The Deer Is Back As Markets Go 'Reality-On'

Tyler Durden's picture

Today wasn't the worst plunge in the stock market so far this year... It was the second-worst by a whisper. And just like that we are one third of the way down to Goldman's target. But everything is priced in? It seems that between the realization that global growth may actually be slowing (between China PMI and this morning's Philly Fed) and the recognition that there is no-QE-without-a-crash, markets began to lose steam early on this morning (led by energy names crushed by the biggest two-day drop in oil in over 9 months). Then Goldman's timely note to short the market if you want Bernanke to act (and the rumors of pending global bank downgrades) sent us over the edge as the S&P lost its upchannel and plunged (down over 40pts from its highs of Tuesday). The Dow is following a very worrisome pattern (echoing last year far too well) as it lost the second most points in 8 months. Gold (and the rest of the commodity complex - led by WTI -7% this week) fell notably as the USD surged to up almost 1% on the week. Gold's and USD's moves suggested further pain for the S&P as Treasuries stabilized at notably better levels and did not plunge on the day (though much of this is equities playing catch up to a longer-term dislocation). VIX jumped over 3 vols back over 20% (as perhaps the jump in implied correlation we highlighted was on to something). AUD (as we suggested) was crushed as risk-on trades drive carry-off and the China trade dumped it by the most in a day since November (almost back to parity). Heavy volume and a big pick up in average trade size suggest this has more to run as broke back under the 50DMA and back inside the down-channel for the S&P.

To summarize all of the above, we go back to our favorite visual description:

Today wasn't the worst plunge in the stock market so far this year... It was the
second-worst by a whisper. And just like that we are one third of the way down
to Goldman's target.

and if you were wondering why Goldman thinks 1285 is the level...remember this chart from a day or two ago?

The Dow is following a very ominous pattern with its second largest drop in eight months...

and today's trainwreck hit all our levels on the way down...

and medium term we are back under the 50DMA, back inside the downtrend channel and saw volume (and average trade size - lower pane) pick up notably in the S&P 500 e-mini futures...

Oil's 2-day drop is the highest in 9 months...

The week so far in commodity-land...

and the last few days across asset classes...

Stocks priced in gold have gone largely sideways for the last few months but remain at an important level...

and on a longer-term basis, CONTEXT (a proxy for risk-assets in general) has had a very different tale to tell over the past few months (this is not the day-to-day model we use but a longer-term indication of what global risk markets is saying about relative ebullience or pessimism in stocks)...


Charts: Bloomberg and Capital Context

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CClarity's picture

Equities and commodities finally paid attention to bonds today.  And fact that ZIRP is not growth inducing in the Real Economies of Developed World.  

SilverTree's picture

~I see the Dow Jones and I want to paint it RED.

NewThor's picture

If you invert the image in photoshop,

you can see Timmy and Bernank taking turns

butt fucking the DEER.

caimen garou's picture

deer turns his head back to tim and bernake and ask, is that what you call shorting the market?

vast-dom's picture

that deer's about to become venison. question is who's gonna get the primest cut?

Max Hunter's picture

deer turns his head back to tim

Ohhh yeah.. the fish eye.. been there.. ;)

Liquid Courage's picture

And the deer's female, so ... draw your own conclusions.

HarryM's picture

Does anyone still remember what followed the largest drop this year?

Why the largest gain , of course


Why didn't someone step up to the plate today for the save?

Dr. Richard Head's picture

Painting the DOW Jones red
We're painting the Dow Jones red
We dare not stop
We'll liquidate our drop
So let the Red be spread
We're painting DOW Jones red
We're painting DOW Jones red

Ohhhhhhhhhhhhhhhhhhh, painting the DOW Jones red.

From this day forward the DOW Jones will be known as the DOWN Jones until such time a black paint liquidity is injected by the bearded one.

I am more equal than others's picture

Dick meet the Stones



Public education at its best.

Silver Bug's picture

Unless they leave the QE tap on constantly, the market will continue to go down.

I am more equal than others's picture

You have too much sympathy for the devil. 

pkea's picture

come on, isn't the deer related to the whale....or just the other side of it...the real deers got killed off a long time ago,

and please don't tell me that you really think the drop was moody's downgrade related....

fockewulf190's picture

I'm surprised there are any deer left to hit. Soon it's going to be Deathrace 2012 on the rest of the herd.

