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Stocks Drop Most In 2013 As Gold Is Crucified On The Death Cross

Tyler Durden's picture




 

A strange sea of red inhabits the screens of many traders and investors across the USA this evening, and all it took was for the FOMC to hint that the punchbowl will have to be taken away at some point in the future. Biggest jump in VIX in 2013; biggest plunge in Homebuilders in 8 months (as TOL misses and Starts were ugly); biggest dump in stocks in 2013; Gold plunges to $1565 and suffers Death Cross; USD soars and crosses above its 200DMA; and oil has frantic flash crash early on. Not a pretty day as stocks drop below the lower edge of their up-trend channel for the year and test critical support amid the highest volume of the year. The four words on everyone's lips this evening: Where is Kevin Henry?

S&P 500 futures uptrend is broken...

 

and remains at a critical support...

 

as Gold 'death crosses' - with its 50DMA crossing under its 200DMA...

 

Stocks still have quite a way to go to catch down to credit for the year but our HYG-SPY compression trade is doing well so far...

 

and VIX seems far less excited - as today saw its biggest snap higher since the 12/28 fiscal cliff concerns...

 

Homebuilders were monkey-hammered today...to its 50DMA

 

As the initial selloff in rates post-FOMC hurt Utilities but then the hawkishness sent risk-on sectors reeling...

 

USD soared as GBP was dumped early on - post FOMC strength was sustained...

 

Charts: Bloomberg and Capital Context

Bonus Chart: If credit turns out to be even modestly correct - which we have seen again and again - then the following relative sector rich/cheap from Capital Context provide some insight into just how frothy stocks have become (relative to credit). Remember this is not saying that, for instance, the S&P is 2.1% overpriced - it is saying the S&P is 2.1% ahead of credit markets (and as selling progresses so credit will likely feel further pain). The biggest divergence is in homebuilders...


 

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Wed, 02/20/2013 - 17:53 | 3261262 Quinvarius
Quinvarius's picture

I am pretty sure gold will rise again, just like Jesus.

Wed, 02/20/2013 - 17:54 | 3261264 smartstrike
smartstrike's picture

....when we gonna start hitting Hindenburg Omens? That's fun!

Wed, 02/20/2013 - 17:55 | 3261272 czarangelus
czarangelus's picture

Can someone tell me where I can buy silver with an Amex card? I tried JM Bullion and they took my fucking money, then said I live in a "high risk area" and cancelled my order. I don't want to miss this opportunity but I have to buy on credit to get in on it.

Wed, 02/20/2013 - 17:57 | 3261276 Quinvarius
Quinvarius's picture

Dude don't do that on credit.  Buy smaller amounts with cash.

Wed, 02/20/2013 - 17:59 | 3261285 czarangelus
czarangelus's picture

It's not a problem; I have 0% intro rate and I'll pay it off long before then. The prices right now are too good not to leverage for.

Wed, 02/20/2013 - 18:06 | 3261313 dexter_morgan
dexter_morgan's picture

Credit Card transactions are traceable.......should anyone (gubmit) care to know who has what out there.....

Wed, 02/20/2013 - 17:56 | 3261274 Quinvarius
Quinvarius's picture

You are crazy if you are selling gold.

http://research.stlouisfed.org/fred2/series/BASE

This is an awesome buying opportunity.  I started dumping stocks for gold today.  I actually timed it pretty good on the stock side of the equation.

Wed, 02/20/2013 - 18:12 | 3261339 Al Huxley
Al Huxley's picture

Wait, are you suggesting that the monetary base going vertical might have the same effect on the price of gold as it has previously?  That maybe this 'price crash' is just orchestrated theatrics to panic the lemmings or keep them from buying gold?

Wed, 02/20/2013 - 18:02 | 3261298 Madcow
Madcow's picture

massive auto-pilot buget cuts are coming - gold is screaming - to all with ears to hear 

 

 

Wed, 02/20/2013 - 18:23 | 3261371 Panafrican Funk...
Panafrican Funktron Robot's picture

Yep, a "massive" 2.4% of the federal budget is set to be cut.  How incredibly "massive".  Really though, any excuse for price action is a win for "the house", who relies on volume to generate wealth skim.  

 

Wed, 02/20/2013 - 18:05 | 3261311 monopoly
monopoly's picture

I have not sold one share of miners, not one ounce of gold or silver since this correction began. Yes, my miners are DEEP in the red. But I am not letting the head inmate tear me away from my gold. Since when does the FEd ever know what it is doing. When was the last time they did something right?

I cannot believe how sheeples listen to every word out of there foul mouths as Gospel. It is beyond insane. 

I know how this movie ends, I just am not sure of the timing. 

Wed, 02/20/2013 - 20:17 | 3261677 SamuelMaverick
SamuelMaverick's picture

Sold my miners in Nov 2012. I will be going back in during the next few weeks, I just want the TSX and HUI to flatline for a few days in a row before I start buying with both hands.  Golds primary bull trend is still 100% intact.  

