• Gold Money
    05/03/2016 - 11:35
    Crude oil time-spreads have completely dislocated from inventories. Historically, such dislocations have proved to be short lived. We expect that either spot prices will sell-off again or the back...

Dow Closes Below 13K For The First Time Since February 27, 2012; Flash Crashes

Tyler Durden's picture


Risk off. On one of the highest volume days in months (for equity cash and futures), ES (the S&P e-mini futures contract) fell over 20pts from high to low following Bernanke's lack of expansionary comment. Right at the close we accelerated very fast losing around 6pts almost instantly as the market had a very jittery feel. The major financials were off 2.5-3% from the 10amET Bernanke speech release (and XLF was down 1.4% from that peak) but it was the precious metals that shocked. Gold had it largest percentage drop (over 5%) since early December 2008 (around $100) and Silver plunged over 7% at its worst, managing to come back a little to close down around 6%. Oil did not follow the Central-Plan (to talk down the print-fest) as WTI pushed back up to $107 and Brent over $123 as the USD rallied aggressively - now up over 0.5% on the week. Treasuries early dislike for the removal of the punchbowl was quickly dismissed as equities sold off this afternoon and we drifted back 1-2bps from high yields of the day (though still higher yields close to close). As we noted two days ago on Twitter, the market seems only capable of reacting to addition or removal of central bank liquidity and what was perhaps odd today was the delayed reaction - one of incredulity maybe at the gall of these printers to stop/pause.

In the last minute of the day session (between the white vertical bars on the chart), ES accelerated to the downside very fast, taking out the entire stack and had a very flashy reminiscence to it.

While markets never perfectly repeat, they do seem to echo and the rectangles in the chart below are of equal period and size move (click for more clarity) - perhaps we now know just how far the Central Banks can push things before unintended consequences begin to get out of control...

The Dow crossed 13,000 17 times today and closed back below that illustrious level but it was the underperformance of financials post Bernanke that was most notable (MS & BofA -2.8%, and GS -2.3%)...

Credit continued its up-in-quality rotation that we had warned about with IG outperforming while HY and ES synced up (higher beta) and sold off. HYG though also outperformed, but it looks like some final convergence clean-up against HY (or perhaps just retail rotation from risky stocks into the safety of high-yield bonds </sarcasm>)...

But gold dropped over 5% completing its worst day since early December 2008...


Gold is trading back to late January levels while Silver is only back to last week's levels - though the vol was very very violent today. As is clear from the chart below, Oil did not follow the plan...

The USD strength today was indeed impressive (up around 1% from its early morning lows) as EURUSD is now down almost 1% on the week.


Charts: Bloomberg

Bonus Chart: YTD performance for the S&P 500 matches the 1997 performance through February and from the chart below, we can see what happened next...

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Wed, 02/29/2012 - 17:25 | 2209797 mark mchugh
mark mchugh's picture

I think you meant "2012" in the headline, Ty

Wed, 02/29/2012 - 17:26 | 2209806 mark mchugh
mark mchugh's picture


Wed, 02/29/2012 - 17:37 | 2209878 spiral_eyes
spiral_eyes's picture

gold down?

pwaha BTFD.

Wed, 02/29/2012 - 19:32 | 2210294 Jay Gould Esq.
Jay Gould Esq.'s picture

Today's session: gold trades down >5%.

Gartman ( via telephone ) announces to CNBC's Melissa Lee on this evening's "Fast Money" that he was selling gold today, "...because you had to."


Wed, 02/29/2012 - 17:26 | 2209804 monopoly
monopoly's picture

Love the header. Perfect.

Wed, 02/29/2012 - 17:31 | 2209838 JPM Hater001
JPM Hater001's picture

Clearly the bubble is popping...


Wed, 02/29/2012 - 17:31 | 2209841 Mark Carney
Mark Carney's picture


-the bernak

Wed, 02/29/2012 - 17:32 | 2209846 Mark Carney
Mark Carney's picture


-the bernak

Wed, 02/29/2012 - 17:43 | 2209911 brewing
brewing's picture

cnbc asshats said qe3 was already baked on in...

Wed, 02/29/2012 - 18:13 | 2210037 ZippyBananaPants
ZippyBananaPants's picture

I watch and read all day, every day:

Today feels different, this could be the start of something.  

Wed, 02/29/2012 - 18:53 | 2210168 JPM Hater001
JPM Hater001's picture

Probably just some bad gas.  Take some Malox and call me in the morning...20 minutes after opening bell preferably.  Then we will have a better chance of discerning.

Wed, 02/29/2012 - 19:50 | 2210338 AbruptlyKawaii
AbruptlyKawaii's picture

open the pod bay doors hal!

Wed, 02/29/2012 - 17:26 | 2209805 achmachat
achmachat's picture

whoever said that the 29th of february is not a special day....?!

Wed, 02/29/2012 - 17:30 | 2209831 A Lunatic
A Lunatic's picture

Yep, a bonus day to reel in filthy lucre from the unwashed masses.............

