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So Just What Happened On July 15?

Tyler Durden's picture


Now that the market is back to mirroring the melt up from last summer where bad news drove the market higher, and rare good news drove it to the moon, and every day's closing price is more or less predetermined in the prior premarket session, is it ok if those handful of people who still give a ratus gluteus about market structure understand just what happened last Thursday, July 15 (incidentally the day Goldman announced its settlement, and just pre the infamous OpEx), when the ES-SPY relationship blew up, as the chart below shows. Where futures and SPY have traditionally correlated to 0.999*, on July 15 something snapped.

OK - we realize that with the Fed out of bullets, land mines, grenades and bazookas, and just a nuclear bomb or two left in the arsenal (not to mention countless lies), and the administration set to suffer a historic loss in November, it will be Bernanke and Obama's only hope to ramp the market at least several hundred points over the next few months. That's fine - nothing would surprise us anymore. After all, mutual funds have a few more billion in redemptions to face before they are all tapped out so the market must illogically surge. But little market abnormalities like the one above still entertain and amuse, and if maybe Liberty 33 could release a press release, blink in Morse Code, or send some other signal as to what happened, we can all go to bed knowing that the abnormal is now officially perfectly normal. And we simply ask, because there was a time, a whopping year or two ago, when such a sudden and violent shift in correlation would mean someone certainly blew up. Of course, with trading now being executed by a handful of counterparties, it would make an answer to such a question all the more interesting, if completely irrelevant in the grand scheme of all things Ponzi.

h/t Credit Trader


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Thu, 07/22/2010 - 14:36 | 484042 hedgeless_horseman
hedgeless_horseman's picture

Zero Wing attack?

On a long enough time frame, all your trades are belong to U.S.

Thu, 07/22/2010 - 14:35 | 484047 NOTW777
NOTW777's picture

all this focus on pumping up the markets shows the identities of obama's and the left's key constituencies

Thu, 07/22/2010 - 15:57 | 484219 RobinHoodrat
RobinHoodrat's picture

If you make the assumption that big business still likes the repubs more than the dems, wouldn't forces try to tank the market pre Nov.?  Scare ppl into thinking the dems can't handle the economy?

Fri, 07/23/2010 - 00:14 | 484934 barkingbill
barkingbill's picture

big business, corporate oligarchy, controls both parties. i don't know if they really care too much who gets elected. they will corrupt them all. 

Thu, 07/22/2010 - 14:35 | 484048 jkruffin
jkruffin's picture

Last time we saw this extent of a melt-up day,  it was soon followed by 8-9 days of massive losses.  I think today is capitulation of sheeple buying day.  They got the nitwits sucked in now, and they are going to collapse this market starting tomorrow.  No way this diversion can hold between stocks and bonds.  Looking at the bond markets, yesterday we say -109 DOW  and  long bonds were +1.58/.93  and today on a 240+ DOW the bonds are  only -.93/-.39

That tells me money is not coming out of the bond market like the DOW/S&P frontrunners want you to believe.

Thu, 07/22/2010 - 14:48 | 484070 arnoldsimage
arnoldsimage's picture

they're too greedy to simply stop at sp 1095 before they pull the plug. they will run it higher. money junkies never get their fill.

Thu, 07/22/2010 - 15:27 | 484151 HarryWanger
HarryWanger's picture

I think the melt up continues now for a while - probably through elections. Now with "strong" earnings from major players and raising guidance, it could be just what is needed to start sucking in the "flash crash scared the shit outta me" crowd. 

Once you get them back in the game, which I believe will start to happen as summer closes, then you can slam the door on them after the election or in very early 2011.

Until then, I really can't see where the downside catalyst could lie. Employment? We already know that's bad and we already know there is some sort of slowing of the inventory cycle. Tough to jump in long but it's starting to make sense in a very bizarro way.

Thu, 07/22/2010 - 15:35 | 484165 Popo
Popo's picture

Remember how well the "Crash will come after the election" prediction worked out last time?   It happened on Bush's watch to everyone's surprise.

