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Gold Pops, Stocks Drop, And Oil Plops

Tyler Durden's picture




 

After opening over 1% higher, S&P 500 e-mini futures plunged to close at their lows of the day (down 1.5%) amid the widest range day in six months. Volume was heavy after ES touched up to its 200DMA at the Sunday night open slide along with Europe's weakness, stabilized at Thursday's closing VWAP around the European close, only to dump in the afternoon (as financials, materials, and AAPL led the plunge). The major US financials lost 5-7% from their opening ticks of the day with Citi, BofA, and MS the worst performers (as AAPL ended -1.5% after being up over 1%). Gold back at $1600 (and Silver) rallied 0.4% (diverging from recent sync with stocks) even as USD strength kicked in - ending the day +0.17% (from a -0.85% low in early European trading). Oil meanwhile ended down over 3% (ending below $81.50) from up 3% in early trading on OPEC chatter and global growth concerns (and we assume correlated risk liquidation). Credit underperformed - leading stocks once again - with IG back to last Wednesday's wides (as cheap macro overlays were laid out). Stocks and HYG (the high-yield bond ETF) plunged into the close to catch up to HY credit. Treasury yields dropped, along with stocks, down 2-5bps from Friday's close, as the 7Y segment outperformed (but were down 11-13bps from their opening high yields). VIX saw a huge range day of around 3.6 vols as we closed back above 23.5% and implied correlation soared almost 6pts to 74.5 (biggest pop in 7.5 months). Realized cross-asset class correlation rose significantly and remained extremely high into the close implying very systemic market movement - which given the weakness after-hours seems worrisome.

S&P 500 e-mini futures touched their 200DMA (light blue) before plunging with the largest range day in over six months (middle pane) and along with a pick up in volume is very reminiscent of the summer of 2011. A 42pt high to low range today!...

Selling pressure was significant as aside from the lift into the European close, ES was unable to get back close to VWAP (light blue). After stabilizing at the Thursday closing VWAP level (blue dots), ES rolled over in the afternoon to end at Friday's lows...

Which is where IG credit was warning us on Friday. Notice the plunge in ES and HYG towards the close as they reverted back down to HY's reality. IG likely being used a cheap carry macro hedge here (given the cost of carry on HY). HYG closed modestly below its intrinsics fair-value - its 'cheapest' in a week. Will this time be the contagion to real bond selling (as we saw more HY outflows last week)...

Interestingly, the IG and HY bond advance/decline lines are really stressed here - and yet cash prices are not tumbling (yet)...

The USD gained over 1% from its early morning lows today but AUD and CAD (carry) underperformed (as JPY and GBP outperformed)...

But gold was the standout in terms of divergence (especially in light of the USD strength) as Oil got destroyed...

and diverged from equities, USD, and Stocks...

But it was financials that were just a disaster today (from the opening tick)...Citi -7%, BofA -6%, MS -5.5% and JPM -4.5%

Across asset classes, correlation rose significantly from early overnight and stayed very systemic (lower right chart). SPY (the S&P 500 ETF) oscillated around HYG, VXX, TLT fair-value (upper left) but at the close the drop in HYG and pop in VXX implied more pain for SPY (which we also saw in ES). The upper right chart shows that broadly speaking risk assets were dragging stocks lower today and the after-hours plunge basically reconnected ES with CONTEXT reality (for now) at around 1300 again. What is most interesting once again is the fact that VIX leaked higher and higher all day to catch up with the credit/equity fair-value framework (lower left).

All-in-all, stocks shrugged off their hopium once again and reverted to more of a fair price to other risk assets. The rise in implied correlation (and demand for macro protection in credit) suggests there is more to come here.

Charts: Bloomberg and Capital Context

Bonus Chart: AAPL gave up early gains for an ugly close but VWAPs remained key support and resistance...


 

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Mon, 06/11/2012 - 16:31 | 2515921 francis_sawyer
francis_sawyer's picture

Pop that [insert noun here]

Mon, 06/11/2012 - 16:33 | 2515922 achmachat
achmachat's picture

can of pringles?!

