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Biggest 3-Day Slump In Stocks In 10 Weeks As S&P Hugs Pre-QE Levels

Tyler Durden's picture





 

The S&P 500 futures (ES) dropped from the opening whistle, bounced a little, then fell all the way down to pre-FOMC levels and then wriggled sideways auctioning in a narrow range for the rest of the day after Europe closed. The Dow and S&P are now red for the month with their biggest 3-Day drop in almost three months as the 50DMA comes back into view. Oil prices surged early on but as the selling came in stocks so oil fell back under $92 dragging the Energy sector lower (as CVX's chicken-and-egg with oil and its outlook continues). All S&P sectors were red on the day but financials outperformed (-0.06%) along with Utilities. Stocks ended just off their lows (as CNBC is so happy to tell us) but Treasury yields closed at their lows - tumbling over 7bps from the 10Y auction. The USD (and gold and silver) were dead today amid all the chaos - with a slight gain in silver and the USD limped lower from a better start. Gold remains -1% on the week. The Russell and Nasdaq are now the worst performers post-QE (-4.4%) while Dow Transports are -4% (and Dow/S&P down around 2%). VIX trod water with a small compression into the close - ending around 16.3%. IG credit outperformed as HY tracked stocks lower.

 

Notably - ES never made it back to VWAP from early on...

 

which leaves S&P futures well below the uptrend...

 

with the Dow at its 50DMA and its biggest drop in over two months...

 

leaving the Nasdaq and Russell high-beta beauties underperforming notably...

 

as IG credit outperformed with HY tracking stocks lower...

 

Across risk assets, we see the ETFs all tracking nicely together (left chart) but in the broader risk classes, the strength in Treasuries and weakness in Oil along with credit weakness saw CONTEXT (our risk-proxy) notably underperforming this afternoon - as stocks clung to Draghi's cliff...

AAPL ended up 0.8% on the day - hugging its VWAP all afternoon, which also tracked yesterday's VWAP perfectly.

 

Meanwhile with just a few seconds to go in the day - with VIX futures seemingly artificailly low (given stocks at their lows) - a huge buy order comes in and lifts the bid 20-25c - totally normal...

 

Charts: Bloomberg and Capital Context

 


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Wed, 10/10/2012 - 16:26 | Link to Comment silvermaister
silvermaister's picture

BUY PHISYCAL SILVER !!

 

 

Wed, 10/10/2012 - 16:28 | Link to Comment RockyRacoon
RockyRacoon's picture

Check.  Then what?

Wed, 10/10/2012 - 16:29 | Link to Comment redpill
redpill's picture

This is outrageous.  Selling stocks is domestic terrorism.

Wed, 10/10/2012 - 16:44 | Link to Comment Daily Bail
Daily Bail's picture

Maybe, but this is REAL domestic terrorism, from our government no less:

TSA forced woman to strip in public on final vacation before dying

Wed, 10/10/2012 - 16:47 | Link to Comment flacon
flacon's picture

Bounce tomorrow morning?

Wed, 10/10/2012 - 16:52 | Link to Comment redpill
redpill's picture

In Detroit they eat the dead cats before they have time to.

Wed, 10/10/2012 - 17:53 | Link to Comment flacon
flacon's picture

What do they do with cats in Neuuu Youurk?

Wed, 10/10/2012 - 17:12 | Link to Comment LooseLee
LooseLee's picture

Only a lackey of the status quo would utter such nonsensse. Selling stocks is intelligent!

Wed, 10/10/2012 - 16:29 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

Laugh at the buy and hold stock crowd?  We fucking warned them many times.

Wed, 10/10/2012 - 16:29 | Link to Comment Lohn Jocke
Lohn Jocke's picture

...but...this time it's different!

Wed, 10/10/2012 - 16:37 | Link to Comment fuu
fuu's picture

2: ???

3: Profit!

Wed, 10/10/2012 - 16:31 | Link to Comment TeamDepends
TeamDepends's picture

Don't be the first one to twitch.

Wed, 10/10/2012 - 17:29 | Link to Comment Overfed
Overfed's picture

Then, if you still Have $$, buy more. And maybe some gold, ammo and non-perishable food, too. And a water purifier.

Wed, 10/10/2012 - 16:28 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

I guess tanking the market now is as good as any other election.  Worked out well for Obama and Goldman Sachs, so the same should hold true for Mitt W. Obama...and Goldman Sachs, of course.

