality. Fortunes are made and lost in a hurry and investment advisors have a rare chance to really justify their existence. But, as usual, there is no free lunch. These opportunities to be useful come loaded with career risk.

So, here we are again. I expect once again for my bubble call to meet my modest definition of success: at some future date, whenever that may be, it will have paid for you to have ducked from midsummer of 2020. But few professional or individual investors will have been able to have ducked. The combination of timing uncertainty and rapidly accelerating regret on the part of clients means that the career and business risk of fighting the bubble is too great for large commercial enterprises. They can never put their full weight behind bearish advice even if the P/E goes to 65x as it did in Japan. The nearest any of these giant institutions have ever come to offering fully bearish advice in a bubble was UBS in 1999, whose position was nearly identical to ours at GMO. That is to say, somewhere between brave and foolhardy. Luckily for us though, they changed their tack and converted to a fully invested growth stock recommendation at UBS Brinson and its subsidiary, Phillips & Drew, in February 2000, just before the market peak. This took out the 800-pound gorilla that would otherwise have taken most of the rewards for stubborn contrariness. So, don't wait for the Goldmans and Morgan Stanleys to become bearish: it can never happen. For them it is a horribly non-commercial bet. Perhaps it is for anyone. Profitable and risk-reducing for the clients, yes, but commercially impractical for advisors. Their best policy is clear and simple: always be extremely bullish. It is good for business and intellectually undemanding. It is appealing to most investors who much prefer optimism to realistic appraisal, as witnessed so vividly with COVID. And when it all ends, you will as a persistent bull have overwhelming company. This is why you have always had bullish advice in a bubble and always will.

However, for any manager willing to take on that career risk – or more likely for the individual investor – requiring that you get the timing right is overreach. If the hurdle for calling a bubble is set too high, so that you must call the top precisely, you will never try. And that condemns you to ride over the cliff every cycle, along with the great majority of investors and managers.

*What to Do?*
As often happens at bubbly peaks like 1929, 2000, and the Nifty Fifty of 1972 (a second-tier bubble in the company of champions), today’s market features extreme disparities in value by asset class, sector, and company. Those at the very cheap end include traditional value stocks all over the world, relative to growth stocks. Value stocks have had their worst-ever relative decade ending December 2019, followed by the worst-ever year in 2020, with spreads between Growth and Value performance averaging between 20 and 30 percentage points for the single year! Similarly, Emerging Market equities are at 1 of their 3, more or less co-equal, relative lows against the U.S. of the last 50 years. Not surprisingly, we believe it is in the overlap of these two ideas, Value and Emerging, that your relative bets should go, along with the greatest avoidance of U.S. Growth stocks that your career and business risk will allow. Good luck!



So, if he is normally 2yrs too early, where exactly do we sit, best guess/estimation?











So we have just been through or are still in the Tech. phase. Materials is coming up fast. We have missed industrials, largely due to the very specific issues around C19. I'll start looking for a top when Energy is leading the pack.

jog on
duc


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## ducati916 (8 January 2021)

Moving away from the noise and looking at three distinct areas of the markets:

S&P500 will continue to rise in the near term.






The 10yr will consolidate +/- at 1.3%. Therefore I would expect gold to again start moving higher in the interim.






BTC will continue higher. The thing with BTC is that it is a separate thing. It doesn't really tell us anything about markets. It is its own self-contained religion currently. At +/- $500B it simply is too small to influence other markets. It is rank speculation. It may change in the future, but not currently.

An interesting stat. re. the other religion that is TSLA:






That is never a good thing.


jog on
duc


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## Dr.Stock (8 January 2021)

ducati916 said:


> Moving away from the noise and looking at three distinct areas of the markets:
> 
> S&P500 will continue to rise in the near term.
> 
> ...



Cheer Mr Ducati
Always enjoy starting  my day with your appraisal.
I very much Appreciate your effort and time to post.


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## UMike (8 January 2021)

ducati916 said:


> So the first real trading day of 2021 and we have a vol. spike:....
> How January goes, goes the rest of the year. Therefore we would want to see January recover.
> .......
> I would expect the 'buy-the-dip' brigade to be out in force. This is a jump in vol. but the fundamental underpinning of the Bull (ultra-low interest rates) are still in place and are not going anywhere anytime soon. Whether the dip continues, is anybody's guess currently, however I would venture that tomorrow will see the peak in the VIX and then gradually receding vol. I would wait until tomorrow before buying-the-dip.
> ...



 Just sold my last lot of QBE (earlier on), Santos and WPL that I got at the lows mid year. (although I got and sold Santos twice now). Let Banks go too early.

Just wondering when the next dip will be. Or will it be as I expect another Crash.
Can't see the gulf of struggling economies and booming markets last forever!


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## ducati916 (8 January 2021)

UMike said:


> Just sold my last lot of QBE (earlier on), Santos and WPL that I got at the lows mid year. (although I got and sold Santos twice now). Let Banks go too early.
> 
> Just wondering when the next dip will be. Or will it be as I expect another Crash.
> Can't see the gulf of struggling economies and booming markets last forever!





In this chart we have a way of looking at the huge mutual fund managers who are not allowed to be out of the market, their cash holdings essentially always have to be invested (possibly they can hold 10% cash) nor can they go short the market. So we have when the market is a bull market, they are overweight XLY (Consumer Discretionary) and underweight XLP (Consumer Staples). When they become nervous, they switch to underweight XLY and overweight XLP.






They are super bullish! These guys control hundreds of billions of dollars (trillions even). You can see leading into 2020, they were bears. There were lots of other bear indicators.

So yes, the market is somewhat overbought. Yes, there could well be some corrections. But there is no sign yet of a bear.

jog on
duc


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## ducati916 (9 January 2021)

Musk now officially world's richest man, although when Bezos got divorced he had to give 50% of his wealth to his ex-wife, so actually Musk is nowhere close. Anyway:

Stocks fluctuating. Yield levels currently of no concern to stocks. They could sustain real yields of probably 5%. That would probably be their lot however with valuations so extended. However, if earnings growth can stay abreast of inflationary pressures, they can resist for a while. If however inflation morphs back to disinflation, those real yields will exceed nominal and we'll hit that 5% barrier a lot sooner. ATM inflation = good.






Bonds: 10yr moving fast towards my projected 1.3%. So much so, 1.45% could well be on the cards.






That (not drawn) 1.43%/1.5% level looks magnetic.






Commodities: still driving that inflation meme, hence Bonds.






Gold & Silver....woodshed. My miners position: looking increasingly like it's headed south.






Crypto:






The level for BTC is fast approaching: does it make it through to blue sky? Next week will probably be the week. Previously a 3 year run. Long consolidation and a new run, yes, it could well go through.






Mr flippe-floppe-flye returns:









jog on
duc


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## ducati916 (9 January 2021)

A number of gold charts have appeared:

@rederob 

Still bullish.







@Cam019 

Bearish.






I am also bearish currently. First up just a straight 10yr chart. Just looks weak.






The Miners: also looking weak. At one point we did extend through the resistance, but it failed.






As against interest rates. 16yrs worth of chart. Gold has always inversely correlated against yield. Yield is rising. You would expect gold to fall unless real yields were still negative as against PPI rather than CPI. The question is where do yields fail, if/when the Fed. steps in front of them. At 0.10 level or 0.261 level?















Just run too far too fast.

This chart also looks bearish. The last 10yrs.






As against debts:






I think gold grinds lower most of the year, fighting all the way as true believers buy the multitude of dips on the way down. That can reverse, but it will take (a) a surge in PPI inflation and (b) Fed. capping rates. Can that happen? Of course, I even have it as probable. So a short term bear, long term bull.

jog on
duc


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## Dona Ferentes (9 January 2021)

ducati916 said:


> *Executive Summary*
> The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.
> 
> These great bubbles are where fortunes are made and lost – and where investors truly prove their mettle. For positioning a portfolio to avoid the worst pain of a major bubble breaking is likely the most difficult part. Every career incentive in the industry and every fault of individual human psychology will work toward sucking investors in.
> ...



glad to see @finicky took a read, liked.,  Jeremy Grantham writes well, & from experience. Of course there is a huge difference in approach running billions compared to decisions on the individual level. It's all about preservation of capital whether it's a mill or two, or just starting out with a small kitty.  









						Waiting for the Last Dance
					

The long bull market since 2009 has matured into an epic bubble, featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior.



					www.gmo.com
				




Where do we sit? Better to be six months early than six minutes late??  It is a bubble.


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## ducati916 (10 January 2021)

Dona Ferentes said:


> glad to see @finicky took a read, liked.,  Jeremy Grantham writes well, & from experience. Of course there is a huge difference in approach running billions compared to decisions on the individual level. It's all about preservation of capital whether it's a mill or two, or just starting out with a small kitty.
> 
> 
> 
> ...





The purpose of this thread is to demonstrate that trading a market, whether it is a bubble or not, tops and bottoms can be successfully traded in real time. In respect to tops, that is whether it is a 1987/2020 style fast crash or a 2000 slow burn. The slow burn is a much harder market to trade.

Fundamentally I agree, the markets are grossly overvalued currently. The problem is if they continue to rise for X years and increase that overvaluation: do we (a) get out now and lose that additional return or (b) stay the course looking for the turn?

Hence the (over) reliance on technicals on this forum. Most will believe that the technicals will provide a signal, easily recognisable, at the top and the turning point. The technicals will provide a signal. It is not always easily recognised. This is in part due to: (a) conditioning to buy the dip, (b) individual psychological issues, (c) faulty mechanical systems/tech. analysis methods, (d) over-reliance on the financial press, (e) over-reliance on guru advice, (f) add your own.

An example of a Psychological issue: there is a tremendous tension between maintaining the (a) flexibility of an open mind and being willing to flippe-floppe on a moment's notice and (b) standing your ground because you 'know' you are right. At various points in an individual's market experience, both positions can make or lose him significant amounts of money. Both are important, both are required to succeed. How to reconcile this tension?

Another example of one of the identified issues that recurred numerous times via @over9k was an attempt to trade the 'news'. If you are a 'technical' trader you simply ignore the news. It is 100% irrelevant. You trade your chart. If you are a fundamentals chap, then the news is a factor that you must assimilate into your analysis and position. You should not attempt to mix & match (for I hope obvious reasons) unless you are using it in a quite specific manner.

This thread will continue to the end of the bull, whenever that may be and the proof will be in the pudding (or not as the case may be).

jog on
duc


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## ducati916 (10 January 2021)

Some history, which rhymes:






These are the original SPACS.

SPACS are a part of the current overvaluation in the current market:






Some $80B in 2020.

Were they profitable?






No. This certainly echos the dot.com market where profits were non-existent.

Next week's IPOs. Look at the # of SPACS in there.






By all accounts, one to list, or just recently listed has the Shaq Attack as its sponsor. WTF does he know about markets?

We have therefore an interesting psychology (again) at work. We have, thanks to social media, a really significant FOMO mindset. This again was a hallmark of the dot.com market: I remember talking to colleagues about work and the conversation would almost inevitably move to stocks, particularly NASDAQ stocks. CSCO was a biggie. This phenom. is x10, x100 due to social media. Robinhood is one of the latest manifestations of the older style stock bulletin boards (which of course ASF is one) where all manner of nefarious schemes play out.

Obviously it will end badly. It always does. The trick is to stay to the end of the party, just before the lights come on and then leave.

jog on
duc


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## ducati916 (12 January 2021)

There is really only 1 story today: Cryptos.