Mon, 06/11/2012 - 16:33 | 2515930 francis_sawyer
Mon, 06/11/2012 - 18:02 | 2516166 noob
noob's picture

Johnny Cash - The Man Comes Around
http://www.youtube.com/watch?v=k9IfHDi-2EA

Mon, 06/11/2012 - 16:42 | 2515969 slaughterer
slaughterer's picture

Have found the strength in HYG over the last two days very mysterious.  But the last 15 minutes of today's session put an end to that mystery.  

Mon, 06/11/2012 - 17:20 | 2516069 CPL
CPL's picture

Margin call bitchez. Doin it right.

http://www.youtube.com/watch?v=vM7jE16kcXA

Mon, 06/11/2012 - 16:36 | 2515924 Sudden Debt
Sudden Debt's picture

Yeah.... Been shorting ms, bac, jpm since friday... Not to bad... Not to bad at all! A little hart attack this morning but smokes and alcohol cured that one

Mon, 06/11/2012 - 16:42 | 2515971 disabledvet
Mon, 06/11/2012 - 17:28 | 2516085 CPL
CPL's picture

To the 28 million people still fucking around with facebook today.

 

That was the opportunity to dump and walk away from Facebook and be rid of the damned POS ego masterbation tool once and for all.  There is no reward in it...never will be.  Costs as much as a government to run and makes less net profit per quarter than a street level chip shop.  It's pretty disgusting overall.

Just ask any bagholders still in Nortel and soon to be RIMM.

Mon, 06/11/2012 - 18:15 | 2516195 Jay Gould Esq.
Jay Gould Esq.'s picture

+1

Mon, 06/11/2012 - 20:19 | 2516450 beachdude
beachdude's picture

Short FB to 20... and maybe even then some.

Mon, 06/11/2012 - 20:19 | 2516449 trebuchet
trebuchet's picture

< Gold 2000

< Gold 1500

 

Where do people think Gold will go?

My concern now is that if we go for the Big drop like 2008 then gold goes down too - cross correlations in systemic price meltdown..... 

a big gold selloff to cover margins etc?

This was done earlier but the prices were unrealistic: 2000 & 1000 (not in this crazy day are we going back down to 1000) 

Mon, 06/11/2012 - 21:15 | 2516585 Reptil
Reptil's picture

in US dollars?

hmmm  how about valuation in oil or commodities?

Mon, 06/11/2012 - 16:33 | 2515927 mayhem_korner
mayhem_korner's picture

 

 

Dow futures started at +115 when Becky Q was teasing her hair this am.  That's a 250 point drop from bell to bell.  Maybe those MSMers didn't notice...

Mon, 06/11/2012 - 16:33 | 2515928 unrulian
unrulian's picture

and a pig is a cop

Mon, 06/11/2012 - 16:40 | 2515939 hedgeless_horseman
hedgeless_horseman's picture

 

 

Speaking of censorship....when did Australians become such fucking pussies?  Punishing these olympic swimmers for a photo in an American gun store? 

You poor kids, swim well for yourselves.  Forget about those fuckers back home. 

Mon, 06/11/2012 - 16:41 | 2515961 kekekekekekeke
kekekekekekeke's picture

I used to be as anti-gun as you could get and in a perfect world rah rah rah maybe (I am a gunowner now) but it's amazing how guns are becoming more and more stigmatized as something ~fringe~ and ~scary~ while IN THE REAL WORLD gun ownership rates skyrocket

at least they shoulda been naked

Mon, 06/11/2012 - 17:11 | 2516056 Ookspay
Ookspay's picture

The right to defend oneself is a natural right and God given. Without weapons only the strongest bullies would rule the world. Gun ownership is rising as people realize that government may not be able to protect them and may in fact be the "bully".

Got Sig?

http://www.sigsauer.com/CatalogProductDetails/sig556-swat.aspx

http://www.sigsauer.com/CatalogProductDetails/p229-elite-dark.aspx

Mon, 06/11/2012 - 18:07 | 2516175 r00t61
r00t61's picture

SA/DA hammer-fired pistols are a thing of the past, in my opinion.

They've been supplanted by good striker-fired designs, like a Glock, an XD, a Walther, or similar.

