Risk-ES Spread Collapses

Tyler Durden's picture

Just over 2 hours after the Fed ramped the ES at the expense of every other risk pair, the spread has collapsed. We said: "Bottom line: either play both legs outright in a pair combo, or sell ES for a FV 4 points lower." Well, the ES is now 4 points lower. And unlike Goldman, which was 60 pips away from its 1.50 EURUSD target and decided to hold on, only to get blown up literally minutes later, we are not greedy and are closing it.

Update: hmmm, perhaps we were a little early. Market closes - Spread closes.

Courtesy of Capital Context

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Hephasteus's picture

Foxconn plant in taiwan got hit by lightening and exploded.

Unlisted link but might work for ya.


Herd Redirection Committee's picture

Is this for real?  Wow, that is a pretty big jink in the supply chain for Apple!

Any way, check out the latest from the Capital Research Institute "United States of Corruption & Injustice"


America isn’t the only country with serious problems, but the US dollar is still the world’s reserve currency (for now), so what happens in America invariably impacts the entire world.  As such, its problems are typical of those found across the entire world.  Problems such as:

  • Incredible disparity in income and wealth between the poorest and richest members of society.
  • Unbelievable levels of injustice, with two sets of rules.  The one you get depends on how expensive your team of lawyers is.
  • Large amounts of financial fraud, following the death of free markets
  • Government in devote service to ‘special interests’, AKA Corporatism, instead of the people

 The nation has completely lost sight of its founding ideals...

Hard1's picture

Tyler: what is in the .ESBASKET?

For the rest: "Collapses Bitchezzz!!!"

Tyler Durden's picture

AUDJPY, EURJPY, 10Y, 2s10s30s, gold, oil. Regressed daily.

Hard1's picture

Thanks mate!   

oh, and "Spread Bitchez!! sounds better"

scatterbrains's picture

Speaking of GS, the stock is looking fugly, in fact the entire $BKX has divereged massively from the SPY and never even got back to the pre-flash crash highs of last year.


Someone with access throw a weekly chart of $BKX vs. SPY for the group..



LawsofPhysics's picture

Again, many thanks to ZH for the profit.  Another donation forthcoming.

stewmint's picture

It's all because Randy Macho Man Savage died today. That's what this is all about.


Ohhhhhh yyyyyyyea!

no life's picture

The Bernank may be losing his pimp hand...

RobotTrader's picture

Better buy that dip.

Weak action in the banks makes QE.X assured....

PigMen will not allow these bank stocks to grind down much further.

There will be unprecedented, immediate, and aggressive action taken to rescue these stocks.

Internet Tough Guy's picture

Banks down, another momo perfect fade. And gold up. General Jim is having a good laugh at your expense, momo. You must be puking up blood. But momo...you promised! LOL

tickhound's picture

"Weak action in the banks makes QE.X assured...."

But... I thought you and yours said repeatedly that, um... oh nevermind.  We all know the drill.

rubearish10's picture

But wait,,,,Bernanke and BOJ said things will get better in the second half. Oh, because of more QE or HOPE? You pick!

Miles Kendig's picture

Bank on it Danno, the rooms are correlated


RobotTrader's picture

Odds were high that TPTB was going to end QE due to rampant commodity speculation.

However, things have now changed dramatically.

QE will be implemented in order to rescue the XLF, now that the short sellers are all over that group.

Just watch and see what happens.

The short sellers will be burned at the most inopportune time.

Internet Tough Guy's picture

Poor momo, as General Jims 1650 gets closer, buying back the yellow rocks he sold at 1000 gets farther away. At least he has TZOO. LOL

Big Ben's picture

Some people are claiming that the near-zero interest rates produced by QE are making it difficult for the banks to make money. My guess is that the Fed cares more about the banks' balance sheets than their share prices.

Bam_Man's picture

Yup. Retail savings/retirement dollars continue to leave near-zero yielding bank accounts and MMMF's. This will keep a bid under Treasuries until the retail migration is complete (at which point Treasuries will have completely "crowded out" real capital formation, but that's another story).

Banks' Income Statements are their past.

