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"Markets In Turmoil" Russell 2000 Plunges Most In Over 2 Years, Dow Down For 2014

Tyler Durden's picture




 

The deer is back...

 

Stocks finally snapped and caught down to high-yield credit's warnings. The worst day for the Dow in 6 months, smashing through its 50- and 100-day moving-average. The Russell 2000 was worst on the day to end July down over 6% - its worst month since May 2012. The S&P's had almost its worst day in 6 months. Trannies dropped 3.4% on the week - the worst in 11 months. Stocks closed at the day's lows.

 

NOT OFF THE LOWS...

The week

 

All major US equity indices close lower in July... The Russell 2000's worst month since May 2012

 

The Year... Dow Red, Russell -3.6%

 

Was Yellen right after all?

 

Stocks finally caught down to credit's warnings...

 

Dow's worst day in 6 months...

 

 

Builders are worst but Discretionary and Staples are now red YTD...

 

Amid all the carnage in stocks, Treasury yields closed +/-1bps (long-end higher in yield, short-end lower)...

 

The USD was flat...

 

Commodity markets were clubbed as we suspect EU closing margin calls (and then US margin calls) hit them... WTI dropped below $98!!

 

 

Year-to-date, gold and bonds continue to lead, HY lags...

 

While talking heads were anxious to explain how there was no panic... the moves in commodities had the smell of margin calls to them as equities demanded more cover...

 

So to sum up - carnage in stocks... USD flat, bonds flat... Oil monkey-hammered and PMs dumped.

Charts: Bloomberg

Bonus Chart: "Sell In May" worked after all...

 

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Thu, 07/31/2014 - 17:23 | 5029516 DoChenRollingBearing
DoChenRollingBearing's picture

A guess only: Deflation hurts gold short-term.

Thu, 07/31/2014 - 17:48 | 5029595 Tall Tom
Tall Tom's picture

FWIW...The price of Gold will decline as paper holders liquidate to cover their positions. It happened in 2008. It will happen this time around also.

 

Gold does not take as great a hit as the rest of the broader market. But it will take a hit.

 

Now the Fed will have two choices. They can allow it which is the least damaging of the choices as the damage has already been done.

 

This will be painful and not politically palatable.

 

Or they can start printing on overdrive.

 

My bet is that they will print on overdrive. But that path has still not yet crystalized.

 

The collapse of Banco Espirito Santo and the Default of Argentina in concert with it has caused huge imbalances in the Derivatives Markets.

 

The extent of that damage is still unclear.

 

My bet is that this Market will bounce off of the 200 dMA.

 

Then it will sucker everyone back in as it is a Dead Cat Bounce. Now you can buy in at that point for a few gains. But it will rise again and then collapse again plunging through the 200 dMA from which it will not recover.

 

Let's see if we visit the 200dMA tomorrow. If we do and it bounces then my prognostication will be half confirmed. But if on the next advance it does not surpass the highs that were reaized in this advance then it will head for collapse plunging well below the 200 dMA.

 

IF IT DOES NOT BOUNCE OFF OF THE 200 dMA then look out below.

 

This is how Market Crashes manifest 85% of the time to my understanding.

 

You can let it bounce off the 200 dMA and get back in. But at that point you are in very risky territory.

 

The downside risks heavily outweigh the upside gains.

Thu, 07/31/2014 - 20:16 | 5030299 stormsailor
stormsailor's picture

it will hit an all time high tomorrow, but i like the way you think

Thu, 07/31/2014 - 16:39 | 5029283 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

Color me slightly impressed if this continues through tomorrow. Normally I would say that a day following a sell off like this is a guaranteed buying oportunity...but the jobs number is now annoying data for the bulls which might get in the way of their party. 

Thu, 07/31/2014 - 16:47 | 5029338 Tenshin Headache
Tenshin Headache's picture

There are a number of European PMIs coming out overnight as well.

Thu, 07/31/2014 - 16:39 | 5029286 rsnoble
rsnoble's picture

So we'll see if this is the start of the turn around or don't forget 'rebound friday'.

I'm sure they'll come up with some kind of horseshit news that will have smoke pouring out from under he HFT's prior the open.

