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Dow Soars 350 Points In 27 Hours
Following yesterday's significant volume and major short-squeeze ('most shorted' ramped 4% off the lows), today saw neither with volumes light and equity performance prety much balance across the board. Most of the strength occurred overnight with stocks dumping off the open, ramped on Europe's close, modestly sold on Yellen's speech, then ramped into the close. The Dow and Trannies made it all the way back up to unchanged from the March FOMC statement/press conference. Every status quo hugging asset-getherer heard what they wanted from Yellen - except that Treasuries sold off at the short-end and flattened dramatically to near 5-year lows (not exactly the dovish hype headlines are made of). Copper jumped and oil dumped with gold and silver treading water on the day. VIX was monkey-hammered lower and stocks tracked it. Bottom line, while stock bulls hear dovishness, bond traders are calling Yellen's bluff.
Who do you believe?
The only chart that matters...
Dow back into the green from the March FOMC...
and Trannies leading the way on the week
High beta growth hype stocks are back in the green on the week with TWTR just fucking awesome dude...(before you breeze by - look at the scale of performance shifts in th elast 3 days... that's a 24% swing)
VIX has roundtripped from last week's highs and stocks are trading tock for tick with it...
Treasuries changed course notably on Yellen's speech...
Talking heads prefer to believe that stocks strength was on the back of "dovish" talk from Yellen but the following chart shows the market's reaction... not exactly buying her talk...
5s30s dropped below 180bps to the lowest since oct 2009
"most shorted" stocks are up 4% off yesterday's lows (double the market's performance) as it seems the big push into shorts was just too much for the market to bear and the snap back was just as vicious. Notably today's flatness saw little to no focus on short-squezes...
Charts: Bloomberg
Bonus Chart: A reminder of the "costs" imposed on Russia (relative to the US)...
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Pumped dumped now back to the pump.....sounds like monetary porn eh
Go long everything. Backwards is forwards every day this week
4/16/14 = 4/16/14 etc etc
I'm gagging on this... ugh... f'n SPY! I got stopped out thrice today. Piece of sheeet!
It's only day two of the up move, we have another few days till we make new highs so just buy them now then wait a week or two as we go higher, sell them out at 1900 if you are scared or if you have hands hold em till 1950, we should pull back from 1950 to retest 1900 before we make our way to 2000. One thing is for sure though, dont sell em here. That would be insane; we are clearly going substantially higher and this is just the beginning of that move.
Look at IBM earnings as an indication, stock is tanking on ever decreasing demand. Super bullish for the broad market, as the real economy continues its decline the FED will keep handing money directly to the mega banks and they will continue to buy up assets.
Interesting perspective man. It should be very interesting to see what happens. The permabear in me sees it a bit differently. The 10yr clung to 2.63% today. These mega cap crap companies have been the last safe haven out there. If we are going to distch IBM and Intel etc. here while google bombs, where are people going to run to? I wonder if we open up down 150 tomorrow we see that 10yr under 2.6% and if that happens look out.
This is a great visualization of Mega cap tech tomorrow
https://www.youtube.com/watch?v=4eYSpIz2FjU
Don't Gartman me Bro!
Hi Fonz -- As a fellow CSH/Huntington resident, I always respect and pay attention to your posts (and Docs).
I don't understand the bond talk. It seems like just yesterday, probably a few months ago that posters were talking about "if the 10 year goes above 3% all hell breaks loose" now, you and others are talking about rates going the other way and if bonds breach 2.6% then all hell breaks loose.
Could you point me to an explanation in laymens terms, or give me a quick rundown on the importance of 2.6 or 3.1.
Thanks -- See you at Gunther's
Hey Jani,
I can't understand the rhyme or reason as to why rates are doing what they are doing lately. Last year it seemed the fed was intent on getting people out of bonds and into stocks. So that move up in interest rates towards 3% seemed scary but methodical. Amazingly, as if perfectly programmed, yields topped out right at 3%. I thought they would go higher. However it seemed the impact of higher rates started to mess with the economic system a bit too much. When they settled back into the 2.75% range it seemed to me that this was the sweet spot the fed wanted. People were not comfortable owning bonds because they were afraid of future losses, and the impact of higher rates were less detrimental to the economy.
However much to my surprise, we started off this year weak in the stock market and money has flowed back into bonds. The market seems stable but edgy at the same time right now. I don't know the exact number. But lets say it's 2.6% on the 10yr. If stocks weaken again and we crack below that number people are going to remember that just 1yr ago we were at 1.8% on the 10yr and believe that it may be easier to make money in bonds than stocks. So a technical break below a certain number would cause an avalanche into bonds and out of stocks. That would hurt the fed badly. It sends deflationary signals and could cause a lot of problems in the stock market, which the fed has designated as the only place for people to be to maintain the wealth effect. The fed would have to start all over again trying to get people to stop hunkering down in bonds and hogging percious collateral. There is a lot more to it but I hope that helps.
Thanks for the explanation Fonz.
I never really undestood the corelation between stocks and bonds -- makes a lot of sense the way you explain how the assets flow between instrument classes and how when the Fed manipulates rates big shit can happen.
The Interest Rate Swap Derivatives Market is the reason for the problems of breaks to the high side or breaks to the low side.
These derivatives are highly levered and small moves in Interest Rates have very large implications. Even Warren Buffet is correct when he said that the Derivatives Market is a "Weapon of Financial Mass Destruction". (I do not like Buffet but when he is correct then he is correct. This is NOT about personalities.)
