Market Is Long Of Mania In Schizophrenic Terms

Tyler Durden's picture

NASDAQ managed its largest gain in four months as Apple came back into vogue and saved the day. The equity indices were alone in their magnificent exuberance after the European close as Gold, Treasuries, and the USD all tracked sideways in a very narrow range. As we have been warning, the mania is back in equity (and credit markets but less so) as April has now seen six of the last nine days swinging between 2 sigma gains and 2 sigma losses (for the NASDAQ). Volume was average today in ES (the S&P 500 e-mini futures) and NYSE (stocks) but high in Apple's equity and options markets as the schizophrenic behavior pushed the stock from under $572 at the open to almost $610 by the close (though notably stuck between Friday's close $605.19 and its closing VWAP at $610.74). The last day to fund your IRA combined with tomorrow's VIX futures/options expiration likely helped some of this momentum (as we note VIX is about 1 vol higher than it was when the S&P closed at these levels on Friday). Just as in Europe, credit markets were simply not as enamored with the Spanish auction or Apple's awesomeness as equities and drifted sideways to weaker all afternoon (with some late-day weakness in HYG as it starts to fall back towards its NAV). Financials and Materials lost some ground into the close and ES gave all its post-Europe-close gains back as volume and trade size picked up significantly at last Thursday's swing highs (near pre-NFP levels again). The Treasury complex saw all its 'losses' in the early going and went sideways in an extremely narrow range for much of the US day session - ending the day slightly higher in yield (0.5-1.5bps) on the week. Commodities surged early on as the USD slipped but drifted back from mid-morning on (except WTI which broke above $105 (ended above $104) for the first time in 2 weeks. Gold and Silver nose-dived right after the US open only to recover it all by the European close. EUR strength (and USD weakness) occurred early this morning on the Spanish auction and aside from a rip in CAD the rest of the day was relatively tight ranges with a very small drift higher in DXY. All-in-all, it seemed like an oversold snap that saw opportunistic sellers coming in at the end as average trade size surged and ES closed back above its 50DMA again - echoing last week's mania and worryingly raising realized vol for all those hopes and dreamers.

NASDAQ (and in fact the rest of the equity index complex) is exhibiting very significant swings intraday. Based on 3 month vol, we have experienced six 2 sigma swings in the last nine days...the last time such an event happened was the whipsaw mania of last summer that further served to destroy retail faith in markets...


Across asset classes the distinct phases of today's market are very evident. Gold's nose-dive after the US open (and recovery by the European close) are clear and the sideways drift after Europe with Equities outperforming only to revert it all back at the close...

FX markets were dominated by the AUD and CAD rallies (most notably the latter - chart below shows USD strength is higher relative to each currency) but soon after the European close these started to leak back lower - following JPY's general trend all day (as carry trades went from bid to stable)...

VIX (green) is notably higher than the last time the S&P closed at these levels (orange). Also noteworthy is the fact that VIX closed near its opening levels of the day - given the jump in price (suggesting macro vol overlays were evident)...

Equities remain rich relative to credit and even HYG has started to pull lower after reconverging from April rotation...

HYG is notably rich relative to its NAV...

Gold and Silver stumbled hard right after the US open but recovered  - though we note Gold remains lower on the week while Silver is higher (more in line with USD's weakness)...

And on Apple, we thought it interesting that it was unable to break above Friday's closing VWAP adn the blue shaded bars show heavier block trade activity occuring into the Friday closing price level and again as pushed close to Friday's VWAP (as algos jiggled it higher for some better exit levels)...

Finally, based on broad risk assets (as proxied by our CONTEXT model) we have seen this pattern before. Last week we saw equities surge exuberantly higher leaving risk in general in the dust (as we noted earlier on the back of well-recoved Italy bill auction that time). While markets do not always repeat, they certainly rhyme from time to time...

Charts: Bloomberg

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ZeroPower's picture

As mentioned USDCAD was story of the day but nice to see the JPY lose some of its enviable strength today as well.

vast-dom's picture


The market has been and continues to suffer from Borderline Personality Disorder [BPD]:



  1. Frantic efforts to avoid real or imagined abandonment. [e.g. QE abandonment; Hopium abandonment; etc.] Note: Do not include suicidal or self-injuring behavior covered in Criterion 5
  2. A pattern of unstable and intense interpersonal relationships characterized by alternating between extremes of idealization and devaluation[no e.g. necessary.]
  3. Identity disturbance: markedly and persistently unstable self-image or sense of self[no e.g. necessary.]
  4. Impulsivity in at least two areas that are potentially self-damaging (e.g., promiscuous sex, excessive spending, eating disordersbinge eatingsubstance abusereckless driving). [e.g. QE binging; hopium binging; binging on delusions and bogus reports, accounting, census, etc. ; etc.] Note: Do not include suicidal or self-injuring behavior covered in Criterion 5
  5. Recurrent suicidal behavior, gestures, threats or self-injuring behavior such as cutting, interfering with the healing of scars (excoriation) or picking at oneself. [the markets are one big borderline suicide of late.]
  6. Affective instability due to a marked reactivity of mood (e.g., intense episodic dysphoria, irritability or anxiety usually lasting a few hours and only rarely more than a few days). [e.g. VIX, etc.]
  7. Chronic feelings of emptiness [yup.]
  8. Inappropriate anger or difficulty controlling anger (e.g., frequent displays of temper, constant anger, recurrent physical fights). [check.]
  9. Transient, stress-related paranoid ideation, delusions or severe dissociative symptoms [def.]

