We make it a habit to monitor our proprietary mcm Indexes. One of them is the mcm Smart Money Index. Regular readers will note that our previous comments have demonstrated that the Smart Money Index as it is theorized and calculated in popular form is deceptive and mostly useless. We have revised the index to accommodate for functional inaccuracy between the theory and the real world. So, the mcm Smart Money Index shows meaningful data for a real-world situation and condition.
Based on discussions in the mcm lounge I wanted to take a look at the mcm Smart Money Index and mcm Indexes and the message was and is not good. It is unbelievable how stretched things are, not to mention how disturbing. There is absolutely NO performance or VERY NEGATIVE PERFORMANCE.
I think these indexes represent the quality of life, stress and conflict that people are dealing with in their lives. If things are less stressful and more positive or growing, the indexes show harmony and balance towards expansion and conversely when the opposite. If these charts are any guide, people, generally, must be profoundly unhappy as a whole.
I want to restate that productive capacity in the world has been coopted - overwhelmed by the agenda of credit expansion at any costs. Thus, once productive people in China (and all over the world) are driven towards unproductive pursuits (and in which they have no particular aptitude or training) such as trading and chasing IPO's while simultaneously borrowing vast sums on margin. Worse, their activities, are not productive for an economy, innovation or a person from the outset. But, more, the results, in the end, are totally negative - for people, the economy, their families and their friends. This is a disease, and it is spreading everywhere and to many people who do not deserve it or ever thought such a conflict could overwhelm them.
What is happening when you look at these charts is you see various indexes that represent different classes and objectives of traders/market participants. Over the last 1.5 years only ONE of them has been marking money - the low liquidity overnight session. When one looks further out its easy to see that investors in many of these indexes would be currently sporting account balances near the 2009 lows at the very same time that the markets are up 300%. This is a crazy concept and indicative of just how stressed the markets and participants are.
I recommend reading: Drama in the Market Seas - A Revealing Look via the mcm Market Indexes
Below is the chart from Jun 18th...and markets have had a dramatic deterioration in quite a short time.