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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 | 802636 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 | 802656 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 | 802667 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Viva El Sur!

Mon, 12/13/2010 - 17:24 | 802684 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 | 802703 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 | 802642 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 | 802644 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Maybe the big monie is just as confused as you!

Mon, 12/13/2010 - 17:18 | 802660 goldmiddelfinger
goldmiddelfinger's picture

PSQ is going to zero regardless of what QQQQ does

Mon, 12/13/2010 - 17:21 | 802669 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

I hope this is just noise and not signal.

Mon, 12/13/2010 - 17:31 | 802707 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Its a whiteness.

Mon, 12/13/2010 - 18:09 | 802800 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 | 802651 RobotTrader
RobotTrader's picture

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

Mon, 12/13/2010 - 17:18 | 802658 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 | 802664 goldmiddelfinger
goldmiddelfinger's picture

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

Mon, 12/13/2010 - 17:23 | 802674 RobotTrader
RobotTrader's picture

Time to buy this?

Mon, 12/13/2010 - 17:27 | 802695 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 | 802738 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 | 802842 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 | 803061 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 | 802679 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 | 802680 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 | 802687 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 | 802699 goldmiddelfinger
goldmiddelfinger's picture

That's a heck of a real estate bubble collapse

Mon, 12/13/2010 - 17:46 | 802745 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 | 802794 whatsinaname
whatsinaname's picture

was that dome made here ?

Mon, 12/13/2010 - 18:57 | 802895 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 | 803019 Miss Expectations
Miss Expectations's picture

Behold the power of just

one

more

snowflake.

Mon, 12/13/2010 - 20:47 | 803180 Cognitive Dissonance
Cognitive Dissonance's picture

The snowflake that broke the Metrodome's back.

Mon, 12/13/2010 - 17:28 | 802697 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 | 802701 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 | 802748 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 | 802749 RobotTrader
RobotTrader's picture

"Chit Pole" was destroyed.

Mon, 12/13/2010 - 18:56 | 802892 Leo Kolivakis
Leo Kolivakis's picture

Holy burritos!!!

Mon, 12/13/2010 - 20:03 | 803023 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 | 803070 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 | 803109 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 | 802750 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 | 802769 slingshot
slingshot's picture

russell often leads  was weak today

Mon, 12/13/2010 - 17:56 | 802776 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 | 802823 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 | 802832 prophet
prophet's picture

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

Mon, 12/13/2010 - 19:04 | 802911 erik
erik's picture

ha, that's clever, i like it.

Mon, 12/13/2010 - 18:30 | 802839 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 | 802869 Leo Kolivakis
Leo Kolivakis's picture

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

 

 

Mon, 12/13/2010 - 18:47 | 802876 TexDenim
TexDenim's picture

The great avalanche is about to begin?

Mon, 12/13/2010 - 19:00 | 802902 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 | 802922 lolmaster
lolmaster's picture

momos got pomo'ed now the ponzi can go banzai

Mon, 12/13/2010 - 22:04 | 803423 iota
iota's picture

*distant sound of beat boxing*

Don't stop there!

Mon, 12/13/2010 - 19:23 | 802953 mule65
mule65's picture

Mole hill to mountain.

Mon, 12/13/2010 - 20:26 | 803091 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 | 803137 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 | 803679 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 | 803699 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 | 803727 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 | 803873 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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