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The Eurhopium Runs Out As Spain Has Biggest Drop In 3 Weeks

Tyler Durden's picture


Spain's IBEX equity index is down 2% today - the largest drop in three weeks - after touching the 200DMA on Monday and turning down (-3.3%). The equity market - which appears to be trading like nothing more than an upside call on any potential for survivability (and is 'helped' by a short-selling ban) - remains notably rich to its relatively less-ebullient sovereign bond market - which suggests a minimum downside of 6-7% more - just to shake off the exuberance. Yes, the short-end has done better, roll risk aside, but today 2Y is 9bps wider as the 5Y CDS is 13bps wider and 10Y spread 15bps wider. Is Draghi's 'Eurhopium' dream wearing off?


Spain's IBEX is rolling over from the 200DMA...


but remains notably rich to its bond market...


Chart: Bloomberg


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Wed, 08/22/2012 - 09:22 | Link to Comment Jason T
Jason T's picture

feels like we had a double top, a blow off top in APPL.... not to mention a massive storm brewing in middle east and eurozone ... 


Wed, 08/22/2012 - 09:36 | Link to Comment GetZeeGold
GetZeeGold's picture



Spain, much like Keith Richards......can't be killed with conventional weapons.


Wed, 08/22/2012 - 10:15 | Link to Comment Stock Tips Inve...
Stock Tips Investment's picture

The market in Spain could begin a new leg down. The economy continues to problems and is far from begin to see an improvement. Still need to apply more medicine "bitter". Recompose all that mess may not be as easy.

Wed, 08/22/2012 - 20:38 | Link to Comment StychoKiller
StychoKiller's picture

Keith Richards is STILL a really great guitar player; what's Spain known for these daze?

Wed, 08/22/2012 - 11:10 | Link to Comment kaa1016
kaa1016's picture

I'm with you. I was trading AAPL calls and with the GOOG reversal right before the open yesterday and AAPL not getting through $675 followed by a high volume reversal after a new high has me thinking the run in this stock may be over for now. TLT bounced off of the 200 dma, SPX right at the highs, and the path of least resistance looks lower for the market. We'll see...

Wed, 08/22/2012 - 09:26 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Climbing a wall of worry?

Just asking 'cuse the market can stay dysfunctional far longer than you or I can stay solvent.

Wed, 08/22/2012 - 09:25 | Link to Comment malikai
malikai's picture

EURUSD looks like it's feeling the pressure.

Wed, 08/22/2012 - 10:08 | Link to Comment pazmaker
pazmaker's picture

not anymore back up to 1.248 vs usd

Wed, 08/22/2012 - 09:31 | Link to Comment FiatFapper
FiatFapper's picture

Which is more plausible in next few months?

i) euro tanks and investemnet institutions lose their gilts / bonds

ii) euro / SP500 rallies with election in few months

Market machinations and timing is the key, i think shit will hit the wall in 2013 once the totalitarian iron fist is firmly in place.

Wed, 08/22/2012 - 09:32 | Link to Comment piliage
piliage's picture

you forgot one

iii) Merkel pays the Jizya and goes Greek.

Wed, 08/22/2012 - 09:34 | Link to Comment EscapeKey
EscapeKey's picture


Forever, ’till the end of time

From now on, only Ben and I

We’re going up-up-up-up-up-up-up


An everlasting piece of art

A printing press within the Fed

We’re going up-up-up-up-up-up-up

Wed, 08/22/2012 - 20:40 | Link to Comment StychoKiller
StychoKiller's picture

"It's either madness or euphoria..." -- Billy Joel

My Munny's on madness...

Wed, 08/22/2012 - 09:37 | Link to Comment timbo_em
timbo_em's picture

For now, all it takes is another interview or speech by the Draghi. This time he promises to do anything and everything and a even bit more to save the Euro. Followed by 'believe me, it will be more than enough'. Et voilà, headline algos will push every index another 3-5 percent.

Wed, 08/22/2012 - 09:41 | Link to Comment Conman
Conman's picture

He already did promise to do whatever it takes. Cant realyl expand on that statement, but yeah you're right. Itll pop markets. Then not so much when nothing gets done yet again. US markets living in thier own fantasy land, where noone is playing and the robots keep taking it higher on nothing.

Wed, 08/22/2012 - 09:55 | Link to Comment g speed
g speed's picture

In a mark to guess world all values are arbritrary -- so all capitol is suspect--  companies worth billions who's stock has an abritrary value may not be worth anything if anything or everything "they are" is based on stock price-- TRUTH-- we don't know where markets are-period.