Banks' Balance Sheets are THEIR  FUTURE.

aminorex's picture

Borrowing for free and buying treasuries has been working pretty well.  It's retail, writedowns and lawsuits that are bleeding away all that free money.  To call it a volatile environment would be understatement.

leftcoastfool's picture


So, you don't think that TPTB need to allow/engineer a stock market crash (profitting greatly all the way down) in order to get political support for more QE?  Just curious...

Boston's picture

Waaaaay to early for that.  The political backlash---domestically and internationally---would be too severe for QE3 to be implemented now.

It'll take much more damage....in the XLF and the broader indices....for QE3 to happen.

In the meantime, just buy Treasuries.


Yen Cross's picture

 I'm medium term short yen/usd. A bit longer term, I think a risk off trading environment over the summer (Northern Hemisphere) along with geo political instability, will put pressure on commodity based currencies. The uncertainty regarding Federal Reserve policy, and the correlation break down in commodities vs usd are intriguing.

   I'm inclined to stay short the commodity based currencies vs Yen. (EX;aud,cad,eur,yuan.)

  The usd moves are still too erratic.

AmazingLarry's picture

I still have yet to figure out what "ES" stands for. A little halp 4 teh nooB?

LRC Fan's picture

Stands for "E Mini S&P 500" which is the futures contract for the S&P 500. 

E-mini S and p 500. 

rubearish10's picture

Electronic Spiders (SPDR's).

AldoHux_IV's picture

If the correlation continues to break between silver and & SPX, we may be looking at beginning of another silver run, but then again who knows what the crazy SPX will do from here on out: trust that the fed will be there or move down so the fed can act.

Yen Cross's picture

 I'm looking at the commodities market as a whole. Yes an SPX retraction should soften commodities prices. These price changes would be realized in the early 4th quarter.

  Silver is a hedge. Hense the demand. Do you want to own somthing that moves 50usd in a market cycle, or something that moves 5usd in a market cycle? I'm not taking sides. I prefer silver for P/M stability and Gold for LIQUIDITY!

Captain Planet's picture

what kind of electronic spider is the spx?


Yen Cross's picture

 ES is a chart overlay reflecting a basket of financial instruments! REF: the BLACK chart above.

LRC Fan's picture

Stocks fell off a cliff the last 20 min of the session and have kept falling after hours.  Something big coming this weekend?  Or just more insiders getting out?  I still think by Monday we'll be way higher, that's just how Bernanke and Sack roll.  But the 10 minute chart of the DIA the past 10 days does not look good at all for the bulls.  The market wants to tank so hard.  If the PPT loses control, look out. 

Yen Cross's picture

 Just squaring up for the weekend. Covering Puts and long positions!

PeterSchump's picture

End of the world is forcast for tomorrow.  Asset managers want to make sure their books look clean if indeed it does happen and do not want to be caught long.

aminorex's picture

retail exits before expiration; intraday liquidation; price pinning action (final delta hedges); gamma scalpers.  completely non-fundamental.

dcb's picture

good I have been wondering what is taking so long my target on uUP is abot 22.00 the trade on this has been making me crazy, and costing me a lot of money.


I hate the hft stuff, udn rallies all day only to sell off at the end. they have to get rid of HFT, i bought some udn today, have a stop loss, sod my position this am, stopped out, but it has been acting funny

dcb's picture

I have also been expecting for a whilea move back to trend. further below. once more these traders make me crazy, in a non hft world things would bounce up from baseline and settle back. afriad of gettng stuck with crap.

Rick64's picture

Love this trade.

cheers ZH

Captain Planet's picture

for another noob (dont even have a futures account, just trying to understand this stuff)

in working a spread play, do you hold positions in both components in a long/short carry trade(is that what a carry trade even means?)

can you ''regress'' these trades daily to your desire?


Captain Planet's picture

on the COT for example, what does ''spreading'' refer to, and how is that connected to the questions above?

Yen Cross's picture

 You are reading CoT charts. Nice work! Remember REAL money and options.

Captain Planet's picture

I am, but I could use a little help understanding them.

This is ZH U, right, or did I walk into the wrong class?

Do the miners disclose info such as their futures holdings to investors?

Is the fact that Barrick has a major short position made available to the general public, or only those with ''access''? (no BloomTerm here, or other subscrips here)

Would I find this info if I dug through a miner's SEC or other public filings?



Captain Planet's picture

deleted: dp #winning!