Down 25% in 2 sessions. This will really test the staying power of even the religious. The smaller speculators will be sitting on massive losses of either capital or open profits. It will remain to be seen if those that still have open profits close out or hang on.















Earnings season about to begin, which will bring increased vol. back into stocks. Stocks are overbought and vulnerable as evidenced below: the importance of the chart is that it (again) illustrates the (a) divergence in advancing/declining stocks at all time highs and (b) just how far above the median line (in blue) that we are.






Those that disappoint, either with earnings or forward guidance, probably will be sold. This could push vol. higher across the board.

Interest rates continue to rise.










I see a pause at 1.3%. We are at 1.12%. Still a little way to go. If we overshoot, that will be a concern for stocks, gold and possibly even BTC.

Stocks and Commodities down slightly:












Mr flippe-floppe-flye is willing to step into the crypto market as the buyer of last resort:






jog on
duc


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## ducati916 (13 January 2021)

There are contradicting forces at work re. inflation/disinflation/deflation. The arguments each have their own supporters. The eventual outcome could/will have a significant influence on market prices across all asset classes.

The deflation argument in 1 sentence: Corporate debt is at +/- $12T. Rising interest rates place that debt at risk of default. A default across a broad swathe of borrowers is deflationary.






Well on the way to 1.3%. I have it pausing at 1.3%. What if it overshoots or just continues higher? The Fed. at some point could/would 'probably' cap rates. What if they don't?

Inflation is still picking up. Not an issue yet, but it is probably driving the rise in rates.











I have (via Gold Producers) gold still weak and getting weaker:






Vol. in the stock market rising:

I have added the 'new' trend line, but I'm not 100% convinced it is correctly placed. It is therefore a guideline currently.






The war with China (which was 1 of the major disinflationary forces) is/will heat up, below China's stated policy:











In the news today, WMT announces it is moving into FinTech, it was an agent of disinflation:






Biden & Democrats close to taking over:






Carter was POTUS during the 1970's and Stagflation. 

Mr flippe-floppe-flye:






jog on
duc


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## ducati916 (14 January 2021)

The market moving into 2021 is essentially 1 question: Inflation or Deflation? Fed. policy is pro-inflation. If there were to be a widespread deflation (bankruptcy on an epic scale and a significant % of that $12T Corporate debt default) the Fed. would likely (try) to step in front of that tidal wave. The result would be potentially an out of control inflation.

This is my 'inflation' chart. However Ag. is also on the move see @Warr87 and his Ag. based trades. The evidence is starting to build a reasonably strong case for inflation taking hold and building through the year.

That will see interest rates rise. Until the Fed. caps them. The Fed. have already flagged that they will move to curve control. Then the inflation trade is on. PMs will explode, commodities will explode and currencies will gyrate wildly with increased vol. The interesting question is what will the US$ do? Common wisdom would dictate lower and probably significantly so. I'm not so sure on that one.

The question is: at what level of interest rate does the Fed. cap? Lots of people are guessing. The Fed. has not (yet) indicated. (Next chart down) looking at rates, we know where the 'Taper Tantrum' took place, so lower than that, which means that 3% is about our ceiling.

The 10yr will move to 1.3%. It may well overshoot to the upside. If it does not stop at 3% it will be stopped by the Fed.. However, by that point, the SPY will have already broken and be in a funk.

For inflation types of trades see flippe-floppe-flye below.












The US will be retiring energy generation:






What will replace that lost generation? The plan seems to be Green. What happens when there is no wind/sun/etc?

More news:

Oil prices shot up to a 10-month high, posting further gains in the wake of the OPEC+ cuts, and edged a bit higher by a weaker dollar. Some analysts are starting to argue that the rally is getting a little overdone. WTI is above the 200-week moving average, and “it may soon top out,” according to Commerzbank. 

*LNG prices skyrocket.* JKM prices for LNG in northeast Asia are shooting through the roof. Cold weather and higher demand in China and Asia have JKM prices for February delivery well above $21/MMBtu, while individual spot cargoes have traded in the high $30s/MMBtu, breaking all-time record highs. The cost to rent LNG tankers is also breaking records.

_*OPEC cuts could help shale.*_ The jump in crude oil prices could finally bring positive cash flow to much of the U.S. shale industry, according to Rystad Energy. The firm says cash flow could increase by 32% this year. 

_*OPEC+ compliance slips to just 75%. *_OPEC+ group’s compliance with the oil production cuts fell to 75% in December 2020—one of the lowest levels since the pact was enacted in May 2020, tanker tracking firm Petro-Logistics said on Tuesday.

_*Kansas City Fed: shale needs $56 WTI. *_According to the latest survey from the Kansas City Federal Reserve, oil and gas firms reported that oil prices needed to be on average $56 per barrel for a substantial increase in drilling to occur, and natural gas prices needed to be $3.28 per Btu. The industry’s expectations for future activity improved.

_*Shell to cut 300 jobs in North Sea. *_*Royal Dutch Shell (NYSE: RDS.A)* said it will eliminate 300 jobs in the North Sea over the next two years. 

_*Fitch warns of oil and gas defaults. *_Fitch Ratings warned about the continued threat of defaults in a recent update, noting the oil and gas industry would this year again be the one with the most defaults.

_*Renewables to dominate new power installations. *_Renewable energy, mostly solar and wind, are set to account for more than two-thirds of the new electricity generation capacity that the United States will install this year, according to the EIA. A total of 39.7 GW of new electricity generating capacity is expected to start commercial operation in 2021, with solar accounting for 39% and wind accounting for 31%. 

_*European freeze rattles energy. *_A polar vortex is bringing Arctic weather across much of Europe, blanketing Spain in snow and sending temperatures to unusually low levels. That is adding more upward pressure to gas markets.

_*Wind becomes top power supplier in Texas.*_ “Wind power surged past coal in Texas’ electricity mix for the first time in 2020, the latest sign of renewable energy’s rising prominence in America’s fossil fuel heartland,” the Financial Times wrote. 

*Faraday in SPAC to go public.* *Faraday & Future Inc.,* an electric-vehicle startup, is in talks to go public through a merger with Property Solutions Acquisition Corp., a special purpose acquisition company, or SPAC. The entity hopes to raise $400 million, and the combined entity hopes to be worth around $3 billion.

*Drillers stockpile permits ahead of Biden admin. *Energy companies have amassed a backlog of drilling permits ahead of the incoming Biden administration in case there are new restrictions on federal lands. 

_*GM changes logo to promote EVs. *_*GM (NYSE: GM)* changed its logo for the first time in 56 years, and the new image noticeably looks like a plug, in an effort to promote EVs.

_*Chinese rival to Tesla. *_Chinese automaker Nio Inc. unveiled its first all-electric sedan in a bid to compete with *Tesla (NASDAQ: TSLA)*. 

_*Supreme Court to look at biofuels waivers. *_The Supreme Court will review the ability of oil refineries to win exemptions from federal biofuel-blending quotas, the latest twist in the ongoing battle between the ethanol and oil refining industries. 

_*HSBC under pressure to cut fossil fuel investments. *_Shareholders of HSBC have filed a resolution urging the bank to cut its support for oil, gas and coal. 

_*Total SA to add renewables investments. *_*Total (NYSE: TOT) *will add renewable energy investments in 2021, according to CEO Patrick Pouyanne. The company aims to increase holdings to 35 GW by 2025, up from 9 GW today. 

_*Saudi Arabia launches NEOM. *_Saudi crown prince Mohammed bin Salman launched plans to build NEOM, a zero-carbon city.

_*$1 billion inflows to renewable energy after Dem sweep.*_ After Democrats took control of the Senate, $1 billion flowed into renewable energy exchange-traded funds. 

_*EIA natural gas reserves fell by 2%.*_ Natural gas reserves in the United States fell by 2 percent in 2019 due to low prices, the Energy Information Administration said in an update on the country’s oil and gas reserves.

Mr flippe-floppe-flye:






jog on
duc


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## Smurf1976 (14 January 2021)

ducati916 said:


> More news



I won't derail the thread by commenting on the details but I can't help but notice that the overwhelmingly dominant theme there is energy both renewable and non-renewable.

It's a sector where investment opportunities exist certainly, just be careful to sort the politics and hype from the facts since the energy sector does attract plenty of the former and it's a field with considerable technical complexity and a great deal of mainstream public misunderstanding as to how things actually work in a technical (engineering) sense and what has value financially and what doesn't.

It's a sector where the detail of what a company actually does is critical so far as investment implications are concerned.


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## qldfrog (14 January 2021)

Mr Duc,
I would like to bring the US dollar index dxy to your attention, especially the long term chart: 10y+
You will quickly notice that it has just reached the bottom of its range and has started its up move.this could be of importance for us, as foreigners, and as an extra cause of inflation


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## qldfrog (14 January 2021)

qldfrog said:


> Mr Duc,
> I would like to bring the US dollar index dxy to your attention, especially the long term chart: 10y+
> You will quickly notice that it has just reached the bottom of its range and has started its up move.this could be of importance for us, as foreigners, and as an extra cause of inflation



Sorry for absence of chart.can not do right on the phone..


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## ducati916 (14 January 2021)

qldfrog said:


> Mr Duc,
> I would like to bring the US dollar index dxy to your attention, especially the long term chart: 10y+
> You will quickly notice that it has just reached the bottom of its range and has started its up move.this could be of importance for us, as foreigners, and as an extra cause of inflation




USD. The question is (as it sits on a pretty major support area): does it display strength or weakness?






Of course timeframe will be very important here. First up:

Interest rates: rising. This (potentially means) holders of Treasuries are sellers to lock in capital gains that they (may) have and with rising rates, why not buy at a more attractive yield, which then allows for (further) capital appreciation if/when the Fed. caps rates.






The second, really macro view is also lower. This is because the US petro-dollar monopoly is being challenged:






Both China & Russia want to break the monopoly that the US has held since the deal with the Arabs in the early 1970's/late 1960's, which, essentially provided the US (along with Bretton Woods in 1944) the Reserve Currency status that has allowed the US to become one of, if not the largest debtor nations in history.






The deal, essentially forced all oil consuming nations (which is everyone) to hold USD to purchase oil. This of course placed a permanent bid under the USD. As the US rotated from a primary manufacturing nation to a services and tech. economy, it allowed the US to finance these trade deficits as manufacturers (China) recycled USD received back into Treasuries and other assets (stocks), financing the balance of trade deficits, in large part to peg the Yuan to the USD. 

This is changing:






The counter-argument is this: if the USD is to 'collapse'; where does that leave other currencies? The US consumer is the consumer of last resort. However, with China increasing its internal consumption, that may not be as true as it once was.






In the short term, next couple of weeks, I expect USD weakness.

jog on
duc


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## ducati916 (15 January 2021)

Earnings season now underway. The market is kinda/sorta:

We are in the middle of the range. Which simply means we can go either way. Earnings are bad/worse than expected or forward guidance sucks and we could have a bit of a decline. Earnings better than expected, we can move up. Earnings will play out in the daily time frame.






Longer time frames are looking bullish. Here we have Transports (aggressive and include airlines) with Utilities (classically defensive) and we are moving towards all-time-highs. As we hit all-time-highs we may see a pullback and retest. For the moment, bullish.






We can see that there is rotation in the leadership. This is a good thing. Top chart last year. Lower chart last 6 months.










Gold & Silver: I have gold moving lower. The 10yr is moving to 1.3%, which means gold is moving lower. Not a crash, just a steady grind lower. The interesting dynamic will be if the Fed. caps at somewhere between 2%/3%, then gold moves higher again.

