Buckle your chinstraps, gang? Probably should. If you have not taken your first peek at global equity indices this morning, then you don’t know. There’s a new sheriff in town, and ugly is his name. Moral has not improved, and apparently, the beatings have continued. The Shanghai Composite (China) -8.5%, Nikkei (Japan) -4.5%, and Sensex (India) -5.5% have been severely dislocated. European markets are all down at least 2% as well, as I type. S&P futures are trading well below (very well below) fair value, but are also well above their overnight lows. On top of all that, Crude, the WTI variety has been trading with a 38 handle this morning. Many folks were hoping that the PBOC might pull a rabbit out of a hat this weekend, but that clearly was not the case. Is the PBOC out of magic tricks? Yeah, right. US Treasuries anyone? Get ’em while they’re hot.
I don’t know where the equity markets grab a toehold, nobody does….. but I do know this. Investors, and asset managers will at some point, come to the realization that they can not make decent dough anywhere else. Stocks have enjoyed an “only game in town” status for quite some time now. In fact, even if the FOMC were to hike the Fed Funds Rate just a smidge (which they likely can no longer do), like they have been expected to do, it does not change the playing field one iota as far as that is concerned. That doesn’t mean that you can time this market. Don’t even try. The buyers will be back, but there’s still fear out there, and when there’s fear, the main theme becomes “preservation of capital”. A visible capitulation would be a wonderful thing to see on the charts. We may get that today, but we may not be that lucky. Now that humans don’t do the bulk of the trading like they used to, the wash-out may not have the same feel to it that we’re expecting to see.
There are no domestic macro-economic data-points to peruse this morning. The earnings calendar is, at this point, on the back burner. What we do have is Atlanta Fed Pres. Dennis (Spider) Lockhart, who spoke in a rather hawkish manner a couple of weeks ago, and will speak from Berkeley, California just before tonight’s closing bell. What could go wrong? Hey, listen to me….you woke up this morning. They can’t beat that, and they can’t beat you.
Sarge’s TRADING LEVELS
SPX: 1973, 1958, 1944, 1926, 1905
RUT: 1150, 1140, 1133, 1122, 1110