Wed, 08/22/2012 - 10:48 | Link to Comment Alea Iactaest
Alea Iactaest's picture


Another edition of Daily HopeTM, this courtesy of Kathimerini (largest Greek daily paper):

Greece seeks Juncker nod

Prime Minister Antonis Samaras is hoping that Eurogroup chief Jean-Claude Juncker will give Greece and its continued euro membership his strong backing following talks in Athens between the two men on Wednesday

Really just ridiculous at this point. Please bring on the unicorns.

Wed, 08/22/2012 - 10:54 | Link to Comment Alea Iactaest
Alea Iactaest's picture

Oops, The Telegraph has a timely follow up on their front page:

Debt crisis: Merkel and Juncker dash hopes for swift deal on Greece


There's that word again.

Wed, 08/22/2012 - 09:38 | Link to Comment yogibear
yogibear's picture

The trading bots are monitoring. Front-running any trade in a big way.

Wed, 08/22/2012 - 09:40 | Link to Comment I am more equal...
I am more equal than others's picture

The Law of gravity says what goes up must come down.  The law of stupidity says there is nothing that tells me what to do. 

Wed, 08/22/2012 - 09:41 | Link to Comment EscapeKey
EscapeKey's picture

Yeah that's not necessarily correct in nominal terms.

Wed, 08/22/2012 - 09:41 | Link to Comment youngman
youngman's picture

Tell me is the housing market rebounding in Spain....lots of second home buyers coming from Greece..Italy...Portugal...Japan...China...Spain itself....I don´t think so...unemployment getting what people are buying into is a big crash when the truth comes out...Sept 12 is a big day..we will know more then...not all...just more

Wed, 08/22/2012 - 09:44 | Link to Comment Todd Horlbeck
Todd Horlbeck's picture

You have to wonder if the bond market will drop like the stock market when reality sets in.

Wed, 08/22/2012 - 09:55 | Link to Comment Vince Clortho
Vince Clortho's picture

Wait until ________________ (insert date of an election, a central bank meeting, a press conference, a summit, a report date, ect.)

Each time that date passes, someone issues a new "wait until" date.

For the past couple years, we have been watching repetitions of the above.

It's all puppeteering.  Some puppets make announcements or release statistics; other puppets write media stories about it; still other puppets manipulate the stock and bond "markets", supposedly in response to the manufactured event.

Wed, 08/22/2012 - 20:42 | Link to Comment StychoKiller
StychoKiller's picture

The Meta-program!  Now, what's the meta-meta-program?

Wed, 08/22/2012 - 09:56 | Link to Comment waterdude
waterdude's picture

more mindless zerohedge eu-doom n glooming.  Some roll over: 4 day ma still above 8 day, still above 18 day.  50day breaking up through 100day tomorrow.  Not even overbot on RSI.  You guys need a new harmonica or something.


Wed, 08/22/2012 - 09:57 | Link to Comment Silversem
Silversem's picture

The assets that profit from all of this financial turmoil are gold and silver. I believe this is a very good time to trade them and if you want to use leverage, CFD's are the perfect tool. 

Wed, 08/22/2012 - 10:04 | Link to Comment Gandalf6900
Gandalf6900's picture

One question:

When is the german council ruling on debt?

When does the fed convene for their lovely meeting in Sept?



Wed, 08/22/2012 - 10:05 | Link to Comment Gandalf6900
Gandalf6900's picture

thats two questions, I know...

Wed, 08/22/2012 - 10:21 | Link to Comment Flaming Ferrari
Flaming Ferrari's picture

That was the dip, fill yer boots!

Wed, 08/22/2012 - 10:49 | Link to Comment NEOSERF
NEOSERF's picture

Reuters is showing pics of a march that a mayor of one of the large cities endorsed to march on Madrid to oppose compliance with the austerity measures...Spain is done...on to Italy where people are selling gold teeth for money and where gold shops have quadrupled in the last 2 years...yes, more QE will help everything...for about 6 months and then the bill we be bigger still

Wed, 08/22/2012 - 10:51 | Link to Comment NEOSERF
NEOSERF's picture

Europe is caught in the middle...they aren't low cost like Asia and Latin America and outside of the Germans are not innovative like the US...what exactly is the competitive advantage there that allows for the much vaunted "growth" needed to slow this decline?

Wed, 08/22/2012 - 13:29 | Link to Comment Grand Supercycle
Grand Supercycle's picture

Risk off sentiment ~ SPX 8 hour bearish chart warning continues and FTSE daily chart gives bearish warning.

Of course central bank intervention could burn more shorts and reverse this scenario...

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