Freefall: EURUSD 1.2388 And Plunging, Market Liquidity Disappears Again, Traders Brace For Another Flash Crash

Tyler Durden's picture

Full profit taking in everything. Now even gold is plunging, but it is likely an LBMA "intervention." EURUSD just broke through 1.23 and has no further realistic supports for a long time. The money has no option but to go into gold or money markets. For now it is not going into gold, which means it is a relatively good buying opportunity. Liquidity in stocks is now gone as volume picks up. Two of the desk traders we have spoken to are all wearing fireman's hats, bracing for Flash Crash part 2. Look for much more action out of the ECB/FED/IMF/EU/X-Men/Ghostbusters before Asia opens this Sunday. In the meantime, everyone must sure be grateful that the SEC is contemplating instituting new and improved circuitbreakers some time in 2039.


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cbaba's picture

It took only 1 week after the last weeks 1 trillion dollar injection.

They can save the day but next week will be ugly.

Postal's picture

As if the last two years haven't been ugly. I know, it's gonna get worse. :/

jaybaybaker's picture

What does nobody expect right now?

1. A liquidity trap that sucks the stock market dry
2. Lower government bond interest rates
3. A crash in gold due to liquidity constraints and hot money leaving (with all newby goldbugs losing their shirts)
4. A euro rally, maybe up to the 1.35/1.40 handles

Guess what, all of these four things will happen next week.

Enjoy the spectacle and don't be caught on the wrong side.

Mr Lennon Hendrix's picture

I expect you to say a bunch of dumb things....

jaybaybaker's picture

I just want to help you keep thinking. I was in the gold camp since 2005, just like you I suppose, but now it's time to get out.

We have about 99% bulls, extreme optimism, even certainty that gold will continue to go up in a straight line, at it's sitting at $1,230. Watch the momentum die in real time.

Sorry, but that's a top, all the usual bells are ringing. It's very easy to see. Oh wait, this time is different ... this time will be the only time in history that 99% bulls does not mean a top.

Mr Lennon Hendrix's picture

You have no idea what you are talking about.

jaybaybaker's picture

Definition of an Elliott Wave 5 (from Wikipedia):

"Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high, the indicator does not reach a new peak). At the end of a major bull market, bears may very well be ridiculed."

Thanks for ridiculing me, you are making my case.

Harbourcity's picture

Anyone who uses The Elliot Wave "theory" as support of their argument is sorely ignorant.



Missing_Link's picture

+++ ^2

I'd sooner use tea leaves and pig entrails than Elliott Wave.  Not that there's much difference.

tmosley's picture

At least you can make sausage from pig entrails.

Mr Lennon Hendrix's picture

Everybody owns stocks (401k) and everybody is involved with the FIAT ponzi.  Ask around who owns gold/silver bullion...ask around.  No one owns gold and silver bullion.  No one.  It is not a bubble, and will not be a bubble until it is all that is left.  Right now everybody is getting swindled buying stocks, bonds, and thinking paper is safe.  It is not.  And last night you were saying epic market crash.  I agree, but if it does crash, even in the case of an orderly controlled demolishion via the SEC, gold will have even MORE value, as it will be all that remains.  You talk in circles, and then give me Eliot Wave as a disclaimer.  WARNING:  There is no spoon! 

What did your magical trading theory tell you today?  That if the market pulls back, people turn to gold and silver?  Because that is what happened.  The truth is right in front of you, more pressing day by day, yet you prescribe to some "theory" like litheum, telling yourself, "It will work, it was prescribed by a Dr."  The shaman left the village once the seige started.  He said to his comrades, "This is bad news.  We must leave."  He was told, "We have to stay, it is all we know."  The cave you dwell is run by shadow puppets.  Sorry Jay, reality is much more so than you can imagine.

Mr Lennon Hendrix's picture

Jay I am riduculing you because all you do is use "psych" scare tactics.  You are by far the worst poster on this site.  I would happily entertain Yip, Harry, and Master Bates all at once than you.  You said last night "confiscation" now Eliot Wave"  you are using every tactic yet you offer no answer to my theories.  No answers.  I do usually not name call, for yes, it weakens my aruements by distracting my points, but you are SCUM!!!!!!!

Primal Reversion's picture

Where can I get this indicator of yours that tells when we've reached the 99% bull threshold?

IMO there's no way to tell you've reached the critical level until you've reached it. There's a lot more room to go up and with the fear everywhere else, where else can one flee to safety than gold?

I've learned that calling tops and bottoms in any market is a quick way to look like a fool, or a genius, with a much higher probability of the former. When you're dealing with human emotion, there's simply no way to know.

RodneyHampton's picture

I think there are at least 4 banks with the software you seek judging from their perfect Q1 results.

WaterWings's picture

99% of people paying attention agree the US is bankrupt. Does that mean we're not? Hooray! I'm going to Cancun!

anony's picture

"..We have about 99% bulls.."?????

