Bernanke Decrees: Gold Rips, VIX Slips, And Volume Dips

Tyler Durden's picture


Gold managed a 1.8% surge today (back above $1690 and its 200- and 100-DMAs and its largest jump in 2 months) from Friday's close thanks to the combination of the ECB on Friday and Merkel and Bernanke today assuring the world that anything more than a 2% dip in stocks will not be tolerated. While Silver outperformed Gold from Friday's close, based on its 2-3x beta of the last year this was a notable 'underperformance' as Gold outpaced everything (beta adjusted). Perhaps importantly, the S&P 500 when priced in gold met and rejected resistance at a key level today - even with its nominal 30pt rally off of Friday's S&P lows. Volumes were abysmal with stocks well below YTD average and the S&P futures 20% below average and among the lowest few days' volumes of the year. Credit markets did not participate as exuberantly (though HY outperformed IG as you would expect) but the day seemed split into 4 segments: pre-Bernanke (quiet/sideways), Bernanke to US Open (rampfest, Gold outperforms, TSY rally), US Open to EU Close (TSY selloff notably, equities sideways, Gold rips), and then from EU Close to US Close (Equity/Gold/TSY rally as USD leaked lower). In FX, JPY was relatively stable at its lows after Bernanke's speech as the rest of the majors strengthened versus the USD (as EUR broke above 1.3350 once again). Oil managed a small rally on the day but underperformed the USD's 0.5% weakness from Friday as Treasuries were very flip-floppy today - ending the day with a small twist around 7Y (30Y +3bps). VIX made new lows and closed there as the term structure flattened further to its flattest in almost 4 months (with the largest six-day flatttening in 8 months).

The S&P priced in Gold appears to have met and rejected resistance at around this level but of course this does nothing to slow the nominal equity rally that is now ignorant of anything but centrally planned rhetoric...

and ES (the S&P 500 e-mini futures contract) rallied right up to the long-run (March 2009) rally low up-trendline (and also its post-Thanksgiving Day rally up-trendline too)...


The equity market excitedly outperformed credit today (as stocks were led by Healthcare - Obamacare-related and then the typical high-beta Financials, Industrials, and Discretionary but everything was up today).

Oil generally ignored all the hullaballoo of the precious metals and copper surging and tracked much more closely with the USD today...

As is clear, Copper and Silver outpaced Gold today BUT on a normal beta-adjusted basis the Gold move is considerably larger.

The day seemed to break into 4 segments in terms of correlated market action...

Given the pre-Bernanke pre-amble, it is evident just how big a 'beta' adjusted day Gold had. Treasuries were confused as the standard QE-on trade fell apart on some US-Open to EU-Close selling which appeare to translate directly into gold buying from the chart above. After Europe closed, the game was on and Vol was crushed, Stocks ramped, Gold soared and Treasuries rallied back to their best levels of the day (though the long-end underperformed the short-end from Friday's close).

VIX closed at its lowest since June 2007, unable to take out the intraday lows though from a week or so ago). What is most interesting is the start of a capitulation in the term structure - i.e. the premium for protection is coming down notably not just in the front-month but in later months where investors/traders have been keeping their hedges on. While painful, until this plays out to more normalized 'flatness' (which are actually approaching rapidly now) there is too much ammo to keep pushing higher as shorts cover or hedgers capitulate.


As the VIX/VXV term structure ratio (or relative flatness of the term structure of volatility) has seen the last six days show the biggest flattening in 8 months as the term structure is nearly normalized to its 50DMA...


What is quite entertaining is watching CNBC explain this new reality as dismal data disappointing everywhere and Pisani facing up to a new normal non-recovery in housing and yet the performance of stocks is somehow magically fundamentals supported by the Fed's actions (indirectly instrad of directly via pure debasement) can tell even their tough veneer of perma-bullishness is starting to crack at the addicted loquidity-fueled monster than Ben and his friends have unleashed...

Charts: Bloomberg

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 03/26/2012 - 16:37 | 2292326 Temporalist
Temporalist's picture

I got my tungsten foil hat on.

Mon, 03/26/2012 - 17:19 | 2292455 slaughterer
slaughterer's picture

EOQ window-dressing week.

Mon, 03/26/2012 - 18:04 | 2292576 redpill
redpill's picture

Hopefully no double-levered VIX ETF muppets were harmed in the filming of this picture.

Mon, 03/26/2012 - 20:02 | 2292910 Chaffinch
Chaffinch's picture

Off topic
BBC Radio 4 have just broadcast an excellent programme called "Analysis" in which they explore the conjuring trick by which the Bank of England calls money into existence by the 'magic' of QE - comparisons to Weimar Republic etc. - AT LAST the mainstream media are starting to wake up!

I hope this link works - there is about a minute of junk at the start - sorry!

Mon, 03/26/2012 - 20:09 | 2292940 CU1981
CU1981's picture

How come 0 hedge never mentions the NWO ? Only NATO .... Hello Tyler... Chairsatan2 ?????

Mon, 03/26/2012 - 19:28 | 2292851 BKbroiler
BKbroiler's picture

Rips, Slips, and Dips? 

