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Dow Drops 6th Day - Longest Losing Streak In 14 Months

Tyler Durden's picture




 

An ugly dump in stocks early on sent all the major indices to yesterday's lows (and bond yields to yesterday's lows) but for a smorgasbord of reasons (pick from: Bullard "QE4", jobless claims, industrial production, oil rising, lack of Ebola panic, oh and POMO) stock performed the ubiquitous bounce and extended gains quite handsomely before fading back in the afternoon. Volume was considerably lower than yesterday but solid (driven mostly by the dump). All major asset classes ticked together all day with USDJPY, Treasury yields, stocks, and oil all rising with one another. The USD was flat (despite some intraday kneejerks) as were gold and silver. Copper slid lower as oil jerked dramatically higher intraday before falling back (holding above $82). VIX fell modestly to around 25.5. Once again early manic-selling led to late buying panic (but the volume buying was dramatically lower). The Dow closed red for the 6th day in a row - longest losing streak since Aug 2013.

 

Russell & Trannies were the best performers on the day as the major indices all closed around unchanged despite the best effortsof JPY...

 

The weakness in stocks (during the European session) is evident from futures...

 

Ramp volume (which lifted S&P Futs back to VWAP) was weak relative to selling volume

 

Sectors saw the worst first today as Energy rebounded...

 

Everything was nicely coupled today...

 

A very big swing in HY CDX today (looks like hedges being unwound and managers reducing risk into the rally)

 

VIX decoupled again at the close (same as the last 2 days)...

 

The USD kneejerked higher and back down around EU and US data to close very marginally higher (-0.9% on the week)

 

Treasury yields rose 3-4bps on the day - across the curve

 

Oil surged (but faded back), gold and silver flat, copper lower...

 

Charts: Bloomberg

Bonus Chart: GOOG....

 

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Thu, 10/16/2014 - 16:12 | 5343197 Kaiser Sousa
Kaiser Sousa's picture

yeah it sold off alright...
after a fucking 200 point correction to the upside on volume no where near the 94 million shares traded in the last 30 minutes...

anybody that cant see what their doin to hold this piece of shit together is a fucking moron.

Thu, 10/16/2014 - 16:14 | 5343214 dontgoforit
dontgoforit's picture

Duct tape and bailing wire.

Thu, 10/16/2014 - 16:19 | 5343241 nink
nink's picture

The PPT did a great job today I think. almost green

Thu, 10/16/2014 - 16:29 | 5343286 i_call_you_my_base
i_call_you_my_base's picture

Agree, they deserve the slowest clap.

Thu, 10/16/2014 - 16:38 | 5343344 hobopants
hobopants's picture

Anyway we could rig it so the buy button on the PPT terminals shocks the shit out of the user? There has got to be some way to keep them from ressurecting Frakenmarket over and over and over again.

Thu, 10/16/2014 - 20:04 | 5344430 max2205
max2205's picture

I was hoping for volitility but some issues have been up and down 5% day to day

 

Making me feel dizzy. 

Thu, 10/16/2014 - 16:57 | 5343504 JuliaS
JuliaS's picture

Google will drag tomorrow's NASDAQ. DOW will get a runup and then another full red Monday will follow.

Thu, 10/16/2014 - 16:56 | 5343506 Bloppy
Bloppy's picture

Just because PPT pulled it off today doesn't mean they'll do it tomorrow, Monday, Tuesday, etc...

 

If tiny St Lucia can act on Ebola, why can't the US?

Thu, 10/16/2014 - 16:21 | 5343254 xcehn
xcehn's picture

Epic criminality--kleptocracy in action.

http://agonist.org/the-great-expectancy/

Thu, 10/16/2014 - 17:41 | 5343726 CASTBOUND
CASTBOUND's picture

my buddy's ex-wife makes $80 hourly on the computer . She has been fired from work for 7 months but last month her pay check was $19252 just working on the computer for a few hours. see here http://goo.gl/yioYBZ

Thu, 10/16/2014 - 18:15 | 5343921 Kirk2NCC1701
Thu, 10/16/2014 - 16:12 | 5343198 css1971
css1971's picture

Really?

 

6 whole days?

Thu, 10/16/2014 - 16:13 | 5343209 SHEEPFUKKER
SHEEPFUKKER's picture

I know right, after being up for nearly 6 years straight. 

