Market Has Longest Losing Streak In 10 Months

Tyler Durden's picture

For the first time since last July, right before the market's grand plan collapse, the Dow has fallen for 6 days-in-a-row. We could of course have just copy/pasted yesterday's end-of-day as today was a case of deja deja vu all over again as we sold off hard overnight (basically top-ticking right before the US day-session close), made new overnight lows, then managed a miraculous rally into and across the European close only to stall once again as the dip-buying algos enabled bigger blocks to dump into momentum retail players. The European close hour saw your standard 4-sigma swing (low to high) in ES (S&P 500 e-mini futures) but gave half of it back it its typical VWAP reversion as for three days in a row we have dipped and tested the S&P's 50DMA and rallied on lower volume (though ended the day with the 3rd highest volume of the year). The USD rallied further with the EUR ending around 1.2950 (though off its lows of the day) but once again commodities (which sold off pretty hard overnight) managed to crawl their way back higher (closing rather interestingly at the same levels at which they opened the European day-session). VIX ended above 20% (its highest close in a month) and its flattest term structure in five months. Treasuries ended the day marginally changed (-1bps 10Y, +1bps 3Y) but ended well off their low yields of the day. High yield credit was a major underperformer - ending below yesterday's lows (as was IG credit) - bearishly diverging from equities again.

Six down days in a row for the Dow - is history set to echo/repeat?


S&P 500 e-mini futures (ES) sold off to new lows, rallied (green arrow) over 4 sigma across VWAP (dark red line) back to this week's high resistance and then faded (once again) to drop back perfectly to VWAP - red arrow - (AGAIN!)...

Longer-term patterns are starting to look very similar - today was the 3rd highest ES volume of the year and volume is rising as this sell-off picks up pace - just like it did last summer...

It's Deja Vu All Over Again... (this is ES relative to VWAP over the last few days)...

and in commodity-land - deja vu also and the dip was bought (green U's) - what is interesting today is the basically unch move from midnight (Europe's open) to the US close (orange arrows). Once again WTI was all the rage and how great it was for consumers - we note that oil is now only -2% on the week - not exactly the kind of wallet-helping move so many think it is...

Credit markets were not happy - taking their lead from Europe - HY and IG underperformed and ended below yesterday's lows - very different from equities...

Just for interest's sake we took a look at realized vols for equity and bond total returns over the past few years. Obviously bonds are 'less' volatile, as is the volatility of that volatility - which perhaps fits with Einhorn's recent insight that the Bernanke Put is not under stocks but under Treasuries and merely manifests itself more obviously in stocks. What we noted is the decoupling and re-coupling of equity and treasury over times and the current re-convergence as equity vol rises (which reminds us that VIX managed to get above 21.5% earlier today around its 100DMA closing around 20% and shifting its term-structure in a bear-flattener to the flattest in five months)...



We spent a lot of time recently discussing European banks (notice how generally well-behaved European equity and credit markets have been  - lower pane) but US banks have been hit relatively hard (in the credit markets) and yet US financial equities remain stubbornly unable to give up that last bit of Bove-hope (upper pane)...

and finally - trying to make sense of the movements across all asset classes was tough (with some leaking higher in yield in Treasuries this afternoon - even as stocks limped back to VWAP) but overall - risk-assets were not as exuberant post-Europe again as stocks and by the close, stocks had reverted back to risk-asset (CONTEXT) reality...

Once again - as a reminder - Europe will open tonight - that is all as it reminds us of the following clip...

Charts: Bloomberg and Capital Context


Bonus Chart: We missed the European EOD earlier so here are European sovereign spreads this week...(Spain and Portugal 10Y spread to bunds +41 and 49bps on the week with Spain >6% yields at its highest in 5 months and Italy +23bps in the last 3 days)...

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EclecticParrot's picture

A typically unsettled late spring afternoon -- rain falls softly as a child of four with curly golden locks speaks to her mother in an oh-so-precious, squeaky voice:


Tot:  “Mommy?”

Mother:  “Yes, Sweat Pea?”

Child (with a puzzled look):  “Mommy, why does the goddamn market go up every afternoon ?”

