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Equities Plunge Most In A Month As Gold And Treasuries Extend Gains

Tyler Durden's picture


Volume? Check. Spanish Spreads wider? Check. Maria B Saying "Wall-of-Worry"? Check. Sure enough, all the pieces were there for a sell-off today as the S&P saw its largest drop in a month as volumes have resurged in the last three days (of fading markets) and average trade size has gradually fallen from its peak (at the multi-year highs on Tuesday). Cross-asset-class correlations picked up notably and equities caught down to risk-assets (after yesterday's 'rally'). VIX rose once again - back above 16% - with the biggest 3-day rise in a month. Gold has rallied 1% per day for the last three days (something we haven't seen since OCT11) up near $1675. 10Y Treasury yields have now dropped 5 days in a row (something we haven't seen since APR12), down over 20bps from their highs/200DMA. Oil stumbled on the day, now down 0.3% on the week, even as Silver is up almost 9% on the week (and Gold 3.3%) - even as the USD is down 1.4% on the week (leaking lower still on the day after its gap overnight). Materials underperformed by the most today (which smells like QE-off) and was followed by Energy and Financials. Stocks underperformed (though HYG was modestly bid - we suspect on convergence trades) as stocks caught down to credit once again.


S&P 500 e-mini futures (ES) dropped by the most in a month today (on contonued heavy volume - middle pane)...


Gold has risen for 3 days in row - back above its 200DMA...


and Treasury yields have fallen for 5 days in a row...


Can you spot the sell off days (clue - lower pane is difference between volume and its average...)


and average trade size rose into the peak and has fallen back as we sell-off - so often this pattern of professionals (larger block traders) trading into turning points signals a reversal...


and after disconnecting higher yesterday, stocks have reconnected and correlation has reasserted systemically with risk assets...



Charts: Bloomberg and Capital Context

Bonus Chart: Comparing Citi's US Economic Surprise Index with the S&P provides insight but the current market behavior (lower pane - green box) and upper pane (green box) do look increasingly similar - as markets rallied on hope that macro data was improving more than economists' expected (and meanwhile earnings were dropping but that was trumped by the former)... who knows?


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Thu, 08/23/2012 - 16:18 | Link to Comment LawsofPhysics
LawsofPhysics's picture

This is a coupling TPTB dread.  They gotta keep a bid on treasuries but cannot have gold track that.  Fun Fun (at least until the election).

Thu, 08/23/2012 - 18:39 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

LoP guy, TPTB aren't bidding Treasuries.  Terrified Europeans are, and terrifed Japanese are.

And they should, because we are hearing NOTHING about the credit default swap exposure for Spanish banks and sovereigns.  We got swap attention on Greece, but where is the talk of Spanish swap triggers?

Thu, 08/23/2012 - 19:33 | Link to Comment caconhma
caconhma's picture

Driving today to work, I was listening NPR. The topic was the Presidential campaign fund raising by Obama and Romney.

From the discussions, it became clear that the Obama campaign is having major problems raising money since major Zionist donors (including Soros) are very disappointed with Obama timid support for Israel’s reckless warmongering policies and decided to support Romney who promised to get America into a war with Iran. It is important to note that, apparently, the Pentagon’s high brass is not eager to start a major war with Iran.

In a case of Obama is not the ruling financial oligarchy choice, then:

·         There will not be any Q3 before the presidential elections

·         Zionist financial mafia will organizes a major bad economic news flow before the elections as well as will engineer a sizable financial markets drop

·         It will be interesting to see how far Obama will go to stay in the office


Thu, 08/23/2012 - 19:58 | Link to Comment jomama
jomama's picture

gee whiz, this puppet show is soooo interesting. 

and i thought i had an overactive imagination!

Thu, 08/23/2012 - 22:27 | Link to Comment madridisburning
madridisburning's picture

How aggressively stupid of you. Zionist and Soros in the same sentence? What an idiot!

Thu, 08/23/2012 - 16:19 | Link to Comment monopoly
monopoly's picture

This looks like a correction is dead ahead. No interest for now.

And this from NYT.

China Besieged by Glut of Unsold Goods

Thu, 08/23/2012 - 18:32 | Link to Comment Xanthias
Xanthias's picture

Looks eerily like the Janjuah chart from two months ago:

Thu, 08/23/2012 - 16:20 | Link to Comment TheSilverJournal
TheSilverJournal's picture

I don't see why anyone would invest in anything other than silver. Probably the best value of any asset in history.

Thu, 08/23/2012 - 18:12 | Link to Comment Never One Roach
Never One Roach's picture

$200 per ounce is still John Williams call over at Shadow Stats last interview I heard. Veyr possible as: 1. monetary exapansion ramps up to cover the massive deleveraging so as to avoid more severe depression and 2. as people in places like China 'disintermediate' out of the Bubble House market there and pile into somehting easier to store, carry and buy/sell.

