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Late Day High-Beta Selloff Ends Nasdaq 8 Day Rally

Tyler Durden's picture





 

Out of nowhere, a late day selloff in high beta tech names ends the Nasdaq's 8 day winning rally, and causes a red close to the tech index which as we presented over the weekend, has the highest bull/bear ratio since the dot com days. Various rumors are swirling to explain this stunning event, among which one of the more provocative ones is that the universe of Rentec alphaclones (namely the moderate money momos, which have recently taken over the market, and which mimic Rentec RIEF B public holdings, which many believe are broadly indicative of Medallion's portfolio) is slowly starting to pocket year end profits, comparable to the action in gold last week, when gold sold off after a couple of macro funds closed out gold positions at massive profits. Is the now extinct process of profit taking about to reemerge from the ashes? On the other hand, this could merely be a brief respite to what has become the most ridiculous tech-driven momo market in many current traders' lifetimes.

 

 


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Mon, 12/13/2010 - 17:12 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Someone don't want paper.  Bet gold is bought up tomorrow.

Charting Monday:  Dollar and PMs:

http://lhmarketwatch.blogspot.com/2010/12/charting-monday-dollar-and-pms...

Mon, 12/13/2010 - 17:18 | Link to Comment Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

Yeah I closed my silver short and going long again. Usually a sure sign pm's will tank. Ewz is holding up. Brazil is not a China story. Little debt. Little government ....and those peasants work 12 hour days to give us their surplus labor value.

Mon, 12/13/2010 - 17:20 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Viva El Sur!

Mon, 12/13/2010 - 17:24 | Link to Comment Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

Can you believe there is no mortgage market in Brazil? Not mbs. No mortgage market period. Less than five percent of houses have a mortgage.

Mon, 12/13/2010 - 17:30 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Imagine if the market went legal!  Not that I want it too, but there would be a lot of monie to be made there, for the government and speculators.  I think that this is the final plan of the IMF.  Once they have all the "First World" nations in its debt, then the IMF starts having "Third Worlds" sell land rights with "verifiable" deeds.  Even though I think there will be a push for this, I do not know if it would work.  Governances are sloppy.

Mon, 12/13/2010 - 17:14 | Link to Comment RobotTrader
RobotTrader's picture

World record volume in PSQ today.

Maybe the big money is pre-positioning for a reversal?

Might be time to "Get out of Dodge" on the high tech growth names....

 

Mon, 12/13/2010 - 17:15 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Maybe the big monie is just as confused as you!

Mon, 12/13/2010 - 17:18 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

PSQ is going to zero regardless of what QQQQ does

Mon, 12/13/2010 - 17:21 | Link to Comment Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

I hope this is just noise and not signal.

Mon, 12/13/2010 - 17:31 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Its a whiteness.

Mon, 12/13/2010 - 18:09 | Link to Comment fiddler_on_the_roof
fiddler_on_the_roof's picture

Robot is right. I am out of long posiitons held since last trough in S&P, except Gold & seed companies.

Even if the S&P does not fall much, it will more than be compensated by a drop in DXy(dollar). Downwards, there is no santa rally.

Mon, 12/13/2010 - 17:17 | Link to Comment RobotTrader
RobotTrader's picture

Chinese "junker" IPO's got round tripped the last few days....

Mon, 12/13/2010 - 17:18 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

It's all good until it's bad. Then it's very very bad.

Mon, 12/13/2010 - 17:20 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

and your point is..............

Mon, 12/13/2010 - 17:23 | Link to Comment RobotTrader
RobotTrader's picture

Time to buy this?

Mon, 12/13/2010 - 17:27 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Going to zero like your PSQ. You can post it after the fact as usual. You won't forget the supercillious commentary.

Mon, 12/13/2010 - 17:43 | Link to Comment bbtrader
bbtrader's picture

RoboT isn't as spot on with the TA or trades as he wants us to believe.  Nothing but charts that are little more than pretty pictures.  I do like the busty redheads though.

Mon, 12/13/2010 - 18:33 | Link to Comment Dismal Scientist
Dismal Scientist's picture

You have to be super nimble, its been a destroyer of value given the contango issue. Option skew has been declining, market not looking for a big downward move. Its just end of year book closing, not the end of the world...

Mon, 12/13/2010 - 20:16 | Link to Comment omi
omi's picture

Don't bother with this garbage when there are VIX futures and VIX options, do it right. Are you're saying you're too cheap for a call spread?

Mon, 12/13/2010 - 17:23 | Link to Comment inkt2002
inkt2002's picture

Kind of a sad scene to watch bears get all excited about a sideways day after 7 straight up days :(

Mon, 12/13/2010 - 17:23 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Who didn't expect this?

