Big Blue Blasts Dow To (Another) New Record High As Chinese Yield Curve Inverts

Tyler Durden's picture

Don't fight The Fed or The Machines...

The Dow is now the 2nd most overbought in 22 years... 3rd most overbought in 62 years

 

Kicking off The National Congress last night, Xi's words did not manage to inspire the bond market as China's yield curve inverted once again...

 

But thanks to Big Blue's best day in almost 9 years...

 

The Dow soared over 150 points, now above 23,100 (IBM +100 Dow pts, Goldman +45 Dow pts)

 

Notably there was an odd flash-crash 'error' in The Dow's VIX today...

 

As once again, Dow and Dow VIX rose together... something has to give...

NOTE - the decoupling between price and risk occurred when China intervened.

On the day the Nasdaq and S&P were unchanged as Trannies topped the surge in The Dow...

 

But Trannies remain red on the week as The Dow leads by a mile... (NOTE - some weakness into the close)

 

VIX found support at 10.00... and note the mini-spike in VIX into the close (random walk?)

 

FANG Stocks sank into the red on the week...

 

But healthcare stocks didn't despite yesterday's rally headlines being destroyed today...

 

Treasury yields rose on the day...mostly driven by European weakness...

 

The yield curve steepened modestly on the day, but remains at 9 year lows...

 

Another day, another pump'n'dump in the dollar index...

 

Bitcoin got hammered early on ICO news but once everyone realised it was old news, the cryptocurrency ripped back to 5400...

 

WTI and RBOB both initially sank after DOE data showed a mixed inventory picture and collapse in production, but by the close, both were in the green...

 

Gold and Silver extended their losses (below $1300 and stalled at $17 respectively) after bouncing after the China's Golden Week...

 

Finally we note that 'crash' risk (SKEW) has never been this high relative to 'normal' risk (VIX)...

 

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jamesmmu's picture
Looming Market Collapse: US Recession Is Approaching, Liquidity Is Leaving, Margin-Adjusted PE Ratios At Historical High, Trader Makes Bet on Major Pullback for Financials

http://investmentwatchblog.com/looming-market-collapse-us-recession-is-a...

MisterMousePotato's picture

"Big Blue?" Aka the company that has reported 17 straight quarters of declining sales? (Or is that Caterpillar, the company expected to take the Dow to 30,000 tomorrow?)

FactDog's picture

The DOOM Porn on the markets is intended to instil panic; whilst the Fed and major players scoop up the only thing that will have value in ten years -- shares of functional companies.

This deal will hit DOW 100,000 before anyone notices the inflation.   

 

 

 

Juggernaut x2's picture

"functional"- LOL,  not innovative or ground-breaking- just "functional"-  like a 99 year old man on life support

Solosides's picture

Please show me some of these "functional companies"

Solosides's picture

Another day, another round of mentally retarded Goyim who BTFD

 

Have you done your part, and smashed open a bankers head with a car battery out in the middle of the street today?

LawsofPhysics's picture

If by "mentally retarded Goyim" you mean "primary dealer prop trading desks", then yes, yes, you are correct!

 

I certainly didn't buy shit today (sorry, my bad). In fact, I sold some shares.  Hoping now the AMD gets the same pump the IBM got...

 

Masher1's picture

I think Friay is "smash a bankers head in" day...

NoDebt's picture

"The Dow is now the 2nd most overbought in 22 years... 3rd most overbought in 62 years"

American exceptionalism.  This time we're not stopping until we set a new all-time record, plus another 10%.

 

Kido's picture

classic shooting star + fail break of ATH for XLV, let's see how it goes tomorrow

NDXTrader's picture

It's almost as if the world's central banks print unlimited amounts of currency and buy stocks they can make stock markets denominated in those currencies go up 

Overleveraged_and_Impatient's picture

Well well well, what can I say folks. The fact of the matter is if you've been off the train its STILL not too late to get back on! The Central Banks have decided and Donald Trump has decided. The Stock Market will be at Continuous All Time Highs until further notice. My strategy was to put as much money as possible behind 3x Long Leveraged S&P 500. I have made so much money this year that I will be quitting my job very, very soon. I honestly did not expect to do as well as I have doing.

You see, the Central Banks own all the stocks now and they will not sell! It's like someone who buys a house and just doesn't choose to sell it, the price will not come down. Central Banks don't need to liquidate stocks like normal people do to make money, they can just make their own! It's an interesting situation, and logically the only thing Stocks can do in light of this is go up. 

To think, people thought that Donald Trump couldn't pull it off. He can and he did. He is the Ultimate Stock Market President of all time. More so than Clinton, Dubya, and especially Barack Obama. 

