"Dead Cat Bounce" Or "Pause That Refreshes"

Tyler Durden's picture

While the off-the-lows mentality of today's market performance was heralded by most as a signal that the BTFD'rs are back, we gently remind them that the Nikkei (futures) did not bounce at all... In fact S&P futures bounced to a rather eerily perfect 38.2% Fibonacci retracement of the overnight plunge and then faded into the close. All the major indices managed to get back to unchanged on the day (but the S&P 500 was the last to make it and instantly turned around once it did). Credit markets opened gap wider and did not bounce back anything like stocks. Treasuries sold off modestly from their pre-opening levels then drifted lower in yield into the close (ending down 2-3bps on the day but up 6-7bps on the week). The USD weakened most of the day and commodities gained on the day with gold and silver now up over 2% on the week. VIX fell from the open to the close but ended the day higher as we suspect hedges were lifted and exposure reduced into the bounce.

 

Dead Cat Bounce? 38.2% retrace...

 

The S&P 500 managed to get back perfectly unchanged before fading away into the close...

 

Stocks played catch down to credit...

 

Still a way to go to catch down to the hedgers...

 

Good day for commodities in general...

 

helped by USD weakness (as EUR strength and JPY strength - repatriation? - held it down)...

 

Where's the bounce?

 

Charts: Bloomberg and Capital Context

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ekm's picture

The one to watch is crude oil.

I regained all its losses during Obama's speech.

fonzannoon's picture

so what does that tell you?

disabledvet's picture

a North American energy cartel has formed. "it's not good for North America either."

ekm's picture

If you do not stop QE, real economy is screwed and you mister pres will get all the blame

 

 

fonzannoon's picture

or he could just keep putting out bullshit data saying otherwise and have the msm parrot it all day long.

ekm's picture

He's getting the real data. He's clueless, but not an idiot.

 

AlphaDawg's picture

QE cannot be stopped. Bond yeilds would spike and the gov/treasury would have to crap the bag.

best investment would be to get the fuck out

ekm's picture

Not many bonds left to buy.

If they buy everything, the system will run out of collateral.

 

The system is based on collateral, it can't exist without collateral.

AlphaDawg's picture

plenty of bonds to buy, the gov is overspending by 1tril + every year

ekm's picture

Bottom line:

Crude oil in super inflation and real economy dead.

Financial system is a derivative or energy and real economy.

 

There is absolutely no solution but a collapse.

 

rqb1's picture

I always look for your comments, like them.  My opinion is they will stop qe, b/c they are force to, they will save the $. 

ekm's picture

Quite humbled. Thx a lot.

I totally agree. If they continue QE, world will continue with dollar bypassing, hence multicountry currency swaps.

That is a disaster for the dollar.

AlphaDawg's picture

dude, i completely agree it is doomed for collapse......just saying, the cannot stop QE, and if they do, they will reverse the decision FAST or the collapse will be iminent.

SamAdams's picture

The FED cannot save the economy this time.  Collapse no later than 2017 from which I expect a new government to officially arise.  Already the transition is active.  Just watch POMO, that's your schedule.  Taper hints to prop the $ and kill gold are just BS until the schedule shows change.  History says, zero interest, lots of printing and then raise rates cratering the economy, transfering real wealth in exchange for thin-air banker's notes.  The next great fleecing is the big one, yet at the same time, the population has never been so aware of the oligarchy and its methods.  Currently, the Government is helping to awaken the population by revealing its tyranny as it struggles to maintain control over an elightened and angry citizenry.  Classic....

willwork4food's picture

+10. They would want enough people pissed off that it sends the trouble makers out on the street creating havoc, thereby justifying brute force and militarization of police forces to all the others that don't care or those that would acquiesce anything to keep their jobs.

ekm's picture

It's the real economy that empowers the finnancial system.

If financial system takes over, it suffocates the real economy and it inevitably dies.

Financial system has died. We just need a funaral, quote soon.

fonzannoon's picture

ekm you are right about collateral. it all comes back to collateral. why would they debate the "signal" to collapse it second by second...what does it matter? Just let the fucker go.

ekm's picture

I think the executive order to allow collapse is on the desk and about to be signed, if not already signed and process  and timing is being guaged DAILY.

Dr. Engali's picture

They will not collapse this thing without some external force to blame it on. When they collapse it they don't want the masses coming after them. Unless of course it's their plan that we take each other out and then they come in and mop up the rest.

fonzannoon's picture

Doc I wonder if you and ekm have a slightly different take. I think you are talking about the big one. I think ekm is talking about the system burping up a PD or two and then carrying on.

Dr. Engali's picture

That may be the case. It's hard to tell. But I don't believe they can do that without causing total chaos and collapsing the whole thing. Lehman was not a very big and look at what happened when they took that out. Imagine what will happen if they try taking out MS.

fonzannoon's picture

The next institution that fails won't get bailed out. The minute people see for themselves that their deposits are truly no longer insured we get the bank run to end all bank runs. I don't see how we play on either.

The only part about ekm's overall premise that I wonder about is the idea that all this is to drop crude so energy prices boost the economy. The collateral damage that comes along with that does more damage in my opinion than current crude prices.

Dr. Engali's picture

I agree. Sure fuel prices will collapse, but the people with money are five years older and five years closer to retirement. If chaos hits the markets again you will see their wallets tighten up even more. The gains with lower fuel will be more Han offset by the loss of economic activity.

ekm's picture

Doc, there are no solutions in life, there are only choices.

It's either or.

People close to retirement are screwed either way and those can't oppose much the gov.

 

Whereas unemployed youngsters are dangerous people. Remember Paris 2 years ago, London last year and Stockholm right now.

Youth riots

the Absurd's picture

You seem to forget the massive run-up in oil prices 2007 - 2008 before QE programs were official.

