Andrew Giovinazzi's blog

Falling like a BRIC

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I remember not too long ago there was an acronym given to the emerging markets star countries.  Brazil, Russia, India and China were  and are known as the BRIC’s for their buoyant markets and running economies.  What the heck happened?  In two cases oil crashed, some corruption in some others and an outright equity collapse from poor capital structures put the BRIC’s into the dust bin for 2015.  The SPX might be poking along but it is not down over 10% like the EEM is.

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China leaves a mess in the oil patch

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2050 to 2100 is the refrain.  Rinse and repeat as stocks bounce between those two numbers until something real happens.  The reasons for not going over 2100 are: No QE, oil prices and China is slowing down.  That is also causing what appears to be more than a temporary bout of deflation.  China has been consuming mass quantities and now not so much.  The Yuan devaluation was a rare misstep in what has been a historic growth trend in The Middle Kingdom.

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Someone is TWTRing the volatility

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Stocks ripped today on no real news.  There is some stimulus possibility out of China, the Fed is looking for more inflation and oil and other commodities stopped dropping.  Basically the same as on Friday except there was better headlines for news driven Algos to jump on.   Our chat room joke is SPX 2050-2100 SPX and it is either in one of those places or trying to get to the other one.  Today the SPX wanted 2100 and got it.  While the SPX is range bound TWTR is not.

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Who is crushing AAPL?

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AAPL is making a low that we have not seen since January.  Normally we don’t write about the stock because the trade in it is very uninteresting since the stock split.  It has rallied enormously since then but for now is suffering the same fate as all (2) the near 1 trillion dollar market caps suffer; a reason to go higher.  Today is a little different.

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Is it different this time around?

AAPL and MSFT got a black eye tonight on less than stellar earnings reports.  I think that represents around 20% of the market cap of the NDX.  All those that have been calling for the demise of stocks will have reason to cheer today.  Our rally to all-time highs got derailed by something normal like reduced earnings forecasts instead of Greece, QE or some other macro mess.  While financials and tech have powered us to all-time highs, energy, oil and metals are hitting some near term lows.

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Market still cares about Greece, sort of.

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The morning looked solid today as stock ran on GOOG, FB and AAPL rallies.  Financials look good as BAC is finally getting out from the constant deluge of fines from the financial crisis.  All was going just fine until reports of unrest in Greece started rumbling through the markets.  Treasuries spiked even into Yellen's hawkish rate tones.  Something happened and it had nothing to do with the USA.

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Think of this weekend as an earnings straddle

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As we go into the 3 day weekend the traders are putting the juice back in the options.  As I said in our Vol Report this morning, VIX will stay bid to the close.  After all no one really knows how the market will react to whatever Greece decides about Greece.  It is a binary event similar to what goes on around earnings.  The best clue to the prospective move is around the ATM straddle.

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Greece Defaults

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It happened.  It finally happened.  Greece defaults on debt to the IMF and gets the title of most beautiful but deadbeat country.  What did stocks do?  They rallied after it appeared Greece’s citizens think the EU is saner than the current government. Voters will most likely vote yes on referendum to stay in the Euro Zone on Sunday.

 

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AAPL declares earnings and the market adjusts

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As I write this Greece defaults on debt to the IMF and sends its citizens into some uncharted waters.  The SPY is up .25 from the close so it is a safe bet for now that US stocks don’t care anymore.  The game is ending and is about to play out with a referendum this weekend.  It would not surprise me to see stocks start a rally again and end up at new highs after the labor reports this week.  Another surprise was the jump in AAPL IV on a down volatility day in the market.

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