Which raises a really interesting trade: The Carry Trade. If the Fed. caps rates and you can sell in any amount, $1B, $10B, whatever your maximum margin is, Treasury Bonds and buy a higher yielding asset class, this trade will be put on in massive size and leverage. To purchase let's say $5T in selling, the Fed's Balance Sheet will simply go nuclear. That is when gold moves to the $5000/oz+.

The second dynamic will be: the arbitrage, will it be US assets or non-US assets? I think initially US assets (MBBS, Corporates) will all catch a bid and go to ZIRP and possibly NIRP in real terms. Then riskier assets will catch a bid, dividend paying stocks etc, which will include Emerging markets.

What happens when the Fed. reverses? All of those trades go into a massive reverse. This will cause a huge crash as not everyone can exit at the same time. Rates will fall back to zero. The big players, closing out an arb. will likely be whole: marginal players may be carried out on their shield.

This is likely to occur when inflation has taken hold. So now we have a situation where inflation is running, yields are at zero, which drives inflation even higher.

So can the Fed. raise rates? Of course. Will they? If they raise above the cap. then those huge carry trades start to close out with a loss in one leg of the trade, combined with a potential market crash against all risk assets. Will they raise? I have no idea.






Meanwhile, flippe-floppe-flye:









One of the risks of BTC I guess.

History of last year:






jog on
duc


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## ducati916 (16 January 2021)

We have a mixed bag:

With Trump on the way out, his record:






The market continues to vacillate between 'inflation, disinflation and deflation'. The returns historically:






Disinflation (without doubt) is better. Yet, inflation is what the Fed. seeks. That is because deflation is the 1929-1934 experience.

Then we have the 'growth v value' argument: over longer time frames, there is not much in it. If you can switch between the 2 strategies at optimal times, then you will have quite significant outperformance.






Gold:

I actually find this to be a really bullish set-up.






On a daily set-up, it looks horrible:






On my ratio chart: could go either way. This really is reflective of the 'inflation, disinflation, deflation' argument that is currently being traded across all financial markets. The answer is: no-one actually knows. There are simply too many moving parts and unforeseeable ramifications currently.

We may have a few technical breaks that turn out to be wrong, followed by reversals.






BTC: read this article:









						Bitcoin: Magic Internet Money | Research Affiliates
					

The sage advice to “know what you are investing in” is being dangerously overlooked by both novice and seasoned investors when it comes to bitcoin. A former bitcoin miner explains why the price of BTC is nearly certainly a bubble and likely manipulated. Investors should proceed with extreme caution.




					www.researchaffiliates.com
				




The Fed.:






And Mr flippe-floppe-flye:






Earnings (proper) kicked off with the banks: JPM released reserves as earnings, as will I suspect many of the other banks. Hence the meh response to the big earnings beats by the market.

Highest conviction trade: rates to 1.3%. Stocks can live with that. Gold, hmmm, not so sure. BTC, now that the spectre of fraud is in the air, if investigated/whatever....zero.

jog on
duc


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## ducati916 (18 January 2021)

US markets look set to fall into the start of the week:

From Friday's close, we had a jump in vol. I think this continues and breaks the trend line. You could blame interest rates, the dollar, BTC, economy, Trump, whatever. The thing is vol. has not moved to a new low. That is the issue. The US markets are structured to sell vol. and suppress it. When it doesn't happen, then you have to be on the lookout for a jump higher.

Now this is not the end. Far from it. But it could be a slightly deeper sell-off than we have had for a few weeks.






From Mr flippe-floppe-flye






jog on
duc


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## ducati916 (19 January 2021)

With US markets closed for MLK day, just thought I would comment on the gold analysis.









So while I have nothing against a purely 'technical' analysis of a price chart, I would argue that that analysis has to be placed in a context of a fundamental perspective to hold any predictive power.

Gold, outside of its purely speculative component is pitched as an inflationary hedge against devaluation of a currency. An alternative and superior form of money.

In the shorter term (our lifetimes) that value will fluctuate.

It will fluctuate around the current economic/social/financial state of affairs in which we live. The question (for gold) that has dominated since 2008 through today is the question: deflation/disinflation/inflation/hyper-inflation?

The correlation to interest rates has always been high. It is high because interest rates (real & nominal) drive the value of a fiat currency and by extension its shadow currency (gold).

In this chart, I simply left the EMAs on the analysis. It is striking how the 10yr yield has crossed the 50EMA. That is bullish for rates. By implication, that must be bearish for gold. When the Fed. cap rates, which they have stated that they will, that is bullish (very) for gold. If rates continue to rise and they will, the 10yr is on its way to 1.3%, gold will continue to exhibit weakness.






Looking at gold/gold mining charts in isolation, I agree, they sorta/kinda look bullish. We'll see. Count me a bear.

jog on
duc


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## ducati916 (20 January 2021)

Pretty quiet day for earnings: the major report is NFLX after the close, the first of the major Tech. firms to report.

The VIX is suppressed, but not out: until it makes new lows, that risk remains.






Sold GE ahead of earnings:






The last month:






Energy the leading sector. Tech. has stagnated and gone nowhere. We want Tech. to come back.

Energy news:

*Friday, January 15th, 2021*

Oil prices fell back on Friday over demand concerns. News that China has reported its highest Covid-19 case count in months weighed on market sentiment. 

_*OPEC sees shale rebounding.*_ OPEC admitted that an improved outlook for crude oil prices could result in higher U.S. shale production. OPEC upgraded its forecast for U.S. oil production, expecting an increase of 370,000 bpd, up from a previous forecast of 71,000 bpd.

_*LNG spike causing havoc worldwide.*_ Bitter cold and skyrocketing prices for LNG is now being felt in more places than just Asia. The ripple effects are affecting gas markets everywhere, straining supplies and forcing consumers to cut back. Another potential side effect could be the undermining of the spot market, potentially leading to more emphasis on oil-linked contracts, which would provide more stability. 

_*Total quits API.*_ *Total (NYSE: TOT)* announced its decision to withdraw from the American Petroleum Institute, the industry’s most powerful lobby. The French oil giant cited API’s opposition to methane regulations, EV subsidies, and carbon pricing. Total also disagreed with API’s political contributions to U.S. politicians that oppose the Paris Climate Agreement. 

_*Gas projects in Mozambique at risk. *_A chronic insurgency puts* Total’s (NYSE: TOT) *$23 billion gas production and LNG export project at risk. The same is true of *ExxonMobil’s (NYSE: XOM)* planned $33 billion facility. Total has halted work at its site due to nearby attacks.

_*JPMorgan touts commodities, pro-risk posture.*_ JPMorgan told investors to boost commodity positions, go underweight on bonds and take a pro-risk exposure to equities. “We increase our overweight in commodities, in particular energy, both as an inflation hedge and to position for a continued cyclical recovery,” analysts wrote.

_*Exxon target of new SEC probe.*_ *ExxonMobil (NYSE: XOM) *is under investigation by the Securities and Exchange Commission (SEC) after an employee filed a whistleblower complaint last fall, alleging that the company has overvalued its Permian assets.

_*Shale boosts hedging.*_ U.S. shale drillers increased hedging with WTI surging above $50 per barrel.

_*Is the rally in renewables sustainable? *_Solar and wind power companies have soared in value. The New York Times explores the potential bubble in clean tech stocks.

_*Biden’s $1.9 trillion stimulus could preview energy package. *_President-elect Biden proposed a $1.9 trillion covid rescue package, which included vaccination efforts, $1,400 checks to Americans, and other stimulus measures. He has indicated that a sequel package in the spring, which could be even larger, would target major investments in clean energy. 

*Halliburton turns to grid instead of diesel. Halliburton (NYSE: HAL)* is swapping out diesel engines for the electric grid for its Permian basin operations. 

_*Shell declares force majeure on Forcados.*_ *Royal Dutch Shell (RDS.A, RDS.B)* says loadings of Nigeria's key export grade Forcados are on force majeure due to the shutdown of the Trans Forcados pipeline.

_*Summit Midstream Partners soars on greenlight.*_ *Summit Midstream Partners, LP (NYSE: SMLP)* saw its share price shoot up after its Double E Pipeline received a greenlight from FERC.

_*ExxonMobil upgraded by JPMorgan.*_ JPMorgan upgraded *ExxonMobil (NYSE: XOM)* to Overweight for the first time in seven years.

_*Siemens to produce hydrogen from wind.*_ *Siemens Gamesa (BME: SGRE) *and *Siemens Energy (ETR: ENR)* are developing a commercial offshore wind turbine that produces hydrogen via electrolysis, the companies said.

_*EIA: Oil production to rise to 11.49 mb/d in 2022.*_ The EIA unveiled its first forecast for 2022, projecting that U.S. oil production rises to 11.49 mb/d, a 3% increase over this year’s levels. 

_*Proterra to go public.*_ Electric bus producer Proterra will launch an IPO, with preliminary estimates valuing the company at $1.8 billion.

_*Saudi cuts exports to Asia. *_Saudi Arabia has reduced sales of oil to at least 11 refiners in Asia, evidence that it is following through to some degree on its pledge to cut production by 1 mb/d.

_*Gasoline profit margins increase.*_ The profit margin for refining gasoline has widened to its largest extent since July, as markets anticipate demand recovery by mid-year.

_*U.S. warns European companies on Nord Stream 2.*_ The Trump administration warned European companies that they risk U.S. sanctions over their involvement in the Nord Stream 2 pipeline. 

_*Equinor wins offshore wind contract in New York.*_ *Equinor (NYSE: EQNR) *was selected for a major offshore wind project off the coast of Long Island. The combined 3.3 GW Empire Wind and Beacon Wind projects will be the largest offshore wind installation in the U.S. to date.

_*Chesapeake Energy to emerge from bankruptcy. *_Chesapeake Energy will emerge from bankruptcy valued at over $5 billion. 

_*Occidental to use direct air capture for oil production.*_ *Occidental Petroleum (NYSE: OXY) *plans to build a direct air capture (DAC) facility, which will remove carbon dioxide from the atmosphere, and then use the CO2 to produce more oil. The project could be the world’s first large-scale DAC facility and it could cost hundreds of millions of dollars. 

_*Forest Service gives go-ahead to Marcellus pipeline.*_ The U.S. Forest Service approved the construction of the Mountain Valley Pipeline through a sensitive part of the Jefferson National Forest, a big win for a project that would carry Marcellus shale gas to the U.S. southeast.

_*Ireland drops another LNG terminal over methane concerns.*_ The Port of Cork in Ireland allowed an agreement with *NextDecade Corp. (NASDAQ: NEXT)* for an LNG import terminal to expire. It’s the latest setback for the LNG company in Europe over concerns about methane emissions. NextDecade is planning an LNG export terminal in Texas.


Nothing from Mr flippe-floppe-flye currently. In his absence, 2021 predictions:












jog on
duc


----------



## ducati916 (20 January 2021)

So in this morning's post, the chart displayed that in the last month, energy was leading the pack. Here's why:






More news:

*Market Movers*

-    *ExxonMobil (NYSE: XOM) *said that its latest well in offshore Guyana did not find commercial volumes of oil. That is the second setback the company has faced in Guyana in recent months.

-    *ConocoPhillips (NYSE: COP) *announced that it has completed its acquisition of Concho Resources. 

-    *Tellurian (NASDAQ: TELL) *co-founder Charif Souki said that the company is aiming to start construction on its $16.8 billion Driftwood LNG project this summer. 