I've lost the bleeps, I lost the sweeps, and I lost the creeps.

Mon, 03/26/2012 - 19:31 | 2292860 fightthepower
fightthepower's picture

Fuck you Bernanke!

Mon, 03/26/2012 - 16:40 | 2292336 meetired
meetired's picture

To hell with the Bernanke Put, I'm putting on the Bernanke Gets Put in the Ground play.

Mon, 03/26/2012 - 20:13 | 2292946 moonshadow
moonshadow's picture

watch out-in utah they're monitoring what u just said

Mon, 03/26/2012 - 21:30 | 2293085 Papasmurf
Papasmurf's picture


Mon, 03/26/2012 - 16:42 | 2292346 YesWeKahn
YesWeKahn's picture

Bernanke just has to schedule to fart every day to keep the market pumped. When he finally is out of dirty air, the world will end.

Mon, 03/26/2012 - 17:07 | 2292415 YesWeKahn
YesWeKahn's picture

Bernank started to monitor this board and gives negative recs on every post.

Mon, 03/26/2012 - 17:56 | 2292549 e_goldstein
e_goldstein's picture

We <3 you, chairsatan. We <3 you even longer, if you pay in silver.

Mon, 03/26/2012 - 23:33 | 2293331 StychoKiller
Mon, 03/26/2012 - 16:45 | 2292355 trembo slice
trembo slice's picture

Silver outpaced gold, eh?

Mon, 03/26/2012 - 16:50 | 2292366 walstudio
walstudio's picture

Tyler, maybe it's time for you to say, "Ok, I am wrong, the market is right"

--The market is always right.


Mon, 03/26/2012 - 16:56 | 2292379 ZeroPower
ZeroPower's picture

We've heard the same thing up until July '11 whereby 1350 was breached and everyone was on their high horse looking for SPX 1500.

Can we finally get there this time? Possibly... but is it sustainable? Quite likely not. We just need a few more suckers to hop in around these highs, so give it a few more months...

Mon, 03/26/2012 - 17:00 | 2292389 walküre
walküre's picture

The "market" .. LOL

Mon, 03/26/2012 - 17:23 | 2292466 Howdan
Howdan's picture

Hahaha - the "market".....that made me laugh so hard I was crying!

It's funny because it's true. Market? What market?


Mon, 03/26/2012 - 17:08 | 2292401 Comay Mierda
Comay Mierda's picture

technicals and fundamentals have disconnected

for those trading on fundamentals remember the market can stay irrational longer than you can stay solvent.

for those trading on technicals, tread carefully. algo flash crashes can occur in the blink of an eye

the safe way to play this scenario is buy PM's and hard assets and sleep easy at night

Mon, 03/26/2012 - 22:20 | 2293193 bnbdnb
bnbdnb's picture

The bond market is right.

Mon, 03/26/2012 - 16:51 | 2292369 devo
devo's picture

Is it too late to participate? I mean, this is clearly going up more, just wondering if the reward is worth the risk at this point.

Mon, 03/26/2012 - 16:53 | 2292373 suckerfishzilla
suckerfishzilla's picture

How much of this article can be taken seriously when the gold bias of the author is so apparent?  What the f*ck is it with you retards?  Silver has been spanking gold all damn day. 

Mon, 03/26/2012 - 17:01 | 2292391 suckerfishzilla
suckerfishzilla's picture

Three votes down from the retard gallery so far. 

Mon, 03/26/2012 - 17:05 | 2292404 brewing
brewing's picture

you're just lookin for a good junkin, aren't you...

Mon, 03/26/2012 - 17:12 | 2292434 suckerfishzilla
suckerfishzilla's picture

And YOU didn't address the content of my post either.  

Mon, 03/26/2012 - 17:16 | 2292440 gangland
gangland's picture

that's because this douchebag "brewing" is an unemployed alcoholic drunk troll in his mom's basement with nothing of value to add. ever. look at his pathetic posts.

Mon, 03/26/2012 - 17:25 | 2292473 brewing
brewing's picture

great post writing and comedy seem to suit you well...

Mon, 03/26/2012 - 17:47 | 2292523 suckerfishzilla
suckerfishzilla's picture

"Oh!.  I have gold and a junk button.  that makes me intellectually superior."

Mon, 03/26/2012 - 18:18 | 2292616 Troll Magnet
Troll Magnet's picture

hey sucker,

i think it's safe to assume that most gold owners on ZH also own silver.  lots of it.

Mon, 03/26/2012 - 18:49 | 2292746 suckerfishzilla
suckerfishzilla's picture

What does that have to do with the fact that the author of the article misrepresents the data?  Is that too difficult for you to grasp?

Mon, 03/26/2012 - 19:17 | 2292832 suckerfishzilla
suckerfishzilla's picture

Bernanke lies about the value of the dollar and treasuries all of the time.  How does that make gold investors any better if they lie about the fundamentals of their investments? 

