Stocks Catch-Down To Credit As Silver Surges

Tyler Durden's picture

We noted yesterday the growing disconnect between stocks and credit - today saw stocks start to play catch-down. High-yield credit (specifically HYG - the bond ETF) has fallen four days in a row - its biggest four day plunge in over 2 months (with today's drop the biggest single-day drop in almost 4 months) amid mega volume. VIX (another notable disconnect) continued to push higher (above 14% for the first time in 3 weeks). Treasuries had been leaking higher in yield on the week (30Y +8bps as FOMC hit) but slid lower as the post-FOMC day wore on. The USD weakness (led by significant strength in CHF and EUR) supported precious metals (and commodities broadly) but not stocks. Silver are up almost 3% on the week (and Gold outperforming USD's implied shift). Homebuilders faded from the open with all the QE-sensitive sectors (Materials, Energy, and Discretionary) all red on the week now. It would appear that bonds recoupling (higher in yield) with stocks was the end of the catalyst for this run higher for now as divergences are appearing everywhere.


S&P 500 futures went red on the week at the close...Worst day in a month!


Something unusual happened... the S&P 500 futures fell from the EU close to the US close...

Trannies lost their way today - and are beginning the reversion...(YTD performance for the mahor indices - except RUT sorry)


and YTD performance for financials...


As post-FOMC saw stocks losing the bonds rallied...



It would appear that GDP was today's early trigger for the PMs...


FX markets saw USD weakness continue - led by quite serious strength in CHF...which seemed to trigger off the start of bad news from Italy...


Divergence #1: VIX vs Stocks


Divergence #2: HY Bonds vs Stocks


Divergence #3: Credit Spreads vs Stocks


Divergence #4: Gold and Stocks/Bonds


Source: Bloomberg and Capital Context

Capital Context (@CapitalContext) LLC is the leader in integrating credit-market data to actively trade equity markets. From our world-renowned intraday 'CONTEXT' and 'SPY Arb' models to the daily long-short equity portfolio, sector-weight updates and tactical asset-allocation strategies, Capital Context offers sophisticated hedge-fund strategies to the active trading community.


Bonus Chart: RIMMberrrr....

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terryfuckwit's picture

mofo of all silver bitchez

jonan's picture

looks like norrin radd finally got his powers back...

bobthehorse's picture

Silver has a lot of industrial uses.

If the economy slows down, the price tanks.

You're better off sticking to gold.

But what do I know?

DoChenRollingBearing's picture

WHICH PM matters less than just buying any of them.

Buy gold and/or silver!  Sooner the better.

stormsailor's picture

better yet,  dredge it out of the creek.  one ounce of matchstick size down to flower gold in 4hrs dredging last weekend.

DoChenRollingBearing's picture

Coolisimo!  Mining it yourself.

Carry on...


How can anyone junk stormsailor's comment?

Unstable Condition's picture

Wow, someone actually junked your comment....WTF?

stormsailor's picture

yeah, i know.  like my ego is so bruised,  hahahahhahaahhah

Freddie's picture

I wish I could find my gun at the bottom of the lake or some gold bars.  I cry myself to sleep each night.

Xibalba's picture

Is CrAPPLe shorting RIMM? 

Mr Lennon Hendrix's picture

Silver dominates all yall's bitchez!


Dan Duncan's picture

For the professional traders, a quick question:  In light of today's precipitous drop in the stock market after the Fed announcement, do you think there will be an emergency meeting tonight?  

Today's free-fall really spooked me, and frankly...I am now extremely concerned about not only my retirement, but about my entire financial future.  Any thoughts or insights on how to navigate these trying times of .5% drops would be much appreciated!



GOSPLAN HERO's picture

Plata is a nice Spanish word - it translates as money or silver!

Stuntgirl's picture

In Argentina, it does. In Spain, money is Dinero, from the byzantine Denarius Auri. I just realized I have no idea of where the word "money" comes from. In French, it's also silver. In Japanese, Gold and money are the same word.

