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Market Loses Nearly Half Of Short Covering Relief Rally In A Few Hours On High Volume, And A LHLL Deja Vu

Tyler Durden's picture




 

Once again the actual value of accumulation volume can be seen today: after a 10 days short covering rally on fumes pushed the market higher by nearly 7%, one day alone was sufficient to cut the rally almost in half. The bounce is now back to the half way point of the most recent decline, and just above the half way point of the bounce, at just under 1,060. It appears Goldman's technical charting on the 55/200 DMA cross was spot on.

Note that this chart is just a little date, as stocks closed at 1,062.50

And yes, as usual, the volme on down days is incomparably higher than that of up days.

Lastly, note not only the Lower Highs, Lower Lows, but that the market is repeating the identical drop regime as was seen during the last plunge.

 

 

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Fri, 07/16/2010 - 16:26 | 474374 Gully Foyle
Gully Foyle's picture

But will a record number of banks close today?

 

Fri, 07/16/2010 - 16:32 | 474383 firstdivision
firstdivision's picture

Defo going to break 1020 so that it will be the new resistence on this leg down.

Fri, 07/16/2010 - 17:04 | 474456 Orly
Orly's picture

I have it that we'll see a bounce from 1022 to 1155 (with a little help from Charles Nenner. See the article yesterday on ZeroHedge...).  This retracement will be blindingly fast, perhaps resulting in a "failed flag" structure that will see the top in the market for years to come.  The 1022 level is above the last intra-day low set in the beginning of July 2010, so that level is the scrimmage line.

or,

If the SPX breaks below 1022 on a closing basis, then the next step down would be to 988.  We'll get to whip out our SPX 1000 hats for the last time for many years.  Then, it will be nearly identical to cutting teeth, with what I like to call, "sharks in the water:" rapid rises in the index, followed by drifting downtrends (that make a forex robot dream happily at night, by the way...), all the while making lower lows and lower highs. A dying pulse.

Final destination: Station 444.

Fri, 07/16/2010 - 18:06 | 474583 New_Meat
New_Meat's picture

Yamada been with you, Orly.  Takes time - Ned

Sat, 07/17/2010 - 13:40 | 475374 -1Delta
-1Delta's picture

lower highs and lower lows... 40exp<200 day.. no reason to overthink it..

The  PUT volume was the lowest in a long time.. 8 for 8 60 points lower 

 

Fri, 07/16/2010 - 16:33 | 474388 Instant Karma
Instant Karma's picture

"The only winning move is not to play." Stocks acting strangely going up for days on no volume and then getting smashed.

Bonds doing well. A bubble though.

Weird stuff with the Euro...what's going on there?

Just wait for all that bond market money to flood back into stocks and commodities. Might take a while, but it will be cool....

Fri, 07/16/2010 - 16:38 | 474398 Chumly
Chumly's picture

At this point John Law was issuing more shares and printing more money to buy them, but everyone was selling or already lost their arses.

Fri, 07/16/2010 - 19:36 | 474668 thesapein
thesapein's picture

There was a brilliant guy with probably good intentions, no? Kind of like Dr Frankenstein. It looked so good on paper, 'til others took it over and what a monster was created!

Stocks back then were actually called bubbles. Reminds me of when we say junk bonds and still buy them.

Fri, 07/16/2010 - 16:39 | 474400 lizzy36
lizzy36's picture

One wonders if the "years bottom" as noted by doug kass (intraday 1010 SPX) will hold?

 

Fri, 07/16/2010 - 16:52 | 474438 Fazzie
Fazzie's picture

 It will hold about like you hold that football for Charlie Brown.

Fri, 07/16/2010 - 23:40 | 474971 mtomato2
mtomato2's picture

!

Fri, 07/16/2010 - 16:53 | 474440 Muir
Muir's picture

See it closed up.

You are still a citizen.

Fri, 07/16/2010 - 16:43 | 474405 Rogerwilco
Rogerwilco's picture

It's a tie game and Ben "last domino" Bernanke is coming to the plate with the bases loaded and two outs in the bottom of the ninth. I wouldn't be short the DX or long on equities or commodities right now.

