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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Cassandra Syndrome's picture

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

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???

Mike2756's picture

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

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.

Translational Lift's picture

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

colonial's picture

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

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.

SheepDog-One's picture

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

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.

mynhair's picture

I'll take collapse for 50, Alex.

Long-John-Silver's picture

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

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.

Village Smithy's picture

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

lieutenantjohnchard's picture

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

SmoothCoolSmoke's picture

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

etrader's picture

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

Mercury's picture

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

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?

rubearish10's picture

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

RobotTrader's picture

General Jim must be having a heart attack.

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

Infinite QE's picture

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

lieutenantjohnchard's picture

robottrader: when you need a dumb money indicator.

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.

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.

ZeroPower's picture

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

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.

ZeroPower's picture

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

SheepDog-One's picture

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

Village Smithy's picture

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

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.

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.

RobotTrader's picture

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

What about NEM, ABX, AEM, etc.

Oh, never mind.......


Internet Tough Guy's picture

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

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.

lieutenantjohnchard's picture

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

Boston's picture


1.44% today.....

1.00% tomorrow......?