Equities Close Weak On Heavy Volume As Month Ends Up 1%

Tyler Durden's picture


Do you believe in miracles? Well, all those managers who were long the QE-sensitive darlings of Financials, Materials, and Consumer Discretionary into the month can breath a collective unchanged sigh of relief - thanks to last week's Draghi drag higher. The Energy sector managed a stupendous 4.9% gain on the month. The S&P 500, Dow, and Nasdaq all finished about 1-1.4% higher on the month (while Dow Transports ended -2.3%) as we came close to some Hindenberg Omens in the last few days. Today's market felt like the start of a sell-the-news day as we leaked back to the edge of the Friday cliff in S&P 500 e-mini futures (ES) - with an after-day-session-close snap down to catch-down to where risk-assets had broadly been biased all day - amid huge volume (leaving ES below its recent swing highs and Fibonacci levels). Commodities generally slid lower but WTI led the way ending down over 3% from Friday's close. Gold, Silver, and Copper all slid even as USD slid lower too. Treasury yields fell back retracing about half of the post-Draghi sell-off. VIX ended testing 19% into the close, up almost 1vol as the term-structure flattened ahead of the events of the next couple of days. The massive rip in volume at the close (and 5pt drop in ES) suggest plenty of short-term exits ahead of the fun-and-games of the next two days and certainly Treasuries were sending similar derisking signals.

Major end-of-month volume flush at the close to leave ES at the cliff's edge once more... the 150,000 ES contracts in the last 2 minutes of the day-session equates to around $10.3bn notional - not bad eh?


and on the month...


and sectors were saved by last week's rip...


but today seemed like a reversion day in commodities as they WTI, Gold, and Silver all converged lower into month-end - though managed to close higher.


but stocks generally reverted lower to catch up to the general derisking in risk assets today...


and across asset classes, Treasuries outperformed and stocks and gold basically recoupled after two disconnects...


We can only assume so many were wrong-footed into uber-bullish positions post the EU Summit that there was some serious window-dressing needed to recover from a nasty month.


Charts: Bloomberg and Capital Context


Bonus Chart: GLD has seen no positive inflows since 6/18 and yet GLD prices have risen during this period with July seeing redemptions of about 10,000 shares...


Bonus Bonus Chart: Financials were extremely widely dispersed on the month from BofA -10.5% to Goldman +5.3% with the XLF (Financials ETF) up a measly 0.2%...

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Tue, 07/31/2012 - 16:29 | 2666328 Abraxas
Abraxas's picture

For how long can this madness last?

Tue, 07/31/2012 - 16:36 | 2666353 malikai
malikai's picture

Beware, gold traders:


Not a pretty picture for anything else. Benocide better announce QEx5000 tomorrow or look out below.

Tue, 07/31/2012 - 17:00 | 2666425 Vincent Vega
Vincent Vega's picture

I would welcome a new, much lower price to purchase some physical...bring it.

Tue, 07/31/2012 - 17:06 | 2666441 malikai
malikai's picture

You and me both. But I don't think I'd want to be long on the paper markets right now.

Tue, 07/31/2012 - 17:13 | 2666465 tawse57
tawse57's picture

Thanks for the links to the charts. What am I looking at here - are the wavy lines Dr. McCoy's heart and lung machine that does all that heavy bleeping on Star Trek?

Tue, 07/31/2012 - 17:26 | 2666492 malikai
malikai's picture

Output is the model output, it's what QSN's price is. Actual is actual.

Diverg is the difference between the output and actual. Look at "momo fader" in howto. This is what the setup looks like.

Tue, 07/31/2012 - 18:56 | 2666722 tawse57
tawse57's picture

Thanks for explaining that. I do appreciate it but I still have no idea what I am looking at. I will take your word that it is important and will be suitably worried about it.

Tue, 07/31/2012 - 16:38 | 2666363 Dr Benway
Dr Benway's picture

Longer than you can stay solvent if you fade it. It's like wargames, only way to win is not to play.

Tue, 07/31/2012 - 17:11 | 2666458 CvlDobd
CvlDobd's picture

I'm so sick of readin that quote here.

