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VIX Spikes To 3-Month Highs As Stocks Continue Collapse

Tyler Durden's picture





 

VIX's 25% spike from yesterday's lows to over 17% is the largest jump in 7 months. Stocks are continuing to collapse broadly (even as Bonds are stable) with the Dow almost unchanged from Taper now. Trannies are back to their 50DMA for the first time in over 3 months and the Dow and S&P are well through the 50DMA. The USD is stable but JPY is leading the charge lower in stocks. Credit markets are at 7 week wides. Not "off the lows"

VIX spiking...

 

Dow almost unch from the Taper...

 

Credit leading the way...

 


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Fri, 01/24/2014 - 15:35 | Link to Comment Cannon Fodder
Cannon Fodder's picture

In regards to algo's. Once the market starts going down, does the collapse get accelerated do to selling from algo's? Do you have the possibility of a positive feed back loop that is more extreme than if just humans were involved?

Fri, 01/24/2014 - 15:38 | Link to Comment maskone909
maskone909's picture

hope so

Fri, 01/24/2014 - 15:41 | Link to Comment Say What Again
Say What Again's picture

One of the key drivers for extended sell-offs is the degree to which the longs were on margin, and start getting margin calls.  When you get a margin call from hell, you sell what you can sell (to make up the funding requiments), not what you want to sell.

Fri, 01/24/2014 - 15:42 | Link to Comment maskone909
maskone909's picture

margin debt at all time highs

Fri, 01/24/2014 - 15:46 | Link to Comment stocktivity
stocktivity's picture

Beat me to it - ha

Fri, 01/24/2014 - 15:51 | Link to Comment El Oregonian
El Oregonian's picture

"Thar she Blows!!!" er, what? "Thar she goes!!!" um, wait. "Thar she Rolls!!!"

Fri, 01/24/2014 - 17:10 | Link to Comment Future Jim
Future Jim's picture

Why today? What is the catalyst?

Fri, 01/24/2014 - 17:24 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

JPY carry train (idiot Gartman's "the single best trade for 2014") -- sell JPY/buy stocks -- has derailed.
http://static.seekingalpha.com/uploads/2009/11/17/saupload_india_is_crow...

Dennis Gartman says the single best trade for 2014 will be one that worked big-time in 2013: shorting the Japanese yen.
http://www.cnbc.com/id/101297515

Fri, 01/24/2014 - 16:36 | Link to Comment aVileRat
aVileRat's picture

Just wait till all those momo funds in NYC get margin calls on Monday.

Popcorn is going to be going bid Monday morning.

On another note, Chinese call is still the game to watch going into next Tuesday morning after the CAT earnings.

 

Fri, 01/24/2014 - 15:52 | Link to Comment seek
seek's picture

"When you get a margin call from hell, you sell what you can sell (to make up the funding requiments), not what you want to sell."

Which is the exact reason right before the shit hits the fan we usually see dips in gold prices -- it's solid collateral that can always be sold.

Fri, 01/24/2014 - 16:18 | Link to Comment Say What Again
Say What Again's picture

Exactly!

In an extreme bear market EVERYTHING gets sold, because folks need to come up with cash fast.  In fact, in many cases, its the stronger asset that gets sold the most, because they are the only ones with any value -and- liquidity. 

You know what the old timers say; "buy when there is blood in the streets"  But remember, you need to have cash ready or you can't buy.

 

Fri, 01/24/2014 - 16:08 | Link to Comment Wait What
Wait What's picture

excuse my limited understanding of this situation, but isn't it around 3 days that a margin callee is granted by a margin caller to settle, which would make next tues/wed a most significant moment in telling us just how much has to be delevered to settle and create a capital cushion? too much leverage at these prices == further losses next week. not much leverage at these prices == everything's cool, nothing to see here.

Fri, 01/24/2014 - 16:21 | Link to Comment Say What Again
Say What Again's picture

not really.  you get a call / notice in the morning, and you have about 4 hours to place funds in the account (either a wire or a sell of assets).  If you don't do that, they (the broker) starts selling, and they could give a shit what they sell.  They will usually sell whatever is easiest for them.

Its your responsibility to look at your maintenance requirements every night and to ensure that you have not gone over the limit. 

 

Fri, 01/24/2014 - 20:35 | Link to Comment Wait What
Wait What's picture

kewl. thx. i guess from the selling into the close and AH quite a few accounts got those calls today. CB's are going to have to pull a bazooka out of their arses this weekend to prevent  a 'meltdown monday'.

Fri, 01/24/2014 - 15:37 | Link to Comment Say What Again
Say What Again's picture

As I mentioned earlier in the day, the internal metrics are hitting extremes.  Down Volume, TICK, etc

Fri, 01/24/2014 - 15:38 | Link to Comment VD
VD's picture

guess mr bagholder gots to taper more, in that reverse psychology headfake kinda wat....