Mom:  “Well, darling, remember the Southern Europeans we talked about?”

Girl:  “The ones Daddy calls ‘effete pantywaists’ ? ”

Mom:  “That’s right, Sugar Bear.  They spend all day shorting their markets while watching soccer matches, with public funds as collateral, then after the European close they use the profits, along with cash borrowed from the Germans, to squeeze the ‘rocks’ of short sellers in this country.”

Child (in a sudden burst of laughter):  “Aw, MOMMY!  Is that why you always buy the fuggin’ dips ?!! “

Mom:  “Yes, Honey Bun --good girl !! 

Tot (quizzically, twisting her hair with the left index finger):  “Gee Willikers !  Can’t anything be done to stop these hairy-armed bastards?”

Mother:  “Unfortunately, no, Apple Butter.  Given they’re clever, not lazy, they’ve managed to blame the whole scheme on the ‘Algos’, which is Greek for ‘MIT girly-men.’ “

Girl (her look suddenly turned pensive):  “But what would happen if European markets went up?”

Mom:  “They’d adjust their assumed rate of return and lower the retirement age again.  Why, Sweetie-Bean, if you were Greek, you’d be retired already.”

Tot: (giggles, rolls onto her back, kicking her legs in the air)

Mother:  “Now, be a dearie and call the dog while I find an umbrella-- it’s time we took another random walk.”

Kid (whistles excitedly for her pooch):  “Direxion !!  (Pfweeet !!!)   Here, boy !!   Dir-EX-i-ON !!! “

sunaJ's picture

Oversimplified, discontinuous and boring, actually.  I guess it is interesting that he uses a 4 year-old to explain what he thinks he knows...

EclecticParrot's picture

I've often wondered:  are there people who could spend a full 40 minutes on 'The Onion' site before realizing it's satire ?  I guess we now have our answer ...

NotApplicable's picture

Better yet, they share their indignation with anyone dumb enough to be their friend.

Levadiakos's picture

Jon Stewart as the go-to news source

q99x2's picture

Got at least one European in the audience.

TideFighter's picture

Tot could have explained it without rolling on her back and throwing her legs in the air. This muppet thinks you would light up the sexual predator map, hopefully not to close to my house. Now run along and play with your dolls, Parrot, and leave the heavy lifting to those who explain EU financial conundrums without conjoining infantile fantasies.  

skepticCarl's picture

You're from Philly, aren't you, Tide?

Id fight Gandhi's picture

Still has a long way to fall.

Oil, it's funny. When it's up it means demand is strong, good for the economy, people don't mind paying more. When it's down, people will have more money to spend on the economy. Always good times.

max2205's picture


ihedgemyhedges's picture

Then you better turn CSCO's after hours chart upside down if you're ticker symbol choices: OUCH or OSTH.

NotApplicable's picture

Woah... I take it their "finance our customers who can no longer afford our products" strategy is starting to impact the bottom line?

mayhem_korner's picture



The market has a Twist Off Top.

random shots's picture



Just post "COMEX Margin Hike" "Tax Cuts Repealed" "US Loses AA Rating" "AAPL Wells Notice" and be done with it.  That should cause the algos to crash the market. 

SmoothCoolSmoke's picture

Man I love the pattern of the last 3 days.  Weekly SPY options are like printing money!!!  Puts at the open, calls at 11, puts the last 30 minutes.

Gimmie a month of this and I'll never be heard from again!


machineh's picture

At my place it's putas at the open, call girls at 11, and more putas for the last 30 minutes.

LawsofPhysics's picture

If only technicals mattered. All this chart porn would certainly be much more fulfilling < sigh >

slackrabbit's picture

agaun krugman say this is bullish

buzzsaw99's picture

I love how the msm plays up the oil price drop as being significant. LMAO!

Milton Waddams's picture

Some time after the invasion of Iraq there was a paradigm shift in the way propagandists spun movements in the price of oil. Prior to the invasion increases were typically spun as potential headwinds to economic growth, post invasion increases were increasingly spun as bullish indications on economic activity. Hmm... I wonder why that is???