Whether you want to or not you are playing. You are compensated for your time in Bernanke bucks that buy less and less everyday. Oh what's that? You aren't playing because you own gold? False! You bought it at a manipulated price with a manipulated currency with bulshit taxes on top of it. The only way you aren't playin is if you are directly compensated for time with PMs and you do all your trade in PMs. If not you are still playing.

That's my frustration. You can't get an honest return on anything worth holding so your purchasing power goes down while the cost of everything goes up. It goes up to keep you a part of their stupid fucking game.

You aren't winning, I don't care how little you think you're playing. We all are losing to the cronies.

Let's turn the tables on the fuckers!

Tue, 07/31/2012 - 17:16 | 2666470 Dr Benway
Dr Benway's picture

Well if a significant proportion of people opted out of debt and shares, that would immediately crash the system


So you are wrong.


Not only is it possible not to play, but this way of crashing the system is much better than any violent means.


Also, if you buy your gold at prices manipulated downward, how can you complain?

Tue, 07/31/2012 - 17:22 | 2666483 CvlDobd
CvlDobd's picture

Im not complaining about he price of gold.

So you pull out an crash the system? Then what? Every mom and pop is going to start trading in PMs?

I'm not wrong and I stand by my original comment. As long as I am paid for my time in a utterly worthless currency them I am playing the game, as much a that irks me.

Tue, 07/31/2012 - 17:58 | 2666577 BandGap
BandGap's picture

Stop the nonsense. I'm not playing because there is no way to win. It's a really hard mindset to accept but, even though I am gainfully employed and still propping up this clown show, I know that no matter what I do things will never be the same.

Accept the inevitable, plan accordingly. Really, you'll have a helluva lot more options when you do.


Tue, 07/31/2012 - 17:58 | 2666578 BandGap
BandGap's picture

Stop the nonsense. I'm not playing because there is no way to win. It's a really hard mindset to accept but, even though I am gainfully employed and still propping up this clown show, I know that no matter what I do things will never be the same.

Accept the inevitable, plan accordingly. Really, you'll have a helluva lot more options when you do.


Tue, 07/31/2012 - 17:53 | 2666570 Coreadrin
Coreadrin's picture

Until we run out of greater fools...

And yes, it is longer than you can stay solvent.  The only thing that has kept my shorts alive and kicking in broad markets (commodites are doing well) is hedging with calls, which means my losses are just small - still losses though, but I'm an e-waver and that means P3 is coming.  Have to trade my discipline, don't you know.  2008 v2.0 is just too fracking much to miss.

Meanwhile, I hear the sound of *beep *beep *beep.  (that's me, backing up the truck for <20 silver).  Pop to 28-30 on the SLV then we should get a nice leg down.  My piggy bank gets smashed at that point.

Tue, 07/31/2012 - 16:31 | 2666333 buzzsaw99
buzzsaw99's picture

beware the ides of august

Tue, 07/31/2012 - 16:33 | 2666343 Conman
Conman's picture

Eh this is boring. Can we have the 500 point dow swings of summer '11? Now that was fun.

Tue, 07/31/2012 - 16:44 | 2666383 Hype Alert
Hype Alert's picture

I thought those had been programmed out.

Tue, 07/31/2012 - 18:01 | 2666584 BandGap
BandGap's picture

You got that fucking right. That caused serious panic until they put the dampening algos in place. People were freaking.


Tue, 07/31/2012 - 16:33 | 2666344 Marginal Call
Marginal Call's picture

The delta on the ES was waaay heavy to the short side.   That much sell pressure is usually good for 50 points.


I went out and got a sandwich and came back to some fucked up charts. 

Tue, 07/31/2012 - 16:38 | 2666365 PiratePawpaw
PiratePawpaw's picture

My Silver slid up. Bummer.....wait

Tue, 07/31/2012 - 16:47 | 2666392 gjp
gjp's picture

Hope never dies in this market.  US stocks holding 90% of their gains from Draghi nonsense last week, Amazon near all-time highs despite missing not only earnings but sales too (how does that fit with the investing-for-growth theory?) and Apple now above where it was before its big miss as people speculate on another minor upgrade into an increasingly saturated smart phone market.  Something has got to give.