Thu, 10/16/2014 - 16:16 | 5343221 dontgoforit
dontgoforit's picture

Even Super QE can't stop the inevitable, Goldman.

Thu, 10/16/2014 - 16:29 | 5343287 disabledvet
disabledvet's picture

I agree with this. I think long and strong going into an All Ebola Friday and weekend is nucking phuts.

We do need to "clear the air" (see below...is Ebola for real or not?) before buying into the silly season.

Thu, 10/16/2014 - 17:50 | 5343772 sun tzu
sun tzu's picture

They can pump stocks up all they want like in Zimbabwe, except the money will be worthless. Zimbabwe's stock market had the best returns in the world during the hyperinflation years, but it cost $1,000,000,000 to buy a loaf of bread or dozen eggs. Given the choice between 300,000,000 people and Wall Street, the Fed will choose Wall Street until the starving people riot in the streets. Then the Fed and media will blame the starving people for crashing the stock market. 

Thu, 10/16/2014 - 16:12 | 5343208 Oxygen
Oxygen's picture

I think this time is for real.
It's does a couple of time i said that,
But now ot's look really scary for the stock market
(Economie already dead)

Thu, 10/16/2014 - 16:13 | 5343211 Spungo
Spungo's picture

Thursday comedy: Sears Canada up 20% even though the company is essentially bankrupt and liquidating its assets.
https://www.google.com/finance?q=TSE%3ASCC&ei=tiZAVPmePMfH8wbYrIDwBA

Thu, 10/16/2014 - 16:15 | 5343215 digitlman
digitlman's picture

Yeah but in this case 20% is like a dollar.

 

lol

Thu, 10/16/2014 - 16:13 | 5343212 dontgoforit
dontgoforit's picture

They just ain't no gud newz, pardner.

Thu, 10/16/2014 - 16:13 | 5343213 devo
devo's picture

Where's Reggie with his Google articles?

Thu, 10/16/2014 - 16:16 | 5343218 Sudden Debt
Sudden Debt's picture

AND EVERYWHERE PEOPLE BLAME EBOLA?!?!?
WHAT THE HELL IS WRONG WITH PEOPLE?!?!

It's all over the news over here! Morons...

Thu, 10/16/2014 - 16:34 | 5343316 disabledvet
disabledvet's picture

Totally incompetent response to the news of Ebola.

I'm not surprised by how perfectly bad the response has been...but looking at the equity folks they have every reason to "sell buying" here.

The valuations are enormous, no recovery has materialized, the Fed has failed at creating anything more than nominal inflation, mid cycle slowdowns are normative, political classes are incentivized to lie, this really might be an Ebola Outbreak!, we really haven't made any friends either here or abroad going on...is it 13 years now?

Thu, 10/16/2014 - 17:44 | 5343739 Manthong
Manthong's picture

According to one Rickards chart I saw, the total Market CAP-GDP today is over 200%..

in mid-1929, it was under 90%.

Where could there possibly be any problem here?

Thu, 10/16/2014 - 17:49 | 5343768 disabledvet
disabledvet's picture

"Two speed Europe", Fukushima, now this...

Thu, 10/16/2014 - 16:46 | 5343439 Motorhead
Motorhead's picture

Funny how that person from the Dallas case (RIP) departed from Brussels...from what I have heard (or, not heard), there isn't anybody in Brussels with ebola.

Thu, 10/16/2014 - 16:53 | 5343487 disabledvet
disabledvet's picture

Scary comment actually. "What if he lied about where he came from."

Could be the whole thing is a contrivance to scare the shit out of everbody.
That would include the President however...

Thu, 10/16/2014 - 16:58 | 5343500 Sudden Debt
Sudden Debt's picture

Actually there are, several.

But that doesn't matter. Most cases have a non symptom of 21 days before they get sick. And if that's true, we'll have a pandemic that will wipe out a serious ammount of people.

and they compaire it to the flue.

people than think: oh the flue! That's not that bad!

.... Yeah... Ask the indians that question again...

the flue killed enormous amounts before they had anyrhing like a cure. In the old days, if you had the flue, you where a gonner.

Thu, 10/16/2014 - 17:52 | 5343784 disabledvet
disabledvet's picture

Pathogens do exist inside our bodies.

What separates the "Ebola" one from the others?