A crash is simply no longer possible. The game has changed and we are in the midst of a brand new paradigm. Not to sound bearish, but the empire will crumble EVENTUALLY. Probably in another 50 years. Unless you are prepared to be a bear for 50+ years DO NOT short the stock market. Good luck everyone and have a happy rest of the week. Looking forward to S&P 500 2600 print before election day anniversary!

jcaz's picture

LOL-  I didn't realize that there was anyone left who "invests" in that 3X long garbage-  takes those feebs about a week before they figure out that the time burn wipes out any real "gains",  but hey, thanks for the cash-  I sell the risk that gets re-packaged into those pigs every day......

D.r. Funk's picture

Of course those people pointed to as saviors in this formulated rhetoric, are saying (the obvious) that valuations are a taddddddd stretched and worrisome. So, #1, the indexes are just going to be able to go That much higher? Without full bubble boombust conditions? Which of course are already present. #2 The same qe and pomo programming leftover from the post lehman infusions is still present, so they're knowingly surging it? Even though they "have concern" about already present valuations?

What a backwards fucking environment that zhers have let someone in saying "its STILL not too late to get back on" Lol. Are you kidding. Zhers have someone praising central bankers? Yellen? Are you fucking kidding? (Lol)

Solosides's picture

"I have made so much money this year that I will be quitting my job very, very soon"

You're going to be in a very rude awakening, very soon

 

"It's like someone who buys a house and just doesn't choose to sell it, the price will not come down"

What happens that house is neglected and becomes infested with roaches, and the neigborhood goes to complete shit?

 

You sound like every single "investor" I knew back in '06/'07

smacker's picture

What you're saying is that the market is a foolproof failsafe ponzi scheme.

Nobody can lose, so just keep piling in to infinity and beyond.

Is that correct?

MisterMousePotato's picture

Things have gotten so weird that I cannot tell if people are giving you angry down twinkles because they agree with you or disagree with you.

D.r. Funk's picture

Closer to the end of this (coordinated additional leg) than the beginning. They know it. Over and over now we've seen what are opaquely-overaggressive multiday runs, that all the surrounding logic show are nonorganic.

pre-scribed. would be. the word.

Manipulators. Not fooling some of us. Pre-scribed leg that generally started following hurricane irma is closer to the end than the beginning. You're not getting 24 I will Not have to see 24 dow I - Will - BEAT - You

Traderone's picture

I fucking love this guy!!!

Traderone's picture

hmm, don't I feel like a tit, my comment was meant for overleveraged not you Funkie.

D.r. Funk's picture

No I know, it's direct corroboration of how backwards it is, The truthteller gets maligned, The propaganda gets hugs. Pretty unreal but very fitting for the endgame of a bubble

Traderone's picture

I didn't malign you fella so wind your neck in. 

''Pretty unreal but very fitting for the endgame of a bubble'' I get annoyed when I read such comments because it implies that one can tell the future. Can you predict the future? of course not so quit with the bullshit. Finally, if this thing did collapse then I would wait for confirmation i.e. act rationally, and then short it. Up or down I WILL make money. 

Keltner Channel Surf's picture

Yes you will ... however, if ES continues in a 1/2-pt range each day while they exercise 'Dow component control' (per Funk's writings), as they ("tptb", Those Poised To Buy) surely did today with IBM (how can a company my grandmother still has paper stock certificates in produce a post-2000 earnings beat, gotta be a scam!) then you won't make crap, and will be watchie footie mid-week afternoons with yours truly (sigh)

Traderone's picture

How depressing, I am scalping a few ticks long each day but it really is a grind. Shorts got trapped badly today on a double bottom on the ES so I was able to ride it up to the first hour high for a decent trade with an excellent R/R. Not sure about the Russell but you should check out the first hr highs and lows and see how the market reacts around them. The ES highly respects those levels, regards.

D.r. Funk's picture

I can't help stodgy tweedledums who don't have nuance. Talk to kaiser circa 2015 about dow components.

If you were writing a movie about how a stock market was usurped. 10-15 weighted names would be all you need

I speculated that in early 2013

It subsequently became more

and more evident

dum-dee-dum

 

 

Keltner Channel Surf's picture

Given all conspiracies have their root in either a lack of, or misapplication of, knowledge (and, to be fair, yours and Kaiser’s are more of the latter), old-timers like myself have a responsibility to occasionally try to educate you fledglings.

Thus:  the ‘component control’ you speak of is a basic form of ‘closet indexing’ in practice since at least the early 90s, an extremely crude form of a ‘quant’ method, in which firms learned they could approach the performance of an index ‘bogie’ buy buying as few as 15-20 key names, if they were appropriately spread across industry groups.  Then, by tweaking the industry or a specific name slightly, they could attempt to "beat" the index, but ensure never falling far enough behind bogies that the (goddamn) consultants would suggest a new manager search.