Fri, 07/16/2010 - 16:42 | 474408 traderjoe
traderjoe's picture

The options players pinned AAPL at 250 ($249.90). A beautiful thing to watch...

When's the liquidity snap/event we are all looking for? A EU bank going insolvent over a weekend? How about a muni filing Chapter 9?

Fri, 07/16/2010 - 16:43 | 474414 mrdenis
mrdenis's picture

I think I spotted a few of thoes guys ,goin' down the shore ....http://www.youtube.com/watch?v=9RfUMBgfhn0&feature=related

Fri, 07/16/2010 - 17:55 | 474555 Thalamus
Thalamus's picture

Your bouncing breasts are distracting...

Fri, 07/16/2010 - 23:42 | 474972 mtomato2
mtomato2's picture

no reason to junk... He's right.  But in a good way.

Sat, 07/17/2010 - 13:42 | 475376 -1Delta
-1Delta's picture

Nic and GS were correct... forget ego.. it was the most lame bear market rally ever..

Fri, 07/16/2010 - 16:46 | 474424 mynhair
mynhair's picture

Which fund liquidated?  Just Paulson?  TBT was in freeze frame for the last couple of hours.

Fri, 07/16/2010 - 17:06 | 474458 Orly
Orly's picture

All of forex was in freeze-frame mode, too, for the last couple of hours of trading.

Fri, 07/16/2010 - 16:50 | 474432 Debtless
Debtless's picture

Plunge bitches. 

Sold GS at 153 this morning after the pop.

I wish I had even more to dump.

 

Fri, 07/16/2010 - 17:26 | 474487 Paper CRUSHer
Paper CRUSHer's picture

MISSION UPDATE 3

"WAY'D GO SERG' "

"SECTION SPX1090 SECURED SIR,PPT IN RETREAT SIR"

"SGT.TYLER THE AMOX HELD THE BASTARDS DOWN"

http://www.thecolektr.com/Amox.jpg

"TROOPERS,I WANT YOU TO FAMILIARIZE YOURSELVES WITH THESE"

http://www.thecolektr.com/Caps.jpg

"LAY A PERIMETER ABOVE SECTOR DMA50"

"I WANT EVERBODY TO PLANT THESE BABIES ACROSS 100 METRES AND SET DETONATION TIME TO 60 SECONDS"

"CORPORAL MOVE THE REST OF THE SOLDIERS TO SAFE DISTANCE AND HUNKER-DOWN BEFORE THAT DEFLATIONARY SHOCKWAVE HITS "

"SHIT SERG'THE PPT HAVE CLASS 1 QE2 NUKE DEVICE SIR"

"I AM WELL AWARE OF THAT SOLDIER"

 

Fri, 07/16/2010 - 17:51 | 474546 Muir
Muir's picture

Good

But

 

[Bernanke to deflationist]

You Maniacs! You blew it up! Ah, damn you! God damn you all to hell!

Sat, 07/17/2010 - 00:44 | 475028 StychoKiller
StychoKiller's picture

(sigh), unfortunately, I'm old enough to remember the bug killers you've posted.

Fri, 07/16/2010 - 17:26 | 474489 alexander-delarge
alexander-delarge's picture

For someone who knows technicals, unlike myself;  The recent head&shoulders pattern, where the neckline was broken, then the market climbed higher, etc ( you know the story ).....does that need any further confirmation on the upside if it's to be a head&shoulders 'fake' ? ( not looking like a fake today, i know ) Or, if the market sells off to the neckline again and goes below, that shows the violation of the H&S.... ? any thoughts, comments, etc., are welcomed. thanks.

Fri, 07/16/2010 - 17:44 | 474531 PeterB
PeterB's picture

I think your H&S pattern is about to touch its toes

Fri, 07/16/2010 - 18:35 | 474615 swmnguy
swmnguy's picture

Knees and toes, knees and toes.

Fri, 07/16/2010 - 18:13 | 474593 New_Meat
New_Meat's picture

anal-cranial inversion

Fri, 07/16/2010 - 17:49 | 474543 Smiddywesson
Smiddywesson's picture

 

"Just wait for all that bond market money to flood back into stocks and commodities. Might take a while, but it will be cool...."