Lionhead's picture

Bernanke is now caught in the ZIRP liquidity trap. He clearly dodged the question brought by the Japanese reporter in yesterday's news conference. The only thing the FED will produce now is Stagflation. The 'master of the universe' will soon see what he's wrought - failure. Here's the logic:

Why? The reason you fund long-term is to reduce risk and volatility. If you have a 30 year fixed mortgage, someone else is assuming the risk short-term for a rise in interest rates. The Fed in shifting away from long-term into short-term is making it possible for government interest expenditures to rise like a rocket-ship when the debt crisis reaches here. This will create the meltdown for government will be just like the banks, lending long-term with demand deposits. The crisis hits, the depositors want their funds, but the bank lent them out for the long-term and cannot return cash now, that creates the run, and the bank fails. The Fed has just adopted the very same risk showing how desperate they are to help Obama win the election trying to stimulate the economy. Sorry – it will fail as usual. If you want to help the economy – regulate the profit market at the bank. They are NOT passing along interest savings to borrowers so the lowering of rates is just increasing profits at banks – not stimulating a damn thing!

The extension of Operation Twist will not provide ANY benefit whatsoever. Businesses and consumers who aren’t borrowing now aren’t that likely to change their minds just because rates dropped a little more. Banks will not pass on that savings anyway. So what are you really doing? The Fed can do NOTHING. But they cannot be scene to be doing nothing, so they do something even if it will accomplish nothing.

I have tried to explain that the theories everyone is using today regarding the economy are simply wrong assuming it is a fish bowl with no consideration as to external influences. The cost of producing oil has risen from $25 to nearly $75. The cost of government continues to rise. Local governments are raising taxes. This is producing NOT an economic recovery, but STAGFLATION, where there is inflation we see in prices, but the driving force is not DEMAND, but rising costs. Banks contribute to STAGFLATION refusing to pass on savings with lower cost of funds while refusing to now lend without full collateral. So they will lend only to those who do not need it and are not interested in borrowing for investment, and this keeps the deflationary trend in place. The banks then are more likely to trade with client funds so they do not have to lower their profit margin.

So welcome to the crazy world of STAGFLATION where you can’t keep down rising costs, but the rise is not fueled by private demand.

 He's trapped & we all are as we go down with them. Gold is the only solution to ease the transition until the sovereign & bank defaults have subsided.

pkea's picture

who turned the reality on on who...but a nice pic.

fuu's picture

Venison bItChEz!

El Viejo's picture

"Chance favors a prepared mind."  I forget who.

Or in this case a prepared portfolio.

TruthInSunshine's picture

The 401(k)/calPERS/pension/retirement-funds-in-equity-markets crowd that the TBTF will take hostage as they slam the "stock market" until they get cargo holds full of more free money (debt accretive) from The Bernank.

Same old song and dance as 2008-2009. Hank Paulson's 'Tanks in the streets and martial law" moments, verson 2.0.

lakecity55's picture

There are only 100 "senators."

There are a lot more of us muppets.

slewie the pi-rat's picture

nothing much funnier than someone who is a paid party operative on zH to pretend he is a muppet

thxz so much for this!

roadhazard's picture

 I really hate when a website will not let you return to where you were.

Dr. Engali's picture

I'm serving venison  for dinner tonight actually. Kind of ironic.

Seize Mars's picture

Actually I'm not sure that's irony, I think it's just coincidence.

Hulk's picture

How bad was the damage to the car ???

jerry_theking_lawler's picture

yep. me too. ground deer steaks. fresh tomatoes, squash, cucumbers, potatoes....yep. all fresh.  since NOTHING on my plate was from a store, my message to TPTB...suck it.

Offthebeach's picture

Coming soon to an America near you, Muppetilism. Muppets eating Muppets. Yum!

tiwimon's picture

Soylent Green muppet style eh?


/Or is it only Soylent Green when its Kermit the frog? otherwise its just Soylent or what?

lakecity55's picture

"My God, Bernanke, these FRNs are.... Soylent Green!"

Ben: Evil Laugh.

Piranhanoia's picture

No, its cotton.  Milo Minderbinder bought a lot of cotton.  Got caught in a catch 22.

mayhem_korner's picture



+1 for Moniker, +1 for Avatar

Comment strikes a little close to home for me, tho...  ;)

janus's picture


janus was thinkin bout you the other day...actually, it's the other way around -- janus was thinkin about lancelot link, and the ole fuu ikon popped in the cabeza.

so, here ya go...this is from back in the day; back when nick at nite ruled the airwaves:

monkey biz,


fuu's picture

That is pure win!

the not so mighty maximiza's picture

To get that QE they must distroy.

SilverTree's picture

My EBT, My EBT, My EBT, My EBT, I swipe my EBT.

Instant Wealth's picture

Waidmannsheil, fellow short companions!

Dr. Engali's picture

Well at least we closed off the lows ;->

HD's picture

If we only hit the Goldman 1285 I'll be pissed. Ramp the market 300 S&P points on a sugar high - give back 100 and scream for more sugar...