Tue, 07/31/2012 - 18:02 | 2666585 BandGap
BandGap's picture

Yep, one domino. Pick the origin.

Tue, 07/31/2012 - 18:30 | 2666648 GernB
GernB's picture

And, the rip in stocks may have made QE3 much harder to rationalize with the market within a few percent of it's highs. The ECB can't possibly pull off what the market has priced in. And the employment report is unlikely to look pretty.

Tue, 07/31/2012 - 16:48 | 2666399 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Reversal in 3...2...1

Tue, 07/31/2012 - 16:54 | 2666412 q99x2
q99x2's picture

Goldilocks recovery.

Tue, 07/31/2012 - 16:56 | 2666415 Yen Cross
Yen Cross's picture

 We have some good China news out later. ( MFg. PMI , HSBC MFg. PMI ). The aud looks like it wants to take dump. Let's see how far from reality the PBoC is this time around.

Tue, 07/31/2012 - 16:57 | 2666417 youngman
youngman's picture

It was options expiry today in the PM´s I think...so very little downward pressure.they usually hit it hard to scare out the little ones...I think gold and slver are on the one way ticket at this point....nothing is going well in the EU nor in the USA...the midwest is going to be hit hard with the crop losses....GB will have a huge loss on the Olympics...no one is there...the town is empty..India just lost two days of gold sales...among other things....Here in Colombia tomatoes went from 24,000 pesos a box last year to only 2,000 this year....corn and beans also....so we are slowing down...so for me...the hole is getting deeper and deeper...

Tue, 07/31/2012 - 17:02 | 2666430 buzzsaw99
buzzsaw99's picture

I think I saw the ghost of george orwell slinking down the streets of London.

Tue, 07/31/2012 - 17:16 | 2666471 Winston Churchill
Winston Churchill's picture

No you didn't.

He haunts "The road to Wigan pier".

Tue, 07/31/2012 - 17:31 | 2666513 buzzsaw99
buzzsaw99's picture

It could have been Dickens I guess, didn't get a good look.

Tue, 07/31/2012 - 18:28 | 2666644 GernB
GernB's picture

I saw a werewolf drinking a pina colada at Trader Vic's. His hair was perfect.

Tue, 07/31/2012 - 17:05 | 2666438 worbsid
worbsid's picture

quit digging!

Tue, 07/31/2012 - 17:12 | 2666462 tawse57
tawse57's picture

All good valid observations.

I think August will see the DOW go down hard. Maybe it is wishful thinking on my part but this baby is so top heavy.

Either that or we will be talking about DOW 14,000 in 30 days!

Tue, 07/31/2012 - 17:18 | 2666473 Winston Churchill
Winston Churchill's picture

I too was indecisive,but now I am not so sure.

Tue, 07/31/2012 - 18:57 | 2666728 tawse57
tawse57's picture

I am too scared to hedge shares... and I don't know how anyhow... so I thought I would hedge my opinions... then again, maybe I won't.

Tue, 07/31/2012 - 20:55 | 2667067 pavman
pavman's picture

the midwest is going to be hit hard with the crop losses

Its like the 30s all over again... now when was that second, deeper crash?

Tue, 07/31/2012 - 17:42 | 2666545 madridisburning
madridisburning's picture

Why don't you find a stream in the Sierras, or better yet, Brazil, and pan for gold? Then you will get paid for your effort in gold. Or, maybe you were not serious. Picks anyone?  I'm selling.

Tue, 07/31/2012 - 18:25 | 2666633 GernB
GernB's picture

It takes some effort to wrap my head around the idea that gold can have no positive inflows, but prices rise. How does that work?

Tue, 07/31/2012 - 18:53 | 2666709 Jay Gould Esq.
Jay Gould Esq.'s picture

Perhaps it works if the shares of paper gold are as unsubstantiated as the fiat units they are reckoned in.

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