 

Er, no.  People left equities for bonds because their retirement funds, which were "guaranteed" on average, to earn them 10% per annum over the long run, were absolutely devastated.  When bonds turn out to be a similar trap, they will never, EVER, return to the stock market.  The outflow from equity funds is growing, and after they see what is to come, this group of suckers is gone for good. 

 

Not going to happen.

Fri, 07/16/2010 - 21:25 | 474771 jeff montanye
jeff montanye's picture

their children may return; their grandchildren very likely.  they?  no.

Sat, 07/17/2010 - 12:08 | 475321 CrazyCooter
CrazyCooter's picture

I am purely anecdotal, but I speak regarding my personal experiences and lessons learned.

I had very little retirement in 99/00 because of my age. I saw it coming (I am a software engineer) but I didnt put two and two together. I dont suck at math and I understood the implications after the fact. Classic fool me once/fool me twice.

Around 2007 I did a lot of homework, got with an independant investment professional and made my first significant retirement allocation. During our initial meeting I frothed at the mouth about concerns regarding housing prices/etc/etc. I eventually ended up with some bond allocations for my cash. They lost 30% at peak and recovered half that. Classic fool me once/fool me twice.

Currently I have a match from my employer for 401k. I stopped contributing. Do you know why? Because I cant control my money. I went through a divorce and my best option was "borrow" from my 401k at terms I did not like. Hello, this is MY money.

Never again will anyone have such control over my finances. If I dont understand fully the instrument I am putting my cash into and have full control, I am not buying it. Bullion is a starter, but eventualy I hope to snag a piece of a small business that produces something of value. Wall street will never see a dime of my money every again, in so far as I have any control over the circumstances.

Regards,

Cooter

Fri, 07/16/2010 - 18:00 | 474569 Thalamus
Thalamus's picture

It feels a lot better to be short over the weekend vs. long is all I have to say.

Fri, 07/16/2010 - 19:38 | 474670 OutLookingIn
OutLookingIn's picture

 

Of course Goldman's charting is spot on! Easy when you make up the chart and then put in your HFT algos order to match!

Market down. Volume up. Check. Sell orders complete. Check. Martini time!

Fri, 07/16/2010 - 20:48 | 474738 Overleveraged_a...
Overleveraged_and_Impatient's picture

I don't trade equities, I'm strictly a currency trader. Assuming we have a boring weekend, I think the Asian session will give us a slight drop (risk off across the board) before moving sideways, and possibly melting up for Monday's American session.

It may not be the time to panic just yet, especially now that everybody is waiting on apocalypse just cuz of a short squeeze squeeze today. I would go so far as to wait for risky pairs to make new highs before putting on big short positions.

 

Fri, 07/16/2010 - 21:12 | 474763 ratava
ratava's picture

i dont see how S&P will not retest the 900s. 800 looks like the last stand that would trigger QE 2.0 but 900 is just cheap enough for people who know any lower will push intervention. nikkei is already at 94xx and gold has some room to fall due to deflation fears as well.

Fri, 07/16/2010 - 22:31 | 474888 Tense INDIAN
Tense INDIAN's picture

i dont understand one thing....why are these averages so important to the manipulation team....afterall , the markets so much manipulated that they can close the markets at any level......

Sat, 07/17/2010 - 09:58 | 475255 Boilermaker
Boilermaker's picture

I'm sure I'll be attacked, but, I think the point is that it justifies the manipulation on a technical level and allows for the plausible, albeit improbable, moves upward.  As long as they can continue to pump it and force the moving averages upward then they can continue pumping and pin the upward trends on 'technicals'.

Hey, I agree though, it's all a pile of bullshit.

Sat, 07/17/2010 - 16:33 | 475476 no life
no life's picture

Delirium sets in for the stock market, and it doesn't really mind.

Sat, 07/17/2010 - 16:51 | 475488 dvsteenk
dvsteenk's picture

next stop 1040...

Sun, 07/18/2010 - 05:05 | 475895 Grand Supercycle
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