Conax's picture

"Moneta, epithet of Juno, in whose Roman temple money was coined." ~ Webster's

"Gimme some monetti, Marc, I'm goin to the games." ~ Cleopatra

bigkahuna's picture

Good point. Here is what the internet sayz:


The word "money" is believed to originate from a temple of Hera, located on Capitoline, one of Rome's seven hills. In the ancient world Hera was often associated with money. The temple of Juno Moneta at Rome was the place where the mint of Ancient Rome was located.[18] The name "Juno" may derive from the Etruscan goddess Uni (which means "the one", "unique", "unit", "union", "united") and "Moneta" either from the Latin word "monere" (remind, warn, or instruct) or the Greek word "moneres" (alone, unique).

In the Western world, a prevalent term for coin-money has been specie, stemming from Latin in specie, meaning 'in kind'.[19]

WmMcK's picture

Argent-ina - a little silver.
La Salta Linda - the pretty jump.
Doug Casey likes it there, may be worth a "visit".

francis_sawyer's picture

In America they're called "bux" [which is short for something or other]...

brucyy's picture

I'm not in the industry but been through enough shit to tell you this :

either quit this market completely and hoard Pms , 

Or if you really want to trade , play very small size , and think weeks or month , stay the feck out of anything shorter than this..that's HFT territory , you'll get killed in no time. 

the PPT exists : welcome to the socialist wonderland. Know that Wall street belongs to jail , and you're up against blood sucking terrorist organizations.  Use your brain to do what gov fail to do : keep your balance sheet in order 'cause your losses will always be losses , you aint obama / dabernake. 




tango's picture

What precipitous drop?  The DOW was down 45 on news that in other times would have evoked a 2% correction.  I retired several years early, interviewed for financial adisors and chose one that shared my philosophy of rational returns, capital retention and a healthy skeptism of the powers that be.   If you are nearing retirement the LAST thing you want is a major portion of your funds in the market.  NOT because it won't rise but because it could begin falling and if you are like most folks you will wait way too long before getting out.     

What to invest in?  PM (particularly silver) for their hedge value, land, things like MET Life annual percent payouts (if they go down what does it matter?) and only stocks in tech, bio, energy and food.  You owe me $1,234  - LOL




WmMcK's picture

"MET Life annual percent payouts"

If you're getting 5% (even minus a fee) and sleeping well at night, I salute you.

eclectic syncretist's picture

Yeah.  They're going to have a meeting and announce they're lowering interest rates to -10% and going to monetize 100 trillion dollars a month.

Or perhaps, just maybe, people like yourself begin to realize they can't boost the economy by diluting the value of the dollar, or by lowering the cost of debt, at least not at this point.  Look up "liquidity trap" or "pushing on a string", and take it from there.

akak's picture

Waiting for Trav's gratuitous comment about "silver bagholders" in 4, 3, 2 .....

kito's picture

remember that there are alot of folks who bought phys silver 2 years ago at 49 i would classify that ongoing loss as "holding the bag"....just sayin is all......

Mr Lennon Hendrix's picture

Remember that there are a lot of folks who bought silver at 49 who aren't day traders and really don't give a shit what the paper price is and they are stacking no matter because at the end of the day they would rather have no counter party risk than track short term price fluctuations.

kito's picture

until all assets...all assets...get their asses wiped by an implosion.............

The Shootist's picture

I'e learned not to believe mega-bulls so much. Not that they're necessarily wrong, but that rigging and can-kicking know no bounds. And human stupidity (sheeple) knows no bounds. I'm honestly as bullish on guns/ ammo as I am pm's.

My poor .02

Mr Lennon Hendrix's picture

My price targets were spot on until we blew out at $50, but it was and still is hard to not see a great price increase for the precious metals.  Why can't silver be priced above $100?  The only reason I see is because of the massive derivative short position against it - a short position that is most likely not allocated by bullion.