"US and Russia made friends over night" or some other crazy crap.

Thu, 07/31/2014 - 16:39 | 5029287 ShrNfr
ShrNfr's picture

Oh deer.

Thu, 07/31/2014 - 16:44 | 5029304 q99x2
q99x2's picture

Its a software program stupid. BTFD

Thu, 07/31/2014 - 16:44 | 5029311 q99x2
q99x2's picture

Get that F'n deer away from the road. BTFD

Thu, 07/31/2014 - 16:45 | 5029319 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

When was the last time that we had a deer? Just curious. 

Thu, 07/31/2014 - 16:51 | 5029356 Tenshin Headache
Tenshin Headache's picture

Right before he was run over, as usual. I hope he fares better this time out.

Thu, 07/31/2014 - 16:45 | 5029321 teslaberry
teslaberry's picture

btfd you morons. QE is not over yet and shadow QE isn't either.

also, btfd . just do it and shut up.

Thu, 07/31/2014 - 16:45 | 5029327 kurt
kurt's picture

Die Monster Die!

Thu, 07/31/2014 - 16:49 | 5029345 css1971
css1971's picture

Seriously... 1 day? The deer? The deer's for when they don't know what to do. Stuck in the headlights.

They know what to do, they're going to BTFD!

 

Wait till BTFD doesn't work any more.

Thu, 07/31/2014 - 17:02 | 5029407 SheepDog-One
SheepDog-One's picture

'Investors' desperately chasing some yeild leveraged up 50% or more......to them, it's HUGE!

Thu, 07/31/2014 - 16:50 | 5029352 Sick
Sick's picture

Christine Laguarde's numerology....7/31/2014...? stupid kunt

Thu, 07/31/2014 - 16:57 | 5029393 SheepDog-One
SheepDog-One's picture

 Oh well, I'm sure it's just like GDP and the DOW will swing up +500 tomorrow or whatever.....stay calm....it's all just totally normal and whatnot. Just keep consumin, that's what's really important.

Thu, 07/31/2014 - 17:05 | 5029426 SheepDog-One
SheepDog-One's picture

It's totally fair to short-squeeze daily, but margin calls on leveraged bulls is dirty pool? Yea whatever.

Thu, 07/31/2014 - 17:05 | 5029436 Duffy
Duffy's picture

+ 100

Thu, 07/31/2014 - 17:05 | 5029429 Duffy
Duffy's picture

I'm staying with my rubles....  things have to make sense now and then!

Thu, 07/31/2014 - 17:07 | 5029441 kurzdump
kurzdump's picture

Doomsday is scheduled for August 5.

Thu, 07/31/2014 - 17:41 | 5029573 HardlyZero
HardlyZero's picture

Keep current about the borders, ebola, air-travel, Portugal, Argentina, Spain, Italy, Ukraine. 

Any of these could show the tipping point by August 5th 2014.

Thu, 07/31/2014 - 17:10 | 5029461 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

What is 'monkey hammering' specifically, Z/H?

NOTE: The DOW decline is the worst since Lehman's Chapter 11.

This is likely to be very messy from here on out.

OCCUPY WALL STREET - OCCUPY EVERYTHING

Thu, 07/31/2014 - 18:18 | 5029747 RaceToTheBottom
RaceToTheBottom's picture

"What is 'monkey hammering' "

A drink that you can only buy if you have fiat currencies

Thu, 07/31/2014 - 17:12 | 5029468 silverserfer
silverserfer's picture

Yellen has slain the goat and drank the blood. The word has been given. She will now be seen wearing her satanic ghetto bling necklace from here on out during fed minuites. 

Thu, 07/31/2014 - 17:16 | 5029483 czarangelus
czarangelus's picture

I picked a bad day to stop snorting grass.

Thu, 07/31/2014 - 18:08 | 5029695 mt paul
mt paul's picture

free basing dandelions 

isn't for everybody ...

Thu, 07/31/2014 - 17:16 | 5029484 Seize Mars
Seize Mars's picture

Oh shit! Wait, what's my total exposure to equities? Oh yeah, that's right.
Fucking ZERO.
Welcome to the ShitAbyss, SUCKERS.
LOL.

