Impending Crash

Bull market not looking so hot (S&P 500). The great divergence between SPX/DJIA and Dow Transports has been going on since November 2014.

Notice also the steady decline in net new highs. Today there are no new highs.

Is the EXXI blip over? The holding company note due 2018 last traded at 8 cents - current yield of 37.5%.

The BTU stock got squeezed back to the 50MA. However, the BTU sub note was only up a couple points to 13 cents - still a current yield of 36%. Even the second lien note traded at under 44 cents today!

It's great to see crude oil below $41. Equities are the dumbest market and bonds and energy are smarter; maybe oil is sending a message people should listen to?

S&P Futures Below 200-Day Moving Average

This ought to be good for a pretty good correction. See Hussman.

The Most Prescient Man

September 2008:

"'If money isn’t loosened up, this sucker could go down,' President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room."

Thereby demonstrating a superb understanding of the inherent stability of the financial system.

Best Day Ever

A 10 point bid/ask spread on the S&P 500!

December 1899 Market Crash

An interesting story about a "Day of Panic and Financial Wrecks" from the New York Times archives.

"After yesterday's experience Wall Street men, recalling the troubles following President Cleveland's Venezuelan message in 1895, and the opening of the Bryan free silver campaign in 1896, were inclined to talk of those times as days of comparative quiet."

How Quickly It Can Happen

In April 1999 - "at its peak, Priceline was valued at more than $23 billion. This for a company that has been operating for only a year, had less than a penny in sales for every dollar of its market capitalization, and has yet to post a single penny in profits."

From that point, the stock completely collapsed, getting cut almost in half in a period of a month and falling a total of 99% in under two years.

Just like the revisionist theory of the 2008 crash (that it happened because the government "let" Lehman Brothers fail), there are academic rationalizations for the NASDAQ bubble in 2000, like the paper: Was there a Nasdaq bubble in the late 1990s?.

The price/book for the NASDAQ at the peak in March 2000 was 8.55. As I mentioned earlier this month, when Ben Graham started investing in 1916, IBM (then known as CTR, Computer-Tabulating-Recording Co) had a 7% dividend yield, traded at one-third of book value, and less than ten times earnings. And people still said it was overpriced and they wouldn't "touch it with a ten-foot pole"!

Happy Flash Crash Anniversary!