*Tuesday, January 19, 2021 *

Oil prices fell more than 2% on Monday on rising concerns about oil demand. New lockdown restrictions in China spooked the market. “The COVID-19 pandemic’s spread is taking center stage again and traders are getting increasingly worried about the long duration of European lockdown and about the new restrictions (in) China,” Bjornar Tonnage from Rystad Energy said. However, oil regained lost ground in early trading on Tuesday. 

_*IEA: Demand to recover by 5.5 mb/d.*_ In the IEA’s January Oil Market Report, the agency projects that oil demand will bounce back to 96.6 mb/d this year, an increase of 5.5 mb/d over 2020 levels. That erases some of the 8.8-mb/d decline from last year. However, the agency cut its forecast for first-quarter demand by 600,000 bpd compared to last month’s report. On the supply side, production will increase by 1 mb/d this year, after declining by 6.6 mb/d in 2020.

_*Biden may cancel Keystone XL. *_President Biden may cancel the permit for the Keystone XL, perhaps on his first day in office, according to Reuters. In an effort to stave off a death sentence for the project, *TC Energy (NYSE: TRP)* said it would make the pipeline have a net carbon zero emissions profile by spending $1.7 billion on renewable energy to power the pipeline and to use union labor. Bloomberg reports that materials and pipe could be sold for scrap. 

_*Biden executive orders planned for Day 1. *_A series of executive orders are expected on Wednesday from newly inaugurated President Biden. In addition to one on Keystone XL, Biden is expected to rejoin the Paris Climate Agreement, reimpose methane regulations on oil and gas operations, use the federal procurement power to make government buildings shift towards clean energy, and block new drilling permits in the Arctic National Wildlife Refuge.

_*Sky-high LNG prices may not last. *_The rally in LNG prices in Asia is likely temporary. While February JKM prices topped $21/MMBtu, April contracts are trading at around $7. And the long-term pricing outlook for LNG remains bearish, according to the Wall Street Journal. China stands at the center of long-term forecasts, and China’s domestic gas production is on the rise, increasing by 9% in the first 9 months of 2020.

_*Oil majors benefit from LNG  price spike. *_Majors such as *Royal Dutch Shell (NYSE: RDS.A) *and* Total (NYSE: TOT) *might benefit more from the LNG price spike than trading houses due to their access to multiple sources of gas, allowing them to reroute cargoes, according to Reuters.

_*Total buys $2.5 billion stake in Indian renewables company. *_*Total (NYSE: TOT)* is investing $2.5 billion to acquire a 20% stake in Adani Green Energy Ltd., an India-based renewable energy company.

_*IEA: New methane report warns cuts needed. *_Oil and gas operations emitted 70 million metric tons of methane in 2020, a 10% reduction from the year before due to the pandemic, according to the IEA’s new report on methane. “The task now for the oil and gas industry is to make sure that there is no resurgence in methane emissions, even as the world economy recovers, and that 2019 becomes their historical peak,” said IEA executive director Fatih Birol. The IEA said that methane emissions need to decline by 70% over the next decade.

_*Enbridge defies Michigan, attempts to keep Line 5 open.*_ In November, Michigan ordered the Line 5 pipeline shut down. On January 12, *Enbridge (NYSE: ENB) *wrote a letter arguing that the state didn’t have the authority to shut down the aging pipeline. 

_*China’s economy picked up speed in the fourth quarter. *_China’s GDP grew 2.3% in 2020, making China the only major economy that did not suffer economic contraction last year. China grew 6.3% in the fourth quarter, year-on-year.

_*$501 billion in decarbonization. *_The world invested $501 billion into cleantech and decarbonization efforts in 2020, beating the previous record by 9%, according to BloombergNEF. That included more than $300 billion on renewable energy and nearly $140 billion one electric vehicles.

_*Pipeline issue hits Libyan production.*_ A leak that forced the shutdown of an oil pipeline in Libya has reduced its recovering oil production by as much as 200,000 bpd.

_*SEC to increase scrutiny on oil and gas.*_ The Biden administration is likely via the SEC to increase disclosure requirements related to climate risk for oil and gas companies. In fact, a more aggressive push on ESG standards and requirements could be in the offing. The Wall Street Journal looks at the SEC’s potential agenda. Bloomberg also looks at the SEC, although from the angle of financial fraud in the oil and gas industry. 

_*Court strikes a fatal blow to Trump carbon rule. *_The U.S. Court of Appeals for the District of Columbia Circuit killed the Trump administration’s rule on power plant emissions. The court said that the Affordable Clean Energy (ACE) rule, a watered-down replacement for the Obama-era Clean Power Plan, did not adequately protect health and the environment. The decision gives the Biden administration something of a clean slate to start over. 

_*Russia starts work on its Arctic mega project. *_Russia is aiming to develop the massive Vostok project. Rosneft expects the operation to cost $170 billion over a decade that will employ 400,000 workers, create 15 new industrial towns, and build 800 km of new pipelines. The Vostok projects should already produce 30 million tonnes of oil by 2024 which rounds up to 600,000 barrels per day. Eventually, it could produce as much as 2 mb/d.

_*Biden to face question on Venezuela fuel swaps. *_Representatives of fuel suppliers in Venezuela are expected to press the Biden administration to loosen the ban on fuel swaps for the impoverished country.  

_*Axis Capital rules out Arctic projects.*_ *Axis Capital Holdings Ltd. *said it wouldn't insure oil and gas projects in the Arctic National Wildlife Refuge, the first underwriter to rule out insurance for the Arctic.

_*Money pouring into offshore green investments. *_The Wall Street Journal reports that investors are pouring money into retrofitting deep-sea vessels that once serviced offshore oil projects to now handle offshore wind installations.  

From Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916 (21 January 2021)

Stocks are evenly balanced atm. Up or down. If down, that will remain a buy the dip proposition as the bull trend remains intact. So all we are talking about (currently) are fluctuations to the downside. Vol. is again suppressed, it will at some point break higher...see above.

The thing is: breadth is weakening. This takes time to play out. Days, weeks, hours, who knows. Sometimes, it just picks itself back-up again. Sometimes it doesn't. The issue (for me) is that when declining breadth is combined with a consolidating VIX, it spells trouble down the road. As already stated: not a bull ending decline, simply a buy the dip decline.






GM has partnered with MSFT






BTC waiting on 50day. It will either (a) find support and move higher or (b) break below, in which case a lot of latecomers will feel the pain. The pain will test their religious fervour for BTC and all things crypto. Which way? No idea.






History






Mr flippe-floppe-flye







Gold: still bearish, although gold is having a better day today. Interest rates will continue to rise (at least until the Fed. caps them) and gold does not like a rising rates environment. If rates stop rising (other than a Fed cap) then that means the market is no longer fearing inflation. Inflation is the 'big' thing for gold?

If there were to be a deflation, which with $14T in corporate debt and the resulting bailout, could/would lead to a potential hyper-inflation, then gold would shine. This (as far as the Fed is concerned) is the doomsday scenario. 

So I think rates continue to rise to 1.3%, gold declines. To low to cap. Fed. continues to nudge/push inflation and rates rise to 2%, gold falls. At 2% the stock market has another tantrum. The Fed. caps. Now gold rallies from its lows as inflation will/could take hold.

In a meh situation, gold just fluctuates in a holding pattern.






jog on
duc


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## gartley (21 January 2021)

When I first started to look at Elliott Waves and the Fibonacci sequence more than 25 years ago I noticed a very important time based fibonacci relationship. This has been such a good long term guide it amazes me to this day. Basically counting the number of Fibonacci/Lucas sequence years between past historic tops or bottoms:
1932 low  to 1966 high: 34 Years (Fib No)
1932 low to 1987 high: 55 years (Fib No)
1932 low to 2000 high: 76 years (Lucas no)
1987 high  to 2008 high: 21 Years (Fib No)
These are just some examples and there are more.

There is also a very important Fibonacci countdown in progress which ends in the year 2021 as follows:
1932 low to 2021: 89 Years
1966 high to 2021: 55 years
1987 low to 2021: 34 years
2000 high to 2021: 21 Years
2008 high to 2021: 13 years
Jan 2013 low to 2021: 8 years ( this low was when QE expanded)
2016 low 2021: 5 years
2018 low to 2021: 3 years
2020 low to  2021: 1year

This suggests 2021 to be a very volatile year and the Covid crash was probably  just the warm up of what is about to start.

Looking at the long term Delta timing chart this suggests a peak sometime in the next 2 months plus or minus and the cycle projection for the SPX of around 4150 still has not been met.....


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## qldfrog (21 January 2021)

gartley said:


> When I first started to look at Elliott Waves and the Fibonacci sequence more than 25 years ago I noticed a very important time based fibonacci relationship. This has been such a good long term guide it amazes me to this day. Basically counting the number of Fibonacci/Lucas sequence years between past historic tops or bottoms:
> 1932 low  to 1966 high: 34 Years (Fib No)
> 1932 low to 1987 high: 55 years (Fib No)
> 1932 low to 2000 high: 76 years (Lucas no)
> ...



@gartley i am a believer in cycles too,but we have to always use caution.
Post GFC, i found a market period which had an eerie match: time shift and scale with the asx graph.
I invested accordingly, made 60k paper profit with options in hardly a month, went for a holiday, unplugged, in Thailand and came back to a couple k loss/breakeven.
QE....yeap
So never underestimate the ability of the power in place to manipulate what should be and replace it by what they  want: be it CC, covid or Market.
It is a mistake i am guilty of ..


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## ducati916 (22 January 2021)

gartley said:


> When I first started to look at Elliott Waves and the Fibonacci sequence more than 25 years ago I noticed a very important time based fibonacci relationship. This has been such a good long term guide it amazes me to this day. Basically counting the number of Fibonacci/Lucas sequence years between past historic tops or bottoms:
> 1932 low  to 1966 high: 34 Years (Fib No)
> 1932 low to 1987 high: 55 years (Fib No)
> 1932 low to 2000 high: 76 years (Lucas no)
> ...




@gartley 


So I looked at this last night and had a think about it. I actually remember (now) a chap that used to trade currencies to this red/blue/yellow/green vertical bar set-up. Unfortunately I can't remember his methodology. Given that 'timing' is money in the markets, we have the following:

The 2 takeaways: (a) increased vol. and (b) in the next 2 months with potentially a 3'rd (c) the projected top 4150 not yet reached (implying that this is necessary or simply a possibility?)



Does compressing the time scale change anything?
Certainly the 7 year gaps in the bars ties in with various cycle theories (business, Kondratieff etc), how do Fib. ratios relate?

I agree that markets are 'toppy' atm. However, toppy in the sense of a pullback, not a bear market type of decline. That will (in my opinion) if rates hit 2%+ and the Fed. does not cap them. This is related to total corporate debt at $14T of which 90% is rated BBB, or junk. These companies currently are contributing to the disinflationary forces at play, producing X at subsidised prices, thereby dampening inflationary forces in the CPI, but not the PPI, as they contribute to the overall demand for raw materials, hence widening the spread between CPI/PPI and lowering profitability margins, raising valuations etc.

Whereas you seem to be calling for a major break, a bear market break in +/- next 2 months. Does your analysis require a catalyst? If so, what do you see as a potential catalyst?

China breaking out:











TSLA earnings next week. There could well be an earnings play available.






GM could be (if you are an EV convert) to play (at better valuations) the EV game:








Bonds & Gold resume:









Mr flippe-floppe-flye:






jog on
duc


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## gartley (22 January 2021)

ducati916 said:


> @gartley
> 
> 
> So I looked at this last night and had a think about it. I actually remember (now) a chap that used to trade currencies to this red/blue/yellow/green vertical bar set-up. Unfortunately I can't remember his methodology. Given that 'timing' is money in the markets, we have the following:
> ...



