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Trannies Surge, Industrials Purge As Oil Plunges Most In 2 Years

Submitted by Tyler Durden on 10/14/2014 16:05 -0400

Yet again, early exuberance in stocks - which was entirely unsupported by credit and bonds - plunged back to reality late in the day. Intraday volatility in Russell and Trannies was unbelievable with 3-4% swings (Trannies best day in 14 months before the tumble - but managed to close back above its 200DMA). Since Friday, Treasury yields are 6-9bps lower and the dollar rallied back to unchanged today. The big story was the total collapse in oil prices into their close (accompanied by weakness in CAD and EUR, stocks, and bond strength) as it appears someone large got a serious tap on the shoulder to liquidate (WTI under $82 -4.4%, biggest drop in 2 years). Copper gained as gold and silver slipped modestly on the day. HY credit pushed back above 400bps (widest in 13 months) as VIX broke above 24.5 briefly in the last hour (from below 21.5 at its lows) highest since June 2012.

Quite a day in stocks...

And week so far...

As stocks caught down to bonds...

And bonds rallied further today (10Y 2.17% lows, 30Y 2.92% lows)

and credit...

As High Yield credit spreads surged back above 400bps - widest in 13 months...

VIX banged around once again but note that we closed around the levels of the big afternoon dump yesterday...

But USDJPY was in charge of the S&P all day.. and pinned to 107.00

FX markets saw USD strength on the day - led by Cable, EUR, and CAD weakness...

USD strength on the day sapped some strength from PMs, Copper spurted, oil squirted...

Charts: Bloomberg

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Tue, 10/14/2014 - 16:07 | 5330435 ZippyBananaPants

A buddy of mine tried to pick up a Trannie once, he was really drunk!

Tue, 10/14/2014 - 16:12 | 5330472 nink

Queue oil tanker that is about to sink, huricane , strike at suez canal ANYTHING

Tue, 10/14/2014 - 16:40 | 5330630 monogratis

Seems that people are worried about Russian oil exports... wouldn't Canada be the most affected given profitability for shale oil is only in the $80+ range? So much for that whole oil-independence thing.

Tue, 10/14/2014 - 16:48 | 5330668 monogratis

And... here comes the rationalizations: http://www.marketwatch.com/story/why-cratering-oil-may-not-crush-shale-p...

Tue, 10/14/2014 - 17:19 | 5330688 DoChenRollingBearing

I think we have seen that our economy can survive even $90 oil. I concur that shale oil may or may not survive the $75 - $80 range I have seen before. The technology is apparently getting better each month.

But, oil and LOTS of other things have been going down...

"Deflation First, Then Inflation?" http://goo.gl/NRArHa

Tue, 10/14/2014 - 16:09 | 5330441 flacon

My biggest fear is that the S&P will continue to go down without a bounce, throwing everyone off. In other words, I'd love to buy puts but I am afraid of a bounce. Maybe I should do a spread position.

Tue, 10/14/2014 - 16:10 | 5330458 Dungholio

Better talk with your wife first before attempting that.

Tue, 10/14/2014 - 16:47 | 5330646 AssFire

Agreed, way too much bounce last time I had my wife spread; I almost considered a trannie.

Tue, 10/14/2014 - 16:20 | 5330517 Carpenter1

It works....until it doesn't.

Tue, 10/14/2014 - 16:22 | 5330524 ebworthen

Dunno, the "strong economy" hookah is being huffed and passed at a rapid pace in the financial media.

The smoke is heavy, and the glazed eyes wide with excitement over stoned blathering of no rate hikes and QE4.

Earnings estimates lowered so they can beat; and I'd wager stock buybacks done just before the known beat of lowered expectations.

Tue, 10/14/2014 - 16:25 | 5330553 flacon

Yep, that's been the pattern for the past few years regarding earnings reports. Just lower expectations and "voila" BEAT EXPECTATIONS!

Tue, 10/14/2014 - 16:10 | 5330451 Dr. Engali

Somewhere out there a hedge fund is dying and their positions are getting slaughtered.

Tue, 10/14/2014 - 16:15 | 5330480 SheepDog-One

Most of em, all-in and leveraged heavily desperate to get some 'flow'.....LOL

Tue, 10/14/2014 - 16:11 | 5330459 Keltner Channel Surf

Yesterday, POMO was such an easy game to play
Now I’ll actually have to earn my pay
Oh, I believe in yesterday

Suddenly, I’m not half the trader I used to be
There’s a shadow hanging over me ...

Tue, 10/14/2014 - 16:19 | 5330497 Carpenter1

Wonder how many frothy mouthed BTFD'ERS are getting whiplashed day after day.

Yet they'll try again cause that's all they know.

Tue, 10/14/2014 - 16:24 | 5330539 Keltner Channel Surf

True, this could be quite a long painful lesson for more "fundamental” (i.e., QE-driven) institutional investors, though after a horrendously long period of low volatility, mom ‘n’ pop traders like me are lovin’ the past few weeks. I’ve had some of my biggest weeks lately, and I’m sure I’m not alone in ZH land in that regard.

Tue, 10/14/2014 - 16:11 | 5330465 Seasmoke

ZZZZZZZZZ.

Tue, 10/14/2014 - 16:21 | 5330515 negative rates

No sleeping in class, you know better than that sister.

Tue, 10/14/2014 - 16:16 | 5330486 ebworthen

If I hear the "lower gas prices are a tax cut for Americans" meme again I'm going to pop.

It is a pittance compared to healthcare costs and unreported inflation in everything.

Gas would have to go back to $1.00/Gallon to even start making a difference for the bled and dying middle class.

Tue, 10/14/2014 - 16:23 | 5330529 Bell's 2 hearted

"experts" have 2 files (an "up" and a "down") for most things

the file for "up" gas prices -

"blah blah shows demand blah blah good for new fuel efficient vehicle sales blah blah"

Tue, 10/14/2014 - 16:26 | 5330554 SheepDog-One

Yea it's an insult to hear talking heads say a .2 cents drop in a gas price is quite a good deal for us serfs.

Tue, 10/14/2014 - 17:27 | 5330859 Berspankme

I drive a lot and the gas price is saving me about $10-$12.00 per week. Bernanke's dick up my ass has cost me over $100,000 the past few years. Fuck You

Tue, 10/14/2014 - 16:16 | 5330490 Goldilocks