The Day That BTFD Failed

We noted on Friday that something happened in the US stock market that day that has not been seen since the Fed unveiled QE4EVA. It went quietly under the radar of the mainstream media; talking-heads did not mention it; and strategists shrugged it off. What happened? BTFD Failed… and, as BofAML’s Macneil Curry warns, popular trades are in trouble (bad news for equity bulls and treasury bears).

 

As a gentle reminder, the main investing thesis of the last few years has been BTFD (because buying the fucking dip has worked every time in the past, it will continue to work – therefore BFTD, BTFATH, and BTFWWIII)…

 

But – for the first time in 18 months… BTFD failed on Friday… (each dip was met with higher highs)…

 

 

Until Friday.. when the Nasdaq, having “dipped” to the 100DMA was “bought” back above the 50DMA but failed to make new highs and in fact made new lows…

 

So BTFD has failed.

As BofAML’s Macneil Curry warns, Popular trades in trouble

Last week did not turn out like we thought it would. We came in aggressively bullish the S&P500, anticipating a resumption of its l/term uptrend for 1942, and we were equally bearish US Treasuries, recommending a short position in FVM4. Now both of those views appear to be in serious trouble.

The breakdown in tech stocks, with the NASDAQ Comp. closing below its 100d avg for the 1st time since Dec’1212, says that equities are likely to suffer more in the week ahead. This threatens the developing Treasury bear trend, particularly after Friday’s Bullish Reversal Candles across much of the curve.

Chart of the week: NASDAQ Comp breaks key support 

 

The NASDAQ Comp has closed below its 100d avg for the 1st time since Dec’12. THIS IS BAD NEWS.

Historically, the 1st close below the 100d avg in 6 months or more has resulted in significant underperformance, with the avg 1wk, 2wk, and 1m returns all falling into negative territory. Beware, the 3968, Feb-05 low is vulnerable.

 

As the clip above says.. easy, you buy the fucking dip because “if you don’t you’re a fucking idiot”.. unless this time it’s dfferent…

 

    



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