GE-Dip-Buying-Panic Sends Dow To 'Most Overbought' In 62 Years, Yield Curve Collapse Continues

Tyler Durden's picture

Always...

 

As Bloomberg summarizes, the dollar rose, Treasuries sank and all three broad stock indexes are heading for a record close on bets a budget compromise will bring Washington closer to agreeing on Trump’s promise of tax reform. The dollar touched a three-month high and 10-year Treasury yields approached 2.4% while the Canadian dollar tumbled after inflation and retail sales missed estimates. Some clarity on a budget resolution, a good quarter of earnings and the anticipation of an announcement of the next Fed chair has led to market confidence. One stock clearly bucked the earnings trend; GE posted results before the bell, missing analysts’ estimates significantly and slashing its profit forecast. The stock erased losses after falling 7% in premarket trading.

So - GE did this...

GE now 1% above yesterday's close after abysmal earnings, cutting guidance by 30% and “horrible cash flow”

And The Dow did this...

 

Which pushes it to the most overbought (based on RSI) since July 1955...

 

The Dow has not been near 'oversold' since Jan 2015...

 

Another perfect week (5 up days) for the S&P 500 (making 4 in 2017, compared to 1 in 2016, 2 in '14, 2 in '13, 2 in '12, and 2 in '11)

 

VIX ended back below 10 (after briefly spiking above 11.6 yesterday)...

 

and then this happened right at the close...

 

Homebuilders soared today... due to fun-durr-mentals...

 

Bank stocks underperformed today - but still have a long way top go to catch down to the crash in the yield curve..

 

Uglyish week for FANG stocks and AAPL ended red...

 

TSLA Tanked Today...

 

Following last night's budget vote, tax-hope picked up again from recent lows...

 

Yields are higher on the day (and week) with the short-end continuing to underperform...

 

The yield curve continued to collapse this week - lowest weekly close for 5s30s since Nov 2007

 

Copper/Gold is at its highest in 3 years suggesting bond yields have a lot further to rise...

 

The Dollar Index soared today after last night's budget vote - this is the best day for the dollar in 9 months... after bouncing perfectly off the unchanged for the week level...

The Dollar is up 5 of the 6 weeks - highest weekly close in 3 months

 

Yen and Loonie (retail sales weakness) were the biggest losers this week sending the green back higher...

 

Dollar strength weighed on precious metals with copper best on the week and WTI managing to limp into the green for the week today...

 

Finally, Bitcoin soared today (on Zimbabwe panic) above $6000 for the first time ever...

 

Now bigger than Goldman Sachs...

 

So who is right?

 

 

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GunnerySgtHartman's picture

Everything is AWESOMENESS!   /sarc

Solosides's picture

Daily reminder: We are dealing with sociopathic zionist/jesuit banksters who LITERALLY rape, murder, and eat babies. Extreme violence and extermination is the only viable solution towards these vile demented fucks.

lester1's picture

That would be the Reptilian shapeshifters that walk amongst us.

finametrics's picture

speaking of that, how's your mom doing, havent heard from her in a while

Snaffew's picture

turn the tide...do what they do, but do it to them---

D.r. Funk's picture

"most overbought 62 years"

theyre tryin to smoke out bears

obvious onslaught attempt

We know you can't go much longer. We know you can't get much more. We're not folding we get to make some moneybacksoonfuckers

 

Snaffew's picture

wow...what a ridiculous fucking buy everything in the final seconds close that was....un-fucking-believable....but i believe.

D.r. Funk's picture

Endgame baby

I started describing it late summer. At least as manifesting more. Uh yeah, the super-overaggressive over-overbought 'anomalyous' out-of-context euphoria, yet they keep juicing (i would argue ruthless juicing)

It portends: endgame

klondack's picture

Lee Adler http://suremoneyinvestor.com/2017/10/the-4-week-t-bill-is-actually-a-sec... says "U.S. Treasury is set to massively exacerbate the situation by issuing more than $500 billion in new supply over the course of November and December." Why not wait until taxes are lowered before dumping massive profits? 

jamesmmu's picture
Is It Time? Numerous Measures Of Debt Are Near All-time Highs. Go Figure It All Started In China… The ‘Put’ Is Expired After The Communist Meeting. Let It Unravel?

http://investmentwatchblog.com/is-it-time-numerous-measures-of-debt-are-...