Though there is a large segment for whom you'll never pry the 1911 away from even their cold, dead fingers.

Mon, 06/11/2012 - 18:24 | 2516218 Ookspay
Ookspay's picture

Fair enough, they both go boom. I personally like the fact that the p229 has no safety and a decocking device. More reliable and safer with d/a on the first pull, or cock it and s/a. But actually it is just familiarity and faith in it, as it has never mis-fired or FTE'd.

Gotta tell ya though this is pretty sexy!

http://www.genitron.com/basics/Glock23/P2Glock.html

Mon, 06/11/2012 - 20:15 | 2516438 cbxer55
cbxer55's picture

Like me! I love my 1911s. Own nothing but. And all .45ACP as well, best handgun round ever made.  ;-)

Mon, 06/11/2012 - 21:36 | 2516629 HellFish
HellFish's picture

Ookspay, you got that right.  John Moses Browning made men equal.

1911s rule.  Though I do have a sweet XDM in .45 too.

Mon, 06/11/2012 - 18:26 | 2516224 lakecity55
lakecity55's picture

...And before that, flintlocks; swords, bow and arrows, stones.

Rights come from Above, not from corrupt nanny gubbermint.

Mon, 06/11/2012 - 18:38 | 2516251 kekekekekekeke
kekekekekekeke's picture

I only have a glock 26 (gift from my boyfriend) but he has loads of guns including a sig

Mon, 06/11/2012 - 18:39 | 2516254 Turin Turambar
Turin Turambar's picture

Very nice.  I've got a couple of Sigs and love em.  My favorite is my P238 SAS for CC.

Mon, 06/11/2012 - 19:17 | 2516313 Ookspay
Ookspay's picture

The 238 is a Great carry piece! I like the 15 round mag of the p229 though, I carry IWB (inside waste band). This is my dream P238, coming soon...

http://www.sigsauer.com/CatalogProductDetails/p238-desert.aspx

Tue, 06/12/2012 - 03:45 | 2517184 decon
decon's picture

I strap a SIG on every day for work.  The Swiss make good machines.

Mon, 06/11/2012 - 17:04 | 2516036 francis_sawyer
francis_sawyer's picture

I guess this also means that the Aussies will not field a BIATHLON TEAM in the 2014 Winter Olympic games...

Poor blokes...

Mon, 06/11/2012 - 16:54 | 2516009 fuu
fuu's picture

or better yet a terminator

Mon, 06/11/2012 - 16:34 | 2515933 Call me Ishmael
Call me Ishmael's picture


Can someone less lazy than me put together a chart that shows the quantity of Zerohedge articles vs. performance of the S&P? It could make the market as predictable for us as it is for the front running vampire squid.

 

Mon, 06/11/2012 - 17:04 | 2516037 i_call_you_my_base
i_call_you_my_base's picture

Probably retrospect, not predictive.

Mon, 06/11/2012 - 23:01 | 2516851 Call me Ishmael
Call me Ishmael's picture

OK. Maybe not too predictable. But it would be interesting. Zerohedge has embodied the deep fear the market came down with in 2008 with superb detail. The fear... That Lehman was the delayable, spinable, though possibly unstoppable beginning of the end.
The things that happen that make ZH churn out more articles than usual,
are the things that can make people sell in unison.
Classifications of corelations could be glommed from such a chart says I.
Argh.

Mon, 06/11/2012 - 16:35 | 2515934 junkyardjack
junkyardjack's picture

Someone needs to teach the algos what bailout means...

Mon, 06/11/2012 - 16:35 | 2515935 ArrestBobRubin
ArrestBobRubin's picture

If that bite of AAPL today tasted a bit... wormy, well there's a good reason:

Apple integrates Facebook into iPhone software

Word is the handheld device was adamant it "didn't want that crap onboard" but lost out in shady HQ power play.

Siri is pissed too.


Mon, 06/11/2012 - 16:42 | 2515967 Downtoolong
Downtoolong's picture

If Facebook can force itself onto AAPL, imagine what they can do to you.

 

Mon, 06/11/2012 - 17:30 | 2516090 ArrestBobRubin
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Not on it, to me it's always been an obvious con and Trojan horse for easy marks.

