Savvy Money Bets On Deep Stock Market Correction
$DIA, $SPY, $QQQ, $VXX
Carl Icahn is backing up his warning of “a day of reckoning” by shorting lots of stocks.
Icahn warns that “a day of reckoning” was coming for American stock markets unless the federal government stimulates the economy with more spending aka QE.
In a recent filing with the SEC, Icahn Enterprises showed that the investor is not “fooling around”, announcing that it had a net-Short position of 149%.
That means that the value of Icahn’ s short positions, or financial assets that his funds have borrowed rather than bought, is worth 149% more than the value of his long positions. Icahn hopes to make money on these assets declining in value, at which point he would cash out by buying shares in companies at a cheaper price than what he borrowed them for, pocketing the difference in price.
No matter who is elected in November, the next President will probably face a recession, financial experts say.
The 83 month Bull Market is already the 4th-longest in more than 150 years and showing signs of exhaustion as corporate profits peak and wage pressures build. The building pattern is a Rounded Top.
Managed money that has been moving to the sidelines since last October is now on the Short side of the market and has been for the past several weeks.
The history of cyclical fluctuations suggests that the “odds are significantly better than 50-50 that we will have a recession within the next 3 years,” according to former US Treasury Secretary Lawrence Summers.
The Chief US economist for JPMorgan Chase & Co. in New York, puts the probability of a downturn during that frame at about 67%.
Friday, the US major stock market indexes finished at: DJIA -185.18 at 17535.32, NAS Comp -19.66 at 4717.68, S&P 500 -17.50 at 2046.61
Volume: Trade was below average with about 843-M/shares exchanged on the NYSE.
- NAS Comp -5.8% YTD
- Russell 2000 -2.9% YTD
- S&P 500 +0.1% YTD
- DJIA +0.6% YTD
| HeffX-LTN Analysis for DIA: | Overall | Short | Intermediate | Long |
| Neutral (-0.05) | Neutral (0.07) | Bearish (-0.38) | Neutral (0.17) |
| HeffX-LTN Analysis for SPY: | Overall | Short | Intermediate | Long |
| Neutral (-0.04) | Neutral (-0.04) | Bearish (-0.40) | Bullish (0.31) |
| HeffX-LTN Analysis for QQQ: | Overall | Short | Intermediate | Long |
| Neutral (-0.24) | Neutral (-0.16) | Bearish (-0.40) | Neutral (-0.15) |
| HeffX-LTN Analysis for VXX: | Overall | Short | Intermediate | Long |
| Bearish (-0.33) | Neutral (-0.06) | Bearish (-0.44) | Very Bearish (-0.50) |
Have a terrific weekend.
Paul Ebeling
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