Hi duc,

The the methodology is the Delta Phenomenon created by Jim Sloman and popularized  by Welles Wilder. The chart that I attached is for a 19 year cycle. I also use another time cycle which I found myself which is a 4 year cycle but more on that another time. Ther are ofourse smaller cycles that can be applied but I find there is too much noise and don'r really use them that much.
The longer term cycles have been great however, given the long spacing between cycle points for helping you stay on the right side of the trend. I have been using this since 2004 and I remember the run to the GFC and I was looking at cycle point 16. I was expecting something big here given the degree of cycle we where looking at. The same for the low at cycle point 1 in March 2009 and recently cycle point 8 at the pre covid crash high.
Some things to bear in mind, generally speaking cycle points can be  plus minus 2 points(months) compared to earlier ones but now and again we ge the odd that is out further.  We only use the x axis. Disregard the position of the cycle points relative to y axis

Some more examples of the eurusd and audusd below:











With regard to the price projection. The price projection  is 4150 at a minimum and 4286 max.  This is generated by the offset of a FLD ( Future line of Demarction-refer to JM Hurst work) for a nominal 40 week cycle.  When price crossing occur then the price meets these approx 76% of the time. Others are invalidations when price action crosses back over the FLD.
What happens when price reaches the this range? Three possibilities 1/ it reverses, 2/ It consolidates for quite a while before continiuing, 3/ It continues further.
What is important here is that once projection was given back in July, you know that ther is a 76% probability that it will be met.

That is a static price projection, attached in excel spreasheet I have my dynamic cycles routines which by the way do not suggest a top yet on the weekly or monthly (although that may change in the next few months) . But the monthly Price projection has been met at 3850 and the weekly is still projecting 4354. Personally I don't think we will get that far but who knows.
For now stepping back and looking at the way things stand, bullish sentiment is off the planet, highest recorded since 2000, as is rampant speculation of risky bets like Call options, leveraged ETFs and margin debt.
Yet we have the financial press telling us that the markets are about to embark on the most bullish decades in history.....


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## investtrader (22 January 2021)

Am I nuts or does all of that look completely random???


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## gartley (22 January 2021)

investtrader said:


> Am I nuts or does all of that look completely random???



Then best stick to the funnymentals ...


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## ducati916 (23 January 2021)

Hi duc,

The the methodology is the Delta Phenomenon created by Jim Sloman and popularized  by Welles Wilder. The chart that I attached is for a 19 year cycle. I also use another time cycle which I found myself which is a 4 year cycle but more on that another time. Ther are ofourse smaller cycles that can be applied but I find there is too much noise and don'r really use them that much.

The longer term cycles have been great however, given the long spacing between cycle points for helping you stay on the right side of the trend. I have been using this since 2004 and I remember the run to the GFC and I was looking at cycle point 16. I was expecting something big here given the degree of cycle we where looking at. The same for the low at cycle point 1 in March 2009 and recently cycle point 8 at the pre- covid crash high.

Some things to bear in mind, generally speaking cycle points can be  plus minus 2 points(months) compared to earlier ones but now and again we get the odd that is out further.  We only use the x axis. Disregard the position of the cycle points relative to y axis

With regard to the price projection. The price projection  is 4150 at a minimum and 4286 max.  This is generated by the offset of a FLD ( Future line of Demarction-refer to JM Hurst work) for a nominal 40 week cycle.  When price crossing occur then the price meets these approx 76% of the time. Others are invalidations when price action crosses back over the FLD.






What happens when price reaches the this range? Three possibilities 1/ it reverses, 2/ It consolidates for quite a while before continiuing, 3/ It continues further.

What is important here is that once projection was given back in July, you know that there is a 76% probability that it will be met.

That is a static price projection, attached in excel spreadsheet I have my dynamic cycles routines which by the way do not suggest a top yet on the weekly or monthly (although that may change in the next few months) . But the monthly Price projection has been met at 3850 and the weekly is still projecting 4354. Personally I don't think we will get that far but who knows.

For now stepping back and looking at the way things stand, bullish sentiment is off the planet, highest recorded since 2000, as is rampant speculation of risky bets like Call options, leveraged ETFs and margin debt.

Yet we have the financial press telling us that the markets are about to embark on the most bullish decades in history.....

@gartley: which raises a number of further questions.

1. If going back to the left hand (earlier) side of your chart, we see pt. 16 & (16), which includes pre/post 1987 crash. In this instance, pt. 16 was a little late. Pt. (16) in +/- 1990 seems to be back on schedule, with pt.1 again preceding the rise. How much leeway re. timing is there? Is the timing fixed or can it evolve with markets? Is there an element of dynamism to the count? From what you say re. price projections, I would say that there is not, the timing of the points is seemingly fixed in relation to the price projection (but I could be wrong on this).

2. Would you use this analysis as a primary analysis or simply as an additional form of analysis? To me, these extended time frames would suggest this form of analysis as a starting point (primary) and other methodologies or combinations into the shorter compressed time frames.

3. Is there any form of fundamentals tied to this type of analysis? From above I'm guessing no, but then again, the Kondratieff cycles have a basis in a fundamentally based analysis.

4. Why the difference in the weekly and monthly price projections? I would have thought that the higher projection would have been the monthly, not the weekly. Why?

5. How do you arrive at a 76% probability? That is a precise number.

6. Sentiment is an interesting metric. It can be and is measured, providing a quantitative number, but sentiment is an emotion and very qualitative. It can and does, change with price. Does sentiment drive price or price drive sentiment? Does it even matter?

7. The financial press. Runs on a continuum from 0 to 10. Zero being worthless, 10 having something valid to say. The 10's mostly identify big macro-trends that play out over significant time frames. The 0's are just noise.

8. Speculation adds to (reduces) volatility for sure. Speculation adds to liquidity. Volatility and liquidity are intimately connected. When liquidity is high, vol. is low and vol. explodes when liquidity runs for cover. The massive increase in speculation post-C19 has squashed vol. The issue of course is that if liquidity runs for cover, speculators who do not understand that the bid has been pulled will be bankrupted. So the wheel turns.

The various 'bubbles':






The US dollar:










The DXY will continue to command a bid. Why? Because China is a mercantile nation, as is Europe as a block. Name any country, their currencies are in some shape or form pegged to the DXY. The DXY cannot fall below X. Looking at the longer term chart the DXY may fall to a median, possibly even 'crash', but it will bounce back. Without going into excruciating detail, the gist of the problem is:






Gold: just on a kinda wait and see vibe. The 10yr will hit 1.3%, potentially creating a DXY rally/bounce: gold?






A new ETF:











BTC: the test is fast approaching. Will the 50 day hold it as support? 






The answer is usually at the first test a big YES. If BTC fails at resistance and tests the 50 day a second time, the answer is usually a resounding NO. BTC is currently the best example of speculation/volatility/liquidity playing out in the markets.

Finally, Mr flippe-floppe-flye






Oil news:

*Friday, January 22nd, 2021*

Oil posted some losses at the close of the week, with Brent dipping back below $55 per barrel and WTI down below $52. More travel restrictions in Hong Kong, Shanghai, and the UK led to demand pessimism, and a temporary jump in the dollar also weighed on crude. 

_*Biden’s first actions on energy.*_ As expected, President Biden signed a litany of executive orders related to energy and climate, including canceling Keystone XL, rejoining the Paris Climate Agreement and beginning the process of undoing a long list of regulatory actions under the Trump administration.

_*Chamber, API open to methane regulations.*_ The Chamber of Commerce and the American Petroleum Institute (API), the most powerful business and oil lobbies in the U.S., respectively, said that they were open to the reimplementation of methane regulations on oil and gas operations, after supporting a rollback in the Trump era. The industry has long supported voluntary actions only. “This is a new position for API, but we think given where the industry is at this time and the continued importance of reducing methane, it was critical we update this position as the administration changes,” API CEO Mike Sommers told the Washington Examiner.

_*OPEC looks to build ties with Biden. *_OPEC’s secretary general said that the group will seek to strengthen its relationship with the Biden administration, although thorny questions over the Iran nuclear deal and climate change loom.

_*Biden makes Glick FERC chairman. *_President Biden announced that Richard Glick would take over as chairman of the powerful Federal Energy Regulatory Commission (FERC), which regulates the electric grid and interstate oil and gas pipelines. Glick is expected to chart a new course with greater emphasis on clean energy and integrating renewables into the grid.

_*Biden places 60-day moratorium on drilling on federal land.*_ The Biden administration halted new leasing on federal lands for drilling for 60 days. The move may have little practical impact as the industry has stockpiled leases ahead of expected restrictions. Reuters says companies have enough permits to last for years. 

_*Energy shares plunge. *_Stocks of oil and gas companies fell sharply on Thursday in response to a drop in crude oil prices. *EOG Resources (NYSE: EOG)* fell by more than 8%.

_*Goldman bullish on oil. *_Oil prices will be supported this year by the upcoming massive economic stimulus package in the United States and the low probability of much Iranian oil returning to the global market, according to Goldman Sachs.

_*China’s electric grid still stretched. *_The cold spell that left Asian countries scrambling to buy enough natural gas for heating and electricity generation earlier this month made headlines and spurred a massive rally in spot gas prices on the regional market. It also highlighted a problem with China’s electricity consumption: it grew too much, too fast.

_*Suriname could be the last big oil boom. *_Majors are eying Suriname as the next big oil player. With recent success in neighboring Guyana, Suriname offers hope for low-cost oil exploration and production going into 2021. The NYT looks at what could be the world’s last big oil boom.

_*Oil spending outside of U.S. to rebound. *_Non-North American oil spending will rebound later this year, according to Schlumberger (NYSE: SLB). The oilfield services giant posted better-than-expected earnings for the fourth quarter and said markets outside of North America could see double-digit growth in spending in the second half of 2021. 

_*Former coal plant turned to hydrogen hub.*_ Vattenfall AB plans to turn the site of its recently shuttered Moorburg coal power plant in northern Germany into a hub for turning wind and solar power into hydrogen.

_*China’s wind power surges.*_ China added 72 GW of new wind capacity last year, more than double its previous record. China also added 48 GW of new solar. The country’s previous record for all renewable installations combined in a single year was 83 GW.

_*EU Bank chief: “Gas is over.” *_The president of the European Investment Bank, Werner Hoyer, said that Europe needs to move on from fossil fuels. “To put it mildly, gas is over,” he said. The EIB will phase out all funding for fossil fuels by the end of the year, essentially transforming itself into “Europe’s climate bank.”

_*Libya shuts down leaking pipeline. *_Libya’s state-owned National Oil Corp. was forced to shut down a leaking pipeline on Saturday, which cut oil production by around 200,000 barrels a day.

_*EV batteries with 5-minute charging times. *_Batteries capable of fully charging in five minutes have been produced in a factory for the first time.

_*U.S. Supreme Court hears climate arguments.*_ The U.S. Supreme Court heard oral arguments on a highly-anticipated case in which the city of Baltimore is seeking damages from the oil industry related to climate change. The Court is only looking at a narrow procedural question about whether the case should belong in state or federal courts. If the Court decides in Baltimore’s favor, sending the case to state court, it could vastly increase the oil industry’s legal exposure as other states could sue. A decision is expected later this year. 



jog on
duc


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## gartley (23 January 2021)

ducati916 said:


> Hi duc,
> 
> The the methodology is the Delta Phenomenon created by Jim Sloman and popularized  by Welles Wilder. The chart that I attached is for a 19 year cycle. I also use another time cycle which I found myself which is a 4 year cycle but more on that another time. Ther are ofourse smaller cycles that can be applied but I find there is too much noise and don'r really use them that much.
> 
> ...