Wed, 10/10/2012 - 18:53 | Link to Comment RSloane
RSloane's picture

I see a pattern.....

Wed, 10/10/2012 - 16:28 | Link to Comment DavidC
DavidC's picture

Anyone know why the Dow got so slammed today? Comparing to the others, it really got hammered.

DavidC

Wed, 10/10/2012 - 16:29 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

To make the plebes Bernanke themselves before the election.

Wed, 10/10/2012 - 16:30 | Link to Comment Yen Cross
Yen Cross's picture

 The bigger the ponzi , the harder it falls.

Wed, 10/10/2012 - 16:38 | Link to Comment RockyRacoon
RockyRacoon's picture

Rest assured that whoever can answer your question is not to be found piddling around here.  They are busy counting their profits.  Kinda like the folks who really make money in real estate don't do seminars on how to buy rent houses with no money down.

I was in the property management business back in the 1980s and lots of doctors, lawyers, and accountants brought their newly purchases slum property to me to manage.  Uh.... no.   I told them then:  There is no such thing as no money down.  With negative amortization you just pay out the down payment over time.  I would not manage their crap and have them blame me for having to pay into that rental account month after month.  Made them live with their own bad decisions.  The management fees were never big enough to listen to them whine month after month...

Wed, 10/10/2012 - 16:33 | Link to Comment redpill
redpill's picture

1% is hammered?  Just wait, son :)

Wed, 10/10/2012 - 16:49 | Link to Comment DavidC
DavidC's picture

I'm talking in relative terms. NASDAQ off about 0.5%, S&P off about 0.8% and Russell off about 0.19%, so yes, in relative terms the Dow was hit harder.

DavidC

Wed, 10/10/2012 - 16:56 | Link to Comment redpill
redpill's picture

The DOW is only 30 stocks, and you're comparing to indexes made up of hundreds or thousands.  Greater diversification is frequently linked to less volatility, at least until the shit hits the fan, then it's the opposite.

But the easiest way to answer your question is to look at the 30 components and note the biggest % changes.  http://www.cnbc.com/id/26272770 

Wed, 10/10/2012 - 16:38 | Link to Comment DeadFred
DeadFred's picture

Alcoa is one reason.

Wed, 10/10/2012 - 18:49 | Link to Comment RSloane
RSloane's picture

You called this action last week. Ripcord!

Wed, 10/10/2012 - 16:44 | Link to Comment JPM Hater001
JPM Hater001's picture

Yes, it was stapled to the chicken.

Thu, 10/11/2012 - 02:01 | Link to Comment JPM Hater001
JPM Hater001's picture

BTW I think I pounded Rockyraccoon into the pavement here...

Wed, 10/10/2012 - 16:46 | Link to Comment debtor of last ...
debtor of last resort's picture

Because 'they' changed it's name this morning in Down. Didn't you notice?

Wed, 10/10/2012 - 16:52 | Link to Comment Randall Cabot
Randall Cabot's picture

Alcoa and Chevron got hammered on lower forecasts.

Wed, 10/10/2012 - 17:21 | Link to Comment disabledvet
disabledvet's picture

There the best of the best. Slam them first...then see if its true. Certainly appeared that way as high yield got smacked. Fun is when the blue chips sell off and high yield rallies...

Wed, 10/10/2012 - 16:29 | Link to Comment HaroldWang
HaroldWang's picture

AMZN also starting to see some reality set in after Cramer screamed "BUY, BUY, BUY" at 260 just 48 hours ago. Not to menition Jamie is setting up a "Fiscal Cliff War Room". Fun times!

Wed, 10/10/2012 - 16:45 | Link to Comment Cursive
Cursive's picture

@HaroldWang

What the fuck is a "fiscal cliff war room?"  I couldn't find it on investopedia.com.

Wed, 10/10/2012 - 16:55 | Link to Comment HaroldWang
HaroldWang's picture

I think Jamie invented the term today at his press conference. JPM is preparing for terrible times if Cliff is ignored.

Wed, 10/10/2012 - 17:01 | Link to Comment Cursive
Cursive's picture

@HaroldWang

Hell yeah, he invented it.  This is the moronic shit that bank CEO's get rewarded for.  Making up complete bullshit.