DaveyJones's picture

good point. Even in these less than healthy times though, oil still sits close to a hundred. Guess it's getting harder to get while the gang of getters gets bigger 

Hmm...'s picture

I've said several times that I'm the only person in all of ZH who is upside down on his gold holdings, and that is still true.  I've also said that the correlation between stocks and gold has also been unnerving for me since last fall, and this is still true.  and lastly that I'd consider buying Gold if it fell <1600.

Just wanted to do a disclosure that I bought 20oz of gold today, mainly because there is nowhere safe.  gold isn't even totally safe.  but at least it's safer than other alternatives.  I"m personally buying gold because I refuse to give these financial bastards one penny of my hard earned money... and I got nothing to lose with my credit union savings account at 0.8%.

I hate our economic and political leaders who force us into these Sophie's choices.

Good luck to you all, because gold prices usually collapse when I buy.  Apres moi, le deluge.

I Am Not a Copper Top's picture

If it is physical you bought

a) that is a shit load of cash to throw down at once

b) bravo, and

c) don't sell it


If not physical, you are right, not totally safe and yes, you are still giving the financial bastards your money.  Take delivery and sleep well.  It will go up eventually.

Hmm...'s picture

I only buy from Tulving.  20 coins is the minimum purchase.  It is physical.
To be precise, 2012 gold eagles (they were sold out of random year). 

it is a huge amount of cash, at least for me.  but even if you only buy one coin it's about $1675 or so even at today's price.  so even a small purchase is a lot of cash.  But if I'm going to buy, then I want to buy each coin as cheap as possible.  Plus, I trust Tulving, and I don't know anybody cheaper who I would trust.  No way I'm buying on Ebay.

I probably won't sell for decades.  I'm not planning on making anything on this purchase.  I buy gold as insurance, and as a fuck you to the big banks and federal government. 

Since I buy gold as insurance, I don't expect to make any money off of it.  If I do make significant money off of it, it means the shit has hit the fan and I may end up worse off overall anyway.  this is what many gold bugs miss.  The end of our entire financial system as we know it will harm every one of us.  Just like my house insurance.  Sure, if my hosue burns down I "profit" off of my house insurance policy.  However, I've lost my house, a lot of priceless belongings (pictures, etc), and perhaps even my life.  if our rotten to the core evil financial and political system really collapses, all bets are off.  The gold may help.  But our lives will be worse. 

But I routinely get down arrowed to death when I question ZH orthodoxy that gold prices are shooting to the moon, thus I post randomly when I buy.  I don't know if that gives me more legitimacy or not. 

My last 3 purchases were at $1875, $1735, and then today at $1589.  typically after I buy gold takes a wacking.  good luck to you all. 

My next trigger point is if Gold hits $1450 or so, although I might chicken out.  I've been proud of myself for not chickening out with my plans thus far... but it's early in the game (for me, late for you who bought at $500).  I'm dollar cost averaging opposite to everybody here!  hahaha.

Likstane's picture

Stay outta the water.  Get that stuff in the dirt. barbarian stacker.

Village Smithy's picture

That is a helluva good way to look at it IMHO.

r00t61's picture

Now that you've told all of us moldy internetizens about your shiny gold, I suggest you lose it all, in a boating accident, IMMEDIATELY.  And be sure to tell us about that, too.

theTribster's picture

You sir, are an uncivilized barbarian. Next you'll be telling us your sewing them into your clothing! [sarc off]

Congrats on your purchases, even though many seem to think it is a non sophisticated investment (see Gates, Munger, Buffet) I think you will be happy you made the purchase. Now is a good time to buy, it will likely go a little lower but the upside is so ridiculous it won't matter much when you go to sell. I'm with you on the fuck you to the big banks, silver would have had a bigger impact though. Given the recent trend why buy now? Why not wait until it turns around and goes green - that could be days...

I don't think you'll hit the 1489 point, although that would be great. I'm all for the metals dropping as low as possible over the next few months, thank the Fed for the low, low prices. Once we get to the end of the summer or past the elections (if they can keep it propped up) PMs will start on the final leg of this bull run and finsih by setting records and buyng a single share of the Dow. Becuase it's fun to guess, between $3,500 - $4,500oz.