Volatillity in the Interest Rate Swaps (especially the 10 Yr UST since many evaluations are directly tied to it) in the Derivatives Market can cause widespread instability, thus be the causal factor of a Total Financial Meltdown.
There are only an estimated $700 US Trillion to $1500 US Trillion (Milliards for you folks in Great Britain) riding on the Derivatives Markets with just $100 Trillion in total World Real Assets backing it. Nobody, anywhere, is certain of the amount. After all Economics and Finance is only a "precision science".
So sleep well. Janet Yellen and Co. has everything under control...What can possibly go wrong? (LMAO...LMAO...ROTFLMAO)
cant figure out of you are "million dollar bonus" wannabe clone or just a giant douche bag, or maybe both...? how was the ride down from 1895?
Speaking of backwards. Gold is inching closer towards permanent backwardation. 12-month GOFO is inexorably creeping towards zero. There isn't much room left to manipulate the paper price lower.
http://www.lbma.org.uk/pricing-and-statistics
You have to pump when you know earnings will be bad...than -350 pts will get ya back to even.
Ain't that the f'n truth. Same with the metals. Take 'em down before they spike just so they end up where they were.
I bought the bulk of my silver FIVE YEARS AGO when it was $18/oz. Today, HALF A DECADE LATER it's worth about the sme. Frick!
That was a good trade, however we have been lacking in execution>
I should have gone long "printing" and corruption. Maybe next week.
Strange no one mentioned bonds were bid during the speech...
Google will take care of the rally. TIMBER!!!!
"The markets liked what Yellen had to say."
Objective met.
Monetary porn. It works every time. It has lasted well over 4 hours now, should I be worried?
But what I want to know is how well are we doing compared to Venezuela. I mean their stock market is really gone big time of late. Do we have any chance of achieving their greatness anytime soon?
Maybe someday the DOW will be divided by 100 too. All fixed!
measured in Au, yep, that could well be
So is it too late to get in on the Venezuela market run up? I mean this could be my last chance to get rich without working for it!
(everyone knows you can't get rich working for it, right?)
"High beta growth hype stocks are back in the green on the week with TWTR just fucking awesome dude"
I fucking hate twitter twice as much as you Tyler. Hate that piece of shit!
Looks like the Bond traders had a peek at Goog's earnings.
Oh I don't know, twitter's not so bad. :)
check out goog and ibm doc. Throw in axp and it looks like this mini rally may have been just a set up to boil some moar frogs in this new market.
http://wealthydebates.com/epa-requesting-jurisdiction-public-private-str...
I'll give them a "stream" to oversee. ......piss on them....
Rigged, rigged, rigged. Good work PPT et al. Keep it up while you can.
Yeah it's all bullshit but I actually bought the dip.
Short? Who is short? I am the last asshole short this market..just more volumless ping pong and banks going all in again with all their free Fed bucks and their gentlemans agreement with Pres & The Fed along with themselves to never sell stocks again until the year 2024..
All these prices are fiction just like the market..I stand by what I say this market is going back below 666 eventually the moment it is realized the Fed no longer has anything left to throw at this market..That is when the markets close daily because of circuit breakers, short selling is banned and then eventually all selling is banned..
I am not missing this bear move if my life depends on it whenever the fuck it arrives and I may be broke by then but it is going to be a thing of beauty..then again I wont even be able to withdraw my money from the banks because of counterparty failure but ehh..we only live once.
When Putin has all of the Ukraine we may get that Cuban Missile Crisis like 2.0 event and all that funny bullshit hardwork and money printing will evaporate in a weeks time and all we will be left with is 18 Trillion in debt..they cannot start from scratch all over again..we all knew this would be the bubble to end all bubbles.
You will never collect on your short. When TPTB are ready this market turned policy tool will vaporize in over night trading and there won't be anybody left for you to collect from.
Keep patience... It will come. The rise in S&P from 1200 to 1850 happened with a single digit earnings increase, its just QE-fueled believe in the power of Central banks. This confidence trick will indeed turn one day as you said, but it is hard to predict when. Good thing is, the FED seems so stupid that they actually think that they can taper without any consequence on risky assets, they even put forward police rate hikes projections (which will never happen as market participants are pricing in currently) because the economy is doing so great (bs). You can fool markets with projections of taper/rate hikes because of a great economy, but one day they will wake up and see that the latter simply wont be there and they will just face taper/rate hikes.
You have not seen QE until you see it third world style.
Yellin is gonna get her groove on soon, after the next ten percent pullback.
Stocks to da moon! Baby!
the move in trans in nuts... broken fukn market exhibit #1
Do I smell a big spike up followed by a crash?
"Last Dance of the HFT Algos"....get it while the gettin' is good and get out..
Aunt Yellen is such a fluffer! with Magic FingersTM handed off from Alan to Ben to Janet.
The government wants stock market inflation.
What happens after the elections in November?
Enjoy the fantasy until then, I guess.
Even those about to croak have been known to suddenly sit straight up in their beds - before collapsing back and succumbing to the inevitable death rattle
Manipulation would imply to me that not only are the markets being manipulated, but primarily WE are being manipulated. How much of our contrarian perspective is playing into this game? I guess what I am saying is that I don't know that I can actually believe what I THINK I believe. The non-rational world is driving me NUTS!
HHavee some stocks
Have some bonds
Have some cash
Have some precious metals
Have some real estate
Have some guns
Have some ammo
Have some food and water
Have a passport and a plan B