My bet is we crash right smack in the middle of the election season, throwing everyone's campaigns into a 100% financial/economic focus.



Thu, 07/22/2010 - 20:04 | 484696 Jessica6
Jessica6's picture

Yeah, but the big banks probably didn't realize at that point that he was on their side, and he looked set to win back then.

I mean, look at how oil prices crashed in July/August from their highs - around the time Obama began campaigning about closing the Enron Loophole. Remember that?

Once he was in power they realized he wasn't serious and oil prices melted up again. I mean, it *could* just be pure coincidence - just a guess on my part.

I would dearly love to see a crash but I think that weekend when the media were hyping the S&P Death Cross, Prechter was in the NYT about Dow 1000 was a bottom for now. My husband is beginning to believe the markets are so rigged that they'll never crash - just meander sideways the next decade.

Thu, 07/22/2010 - 21:27 | 484791 Fred Hayek
Fred Hayek's picture

You think we're turning japanese?  You think we're turning japanese?  You really think so?

Thu, 07/22/2010 - 16:13 | 484263 GFORCE
GFORCE's picture

This could be the top Mr Wagner? The last time you talked about upside the market collapsed.

Fri, 07/23/2010 - 00:17 | 484938 barkingbill
barkingbill's picture

well you know he has to be patriotic to fit his symbol. so up up and away goes the USA

Thu, 07/22/2010 - 16:38 | 484322 qussl3
qussl3's picture

3Q was when all the bad sentiment numbers began building and the long term unemployed were staring at imminent expiration of benefits.

Don't really see that much scope for earnings to "surprise" to the upside again come Oct.

Also, we presume all quiet on the European front.

Thu, 07/22/2010 - 16:51 | 484353 Ned Zeppelin
Ned Zeppelin's picture

Makes sense.  No news out there that will appreciably slow down this juggernaut.  Dow 11K here we come.

Good yield, high quality bonds, all day long.  

Thu, 07/22/2010 - 20:13 | 484707 ZeroPower
ZeroPower's picture

Whatever happens concering SPX 1100 or 900, it probably won't really convince anyone until September rolls around. Too much money sitting on sidelines or in long-term positions not being touched over the summer. Too many PMs taking their months off in Aug to care what happens to the market. End of August we'll start seeing some more volume and then most hopefully flash crash II to show everyone the system really IS broken

Thu, 07/22/2010 - 19:18 | 484638 Rick64
Rick64's picture


 I think your right. I think they are trying to suck money in before the treasury auctions next week when they will have to use capital to prevent a weak or failed auction. IMO

Thu, 07/22/2010 - 14:36 | 484050 SheepDog-One
SheepDog-One's picture

Something broke? I'd be amazed to see something that is NOT broken today!

Thu, 07/22/2010 - 14:46 | 484068 Nihilarian
Nihilarian's picture

Watch European flick "Mr. Nobody"

Thu, 07/22/2010 - 14:46 | 484069 Nihilarian
Nihilarian's picture

<double post>

Thu, 07/22/2010 - 14:37 | 484051 Turd Ferguson
Turd Ferguson's picture

Wow. What more evidence is needed? Prosecution rests.

Thu, 07/22/2010 - 14:37 | 484052 Horatio Beanblower
Horatio Beanblower's picture

"Things are getting so bad in Newark that the mayor has ordered the government to stop buying toilet paper...At the news conference Booker was also quoted as saying, "Call me Mr. Scrooge, if you want, but they'll be no Christmas decorations around the city."

Thu, 07/22/2010 - 14:57 | 484085 Cognitive Dissonance
Cognitive Dissonance's picture

On the lighter side, why don't they (Newark) use the toilet paper as decorations?

Regarding your post, it's the best of times, it's the worst of times. And while it's infuriating, not from a money lost point of view because I trade the market and am not short as of this posting, but from a "fair market" point of view, did we really expect anything different than this outcome when Big Ben pulled the pin on the QE 1 bomb well before it was officially announced? As well as the stealth QE 2 since March of this year?

