Virtue Signal Stock Plunge

How to take market leading hot stocks and turn them into “market perform” or even underperformers? Try a heafty dose of virtue signalling and political activity against conservatives. Nothing like pissing off 1/2 your customer base to cause “issues”.

Twitter, Facebook, Google all active politically and dropping

Twitter, Facebook, Google all active politically

I’ve included Netflix as it is in the F.A.N.G. group – a historically hot trade to buy the group. Some folks use Apple other use Amazon for the “A” – both doing better than the rest of the group. (FB, Netflix, Google/Alphabet). As FANG tends to trade together, I’m not surprised to see Neflix getting a bit of a hit along with the politically active fellows.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money, Political Current Events. Bookmark the permalink.

16 Responses to Virtue Signal Stock Plunge

  1. p.g.sharrow says:

    Last night it accrued to me that if I wished to influence the election I might spring a massive short to tank the market for a few weeks just before the election then do the buy back at the election, Change the election and make a bundle at the same time…pg

  2. philjourdan says:

    Netflix is not as rabid, but is a full member of FANG.

  3. E.M.Smith says:

    @P.G.:

    Good instincts…

    Add to that: Just why might the well connected Bankers of The Fed have a set of very rapid rate hikes timed to trip the markets and stall the economy just as the time for the midterms gets here? Accident? Coincidence? I don’t think so…

    Inflation is essentially static. Wage growth near nil. There is a minor argument for “normalization” of rates, but that could be done much more slowly. This whole thing takes a year to fully develop, so delay in rate hikes by a couple of months would not do much other than NOT influence the election…

    So Obama gets dropping to near zero rates for essentially all 8 years. Trump gets rate hikes as soon as he’s in…

    From: https://en.wikipedia.org/wiki/History_of_Federal_Open_Market_Committee_actions

    Date 	  	 	Fed. Funds Rate Discount Rate 	
    September 26, 2018 	2.00%–2.25% 	2.75%
    June 13, 2018 	 	1.75%–2.00% 	2.50%
    March 21, 2018 	 	1.50%–1.75% 	2.25%
    December 13, 2017 	1.25%–1.50% 	2.00% 
    June 14, 2017 	 	1.00%–1.25% 	1.75% 	
    March 15, 2017 	 	0.75–1.00% 	1.50% 	
    December 14, 2016 	0.50–0.75% 	1.25% 	
    December 16, 2015 	0.25–0.50% 	1.00% 	
    June 22, 2011 	 	0.00–0.25% 	0.75% 
    December 16, 2008 	0.00–0.25% 	0.50% 	
    
  4. H.R. says:

    I fully believe the market drop and Fed rate hikes are politically driven.

    The problem in recent years is that there is a whole bunch of 401K and other deferred plans that keep automatically buying no matter what the market does. There are going to be a lot of Joe Average retirement accounts that will benefit from buying during the drop.

    IMO, it’s just the GEBs screwing with the market to influence the mid-term elections. What they can’t influence is the number of jobs being created as manufacturing is returning to the U.S.A. They can’t influence the growth in the U.S. economy which is looking good right now and has nothing but upside for the near future.

    I don’t know about others, but the companies I worked for after the 401k plans got started would have the Plan Administrator come in once or twice a year and give a presentation on the state of the market,any changes to the Plan you were in, some general advice on asset allocation, and usually the opportunity to get some individual advice after the group meeting regarding individual goals and asset allocations.

    One thing the presenter usually stressed is that the 401K is for the long haul and they did not advise jumping in and out of the stock market. They would point out that steady investment meant you bought cheap when the market was down and whatever you had bought when the market was up would recover over the long haul. Good advice for long-term Joe and Jane Average investor, particularly if they’re getting company 401K match.

    IMO, due to the large influx of buyers from all the 401K plans, the whales can’t influence the whole market quite the way they used to. Some stocks that will negatively affect the DOW, S&P 500, NASDAQ? Yes. Absolutely. But not the market as a whole anymore.

    The Fed is another matter, though. That table of rate hikes in E.M.’s comment just above really tells the story. It’s majorly political and marginally in response to the improving economy.

  5. John F. Hultquist says:

    Just to add to H.R.’s comment
    Not-for-profit and public sector institutions use 403(b) plans — minor differences with 401(k), but the built in monthly buying works the same.
    In the State of Washington, university plans have a good match after a person has been in for a few years. We are in the retirement zone now, and no longer paying attention to what might have happened in the last 10 years.

  6. E.M.Smith says:

    Turns out there are a LOT of choices for a “Resistance Is Futile” bumper stickers, signs, and more.

    https://www.amazon.com/s?ie=UTF8&field-keywords=bumper%20sticker%20resistance%20is%20futile&index=blended&link_code=qs&sourceid=Mozilla-search&tag=mozilla-20

    It’s just sooo tempting given the “Resist” theme of the Democrats… and as it’s a Trek thing, they can’t just go around bashing every car with that on it… ;-)

  7. pouncer says:

    I don’t know enough about it to have a “theory” but as a conspiracy “conjecture”, can’t George Soros crash an index whenever he likes by dabbling in one of the major corporations in that index? Buy up a large pile of shares over time (which he’d likely do in any case) then dump those shares at a strategic moment?

    This, noting that most indexes are proxies for the market as a whole and that markets are founded on the axiom of RATIONAL investors, not those with idealist or utopian goals.

