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Risk Spread Compression Time As Stock Sell Off Intensifies

Tyler Durden's picture


That yesterday's entire move on the idiotic ramp into the close is now unwound is not at all surprising. We predicted this is what happens when you have busted vacuum tubes lifting every offer in a market that has 3 lots in Level 2. What is surprising is that even as the ES has plunged, the RISK basket has tumbled far faster. As usual, at times of great arbitrage, we point out the glaringly obvious, which at this point is to compress the ES-RISK trade for a 14 ES point equivalent compression.


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Fri, 06/24/2011 - 10:15 | 1398299 Cassandra Syndrome
Cassandra Syndrome's picture

PPT in ........3..........2..........1

Fri, 06/24/2011 - 10:33 | 1398357 Translational Lift
Translational Lift's picture

I wonder what the PPT will try to pull out of their ass to turn this around today.  2PM or 3PM???

Fri, 06/24/2011 - 10:35 | 1398361 Mike2756
Mike2756's picture

Strategic Cash Reserve release. What's that? We don't have one, you say?

Fri, 06/24/2011 - 10:50 | 1398406 Long-John-Silver
Long-John-Silver's picture

We had one in Ft.Knox but the last audit was done in 1948 so who knows what remains of the Strategic Gold Reserve.

Fri, 06/24/2011 - 10:47 | 1398407 Translational Lift
Translational Lift's picture

No problem.....just a couple quick key strokes.....DONE!!

Fri, 06/24/2011 - 11:30 | 1398578 colonial
colonial's picture

very clever post...i wish i had thought of it, and may well use it myself! 

Fri, 06/24/2011 - 10:17 | 1398309 alien-IQ
alien-IQ's picture

at 11am it will reverse as the volume declines. It will begin to creep up on vapor volume until the close. Typical.

Fri, 06/24/2011 - 10:17 | 1398310 SheepDog-One
SheepDog-One's picture

Ummm....try 'Greece saved' again?

Fri, 06/24/2011 - 10:18 | 1398311 Cognitive Dissonance
Cognitive Dissonance's picture

.....when you have busted vacuum tubes lifting every offer in a market that has 3 lots in Level 2.

Skynet (junior grade) to the rescue.

Fri, 06/24/2011 - 10:20 | 1398321 alien-IQ
alien-IQ's picture

that would make an excellent bong.

Fri, 06/24/2011 - 10:21 | 1398327 snowball777
snowball777's picture

looks more like a vaporizer from here, snappy.

Fri, 06/24/2011 - 10:31 | 1398347 Caviar Emptor
Caviar Emptor's picture

Or a cool salt shaker at a hip new bistro

Fri, 06/24/2011 - 10:40 | 1398373 AccreditedEYE
AccreditedEYE's picture

+1 lol

Fri, 06/24/2011 - 10:42 | 1398384 snowball777
snowball777's picture

Touche you metrosexual about town you.

Fri, 06/24/2011 - 10:24 | 1398323 Dr. Engali
Dr. Engali's picture

That is damn funny.

Fri, 06/24/2011 - 10:21 | 1398326 CitizenPete
CitizenPete's picture

Is that You, Tube?

Fri, 06/24/2011 - 10:36 | 1398367 Mike2756
Mike2756's picture

That is too cool!

Fri, 06/24/2011 - 10:48 | 1398410 carbonmutant
carbonmutant's picture

Good One...

Fri, 06/24/2011 - 10:52 | 1398414 Long-John-Silver
Long-John-Silver's picture

I still have a fully functional Vacuum Tube Tester.......

Fri, 06/24/2011 - 11:19 | 1398538 Cognitive Dissonance
Cognitive Dissonance's picture

No sexual jokes please. This is a financial blog. :>)

Fri, 06/24/2011 - 10:22 | 1398316 mynhair
mynhair's picture

I'll take collapse for 50, Alex.

Fri, 06/24/2011 - 10:51 | 1398425 Long-John-Silver
Long-John-Silver's picture

I keep wondering when the FED will print $1,000 bills for circulation.

Fri, 06/24/2011 - 14:57 | 1399370 mayhem_korner
mayhem_korner's picture

It's delayed because Hussein's cabinet is dickering over whether a sitting president can have his face on a bill.