As Todd Harrison was saying back in 2008 (and plenty of times since) they sold the car crash and bought the cancer. And this is what the cancer looks like as it begins to eat away at the brain. Rampant market pumps and desperate swings. Like a drunk who's lost control of the car, the wild swings back and forth become greater and greater before the car winds up in the ditch with the drunk passed out at the wheel.

Or in this case, with the brain turned to mush.

Thu, 07/22/2010 - 14:41 | 484056 NOTW777
NOTW777's picture

EUR/USD resist @ 1.3267 - can it pop there

Thu, 07/22/2010 - 14:43 | 484062 chancee
chancee's picture

I don't understand, why don't they just push the futures up overnight all the way over the 200 DMA  and be done with it.  I mean do we really need the show?  Haven't we all got better things to do than watch this pretend market action?  It's obvious to anyone who's been paying attention that there's been a market mandate by those in charge to push us over the trendline/1100 resistance and negate the lower highs pattern.  Why waste our time?  We get it, it's fake.

Thu, 07/22/2010 - 15:44 | 484188 Panafrican Funk...
Panafrican Funktron Robot's picture

I'm pretty sure Blackrock makes more money if it stays in a "middle range" for a while. 

Thu, 07/22/2010 - 21:31 | 484799 Fred Hayek
Fred Hayek's picture

I'd feel better being at that Black Rock town that Spencer Tracy visited on that bad day.

Thu, 07/22/2010 - 20:01 | 484691 TeddyRoosevelt
TeddyRoosevelt's picture

fake. meaningless. a fraud. but i can appreciate the show. i mean, we're moving 2.5% every other day.  this is great.  if they went to the 200 day tomorrow, they'd have to go to 1020 monday.  now that would be worth the price of admission!

who knows, they could take it to 1170.  and what the hell, new highs are a stones throw away from there.

Thu, 07/22/2010 - 14:44 | 484064 SDRII
SDRII's picture

JPY flat; 10yr is drifting back down

Thu, 07/22/2010 - 14:52 | 484074 lizzy36
lizzy36's picture

Quelle Suprise? Something broken?

You mean that today for instance, es 3 std from vwap isn't normal?

Thu, 07/22/2010 - 15:42 | 484178 nopat
nopat's picture

You know, I never followed your comments, much less any of the comments for that matter.  But I think need to start, like...yesterday. 

Not trying to leghump or anything...just saying...

Thu, 07/22/2010 - 17:27 | 484420 Hephasteus
Hephasteus's picture

She's too smart to understand. But it's fun trying.

Thu, 07/22/2010 - 14:53 | 484076 Bankster T Cubed
Bankster T Cubed's picture

allowing the markets to work means tanking stock and bond markets

and a house-cleaning of current power structure

We're so deep into USSR dynamics now, and it is that condition which colors market action and legislative disfunctionality as well

Thu, 07/22/2010 - 14:55 | 484077 ziggy59
ziggy59's picture

welcome to the Bizarro world, Htrae..


up is down, left is right, ...







Thu, 07/22/2010 - 14:54 | 484078 mogul rider
mogul rider's picture

The parmeciums erupted into the vortex of gelatinus mush mush and thus a star was born,




The squid was caught on the wrong side again,,,

Thu, 07/22/2010 - 14:54 | 484079 crzyhun
crzyhun's picture

As for the 15th, have no clue....but today they were buying puts in the AM and dumping the vix. Now back to more calls than puts and the vix is not budging. Hmmmmmmmmm?? Someone is smelling more downside herein. Stay tuned.


Thu, 07/22/2010 - 14:55 | 484082 cougar_w
cougar_w's picture

A fat-fingered rogue trader with a low-lat co-lo pipe HFT'ed a block of ES while juggling SPY which made the foo hit the bar which spun into the muffler bearing where the spanner then fell into the works thus causing a halt on trading and a trade re-wind that warped the space-time continuum (as usual) taking the chart back to the last H&S inflection where gold was trading in tight correlation against silver with copper just waiting in the wings like a wall flower until K-winter made the 2nd Fibonacci (naturally) explode organically (or maybe orgasmically if that is even a word) spewing it's SPOO all over the kitchen.