Thu, 07/31/2014 - 18:36 | 5029825 Seize Mars
Thu, 07/31/2014 - 17:20 | 5029499 Ban KKiller
Ban KKiller's picture

Long Cyprus, Greek, Argentinean, Venezuelen ...debt. Sorry for the tenses. Buy some Spanish, Irish, Scottish debt too. Then sue, right?

Muppets rule!

Thu, 07/31/2014 - 17:23 | 5029511 GrinandBearit
GrinandBearit's picture

We've been conditioned to expect it to pop right back up.

It would be great if it dropped huge again tomorrow.  

If I was a betting man, I'd bet the market will be green tomorrow. 

Thu, 07/31/2014 - 17:25 | 5029520 John McCloy
John McCloy's picture

This was way to organized of a selloff. Just more of the same..Ive said it before Ill say it again..THESE SELL OFFS ALWAYS COME FOR THE PURPOSE OF DOING THE FOLLOWING...and once that is accomplished they sneak the markets back up again and hope the rest does not follow:

1) Tame Crude at 100..today they knocked it down to 97

2) Tame Metals..Keep Gold in the 1200-1300 range

3) Tame Bond Yields..10 Year at a very acceptable 2.5% Range

   Rinse repeat and sneak the markets back up...going on for 3 years now..this is a centrally planned stock market with a Fed that is the largest hedge fund in the world trying its best to fix prices..This also gives the SEMBLANCE of a normal market..and one that is not centrally planned..We will see the same thing next month like clock work..

  For now onward and upward and hope crude does not follow is their wish.

Thu, 07/31/2014 - 18:09 | 5029706 Say What Again
Say What Again's picture

Who is actually submitting the trades in the market to make the manipulation happen

Thu, 07/31/2014 - 17:33 | 5029555 KenShabby
KenShabby's picture

Paleeeeze, it can't collapese yet. The elections are in 96 days. 

Thu, 07/31/2014 - 17:43 | 5029586 HardlyZero
HardlyZero's picture

Good point.  But may be overrun by events.

Thu, 07/31/2014 - 17:54 | 5029637 Tall Tom
Tall Tom's picture

The market crashed in September, 2008, BEFORE the Presidential Elections.

 

It can do as it pleases. The Fed cannot control this as it is Foreign Banks which are taking the lead.

Thu, 07/31/2014 - 18:06 | 5029676 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

They were allowed to crash. Big difference Insane in the brain McCain probably would have won the election if it wasn't for that crash then Republicans bailing out wall street.

It was a setup including the shakedown.

A crash and burn will poison the public against voting both Democrat or Republican this time around and if give them no third choice, it will get ugly real quickly. They (both parties) really can't afford a crash right now from a political standpoint.

Thu, 07/31/2014 - 17:59 | 5029657 yogibear
yogibear's picture

Everyone is still partying and in the BTFD mode.

Thu, 07/31/2014 - 17:42 | 5029580 antidisestablis...
antidisestablishmentarianismishness's picture

Help, I'm unable to get out because the exits are so crowded.  I tried to sell but it was impossible, just like you all warned so many times.    What should I do?

Thu, 07/31/2014 - 17:45 | 5029590 nodhannum
nodhannum's picture

Not to worry!  Obama will issue an excutive decree from the Reich's Chancellery ordering the markets to go up...up...UP!

Thu, 07/31/2014 - 17:46 | 5029597 reTARD
reTARD's picture

Welcome back deer! Stay a little longer... a lot longer, LOL.

Thu, 07/31/2014 - 17:47 | 5029602 observiate
observiate's picture

all going as planned....fed bureaucrats aka statist socialist scum will release the throttle going into november elections, playing both sides of the card by using it as a ploy to push for evermore nanny-state crap to win their elections, and if they don't win, they'll say "see, you elected all these repubs and the markets are still going down" because the damned populace is too dumb to see the truth and getting dumber by the day.

But yet i/we must hold out hope that enough of the populace will wake up in time and become educated to the truth of such things

Thu, 07/31/2014 - 17:47 | 5029607 firstdivision
firstdivision's picture

When the DOW hits 200SDMA, I'm buying hand over fist. Same shit set up for shorts, different day.