Fri, 06/24/2011 - 10:23 | 1398318 Village Smithy
Village Smithy's picture

Nice though to see all of yesterdays' and last nights' bullshit ramping has been erased. At least for the moment.

Fri, 06/24/2011 - 10:24 | 1398322 lieutenantjohnchard
lieutenantjohnchard's picture

the fast money crowd will be begging for qe3 tonight if the selloff quickens.

Fri, 06/24/2011 - 10:36 | 1398375 SmoothCoolSmoke
SmoothCoolSmoke's picture

Didn't you hear?  Last night Kudlow (sounding desperate) said "the oil release is QE3!"   Too funny.

Fri, 06/24/2011 - 10:43 | 1398398 lieutenantjohnchard
lieutenantjohnchard's picture

i did. it was comical.

Fri, 06/24/2011 - 10:26 | 1398324 etrader
etrader's picture

Usual "Penguins & aircraft" look up & over we go ES price sillyness :)

Fri, 06/24/2011 - 10:21 | 1398325 Mercury
Mercury's picture

Wasn't there a site or original article somewhere that detailed the components/weightings of the "risk basket" ?

Fri, 06/24/2011 - 10:36 | 1398372 Mercury
Mercury's picture

Capital Context, that's right.  Thanks.

Fri, 06/24/2011 - 10:22 | 1398328 sbenard
sbenard's picture

Is there a POMO today to save the day? Will the Pollyanna Party continue sometime today? Or is there no Fed punch bowl?

Fri, 06/24/2011 - 10:22 | 1398331 rubearish10
rubearish10's picture

Has the train "really" left the station??? Break 200 DMA, BREAK IT DAMMIT!

Fri, 06/24/2011 - 10:22 | 1398332 RobotTrader
RobotTrader's picture

General Jim must be having a heart attack.

$1,650 looking more and more like a pipe dream.

Fri, 06/24/2011 - 10:29 | 1398337 Infinite QE
Infinite QE's picture

Only 300+ points have been added since you were panic selling shouting CRASH! LOL!

Fri, 06/24/2011 - 10:25 | 1398342 lieutenantjohnchard
lieutenantjohnchard's picture

robottrader: when you need a dumb money indicator.

Fri, 06/24/2011 - 15:38 | 1399500 Rynak
Rynak's picture

I keep thinking he may be related to GS. Just like them, he always likes to sell into the bottom, and buy into the top.... or at least so he claims.

Fri, 06/24/2011 - 10:39 | 1398371 BlackSea
BlackSea's picture

Let me see today:

1. Futures expiration for gold contract (99% of the time gold down 2-3 days before every time)

2. Margin calls on market drop requiring selling of liquid assets.

Otherwise carry on and keep shorting that gold robot.

Fri, 06/24/2011 - 11:04 | 1398475 ZeroPower
ZeroPower's picture

Your #2 should be relevant quite often considering we're all calling (wanting) an SPX under 1000.

Fri, 06/24/2011 - 11:29 | 1398589 BlackSea
BlackSea's picture

Actually the correlation holds only for the initial drop in SPX after a few day's climb. You will see gold drop with SPX initially, only to level off and then go back up as the selling continues.


As the SPX goes up a few days, the next time the selloff occurs it's the same pattern again - by that time players hedged again with paper gold.

Fri, 06/24/2011 - 13:45 | 1399043 ZeroPower
ZeroPower's picture

Nah, the correlation is pretty strong: i.e. market up 100% from march 09 lows, gold did just about the same.

Fri, 06/24/2011 - 10:52 | 1398413 SheepDog-One
SheepDog-One's picture

Momofader just keeps moving the target...a year ago he said $1,200 gold was a pipe dream. 

Fri, 06/24/2011 - 10:26 | 1398340 Village Smithy
Village Smithy's picture

Better keep your ears on Ransquawk, the delusion of the day should be rolled out any minute.

Fri, 06/24/2011 - 10:25 | 1398341 RobotTrader
RobotTrader's picture

5-yr. yield has collapsed to 1.44%

Looks as if "Paper" has trumped "Things" during this selloff.

CRB Index now trading at new lows for 2011.