Though why they were in the kitchen "trading" remains a puzzle. That part sounds kinky to me.

Thu, 07/22/2010 - 15:45 | 484190 nopat
nopat's picture

The clouds above part like some mythical doorway to allow the familiar face of a combusting celestial chum to poke through, ablaze with the smell of hope. Yet those parting pillows of puffy pre-precipitation are not the only unusual doorway to open this splendid and sunny Spring morn. For here down on earth mere mortals may for one snatched second delay to a double take at the hinged apparition before them. An apparently innocent hatchback that hides a party piece as remarkable as anything involving ping pong balls. The trick – suicide rear doors. The name of the flirty family funster to perform it – quite simply, Vauxhall Meriva.

Yes, the Meriva’s suicide rear doors are clever. But does the driving experience make you want to top yourself? There’s only one way to find out. Let’s do this thing. First impressions are of no-holds barred normality, of suit and tie sensibleness at odds with those wacky-backy back doors. Time to take things up a notch. Soaring past 5k rpm the little four pot gasper goes feral, burrowing deep into its power band to give you all its little legs can muster. Slicing seamlessly through the cog box reveals a shift that’s swift if you’ve got the wrists to take it.

The roads ahead are clear. Corby will soon be in our sights. For the next few miles Meriva and me power south in storming fashion, a fortuitous juxtaposition of situation and circumstance. As the pressure piles on, the little Vaux comes back smiling. Steering transmitting everything it knows on a DAB channel marked ‘feedback’ as the classy chassis absorbs every bump and bobble as if the tyres are made of kitchen paper. Balance is like a bull, ultimately led by the nose but dance like Louis Spence on the pedals and you can get the ‘Riva to tango as if it’s in the Strictly final and Len Goodman is holding up a card marked ‘apex’. On a particularly chewy left hander I slammed shut the gas and felt the tail step sideways. Instantly I gave it a dab of oppo and I was away.

The Vauxhall Meriva Expression 1.4 16v is a bitch. And I spanked it.

Thu, 07/22/2010 - 15:04 | 484098 barthezz
barthezz's picture

TD and all.

I just called the Bloomberg support desk and spoke to a helpful lady which is sending my request to the data team.

If you look at the upper chart using 'SGIP' there is no future data for ESA Index, ESU0 Index or ES1 Index. It simply shows SPY US EQUITY.

Therefore the spread is simply a 0 value minus the normalized SPY US EQUITY. 

More as I get it.


Thu, 07/22/2010 - 15:32 | 484159 credittrader
credittrader's picture

nice catch! thanks mate...looking at a bunch of other screens and ESU0 is messed up for that date everywhere...


Thu, 07/22/2010 - 16:17 | 484271 barthezz
barthezz's picture

They are working on it...

Bloomie on Lexington has it fixed for their representatives (she sent me a 'grab'). Mine did not work yet. Hopefully by tomorrow we are safe, however it is only a data issue from Bloomberg and nothing else!

Hope this helps.

Thu, 07/22/2010 - 16:22 | 484279 barthezz
barthezz's picture

you're more than welcome credit trader!!

I think it is messed up for all - but as I said the lady had it already updated on her monitor.



Thu, 07/22/2010 - 16:56 | 484364 Ned Zeppelin
Ned Zeppelin's picture

Well, heck, that's no fun. You mean it's really just a data glitch, nothing else.?

Thu, 07/22/2010 - 17:34 | 484430 barthezz
barthezz's picture

Yes, it is only a data glitch. I saw the screenshot the rep sent me.

And on my printout I do not see '2' lines for the data of July 15th. There is only the SPY US Equity but no future.. hence the spread mirrors the move in spy and nothing else.


Thu, 07/22/2010 - 15:12 | 484116 MyKillK
MyKillK's picture

There must be something special about July 15.


