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What Happens Next?

Tyler Durden's picture


Each time the S&P 500 has traded more than 12% above its 200-day moving-average, the following correction has not ended until the average itself was breached by price action. Fundamentally, one can tie 'events' to each of these exuberance spikes - in this case, liquidity-turns-into-a-taper - but sometimes historical prices can be a better guide to the human biases for extrapolating trends and building fragility. Given current levels that would mean a 10% drop from current levels to 1516.



(h/t @RonnieSpence)


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Wed, 07/10/2013 - 22:57 | Link to Comment eXMachina
eXMachina's picture


Oh and GOLD bitchez

Wed, 07/10/2013 - 23:08 | Link to Comment ACP
ACP's picture

Speaking of 1516...just for shitzes & July 1516, Selim I of the Ottoman Empire declared war on the Marmeluks and invaded Syria.

It's a sign dammit!

...this QE bullshit is driving me nuts...

Wed, 07/10/2013 - 23:13 | Link to Comment RockyRacoon
RockyRacoon's picture

As well it should.  That may be a feature of the economic regime authored by the Fed, rather than a bug.

Wed, 07/10/2013 - 23:24 | Link to Comment flacon
flacon's picture

I'm still bearish, perhaps to a fault. Yes my puts are getting crushed, but honestly, one of these (unknown) days we could GAP DOWN 900 points on the Dow or 150 poins on the S&P.... just like in 1987. 


I will nurse my wounds tomorrow morning by eating some of my gold. 

Wed, 07/10/2013 - 23:34 | Link to Comment Its Only Rock N Roll
Its Only Rock N Roll's picture

ahhhh....special healing powers this gold has???

Wed, 07/10/2013 - 23:35 | Link to Comment flacon
flacon's picture

It brings out the barbarian in me because it's not edible and it has no dividend. A perfect cocktail of rebellion. 

Thu, 07/11/2013 - 00:03 | Link to Comment flacon
flacon's picture
SPY 500 Flash Crash May 6, 2010


S&P didn't even stop at $1,100.00 just blew right through it. Incredible. 

Thu, 07/11/2013 - 00:29 | Link to Comment Al Huxley
Al Huxley's picture

I actually happened to own some SPY puts, AND happened to be watching the real-time price action as the flash-crash occurred.  It was memorable alright.

Thu, 07/11/2013 - 02:36 | Link to Comment old naughty
old naughty's picture

"10% drop from current levels to 1516"

sounds BANKable.

Thu, 07/11/2013 - 02:57 | Link to Comment Bear
Bear's picture
I bookmarked this ... so when I get too low, I can listen to it again. I lost 50% of my 2010 profits when ES turned at 1058 and headed north to 1135
Thu, 07/11/2013 - 06:01 | Link to Comment fredquimby
fredquimby's picture

But you can drink it :)

Thu, 07/11/2013 - 09:22 | Link to Comment Translational Lift
Translational Lift's picture

That would make for some colorfully enhanced shitz..............

Wed, 07/10/2013 - 23:52 | Link to Comment Obchelli
Obchelli's picture

Painful as futures are already up 17 - they where never down this much for past 20 months

Wed, 07/10/2013 - 23:53 | Link to Comment random shots
random shots's picture

1929 and 1987 were proceeded with DJIA/S&P 500 rising 20% above the 200 Day MA.  Long way up before the trade you want sets up.   

Wed, 07/10/2013 - 23:57 | Link to Comment flacon
flacon's picture

At the rate we're going it could be by next Thursday..... 

What was the rate on May 6th, 2010? It could happen at any time. Go out for a cigarette break and come back with Dow down 900 points!

Thu, 07/11/2013 - 01:15 | Link to Comment random shots
random shots's picture

I remember sitting at lunch with the boys from the office when one of them got a call from their mother. The conversation went something like this..

Co-Worker: Huh? It crashed?..its on the news?..ok *hangs up* Hey guys, the stock market crashed. 

Random Shots: Dafaq?

Co-Worker: Down 10% Percent

Co-Worker 2: Smoke if you got em.