Wed, 10/10/2012 - 18:14 | Link to Comment flacon
flacon's picture

BREAKING NEWS: Banks launch "War On Reality" to be officially dubbed "WOR!"

 

Dimon said the bank has put together a "war room" to prepare for the so-called fiscal cliff.

http://money.cnn.com/2012/10/10/news/economy/jamie-dimon-washington/

Thu, 10/11/2012 - 01:26 | Link to Comment walküre
walküre's picture

Government is going broke and the leeches are hunkering down or getting out of Dodge.

All the while they're jabbering about "SOCIALISM" has bankrupted the country.

16 Trillion in welfare cheques and SNAP cards according to these overpaid leverage bimbos.

Isn't it quaint?

Wed, 10/10/2012 - 16:34 | Link to Comment Lost Wages
Lost Wages's picture

They did a pretty good job of trying to lure us into stocks this time, but it didn't work.

Wed, 10/10/2012 - 16:46 | Link to Comment JPM Hater001
JPM Hater001's picture

What are you a bass?  I bought some more puts but I think thats more of a lure avoidance mechanism...

Wed, 10/10/2012 - 17:29 | Link to Comment Rainman
Rainman's picture

wonder what Brian Sack's doing these days.

Wed, 10/10/2012 - 16:36 | Link to Comment TWSceptic
TWSceptic's picture

In his recent Jackson Hole conference speech, Bernanke said that because there is limited historical experience with quantitative easing, central banks, including the Fed, “have been in the process of learning by doing.”

 

I guess Benny just learned about the trading rule of 'buy the rumor, sell the fact'.

Wed, 10/10/2012 - 16:38 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

I am going to try that one with me wife, "because there is limited historical experience with cheating, husbands like myself, have been in the process of learning by doing.”

That ought to work out fine.

Wed, 10/10/2012 - 17:16 | Link to Comment LooseLee
LooseLee's picture

Got a 'cold fish' like me, eh?

Wed, 10/10/2012 - 16:37 | Link to Comment Stock Tips Inve...
Stock Tips Investment's picture

The market is nervous and it shows no strength to keep going. The beginning of the season of earnings announcements is not very favorable. Indeed, the Nasdaq and Russell are the most affected. Yesterday, the Nasdaq broke the SMA 50 days and continued falling today. The DJ-30 and SP-500 are very close to important support levels. If the break, we see a market with a clear downward trend. Otherwise, the market will return to the way up. In both cases, there will be great opportunities to win big money. Wait and then act quickly.

Wed, 10/10/2012 - 16:40 | Link to Comment RockyRacoon
RockyRacoon's picture

You left out the 3rd alternative:  Get the popcorn ready and watch the show.   There are some of us here who don't dabble in the "markets".   And for good damn reasons.

Wed, 10/10/2012 - 16:41 | Link to Comment Dr. Gonzo
Dr. Gonzo's picture

Time to jawbone a QE 4 program. I vote for putting beanie babies on the balance sheet this time. I paid $3000 for rare collecter beanie baby at the peak of the bubble and it's only worth 50 cents now. I'm holding out for B. Bernake to start a purchase plan. My orginal goal was to sell the beanie baby for $5000. It's still possible with a QE 4. Let's hope so.

Wed, 10/10/2012 - 16:43 | Link to Comment Cursive
Cursive's picture

LOL.  First time watching CNBS in years and they didn't disappoint.  Michelle Silicone Cabrera said if the SPX drops from here, it could be 2008/9 all over again.  Ron Insana called this a "correction".  We're 3% of the highs and the bulltards are shitting their pants.

Wed, 10/10/2012 - 16:46 | Link to Comment DUNTHAT
DUNTHAT's picture

Silicon ???

My Professional opinion is that they are Naturale..

Wed, 10/10/2012 - 16:48 | Link to Comment JPM Hater001
JPM Hater001's picture

Let me know if you guys need a third opinion...I have a free hand.

Wed, 10/10/2012 - 16:57 | Link to Comment Cursive
Cursive's picture

@DUNTHAT

If her breasts are real, that may be the only thing real about her.  That smirk, that incessently smug look trying to break the camera.  Admittedly, I watched only a handful of times in the last 4 years, but I've never noticed any movement, which implies that her breasts are stuffed with silcone.