July 15, 2008, was the day that oil, gold, and the USD simultaneously reversed their years-long trends and led straight into the fall 2008 crash.


It must be the designated day to abandon ship.

Thu, 07/22/2010 - 15:18 | 484126 DoctoRx
DoctoRx's picture



Thu, 07/22/2010 - 15:19 | 484129 HedgingInfinite...
HedgingInfiniteRiskIsNotPossible's picture

Spell checker alert.

Thu, 07/22/2010 - 15:26 | 484146 Problem Is
Problem Is's picture

"with trading now being executed by a handful of counterparties..."

It looks like the handful of counter parties were gulping viagra and red bull in the 85 Broad Street junior executive's mens... ah, I mean boys room...

Thu, 07/22/2010 - 15:40 | 484172 Gimp
Gimp's picture

Traders world has been replaced by Programmers world. Binary Digits bitchez!

Thu, 07/22/2010 - 15:51 | 484182 bingaling
bingaling's picture

I dont know what's happening Ty, but I am sure when it happens someone must make some serious money being it seems to be happening everywhere now whether on a daily chart or real time in minutes . Maybe we should call these bizarre anomalies "pick" pockets.When the market behaves this way it punishes anyone who trades it traditionally this is the "NWO market" where only the chosen few will profit . I imagine pension funds and hedgies out of the loop are now the food . I also imagine all of that drug money floating around the world has to be washed somewhere and we now know that the biggest American banks have licenses from the gov't to clean it .What better placw than the US stock market ?


Thu, 07/22/2010 - 16:09 | 484250 cougar_w
cougar_w's picture

There is nothing wrong with this market. Stop whining and put your money in there, and it will suddenly disappear. That's what this market does; takes your money. It is what it is supposed to do and it will do it every time like a relentless money-taking machine. Put your money in there like a good lad.

You dodn't need that money. The economy needs it. You would just be buying gold or silver or ammunition or some other useless unpatriotic crap instead of your fourth wide-screen HDTV, if they let you keep it and do what you want with it like some communist freedom-hater.

Be a good lad and invest long and walk away confident that you are doing The Right Thing. Now doesn't that feel better? Sure it does.


Thu, 07/22/2010 - 16:10 | 484255 cocoablini
cocoablini's picture

Yesterdays 160+meltdown was a classic failed rally from a bounce turnaround. Very bearish with momentum players bailing out and locking in profits. If the chart does not correct and push past the previous July high then it's an open invite for shorts.
Today was a panic short cover and some news from Europe- whereas the market had no US news to rally off of. I have a feeling the Fed knew they could beartrap shorts on yesterdays obvious short opportunity.
If the chart can break 10,400 Dow then the market has reason to chase momentum to upside and that pushes us back towards 11,000. From there the Fed can perch and watch the descent into fall and adjust with QE2

Thu, 07/22/2010 - 17:56 | 484475 vicelord
vicelord's picture

Anyone think the squeeze in Gold is gonna continue?  Kinda came out of nowhere today. Right at the open.

Thu, 07/22/2010 - 19:13 | 484628 Instant Karma
Instant Karma's picture

The market doesn't react, it is directed.

Thu, 07/22/2010 - 19:15 | 484632 Goldenballs
Goldenballs's picture

Quite simple,

Things are very bad.People are getting skinter.Pensions are becoming unaffordable,property is dropping,goods are not selling in large quantities,unemployment grows,etc,

but the markets go up because of the organised crime of the central banks of the world who need the illusion of normality to get away with their crimes.The only real winners on the stockmarkets are the greedy banks who don,t care wether investors win or loose all they want is trades and fees.Pension funds what a great invention, if a bank charges five sixteenths of one per cent every month and then an annual fee as well on billions how can they ever loose.The Government isn,t going going to stop it as they continually borrow money - your money and then tax you to give you your money back,but for every transaction its the fees that keep the fat bankers getting fatter with all that nice traded fiat currency.Stuff your pension with Gold and Silver and you are no good to the banks or the Government.

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