Fri, 06/24/2011 - 10:28 | 1398348 lieutenantjohnchard
lieutenantjohnchard's picture

robottrader: providing fast, dependable, cost effective 1099 processing services for the greater los angeles area since 2011. call today for pricing. lulu and tzoo quotes included in pricing. a $0.00 value.

Fri, 06/24/2011 - 10:34 | 1398369 RobotTrader
RobotTrader's picture

TZOO has been a 6-bagger that last 12 months.

What about NEM, ABX, AEM, etc.

Oh, never mind.......


Fri, 06/24/2011 - 10:38 | 1398380 Internet Tough Guy
Internet Tough Guy's picture

TZOO down 40% from when you were pumping it. LOL

Fri, 06/24/2011 - 11:04 | 1398419 SheepDog-One
SheepDog-One's picture

Easy for MomoFader, he just moves the target to wherever. Doesnt matter his 'high fliers' are 40% down, or that gold is $300 over what he said was a pipe dream. Keep movin them goal posts Skippy...its easy for a paper account trader.

Fri, 06/24/2011 - 10:39 | 1398388 lieutenantjohnchard
lieutenantjohnchard's picture

i don't own them. i own physical silver and gold. lol.

Fri, 06/24/2011 - 10:33 | 1398368 Boston
Boston's picture


1.44% today.....

1.00% tomorrow......?

Fri, 06/24/2011 - 12:46 | 1398862 10kby2k
10kby2k's picture


Fri, 06/24/2011 - 15:07 | 1399400 mayhem_korner
mayhem_korner's picture

DESPERATION INDEX = (5-year yield bp)/10 + DXY

Sitting around 89.6 right now. 

Fri, 06/24/2011 - 10:25 | 1398343 sbenard
sbenard's picture

Not to worry! We have printed prosperity now! Coming any minute to a market near you!

Fri, 06/24/2011 - 14:09 | 1399161 Frankie Carbone
Frankie Carbone's picture


Fri, 06/24/2011 - 10:30 | 1398345 King_of_simpletons
King_of_simpletons's picture

3:00 PM ramp up job should fix that.

Fri, 06/24/2011 - 10:54 | 1398422 SheepDog-One
SheepDog-One's picture

'Greece fixed' again?

Fri, 06/24/2011 - 10:33 | 1398346 alien-IQ
alien-IQ's picture

expect some "big market moving news" if SPX touches 1263.50. that's when skynet autosends an action alert message to the department of random bullshit. the message usually reads something like this: "RELEASE GOOD NEWS IMMEDIATELY. CONTENT NOT IMPORTANT!"

Fri, 06/24/2011 - 10:36 | 1398365 rubearish10
rubearish10's picture


Fri, 06/24/2011 - 14:14 | 1399177 Frankie Carbone
Frankie Carbone's picture


Fri, 06/24/2011 - 10:47 | 1398408 Silver Dreamer
Silver Dreamer's picture

Osama needs to die... again!

Fri, 06/24/2011 - 10:28 | 1398350 treemagnet
treemagnet's picture

Just remember boys and girls, the 3:00 "Happy Train" is currently running accordingly.

Fri, 06/24/2011 - 14:13 | 1399186 Frankie Carbone
Frankie Carbone's picture


3:00pm must be the scheduled rally. It's 2:15 and the President's Working Group on Capital Markets is nowhere to be seen yet. 

You know their motto:

Boost the Fucking Dip. 

Fri, 06/24/2011 - 10:29 | 1398352 Caviar Emptor
Caviar Emptor's picture

A choppy start to the summer! Sets the tone

Fri, 06/24/2011 - 10:30 | 1398358 sbenard
sbenard's picture

I want my Fed punch bowl! Waaaaaah! Give me my Fed punch bowl! Waaaaah!

Fri, 06/24/2011 - 10:30 | 1398360 RobotTrader
RobotTrader's picture

XLF about to break to new lows.

Fri, 06/24/2011 - 10:38 | 1398381 lieutenantjohnchard
lieutenantjohnchard's picture

you too would be a serial poster if you were attempting to make a living trading, and every trade you made went wrong. you would be doing everything possible to distract yourelf from the tsunami of red on your etrade account screen.

of course a sensible person would quit, and concentrate on their day job processing 1099's.