After taking 15 uber liquid nasdaq names to triple digit share prices it's near 2010 game over. New game 2011 up after a short break.

Mon, 12/13/2010 - 17:27 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

An early warning sign of what happens to artificially inflated economies/stock markets.

 

Mon, 12/13/2010 - 17:28 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

That's a heck of a real estate bubble collapse

Mon, 12/13/2010 - 17:46 | Link to Comment Problem Is
Problem Is's picture

Time to just flood the ole Metro dome-less and make it a hockey rink...

Blast the air conditioning now, Twins facility guys...

Mon, 12/13/2010 - 18:06 | Link to Comment whatsinaname
whatsinaname's picture

was that dome made here ?

Mon, 12/13/2010 - 18:57 | Link to Comment Sudden Debt
Sudden Debt's picture

Yeah,  but they said that plugging the holes isn't that hard.

Just throw some dollars on the holes. and if that don't work, it means you haven't thrown enough money on it.

 

It also might be a wise thing to give money to the concierge because they will surely be able to prevent it from getting worse.

Mon, 12/13/2010 - 19:57 | Link to Comment Miss Expectations
Miss Expectations's picture

Behold the power of just

one

more

snowflake.

Mon, 12/13/2010 - 20:47 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The snowflake that broke the Metrodome's back.

Mon, 12/13/2010 - 17:28 | Link to Comment tickhound
tickhound's picture

So... and in the eternal words of Maria B... "where should we put new money to work, in terms of, putting new money to work?"

Maybe in teva or ipxl or other pharmas specializing in "generics"

Any info on the 1984 Reagan govt code sr 417 (regarding dec 20 expiring pill patents) would be appreciated...

Mon, 12/13/2010 - 17:30 | Link to Comment Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

Just running my finger up the line shows volume has spiked just as often on tops? Psq tops that is./p>

Mon, 12/13/2010 - 17:46 | Link to Comment erik
erik's picture

Volume was weak today.  Price action suggested a reversal day, but without volume it isn't worth the risk.  EUR-USD did not confirm the sell into the close either.

The $3 trillion muni bond market still doesn't seem very thrilled.  Junk bonds sold pretty hard today too.

Mon, 12/13/2010 - 17:47 | Link to Comment RobotTrader
RobotTrader's picture

"Chit Pole" was destroyed.

Mon, 12/13/2010 - 18:56 | Link to Comment Leo Kolivakis
Leo Kolivakis's picture

Holy burritos!!!

Mon, 12/13/2010 - 20:03 | Link to Comment I Am The Unknow...
I Am The Unknown Comic's picture

(Sigh,) I told myself I wouldn't do this.

OK Robo (Leo don't be shy either), I read your post and watched your recent clip over the weekend and I have some newfound respect for you.  So, please help me maintain it.

OK, the VXX closed up over 38.50 today, on a POMO day at the start of a nice new round of POMO.  Wouldn't a reasonable person be concerned that the VXX could close upwards tomorrow, and confirm a reversal?  Shouldn't you be at least a little concerned about a pullback, even if it is just a small percentage due to profit taking?  It could also be the start of a larger sell off. 

Of course, the way things work these days, it will most likely be the case that VXX falls tomorrow and the market is supported.....but do you have something I don't that makes you more confident of that? 

Junk away,  but please let me keep some of this new respect for you.  Thanks.     

oh, and nice avatar tits!

Mon, 12/13/2010 - 20:18 | Link to Comment omi
omi's picture

Are you a correlation trader or tracking correlations? How would you make such a claim, are probabilities in your favor or not, by how much?

There's no such thing as "reasonable investor would do X" (because I think so)

Mon, 12/13/2010 - 20:26 | Link to Comment I Am The Unknow...
I Am The Unknown Comic's picture

Well I suppose my point is that I won't be able to make that call until we see what happens tomorrow, and I will be eyeballing the VXX.  However, with today's move, I certainly am not feeling confident in either direction because this move increases uncertainty. It follows that I think it is reasonable to have concerns about this move.  I'm looking for an explanation from someone who does not have concerns about this move as to why they would not be concerned.

Mon, 12/13/2010 - 17:47 | Link to Comment prophet
prophet's picture

NASDAQ 100 under pressure all day even with AAPL strong.  Composite lagged DJI and SPX.  Screen shot shows tech pretty far down the list.  I use the data and enjoy the banter, but .... well anyway. 