I  base future cycle based on the last couple of cycle points.  As mentioned earlier I allow plus or minus a few bars when doing this.
It's not about precision timing because this is a monthly chart over a 19 year timeframe.
It's more about once a cycle is established then you have all the "time" in between it and the next cycle point to trade the market. I have not seen anything else better than this, but also don't rely on this in isolation.
Fundamentals I don't use at all, don't need , don't have the time and as you have shown above it's usually only telling what has happened and what is supposedly " driving" the market. When in reality the forces driving the markets are internal and dynamic.
The 76% price projection is a statistic that I have arrived at.
I use these dynamic projections every day in my trading even off as low as a 1hr chart as I am taking up to 3 trades a day so I have a lot of data to work with. The disparity between monthly and weekly projections.  It's my experience that when projections between 2 or more timeframes get reasonably close that it when a major reversal is imminent.


----------



## gartley (23 January 2021)

This is an example of trades taken off the 1Hr chart for the AUDUSD for the last 3 weeks.  I use a confirmation indicator ( FT Swing ) crossing below 50 for sells and abobe -50 for buys.  Trade is  initiated after Confimation indicator no 2 ( Cycle differential) lines cross.
I then use the price projection tool as aguide to determine when to book initial profits. In this case AUDUSD off 1Hr is projected to be 0.769 for this leg down. I allow a 20% factor of safety Price projection targets on the 1Hr chart for booking profits.


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## gartley (23 January 2021)

A few more charts and to ponder over originating from 2003 low  and 2008 high in NDX and SPX
	

		
			
		

		
	





	

		
			
		

		
	
 :


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## gartley (23 January 2021)

Further to the earlier series of posts regarding SP500 and other US indices.  The following is a chart of the ETF: VXX which follows the VIX.
Looking at this chart it shows an unusual development, ideally this should mirror the SPX but in the opposite direction.  What has happened over the last 6 weeks is that downward momentum is waning in the VXX whilst the SPX has been rising strongly thus we have a divergence between the two in play.
It appears "heavy hands" are accumulating this in preparation for a  low.
So a bottom may be close here OR it has one last "thrust" to fill the gap @ 15.23 and that for me would be a major consideration to buy, especially given the current price extremes reached by the indices.


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## ducati916 (24 January 2021)

gartley said:


> A few more charts and to ponder over originating from 2003 low  and 2008 high in NDX and SPX
> 
> 
> 
> ...






gartley said:


> Further to the earlier series of posts regarding SP500 and other US indices.  The following is a chart of the ETF: VXX which follows the VIX.
> Looking at this chart it shows an unusual development, ideally this should mirror the SPX but in the opposite direction.  What has happened over the last 6 weeks is that downward momentum is waning in the VXX whilst the SPX has been rising strongly thus we have a divergence between the two in play.
> It appears "heavy hands" are accumulating this in preparation for a  low.
> So a bottom may be close here OR it has one last "thrust" to fill the gap @ 15.23 and that for me would be a major consideration to buy, especially given the current price extremes reached by the indices.
> ...




The 'divergence' in the VIX has been an issue for a couple of weeks now. The difficulty is that when you have a number of false b/o higher and they fail, complacency sets in. The divergence is easily seen






An alternative view of the divergence:






There is also an interesting fundamental dichotomy at work. For the Bulls we have the Fed. For the Bears we have (an increasing volume) of Fraud:









						What The Boom In Fraud Says About The Current Market Environment
					

"Crashes and panics often are precipitated by the revelation of some misfeasance, malfeasance, or malversation (the corruption of officials) that occurred during the mania. One inference is that swindles are a response to the appetite for wealth (or plain greed) stimulated by the boom; the Smiths wa




					thefelderreport.com
				




The (potentially) biggest fraud is yet to come (detailed later in this post). In both the most recent market tops: 2000 and 2007, there was obvious (after the fact) significant fraud in the markets. This situation exists again.

Stock sales from insiders exist at all times, often they are legitimate. Always worth watching.











Sentiment and Margin is high:










The potentially largest fraud and the one that could provide a catalyst for a serious market correction:






Bitcoin remains in a downside correction that started earlier in January. And it's testing some important support levels. The daily bars in Chart 1 show bitcoin testing a couple of support levels formed earlier in the month (horizontal lines). It's also nearing its 50-day moving average (blue arrow). Needless to say, those are important tests to its uptrend. It's hourly bars show those previous support levels more clearly:






The hourly bars in Chart 2 show the bitcoin correction that started during the second week of January. It also shows it testing a previous support zone ranging from 30,300 down to 28,500 (see circles). It remains to be seen if that support zone is able to contain the January correction. The hourly bars also show initial overhead resistance that needs to be overcome near 38,000 (red line):






Which is of itself, simply a correction/whatever in any financial instrument.

However, add in Janet Yellen's remarks, which are so misleading they are just unbelievable, re. 'criminal', that I simply dismissed them initially. However, read this article:



Now her remarks take on a completely different context. As the trial is yet to begin, comments by the (now confirmed) Treasury Secretary could/would be considered highly prejudicial by the defence team to their clients. Hence I believe, the very circumspect nature of the comments from Yellen.

The BTC value is +/- $500B. This potentially is a serious fraud in dollar terms. However, in psychological terms it is multiples bigger than that. This is (I think) a catalyst that can break the market significantly lower.

Therefore the current correction takes on a far more important (sinister) reality check. Is this correction the 'smarter' money bailing out? Time will tell.

With complexity, comes the opportunity for fraud. The other guy being smarter than you. Crypto is a perfect vehicle for those smarter than you to relieve you of your cash.

Earnings next week:






jog on
duc


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## gartley (24 January 2021)

I think one also needs to look at the USD for clues here as well. As it stands the dollar has either bottomed for this leg down or has just one more wave down before embarking on a multi month rally. Some good trades will be on offer soon.


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## ducati916 (25 January 2021)

gartley said:


> I think one also needs to look at the USD for clues here as well. As it stands the dollar has either bottomed for this leg down or has just one more wave down before embarking on a multi month rally. Some good trades will be on offer soon.





So DXY as against Gold.

Gold is looking vulnerable and DXY looking to rally. Really a reversion to mean type of trade.






Which raises the entire issue around gold. Gold has (seemingly) lost some of its lustre to BTC, although that may change again:






BTC looking toppy. Longer term, its fundamentals may even collapse. That however is a story that will play out over time. Gold however has its initial and fundamental issues re. rates:






With rates rising, the attractiveness of gold falls. Rates are looking very bullish atm. They will move to 1.3%. If inflation via PPI continues to gain traction, they will rise higher. At 2% +/- the stock market comes under pressure. At that point, the Fed. rides in with yield control. That is then bullish for gold.






From the gold thread, we have this chart:






Unfortunately, this is taken so far out of context, does it actually provide reasoned analysis?

Gold over a significant time period: the bear market ran from 1981 to 2001. That is a 20yr bear market. The reason? Bond yields (real) were above the inflation rate.






Slightly lower time frame: from above we can see that there were bear market bounces. What exactly differentiates the current situation? Currently real yields are still negative. That is bullish for gold. Real yields are rising, as is inflation measured by the PPI. The race is on. If yields rise above inflation, gold is dead. If not, gold is on.

Inflation of the PPI largely depends on the strength of DXY. If DXY is weak, inflation rises. If oil also rises due to other reasons than a weak DXY, inflation rises further. 






Is the DXY going to collapse?

The short answer is no.

The longer answer is because the DXY is supported by every other currency where that country seeks to maintain or grow their exports. China is trying to grow its internal consumption and shift from pure mercantilism to something mid-way. While that transition takes place, which will take time (lots of time) they remain supportive of a (relative) strong DXY as do Germany, Russia, etc.

Therefore the DXY will fluctuate in wide ranges, but it will not (in the short term) come anywhere close to a collapse as predicted by Schiff et al. The fortune of gold resides in whether a weaker DXY at any given point due to capital/trade flows coincides with an oil shock re. supply as occurred in the late 1970's and early 1980's.

A broad corporate default, if the Fed. stepped in front, would also likely create an inflationary shock as the Fed. would have to monetise some potential $14T in corporate debt. This would probably create a huge move in gold.

So like @gartley I would expect a stronger DXY over the next few weeks, which, probably means a decline in gold as inflationary pressures abate. Rates in this time period will likely go sideways.

Stocks are flagging divergences everywhere and are simply waiting for some excuse/catalyst to sell-off.

jog on
duc


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## gartley (25 January 2021)

Certainly the DX will be interesting especially with respect to the broader market too.  Certainly in the region for a rally and a daily close above 90.77 would probably confirm  that. But also looking at a lot of the major currency pairs traded against the USD in terms of EW, they would have a better "look" if they had that last move up.
What they should look like they will and what they actually is another story and we can't trade by feel but only what the market tells us.
Gold is interesting and I expected it to forming this range bound pattern mid year. ( actually back then I got it wrong and it put one last leg up before starting it). But stepping back and looking at a very long term EW view it looks to me we in the a wave 4 sideways abcde pattern but time will tell.


----------



## ducati916 (26 January 2021)

Interesting start to the week:






Volatility threatening to break out:






Rampant speculation high:





















Interesting charts to follow re. hyper-inflation:






Hyper-inflation does not resemble the 1970's






So, in a hyper-inflation, at least in the early years, stocks (potentially) are a good hedge. Gold is better. What is the market actually saying?

Whether it is extended or not, at some point this will come into play. Is the 'mortgage money' currently speculating in the market, being spent, being saved? All are possibilities. Only after the fact will we start to see who did what.






C19 news:






Last time, the new and old rose together, before the new took off:

What is the new and what is the old this time?






jog on
duc


----------



## qldfrog (26 January 2021)

Vxx was mentioned here.i though about it as a way to directly play the VIX
At current level, not a bad lottery game so left a reminder to purchase yesterday. That i quickly forgot until this morning.
Up in a rush and bought some. After a 5pc overnight jump 🙁


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## ducati916 (27 January 2021)

Earnings season is going quite well by all accounts. Market is meh.

As we head into Feb.










VIX still bubbling:






DXY






Now DXY and Stocks: DXY & Stocks have for the last 8+ years moved pretty much together. Currently we have a significant divergence. An issue?






Speculation via Options...influencing the Market?






Mr flippe-floppe-flye:






POTUS still chasing China:








Not much on offer via Fixed Income: this will be a driver of stocks for those who need yield.






jog on
duc


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## ducati916 (27 January 2021)

So yesterday, @tech/a posted this:






So with regard to supply:



















Supply out of your arse on its way. Wall St. will provide supply infinity. This sort of garbage sunk the 2000 market. It took a while, but it will happen.

So we have had a Hedge Fund bailout. Melvin Capital (short GME ) was targeted by Reddit a message board, who, ganged up (LOL) on them and just about blew them up. SAC and Steve Cohen rode to the rescue:






This has actually been around for 25+ years. The Iomega's were possibly the first example of this where a message board ramped a POS stock to unbelievable valuations until it went to $0.00. Don't drink the kool-aid!

jog on
duc


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## peter2 (27 January 2021)

The market is providing so many interesting sub-plots at the moment. 

Spec stocks are jumping up like bait fish leaping out of the water when the predators are snapping at their heels. 

Consistently unprofitable companies are flying high (like Icarus). 

Corporate valuations are impossible to evaluate in this covid economy.  