Fri, 06/24/2011 - 14:21 | 1399208 Frankie Carbone
Frankie Carbone's picture

He's here because he bought a share of GLL three times in one day, then freaked out and covered it. 

Got flagged as a pattern day trader cause' he only has $131 in his account and didn't realize that covering the position got him tagged for the 4th trade. ;) 

90 days suspension. 

Fri, 06/24/2011 - 10:39 | 1398385 OrdellRobbie
OrdellRobbie's picture

Enjoy your comments, keep them coming. Rare sane comments..

Fri, 06/24/2011 - 10:56 | 1398431 oogs66
oogs66's picture

i posted earlier this morning that the fact that greek debt specifically, and sovereign debt and financials credit in Europe was weaker in spite of the 3pm news that had not been priced into their closing levels, that this rally was suspect.


any time the asset that should move the most, doesn't react, its time to be afraid.  stocks live in a dream world

Fri, 06/24/2011 - 10:33 | 1398362 plocequ1
plocequ1's picture

I hate that confounded compression more  than that i hate that confounded bridge

Fri, 06/24/2011 - 11:15 | 1398516 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture


Fri, 06/24/2011 - 10:32 | 1398364 monopoly
monopoly's picture

Trading this broken market is asking for trouble.

Fri, 06/24/2011 - 14:20 | 1399228 Frankie Carbone
Frankie Carbone's picture

So's mainlining speedballs but that doesn't stop me. 

Fri, 06/24/2011 - 10:40 | 1398374 Note to self
Note to self's picture

So lets just get this straight - QE3's a-comin, the debt ceiling will get raised with little change in spending plan except maybe that cute CPI trick, Europe will continue the slow default ballet, and the Chinese seem to think they will soon be running the whole show. What do we have to look forward optimistically to?  Why I should I make my high school kid take algebra in summer school cause he got a D? 

Fri, 06/24/2011 - 10:48 | 1398409 Village Smithy
Village Smithy's picture

He should go to summer school so that he stays out of the job market and doesn't steel my job cutting grass.

Fri, 06/24/2011 - 14:22 | 1399230 Frankie Carbone
Frankie Carbone's picture

That grass will feed your family. And if you're lucky you might get paid too. 

Fri, 06/24/2011 - 10:40 | 1398376 RobotTrader
RobotTrader's picture

Funny how the best performing sector the last 6 months has been muni-bonds.

Worst performing sector has been the GDX.

Man, the clamoring for fiat paper is simply stupendous.

Fri, 06/24/2011 - 10:44 | 1398386 Internet Tough Guy
Internet Tough Guy's picture

Not TZOO paper. Down 40% from when you were pumping it. Or GS, the ultimate pigman stock, you must be puking up blood on that one. Man, the stupidity is simply stupendous. LOL

Fri, 06/24/2011 - 10:43 | 1398399 RobotTrader
RobotTrader's picture

The only guys puking up blood the last two months are KWN and jsminest junkies like you who margined themselves into oblivion hoping for those outlandish price targest on gold.

Looks like Omaha Beach with all those dead bodies laying around.

Fri, 06/24/2011 - 10:46 | 1398405 Internet Tough Guy
Internet Tough Guy's picture

You must be scratching your head over GS. The ultimate inflation hedge, the ultimate pigman stock, you said. But Momo, you promised. LOL.

Fri, 06/24/2011 - 11:00 | 1398477 SheepDog-One
SheepDog-One's picture

MomoFader isnt puking up blood, his losses on his 'paper trade' account might embarass his self esteem s bit, but didnt cost him a dime in reality.

Fri, 06/24/2011 - 10:51 | 1398426 lieutenantjohnchard
lieutenantjohnchard's picture

yet you still own physical silver and an ira full of gold stocks. project much?

Fri, 06/24/2011 - 11:01 | 1398462 SheepDog-One
SheepDog-One's picture

Momo flipped the script again to distract from all his 'high fliers' being down 40%+, oh someone else did worse. Yea hows that TZOO doing almost 50% lower than where you were pumping it?

Fri, 06/24/2011 - 10:41 | 1398391 lieutenantjohnchard
lieutenantjohnchard's picture

man, the serial posting is stupendous. gotta distract oneself from the sea of red on trading account screen.