Not on this board "we" don't.  I can't get my neighbors, friends, here or out of town to even discuss gold. And the last folks I talked to about it, a buncha DINKs couples (though I admit they were all heterosexual) the wimmin were yapping how they just gathered up all there old gold and sold it by sticking it in an envelope and taking whatever they could get for it from some shysters in another state.  They were thrilled to be selling it for 25% of what it was worth.  When I told them if they had gotten together and pooled their gold they could have gotten $1,200 an ounce for it, they immediately moved to defensive mode with such statements "Oh well, I'm just glad to be rid of it, never wore it, just taking up spaced, yada, yada yada".

If 10% of the populace is bullish gold (or bearish or neutral) then chickens have lips.

kwvrad's picture

CHICKEN HAS LIPS, havent heard that 1 in a looonng time. I spit my coffee out reading that ...rofl

Sucks_to_be_Smart's picture



For the market to do what you think its going to do next week, many fundamental asset correlations and common sense practices would have to be completely abandoned, spurred by nothing outside the realm of complete debt restructuring of the PIIGS or voluntary leave out of the euro by those countries.  Its a million to one shot and i will sell you calls on that prediction every day for the next five years until i retire because of your premiums.  Quick recap:


Yields on government securities don't just magically plummet.  That is effect of supply and demand and demand rises because of fear and flight to safety. 


Given there is a huge flight to safety so yields plummet, there is practically no way in the real world that stock markets rise and euro rallies 10 points.  Huge flight to safety does not equal everyone buy equities!  WRONG.  also, huge flight to safety because of why?  probably because of bad news coming out of europe or another country, which means there's no way euro rallies. 

Flight to safety = buying gold.  There will be no gold deleveraging. 

the PIIGS will not voluntary leave the EU because of the new funding vehicle (EURO TARP), and its too early to kick them out and kicking them out is something i don't even know if they discussed our outlined procedures for in the EU. 


Debt restructuring in those countries would leave every bank in europe F*UCKED and scrambling to fight off bank runs by tapping the reserve fund which is not yet activated over the 60billion in initial funding.  This translates into a huge equity sell off and flight to safety. 


There's just no way in hell equities, euro rally while bond yields drop and gold drops.  Sucker born every day.

Missing_Link's picture

Jay, you're a damned fool.  I am not a gold bug, but let me just say 2 things:

-The percentage of investors who are gold bulls is far less than the 99% you quote.

-Even if it were, the percentage of bulls is not a reliable contrarian indicator.

Bananamerican's picture

sorry jaybay,

there's too much sulfur in the air....literally

jaybaybaker's picture

Watch gold get whacked in real time. It will continue next week. The hot money will leave and all the newbys will want to limit their losses while they can.

Remember, I told you before the move.

Unless the bull reading goes to 110%. Oh wait, it can't go over 100%.

I see you at $700.

Cistercian's picture

 Who wants to "invest" in gold?Buying all the gold that isn't nailed down is the best way to give the finger to the ponzi.

  When the fiat FAILs, you can discuss ad tedium why gold sucks.And we will still be laughing at you.


jaybaybaker's picture

In a world with lesser and lesser fiat currency (sorry to say, but you do not seem to understand that fiat money=debt), i.e. debt destruction (aka write-offs), there is no such thing as inflation.

We have had the inflation of this big super-cycle that started in 1946 and peaked in 2008. Deflation is since the name of the game.

They bought some time in Europe WITHOUT actually creating more debt, in order to prepare their banks for the Greece write-off. This write-off and many others will come, destroying all that fiat money.

But anyway, why bother explaining this to someone who has found his religion already ...

Mr Lennon Hendrix's picture

If debt is money, and there are quadrillions of dollars of debt, then I think you are WRONG!!!!!!!!!!!!!!!!!!!!!!!!!!

Dr. Acula's picture

>there is no such thing as inflation

Except when it's defined as an increasing money supply:

stewie's picture

How can you be so sure that the banks will write off all those bad loans?  It sure didn't happen in the US, they simply changed the accounting rules.  If you are referring to sovereign defaults to reduce the total debt, then do you think people will trust all those Ponzi fiat charades going around in the face of total collapse in the multi-trillion derivative markets?  Hyper-inflation has nothing to do with supply and demand.  It's lost confidence in the currency involved.   Business cycle debt deflation is not what ppl are talking about here.  Now the gvmt can change all the rules under out feet, but this is another story all together.

Rusty_Shackleford's picture



Nothing, and I mean nothing, would make a real goldbug happier than to see gold at $700.


Don't you get it?  We skipped to the last page of the book.  We know how it will end. 

saladbarbeef's picture

It seems the wicked premium for PHYS to spot or GLD belies the fast money or the scared money trying to find a home.

Hephasteus's picture

Can I get some butthurt with that $700 gold. How about some tanks rolling over me. I need more fear. I've got a taste for it.

Please guarantee anal pain next time.

TheDriver's picture

>> What does nobody expect right now?