The mobile app crashed so we could not pull up any data and just finished our lunch.  By the time we got back the market had mostly rebounded.  Glad I was not at my desk when it happened or I might have shat myself. 

Wed, 07/10/2013 - 23:57 | Link to Comment playnstocks
playnstocks's picture

I feel your pain,, I got slammed myself over the last 3 days, and then Benasslick comes out and FN LIES some more.. Taper on.. no i didnt say that. uh maybe... uh no dont sell... uh keep buying....  FN ridiculous.... and then dont forget Alcoa beat.... I hate when CNBS trots out all those morons that say buy buy buy.. "who doesnt want to be in this market"....what to do?

Im gonna have gold with my eggs in the morning with a side of silver!


Wed, 07/10/2013 - 23:59 | Link to Comment flacon
flacon's picture

Cheers for breakfast! Johnnie Walker and Goldschlaeger for breakfast for me. (see my post (video up there) about May 6th flash crash). 


Thu, 07/11/2013 - 00:37 | Link to Comment playnstocks
playnstocks's picture

Great video!  I watched it twice, the guys voice reminds me of Trading Places....All the panic.... Suckers..... OJ Futures... LOL


Thu, 07/11/2013 - 00:38 | Link to Comment playnstocks
playnstocks's picture



Thu, 07/11/2013 - 01:36 | Link to Comment Lets Buy The Dip
Lets Buy The Dip's picture

when you see a chart like that, I mean.....go from the bottom left to the top right, how is that BEARISH like everyone out there keeps saying. if you have been tryign to short this market, you would be getting killed. But people still calling. What I think this is the MOST HATED BULL MARKET EVER SEEN! SEE HERE ==>

Thu, 07/11/2013 - 01:54 | Link to Comment eXMachina
eXMachina's picture

Holy moley!

Silver currently smashing through $20

WTI past $107

Gold approaching $1,300

Wed, 07/10/2013 - 22:58 | Link to Comment thismarketisrigged
thismarketisrigged's picture

i dont want a correction. i want a fucking crash.


corrections mean nothing now. they pump stocks up so high that any correction still brings it to extremely inflated levels.


this thing needs to fucking crash, bernanke needs to be punished.. this man is fucking satan

Wed, 07/10/2013 - 23:12 | Link to Comment Blazed
Blazed's picture

Eh, I think all we get is another correction this time, have to wait till end of Q1 next year for anything substantial.

Wed, 07/10/2013 - 23:31 | Link to Comment thismarketisrigged
thismarketisrigged's picture

ill take the correction now and then a crash come q1 next year, thats fine.


i just cant take this shit. its one thing to have a very overvalued market with real people buying it up.


its another thing to have a fucking criminal fed keep proping it up and never letting it fall too far down, that is what ticks me off.


at least let the game be semi fair, let free markets prevail, 5 fucking years of this shit already. 


i totally was against this shit since they began in 09, but whatever, we had a major crisis and they wanted to try and calm it down a bit, i disagreed but ok, fine. However as seen, it has not done anything for the real economy so obviously its a failure, yet the fed fails to see that and thinks the best option for all of this is to continue inflating stocks.

Wed, 07/10/2013 - 23:23 | Link to Comment MythicalFish
MythicalFish's picture

thismarketisrigged, It's a noble wish. And may I add, not a 'Dragon King' drawn-out crash like 2008, but a shock-and-awe, out-of-the-blue, HFT-cannibalizing, feedback-looping MOMO mother of all flash crashes kind of thing that sets matters right for good. PRETTY PLEASE.


edit: ES futures hit 1666 as I type this - could it be an Omen??? ;-)

Wed, 07/10/2013 - 23:27 | Link to Comment thismarketisrigged
thismarketisrigged's picture

@mythicalfish, we can only hope

Thu, 07/11/2013 - 02:48 | Link to Comment Bear
Bear's picture

Sorry ... on to 1667.50 

Thu, 07/11/2013 - 06:46 | Link to Comment BandGap
BandGap's picture

Under these conditions if the drop is steep enough it could blow past 1516 in a heartbeat.  Careful what you wish for.

