Bill Ackman had a famously bad time with Valeant Pharmaceuticals, which crashed from $263 to the single digits. Last March, having suffered terrible losses for his fund, Ackman “threw in the towel” and dumped his position, prompting even Gartman to chime in.
So did the stock instantly soar higher? No, that would be a little too neat, wouldn’t it? The stock did indeed keep falling for a few more weeks, losing another 20% or so of its value, making Ackman looked like he at least salvaged something out of the mess. However, it soon found support on a trendline that I had pointed out went back nearly two decades………
University Avenue in Palo Alto sparkles at night with trees illuminated with carefully-placed lights by the thousands. The street has been around as long as the town, and in the year 2017, it is a veritable Rodeo Drive, lined with expensive retail stores, wealthy citizens, and dreams of avarice. You hardly ever see anyone wearing business clothes here – – anyone so doing would be rightly perceived as an out-of-town rube – – but it is on this street that companies such as Google and Paypal got their start and the recipients of technology riches shop, eat, and gather.
While the Nasdaq 100 Index (NDX) is busy making new all-time highs, so is the NDX:VXN ratio (VXN is the Nasdaq 100 Volatility Index), as shown on the following two Monthly charts.
What is different about these two, is that the NDX:VXN ratio has run up against major resistance (the top of its long-term uptrending channel, while the NDX has a long way to go before it does the same.
With reference to the ratio chart, a drop and hold below the 460 level (127.2% external Fibonacci retracement level) could forecast a drop down to, potentially, major support at 380 (100% Fib retracement level plus bottom of long-term channel) on this chart, or lower.
My long-held goal of vaulting back up to the VIX trendline is slowly materializing. I’m baffled that the market is so strong with this going on, but it is what it is.
Having said that, I can’t help but express disappointment that, yet again, a sell-off was quickly squelched. It would be nice if it actually stuck one of these days.
Note from Tim: Nearly seven years ago, Market Sniper (“Dutch”) wrote a piece called The Very Last Day in One Trader’s Life, a personal tale. In a similar vein, another Sloper, whom has requested anonymity, offers up this autobiographical tale (unlike Dutch’s, which was about a friend), and I am grateful for this thoughtful contribution. I usually embellish posts, including those from outside contributors, with graphics to make them more interesting and approachable, but I am leaving this as an unadorned essay, as originally submitted:
Let’s talk about something dark. Something really dark. This may not be appropriate for a trading blog. This is a story about suicide. A very personal story about failed life expectations, great loss, and how nice guys finish last.
Ever since age 16, I was driven. I had high life goals, school was easy, grades were high, and life was high. Life came easy. I was born with a silver spoon. My parents were not super rich, but very conservative and had zero debt with enough savings to give their children every advantage they could. When I was old enough to drive, my dad gave me a 1979 Chevy. It was an old beater, it didn’t impress girls, but it was mine. I was proud of it. The Chevy taught me a lot about life. I always had a pair of jumper cables handy since that battery was always dead. A lesson, I had not yet realized the importance. There is always option B when things look dire. A backup plan.
I’ve been watching the herds to try to determine just when the interest rate topic among the best and brightest (as chosen by the media) would start to pivot from ‘rising rates!’ hysterics that have been locked and loaded in the public psyche since the US election to a sort of ‘rut roh, maybe we got played again… ‘ realization that Rome – and a Great America – are not built in a day.
What I am trying to say is that after the previous media headlines last summer (mainstream media: NIRP & BREXIT!!… everybody into risk ‘off’ bonds!) yields reacted a bit and rose as they should have, from a contrary setup, in order to catch the herds off sides.
But then the hysteria over the Trump election led to the Druck’n Suck-In of the true believers (or “Sons of Druckenmiller”) and… here we are with everybody anti-bonds, pro-reflation and pro-interest rates. Maybe they would be right this time, but then again, given the herd’s history (from Sentimentrader w/ my markups)…