The geeks are sticking to the man (Wall Street). (GME and other stocks that are heavily shorted)

I love Dr FFF's comment: "_in between reality and fantasy is this - the netherworld of spirit that permeates the essence of price discovery_ "

Currently there's so much hot air around that it's capable of lifting everything.  I love this business.   🤑


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## mcgrath111 (27 January 2021)

peter2 said:


> The geeks are sticking to the man (Wall Street). (GME and other stocks that are heavily shorted)



My morning ritual for the last week has been to check how gamestock traded overnight (I don't hold), yet it is one of the wildest things in financial markets I have seen - It's like watching afterpays rise, if it occurred over the course of a week lol. The rise will be as glorious as the fall I'd imagine (A lot of people making huge coin, yet lots of retail investors will likely get burnt / buying in too late etc. when profit taking occurs and shorts have closed positions. 

Great post btw Duc, great reads all round!


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## finicky (27 January 2021)

Michael Burry (the 'Big Short' guy who got himself bespoke short bets against sub-primes in 2008) was an early investor in Gamestop (GME) but said about its rise recently, "unnatural, insane and dangerous".


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## ducati916 (28 January 2021)

So the game continues, however, the speculators are potentially going to learn a lesson in liquidity:







I was going to short here:









But no PUTS available. Shame.

BTC:






The VIX:






Liquidity:

In the US comes from 3 primary sources: (a) dollars from new traders/investors and (b) market makers and (c) algos. The market makers are supposed to make a market during declines, to keep the market orderly because the other source of liquidity (a) is absent either because (i) there is no longer marginal dollars available or (ii) those marginal dollars are remaining as cash. The algos will rather than provide liquidity to prop up prices, actively exacerbate the problem by going short.

Unfortunately, the MM do not provide liquidity when needed. When it is needed, it vanishes. The market then proceeds to collapse, at least until the Fed. arrives, which is normally when the losses threaten the system....so pretty late in the game.

Now Mr flippe-floppe-flye:






I'm not sure if this is 'THE' top, but it is certainly toppy and has been for weeks. To my mind, this is simply a correction. Potentially a deep correction, 10%-15% type of correction. 

Liquidity will vanish.....poof! It's gone. These chaps, are about to learn this lesson. 






jog on
duc


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## ducati916 (28 January 2021)

Mr flippe-floppe-flye is all over the shenanigans occurring on Wall St. Actually this is far from the first time this has happened: first time for this generation.

Anyway:












jog on
duc


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## qldfrog (28 January 2021)

Good timing with vxx😊 now, when do i sell?


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## ducati916 (28 January 2021)

Now I'm really laughing....

XRT an ETF with significant assets:










Moving higher thanks to GME (LOL).

jog on
duc


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## qldfrog (28 January 2021)

ducati916 said:


> Now I'm really laughing....
> 
> XRT an ETF with significant assets:
> 
> ...



You do not understand :it is covid and the world has changed LOL


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## peter2 (29 January 2021)

I've started a little short on *XRT* the retail ETF that has GME in it.  Thanks @ducati916  for that detail. 
I sold at 95, and yes it's at 97, 98 now 99.   It's a very little position for fun.  Mean reversion target is about 78. 

Oh, now it's at 94.60.


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## ducati916 (29 January 2021)

peter2 said:


> I've started a little short on *XRT* the retail ETF that has GME in it.  Thanks @ducati916  for that detail.
> I sold at 95, and yes it's at 97, 98 now 99.   It's a very little position for fun.  Mean reversion target is about 78.
> 
> Oh, now it's at 94.60.





And currently:









And still falling.

The story:



























But pretty much, its over. Fun while it lasted. The question is: why would you even bother defending 1 short, that was pretty much finished anyway? Especially when the margin calls were so heavy you had to liquidate other positions.

I suppose the only question is: has this done enough damage, as was the case with LTCM in 1998, to threaten the market? I don't think so, LTCM's leverage took it to $1T when a Trillion was still a big number. Here we are only talking +/- $14B. However, that being said, market crash events are always liquidity events. While on the surface this looks (pretty) benign, you just never really know. That the Brokers have yanked stocks from being traded, suggests that the damage might run a bit deeper than we think.






VIX falling. Keep an eye on it.

Yields back on the march higher. Gold will probably come under pressure again.






DXY ready to move higher: will it support the market? 






The thing is this: breadth is not good. Individual sectors have rolled over. The GME story (while good fun) has potentially distracted from the underlying trend in the broad market, which currently is weakening. Another bout of selling, could see a bit of a panic set in. Margin is high, which means that liquidity is low. It won't take much to ignite a stampede after the events of the last few days, which means liquidity gets yanked toute suite.

The DXY is a run to safety trade (which we may see). Treasuries are a run to safety trade (which we are not seeing). Rotations into defensive plays, Utilities (we are seeing). These are just currently small signs. If they grow, there could be trouble brewing.

jog on
duc


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## ducati916 (29 January 2021)

Oil patch news:


-    The EIA expects global oil demand to be larger than supply in 2021, particularly in the first quarter, leading to sharp inventory drawdowns.

-    EIA projects Brent to average $56 per barrel in the first quarter.

-    However, the agency expects Brent to remain stuck between $51 and $54 on a quarterly basis through 2022.

*Market Movers*

-    *Hess (NYSE: HES)* said it would spend $1.9 billion in 2021, 80% of which would be concentrated in Guyana and the Bakken. 

-    Russian vessel Fortuna started working on the last section of the Nord Stream 2 pipeline in Danish waters, despite U.S. sanctions. 

-    *ExxonMobil (NYSE: XOM)* lifted force majeure on Qua Iboe crude exports in Nigeria for the first time in six weeks. 

*Tuesday, January 26, 2021 *

Oil prices fell at the start of the week on growing concerns related to demand. China is encouraging its population not to travel over the Lunar New Year period due to new Covid-19 cases, a time when millions of people travel.

_*BP cuts exploration team. *_*BP’s (NYSE: BP)* exploration team is down to less than 100 people, from over 700 a few years ago. “The winds have turned very chilly in the exploration team since Looney’s arrival. This is happening incredibly fast,” a senior member of the team told Reuters.

_*Oil majors slow exploration.*_ It isn’t just BP. In 2020, the five largest western oil majors dramatically reduced the number of drilling licenses they acquired. Analysts say as a result of the cutbacks in acquired licenses, production in the second half of the decade will be significantly impacted.

_*Oil industry alarmed at drilling restrictions. *_The Biden administration may suspend new leases on federal lands – the administration already issued a 60-day moratorium – sending the stock prices of oil drillers tumbling. New Mexico may have a lot to lose. However, the industry has already stockpiled permits that could take years to work through, so the practical impact may be limited.

_*Drilling restrictions bullish for oil. *_“[P]olicies to support energy demand but restrict hydrocarbon production (or increase costs of drilling and financing) will prove inflationary in coming years given the still negligible share of transportation demand coming from EVs (and renewables),” Goldman Sachs wrote in a report. 

_*Keystone XL cancellation bolsters TMX.*_ The Trans Mountain expansion project has just become the most important oil pipeline project in Canada after U.S. President Joe Biden stopped the U.S.-Canada cross-border link Keystone XL. The project is “really the only practical option left for increasing pipeline takeaway capacity and there should be a clear statement from the federal government that they’re committed to its completion,” said Dennis McConaghy, a former executive vice-president of Keystone developer TC Energy.

_*Morgan Stanley: LNG shortfall by 2023.*_ Morgan Stanley said that the global market for LNG is tightening. Recent price spikes are temporary, but the bank said that there could be a supply shortfall by 2023. The report said that the Covid-related knocked off 15% of expected global supply through 2025, but demand only fell by 3%. “While the recent price spike has left summer ’21 prices over-extended, creating some near-term price risk to the downside, a new multiyear up-cycle has likely begun,” the report said. As a result LNG prices could double between 2020 and 2023.

_*$50 billion worth of gas projects at risk. *_Volatile LNG prices are putting $50 billion worth of gas-fired power plants in Asia at risk. 

_*IEA: Global gas demand up 2.8% in 2021.*_ In its first-ever quarterly gas report, the IEA said that global gas demand would bounce back this year, erasing losses from 2020. “Global gas demand is expected to recover in 2021 from an unprecedented drop in 2020,” the IEA said.

_*WoodMac: Solar least-cost option by 2030. *_The costs of solar will fall by another 15-25% over the next decade, making solar the least cost form of power generation in all 50 states by 2030, according to a new study by Wood Mackenzie.

_*Equinor divests from Canada’s oil sands.*_ *Equinor (NYSE: EQNR) *sold its 18.8% stake in Athabasca Oil, completing its total exit from onshore Canada.

_*Indonesia seizes Iran oil tanker. *_Indonesia seized an Iranian-flagged oil tanker over a suspected illegal oil transfer. 

_*Shell to buy largest UK EV recharging network.*_ _*Royal Dutch Shell (NYSE: RDS.A)*_ said it would buy the largest network of EV recharging stations in the UK.

_*Biden to electrify government fleet. *_President Biden said that the federal government will be a major purchaser of electric vehicles. The U.S. government has 645,000 vehicles in 2019, which consumed 375 million gallons of gasoline and diesel.

_*China to struggle with shale gas.*_ China’s oil majors will struggle to ratchet up shale gas production beyond 2025, according to Reuters. Geological complexity and high costs could lead to slow growth, which may mean a greater reliance on imported LNG.

_*Refiners set for rough quarter. *_With earnings reports soon to be unveiled, refiners are bracing for another rough quarter. Seven independent U.S. refiners are expected to post an average earnings-per-share loss of $1.51, worse than the $1.06 loss in the third quarter, according to IBES data.

_*Renewables surpass fossil fuels in EU.*_ Renewable energy overtook fossil fuels as the European Union’s largest source of electricity for the first time in 2020. Renewables accounted for 38%, with coal and gas combined at 37%. 

_*NextEra posts loss on Mountain Valley impairment.*_ *NextEra Energy (NYSE: NEE)* posted a fourth-quarter loss after writing down $1.2 billion related to the Mountain Valley pipeline, which suffered a legal setback recently, potentially leading to “substantial delays” in its start up.

_*Sumitomo ends work on new oil projects. *_*Sumitomo Corporation* said that it would not start any new oil projects in an effort to pivot away from fossil fuels. 

_*Oil supertankers to be sold for scrap. *_A surplus of oil supertankers due to overbuilding and because of weak oil demand means that a growing number will be broken down and sold for scrap. 

_*EVs near “tipping point.” *_Experts say that EVs are close to a “tipping point” of mass adoption due to falling costs. EV sales increased by 43% globally last year. Price parity with the internal combustion engine on an unsubsidized basis is expected between 2023 and 2025.

_*EU greenlights $3.5 billion battery project.*_ EU regulators gave the go-ahead to a $3.5 billion battery project spearheaded by a dozen European countries. 

_*New York divests $4 billion from fossil fuels. *_New York City’s Comptroller announced that the City’s pension funds would divest their portfolios from fossil fuels. The $4 billion divestment is one of the largest in the world to date. 

_*BlackRock’s Larry Fink calls for net-zero plans. *_BlackRock’s CEO Larry Fink is set to call on the corporate world to “disclose a plan for how their business model will be compatible with a net-zero economy.” Fink’s annual letter to corporate leaders is widely viewed as a barometer for investment trends in financial markets. 






jog on
duc


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## ducati916 (29 January 2021)

While there may remain a few more convulsions up/down for GME, for the most part it is over:











See next:

More interesting are the ramifications and how to profit going forward. Just posted on another thread:






It has long been known that Robinhood sold order flow. Eventually, this happens:






No way was it the little guy. He may want to claim credit....pah. The algos and HFT boys got involved (on both sides) in the trade. This was simply the most egregious example for a while.

