Theater-Off: Stocks Slump Most In 5 Weeks As Bipolar Market Forgets Its Lithium

Tyler Durden's picture

It's rather ridiculous that today's sell-off of around 0.6% (in the S&P) is the largest plungefest in five weeks. Volumes were high, though not as high as yesterday's with average trade size also relatively high. S&P futures peaked right before the US day-session open today and dropped all day long (with a slight bump higher into the European close) retracing most of yesterday's gains with decent blocks going through in the last few minutes push to lows. VIX led the weakness all day and stocks' selling pressure ignored relative underperformance in Treasuries (yields ended the day around unch), modest USD weakness close-to-close (though the day session saw USD strength return), and a spike in WTI (+3.1% on the week). Even trying to lever HYG didn't work to keep stocks up today. Gold and silver cliff-ledged early but gold recovered and stabilized while Silver slid to lows of the day (-3.5% on the week). Trading was relatively orderly until the last few minutes which saw a typical push for VWAP fail and the sell orders piled up into the close (and beyond in futures).

While the S&P was the worst performer on the day, the Russell and Dow Transports managed to close green - of course, why wouldn't they? (as AAPL closed near the lows)


S&P 500 futures roundtrip of yesterday with failed VWAP push which forced sellers to cover in a hurry...


VIX (spot and futures) led stocks down...


Vol went first, then stocks, then credit, and then finally Treasuries started to roll to risk-off and everything dumped...


Rates (TLT) tended to hold stocks up more than otherwise with VXX and HYG dragging things ugly into the close...though stocks were the clear underperformer...


Stocks sold off on their own to some extent among the risk-assets and this is nowhere better indicated than by today's slump in cross-asset class correlation (which tends to mean the algos are losing control)


Silver definitely the laggard this week...

(as the S&P overtakes Silver YTD)


For now, Treasury weakness is about all there is holding stocks up, risk-assets in general wanted lower but models were denied by that lack of Treasury buying. Today had the feel of OTF (other Time Frame) money looking to exit stocks (and high-yield credit) as the de-correlation implied pressure was too much for algos to manage.


Charts: Bloomberg and Capital Context

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Boilermaker's picture

Russel 2K still closes up.

I love this shit.  I really do.

slaughterer's picture

Small cap indexers at work?  WTF?

ball-and-chain's picture

Final analysis?

We're completely screwed!

Quick.  Run to the hills.  Run for your lives.

Ben Bernanke is Godzilla.  We are Tokyo.

Spirit Of Truth's picture

Ours truly is a bipolar market....and, in fact, a bipolar species.

I wrote a thesis on the topic accordingly:

However, I don't know if lithium will make a collective difference.

StoleYourMoney's picture

No fear in this market, yet...

falak pema's picture

Boehner's transient and defiant boner histrionics; Obammy wil just wait...

icm63's picture

Comparing the VIX to VXZ and VXX the implied volatility skew has been bearish for about two weeks...

techstrategy's picture

The rotation is on.  There is only 1 way flows balance and it will hurt every asset class.  We are witnessing a final behavorial capitulation squeeze before the descent.  The world at large is tired of financing our iOS culture...

El Oregonian's picture

Our loving dictatorship authoritarian government is just about ready to do a "Full TSA body-cavity search" for your loose change in order to satisfy the Oligarchs and Int'l Banksters forced taxes on us...

TSA Agent: "Is that a roll of quarters I feel in your pants?"

ME: "Yes it is, bend over so I can deposit it in your coin slot..."

Bansters-in-my- feces's picture

.........**** Check out Kitco silver lease rate chart....

And report your findings back to ZeroHedge.


Fuck yous Bankers.

Humor for all.

fuu's picture

1 mo = -0.41

3 mo = -0.30

6 mo = -0.07

12 mo = 0

seek's picture

That's the gold lease rate.

Silver is hysterical:

1 mo = -0.65%

2 mo = -1.35%

3 mo = -2.03%

6 mo = -4.2%

1 yr = -5.8%


Yeah, they pay you almost 6% to borrow their silver. This market's not manipulated at all, no-sirree.

Love the kitco disclaimer: The degree to which lease rates may be displayed as negative would suggest the degree to which there is a lack of demand to borrow the metal.


FreeMktFisherMN's picture

Having silver preserved your purchasing power today for the things you need. SLV down 1.76%, while Teucrium CORN down 2.32%. 