Thu, 10/16/2014 - 16:15 | 5343220 fooshorter
fooshorter's picture

That mother fucking Russel was the most god damn amazing thing I have seen in my short life. Watching that shit rocket up as if Yellan the shebeast from satan layer come upon the market itself and threw fucking free money out to the masses!!

The Russell was a bad fucking joke and I look forward to immentient fucking destruction.

 

 

Thu, 10/16/2014 - 16:21 | 5343252 Rainman
Rainman's picture

+1 for ' immentient '

Thu, 10/16/2014 - 20:09 | 5344453 max2205
max2205's picture

The PPT has one button.  It says 'buy the shit out of IWM'

 

THEY all have IWM Hats too.  Says ' got IWM?'

Thu, 10/16/2014 - 17:01 | 5343517 Keltner Channel Surf
Keltner Channel Surf's picture

The fact that the "Russel" got just about to its 20-day MA, but not quite, shouldn't cause us to think it was pure machine mayhem to get to a short reloading point (i.e., they know they have institutional "dump when possible" orders, but want to use short stops to get to a spot where they'll make more $), because that would evidence cynicism, which wouldn't be nice.

The only argument with your post is to suggest you keep the final "l" at the end of "Russell", given it then includes a subliminal "SELL" message. . .

Thu, 10/16/2014 - 17:19 | 5343624 fooshorter
fooshorter's picture

Ha! you do know it is spelled Russell 2000 ... http://www.finviz.com/quote.ashx?t=iwm

On a completley seperate topic:

http://www.bibliotecapleyades.net/bloodlines/russell.htm

 

Fri, 10/17/2014 - 04:58 | 5345457 syntaxterror
syntaxterror's picture

It's Ru$$ell 2000 bitchez!!!

Thu, 10/16/2014 - 16:18 | 5343239 DowTheorist
DowTheorist's picture

No wonder the Dow Industrials is weak. According to the Dow Theory the primary trend turned bearish on October 10th, as explained here:

 

http://www.dowtheoryinvestment.com/2014/10/dow-theory-update-for-october...

 

and here:

 

http://www.dowtheoryinvestment.com/2014/10/dow-theory-special-issue-afte...

 

Whether one thinks the Dow Theory is mumbo-jumbo or not, ca. 70% of the signals tend to be right (+115 years track record), so the odds favor lower prices ahead. I would never fundamentally argue against a technical primary bear market signal.

 

 

Thu, 10/16/2014 - 16:34 | 5343298 Traderone
Traderone's picture

70% success rate eh? Shame the  30% false signals destroy any profits from the 70%.

P.S,   yes,  Dow Theory is total BS.  Don't trade it.

Thu, 10/16/2014 - 16:40 | 5343383 balanced
balanced's picture

Damn it that's a hard lesson to learn. I can't tell you how many times I had thought I'd designed an algorythm that solved the universe, only to find (again) that it was impossible to avoid that 10-20% error rate from wiping out all of the gains. It's as though the universe enforces balance no matter the context.

Thu, 10/16/2014 - 17:14 | 5343588 DowTheorist
DowTheorist's picture

Most technical analysis (and for that matter fundamental) is BS, granted. Otherwise, it would be very easy to find riches in the markets.

The Dow Theory, though, has a solid track record spanning more than +116 years. So it is not a fad. Of course, it can fail, and it will fail if the whole economy crumbles (as buy and hold would fail). However, it has done a remarkable job in protecting investors from catastrophic losses in the past (1929 and 1987 come to my mind).

And it is well documented that it has outperformed the Industrials and the S&P (by 2 or 4% annual, depending on the Dow Theory flavor) while reducing dramatically drawdowns. This is documented for all to see. We cannotmake assurance as tothe future, but I'd rather drive a car that has proven to be safe in the past.

One can feel uncomfortable putting aside all pretense of knowing the future (fudamentals), but until now, the 70% winners have by far exceeded the amount lost in 30% losing trades. This is a fact:

 

http://www.dowtheoryinvestment.com/p/normal-0-21-false-false-false-es-x-...

http://www.dowtheoryinvestment.com/p/face-off-schannep-versus-classical-...

 

But to each his own...and I respect it. Makets work because there is diversity of opinions.

 

 

 

Thu, 10/16/2014 - 17:43 | 5343741 Traderone
Traderone's picture

2 questions. Do you trade it consistently and does it make you money? If the answer to both questions is yes then there is no need for further discussion. Technical analysis is another hocus pocus tool that does not work because individuals traders can't but help putting their own personal bias' onto the charts I.e. they see what they want to see. 