Thu, 07/31/2014 - 17:47 | 5029608 syntaxterror
syntaxterror's picture

If there's another 17% drop, wake me up. Until then, this "market" has gone years without a correction.

Thu, 07/31/2014 - 17:57 | 5029650 yogibear
yogibear's picture

WTF, everyone is in BTFD mode.

Thu, 07/31/2014 - 18:00 | 5029658 Zero Govt
Zero Govt's picture

because without it there'd be no market

Thu, 07/31/2014 - 17:58 | 5029655 the grateful un...
the grateful unemployed's picture

if theres a whiff of deflation, now might be the time to drop the price on that home you are trying to sell, in 2007 my neighbors were trying to sell theirs, a property worth 1M at the peak, they listed at 675, and they dropped it to 475 to unload it. the first buyer couldnt keep it, and it went on the market six months later for 250 in a bank sale. the family that bought it has since moved, and they rent that home to a family of mexican landscapers. but ask anyone, CA RE is strong.

Thu, 07/31/2014 - 22:52 | 5031045 The Most Intere...
The Most Interesting Frog in the World's picture

Big new neighborhood going up across the street. I can smell the capital burn from here. I should say it looks like it was supposed to be big. Got about 20% of the way there with built units. One problem, 25% of the ones already built still not sold. Stopped building. Major slowdown happening in front of our own eyes.

Thu, 07/31/2014 - 17:59 | 5029656 Zero Govt
Zero Govt's picture

love that deer

has it a name?

Thu, 07/31/2014 - 18:09 | 5029705 neuronius
neuronius's picture

Murika...

Thu, 07/31/2014 - 18:01 | 5029662 honestann
honestann's picture

Looks like whoever interpreted that Christine LeGuarde numerology speach got one minor detail wrong.  The intended date was July 31, not July 20.

Thu, 07/31/2014 - 18:14 | 5029730 cartonero
cartonero's picture

July is the seventh month

Thu, 07/31/2014 - 18:20 | 5029756 dragoneyes74
dragoneyes74's picture

I have a few comments on this carnage. 

1.  After several years of hating this market and reluctantly going long anyway (except last winter), this past Sunday I geniunely got bullish.  Seriously.  For the first time in years I actually believed the market would never stop rising.  It beat me.  

2.  Fortunately, I'm not dumb enough to buy the top, but I did try to buy the dip and got ran over.   

3.  This could have been figured out.  If you look at the ES, it made that pattern I write about often.  Anytime there's a runup and a pullback and then the retest pokes to new highs but backs off and closes off the highs, it should be duly noted.  Yes, there's been a fake-out or two in this crazy market, but being that we were near round number resistance of 2000 in a market this overextended, it should have been given more weight.  I totally missed it b/c I've been focusing on the NQ and got complacent.  But if you look back at most tops, they very often look like that.  Not saying this is the final top.  

4.  Every bottom this year after heavy selling has formed RSI divergence on the 4hr charts.  If that happens again here, it means there needs to be a bounce or at least sideways action followed by one more move down to form the divergence.  It so happens that 1900 on the ES should be support and around 3840 on the NQ.  Regardless of how it plays out, when we get the next rally, it's a major red flag if we make a lower high.  This is the kind of selling that demands respect and opens the possibility to there being enough fear in the market that the bulls can't make a new high, especially with nice round numbers for the bears to collectively coalesce around one spot.  Just something to watch out for.  

5.  I always get a bit skittish near the top b/c I don't believe in this bull market, so take this with a grain of salt if you wish, but is anyone else worried about the fact that just about everything seems to be selling?   

6.  The weekly trendline in the ES is around1855/60.  Making a lower high and taking that out would get interesting.  

7.  I hope the bears finally get a bone.  They deserve it.  

Thu, 07/31/2014 - 22:38 | 5031003 Xanthias
Xanthias's picture

Lots of divergences have been discussed: ES-NQ, ES-MacClellan Summation, etc.  Our best guess: 1660 on the ES, 2.20 on the 10 yr., sooner rather than later.  Good luck!

Thu, 07/31/2014 - 18:22 | 5029765 RaceToTheBottom
RaceToTheBottom's picture

Black Friday,, here we come.  And Black Monday, Tuesday ....