Beware of Zucks bearing gifts...

Mon, 06/11/2012 - 16:40 | 2515953 Prostar
Prostar's picture

......Bubble???  That has to be the word since financials are the ones getting hammered and they are the ones behind the bubble thats being propped up in stocks.  Since they are also trying to supress pms which are on the up  I guess it would be fair to assume that  they would feel some heat on that end too. 

Mon, 06/11/2012 - 16:41 | 2515959 Sweet Chicken
Sweet Chicken's picture

When is GOLD's flight to the moon scheduled to leave?! ;)

Mon, 06/11/2012 - 16:46 | 2515988 disabledvet
disabledvet's picture

right now. start buying! haven't you heard?

Mon, 06/11/2012 - 18:04 | 2516162 CPL
CPL's picture

It left four years ago when it was priced in at $575 and governments were throwing it away, right now is the opportunity to make sure you have something left when this all explodes and the "new" shiny single world currency is introduced....won't get that far though.  Civil unrest will end up in the Armies, Marines, Navies and the soon to be expired airforces (fuel costs, no conspiracy here, happening everywhere right now).  Most will just lose it I'm guessing as soon as that loved one from home doesn't write back or answer the phone.

 

Humans are fairly clever and can maintain a level of self deception for a long period of time, until it breaks like a twig and then it gets weird.  In historical terms, the dark ages happen, history is forgotten because it was that awful.  The burning of libraries in Europe with the constant sacking of neighbouring tribes wasn't an accident it was image control.  The 8 thousand year old sanskrit libraries maintained by monks for longer than the concept of a single god near Agra point out that Europe was pretty much a loonie bin.  We get an odd snippet of information about the period, folklore of the Borgias for example.

The Borgias were pretty much a disgustingly wealthy family for reasons that are incredibly unsavoury and violent even if talking in Internet terms today.  

And they are the ones people choose to remember though, not for good or bad, but because they did their job right and did it well.  

There were hundreds of these families in every country, that were WORSE and picture a mind that is so bored and twisted it invents the intestinal crank (machine that winds your guts around a pole while you watch very much awake and alive).  Then there's the cannibalism, lots of it.  Incest and abuse is so common it borders on a second career for some of the younger "nobels" on top of the occassional putting on Armour and raping the neighbours.  I'm afraid most of what was sold on TV about the period is mostly horseshit.  Royality is really just another word for spoilt rich brat which has evolved into really expensive state funded welfare for someone with access to a different hat.    

There is little written about period of history in native terms at that point in time, basically for 500 years people forgot how to read and write with a common franca lingua like Latin.  It's like bookends, lots of everything being written down and transcribed before, then nothing, then everyone remembers how to write again.  

Mon, 06/11/2012 - 20:21 | 2516452 prole
prole's picture

The Borgias were pretty much a disgustingly wealthy family for reasons that are incredibly unsavoury and violent even if talking in Internet terms today.

Yeah but like, did they eat each other's faces?

Mon, 06/11/2012 - 16:45 | 2515981 robertocarlos
robertocarlos's picture

Somebody set us up the bomb.

Mon, 06/11/2012 - 16:45 | 2515986 GoldenGal
GoldenGal's picture

Like the Cusco airport , gold's gate has changed multiple times but as  soon as the flight is full the plane will take off!

Mon, 06/11/2012 - 17:23 | 2516074 ArrestBobRubin
ArrestBobRubin's picture

Whaddaya say GG: Mile High Club?  Muy, muy caliente...

;-)

Mon, 06/11/2012 - 17:56 | 2515992 Dr. Engali
Dr. Engali's picture

China is filling up their oil reserves for a lot less money than we filled up ours. When we were filling up our oil reserves the oil price topped out a little over $140 a barrel. Of course we were talking about releasing oil when it was $120 a barrel. That's government efficiency for you.

Mon, 06/11/2012 - 17:00 | 2516022 pleseus
pleseus's picture

It's called volatility

Mon, 06/11/2012 - 17:04 | 2516038 Angel Face
Angel Face's picture

Trifecta

Mon, 06/11/2012 - 17:09 | 2516053 Motorhead
Motorhead's picture

Hey, the price of a barrel of oil is dropping.  It couldn't be due to those evil speculators now, could it?

