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Stocks Slump Back To Draghi's Elbow

Tyler Durden's picture




 

While everyone is loudly patting themselves on the back for getting the electronic exchanges open and enabling a few proud men to wriggle out of positions (or into them) into month-end, we can't help but notice the overall weak tone of equities. The S&P 500 cash markets proclaim a very small green close but after-hours futures are getting hammered. The Dow is only -10pts (but with IBM and HD alone accounting for 25 points of gain!), The Nasdaq is leaking painfully as AAPL traded down exactly as we thought - inched back above VWAP and tumbled into the close -1.5%. Broad risk-assets, which had been indicating a lower move in US equities, kept on sliding and stocks stayed with them all day as correlations picked back up. Treasury yields are 4-6bps lower than Friday's close, the USD is down around -0.12%, but Gold and Silver are up 0.6% on the week now. Oil slipped (after a European close spike and dike) and Copper slid from the US open. The main story of today is the crash in S&P 500 futures after-hours to the lows of the day (down 8 points from its cash close).

 

Selling was not as severe in the capital structure (VXX/HYG/TLT) as SPY caught up with our model by the close (left) but broad risk assets slid all day and stocks stayed closely in sync until the close when things went absolutely pear-shaped...

 

just look at the volume and movement after the cash market close!! look at the volume explosion at the close (with the market perfectly wriggled up to VWAP in the pre-close in a linear ramp - just as it did in the pre-open!) - If you do not truly believe these markets are broken after seeing this - then we have a bucket of unicorn tears that grow new subway lines if dropped in the ocean we'd like to sell you...

 

To leave ES at Draghi's Elbow...

 

Seems like our note yesterday on the disconnect between gold and stocks rang a bell eh? Here is the month of October - recouple, decouple, recouple...

 

and Year-to-Date - Gold and Silver remain the winners BUT European equities (EuroSTOXX) are now outperforming US equities (Dow) for the year...

 

Chart: Bloomberg and Capital Context

 

Bonus Chart: NFLX surged to cover the Q2 gap but fell back notably from its highs (still closed up 13.5%! because Icahn bought a truckload of calls!)



 

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Wed, 10/31/2012 - 16:31 | 2935609 Cult_of_Reason
Cult_of_Reason's picture

They were expecting another ES ramp into the close. After realizing the ramp is not coming today (after two straight flagrant manipulative ramps on Monday and Tuesday), they panicked and rushed through a narrow low liquidity exit door.

Wed, 10/31/2012 - 16:59 | 2935680 FL_Conservative
FL_Conservative's picture

Not to worry....they BTFD after hours and we're just about back to square.  Manipulation anyone?

Wed, 10/31/2012 - 17:20 | 2935714 walküre
walküre's picture

I'm not an expert...

Does anyone else think that maybe the buildings in Lower Manhattan are structurally no longer 100% fit due to the influx of seawater and the long term corrosive effects on concrete? Can that be remedied or will the buildings become unsafe to inhabit due to the potential for a collapse?

Subway is out for several weeks if not months. Amtrak is questionable

http://www.amtrak.com/servlet/ContentServer?c=AM_Alert_C&pagename=am/AM_...

MTA Rail service "suspended" in/out of Grand Central http://www.mta.info/mnr/

Maybe there are more pressing issues the President should be focusing on right now. 20 million people are cut off. That's 2/3 of Canada. That's 50% of California.

Call the election circus off. We are not operating with a budget now and why should it matter going forward? Suspend Congress and Senate until further notice. Does it make a difference? I don't think so. They're off work half the year anyway.

Wed, 10/31/2012 - 18:04 | 2935817 you enjoy myself
you enjoy myself's picture

forget just the last 2 days, which had insane ramps - it seems like its been every day all year where a couple minutes after the close we get a 2-4 point insta-ramp.  it was surreal to watch ES actually decline at 4:00:01.  a little forboding maybe?

Wed, 10/31/2012 - 16:26 | 2935613 Flaming Ferrari
Flaming Ferrari's picture

Buy for bounce back to Bernanke's bottom.

 

Wed, 10/31/2012 - 16:39 | 2935630 kliguy38
kliguy38's picture

Buy physical and play instead for a kick to his groin

Wed, 10/31/2012 - 16:38 | 2935631 disabledvet
disabledvet's picture

Again "Bulls and bears make money while Pigs get Sandy." I really find it hard to believe that the three Governors plus the President in addition to the Fed aren't going to put their "most expensive foot forward" here by putting the screws to the insurance industry. Could be wrong...haven't watched television in a while...but will be watching to see how this one plays out. Bloomberg as Scrooge McDuck? I just don't buy it.

Wed, 10/31/2012 - 16:48 | 2935660 slaughterer
slaughterer's picture

Next junk stock on "Icahn shopping list": SKUL.  Earnings beat pop coming up on it soon enough.  

Wed, 10/31/2012 - 17:11 | 2935699 adr
adr's picture

Skull Candy has been trowing everything it can at the retail space to see what will stick. The premium Aviator headphones aren't selling. They've gone back to putting $15 headphones on cards and made a new black package for the $25 headphones.

I have it on very good authority that Skull Candy bought back a load of inventory from retailers so they could get new product out ASAP for the holiday after the last batch of headphones moved less than 7% of available inventory.

Remember everything channel stuffed is booked as sold, until the quarter ends without the product actually selling and the money never shows up. Then you got a problem.

It is amazing to be involved with retail buying. New products are always bought right before a quarter ends and held off the shelf until a new quarter starts. That way it can all be booked as sold for the previous quarter and given the maximum amount of time to actually sell. The reason why October is the best time to buy anything is because every publicly traded retail company is running massive incentives to get the product sold so the gaping hole in the books can be filled.

Wed, 10/31/2012 - 17:51 | 2935787 duncecap rack
duncecap rack's picture

Interesting. Thanks, it's always interesting to learn about something you have no clue about.

Wed, 10/31/2012 - 16:55 | 2935670 walküre
walküre's picture

then we have a bucket of unicorn tears that grow new subway lines if dropped in the ocean we'd like to sell you...

Ouch. That's below the waiste line. Don't give it so straight up. I think I heard that unicorn tears can fix the foundations of buildings that were soaked with seawater. There is no residual damage and the buildings can be occupied again for eternity. I heard that, I swear.

Wed, 10/31/2012 - 17:05 | 2935689 Wakanda
Wakanda's picture

Must. Hold. Until. Election. Must...

Wed, 10/31/2012 - 17:32 | 2935740 tomgilb
tomgilb's picture

That's what happens when the PPT goes home.

Wed, 10/31/2012 - 17:49 | 2935781 sablya
sablya's picture

Look again.  It was a hallucination.  S&P 500 futures down 0.04% - if this is the main story of the day, ZH should have taken the day off.  After their non-stop reporting of rats in NYC, they must be exhausted.  LOL, what a joke this site has become.

Wed, 10/31/2012 - 18:22 | 2935859 ekm
ekm's picture

Have patience, have patience!

The slower the acceleration of the purchasing of stocks by Primary Dealers, the sooner the collapse.

 

Beeee, patient.

 

Wed, 10/31/2012 - 17:54 | 2935793 luna_man
luna_man's picture

 

 

Now, who could have said it any better..."Back To Draghi's Elbow"?

 

none other than...MY MAIN MAN

Wed, 10/31/2012 - 19:37 | 2936017 EscapingProgress
EscapingProgress's picture

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