Fri, 01/24/2014 - 15:41 | Link to Comment Australian Economist
Australian Economist's picture

Don't worry, if things get bad then the Fed will turn on their most advanced algo to handle this:

 

10 PRINT

20 GOTO 10

Fri, 01/24/2014 - 15:45 | Link to Comment Okienomics
Okienomics's picture

10 PRINT

14 BUY QQQ

16 SELL GLD

20 GOTO 10

Fri, 01/24/2014 - 15:44 | Link to Comment SheepDog-One
SheepDog-One's picture

You mean like a 'flash crash' thingy? Nah, I head BernKrugYell got that all fixed, surely could never happen again.

Fri, 01/24/2014 - 15:44 | Link to Comment stocktivity
stocktivity's picture

Oh my! Margin at all time highs. Get the popcorn ready for Monday.

Fri, 01/24/2014 - 15:52 | Link to Comment Tasty Sandwich
Tasty Sandwich's picture

If things got really out of hand, they would just close the markets for perhaps several days - like after 9/11.

Circuit Breakers

If the market declined by 20%, triggering a Level 3 circuit-breaker, at any time, trading would be halted for the remainder of the day.

Fri, 01/24/2014 - 15:37 | Link to Comment fooshorter
fooshorter's picture

The market is only going down becuase they are ready for it to go down. Its harvesting time for the sheep.

Fri, 01/24/2014 - 15:55 | Link to Comment Beam Me Up Scotty
Beam Me Up Scotty's picture

Politicians might see it otherwise.  An election is a coming, and the incumbents might not like the Dow to go down yet.  "Mr. Yellen, get to work!!"

Fri, 01/24/2014 - 16:25 | Link to Comment NotApplicable
NotApplicable's picture

"Debt ceiling" debate in 3.. 2.. 1..

They're gonna get blamed for the whole disaster.

Fri, 01/24/2014 - 15:42 | Link to Comment SheepDog-One
SheepDog-One's picture

What's that buzzing sound....sheeple shears? And if the sheeple think that's bad, the slaughter house truck hasn't even arrived, yet.

Fri, 01/24/2014 - 15:50 | Link to Comment swmnguy
swmnguy's picture

Followed close behind by the rendering truck.

Fri, 01/24/2014 - 15:40 | Link to Comment CrimsonAvenger
CrimsonAvenger's picture

Yeah, still not impressed - looks like they're just letting a little air out of the balloon to give Mr. Yellen some freedom of movement. When we start to see 600-700 point drops on the DOW I'll reconsider.

Fri, 01/24/2014 - 15:57 | Link to Comment Beam Me Up Scotty
Beam Me Up Scotty's picture

I agree.  Taper the taper, and RALLY ON WAYNE!!  They haven't even set the printer to ramming speed yet.

Fri, 01/24/2014 - 15:42 | Link to Comment papaswamp
papaswamp's picture

Looks like some defensive lines at 15950 Dow and 1800 SP. Well see what people are willing to hold onto in the closing minutes. Melt up or jitters and people bailing.

Fri, 01/24/2014 - 15:46 | Link to Comment eclectic syncretist
eclectic syncretist's picture

Melt up????!!!!  Bartender, I'll have what that man's drinking!

Fri, 01/24/2014 - 15:52 | Link to Comment papaswamp
papaswamp's picture

Seen stranger things happen. Personally...I think a bunch will bailout into the weekend. Big announcements out of Japan on Sunday....could be an ugly Monday.

Fri, 01/24/2014 - 15:50 | Link to Comment Legolas
Legolas's picture

S&P closing under 1800 would definitely be some bad juju.

Fri, 01/24/2014 - 15:41 | Link to Comment Legolas
Legolas's picture

Gold is still being stopped from breaking out, at least as of 2:30 PM. 

Fri, 01/24/2014 - 15:45 | Link to Comment papaswamp
papaswamp's picture

Shorts don't want that $1270 to be breached.

Fri, 01/24/2014 - 15:50 | Link to Comment Okienomics
Okienomics's picture

Will be interesting if we break gold at $1270 during a wider market downturn.  Levered spec books that are long equities and short gold could get caught in one hell of a margin squeeze.  Can the Fed contain it?

Fri, 01/24/2014 - 15:41 | Link to Comment Spungo
Spungo's picture

"In regards to algo's. Once the market starts going down, does the collapse get accelerated do to selling from algo's? Do you have the possibility of a positive feed back loop that is more extreme than if just humans were involved?"

The net effect would probably be the same, but it would happen much faster when robots are doing it. Back in 1929, the margin call might include a phone call asking for money, and you would sell stocks the next day. Now this might happen within a few minutes.