Thu, 08/23/2012 - 18:17 | Link to Comment TheSilverJournal
TheSilverJournal's picture

I'm calling $1,000 / oz min. Gold will hit at least $10,000 and the silver / gold ratio will hit at least 10/1. Min. The entire bond market and banking system is on the verge of imploding.

Thu, 08/23/2012 - 19:32 | Link to Comment smiler03
smiler03's picture

Can you spare me a shot of whatever it is that you're drinking please ?

Thu, 08/23/2012 - 19:43 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Sure. Reality is good. There's plenty of it, just open your eyes.

If you think that fiat is not going to basically collapse, then you don't understand debt and interest rates.

If you think gold won't hit at least $10,000 / oz, then you don't understand how much wealth is going to flow out of currency, bonds, and assets propped up by cheap credit.

If you think the gold to silver ratio won't hit at least 10/1, then you don't understand how little silver exists relative to gold (there's about 2 to 4 times more oz of silver than gold)

It's set, silver will hit at least $1,000 / oz.

Thu, 08/23/2012 - 21:08 | Link to Comment Long-John-Silver
Long-John-Silver's picture

It's happened before and it will happen again.

Thu, 08/23/2012 - 22:30 | Link to Comment madridisburning
madridisburning's picture

Yeah, right.  You are the one who does understand?????? LOL. Go and hold your breath if you like until it happens.

Thu, 08/23/2012 - 23:01 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Yes, I understand that silver will hit min. $1,000. Use logic, it's not that hard to figure out. I'll walk you through it? Q) Is the dollar and dollar denominated assets on the verge of collapse? A) Yes. Q) When hyperinflation hits, what will be the min. real value of gold? A) Gold will hit at least $10,000 in real terms. Q) How low will the gold/silver ratio shrink? A) The gold/silver ratio will shrink to at least 10/1.

And there you have it. Using logic, you can see that silver will hit min. $1,000 / oz in real terms.

Thu, 08/23/2012 - 22:28 | Link to Comment madridisburning
madridisburning's picture

That is some damn strong stuff he is smoking. Better not inhale.

Fri, 08/24/2012 - 03:40 | Link to Comment AvoidingTaxation
AvoidingTaxation's picture

As Clinton or Obama?

Thu, 08/23/2012 - 16:21 | Link to Comment SilverDoctors
SilverDoctors's picture

GATA's Bill Murphy just stated the move in the metals is due to an imminent manipulation scandal at JP Morgan rivaling LIBORGATE. 

Thu, 08/23/2012 - 17:39 | Link to Comment bdc63
bdc63's picture

everybody knows that JPM is manipulating the price of silver through the options market.

and everybody knows that GATA has been predicting for years that it can't last forever and eventually they're going to have to cover ...

... the WHO, WHAT, WHEN, WHERE and HOW's remain to be addressed ...

Thu, 08/23/2012 - 16:22 | Link to Comment mademesmile
mademesmile's picture

Wall of worry, fiscal cliff and facebook could be a cnbc drinking game.


Thu, 08/23/2012 - 16:24 | Link to Comment HaroldWang
HaroldWang's picture

My god, you forgot the biggest of them all: "QE3". Get wasted drinking every time you hear that.

Thu, 08/23/2012 - 18:03 | Link to Comment Hype Alert
Hype Alert's picture

I can drink when I want and not have to throw up listening to the rest of their dribble.

Thu, 08/23/2012 - 20:42 | Link to Comment Winston Churchill
Winston Churchill's picture

Been teetotal and sober for six years.

If I  listened to cnbc or npr I would have to start drinking again.

Thu, 08/23/2012 - 16:22 | Link to Comment HaroldWang
HaroldWang's picture

Good old "Wall of worry". When they go down, it's "uncertainty" of course very different from worry since uncertainty never causes worry. Most ridiculous phrase ever.

From Ritholtz: "Stock market bulls would like to believe raging bearishness is enabling stocks to climb a wall of worry. Unfortunately this just isn’t the case."

Thu, 08/23/2012 - 16:24 | Link to Comment repete
repete's picture

Maria B Saying "Wall-of-Worry"? Check


Maria is the "Tokyo Rose" of the war on American investors.


Thu, 08/23/2012 - 16:28 | Link to Comment akak
akak's picture

Hey absent RobotTrader, are you starting to feel the heat on your sorry ass yet from that blowtorch?

Thu, 08/23/2012 - 19:36 | Link to Comment smiler03
smiler03's picture

I think the Tyler {RobotTrader} lives in France and is on holiday this month.

Thu, 08/23/2012 - 16:35 | Link to Comment Abraxas
Abraxas's picture

Why did gold go up Mr. Nadler? Was it because of investors taking profit or from lessened demand from Asia? Moron!