Anyway, now that you know order flow from plebs might be jumped on by the algos (when the conditions are right) where to next? Postulated already has been SLV and some other names.

NG:






Natural gas is the known graveyard of Hedge Funds, several having blown themselves up in the past. Supply is short, Shorts are heavy, perfect storm: (disclaimer the duc is heavy in NG).

Zuckerberg:






AAPL's response:






Errr, that's a no.

jog on
duc


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## ducati916 (29 January 2021)

Nothing new under the sun:



























jog on
duc


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## gartley (29 January 2021)

qldfrog said:


> Good timing with vxx😊 now, when do i sellI doubt






qldfrog said:


> Good timing with vxx😊 now, when do i sell?



Correction in indices has further to go (despite the massive short covering last night), so I am hanging on for now.  As soon as I get downside projections either for VXX or SPX I will try and post them. At the moment too early and nothing of significance generated although I have my eyes on a projection of 3500-3600 for a Nominal 10W cycle if price action manages to break red and green offsets. If so most probably we get other lower projections in higher timeframe cycles.




Is this the big one? Not sure but we are expecting historic high here and probably in the next 2 months ( 4 months if it stretches). Things to consider:
Weekly projection still not met (was 4150 min).  It can be invalidated and that will depend on how far the correction goes but has not yet.
The monthly projection of 3850 was met.
For now looking for correction to carry till end Feb plus or minus a week. Thereafter the strength of the upward rally that follows should shed more light. But one thing that is clear, USD probably has stareted a multi month rally.


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## ducati916 (30 January 2021)

Two variables playing out, broad market and the GME meme. Possibly linked via the Hedge Funds, but this is far from clear.

GME:






And its continued effect on XRT






With Options expiring today:






This will be really interesting. Of course for the Hedge Funds that oversold existing shares by some 48%, this could snuff them out. It is quite astounding that they could be so stupid.

Hedge Funds as an aggregate:






The broader market:














Not looking great. I suspect many will shoot first ask questions later. The Options/GME issue will play out over the w/e. The answer will make itself felt on Monday. As no-one really knows the answer, do you hang on hoping for the best?

Mr flippe-floppe-flye:






jog on
duc


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## basilio (30 January 2021)

ducati916 said:


> So without a doubt, the BTC mania is back. I have recovered an article from 2018, which while being an extremely long read, does offer a very different perspective on BTC.
> 
> First however, from @noirua and a link provided:
> 
> ...




That analysis of how the internet has developed into open and closed systems an d the opportunity block chain offers is exceptionally insightful.
Well worth a read if you missed it earlier.

Thanks Ducati


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## ducati916 (30 January 2021)

Oil News:

*Friday, January 29th, 2021*

Oil prices appear set to close out the week mostly flat, but on Friday prices are up from a day earlier. Hopeful news surrounding the two new vaccines – one from Johnson & Johnson and one from Novavax – raised hopes of more vaccine supply.

_*Chevron posted surprise loss on refining hit.*_ *Chevron (NYSE: CVX) *reported a fourth quarter loss of $665 million, which included poor results from its downstream unit and a $120 million charge related to its takeover of Noble Energy. For the full year, Chevron lost $5.5 billion. 

_*Oil majors earnings preview. *_While Chevron reported first, the other oil majors will report earnings in the coming days. Helped by OPEC+ and Big Pharma, the world’s largest oil companies are beginning to remember what it felt like to have some ground under their feet. Here’s what we can reasonably expect.

_*Biden EV order faces questions. *_President Biden ordered the U.S. government to switchover its 645,000-vehicle fleet to EVs made with union labor and at least 50% American-made parts. But no such EV exists yet.* Tesla (NASDAQ: TSLA) *is not unionized and *GM (NYSE: GM)* uses three-quarters imported parts. The EV order may be possible to achieve over time, but will not happen overnight, experts say.

_*Exxon planning board overhaul. *_*ExxonMobil (NYSE: XOM)* is considering a shakeup of its board and increasing investments in sustainability, according to the Wall Street Journal. The changes could be announced next week. The pressure comes from activist shareholders. 

*GM announces 2035 EV goal. GM (NYSE: GM)* made a major announcement on Thursday, saying that it would aim for zero-emissions cars and trucks by 2035 and that the company would be fully carbon neutral by 2040. The announcement will increase pressure on other global automakers to follow suit and it potentially marks a massive change in car and energy markets. Critics point out that the GM announcement sounds aspirational and lacks binding commitments. 

_*Oil lobby seeks alliance with farm belt to fight EVs.*_ Reuters reports that U.S. oil lobbyists are trying to team up with ethanol producers – typically their arch rivals – in order to fight off the Biden administration’s push towards EVs. The American Fuel and Petrochemical Manufacturers (AFPM), an oil refining trade group, has reached out to biofuels and corn groups, but have so far been rebuffed.

_*S&P puts oil majors on negative watch. *_S&P warned that it might cut the credit ratings of multiple oil majors, citing climate and “energy transition” risk. S&P Global Ratings believes the energy transition, price volatility, and weaker profitability are increasing risks for oil and gas producers,” it said in a statement on Tuesday. The warning included *ExxonMobil (NYSE: XOM)*, *Royal Dutch Shell (NYSE: RDS.A)*, *Chevron (NYSE: CVX)* and *Total (NYSE: TOT)*.

_*Dakota Access loses court case, fate could be decided soon.*_ A U.S. appeals court upheld a lower court decision to throw out a key federal permit this week, ordering an environmental review. The decision is a major blow to the pipeline and while the court allowed the pipeline to continue to operate, the decision also leaves the pipeline’s fate in the hands of the Army Corps of Engineers.

_*Iran’s oil exports rose. *_Iran’s oil exports rose to 710,000 bpd in December, from just 490,000 bpd in November. But the U.S. is also trying to seize an Iranian oil shipment, signaling that the U.S. policy has not significantly changed yet.

*Equinor takes $982 million write-down. Equinor (NYSE: EQNR)* took a $982 million impairment related to its Tanzania LNG project. 

_*Permian flaring could be cut at no cost.*_ A new report finds that 40% of flaring in the Permian basin could be eliminated at “no cost.” 

_*Texas RRC skeptical of flaring permits.*_ In a potential sign of a sea change underway at the Texas Railroad Commission, the commissioners delayed a decision on 121 flaring permits from *BP (NYSE: BP)* over concerns about the “waste of our precious resources.”

_*IEA launches energy transition group. *_The International Energy Agency (IEA) launched a global commission to handle the impact on societies from the shift towards renewable energy. The global summit will try to address the fallout from the loss of fossil fuels. 

_*Biden ends overseas fossil fuel funding. *_Another Biden executive order seeks to end the financing of fossil fuel projects abroad. Through the Export-Import Bank, and the Development Finance Corporation, the U.S. has funneled billions of dollars to oil and gas projects in other countries in the past five years. Such projects include LNG in Mozambique, the Vaca Muerta shale in Argentina and financial support for Pemex. 
_* 
Shale promises capital discipline.*_ As oil prices stabilize in the $50s, shale drillers are promising restraint, although many analysts question how sincere that mantra is. Rystad predicts an increase in drilling could see an extra 310,000 bpd return to the market by the end of the year. But Morgan Stanley says that of the companies they watch, on average they are pledging to reinvest no more than 80% of cash flow, suggesting an increased focus on returning cash to shareholders.  

_*Tiny oil company gets 1000% Wall Street bets bump.*_ An oil company producing the equivalent of 70 barrels of oil daily surged in value almost 1,000 percent to $128 million thanks to a surge in trading activity coming from retail traders.

_*Tesla reports first annual profit.*_ *Tesla (NASDAQ: TSLA) *reported earnings of $721 million in 2020, the first full-year profit for the company. But fourth quarter earnings disappointed and the stock fell 5%.

The C19 pandemic (after the fact) has clearly created a resurgence in retail trading:






And due to their limited means, they have embraced Options 






As can be seen, customers trading 1-10 contracts account for a significant volume. In of itself, not an issue. When they club together however into a concentrated block, targeting a very limited universe of stocks:






The results have been (very) good (so far).

A new 'target' already identified:






Hedge funds:






Of course aren't going to sit still for this.

An alternative are these types of charts:






Which you can then investigate via the various means available, short interest scans etc.

There are ramifications:






Now these POS companies can sell new stock at the market and essentially recapitalise. 

Credit is THE big issue in this (type) of market:






Now there is nothing wrong with POS companies being able to recapitalise, caveat emptor. The issue is the over extended Hedge Fund, employing leverage, who get caught on the wrong foot and to meet margin calls, are required to liquidate other investments (bets), which then initiates the complex systems cascade that turns into a runaway train.

The S&P500 is now the CARRY TRADE of the world, with the Fed. backstopping it. An unwind, inadvertently triggered by Hedge Fund or two having to de-leverage could cause really serious damage. With monetary policy at ZIRP, what is left is the Fed. buying every asset in collapse. What exactly happens to the DXY? Who knows.

Whether this is already occurring, who knows. The thing is: what happened this week was different in that it was initiated by retail, aided and abetted by other Hedge Funds targeting the floundering, they just can't resist that blood-in-the-water, without the wider market really paying too much attention, due to the way it has been reported. Remember how the C19 crash started and accelerated, that is the nature of complex system (Butterfly effect).

Prior to today (Friday) there was already a stealth correction underway with an acceleration in the contraction of breadth. Now some of the SHORTS are saying they have covered, many I suspect have not. Options settle on the Saturday after expiration. Which means that the full impact (if there is one) will not be felt until Monday.

Ultimately, this is a CREDIT event or at least potentially one. Credit events turn up all over the world now, triggering other credit events (complex systems).






China is tightening credit. Coincidence? I guess we'll find out.


The populist has taken to the financial markets because they have (a) been disenfranchised and (b) because they have the means now






Having missed out and had their jobs shipped to wherever, they are pissed.

The market is full of:






It will be interesting to see whether this cascades.

jog on
duc


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## qldfrog (30 January 2021)

ducati916 said:


> Oil News:
> 
> *Friday, January 29th, 2021*
> 
> ...



Just have to say it again,love your analysis.kudos👍


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## ducati916 (31 January 2021)

All the shenanigans of the last few days has detracted somewhat from the primary picture (analysis) re. the overall market.

Which is the divergence between 10yr Treasuries and the Market. The 10yr rate is the benchmark risk measure. Ultimately, the market is tied to this. In periods of high or unusual speculation, there is often a lag. Essentially this is what we have had to date. SPACs, IPOs, meme's of this time it is different (due to COVID) and Robinhood etc.

The 10yr is threatening to break an important support area. The 10yr is going to 1.3%, which is below support. I would have had stocks steady to possibly 2%, but it doesn't look good atm. The question is: (a) slow grind to 1.3% or (b) high vol. to 1.3%? I think a slower grind as we have already had pretty high vol. in the 10yr.

Stocks however do not necessarily correlate to a slow grind. They tend to move with much higher vol. both ways.









The various sectors this month:










Real Estate is potentially THE sector to be in currently: (a) on the move higher and (b) resistant to pullbacks (currently at least), which makes sense in an inflationary environment (which we seem to be building towards).






Of course not all sub-sectors are equal:






I'm sure there will be leading stocks in this sector, which is potentially defensive/outperform moving forward.


jog on
duc


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