Thu, 07/11/2013 - 08:09 | Link to Comment wallstreetapost...
wallstreetaposteriori's picture

I agree with that, but this market looks like it will go much higher before it happens.  Its gonna crash and it will be a bigger crash than anyone expects, but currently the markets can only go higher.  Nothing matters anymore.

Wed, 07/10/2013 - 22:58 | Link to Comment Divine Wind
Divine Wind's picture




Some insight is provided in an earlier article published by Tyler et al.

Now Assume No Fed



Wed, 07/10/2013 - 22:59 | Link to Comment BandGap
BandGap's picture

This is an easy question, as I am really close to an answer.

I lose my fucking mind.

Wed, 07/10/2013 - 23:01 | Link to Comment wisehiney
wisehiney's picture

Time for the funds to take some profits to pay granny's annuity, along with the other 10,300 boomers that retired today. At least granny don't gotta live with me.

Wed, 07/10/2013 - 23:05 | Link to Comment sunny
sunny's picture

Problem is this time we have the Fed printing like there is no tomorrow.  All the other times there was no QEternity, no ZIRP, no POMO.  This Time Is Different!  (Cute phrase, someone should write a book....).

There will be no correction of any significance until the Fed stops printing.


Thu, 07/11/2013 - 03:56 | Link to Comment Thorlyx
Thorlyx's picture

We have a winner here....

Wed, 07/10/2013 - 23:06 | Link to Comment kito
kito's picture

Drop? Huh? Ben released the doves today and zh puts up an article on a correction? Really?

Wed, 07/10/2013 - 23:08 | Link to Comment BandGap
BandGap's picture

All for the sake of chaos. His voice is stronger in those scenarios.

Wed, 07/10/2013 - 23:19 | Link to Comment Fail2Deliver
Fail2Deliver's picture

@kito I am with you on that headline What Happens Next is that the market goes up about 500 points over the next two days. Will it take two days is the question.

Wed, 07/10/2013 - 23:06 | Link to Comment JohnG
JohnG's picture



Suddenly SPXU looks attractive for a short term trade.  These markets won't be allowed to fall more than 10% until it REALLY crashes.

And crash they will.

Wed, 07/10/2013 - 23:10 | Link to Comment Chief Falling Knife
Chief Falling Knife's picture

Anyone else marveling at the plethora of bearish divergences on this beast?   (Tomorrow's open should amplify said divergences)  Of course they haven't meant much in the last 4-6 months or so.. but how long can this thing defy everything logical and keep going up?  I know, I know... stupid question.

Wed, 07/10/2013 - 23:39 | Link to Comment Its Only Rock N Roll
Its Only Rock N Roll's picture


and they do matter


Wed, 07/10/2013 - 23:16 | Link to Comment Royal Fleming
Royal Fleming's picture

who gives a shit about stocks. us forex traders love the chaircreature. fuckin beta ben

Wed, 07/10/2013 - 23:17 | Link to Comment wisehiney
wisehiney's picture

Cramer, please tell us!

Wed, 07/10/2013 - 23:18 | Link to Comment Mr. Hudson
Mr. Hudson's picture

I predict that ZH will have an article that exposes collusion between the Central bankers where the Central banks are not only propping up their own markets and currencies, but they are printing money and propping up other countries’ markets and currencies as well. The Yen plummets; Central bankers print more money and buy the Yen, thus propping it back up. The dollar plummets; the same thing. They are scratching each other’s backs, and by doing so they can keep this shit going on for a long, long time.

Wed, 07/10/2013 - 23:31 | Link to Comment whisperin
whisperin's picture

Yes, they can....until the next war breaks out (caused by CB's of course). Now with the total distrust of governments every where, I'm wondering if the next skirmish will be the one that spins out of control. You know something like a ship parked sideways in the Suez Canal!

Wed, 07/10/2013 - 23:56 | Link to Comment garypaul
garypaul's picture

I thought that was common knowledge already????