Good trading to you Sir/Madam.

Thu, 10/16/2014 - 17:51 | 5343789 DowTheorist
DowTheorist's picture

Do you make make any money trading your fundamentals? Give me an answer and I will answer your question. :=)

 

Your remark concerning personal bias is fully right. This is why it is very difficult to trade based on technicals and very few are able to put their biases to rest. Here we agree.

 

Best

Thu, 10/16/2014 - 18:15 | 5343916 Traderone
Traderone's picture

Fundamentals????? Good grief, are you insane?  I am a day trader of the ES exclusively and use live market internals as aides (NYSE ticks, breadth and VWAP). Bias' and opinions are left at the door on the way in and yes I do make more than I lose on a consistent basis. Now, an answer if you please.

Fri, 10/17/2014 - 09:54 | 5346188 DowTheorist
DowTheorist's picture

Fair enough. So we are are not so far apart: we are not on the fundamentalist camp. Your approach seems fully respectable to me (it reminds me, although I lack the details that of Marty Schwarz)

 

I trade a blend of short term technical systems of my own (trade duration from 1 day to 5 days on average), based exclusively on technical parameters and applied to a broad base of stocks.

 

Such systems are profitable on their own. However, they get a performance boost and drawdown reduction (back tested  and in real life since the last 4 years) when I integrate a Dow Theory filter, namely: when the primary trend is bearish according to the Dow Theory, the entry and exit rules are accordingly changed in order to be more in tune with the prevailing market trend. In other words: I don't fight the primary trend ("primary" means trends lasting 1-2 years) of the market.  And honestly, the Dow Theory does a much better job at the determining the trend with a reduced lag than moving averages (at least this is what I have found).

You might ask: Why not directly trade the Dow Theory as such? Am I afraid or suspicious? Why blend it with shorter term trading? Answer: Because I tend to make more with my short term system (i.e. high volatility stocks) coupled with the Dow Theory filter, than by just using the Dow Theory and buying the SPY. However, if my short term trading couldn't accommodate my capital (something which may happen if liquidity continues to evaporate), then I would switch to an almost pure Dow Theory approach. And I say "almost pure" because, if I apply long term Dow Theory trading to high RS stocks (instead of buying the SPY) I also get a performance boost with contained drawdowns.

 

Yes, I have been able to stick to my rules for 4 years. Truly. But the trick is: I had prepared myself intensively during ten years and knew the Dow Theory and my blend of systems inside out. So I agree with you that for the average Joe would be very difficult to stick to it.

 

Really, Traderone we are not so far apart. And has been nice to change ideas with you.

Regards

Thu, 10/16/2014 - 16:20 | 5343246 wagthetails
wagthetails's picture

NFLX nailed 20% because it turns out the growth just isn't there.  i expect that for the overal market. 

Thu, 10/16/2014 - 16:27 | 5343276 squid427
squid427's picture

This feels like September 10 2001 when Rumsfeld said they "lost" 2 trillion dollars. Only worse. Ebola is going to spread like wildfire, the markets and global economy is going to take a giant shit, the gov is going to implement social and economic controls, and the reminants of the constitution will go away forever. I hope I'm being paranoid.

Thu, 10/16/2014 - 16:48 | 5343452 Motorhead
Motorhead's picture

I wonder if Rumsfeld's Gilead has some shtuff going on in the ebola department.

There was swine flu, then avian flu, and now this.  It, too, shall pass.  (Sorry for those who are affected, but statistically, it is nothing to worry about.)

Thu, 10/16/2014 - 16:29 | 5343285 wmbz
wmbz's picture

The un-fed painted itself into a corner long ago, but hell yes they will puke up another QE. Problem is they can keep propping up wall street but main street is fucked.

Not that those mother fuckers give a shit. They know most of Amerika is clueless and will keep taking the ass poundings!

Thu, 10/16/2014 - 16:31 | 5343291 wagthetails
wagthetails's picture

QE4 is simply - Talking about QE4.

Thu, 10/16/2014 - 17:02 | 5343527 B.J. Worthy
B.J. Worthy's picture

But I thought that the first rule of QE is that you do not talk about QE?

Thu, 10/16/2014 - 16:32 | 5343294 Rentier88
Rentier88's picture

Muppets getting owned, the muppets getting owned!