The obvious answer, of course, is The Spanish Inquisition.

floydian slip's picture

You cant eat Spanish Inquisitions! hehe

Cow's picture

Our chief weapon is surprise. SURPRISE and fear, our 2 weapons are fear and surprise and ruthless efficiency, our 3 weapons? are...

AnAnonymous's picture

Not bad at all. Nobody indeed expects that. With reasons.

halcyon's picture


your post has only one problem.

Your posting it on ZH, where >50% population is 15 year olds who get their economic education from prisonplanet and have absolutely no ability to think for themselves or trade.

The rest?

They've already taken their positions. Many aligning with yours.

Good all, although possibly a few days early, imho.


jaybaybaker's picture

Thanks, I guess I'll stop posting. I thought this was a blog for sophisticated analysts and traders ...

Yes, I also think I am a bit early, my guess is that it'll all play out in the next three weeks though.

legerde's picture

I took some profits in GDX yesterday, with the expectation that the cartel needs a lower price going into expiration next Friday.  So I will be converting my GDX into physical "in-my-hands" bullion the middle of next week.

So, jay, you may be right in the short term, but I still believe that longer term nothing has fundamentally changed.  People are losing faith in fiatscos. From my understanding of Harvey Organ, the June physical delivery is going to be large:

"a total of 3.3 tonnes of gold are standing through options exercised.  This number is absolutely huge and it portends huge stuff coming down the pipe for the large June gold delivery month."


Hulk's picture

a total of 3.3 tonnes of gold are standing through options exercised.  This number is absolutely huge and it portends huge stuff coming down the pipe for the large June gold delivery month

This is gold's next bull phase, large deliveries. Folks listening to JayJayBoy are going to wish he had  never showed up...

jaybaybaker's picture

That sounds like a reasonable post. I think our opinions are not very far removed. This is not the end of the gold bull market, but we are just before a very sharp pullback. That's my point. Thanks for responding something thoughtful.

Mr Lennon Hendrix's picture

Yes please stop posting!!!  Troll quietly if you must!

Boxed Merlot's picture

I can track with your "this time it's different" analysis, but on a continuation of the hopefully serious considerations, is there much credence to the 2 tier theory of gold positioning, that of the Au in the "marketplace" and the remaining lion's share held in "soveriegn" states of deposit / usage / societal backing?


My reason for asking is it appears to me Gold production runs so counter to logical methods of supply and demand forces, (when price increases, low grades are exploited), that it makes me wonder if traditional thought patterns re: typical market commodities are misapplied to the babaric relic.  Just wondrin. 



Mr Lennon Hendrix's picture

Wow, out in droves today.  If you think that the majority of ZH is adolescent then do yourself a favor and troll quietly.

WaterWings's picture

LOL! You're still trading!


Chupacabra's picture

Jay, those are some specific predictions.  Will follow your comments more closely if things pan out as you've called them.  Good luck.

tictawk's picture

When will these ass hats realize that nobody is bigger than the markets.  There is a fundermental problem of too much debt and trying to solve a debt crisis by creating more debt is INSANITY....  but in an asylum, insanity is normal... welcome to bizarro world.

B9K9's picture


You appear new here, so I'll give you a heads up:

  • They aren't asshats - they're way ahead of us
  • They know nobody is bigger than the markets - that's what they're counting on
  • They know too much debt will not solve anything - it isn't supposed to
  • They know creating more debt is insanity - it's supposed to

Once you digest this information, you will come to realize that this isn't a bizarro world at all - it's playing out perfectly.

While you, I and the rest of the world wasted our time & energy attempting to be good, productive citizens, a few were told the secret(s) of life: he who controls money controls the world.

The events we're currently experiencing have repeated themselves in nearly identical patterns for 5,000+ years of recorded history - the end results always play out the exact same way.

Right now, some are at the 'austerity' phase, where beholden debtors throw out all remaining ballast in a mad attempt to service ever escalating compounding debt loads. It won't work - it never works, since this is the inflection point on the curve where the principal+interest goes parabolic.

Next comes default and repossession of collateral (foreclosure). After that is a life of debt peonage and a reduced state of living, then finally, a miserable lonely death.

Periodically, the default & repossession state is averted by repudiation & war. In these cases, the money-lenders are either expelled or forced to flee for their lives. Which version do you think we'll see this time around?

Iceland, Greece, ... ? It appears to me they ain't gonna be given up no assets.

Mako's picture


"problem of too much debt and trying to solve a debt crisis by creating more debt"

You were brainwashed by your parents to believe personal finance rules apply to the system.  The system only survives by an expansion of "credit/debt", so your whole statement is kind of incorrect.

The only way the system survives is taking on debt, if not what you going to service the prior debt with?  Hmmm.

WaterWings's picture

Tsk tsk. Mako, you're too much of a hardass today.

merehuman's picture

Mako, BK and many of you who know the reality of the market and post here have an amazing amount of patience.  Here you are fighting against lies and ignorance as well as the more numerous trolls and dummy J6P like me.

Thank you all for your perseverance!