It is a requirement of DSM-IV that a diagnosis of any specific personality disorder also satisfies a set of general personality disorder criteria.


Note: the borderline straddles the self-knowing of behaving destructively and not, while the schizophrenic is constitutionally unable to make the distinction; ergo, the borderline is cunning and extremely dangerous! 

Note: the average time for a borderline to improve is min 2-3 years of diligent rigorous psychotherapy; how long have these markets attempted to heal themselves in last decade? Quite the contrary.


If one wanted to get laid would they go to a whorehouse or an insane asylum? No need to answer.


ihedgemyhedges's picture

And I am still long of nonsensical, BS, money losing trading ideas.

Sincerely, D. Gartman

vast-dom's picture

You are not alone. There are roughly 10M people in abusive damaging relationships with BPD's. It happens. Sometimes it's best to cut your losses. And remember: nothing is wasted -- you learn from mistakes and that's how you really get better.

johnu1978's picture

All I want to know is when Best Buy is going to file bankruptcy. Can anyone tell me that?


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SDRII's picture


"Just as LEAP/E2020 has been anticipating since November 2010 (GEAB N°49), the Socialist candidate (1), in this case François Hollande, will win the 2012 French presidential election (2). There is still the question relating to the first round of this election: will Nicolas Sarkozy, the outgoing president, come out ahead or behind Marine Le Pen (it was also part of our November 2010 anticipation) (3)? Therefore, it’s time to anticipate the consequences of this election for France, Euroland and the EU as well as at world level (NATO, G20, Euro-BRICS) because de facto it’s much more important for the current world’s progress, in full transition because of the world crisis, than the next American election which will see Barack Obama and Mitt Romney clash head-to-head (two candidates financed massively by Wall Street) against a backdrop of the US political system’s general paralysis (4)."

junkyardjack's picture

AAPL to infinity and beyond, put on your shoulder harnesses and hop aboard

adr's picture

Apple stock had its correction, so now it is free to move to $900 before the next correction.

Isn't that how the MSM sees this insanity? Corrections can last anywhere from an hour to a few days. Just healthy action testing the market forces to justify higher price moves, blah blah blah.

There will never be a retail investor outside a compulsive gambler here and there ever again. Yesterday a stock drops $40 and today it goes up almost $40. Tomorrow it could drop $40 again or it could go up $60 and test 52 week highs. Nobody knows.

The hedge funds liquidated their holdings over the past few trading days to meet capital requirements and pay back short term loans that were due. Last night a few calls to the Fed and billions in new credit were handed out to pump the market again.

With advanced warning the big players could set up a situation where they decide to sell 5% of their holdings, enter in a short position, and then sell off that small percentage causing a substantial drop, then rebuy the 5% at the lower price profiting from the short position. Knowing that while the 95% held will lose value for the short term, the equity price will rise back to the previous level within a few days, perhaps even going higher. Giving that 5% bought off the short sale even more profit. Of course that would almost be going short and long at the same time, but HFT allows that type of behavior.

Or am I off my rocker?

walküre's picture

The hedge funds liquidated their holdings over the past few trading days to meet capital requirements and pay back short term loans that were due. Last night a few calls to the Fed and billions in new credit were handed out to pump the market again.


Or am I off my rocker?


Question remains. Will this bounce last or go down in flames again as the hedgies and banks realize that nobody is coming along for the ride?

slaughterer's picture

No "whale" hedge fund will sell sell off a large position without juicing its returns by buying puts, etc. before it sells.  You have it correct.  

Motorhead's picture

Charts, bitchez!

TradingJoe's picture

This "bounce" is to be sold, no matter how much higher it can get from here or just because of that!!!

razorthin's picture

Long term IWM sell signal still valid.  If you must fund that IRA, park it in cash.

chump666's picture

Crazy trading.  Asia will buy the USD dips on their session and we get equity weakness in their region.  EUR will be sell, oil bid, inflation hedges bid like Gold etc etc etc etc etc

Overall it looks like the start of broader volatility.


asteroids's picture

The CAD move was weird. It feels like a last gasp before it too heads south.

chump666's picture

Oil is bid.  back to square one, should crimp Asia and freak out Obama again.


SmoothCoolSmoke's picture

From 7am; Euro went down into tthe NY close......, the Dow went up 140.  WTF?!?!?!

chump666's picture

Asia re: ASX200 (Australia) is f*cking frightening. HFT gaming on nothing volume, BHP con on iron ore (prices down production up) got the machines hot and horny.

This is bad, bad vibes.  The market is now rudderless.

chump666's picture

ah IMF jawbone bullsh*t

  • Adding to the positive developments, the International Monetary Fund raised its 2012 global economic growth outlook by 0.2 percentage points to 3.5%.

Nasty even the IMF helped Wall Street bulltrap it's self and everyone else.

ekm's picture

Right now, we are at the point of no return. Two options:

- The market drops. Consequence: Primary Dealers holdings will lose value and margin calls are triggered

- Keep buying the same stocks so the value is kept up at vanishing volume.


It's clear the second option has become the one only one. They will stop when:

1) The flow is stopped from the Fed

2) They end up buying up all the market.

3) A combination of 1 and 2

Point of no return has been crossed.

chump666's picture

I think the IMF/ECB/Fed are all going insane in realtime.  The IMF pumped the market so that Asia bonds look tasty and that they ALL contribute the IMF bailout fund.  This 'ramp' happened.  Can it be sustained?  No.  Now these diseased a-holes will try and set (sell) the market back into ranges, you can choose, but it looks like at least a 3% correction again or less.

It's about oil again.

That zombie Lenin must be smiling.