 

JU GOT OWNED!

Thu, 10/16/2014 - 16:33 | 5343300 TheRideNeverEnds
TheRideNeverEnds's picture

BTFD

 

we will trade 1950 before 1750, this correction is over.

 

Yesterdays bond move was the capitulation at the bottom; we ever figure out what firm got blown out of their short bonds? 

Thu, 10/16/2014 - 16:39 | 5343369 disabledvet
disabledvet's picture

Was long coming out of the 2008 collapse because I believed in the response to the crisis. Have stayed out of equities for a while now because I haven't believed in the same response this go around.

We'll see bu I would not be surprised by a huge liquidation tomorrow.

Thu, 10/16/2014 - 17:22 | 5343633 Keltner Channel Surf
Keltner Channel Surf's picture

"1950 before 1750"

So . . . the market will first seem like the Great Brink's Robbery, then be as tragic as the death of JS Bach?

Thu, 10/16/2014 - 17:54 | 5343800 disabledvet
disabledvet's picture

"Ahhhhh, Bach...

Thu, 10/16/2014 - 21:16 | 5343938 Keltner Channel Surf
Keltner Channel Surf's picture

Had a feeling you were a fan, Vet.  You must be thrilled Synchrony Financial is using his F-Major 2-Part Invention in their commercials  :)

Thu, 10/16/2014 - 16:40 | 5343381 lasvegaspersona
lasvegaspersona's picture

The stick save just ain't what it used to be.

I refuse to believe that the Fed won't try to save the day. Yes it will all collapse but to have that happen without an apparent effort on their part would be inconceivable.

Thu, 10/16/2014 - 16:45 | 5343423 Motorhead
Motorhead's picture

Gee, and how many times over the years have the pundits said ('specially the gold pumpers) that the Chinese are "dumping" US Treasuries?

Well....

http://hosted.ap.org/dynamic/stories/U/US_FOREIGN_HOLDINGS?SITE=AP&SECTI...

 

Thu, 10/16/2014 - 16:45 | 5343425 Playtime's Over
Playtime's Over's picture

I am a rookie uneducated shade tree economist.  My observation is that there should be great concern if the PPT is throwing all the flaming digital money at the market in an attempt to get it on the upswing.  Seems to be sputtering. At some point it's going to auger like an unlucky test pilot. Many smartypants pepo say they can keep this up forever cause they have the printer but my query would ask if it is a legit way to build value. Most here know it is a giant fed smartypantz hoax.  Where's the "value" peop?  How does a company increase in value when the workers have less and less money to buy products. It's all a confidence game. The fed is all in this time.  Evil evil cksuckers.

Thu, 10/16/2014 - 16:52 | 5343480 Spungo
Spungo's picture

Moving averages are surprisingly good indicators of changing trend. You could dodge almost every stock crash in history just by selling whenever the stock index went below the 100 or 200 day moving average. 

For the Dow Jones, the 50 day moving average was broken on July 31 then again on October 1, October 7, and October 9. Just like giving birth, notice how they're getting closer together. The Dow is having a harder time staying above the average, and it hasn't been above average since the 8th. Ignoring everything related to fundamentals, the technicals are flashing red. Investor sentiment is changing. It doesn't matter if the economy is picking up, it doesn't matter if everybody has a job, it doesn't matter if someone finds a cure for cancer. All that matters is sentiment. Are people jumping into the market or are they pulling out. Right now, it looks like they're pulling out.

It's important to keep track of the indicies because lots of things go down in sympathy. A company might be doing great financially, but their stock will still go down if the market as a whole is crashing. 

Thu, 10/16/2014 - 17:04 | 5343539 Spungo
Spungo's picture

You're thinking of HIV. The first rule of HIV is that you don't tell your sex partners you have HIV.

Thu, 10/16/2014 - 17:55 | 5343814 disabledvet
disabledvet's picture

That had a "Patient Zero" as well...

Thu, 10/16/2014 - 21:37 | 5344752 Lmo Mutton
Lmo Mutton's picture

These guys are good.  They are tossing us around like a wounded hamster at the mercy of a tomcats claws.

I am absolutely convinced they can paint the chart like Michaelangelo.

Fri, 10/17/2014 - 04:55 | 5345452 syntaxterror
syntaxterror's picture

Quick, get the Fed Chair to mumble something. ANYTHING!

Do NOT follow this link or you will be banned from the site!