Fri, 06/24/2011 - 10:57 | 1398437 SheepDog-One
SheepDog-One's picture

Funny how youre just still ZH 'master of hindsight' poster MomoFader.

Fri, 06/24/2011 - 10:45 | 1398392 PaperBear
PaperBear's picture

Come and get the last 28MN oz of registered silver, the manipulators just made it cheaper for us all - $34.38/oz

I expect it will all be gone by the end of July.

Fri, 06/24/2011 - 10:56 | 1398454 Long-John-Silver
Long-John-Silver's picture

The Comex clearance sale continues...

Fri, 06/24/2011 - 10:41 | 1398394 Hank Paulson
Hank Paulson's picture

Ah, how does a mere mortal put this trade on? I have no access to the getco pipe running under Chicago

Fri, 06/24/2011 - 10:48 | 1398412 PaperBear
PaperBear's picture

All this selling of paper silver while the informed are exchanging fiat paper currency for physical silver.

I have to wait for July to get me another fix of physical silver.

Fri, 06/24/2011 - 10:54 | 1398423 RobotTrader
RobotTrader's picture

I see that during horrific gold selloffs, General Jim likes to post pictures of his 40 some odd dogs laying around the house.

Fri, 06/24/2011 - 10:54 | 1398441 lieutenantjohnchard
lieutenantjohnchard's picture

i notice that when hd, mo and vz are down robottrader likes to distract himself by trashing the world for his personal failures.

Fri, 06/24/2011 - 10:54 | 1398446 Internet Tough Guy
Internet Tough Guy's picture

He bought them for the dividends, so he isn't worried. LOL

Fri, 06/24/2011 - 10:58 | 1398468 lieutenantjohnchard
lieutenantjohnchard's picture

too funny. he makes 2% with the dividend and loses 10% principle. so what does he do? he trashes jim sinclair. lol.

Fri, 06/24/2011 - 11:06 | 1398452 SheepDog-One
SheepDog-One's picture

MomoFader, master of 'flippin the script'. And didnt Momo always say he was heavily invested in gold himself? I sure thought so. I guess he scratched off that trade on his paper account at some point.

Fri, 06/24/2011 - 10:55 | 1398447 SheepDog-One
SheepDog-One's picture

Youre the absolute worst ZH poster ever MomoFader, take a bow.

And I wont even junk your posts because I believe you get paid per junk, for whatever reason.

Fri, 06/24/2011 - 11:09 | 1398503 PaperBear
PaperBear's picture

"We are putting the people first and daring to touch the third rail of politics in order to bring reform to an unsustainable system."

I think that 99% of readers of ZH knows that it is the monetary system that is unsustainable.

Fri, 06/24/2011 - 11:14 | 1398514 SheepDog-One
SheepDog-One's picture

The FED fractional reserve tyrannical usury system is whats unsustainable.

Fri, 06/24/2011 - 11:01 | 1398463 treemagnet
treemagnet's picture

I'm just really cranky today - sick of watching a broken system exist.  Almost time to grill and drink.

Fri, 06/24/2011 - 10:58 | 1398467 alien-IQ
alien-IQ's picture

11am vapor volume reversal commencing NOW.

Fri, 06/24/2011 - 11:32 | 1398603 ZimbabweTrillionaire
ZimbabweTrillionaire's picture

Not possible to mirror this trade unless you know what Tyler's

"risk asset basket" is comprised of...

Fri, 06/24/2011 - 11:38 | 1398633 Zer0henge
Zer0henge's picture


Fri, 06/24/2011 - 11:45 | 1398652 ZimbabweTrillionaire
ZimbabweTrillionaire's picture

sell the orange (e-mini)/buy the white (?)

Fri, 06/24/2011 - 12:59 | 1398917 Frank N. Beans
Frank N. Beans's picture



in addition to the "flag as junk" link, would you please add a "Funny!" link as well?? 

Fri, 06/24/2011 - 14:44 | 1399323 chancee
chancee's picture

No one get excited.  SPY is never allowed to selloff on Friday afternoons.  We will magically stay floating around these levels.

Do NOT follow this link or you will be banned from the site!