And For That Flashy Crashy Smell, Here Are Surging Vol And Implied Correlation

Tyler Durden's picture

You can look at the Dow which is hilariously green on the day despite the now doubly confirmed contraction of the US economy. Or you can look at the VIX which is now surging in what can be classified as an offerless market, and up well over 10% at last check. NYSE Circuit breakers now off.

And just to make sure that the market has that fresh Flashy Crashy smell to it, here is Implied Correlation.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
slow_roast's picture

As The World Burns

francis_sawyer's picture

Margin rate hike coming in 5...4...3...2...

redpill's picture

Say some of the large players wanted to create a lot of uncertainty and borderline panic in the market so that they could get the Fed to do QE3 and keep the gravy train rolling.  This is about what that would look like, I'd say.  Mid-day swoons, crushing the confidence of the smaller fish, etc.

Ned Zeppelin's picture

Nope - game theory is the Decent Interval must pass before QE3, during which stocks take a beating.  However, the hoped for effect when QE3 is announced may not happen. Call it the "Cry Wolf" problem of decreasing effectiveness. Gold will of course advance nicely at that time. 

No Bid's picture

Not using SKEW anymore?

Tyler Durden's picture

No need when plunge risk is imminent. And also more relevant for Pin risk ahead of quad witching tomorrow (for reference see Cashing post earlier).

Josh Randall's picture

Things are looking up can't you see ? Time for LIESMAN to gloat some more, and the hit the Shoney's dessert cart for the fourth time

MikeNYC's picture

Trying to translate this into human:

1. rocketing VIX = "shitstorm a-comin"

2. Climbing Implied Correlation = "everything's going into the crapper together"

Did I get that right?

Cognitive Dissonance's picture

I love the smell of panic in the afternoon.

TruthInSunshine's picture

Flashy crashy panic is the most fragrant kind.

When markets shart, bring out the glade, bitchez.

atoast2toast's picture

awesome headline and story, thanks

lizzy36's picture

Because one always likes a giggle....from client facing Goldman May 27, 2011:

Options strategists at Goldman Sachs advise clients to take advantage of a steady S&P 500 the next two months with put options on the VIX. Goldman recommends buying VIX July 17 puts. The CBOE Volatility index measures the prices investors are willing to pay for option hedges on the S&P 500 and tends to rise when stocks fall, and vice versa. VIX options pricing is based on the expected value of the VIX at expiration, not the current spot. VIX down 3.4% at 15.54. 

Cognitive Dissonance's picture

Goldman's really digging deep for those last few greater fools. What will they do when the vein runs out and the mine must be closed?

TruthInSunshine's picture

That's known as the Goldman Bull Call Bear Put VIX Spread.

It's in their manual.

It's either before or after Abacus...

HowardBeale's picture

Seems low probability that one of Goldman's victims will not eventually walk into one of their offices and mete out a little justice. Intrade prediction: Lloyd Blankfein to be beheaded by man with chainsaw: 99%

richard in norway's picture

ill take the other side of that


unfortunately it rare that these guys get what they deserve

IMA5U's picture

that should be framed.  brilliant!

HITMAN56's picture

indu in the green b/c momos short covering?

Tyler Durden's picture

Central bank buying EURUSD for the second time today. Probably PBoC.

Voodoo-economist's picture

just interested, how do you detect this?

Cognitive Dissonance's picture

Tyler is our man inside. For kicks he sneaks onto the Goldman trading floor during NYSE hours and shoots spit balls at the traders while sexting with Marla using the other hand. I have no idea what he does with the third hand and I'm not sure I want to know.

Tyler.......our man in Goldman.

tmosley's picture

For those who don't know, NEVER get the clam chowder at haute NY restaurants.


buzzsaw99's picture

or the lobster bisque, or the...

dracos_ghost's picture

Lehman's ghost rearing it's ugly head again?

dracos_ghost's picture

Just curious, was there a tone at 3:00 to announce this shit.

rubearish10's picture

Short covering as in pre-announcement?

etrader's picture

This is just the same as pattern(ES) as Last hour on  May the 31st. It will have the same outcome. ;)

Someone(s) is getting scroomed on pin risk.

Innocent Bystander's picture

last ditch effort by...

strength of Indu will help pull spx.. easier to work with indu than spx.. IB

Cdad's picture

And let us not forget the most important economic indicator of all...Netflix.  Apparently, its NOT what's for dinner anymore.

I'm so grateful for Carter Worth and the way he brought up the "smoothing mechanism."  Because not only is that a really cool name, it makes it much easier to spot "stawks" that are so absurdly priced and over owned, thus assisting in identifying and selling things that are PRICED FOR STUPID.


Cognitive Dissonance's picture

Mom always told me not to smooth my mechanism or I would go blind. Luckily I stopped before even strong glasses could no longer help.

Cdad's picture

Brother Cog,

Were I you, and knowing how your essays on sheeple psychology about very much about to be needed, either get yourself a nice cury secretary to take dicktation, or invest in a braille keyboard.

Tragic, really, the GROSS misallocation of capital this last year.  Oh well....

**Oh...and thanks to the lunacy of the XRT, an abomination of market manipulation, EVERYONE is going to get yet another chance to sell $30 t-shirts to marauding Greeks**

Cognitive Dissonance's picture

I have yet to hear of a crack addict refusing more crack, particularly when it is 'purchased' on credit. S/he certainly doesn't see it as a gross misallocation, but rather the right stuff at the right time.

Just in time crack fracking.......err......fracking crack.

TruthInSunshine's picture

I have been trying to extrapolate some basic lessons on sheep psychology by watching 'The Men Who Stare At Goats,' and this is an admittedly amateurish endeavor, and I do not feel it has served me well.

I need some truly useful psychological education - you know, like what do sheep see when they view Rorschach inkblots?

Deepskyy's picture

I've not been counted among the sheep in quite some time, but I keep seeing mushroom clouds in mine.


TruthInSunshine's picture

Abby Joseph Cohen says that's actually a delicious shitake mushroom.

Ahwooga's picture

Do Algos dream of electric sheeple?

juangrande's picture

Father walks in on son masturbating and yells "Son! If you don't stop that you'll go blind!" Son replies (waving his arms frantically), " But dad I'm over here!"

dracos_ghost's picture

This QE2/Dollar carry trade unwind is going to be fugly.

Alea Iacta Est's picture

Damnit....its plunging up....

Cognitive Dissonance's picture

There is always more helium available when dealing with the PPT. The question is always if it will be enough.

buzzsaw99's picture

at 3:20 the bears cover. give it another twenty minutes.

mynhair's picture

Think the EUR intervention has a longer half life than remains in this pig.

mynhair's picture

On the bright side, I get more settled funds tomorrow - more TZA to buy.