Can't stop QE.

Can't stop peak oil.

Stop QE = real economy completely collapses now.

Continue QE = real economy completely collapses later.

If the Saudis were telling the truth about how much cheap oil they really have left, oil would at least double or triple in price.

ekm's picture

There's no such a thing as peak oil. There's plenty of oil.

 

However, I ve already burned all necessary nerves to debate about this subject.

the Absurd's picture

Theoretically, we and all plant matter will be turned into oil and other fossil fuels several million years from now.

So, in that sense there's no such thing as peak oil.

It's not something that's debatable.  You either accept reality or deny it.  You've already had it explained to you, yet you deny it.

ekm's picture

Sorry. I've spent far too much energy on this subject.

Can't continue debate.

the Absurd's picture

So, your energy in regards to this subject has peaked.

Interesting.

I know it's much easier to blame corrupt, evil, greedy politicians and bankers.  But, they're really the same as they've always been.

You imply that high oil prices are due to QE, yet they've been higher before QE began.

You're not debating.  You're denying.

MeelionDollerBogus's picture

You spent so much energy because you argued against the facts instead of with them. There's no plentiful oil deposits & the challenge is always open to SHOW where on the globe those deposits are - who found them, how big are they, WHERE are they. No one's ever come up with the answers when challenged. That includes you.

thelibcentury's picture

The Saudis have plenty of "cheap" oil. The question is, will it be available for US $?

Peak oil is a catchphrase; the distate the sellers of oil have for those green pieces of paper is the real problem, has been since the 80's.

Hence the weirdness you see with gold and the derivatives market, hence where we are today.

ekm's picture

That's the duty of US Nacy and Air Force.

That's why 3000 US soldiers died in Iraq, for the oil.

Overfed's picture

For the petrodollar to be more specific.

thelibcentury's picture

Agreed, my thought exactly. It's never been about the supply of oil, just what is accepted in return for it.

Supply changes cause linear price moves; less the lies and the murder and the manufactured conflict and chaos, you would have seen exponential moves, years ago.

the Absurd's picture

Then why are they looking into offshore drilling? That's not cheap.

Even a stupid Wikipedia chart shows interesting jumps in proven reserves.

Why did the Texas oil man George Bush question whether or not they could increase production in 2008?

Of course they will keep taking US dollars, in exchange for US military protection of their regime. Until the situation gets desperate, anyway, and their own people become antsy and want to riot.

I'm the one who should say I'm not going to debate it anymore.  It would save me a lot of grief.  I often wish I didn't understand it.

thelibcentury's picture

Then your wish is granted, at least partially, based on your comments.

You are looking at this backwards - as if the Saudis are the ones worried about their people getting antsy (!)

No, they have only been playing along this long because doing so allowed the scheme to last as long as it has.

 

Taking US $ was never for military protection - it was to provide cover for all those ounces they were receiving through the back door.

 

NotApplicable's picture

Too late. Real economy is screwed either way. The only thing left to determine is who and how much.

Randall Cabot's picture

Is the Tuesday ramp coming on Wednesday next week?

viahj's picture

according to the POMO schedule...biggest of next week is Friday but Wednesday isn't bad...

Wed, May 29, 2013  $2.75 - $3.50 billion

Fri, May 31, 2013     $4.25 - $5.25 billion (2nd largest POMO of the month behind Fri, May 17, 2013 $4.75 - $5.75 billion)

Duffminster's picture

So is it black friday tomorrow?

Beam Me Up Scotty's picture

Doubtful.  I bought some UVXY Dec. near the money calls.  Since I never make money in the market, you are all saved at least until the middle of December, lol. 

debtor of last resort's picture

It seems obvious Japan is picking op dimes in front of the steamroller.

AlphaDawg's picture

They had no choice. Abe and Kuroda know that the debt is out of control. If they didnt do QE bonds would be spiking now anyway.

They will try and saturate the JGB market to keep yields low.

 

Will not work, but it is thier only option to keep things on a steady decline.

 

anyone who understands compounding interest knows, fact, they a screwed. I am sure abe knows too

TheFourthStooge-ing's picture

There was no bounce for the Nikkei because it took the river pig plunge. It might experience a transient bloating (blobbing up), but will soon be the source of a nauseating stench. Its fate is to drift downstream, being picked apart by scavengers, bottom feeders, and rot.

Cdad's picture

Is it even possible for Maria Bartiromo to say "buy on the dip mentality" more times per hour then right now?  Is it some sort of code?  Perhaps, it is her attempt to hypnotize folks?

For god's sake, quit with the whole parrot thing, you useless yutz!  Good grief!

And BTW...it is my experience that when something rises 85% in an straight line, and then suddenly crashes 9% in one day...you DON'T buy that dip.  

Cdad's picture

"Do you think the buy on the dip mentality will come through in Japan, and the buy on the dip mentality remains here in the US."  Maria Bartiromo

Gee...I guess if you say it like that, 50 times, why....sure!  Thanks Maria...I was so close to establishing a sell on the dip mentality.  Whew!  

I wonder if this applies to the buy on the dripping ice cream cone on a hot day mentality?  Or perhaps, a buy on the skip and whistling past the the graveyard mentality?  How about a buy on the dipshit mentality?  Maybe its all about a buy on the dipstick when checking oil mentality? 

Good grief!  Is she actually a parrot?  Squaaaaaaaaaawk....buy on the dip mentality....aaaaaaaaawk.....pretty bird pretty bird....

Cdad's picture

Maybe we should establish a "sell the shit out of everything mentality" now that pure, unequivocal mental retardation seems to be the daily message from the BlowHorn [CNBC]?

Cursive's picture

@Cdad

All indices closed the opening gap than reversed back down.  Bearish.