Thu, 07/31/2014 - 18:37 | 5029832 jomama
jomama's picture

All I know is that someone made some yellenbux today on the NY casino, and it wasn't me.

Thu, 07/31/2014 - 18:49 | 5029893 homiegot
homiegot's picture

We've missed you, deer.

Thu, 07/31/2014 - 18:57 | 5029923 starman
starman's picture

the smart money is gone since May suckas! May the "luck" be with you tomorrow!

Thu, 07/31/2014 - 18:57 | 5029924 No More Bubbles
No More Bubbles's picture

This farcical fraudulent scam of a "market" will be a new highs in October.

Thu, 07/31/2014 - 19:05 | 5029955 bid the soldier...
bid the soldiers shoot's picture

(curliques in a hand so free)

 

When in the course of hoodwink events, when the index upon which the expectant trader's derivatives are valued will not go through the upper band of it's trading range, it becomes necessary to assume a mock bearishness and promote panic selling by weak holders and move the index down to the lower band where stock sold at the upper band will be bought back, ditto shorts covered.

The agog traders will make enough by this maneuver to give a zetz to the index and punch it through the upper band.

The formerly panicked sellers trip over each other, diving back in head first.

 

 

Thu, 07/31/2014 - 19:07 | 5029963 homiegot
homiegot's picture

Sell in May? You're obviously gay.

Thu, 07/31/2014 - 19:44 | 5030121 I Write Code
I Write Code's picture

It has looked for weeks, if not months, as if Yellen's goal is to unwind a bunch of volatility and summation indexes to neutral, ending in about 30-45 days from now.  WHY?  I don't know.  Mostly because she can, because she has to, the Fed having controlled equity prices and indices for about five years now.  This is what she thinks must be done to support the ending of ZIRP and QE.

I don't know that this is correct.  "Gnomes" tend to read charts and then make them self-fulfilling prophecies, and no gnome has ever had more power than Yellen and the Fed have right now.

The next questions are, CAN she really do it, and is she RIGHT to do it?  All we can say is, we certainly hope so.  Bernanke tried some shit and it mostly worked, or at least was not the immediate flaming disaster it might well have been.  Can Yellen now be anywhere near as good and/or lucky?  Stay tuned and find out, God willing and the ebola don't getcha.

Thu, 07/31/2014 - 19:50 | 5030144 Dre4dwolf
Dre4dwolf's picture

Faking GDP Data , Unemployment Data and Market Data will only last for so long, thats a given, and lets be realistic, everyone knows the large GDP gain of Q2 is a complete fabrication completely abridged from reality. . . because it is simply not even possible to have that kind of growth given the real economic conditions on the ground.

No one would be investing in equities and taking on risk unless they thought that the Fed would continue to print free money to be dumped into stocks.

All the people closest to the spigot have no idea what to do with all the free$$$$ so they gambled it on the markets. . .  now that the supposed fountain of Benjamin looks like its closing down, people who are riding the free money train scam to prosperity are withdrawing their chips from the table.

Thu, 07/31/2014 - 22:43 | 5031017 The Most Intere...
The Most Interesting Frog in the World's picture

Something tells me the 4% print was so the last of the muppets go all in. What to do without some dumbass to sell to?

Thu, 07/31/2014 - 19:50 | 5030145 rosiescenario
rosiescenario's picture

Guess the Plunge Protection Team was vacationing on Fire Island....

Thu, 07/31/2014 - 20:01 | 5030211 Aussiekiwi
Aussiekiwi's picture

Not to worry, a little scare so they can say the market is too weak to stand without FED support and the money ptinting will have to continue although at a lower level.

Thu, 07/31/2014 - 21:04 | 5030571 Sorry_about_Dresden
Sorry_about_Dresden's picture

They were selling pm and everything else to meet margin call. More of the same tomorrow? We shall see!

 

Thu, 07/31/2014 - 21:09 | 5030601 JD59
JD59's picture

This is what happens when you elect moron communist liberals into office.

Thu, 07/31/2014 - 21:41 | 5030770 BeerMe
BeerMe's picture

give me down 800 points you fucks

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