A banker would tell you naked shorting is fine as long as the investor can cover.  But in this case they are covering with rehyopothicated derivatives on a fractionally reserved basis.  If anybody had to cover with physical?  It would be over.

So let us be wildly bullish.  Let us give you the GSR as at least 15:1 and let us say to move back to a gold backed system, a system that reigned for thousands of years, gold would need to be valued above $10k.  Let us keep stacking while anyone says otherwise.

trav777's picture

idiot...if someone WERE actually "suppressing" the price, somebody would buy the fuck out of it with both fists.

Why isn't silver over 100/oz?  Because fucking NOBODY except idiot silverbugz would pay that much for an ounce right now!

akak's picture


... if someone WERE actually "suppressing" the price, somebody would buy the fuck out of it with both fists.

And they are!

Why isn't silver over 100/oz?  Because fucking NOBODY except idiot silverbugz would pay that much for an ounce right now!

Why aren't interest rates on long-term US Trasheries not at least 6 or 8% right now?  Because fucking NOBODY except "idiot silverbugz" are willing to run away from the largest and most obvious bubble in all of financial history!  (That includes Trav, of course.)

Trav, I love you man --- you bring new meaning to the word "buffoon" with every post.

Pareto's picture

sorry kito.  you still don't understand the difference between inflation/deflation (increasing/decreasing) money supply and prices.  Moreover, I don't think you get why people hold PMs.  PMs are a store of exchange value.  Price don't matta!  Apart from some arbitrage years. 1 oz of gold still buys about an acre of arable land.  Always has, always will.  PMs are a hedge.  thats it.  Nothing more, nothing less.  If the price of gold and silver, say crash to 10% ov their value tomorrow, it means only that the priceof EVERYTHING else has crashed too.  On a relative basis the exchange value remains unchanged (save some arbitrage).  If assets get wiped by an implosion, as you suggest, that includes cash because what you are talking about is a crisis or rapidly diminishing confidence in the currency.

Unproductive assets, I agree, will lose their bid as the price of shit that people need will rise, given all the liquidity.  However, PMs will not particpate in the drubbing, because in your scenario they will be the only currency that has any currency.  Only and until there is solvency and an effort to reign in debt, and an effort to restore some credibility to the $USD (such as the volker rule where interest rates are allowed to price the true cost of capital), then the only direction I see PMs, is up.  If the FED were to start withdrawing their stimulus, rates would have to rise (ok by me) and then and only then, when capital is truly priced according to market will i ever expect PMs to fall.  And yet even if this were to happen, my PMs will still be worth the same shit I might take in exchange for them.  We don't buy PMs hoping the price of them will rise (at least I don't).  I buy them with indifference, because whatever the price, they still fetch me the same shit in exchange.  and besides all that, I'm not sure the Germans would agree with you.  cheers.

DoChenRollingBearing's picture

I bought some silver at $40.  I also bought at $35, $30, $25 and $20.

Pity I did not buy when it was down around $5 - $15...

Mr Lennon Hendrix's picture

I know I was telling you at $20, but I thought you were here when I was typing at $15 too.

DoChenRollingBearing's picture

Let me check my receipts...  Hmm, you're RIGHT, L H!

All my silver I bought at $35 or more.  @ Messrs. IRS.

tango's picture

My best "stock" move ever was to sell some at 14000 and buy silver at $12.  I am a coin collector so some of it was based on numismatic value but the bags of silver dollars are the best hedge someone can have,  

akak's picture

  Kito said:

remember that there are alot of folks who bought phys silver 2 years ago at 49 akak

And I say "bullshit".

Show me your numbers, tell me quantitatively just exactly what percentage of those who bought silver in the last two or five or ten years bought it at the very peak price in April of 2011 (or even at any price within say 25% of it), or shut the fuck up.