XBroker1's picture

Somebody tell me how DR Horton is still in business.

nope-1004's picture

Does anyone actually still believe that this fake, fixed, ponzified POS "market" is remotely free?

If so, then Heaven help you!

 

nsurf9's picture

No, and it only encourages them to steal (expand debt/dilute and QE) even moar buying power out of what we've earned!

((( And, if ZeroHedge doesn't start using reasonable control of its agressive advertising, it will find itself on a much shorter timeline. )))

nope-1004's picture

new browser alert:  Brave.  Download it for free.  No ads, no popups, no tracking.

https://brave.com/

It will reshape your internet experience.  And no, I have no $ interest in it.

finametrics's picture

had it for a hhwhile on samsung. not bad.

jamesmmu's picture

Something I failed to understand. Yes, market never drop now. IN this market, how traders make money? How can the house giving away so much money to retail investors?

for traders, normally, they buy at $10/sh, and sell at 11 and buy it again when it lower. but market is straight up, just buy once and sell at the end of day, thats it. why buy and sell so many times. at this point, whats the point wallst still hiring traders?

for retail investors, they just need to buy everything at once, thats it, and take profit when need the money. Why trade? and the stock market keep giving away free money?

in a casino, house always win, now the gamblers are winning, and cash out every day, and day after the day.

the house loses? how is possible for house to keep gamblers winning? will stock bubble dry up the liqudity just keeping the bubble alive?

ppl can just bet all the money on call option and sell next day and profit millions. but how is possible for this to continue, they probably need millions more fresh money in the market just to keep DOW in green. right? if I have 300k, I will buy all the options and then cash out in next few days and turn it too 400k, but who will be buying 400k worth of shares when I take profit? friday which is today is option expiration day, they will repeat by buying all call options. will market handle the selling when they cash out the call option and sell those millions of shares? alot of ppl will probably all in today because they think they will profit 100% in next option expiration. FYI, the call options allow the owner to purchase the shares at price from previous weeks or month, and sell it today and you will profit the different. if the house decide to make a turnaround in the market, how many ppl will lose their lifesaving when the market just drop a little bit over the next few weeeks?

about buybacks, companies spend more money buying less shares everyday, will it affect its earning/share ratio? 

hope someone can explain these.

 

thanks

D.r. Funk's picture

jmmu Youre a stalwart

How stock-conspiracy is not as embedded an approach, or template, on zh as one would think, is odd. I recommend considering advancing your narratives slightly. You wouldn't believe, how many things fall into place. And affirmed over a long period of time.

Generally as 1-way market you're describing? Yes. 1-way market since Nov 9 generally. 1-way market stretching and dislocating puts 'everyone' on 1 side of the boat

Keltner Channel Surf's picture

Just as a mall store makes less money when traffic dwindles, trading profits (with the exception of certain option strategies) will always be reduced in periods of overnight gaps that go nowhere with low vol, which is why bank trading profits have been running ~25% below normal, with forecasts for more layoffs.  It’s safe to say that trading has never been more challenging, but is not impossible.

At the same time, many professional traders start and end each day in cash, and wait patiently for entry points.  With most trades computer-generated by battling hordes of algos that automatically constrict their ping-ponging ranges when volume is pathetic, this task becomes more difficult.  It can mean a longer hold, and a grind, for hours to get tiny payoffs, but you take what’s available.  Traders don’t put their life savings into any trade, but carefully consider position-sizing based on specific asset risk, profit factors and other arcane calcs not worth detailing here.

Options are often used for elaborate hedging/income strategies that are rolled forward, much of which isn’t necessarily a directional bet, as you assume, but part of complex, multi-part strategies; some, like selling straddles, profit if the range stays tight.

Contrary to the popular narrative, no one entity is tasked with ‘keeping us green’, regular monthly 401(k) funds dribbling in are enough, especially with pathetic volume/liquidity, to keep going a bit higher, especially as the buy-side, which doesn’t yet believe the Fed, can’t yet move some allocations to bonds without missing their actuarial requirement (7% ?  8% ).  After being burned, they sit and wait, and wait, with the rest of us …

max2205's picture

The ONLY thing that matters in Amerika is that the indexes keep going up.  Everything else is shit 

Keltner Channel Surf's picture

Thanks for setting me straight, otherwise I'd have headed into the weekend harboring elaborate delusions.