At the end of this run I'll be selling 90% of what I'm holding, question is what will I be selling it for? Maybe a new Gold backed currency with Dr Pauls picture on it, that'd be cool. It is almost certin that Gold/Silver will not be the primary vehicle for trade. Maybe the BRICS will actually pull off their own bank with an associated Gol backed currency that they mandate be used for trade with them. I guess we'll see.

Anyway, enjoy the upcoming stacking activities....


blunderdog's picture

How can you be upside-down on a physical asset you own with no lien?  You took a LOAN to do that?

the not so mighty maximiza's picture

This graph seems bullish.

Sudden Debt's picture

Could have happened to the worst of countries...

indianajohns04's picture

What does a flat term structure mean?

GS-DickinDaMuppets's picture

Twiggie's brazier ?


...doing GOD's work...GS-DickinDaMuppets


BlandJoe24's picture

What's your take:  PASOK/Venizoles, as #3 in the elections, will tomorrow be handed the mandate to form a government.  With just a few more members from another block couldn't they join again with New Democracy/Samaras for the same old same old coalition Greek has had?  Couldn't this pop equities and EURO tomorrow (not to mention be a huge blow to the Greeks)?

carbonmutant's picture

In other news:

SYRIZA is now the most popular party in Greece, according to a poll just released. Anti-bailout is gaining traction...

Poor Grogman's picture



"trying to make sense of the movements across all asset classes was tough"

Understatement of the week..

My take is that the big black hole of deflation is swallowing the new money as fast as it is minted (sorry printed).

The cartel trying  to achieve some control over deflation but as they do.  Even more debt is created in the system, thus making the problem worse a few weeks later.  The old ways are no longer getting the job done and the whole system teeters on the edge of the abyss.

Sooner or later an event will occur that requires a reaction from the cartel. The wrong button will be pressed or a mistake will be made and the juggling act will come to a very sudden and unexpected conclusion.

(Central planning 101)

The tangible asset paradigm is the only course of action if one is to take control of ones own destiny under such a scenario.

Hopefully we get a total washout in metals that would allow some real bargain buying opportunities soon. (just dreaming)

We had the warm up a few ears ago, so there are no excuses for not being ready for whatever comes your way.



LarryDavis's picture

The calm before the storm.

Squid Vicious's picture

Cisco just gave back about 8 months worth of gains in 5 days... Boo- Yah!

junkyardjack's picture

FOSL is looking attractive...


BULLETZ, BEANZ, BITCHEZ, AND BLINGZ, BITCHEZ !!!!!  Stock up on the essentials today, or become a FEMA camp sheeple.

Medicated sheeple slaughter house coming soon to a neighborhood near you.

orangegeek's picture

The SP500 fell hard this morning and then recovered slightly.  The bigger picture remains bearish.


Some call this a "dead cat bounce" could call it a "fed-cat bounce too".

junkyardjack's picture

For every seller there's a buyer, bullish

Shizzmoney's picture

Considering how less of us (54%) don't own stocks, and the majority of those that do, don't even make any major skrilla off of them.....

........this news alone makes me more bullish on fist pumps.

halfacanuck's picture

I suspect the weirdness around market closing times is caused by ETF transfers. And traders gaming ETF transfers. And traders gaming those traders. And so on.

I should be working's picture

Head and shoulders top is really a push here.

The market action reminds me of July 2011 when we went down day after day. If the market shoots up and starts acting funny time to sell, but you'll see nearly 1400 first, don't sell into an oversold market.

slewie the pi-rat's picture

PASTE: ...the Bernanke Put is not under stocks but under Treasuries and merely manifests itself more obviously in stocks.

over a year ago, we were discussing the 'naked' puts the FED had issued for Ts, here

tyler wrote the article

q99x2's picture

Maybe the FED doesn't have the perfect market manipulation power that I thought they had. And, since they went down that path now they have all the other central banks to counteract.

Repent the end is near.