Thu, 07/11/2013 - 03:07 | Link to Comment Bear
Bear's picture

Global hyperinflation ... all fiat goes bad simultaneously ... banks recoup losses ... and .gov pays back bonds with old money then declares new one world global currency conversion ... it's called the SHTF time 


Wed, 07/10/2013 - 23:32 | Link to Comment max2205
max2205's picture

Fragility. ... 

Wed, 07/10/2013 - 23:34 | Link to Comment thismarketisrigged
thismarketisrigged's picture

its going to be too funny not to laugh when the market spikes higher on absolutely no volume once again. 


also, tomm morning will deff be interesting to hear santelli go on a rant probably about what bernanke just did again. that will be must watch tv, before the bullshit ramp up in stocks begins.

Thu, 07/11/2013 - 00:36 | Link to Comment Saving Peace
Saving Peace's picture

Meh <-- that's my best reaction to the whole thing really.

I analyzed and rationalized that the S&P can't be that hight, put money where my mouth is and shorted it, got out at a loss a bit later.

Rinse and repeat several times and now I'm out for good. I'm not gonna touch these indices with a 10 foot pole. Fuck the whole thing really. Now all I do is buying Gold and AUD. I'm out of rational ideas.

Thu, 07/11/2013 - 00:45 | Link to Comment Schmuck Raker
Schmuck Raker's picture

"What Happens Next?"

moar bad idea t-shirtssszowee!...

or was the question rhetorical?

in which case Chinesewomendate.commie

Thu, 07/11/2013 - 01:17 | Link to Comment ebworthen
ebworthen's picture

666 would be the most realistic level; symbolically as well.

Thu, 07/11/2013 - 03:00 | Link to Comment Bear
Bear's picture

1666 and death by a thousand cuts

Thu, 07/11/2013 - 01:09 | Link to Comment q99x2
q99x2's picture

Make that 11% from here. Futures are up 1%.

Thu, 07/11/2013 - 01:26 | Link to Comment HaroldWang
HaroldWang's picture

Did you guys not get the memo?? There will be no "correction" and certainly no crash. This is a Jackson Hole moment. Keep equities up and rates down for ever, in their minds. So, we theorectically could run SPX to 2500 and straight up. They're not going to let it go down. We saw this just a couple of weeks ago. Scared the shit out of them and so we get this. Get used to it for a long, long time.

Thu, 07/11/2013 - 02:02 | Link to Comment GernB
GernB's picture

Yes, the correction did not end until the moving average was breached, but in at least two case in the chart above it did not start to correct as soon as it exceeded 12%. It continued up another 50 to 100 points before the correction began. In another case above the initial downturn was retraced over 100% and a new high made before it headed down for good. Yes, it is highly likely the 200 day moving average will be breached in the near future, but it does not mean the market can't go much higher first.

Thu, 07/11/2013 - 04:41 | Link to Comment ross81
ross81's picture

technical analysis seems pointless whilst these scumbags are manipulating everything.

Thu, 07/11/2013 - 05:43 | Link to Comment toadold
toadold's picture

These days market analysis is more like the old cold war Kremlinology, where the guys would try to figure out what was going on by who didn't show up for the May Day Parade, who had been air brushed out official group photos, and what was implied in the 5 year plan.  

"Een old days peeples played da market, in deese days market plays you." , "We would not use an ice axe to assassinate a dissenter..... A nine iron perhaps."

"Rules! Rules! we don't need no stinkin rules."

"Cabin boy, bring me my brown pants."

Thu, 07/11/2013 - 06:49 | Link to Comment taketheredpill
taketheredpill's picture

QE1 Ends > - 20%


QE2 Ends - 20%


Why only  - 10%?  


Thu, 07/11/2013 - 07:47 | Link to Comment orangegeek
orangegeek's picture

NASDAQ100 daily - up ELEVEN days straight.


By the looks of futures this morning, it's going to be 12 days straight.


And $45B per month of POMO marches on.



Thu, 07/11/2013 - 08:06 | Link to Comment The worst trader
The worst trader's picture

Dow 20,000 is next. More free money till the cows drop dead.

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