So, if you’re old enough to shave, try Occam’s Razor:  you’re seeing the end product of VERY large (i.e. CALPERS) funds who are getting index exposure by buying names individually, with wholesale commission levels, using the same principle that created the Taylor Swift mp3’s you’re likely cranking as you read this:  less data, but more important data, efficiently produces nearly identical results in smaller packets.

Actually, I owe you thanks for producing an IDEAL example of how conspiracies are fact-based, but interpretively pound foolish.  They’re not ‘controlling’ the DOW, they're efficiently getting exposure … now go watch the Yankees and stop being so suspicious, funky boy.

D.r. Funk's picture

Occam's Razor provided a reasonable amount of supportive backing along the way. It's so offensive that you are on a conspiracy-page acting as though you're not. More on that later. Even the adjustments and refinements on djia control can be generally interpolated (over a few stages). I never believed I would encounter such an unaware throwback, on zh. Who/that would actually 'contend' conspiracy.

Keltner Channel Surf's picture

In other words: "Whoops, you got me again ..."

D.r. Funk's picture

Are you debating whether we're still in boombust or not? We're safe? And the shiller pe chart is irrefutable as far as eventuality. Why is it endgame? I'll grant you that's only-slightly more speculative. Bullshit? No.

For whatever reason it's ruffling you, It's pretty unfounded

[laugh out loud to the "wait for confirmation" thing. yeah we know there were signs in 08 and financials started leading down first. but rationality in the most-programmed manipulated equity market ever? who's peddling bullshit]

Keltner Channel Surf's picture

I used to love OL, until I realized he might, just possibly [:)], be kidding.

Now I love Funk, 'cause I now suspect he just might be serious.  (Gotta preserve that brain for future study, quite unique)

 

Traderone's picture

I do enjoy the verbal jostling between you and him and then when Blue jumps in I grab the popcorn. :). 

Keltner Channel Surf's picture

As you know, a high-fiber diet is important for traders, especially with long spells of inactivity during low-vol, waiting motionless for hours to close out that crucial 1/8th-point move.  Popcorn is the only snack that's 100% unprocessed whole grain (other than when you chew off a piece of your trading desk after a bad move ...)

BlueHorseShoeLovesDT's picture

Ginnny Rometty sure is a good cook!

D.r. Funk's picture

Are we gonna talk about how nice or avg the weather was?

Keltner Channel Surf's picture

Not so fast, Blue Mood. 

With the shitty post-open horizontal trading, I went for a lovely 70-degree stroll in NE Ohio (in late October).  Kids in shorts on bikes are circling the block as we speak.  It's hardly uncool to note simple pleasures:  the weather is simply splendid !

BlueHorseShoeLovesDT's picture

I meant I am not discussing weather with Mr. Fuck as I am sure he would say, the weather is pre programmed and they can’t keep this manipulation up forever and he will beat them.

I am in NM and the weather is quite nice.

Keltner Channel Surf's picture

Everyone knows NM weather is manipulated, but this time by the good guys, to preserve Roswell evidence.

BlueHorseShoeLovesDT's picture

Yep, we have a secret project up at LANL to do that, I hope they go for more snow this year, I am looking forward to the skiing.

Manipuflation's picture

Um OK, you buy first.

H H Henry P P P Paulson's picture

I asked Watson how a blue chip company is able to jump 10% in a day, he replied with "I dunno lol"

c2nnib2l's picture

tomorrow is 19 of October perfectly 30 years and you forget to put up s&p chart !

any_mouse's picture

Why would IBM go up?

"IBM Corp. somehow managed to maintain its rock-bottom effective tax rate and enjoyed an earnings beat and stock gains Tuesday afternoon thanks to a continuing ability to avoid taxes."

Looks sound and sustainable.

Panic Mode's picture

I will put money to bet the trend. As most of these companies will double down to buy back even more shares, ECB and JCB will even put their kidneys down to buy more equities.

 

DeusHedge's picture

I think rickards would lump this in with the possible black swans,, and it will be the last one. however, with the way people drive, and how people are on zero hedge (too hardcore for zero hedge) I wonder what I can expect in the workforce (slave-force)

Bai Suzhen's picture

I'll always honor IBMs memory for three things: 1) the built like a battleship Selectrics; 2) their contribution to bitch slapping Darl McBride of the Santa Cruz Operation over SCO's bogus Unix/Linux claims; and my 20 compressed floppies of OS/2 Warp that I tried to get to run on an old Gateway Pentium 60.  Well, maybe not so much the last thing.