Thu, 08/23/2012 - 16:55 | Link to Comment Bay of Pigs
Bay of Pigs's picture

No, according to him, it's always the falling US Doelarr that explains a rising gold price.

You would think he might look at other currencies sometime and outside his 6 inch box (worldview). He's a disgrace to Kitco and should have been fired years ago.

Thu, 08/23/2012 - 16:34 | Link to Comment optimator
optimator's picture

There's a chance this might be the reason for todays activity.  remember, we're the last to know. 

The last time we had a day like this was August 2010 and a then this, two days later.
Thu, 08/23/2012 - 17:12 | Link to Comment GeezerGeek
GeezerGeek's picture

It seems like only yesterday that ZH reveled in breaking $1650.

August 2.


Thu, 08/23/2012 - 16:51 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

SPX drops 0.8% and it's a "plunge"......really now, let's be serious. Any suggestions for why the eur/usd held in so well? Haven't seen a made up story yet which fits the price action to that yet.

Thu, 08/23/2012 - 16:51 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

SPX drops 0.8% and it's a "plunge"......really now, let's be serious. Any suggestions for why the eur/usd held in so well? Haven't seen a made up story yet which fits the price action to that yet.

Thu, 08/23/2012 - 16:54 | Link to Comment FiatFapper
FiatFapper's picture

Think critically; the fed has been mandated to pump SP500, so it rallied hard for last 3 months after almost hitting year open. No way will it crash any time soon.

It broke a monthly trend line and recently wicked above a weekly double-top.

Expect consolidation now above this trend line for next few months to park price and extol the virtues of a strong market under obummer's stewardship - all hail the omnipotent leader.

Now expect dollar to rally to give the proletariats a similar feel-good-factor. Make them feel the pleasure that the dollar in their wallets can actually buy shit.

The stage is then set for a second term and all hell will break loose. Investment entities will unwind their euro positions and the hunt will be on for a safe haven currency; my guess is AUDJPY as gold rallies and yen becomes inflationary.

2013 will be fun.

Thu, 08/23/2012 - 16:57 | Link to Comment orangegeek
orangegeek's picture

Markets fell while US Dollar keeps falling - stocks denominated in US Dollars - wouldn't you expect them to go up?


What's driving the US Dollar down?  Primarily the rising Euro - I guess Europe has gone from bankrupty to growth in a few weeks.


Not sure how long Euro's move up will last.  When the US Dollar rises against the Euro, that which is denominated in US Dollars will likely fall or fall faster.

Thu, 08/23/2012 - 17:03 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Massive inflation is the only way to pay back debt, must keep a bid under treasuries...

That's all I have.  If the velocity of money starts picking up, oil will also be a good tell and then the PMs go to the moon or we get world war of course. 

Thu, 08/23/2012 - 16:58 | Link to Comment Jack Sheet
Jack Sheet's picture

Wait till Maria B shows her spread...

Thu, 08/23/2012 - 17:36 | Link to Comment lunaticfringe
lunaticfringe's picture

Bits is a nun. You'll be waiting a long time Jackie boy.

Thu, 08/23/2012 - 17:01 | Link to Comment vertexa
vertexa's picture

Economic collapse fears lead Govts. to remove civilian protections from military

On Aug. 17, Germany became the latest country to remove longstanding protections for civilian populations from military intervention in domestic conflicts. In a new court ruling, which repealed laws created out of the Nazi era in Germany, the government can now use the military against citizens in extreme cases, joining the U.S. and other nation states who have removed the dividing line between civilian and military policing.

The German military will in future be able to use its weapons on German streets in an extreme situation, the Federal Constitutional Court says.

The ruling says the armed forces can be deployed only if Germany faces an assault of "catastrophic proportions", but not to control demonstrations. - BBC

In the United States, Northcom was created shortly after 911 to be an military command dedicated to threats within the homeland, and instituted a discontinuation of Posse Comitatus, which had separated civilian police from military use on citizens since the end of the Civil War. Since its inception in 2002, the Federal government has expanded its sphere of influence over Americans with the creation of the Department of Homeland Security, and the militarization of many bureaucratic agencies. In fact, the majority of these increases have taken effect since the credit crisis of 2008.

Thu, 08/23/2012 - 18:07 | Link to Comment Hype Alert
Hype Alert's picture

No problem, we removed Glass-Steagall and not much happened.


Oh wait.

Thu, 08/23/2012 - 17:09 | Link to Comment MFLTucson
MFLTucson's picture

Talk of treasuries and gold in the same breath is laughable!

Thu, 08/23/2012 - 17:16 | Link to Comment AltKey
AltKey's picture

"Materials underperformed by the most today (which smells like QE-off) and was followed by Energy and Financials."