Oh, and have fun waiting for your appreciating fiat currency, you deflationary dipshit --- I will think of you, and laugh, every time I see prices on everyday goods, and the overall cost of living, relentlessly continue to rise.  If you think that deflation is actually the real threat right now, and not the ongoing debasement of fiat currencies (in contrast to ALL of monetary and financial history during times analogous to our own today), and that inflation is "low and stable", a la Bernanke's lies, I wish I could introduce you to my pension and SS-collecting mother, whose cost of living continues to rise far faster than her lowball CPI-adjusted monthly SS checks.  Dare to claim your specious and intellectually insulting "no inflation" lies to her, buddy, and as meek as she normally is, I guarantee you she will rip you a new one.

Likstane's picture

I bought a couple rounds at 45, some at 40, some at 35, some at 30, some at 25, some at 20, some at 15, and some at 10.  I'll buy some more at 5, or 50 , or 75, or 175, or whatever stupid number denominated in joobux, bennybux, frn's, broken promises to pay in AG or AU, fiat shit paper, or whatever else you want to call those paper thingies with pictures of our American 'heros'.   I just wish I was a better boatsman.

kito's picture

akak, when i say deflation, as ive said many many times, and you choose to ignore me, is asset deflation........the investment vehicles that the world needs to park its money......i dont speak of a box of cereal....i certainly dont espouse the idea that the supermarket bills or the cost of finished goods are going down in price.....although there is a certain percentage of increase in the cost of everyday items due to chinas rising standard of living.....the chinese are not as willing to produce things anymore where labor is 10 cents an hour....i thought we were friends akak, you sadden me with your dipshit comment.................

akak's picture

OK, Kito, I apologize for the dipshit comment; that was uncalled for.

However, I have to stand by the rest of what I said.  It is completely misleading, if not meaningless, to talk about "asset deflation", as deflation, properly speaking, has absolutely nothing to do with asset prices.  As I and others have repeatedly pointed out, the collapse of an asset bubble, or bubbles, is NOT in any way equivalent to "deflation", which is actually a decline in the money supply.

And really, what is up with the strawman argument about all the "bagholders" who supposedly bought silver at or very near its very brief price spike?  Can't you acknowledge the fact that VASTLY more people bought silver at far lower prices?  Cherry-picking a highly selected data point to make one's case does exactly not inspire much respect.

Anyway, I'll admit that we can strenuously disagree while still remaining civil.  I'll try to not be such a dick next time.


kito's picture

thanks. i have no percentage numbers off hand to say who bought at 49, but if we look back at the number of silver eagles/canadian maples, im sure we would find a fairly large amount being sold as it went slightly parabolic. and yes, physical holders of silver are only focused on the end game, not what comex dictates...but the reality is that the price of silver is still what it is, physical or otherwise...and if somebody who bought at near 50, and had to unload some of their coins for some reason, they are taking a big loss.....i assumed that trav refers to "holding the bag" with an eye towards those who bought at the high end of the recent streak...

fonzannoon's picture

It's good to see friendly disagreement on here. We are all planning on watching the currency hit the fan. We may as well have a beer and shoot the shit until then.

FWIW my avg cost is in the $30's. I absolutely paid in the high 40's for some. I also shorted the ten year at 3% and had the vix hand me my ass as well. Not to mention shorting financials at some point too. I also flipped a few Miami condo's before the crash and I had some big winners in there as well. But nobody talks about their losers, and man have i had some.

Anyway Kito my point is,  I know a lot of people who bought silver in the 40's. Phyz. What I also know is NONE of em have sold. They continually buy. Unlike most dogs that people give up on. This just feels different.

WmMcK's picture

Within 25%? I sure did, that's over $10 from the "top" and $15 off the $50.35 high. I also traded Ag for Pt at 1815/46
and back at 1650/30. In the long run, it does not matter what the false ruler units are. Swing trade the ratios -- always hold physical. Extra paper is to pay off debts and get other tangible assets, at least until they stop taking it.

trav777's picture

i never post about how i am waiting for akock's comments

SheepDog-One's picture

Silvertips and Golden Saber bullets are what I'm ordering more of!