Wed, 10/10/2012 - 17:52 | Link to Comment otto skorzeny
otto skorzeny's picture

MCC has a very big penis that she uses on Cramer. I would still enjoy donkey punching her into unconsciousness.

Wed, 10/10/2012 - 16:43 | Link to Comment debtor of last ...
debtor of last resort's picture

When pre QE levels are on steroids already, worry about post QE.

Wed, 10/10/2012 - 16:44 | Link to Comment Mark123
Mark123's picture

Who really cares any more...stocks up, down, sideways..it is all just a side show while the country is looted.

 

Central banks can keep lending to people, corporations, and governments with virtually NO Equity of their own at risk.  When everyone is bankrupt, then they will take the assets and "write off" the loans (loans they created from thin air).  A real win-win for the .00001%ers.

 

How simple it all is.  How stupid we are to allow it.

 

All that will put a stop to this is a great big meteorite smacking into Earth, or perhaps an outbreak of some fancy new plague.

Wed, 10/10/2012 - 16:45 | Link to Comment spinone
spinone's picture

Wheres grand super cycle?

Wed, 10/10/2012 - 17:07 | Link to Comment fuu
fuu's picture

He spammed 'Wiley Coyote Drop' a few times earlier today.

Wed, 10/10/2012 - 16:50 | Link to Comment azzhatter
azzhatter's picture

I keeping hoping for the day that coke addicted jackoff Cramer has a stroke on air, drooling and drowing in his own vomit

Wed, 10/10/2012 - 17:49 | Link to Comment otto skorzeny
otto skorzeny's picture

it's hard not to be a bullish genius for the last 4 years with govt buying everything not nailed down

Wed, 10/10/2012 - 16:52 | Link to Comment slaughterer
slaughterer's picture

Bullish inflows into major financials all day today.  Everything gapping up overnight.    

Wed, 10/10/2012 - 18:38 | Link to Comment Conman
Conman's picture

Bullish or bullshit? Saw that too wondering what they know about earnings going into fri.

Wed, 10/10/2012 - 19:29 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

Thanks - I hadn't botherd to look, but fin. sector definitely kicking ass v SP ever since last Thur Oct 4, in fact. Guess I better load up on FAS tomorrow -while it's cheap. /sarc

Wed, 10/10/2012 - 17:09 | Link to Comment graneros
graneros's picture

Not to worry.  Just as the unemployment rate miraculously fell to 7.8% in the worst economy since the depression the stock market will reach record levels in the days before the election.  The airwaves will be touting our new Messiah as not only the man who single handedly took down Osama Bin Laden, brought down the unemployment rate, gave all Americans affordable health care, brought all our troops home (or is going to or something like that), but now just days before the election gave us record breaking DOW numbers to boot.  Next on the list: turning water to wine (after walking on it of course) and raising the dead.

Wed, 10/10/2012 - 17:11 | Link to Comment malikai
malikai's picture

Everything seems odd. I'll be looking into it deeper tonight.

Bonds look bullish: http://blog.quantsig.net/2012/10/10/paper-2/

Equity looks bullish: http://blog.quantsig.net/2012/10/10/indices-2/

Forex looks bullish: http://blog.quantsig.net/2012/10/10/forex-2/

Meanwhile WTI keeps playing it's bounce game with Brent: http://blog.quantsig.net/2012/10/10/wti-6/

Can it be possible?

Wed, 10/10/2012 - 19:43 | Link to Comment Zen Trader
Zen Trader's picture

Can any one explain why VIX is down inspite of S&P down by over 1/2% ?

Thu, 10/11/2012 - 00:06 | Link to Comment chump666
chump666's picture

the s&p, dow and every index on earth is still long, thus the major correction may not be yet. i.e still a supported market.  but the longer it holds...

 

Wed, 10/10/2012 - 20:56 | Link to Comment DowTheorist
DowTheorist's picture

Today the stock market entered a secondary reaction. Even though the primary trend remains bullish, today was a game changer short term.

 

http://www.dowtheoryinvestment.com/2012/10/dow-theory-update-for-oct-10-...

 

 

Wed, 10/10/2012 - 21:19 | Link to Comment chump666
chump666's picture

Market is still overbought, 2 major days of selling is nothing.

But, the Nasdaq being slaughtered -2.65% in five days is the warning sign from hell.

Major sell coming...starting in Asia 1987 redux style

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