If QE is off, then what's up with gold rallying for three days?  Or is gold just following the dollars lead here?

Thu, 08/23/2012 - 17:33 | Link to Comment Christoph830
Christoph830's picture

War drums

Thu, 08/23/2012 - 17:50 | Link to Comment LawsofPhysics
LawsofPhysics's picture

then why didn't oil also take off?

Thu, 08/23/2012 - 17:17 | Link to Comment Arnold Ziffel
Arnold Ziffel's picture

Faber makes an Uber-Bullish call today...says we have "100% chance of recession."


Sounds 100% Bullish to me  if you apply GS Fuki analysis.

Thu, 08/23/2012 - 17:27 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

Precisely AltKey. EUR/USD should be down on QE dashed hopes or EU troubles..not at the highs. Correlation shifts sometimes indicate a change in the market regime....

Thu, 08/23/2012 - 17:28 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

that bonus chart:  that last entire "surprise cycle" (2011) didn't do too much did it?

a 0.8% drop in an index or five seems like a plunge in these over-orderly "gaming-tabled" markets

now, i spose we'll see a correction?  Ha

we have a lotta phD types?  here:

in a deflationary collapse, does the price of gold cross the price of an apple share and if so, at what price? 

[well,  ... within $1500 on the collapse cross, ok?]


Thu, 08/23/2012 - 17:28 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

Or maybe just an odd day. BTFD and stop worrying.

Thu, 08/23/2012 - 17:35 | Link to Comment lunaticfringe
lunaticfringe's picture

Is it just me or does Maria B seem permanently uptight? I think she needs to get laid. Why don't one of you beltway types throw her a bone?

Thu, 08/23/2012 - 17:42 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

You missed an "r" off "bone"

Thu, 08/23/2012 - 17:43 | Link to Comment Bastiat
Bastiat's picture

Is a that a gold bar in my pocket or . . .

August 23, 2012 8:21 pm

Republicans eye return to gold standard

Thu, 08/23/2012 - 18:12 | Link to Comment Bastiat
Bastiat's picture

My cynical side says:  Yeah, right.  Romney will drop that like lit grenade if he gets in. Just some cheap (if juicy talk) to sucking the RP supporters and get some energy into the Zombie campaign.

Thu, 08/23/2012 - 17:59 | Link to Comment ES-Sniper
ES-Sniper's picture


Some appear to be  heading for the exits before September, same pattern as just before May this year.

Time to "Sell in August and go.......away" No good rhyme, but seeing a lot of good reasons up here. 


Thu, 08/23/2012 - 18:16 | Link to Comment mattdubz86
mattdubz86's picture

The average trade size volume chart looks like a real nice inverse head and shoulders, S+P 1500?

Thu, 08/23/2012 - 18:55 | Link to Comment chump666
chump666's picture

Re-coupling trade with commodities and risk.  We had it coming.  You are nuts if you go long in this, QE3 or no QE3, doesn't matter (Aug rally priced it in).  Profit taking will send this much lower and correlating with the industrial commodities that TANKED whilst we had the Aug meltup in equities = if Bernanke cannot get commodities to rally QE will be an instant flop (as opposed to a quarter later when the market sells anyway).

Gold and USD rising smells like the beginning of a liquidation trade on equities.

Sense crash is very close.

Thu, 08/23/2012 - 20:13 | Link to Comment smiler03
smiler03's picture

I'd love to know what a "crash" actually is. A fall to 1258 only puts the S&P back to year start. But is that a crash, really? I don't know but I'm curious about the definition, if there is such a thing in these Wacky Races days.

Thu, 08/23/2012 - 20:43 | Link to Comment chump666
chump666's picture

10% to 20 % negative, but in one day.  So a sell off that wipes out a whole year on the S&P.  That is a crash.  The only thing, or things that are supporting this market are HFTs churning the 50 and 100 MA's, sucking in longs.  If commodities were super bid and the USD was under 80, I would be say that the indexs are supported by the money pumps.  They are not.

I would also extend this to the EUR, which is primed to go under parity. Sans the ECB futile attempts at elevation.

Thu, 08/23/2012 - 21:01 | Link to Comment Ted Baker
Ted Baker's picture


Fri, 08/24/2012 - 01:41 | Link to Comment ak_khanna
ak_khanna's picture

The market operators are using expected QE as an excuse to kill the shorts. Once most of the shorts are out of the system and go on the long side, the operators will themselves take the short position and move the market to the downside using poor economic data as an excuse to kill the longs. This is how price discovery takes place in today's world.

The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.

Fri, 08/24/2012 - 06:36 | Link to Comment Grand Supercycle
Grand Supercycle's picture

SPX / DOW / NASDAQ / DAX / FTSE choppy daily charts are still breaking down.

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