Was Amazon’s weak numbers leaked early?

So what happen at around noon on Thursday that caused the Nasdaq to fall 140 points in the next hour?

I would venture that a box with a smile was turned upside down in a number of large, in-the-know trading firms, but more of that in a second.

The VIX shot up to over 11, which it has not hit for the last three months and the charts show that liquidity dried up very quickly. The FAANG stocks took the brunt of the hit, which makes some sense since they are widely held and have been on a tear.

The move was quick and abrupt, which indicates to me the black box algo trading platforms started the selling and then it intensified through the echo chamber to spur more selling. Not out of the question on light trading day in late July.

What does give pause, however, is the liquidity or lack thereof, on the downside. As the algos and tech-focuses ETF were selling, the chart shows little action to stem the selling on the way down.

While this was little more than a blip on the screen, it could foreshadow a more dire and desperate move perhaps in August when most trading desks are operating on autopilot until Labor.

That said I would not want to suggest that major market participants had an inkling that Amazon was going to tank after reporting a huge miss on the bottom line after the bell.

However, if you look at Amazon’s trading over the day, then a strong case could be made that it led to the Nasdaq sell off.

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Mt. Gox founder, Mark Karpeles begins fraud trial in Tokyo

After a brief aside yesterday to explain the bizarre circumstances of my hospitalization, we’ll get back to the financial news and thank you for all the kind messages.

The trial of former Mt. Gox chief executive officer Mark Karpeles began Tuesday in Tokyo. He is charged with embezzlement and fraud stemming from the collapse of then the world’s most-active trading platform for buying and selling digital currencies.

Almost  850,000 bitcoins – then worth about $500M — were stolen in a hack disclosed in February 2014, along with $28 million in cash from the exchange’s bank accounts. In today’s falling bitcoin price the same amount would be valued at just under $2B.

Karpeles, a 32-year-old Frenchman, has pleaded not guilty to the charges, but acknowledges the transfers. This is the first time he has addressed the charges publicly after the bankruptcy filing in 2014.

“I swear to God that I am innocent,” he said in Japanese to the three-judge panel hearing his case, according to the pool report.

No word on how long the trial will last, but in its bankruptcy filing Gox reported that about 200,000 bitcoin were recovered after the alleged hack.

Why Wall Street loves Trump’s tweets and memes

As we come up on the 241st Independence Day, I don’t believe the US has ever been more divided since the late 1850’s and early 1860’s during the run up to the Civil War.

However the political strife — lead by President’s Trump’s acceptance by maybe half the country — appears to be slightly less bellicose than the civil unrest in 1850’s, and certainly has no effect on financial markets.

While Wall Street’s CEOs have come out vocally (and via Twitter) criticizing Trump for his climate change stance, however these execs are seeing their stocks hitting new highs as they also take care of their shareholders with large buybacks and dividend spikes.

Most of the most ardent Trump opponents on both coasts are also the ones benefiting the most by the unrest in DC in their portfolio. Since the White House is mired in its own daily theatrics, which drives the news of the day, there is little that can be done to fix what is wrong with the US.

A defensive administration, with Congress having to deal with the fall out, is creating a gridlock that leaves much undone legislatively.

This seems to be the most logical reason for facelift tweets and CNN memes. Why else would a president sabotage his agenda?

I don’t subscribe to the theory that Trump is unbalanced and needs to be managed. He cannot do these acts without a belief by many in the administration that this is a good tact.

A proof to this could be despite all this going on in the middle of the night from the White House, the fear on the Street is nonexistent — the VIXX index measuring volatility is below 11.

Historically these “unpresidential” acts, which would be seen as raising uncertainty, would have markets skittish. However, these acts push any real change from happening on that day.

If he acts continue, then no change will happen this week, or this month, or this year. And I believe that’s what the market is counting on for the foreseeable future.

Fangs may lead marts south; BTC heads north of $3K

On Thursday, I wrote about hearing on the street that Friday was going to be a difficult day for stocks.

I then wrote on Friday that futures were not showing any worries from either the James Comey testimony, the English election results nor the possible rate hike this week by the Federal Reserve. However, the headline I wrote was “Nothing to see here, please go buy some FANGs”.

Well the FANGs were the problem. The Nasdaq traded lower by 1.8% Friday as Facebook (-3.3%), Apple (-3.8%), Netflix (-4.7%) and Google (-3.4%).

The selloff came from a Goldman Sachs analyst report saying these and other tech firms’ stock prices are getting overvalued and reaching valuations like the pre-Internet bubble burst.

The pullback should not be too much of a surprise since the Nasdaq is up more than 15% year-to-date, which is double the Dow Jones industrial average’s gains over the same period.


Bitcoin spent much of the overnight trading session above the $3K mark, before pulling back to $2995 by 6AM EDT.

The cryptocurrency is finding strength on each pullback, which for a market technician means there’s a large base being formed. This base is allowing for $80-$100 spikes in daily pricing like we saw Sunday.

Weekends are still the best price appreciation days since the buying does not need any major trading outpost such as London, New York or Hong Kong to execute the trade.

Investors double down on new to chase returns

Out with the old and and in with the new at double the price.

That’s what we have in the markets today. Wal-Mart has a market cap of $236B, while Amazon’s value is twice that at $478B with a share value of nearly $1,000 as compared to $78 for the predominantly brick and mortar retailer.

Also, bitcoin in the next few minutes may be worth twice the price of an ounce of gold, again.

On Tuesday it was reported that former SAC Capital chief Stevie Cohen is looking to raise at least $10B to add to his own $11B for his new hedge fund to launch in January.

Cohen was riding high until the Securities and Exchange Commission forced him to shut it down in 2013 and accept a four-year ban from the industry for not properly managing his staff when some SAC employees were charged with insider trading by then NY Federal Prosecutor Preet Bharara.

The doubling down on the new seems to be a signal of a top to the markets as the tried and true cannot find the legs to go to the next level as valuations are stymied thereby forcing capital to find a newly formed bubble.