Fri, 01/24/2014 - 15:45 | Link to Comment Cornholiovanderbilt
Cornholiovanderbilt's picture

YES.WE.CAN!!!!!!!!!!!!!!!!!  (fn sarc)

Fri, 01/24/2014 - 15:49 | Link to Comment walküre
walküre's picture

The bulls in the comment section at Handelsblatt.de are buying, buying, buying with both hands over fists according to their writings.

I imagine the bulls anywhere are just as delusional or evil trying to suck everyone back in. I can't believe they're really that stupid to think DAX 9,000+ is the new normal and DAX 10,000 is just a few months away.

My bullshit meter is pegged sky high. Last time I've seen this crap was in early 2008. This is a repeat and I'm not sure if the CBs will go all in again a second time.

When this thing melts down, it will melt to the core.

Short this at your own peril.

Fri, 01/24/2014 - 16:01 | Link to Comment Frank N. Beans
Frank N. Beans's picture

they may say BUY, but I thought most people were already ALL IN!

Fri, 01/24/2014 - 16:39 | Link to Comment stormsailor
stormsailor's picture

shorting the market in 2008 was like shooting fish in a barrel.  they had the no-shorting on financials

Fri, 01/24/2014 - 15:48 | Link to Comment Rising Sun
Rising Sun's picture

Let's see what that wretched cunt Yellen does on Monday.

 

That fucking bitch is sure to buy extra toner this weekend.

Fri, 01/24/2014 - 16:08 | Link to Comment stocktivity
stocktivity's picture

First test for "Old Yellen"

Fri, 01/24/2014 - 16:22 | Link to Comment B.J. Worthy
B.J. Worthy's picture

Toner low.

Fri, 01/24/2014 - 15:54 | Link to Comment buzzsaw99
buzzsaw99's picture

imo this whole selloff is orchestrated so the fixed income desks can sell some Ts. Don't fake the funk or your nose will grow. – Bootsy Collins

Fri, 01/24/2014 - 15:50 | Link to Comment starman
starman's picture

donno about you but my dick just got hard?!

Fri, 01/24/2014 - 16:05 | Link to Comment Meremortal
Meremortal's picture

This market can't go down. My largest position is short the S+P. It has to bite me in the ass.

Fri, 01/24/2014 - 16:16 | Link to Comment Spungo
Spungo's picture

" isn't it around 3 days that a margin callee is granted by a margin caller to settle"

I think it depends on the broker. 

Fri, 01/24/2014 - 16:18 | Link to Comment B.J. Worthy
B.J. Worthy's picture

I pity the fools that listened to FINRA two weeks ago. Lovin' my UVXY right now!

Fri, 01/24/2014 - 18:51 | Link to Comment TheRideNeverEnds
TheRideNeverEnds's picture

I was really loving mine this morning when I looked at my platform and saw a crazy number in my PnL from UVXY being up 400%.

 

Then I remembered the reverse split and took my finger off the sell button.

Fri, 01/24/2014 - 16:23 | Link to Comment css1971
css1971's picture

2% Tyler. Come on, the Fed can turn that around in less than a day.

Fri, 01/24/2014 - 16:27 | Link to Comment NotApplicable
NotApplicable's picture

Fifteen minutes, I believe.

Fri, 01/24/2014 - 18:53 | Link to Comment TheRideNeverEnds
TheRideNeverEnds's picture

Fifteen milliseconds (before the release of their statement) is more like it.

Fri, 01/24/2014 - 16:27 | Link to Comment Caracalla
Caracalla's picture

Unless the DOW and S&P can recover the 50 DMA before close this week, it will be a trend change and time to go short in a big way.  I've got my trigger finger at the ready for SPXU, TZA, SQQQ, and UVXY

Fri, 01/24/2014 - 16:37 | Link to Comment Caracalla
Caracalla's picture

Unless the DOW and S&P can recover the 50 DMA before close this week, it will be a trend change and time to go short in a big way.  I've got my trigger finger at the ready for SPXU, TZA, SQQQ, and UVXY

Fri, 01/24/2014 - 19:24 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Don't forget hvu (tsx) , vxx , faz

ryaxx moves the right way at the right time but small enough I'd perhaps ignore it.

Fri, 01/24/2014 - 17:00 | Link to Comment Onthebeach
Onthebeach's picture

Please inform Dr Yellen that her rehab patient in 75B is responding poorly to the QE taper and has been abusing nursing staff, pounding on the door of their room and threatening self-harm.  

Fri, 01/24/2014 - 19:15 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

UVXY, VXX, HVU  bitchez!

and GOLD

bitcoin: dropped to $903. Just wait till it's 90.30.
Just goes to show in a time of need bitcoin is NOT what people want.
Volume may be low but it isn't buying or rising the price so...

Fri, 01/24/2014 - 19:52 | Link to Comment razorthin
razorthin's picture

Collapse?  Yawn.  Until we see a 1,000 point down day, you know the drill.  Buy the next opening gap up off the dip.

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