Don't know why oil was up so much today but its ratio with PMs will revert to its norm. And PMs being suppressed down like a beachball under water means that in addition to preserving purchasing pwoer, they will enhance wealth greatly as they uncoil and legitimate risk valuations assert themselves (higher interest rates)

Bansters-in-my- feces's picture

I mean why would anyone lease thier silver out for Negative -5.80 %

for one year...???

Almost negative 6%....What the fuck....

Unless it was paper.

This does not sound like a normal or practical buisness model.


Ps...fuck you bernanke.

chubbyjjfong's picture

Let the insanity continue.  Little digits and cyberspace and lines and graphs with tweaks and fucking whizzers and banksters masterbating all over their shitty pimped out, water cooled pieces of crap computer bond trading platforms next to their fucking pot plant and family photos offset just enough to reveal the view to their 'just tapped' receptionist whos also doing Jim in accounts whos wife is trying to out status all her fat banking wives friends with mindless shit about handbags and Jimmy Choo shoes


q99x2's picture

When the news mentions GS is recommending their clients invest in stocks you know to get out quick.

deejo's picture

My heart cries for the algos. Thats a lot of correlation to try upholding. We should donate more RAM.

Frastric's picture

Fiscal cliff bitchez! Market plunge ala 2011 style!

EclecticParrot's picture

Yes! Nothing's better than seeing the (until recently rare) late day VWAP failure.  Sorta like Berlusconi with a limp noodle -- all pimped up and nowhere to go.  Meanwhile, the Russell ends perched atop VWAP (after teasing past it one last time), giggling, wearing nothing but a speedo.

On the topic of bunga-bunga, the Russell seems to be blowing what remains of its wad, spraying the shorts one last time, I assume a setup for a Jan '13 plunge (?).  I hope that's the case, rather than Joe Investor loading up for a Fiscal Cliff Notes inspired "january effect."  That could end quite tragically. no ?  Unless this is a hedgie short-term haven (like AAPL), looking forward to the dorks goosing TNA everyday finding a more constructive (and sincere) hobby.



Tom Green Swedish's picture

"Stocks are weird"



Squid Vicious's picture

but... Cramer said yesterday the strength in trans is a super-bullish sign for the economy... BUY BUY BUY ! ALL ABOARD!... jeez I guess I picked the wrong week to start watching Cramer least it's healthier than sniffing glue

kevinearick's picture

Open Source
Open Source is not a philanthropic, non-profit, or goodwill organization. It is a deferred income vehicle.
It has two objectives, to set the price to fix this mess, and to determine who is going to participate in the resulting income streams.
The Fed isn’t going anywhere; it’s in the black hole, in a positive feedback loop with the same technology it deployed to gut labor within the empire. Every time it doubles down it wipes out more capital, ejecting the middle class to balance the transaction. Its monetization program simply provides an artificial side to the buy/sell so everyone in the market doesn’t realize they are being bankrupted. Once the buck breaks, the pensions go poof.
Do really think open source is going to pay the gold bugs anything more than a percentage for their participation? They earned a percentage, but they are not going to get NPV on future earnings. That’s not the reward for speculation. Open Source doesn’t need money. It is quite capable of metering transactions without paper, or gold.
The Fed applies central control, so Open Source is decentralized. The empire is just a dc machine. Writing more laws is not going to make it less of a machine / black hole.

MeelionDollerBogus's picture

I think you're misunderstanding "open source" vs "physical tangible value".

You can disperse updates, software reconfiguration, even inventive power among existing resource-holders in hardware using open-sourcing / crowd-sourcing. What you can't do is open-source land-ownership, mining & shipping of those things like silver, copper, gold, oil, food.

You can certainly have open-source & raw tangible intrinsic value co-operate but you can't use one to eliminate the other.

orangegeek's picture

SP500 hourly shows we could be in for a big fall tomorrow.

chump666's picture

Alas, is the HFT bubble about to burst?

dunce's picture

Markets do not double in a few months but they often drop by half in the same time frame. There is no reason to believe that our econmy is going to take off despite the strength of our oil and gas production. It is more likely that is what is sustaining what little growth we see. The odds are much greater for a collapse of painful size. cliff deal or no deal there is nothing but rough road ahead for our country and the rest of the world because we have no capable leaders. More spending is just more govt. burden, not any kind of stimulus.

anyways's picture

Very good analysis. Thanks.