Wed, 02/20/2013 - 18:10 | 3261332 Al Huxley
Al Huxley's picture

Wow, seems like only a few weeks ago the Fed was monetizing $85 billion/month, the deficit was out of control, the debt was pushing $17 trillion, the Germans were asking for their gold back, Greece, Spain and Italy were facing crushing financial crises... How times change, can't believe we were in that kind of state at one time, and now here we are, Fed talking about being able to tighten up.  Who would have guessed...

Wed, 02/20/2013 - 18:46 | 3261414 They Tried to S...
They Tried to Steal My Gold's picture

Dont get fooled by the bluff....or the illusion. Things are getting worse in Europe....Germany is going to go into a recession and so are we.....Currencies will race to the bottom - Gold will go lower and then higher as a holder of value and the inflation bug rears its ugly head in certain commodities while deflation still  co-exists....

 

Its a bad bad spiral Al Huxly of Huxley and Associates but Food and PM's will go higher...

Wed, 02/20/2013 - 18:21 | 3261360 Tombstone
Tombstone's picture

Most death crosses, you find along the side of the road, along with the bears.  But not the bulls, as they reside in limbo, a place where losses are never realized.

Wed, 02/20/2013 - 18:23 | 3261370 unirealist
unirealist's picture

Conjectures on future prices of gold and silver have always included the possibility that prices will fall catastophically as the financial system collapses.  Maybe even to ZERO.

Goldbugs believe (with good reason) that in time paper will be worth nothing, and gold and silver will be the only currency again.

Just BEFORE that period begins, however, everyone will try to move to CASH.  And when that happens the credit markets and asset prices will crash.  So will the cash prices of "paper" gold and silver.

It is not unthinkable that spot gold and silver will have no bid price (become effectively zero) as all traders desperately try to get into cash.

Needless to say, it will also be impossible to find a SELLER of physical gold or silver.

Woe to those whose gold and silver stashes are not hedged with a safe amount of fiat, to bridge the period of weeks/months in which society is collapsing but gov't is still in control. 

Wed, 02/20/2013 - 18:30 | 3261388 Village Smithy
Village Smithy's picture

If these genius boys (and girls) at the Fed  saw that QE was actually improving the housing market they would be adding more, not talking about tightening. They see the real unmassaged numbers and they also see that it isn't working.

Wed, 02/20/2013 - 18:47 | 3261424 Les Grossman
Les Grossman's picture

Death & Golden Cross signals are an extremely overly simplified application of technical analysis. 

I wouldnt be surprised to see a bounce up here...Although I 've been trading GC with a bearish bias since December.

Wed, 02/20/2013 - 19:16 | 3261515 DowTheorist
DowTheorist's picture

Bingo!

Wed, 02/20/2013 - 18:50 | 3261438 zapdude
zapdude's picture

Calling my local coin dealer first thing tomorrow when they open.  Wonder what their $ over spot will be for Pamp Suisse 1 oz bars?

I don't have the discipline to regularly buy, but I promised myself I would always stack more on the big dips like this one.

Ta Da!  Here we go again!

Wed, 02/20/2013 - 20:43 | 3261748 Al Huxley
Al Huxley's picture

Price for coins at my local dealer didn't drop anywhere near as much as the comex price.  Disappointing really, it was a sale, but not a SUPER sale.

Wed, 02/20/2013 - 19:15 | 3261511 DowTheorist
DowTheorist's picture

The dead cross comes a little bit late for gold (when it is likely that most of the correction is over).

Much more accurate (and several percentage points higher)  were the Dow Theory patterns that signaled a primary bear market in paper gold (GLD, futures, etc.) and silver on December 20. Since that day, repeatedly,  the Dow Theory maintained its bearish verdict.

 

http://www.dowtheoryinvestment.com/2012/12/dow-theory-update-for-dec-20-...

 

As to stocks, all Dow Theory flavors agree that they are under a primary bull market. So the benefit of the doubt is to be given to the prevailing primary trend, even though it is more than due a correction.

 

http://www.dowtheoryinvestment.com/2013/01/dow-theory-update-for-jan-18-...

 

 

 

Wed, 02/20/2013 - 19:21 | 3261526 ebworthen
ebworthen's picture

Dollar strength versus Gold an interesting chart, they crossed over February 1st, dollar up / Gold down.

Lot's of gaming going on in the casino with sectors; I'm just buying Gold and Silver on dips like this.

Fuck you Ben Bernanke, J.P. Morgan Chase, and Wall Street.

Wed, 02/20/2013 - 19:48 | 3261591 devo
devo's picture

Jim Cramer was just bashing gold/silver and mining stocks on Mad Money. Joe Sixpack (or whoever watches that show for actual advice and not contrarian indicators) is even more scared.

Wed, 02/20/2013 - 19:53 | 3261608 orangegeek
orangegeek's picture

Gold Bugs Index has been indicating a drop in Gold for some time.

 

http://bullandbearmash.com/chart/gold-daily-falls-sharply-40-today/

Wed, 02/20/2013 - 19:56 | 3261616 mt paul
mt paul's picture

did not buy the dip today

maybe tomorrow..