Wed, 02/29/2012 - 17:27 | 2209811 czarangelus
czarangelus's picture


j/k, but I really am worried that this is the melt up that people like Schiff have been warning about. Are the banks going to use Bernanke Bux to just pump this bitch up to 20,000?

Wed, 02/29/2012 - 17:33 | 2209855 dwdollar
dwdollar's picture

The little known factoid that is never mentioned by the momos...

Wed, 02/29/2012 - 17:27 | 2209814 citta vritti
citta vritti's picture

new balls, please

Wed, 02/29/2012 - 17:28 | 2209815 mendolover
mendolover's picture

Awesome headline!

Wed, 02/29/2012 - 17:28 | 2209819 monopoly
monopoly's picture

New balls? Shit, I need a pacemaker now.

Wed, 02/29/2012 - 17:28 | 2209821 AC_Doctor
AC_Doctor's picture

You mean the 10,000 gold contracts  and the 5000 silver contracts that JPM dumped just as the the FED monetary statement was released.  How fucking blatant is this manipulation?

Wed, 02/29/2012 - 17:33 | 2209851 JPM Hater001
JPM Hater001's picture

I did nothing....

Oh, you mean my arch nemisis. 

Anyone have any more questions about the moniker?

Wed, 02/29/2012 - 17:41 | 2209893 JPM Hater001
JPM Hater001's picture

Oh, and that DUI the market was pulled over for...it accidently walked into the street and got hit by a passing panic.

Wed, 02/29/2012 - 18:58 | 2210185 goldfish1
goldfish1's picture

They can't stop it. Back when they said 37 was the magic number to break JPM...up down up down... of course they dumped all they dared. They're bailing water with a sieve.

Wed, 02/29/2012 - 17:30 | 2209823 SheepDog-One
SheepDog-One's picture

But isnt the only relevant story out there about how PM's are down? Stocks simply cant be down, we havent hit guaranteed DOW 250,000 yet...this simply must be a glitch.

Wed, 02/29/2012 - 18:42 | 2210134 CrashisOptimistic
CrashisOptimistic's picture

"Oil did not follow the Central-Plan (to talk down the print-fest) as WTI pushed back up to $107 and Brent over $123 as the USD rallied aggressively - now up over 0.5% on the week."

And this says what, sportsfans, about the theory that oil's ramp up is purely monetary and not geology?  

There was not a single threat against Iran, errrr, Iranian threat against whoever today in the news.

Wed, 02/29/2012 - 17:29 | 2209824 schismjism
schismjism's picture

with the riots in spain today, the system is crashing.....


Wed, 02/29/2012 - 17:31 | 2209836 dwdollar
dwdollar's picture

LOL.. this title is fucking hilarious....

Wed, 02/29/2012 - 17:31 | 2209837 blu
blu's picture

We won't have another day like this for 4 years. Exactly.

Wed, 02/29/2012 - 17:31 | 2209839 Comay Mierda
Comay Mierda's picture

bernanke is just trying to come off as a disciplined monetarist in hinting that there wont be any more easing.

wait til the dominos of defaults start falling.  real fucken soon too.  then he will revert to the out of control keynesian and print infinite 1's and 0's

Wed, 02/29/2012 - 17:41 | 2209867 JPM Hater001
JPM Hater001's picture

Yes, the money that's "not worth the paper it's not printed on." - Gerald Celente

Wed, 02/29/2012 - 17:32 | 2209843 Theta_Burn
Theta_Burn's picture

PM's ride was like a Kingda Ka rush. holy f@#^

Wonder how long the PM beat-down will last this time


Wed, 02/29/2012 - 17:36 | 2209872 JPM Hater001
JPM Hater001's picture

Hopefully till bonus day so I can stack up.

I'm not hopeful though- It's 2 weeks away.

Wed, 02/29/2012 - 17:32 | 2209845 fonzannoon
fonzannoon's picture

someone please explain the mechanism called the vxx tro me and use small words.

Wed, 02/29/2012 - 17:38 | 2209880 JPM Hater001
JPM Hater001's picture

It's the rating used for porn with midgets in it.... 

Wed, 02/29/2012 - 17:58 | 2209977 Squid Vicious
Squid Vicious's picture

supposed to track vix by buying vix futures contracts but underperforms when vix futures are in contango because it has to roll into more expensive forward month contracts...

Wed, 02/29/2012 - 22:22 | 2210797 JPM Hater001
JPM Hater001's picture

I liked mine better.

Farts and midgets are always funny.

Fri, 03/23/2012 - 01:40 | 2282690 MeelionDollerBogus
MeelionDollerBogus's picture

vxx is supposed to follow VIX. It sort-of does.

I compared vxx to spy. spy follows s&p500, generally 9.98x SPY price = S&P 500 index. Similarly DIA follows Dow.

My comparison shows a ratio of -4.11x to -4.6x. This can get confusing so I'll go step by step.

If SPY goes up 1% that's 1.01. If it goes down 1% that's 0.99.

If SPY moves then VXX normally moves 4.11 as much (bigger gains) but in the OPPOSITE direction. So that's 1.01 to the power (-4.11): 1% gain on SPY, 0.9599 on vxx (loss of 4% by common terms; precise reverse of 1.04174361251 or "1 / 4.17% gains")

Following so far?