Mon, 06/11/2012 - 18:01 | 2516165 slewie the pi-rat
slewie the pi-rat's picture

no;  it is b/c of risk0ff

oil went up with the risk0n head-fake

now it is going down with the risk0ff head fake

is there a chiropractor in the house?

plus, that is an up & down violation and the banksters turn the ball over to the nannies at midcourt, with the score tied and 8 seconds left in ovetime and the winner plays the winner of tomorrow's game between zeroHedge and the MIC, which looks to be a real war of attrition...

Mon, 06/11/2012 - 17:41 | 2516111 nmewn
nmewn's picture

"...(down 1.5%) amid the widest range day in six months."

2.5% swings...perfectly normal..."Doin fine"

Mon, 06/11/2012 - 17:51 | 2516141 icanhasbailout
icanhasbailout's picture

So how does Peak Oil theory explain a > 20% drop in the price of oil? Did we just discover a few trillion new easily extractable barrels somewhere?

Mon, 06/11/2012 - 18:09 | 2516182 The.Oracle
The.Oracle's picture

Do you think it was finding new reserves that dropped oil from 140 to 60 in '08?

Mon, 06/11/2012 - 18:10 | 2516183 mjk0259
mjk0259's picture

Oil price has always had a big speculator premium in it according to Talibi and also XOM chairman. Maybe that is collapsing for  a while or they switched their bets to the other direction. Other possiblity is Saudi's driving down price to screw Iran and/or shale oil/tar sands producers.

 

Mon, 06/11/2012 - 18:10 | 2516184 Likstane
Likstane's picture

No shit, thanks for putting into words the obvious.  No sarc, just agreement.  

Mon, 06/11/2012 - 18:44 | 2516264 amadeusb4
amadeusb4's picture

Peak oil infers that oil prices will not only rise but become more volatile. But it's the arena outside of peak oil that dominates the price of oil now, namely economic growth. As the world enters a deleveraging induced depression, the simultaneous drop in demand and swing towards deflation causes the demand for oil to drop at the same time that prices are dropping from a move towards cash. The falling price is also not helped by unusually high inventories. It will be very difficult to predict a bottom for these trends which is why I'm not trading oil at this time.

Mon, 06/11/2012 - 19:14 | 2516310 PrinceDraxx
PrinceDraxx's picture

Peak Oil is a crock of shit. Explaining the ups & downs in the price of oil is the same as explaining the ups & downs in the stock market. There isn't any explanation. Herd animals and algos is a good guess.

 

We will never run out of oil. Might not be able to get it out of the ground for $80/bbl. or even $300/bbl, but we'll never run out.

Mon, 06/11/2012 - 18:07 | 2516178 adr
adr's picture

If oil plopped then I would really like to know why the FUCK gasoline went from $3.45 at 2 PM to $3.79 at 5 PM!!! AT VERY FUCKING STATION!!! $.34 IN 3 HOURS??!??!??!!!

Did a unicorn fart stir up the gulf?

Hmm $100 barrel oil $3.79 gas. $81 a barrel $3.79 gas.

I'm pissed enough to play let's make napalm.

Mon, 06/11/2012 - 18:12 | 2516188 slaughterer
slaughterer's picture

It seems that the PM attacks will be delayed until tonight and tomorrow.  Desks were too busy plunging oil to take on PMs today.  

Mon, 06/11/2012 - 18:23 | 2516213 kensdad
kensdad's picture

The algos are never too busy to attack gold.  Maybe one of these days gold will just gap higher and never look back?  That ought to leave a trail of dead algos in its wake...

Mon, 06/11/2012 - 20:02 | 2516415 dcb
dcb's picture

 wish there was a way to post graphics, alsa I'd live to share some charting. I had to work today, so it made things difficult.

Mon, 06/11/2012 - 20:10 | 2516431 dcb
dcb's picture

esp when some things are trading so strange.

Mon, 06/11/2012 - 23:37 | 2516946 thorgodofthunder
thorgodofthunder's picture

RIMM will get bought out by a P/E firm at $15+

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