Keltner Channel Surf's picture

Same to you.  Hopefully you big players can finally bring a bit of volatility to markets so us small-time grinders can eat more than two meals a day. :)

BlueHorseShoeLovesDT's picture

I have eaked out a few earnings plays, still good from my big NFLX short, shorted Vix yesterday for the first time in a while.

Looks like we had mindless etf/fund buying into the close, 20 years ago I would have expected selling into the close after a day like today, but no more.

Keltner Channel Surf's picture

What ?!  You freely admit, on these pages, to have shorted VIX?

That's like walking into a 5-yr-old's "Frozen"-themed birthday party wearing an "Elsa Sucks" T-shirt.

Jafo's picture

If the US were a closed system then your doubts would be valid JMMU.  It is not a closed system.  There is big trouble looming in other parts of the world (European banking system and European government bonds) and the smart money does not want to be trapped when the inevitable SHTF moment arrives.  It is parking in the US and a lot of it is going into the Dow and the S&P.  Money flows will slow down and speed up with the changes of the perception of the crisis in Europe but it is unlikely that it will reverse until sanity in monetary policy returns to Europe.  You may think that the US has problems (and it does) but they are not as bad as elsewhere.  As they say, it is the best dog in the show.

ElTerco's picture

Of course GE is going to bounce. Many congresspersons own a lot of it in their portfolios.

khakuda's picture

Every day is the same.  Automatic mindless buying at any price.

D.r. Funk's picture

youre missing a lot if you characterize or still characterize it as -mindless- buying

im merely trying to elevate the discourse

mindless buying makes 0 sense if you look at context, patterns, narratives, holistic

debtor of last resort's picture

Well, General Eccles is up, so...

Osmium's picture

Hey, you forgot the chart that compares todays Market to 1987.  WTF is up with that?

Tugg McFancy's picture

Rig counts? Don't forget 'em.

Kido's picture

Uh I think you have the two series in the last chart inverted...

D.r. Funk's picture

The confluence around protected-power is now, at least, circling tighter. (Awans, Comey, Wasserman, Mueller Russia, C foundation, Assange 650, Hrc, Mueller-Comey-Hrc) The breach into that timeline, would be inflection pt. Inflection. point. The geopolitical ancillary-escalations have a role, in, that, game as well (Nkorea, Anti petrodollar, Isis, Faux coldwar) The inflection point would, most likely, be the breaking point because Destabilization, is most likely their countermove, to takedown (or takedown vulnerability going hot) as the game-of-chicken described by some of us. many months. ago
goes live

khakuda's picture

Janet "let them eat cake" Yellen can pat herself on the back as she impoverishes those that don't yet own stocks or homes.

mily's picture

S&Piss looks almost exactly the same as in Feb2017, like a script or something...

the late idi armin's picture

yep the fundermentals are sound, everyone is fucking crazy

D.r. Funk's picture

Ive laid quite a lot of blame on the babyboomers, for quite awhile. Their greed. Their silence. Their heinous entitlement.

allowed and created a tech bubble

allowed and created a housing bubble

following that great fucking legacy:

Allowed A Debt and Equity bubble

The failure to learn, at least from the 1st 2 boombusts, within only a 12 or so year period is infinitely damning. Their silence in perpetually rising equity levels as the ""wise elder generation"" is on record

jewish_master's picture

well we wont have to suffer a lot from this degenrates hippies a lot.... 

buzzsaw99's picture

You fool! You fell victim to one of the classic blunders - the most famous of which is "never get involved in a land war in Asia" - but only slightly less well-known is this: "Never bet against chinese intervention when death is on the line"! Ha ha ha ha ha ha ha! Ha ha ha ha ha ha ha! Ha ha ha... [/vizzini]

AlphaSeraph's picture

<<<<< This is a blow off top that will result in a crash

<<<<< This is a melt-up and the early stages of USD hyperinflation

Fundies's picture

Schlongwave nailed it.

Rebelrebel7's picture

You are all beautiful and unique snowflakes! Trophies for everyone, with a smiley face and a crown! Everyone wins all the time everytime, unless you are in the 99%.