Mon, 12/13/2010 - 17:55 | Link to Comment slingshot
slingshot's picture

russell often leads  was weak today

Mon, 12/13/2010 - 17:56 | Link to Comment DavidRicardo
DavidRicardo's picture

Also, being here in the Valley, I can tell you why tech went anywhere during last two years: VERY generous government incentives to invest in hardware and software.

 

Guess what?  Everyone is now tech'ed up and nowhere to go.  Everyone's got state of the art, everyone's going as fast as possible.

 

Just at the moment the withdrawal of consumer credit is starting to ramp up.

 

So DON'T rely on tech going forward.  That was all phony growth.

Mon, 12/13/2010 - 18:19 | Link to Comment TraderTimm
TraderTimm's picture

I've seen this movie before. What happens next is the "Spike and flag" movement we've all come to loathe as bears. Yeah, just watch.

(Yes, it makes me sick - but at least I'm not getting stabbed in the gut anymore.)

Prove me wrong market, prove me wrong...

Mon, 12/13/2010 - 18:25 | Link to Comment prophet
prophet's picture

You bring the dip, I'll bring the chips.

Mon, 12/13/2010 - 19:04 | Link to Comment erik
erik's picture

ha, that's clever, i like it.

Mon, 12/13/2010 - 18:30 | Link to Comment goober
goober's picture

My recent thoughts on PMs, just my opinion and ramblings to a friend, scroll down and read GOOBER

http://psychologyofthecall.blogspot.com/.......................  nice picture of me!

Mon, 12/13/2010 - 18:44 | Link to Comment Leo Kolivakis
Leo Kolivakis's picture

Momos on a rampage...check out these charts:

 

 

Mon, 12/13/2010 - 18:47 | Link to Comment TexDenim
TexDenim's picture

The great avalanche is about to begin?

Mon, 12/13/2010 - 19:00 | Link to Comment Sudden Debt
Sudden Debt's picture

don't get confused because of 1 down day. THEY want you to believe it will go down so THEY can buy your stock.

PUT ON YOUR TIN FOILED HAT GOD DAMNIT!!

Mon, 12/13/2010 - 19:10 | Link to Comment lolmaster
lolmaster's picture

momos got pomo'ed now the ponzi can go banzai

Mon, 12/13/2010 - 22:04 | Link to Comment iota
iota's picture

*distant sound of beat boxing*

Don't stop there!

Mon, 12/13/2010 - 19:23 | Link to Comment mule65
mule65's picture

Mole hill to mountain.

Mon, 12/13/2010 - 20:26 | Link to Comment omi
omi's picture

I don't mean to be rude, but idiot (news) traders just seem to be oblivious to basic setups like bearish divergences. This wasn't out of nowhere move.

Have a look.

Hourly: http://i.imgur.com/D7PbP.png  

15 min: http://i.imgur.com/4hUpU.png

 

you're just testing levels and can't get a move to test a previous drop off level. Recent levels of interest and formations are getting acceleration bars through, does that not tell you something? Watch that lower circle, we may get an acceleration bar through it if it doesn't reverse here, in that case it looks like a repeated move (kind of like a bear flag, but without so many bars)

 

 

 

 

 

 

 

 

 

 

Mon, 12/13/2010 - 20:36 | Link to Comment goober
goober's picture

Yes that is a dominate candle, but I also see other dominant candles all along the upward channel and higher highs and higher lows ? Are you that sure technicals are actually valid in this PUMP environment or has the FED and Banks distorted all indicators to a point of dysfunction making them some what scary to rely on? I agree with being nimble and very cautious and sometimes simply stepping aside and reading for the day or ! 

Mon, 12/13/2010 - 23:51 | Link to Comment spekulatn
spekulatn's picture

Well done. Short sweet and to the fuckin point for those robots out there ;)

http://pragcap.com/the-1-reason-to-be-scared-right-now

 

Tue, 12/14/2010 - 00:05 | Link to Comment antidisestablis...
antidisestablishmentarianismishness's picture

"the most ridiculous tech-driven momo market in many current traders' lifetimes."

 

I didn't realize there were that many traders under age 10 but that would explain a lot.

Tue, 12/14/2010 - 00:22 | Link to Comment Stock-Paper-Silver
Stock-Paper-Silver's picture

I know "almost" is worth about as much a the paper the dollar is printed on but...  wasn't it close to a Hindenburg Omen today? Is tomorrow a POMO day? You'd think the powers at be would make sure this doesn't occur because of the psychological impact.

Tue, 12/14/2010 - 01:55 | Link to Comment goober
goober's picture

Tomorrow is NOT a scheduled POMO day. So don't go and get all long thinking it is ! Just a little heads up.

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