  8. E.M.Smith says:

    @Pouncer:

    It is easier than that. A guy with $ Billions just calls his broker and says “Short the S&P for $400 million.” and all 500 stocks are sold short. They borrow (that ‘hypothicate’ agreement you signed with your broker…) the shares from all the people who own them…

  9. E.M.Smith says:

    Oh, and notice that since the sale generates cash, he doesn’t even have to put up any money. He just needs enough credit line to cover any losses that might develop, which means a letter on file from his bank (yes HIS bank…) saying he’s good for it and has enough margin in the account is all it takes.

    This IS done, and it is why I look for giant sell off days at the market tops. You see, the “story” in the news is that millions of people all woke up and decided to sell at the same day and hour. The reality is that Whale Shorts decided to sell for them via that one phone call… You will see a huge down day from a “topping action” failure to advance. Then a modest down sometimes with a recovery end of day – that’s the real folks reacting. Then, about the 3rd day, another giant down spike on volume. First prime the pump with fear, then confirm it, and the herd gets running toward the cliff… Now all you need to do is keep them moving by selling into any day that tries to be a big up day. Once the herd hits the bottom, buy back dirt cheap and cover your short.

    Soros made most of his money shorting things (especially the British Pound) and is a master at the Big Short… That’s just the facts.

  10. Steven Fraser says:

    10-year treasuries are headed down…market is popping today. We will see if it settles in, after the bottom is re-tested.

  11. E.M.Smith says:

    On Fridays, a lot of traders exit their positions for the weekend. So any reversal, if small, means nothing. Monday is the tell. When those big traders put their trade back on, which way does it go…

    Also, trends never go 100% one way. It is one or two days, then reverse a bit, then one or two more, then back. Connect the tops and connect the bottoms of the wiggles, then you have a trend…

  12. Larry Ledwick says:

    Generic question on stock trends analysis:
    If you connect the tops and the bottoms what does the relationship of those two trends tell you?

    For example if the tops trend is sinking down toward the bottoms trend or the bottoms trend coming up towards the tops trend.

    Or if the bottoms trend is near flat but the tops trend is climbing etc.

  13. jim2 says:

    It’s not unusual to see sharp drops in a secular bull market and we are in one now. We are on a sustainable growth trend. Interest rates will rise a bit, always scary, but perfectly normal in a growing economy.

  14. Steven Fraser says:

    @EM: Veritas!

  15. E.M.Smith says:

    What Jim2 said!

    @Steven Fraser: Thanks!

    @Larry:

    Rarely do top and bottom trend diverge for long. So if you look at yearly charts, it only happens at a reversal and only for a day or three. There’s lots of folklore about “pennants” and “flags”, but it doesn’t mean as much as the chartists think. Mostly all a pennant (triangle with top and bottom trends narrowing to a point on one end and a wide range on the other) means is that it’s a battle ground between 2 groups of incredibly wealthy traders trying to push things up or down. Eventually one of them wins and you get a “breakout”. Trying to guess the winner in advance is great fun and profitable if you can do it…

    So mostly what I was saying was “you can connect all the tops and get a trend. Or you can connect all the bottoms and get a trend. They will be the same 99%+ of the time. When they aren’t, go to cash and wait a few days and they will be again. Or be a highly skilled aggressive trader and predict who will win the competition of the wedge.”

    FWIW, I call that same “pennant” by a different name. I call it “wedging in” when the point is to the right. It shows the competition narrowing and a winner will show up soon. When the wedge is widening to the righ is a much less frequent occurrence. I think I’ve only really seen it as a reversal at a major top / bottom. Not long enough in duration to call it a full on wedge. I think maybe I’ll go look at charts for a while and see if it happens often enough or long enough to say anything of interest.

    This chart ( SPY 1 yr daily Bollinger Bands) uses the Bollinger Bands as a quasi trend line (they don’t give me trend lines of tops and bottoms here, I usually just eye-ball it) but these give a similar effect. They “widen to the right” at major market breakdowns, like last Feb. But you already know that from the dramatic price drops and huge daily price range (big volatility). A long slow ‘wedging in’ starts about June ending at the point where we just had a breakdown and the bulls are running…

    http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Fund&symb=SPY&x=65&y=8&time=8&startdate=1%2F4%2F1999&enddate=5%2F1%2F2017&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=3&maval=23&uf=8&lf=268435456&lf2=4&lf3=1024&type=4&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15

    FWIW, I give it about 3 more days then likely a good time to buy for a trade while assessing if it is just a ‘return to the SMA stack and fall away’ – a new bear market; or just a correction in a secular bull market. Most likely by far, given the state of the economy, is just a garden variety “correction” (AKA scare the rubes out of their stocks so we can buy them 10% cheaper and then sell them back higher in a month…)

    This version of the chart has Price Channel on it. You can sort of see how the range narrows and widens in the same way. Note how the Simple Moving Average very accurately says “Bull” vs “Bear” just based on which line is on top (fastest on top, bull, slowest on top, bear). They also show a clear trend line… just visualize something running right in between them…

    http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Fund&symb=SPY&x=54&y=17&time=8&startdate=1%2F4%2F1999&enddate=5%2F1%2F2017&freq=1&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=3&maval=23&uf=128&lf=268435456&lf2=4&lf3=1024&type=4&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=15

    I’ll see if I can find something that lets me add trend lines on tops & bottoms… and isn’t a pain to use…

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