So if you think the market will tank then a vxx move upward is expected. If you think the market will rise then a decent vxx drop should be expected. If you like options & use a vxx strangle you can do OK. I just used that. This means a put & call together. Search the terms if options interest you.

If I expect to see SPY lose 1% (0.99) then 0.99 to the power (-4.11) is 1.04217187856 or 4.2% gain expected on vxx in the same time-frame.

Wed, 02/29/2012 - 17:33 | 2209848 Zero Govt
Zero Govt's picture

asset divergence

spiked volume

"Don't Panic"

this zombie bitch Goldilocks economy is not falling apart at the seams ...Bubble Ben can hold it all together

ahem, Exits anyone?

Wed, 02/29/2012 - 17:33 | 2209850 SheepDog-One
SheepDog-One's picture

'Market seems only capable of reacting to addition or removal of liquidity to central banks now'....well what do they expect from a market built on 0% free money? Dont complain to me now that you dont want the shitburger...You built it, you eat it! 

Wed, 02/29/2012 - 17:36 | 2209854 SeverinSlade
SeverinSlade's picture

Days like today are going to become more and more frequent (with some days PMs dropping 5+% like a brick and others jumping 5+%).  We are approaching the end game.  That's not to say that the central planners can't kick the can further down the road...HOWEVER, which each round of easing, that can becomes heavier and heavier. 

Just my opinion, but I believe the Fed has avoided QE3 this long because it knows that QE3 won't really do jack shit overall (and has instead opted to continually hint at it - basically dangling the carrot in front of the market).  QE3 could very well lead to the systemtic collapse that is long overdue.  Iran, China, Russia, India, etc. all continue to distance themselves from the USD...When QE3 comes, and we all know it will, it's going to have to be massive if it is to have any effect whatsoever on the markets.  How many more rounds of currency devaluation will China and the rest of the world take before they demand a new reserve currency?

Then throw in the inevitable war with Iran.  China's investments are continually losing value at the same time that the Anglo-American empire (what is left of it) is doing its best to cripple China/Russia's strategic allies.

Wed, 02/29/2012 - 18:20 | 2210061 max2205
max2205's picture

Those yellow fuckers just had a 'visit' with timmah and Obummmer last week. Coincidence ? Not

Wed, 02/29/2012 - 18:22 | 2210063 There is No Spoon
There is No Spoon's picture

QE3 will be used to prop up the stock market just like the first two. The Fed knows that QE doesn't help the economy but it does juice up the stock market. So when gold, oil, and the s&p are low enough, the Fed will do something about it. Bernanke has been saying this repeatedly, only using the term "economic conditions" instead of "asset prices." He can't do anything while gold is breaking out, his hands are tied. Iran, China, et al. have already abandoned the dollar in principle, but it takes time to unwind such a big trade. They're all trading their dollars for gold, trading with each other without using dollars, and in Iran's case, trading oil directly for gold.

Pretty soon Iran will trade for gold priced in yuan instead of dollars. However China will have to unpeg first. When China unpegs, the dollar is finished, because that means they'd have already dumped their dollar holdings. Or maybe Iran will set their own price for barrels of oil in terms of an ounce of gold, bypassing fiat entirely (are they doing this already?). With Iran bypassing the dollar in favor of gold, they're pretty much guaranteeing war, but it looks like Israel will attack them and the U.S. will provide support at first, before sending troops in.

The "developed" nations have become the laughingstock of the rest of the world. The "developing" countries are no longer willing to tolerate western hegemony. War with Iran will be nothing like war with Iraq. Russia will cut off oil and gas to Europe to punish them for warmongering and cheerleading the U.S./Israeli invasion. Europe will go further into depression as will America when gas prices double. And that's just the beginning.

Wed, 02/29/2012 - 18:37 | 2210114 chubbar
chubbar's picture

You can bet that India isn't going to be trading gold for oil at these prices. Iran has already stated that it'll take any country's fiat in exchange for oil. No need to trade gold for oil until after the monetary system collapse.

Wed, 02/29/2012 - 17:33 | 2209856 Moneyswirth
Moneyswirth's picture


Wed, 02/29/2012 - 17:37 | 2209877 Robslob
Robslob's picture




Wed, 02/29/2012 - 17:36 | 2209861 tickhound
tickhound's picture

No more easing?  No more liquid? BWAHAHAHAHAHAHAHAHAHA!  yeah right.  Did someone suddenly learn how to shit gold bricks? 

Beatdown precedes the pump... rinse, repeat.  We've seen this story before, bitchez.  We know it by heart.

 Nuthin' has changed.  Certainly not the math.

Wed, 02/29/2012 - 17:35 | 2209865 lolmao500
lolmao500's picture

Why care about bankruptcy and money since life is transitory?

Wed, 02/29/2012 - 17:36 | 2209873 Alex Kintner
Alex Kintner's picture

Tyler Turden in the punch bowl.

Thu, 03/01/2012 - 01:29 | 2211367 StychoKiller
StychoKiller's picture

The Bernank, in the Library, with a Gold candlestick...

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