Mon, 03/26/2012 - 19:22 | 2292840 Dave Thomas
Dave Thomas's picture

RoboTrader jumping in touting LULUmon yoga active wear would be the tiss to the BA DUM TISS. Right about now.

Mon, 03/26/2012 - 17:09 | 2292421 walstudio
walstudio's picture

Put it simple, when the market doesn't go with what the "model" says, 

it's either

1) The market is wrong,

2) Your "model" is wrong.

Or, you guys can keep hiding your head into the sand, it's been about 100 days since Dec 19th rally, btw.

Mon, 03/26/2012 - 17:39 | 2292505 walküre
walküre's picture

I stayed in cash and missed the opportunity. Didn't lose anything either.

LTRO was the name of the juice.

Let's see how much longer the charade can go on. Humpty Dumpty is still broken in pieces.

Mon, 03/26/2012 - 23:52 | 2293373 sun tzu
sun tzu's picture

Was the market wrong in March 200 when the NASDAQ hit 5250? The market was right until it wasn't and millions got wiped out. I'd rather stay on the sidelines. I rode it up for 40% and now it's in the danger zone.

Mon, 03/26/2012 - 17:20 | 2292447 devo
devo's picture

Yeah, I got 4 downs for speaking realistically and presenting a valid question with debate potential.

Look dudes, I like gold and all, but this stock market is going higher. We're supposed to lie and pretend it isn't?

Mon, 03/26/2012 - 17:44 | 2292514 walküre
walküre's picture

Are you looking at the broader picture or at individual stocks?

When you look at some individual stocks, the performance is mostly awful except for a few "darling" stocks.

All the miners I sold last year are still down further. The energy stocks are down further.

Bank stocks are up. As if.

So, what would you buy?

Mon, 03/26/2012 - 18:39 | 2292677 devo
devo's picture

Probably an index fund, which sucks, but it's a broader way to ride the rally. I mean, I am not comfortable buying here, but I also hate sitting on the sidelines watching this meltup. I bought some value stocks (Vodafone@26.03, Newmont@52.12) last week near 52 week lows and they've popped a little since then, but I can't find many undervalued individual stocks. Especially since I am so bearish on the long term prospects. But, on the flip side I know markets will get all the money they need to levitate. So, the question is, do we go in? I mean, I feel like this is a trap. At some point it won't be, though, and we'll have missed a large run (or we already have). Unless it finally corrects/implodes. This earnings seasons might decide if I go in or not. I mean, I think earnings are going to be sh*t moving forward. UI is ending for many people as U6 climbs. Retailers have been weary to pass on inflation to consumers, so their eating a bit of that for now. That won't last, either. Really tough situation imo. Do we go in or not? It would be nice to get a real discussion instead of nasty quips from gun-toting gold bugs and jaded folks who think everything but metal is shit. I like diversity and having a foot in each world.

Mon, 03/26/2012 - 21:37 | 2293103 CvlDobd
CvlDobd's picture

PIB is at a low risk entry point. I suspect it breaks lower given the shit relative strength but if you are looking for low price/risk entry it might make sense here w/ a stop a little under recent lows.

Mon, 03/26/2012 - 23:54 | 2293379 sun tzu
sun tzu's picture

Buying here is like buying in 2000. Yeah the market keeps going up until it collapses. Everyone knows that it's overbought but they keep wanting to squeeze out that last dime

Mon, 03/26/2012 - 18:40 | 2292695 Awakened Sheeple
Awakened Sheeple's picture

but this stock market is going higher until the central banks say so.

There, fixed it for you.

Mon, 03/26/2012 - 23:10 | 2293278 luna_man
luna_man's picture



It's Simple, You like the rise, THEN PUT YOUR MONEY WHERE YOUR MOUTH IS!!...looking for approval?

MY MAIN MAN...Keep telling "ME", what you see, hear and smell!!!

Pay no attention to the "knuckleheads"!!

Mon, 03/26/2012 - 21:32 | 2293087 Papasmurf
Papasmurf's picture

It was only three because I hadn't read your post yet.

Mon, 03/26/2012 - 17:08 | 2292413 SilverRhino
SilverRhino's picture

And it's going to get SMACKED sometime this week.    3/31 is coming.

And yes I am stacking some right after that smackdown.

Mon, 03/26/2012 - 17:16 | 2292439 trembo slice
trembo slice's picture

no need for the hostility bro.

Mon, 03/26/2012 - 17:33 | 2292492 DosZap
DosZap's picture


Dude,retard is a bad word,mentally challenged like your math is better.

Plus do your damned math.................SPANKING?.

If you call .24% SPANKING...........I would hate to see a 5% diff.

1.86% v.s. 1.65%

Mon, 03/26/2012 - 16:56 | 2292378 fonzannoon
fonzannoon's picture

crack up boom

Mon, 03/26/2012 - 17:00 | 2292386 gjp
gjp's picture

True that.  A textbook case.  What should one do in a crack up boom when insanity and greed are rampant?  I really don't know ... it's making me crack up actually.

Mon, 03/26/2012 - 17:01 | 2292390 fonzannoon
fonzannoon's picture

Own real shit

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