Wed, 02/20/2013 - 20:10 | 3261642 Hongcha
Hongcha's picture

Long GLD and SLV today; covered SPY short, leaving a fair amount on the table.

I sure hope gold bounces here; General Jim is getting a little hard to take.  I respect Sinclair but his "I'm bleedin' for youse ovah here" schtick is wearing thin.  I'm afraid his head is going to explode. 

Wed, 02/20/2013 - 20:53 | 3261772 Super Broccoli
Super Broccoli's picture

GLD and SLV ? dump that shit and take physical !

Wed, 02/20/2013 - 20:53 | 3261773 joego1
joego1's picture

I noticed the coin sites didn't have a fire sale on PM today. Maybe tomorrow, or maybe disconnected?

Wed, 02/20/2013 - 21:53 | 3261838 Youri Carma
Youri Carma's picture

According to Ole Hansen, head of commodities strategy at Saxo Bank “It’s not a death cross in its true definition” http://blogs.marketwatch.com/thetell/2013/02/20/so-called-death-cross-is-not-golds-only-problem/

The devil, as always, can be found in the details of the death cross.

 

And indeed the devil is in the details again like said:

One more piece of disappointment for gold has recently come from China. On Monday, the government announced it wants to drain liquidity from local money markets for the first time in eight months. That keeps a lid on inflation and demand limited for gold as an inflation hedge, says Hansen. Gives new meaning to the term “liquid gold“.

Read more on China’s money-draining moves http://blogs.marketwatch.com/thetell/2013/02/18/china-central-bank-taketh-away-liquidity-first-time-in-8-months/

Wed, 02/20/2013 - 21:54 | 3261907 Youri Carma
Youri Carma's picture

All I can say is WTF!!!???

Wed, 02/20/2013 - 22:11 | 3261943 Trimmed Hedge
Trimmed Hedge's picture

When does silver hit $50 again?

Wed, 02/20/2013 - 22:20 | 3261966 Totentänzerlied
Totentänzerlied's picture

Are they dyin' in the streets yet?

Wed, 02/20/2013 - 22:21 | 3261968 gatorengineer
gatorengineer's picture

And a Teary Eyed Boner in the morning announces a cave on the sequester and stocks are up 3%..........  Bets anyone?

Wed, 02/20/2013 - 22:24 | 3261980 badgerpup
badgerpup's picture

PMs are only one store of intrinsic value to offset the flaws of fiat. To expect that they will increase or decrease in price in accordance with your expectations is a fools game. Throughout history we have held various forms of value in the face of crisis. In many instances, food crops, livestock and property have been of much more utilitarian value than PMs. That said, the allure of gold and gems lies in their permanence over time. Their value, however, fluctuates wildly. Old timers can well remember the "stack'em bitchez" entusiasm of the 1979 run up in PM prices, and the consequent freefall to the $200s for a very long time. yeah, stack'em, but don't get too carried away. Remember that deflation is just the obverse of the inflation coin. The gents in the castle are usually one step ahead of the masses and they are very good at price manipulation. Oh, BTW, they really like wars.

Thu, 02/21/2013 - 01:25 | 3262348 Lord Of Finance
Lord Of Finance's picture

  "Gold is crucified on the death cross"

 

  

"Forgive these men father. They know not what they do."

 

 

on second thought:

 

  To hell with 'em. They know exactly what they do!

Thu, 02/21/2013 - 01:27 | 3262356 Les Grossman
Les Grossman's picture

Anybody who sold GCJ13 1 to 3 days ago has made around 100% on their money.  Anybody who bought physical gold 18 months ago has lost around 25% and is still waiting for 2k.   Simple math

Thu, 02/21/2013 - 02:29 | 3262406 Lord Of Finance
Lord Of Finance's picture

You said it all. They made 100% in money. But most of us have made 200%- 400% in a real asset. 

 

It's sound insurance, as well as a sound investment against reckless rederal reserve intervention and treasury department monetary debasing. Simple logic.

 

 

As for waiting for 2k. Or 3k? As history is our guide, waiting for that time will be as fruitful as waiting for the sun to rise.

Thu, 02/21/2013 - 04:11 | 3262488 Edward Fiatski
Edward Fiatski's picture

Haha, Tylers, stahp, "A strange sea of red inhabits the screens of many traders and investors across the USA this evening." LOL

SHIT CAN ONLY GO UP RIGHT? EUR is heading for a Rendezvous with the 228 DMA, as it broke a long-term uptrending channel & closed below the 53 DMA.

BTFD yet? I don't think so! LOL

Thu, 02/21/2013 - 07:30 | 3262570 Grand Supercycle
Grand Supercycle's picture

Wile E. Coyote sell off gets closer as SP500 daily & weekly uptrends simultaneously complete their protracted topping process.

It’s taken longer to roll over because daily AND weekly trends are terminating together.

So the resultant downtrend will have good momentum.

http://trader618.com

Thu, 02/21/2013 - 09:52 | 3262852 Downtoolong
Downtoolong's picture

Where is Kevin Henry?

Maybe he discovered his conscience, in which case he will surely be fired for becoming the world’s first rogue non-trader.

Do NOT follow this link or you will be banned from the site!