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US Equities Plunge To 2-Month Lows

Tyler Durden's picture


S&P 500 e-mini futures (ES) just opened down over 11pts from Friday's close and have traded below the 4/10 and 4/23 lows to trade back to their lowest since 3/8 taking out the 1350 stops. The EUR is at its lowest against the GBP since Nov 2008, closing in in the first sub-1.30 print since 4/16 with a little more pain taking us to 4-month lows in EURUSD (now within 20pips of 4-month lows). Gold and Silver (spot) are modestly lower relative to the 0.4% raise in the USD. Treasuries are not open yet but broad risk assets imply a considerably lower print for ES in the mid-1320s at current prices. WTI has opened with a $95 handle crossing its 200DMA to its lowest since 12/20.

In CONTEXT (based on the medium-term correlation of a broad basket of risk-assets), ES should be notably lower...


and sure enough - EURUSD just broke down through 1.30 to its 3 month lows...Feb 16-> 1.2974 and near 4-month lows. Notably, EUR-USD swap-spreads have been pointing to a lower spot rate for a week or so now and as the chart below shows - indicate 50-60pips more downside before we get really excited...

and WTI at its lowest price of the year with a $95 handle and below its 200DMA...


Chart: Bloomberg


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Sun, 05/06/2012 - 18:18 | 2401725 Cassandra Syndrome
Cassandra Syndrome's picture

Why is Gold dropping substantially?

Sun, 05/06/2012 - 18:20 | 2401733 ouchtouch
ouchtouch's picture

Anticipating the Mother of All Margin Calls, perhaps?

Sun, 05/06/2012 - 18:37 | 2401784 flacon
flacon's picture

I am comforted in the fact that our central planner has a pH Dee from Princeton University. /sarc

Sun, 05/06/2012 - 18:51 | 2401828 max2205
max2205's picture

Omg... It WAS (not) the best time to load up on (squid) stocks. Well played Goldman, well played.

Sun, 05/06/2012 - 18:51 | 2401830 VonManstein
VonManstein's picture

its just usual knee jerk response.. dont think it will last too long.. there is gonna be legit buying on this

Sun, 05/06/2012 - 18:57 | 2401845 Aductor
Aductor's picture

Maybe from some clueless US traders. The Greek situation is serious, given what they have already thrown at the problem, and can get pretty prolonged. It is not so much the fact that the Greece economy will have an impact in Europe or the US (it won't), but the political impact. Greece leaving the Euro or trying to re-negotiate their bailout terms will increase uncertainty about EU's ability to sort out the bigger problems like an Italy or a Spain.

We should probably test 1340 on SPX, and if I am not mistaken, any close below 1369 will effect a HS-pattern. Seasonality is bad and a topping-pattern emerging.

Sun, 05/06/2012 - 19:03 | 2401856 RoadKill
RoadKill's picture

We are already in a H&S.  Both last week and 3 month.  Neckline on 3 month is 1,340.  If we break that next support is 200 DMA at 1,274 I think...

I'm not a master chartist so if someone has a better read please share.

Sun, 05/06/2012 - 19:12 | 2401882 Aductor
Aductor's picture

Sorry, I was a bit vague. Yes, we are in H-S but I put the neckline at 1369. In any case, it seems downside potential is roughly 5-7% in the short term.

Sun, 05/06/2012 - 18:20 | 2401734 infiniti
infiniti's picture

For the same reason that crude and ES are 100% correlated. It's all one trade.

Sun, 05/06/2012 - 18:39 | 2401792 DeadFred
DeadFred's picture

Did I miss the longWTI call by Goldman? LOL someone is unhappy about this move. Hold onto your gold, this too shall pass.

Sun, 05/06/2012 - 18:48 | 2401824 WonderDawg
WonderDawg's picture

I'd love to see it drop a couple hundred, be time to starting buying again. I think it almost has to drop to about $1300 or lower before it goes ballistic. But maybe not. Who knows? I guess I'll keep phasing in the purchases slowly, and if it drops hard, then pick up the pace.

Sun, 05/06/2012 - 19:05 | 2401865 RoadKill
RoadKill's picture

If we go into a deflation cycle, or even real fears of deflation, it will drop below SPX like in 2009.  Then you load up.  SPX at 1,000; Gold at 900ish; Silver at $15 and hopefully Plat at $750.  I'd load up on Plat at that point.

Sun, 05/06/2012 - 19:21 | 2401901 thecoloredsky
thecoloredsky's picture

I might be naive, but I see large demand for BTFD (buy the fucking dips). Maybe it'll get to those levels, but the premiums will be skyrocketed in the fiat world.

Sun, 05/06/2012 - 18:28 | 2401756 Chaffinch
Chaffinch's picture

Gold dropping maybe because first knee-jerk reaction is usually in wrong direction. Plus da boyz want to take out the stops on all those newby longs. BTFD.

Sun, 05/06/2012 - 18:33 | 2401772 ZeroPower
ZeroPower's picture

Yup, this isn't real action by any means yet.

The only people "at work" right now are a few lonely asia pacific people running the desk and are just getting started. Forget about the retail that just joined soon as their e-trade futures accounts allowed them to at 6pm, ready to pile on short, while the big boys are running it down and waiting to go long.


Sun, 05/06/2012 - 18:44 | 2401808 machineh
machineh's picture

Gold is the mirror of the dollar.

If the euro drops, so does gold.

Sun, 05/06/2012 - 18:54 | 2401839 VonManstein
VonManstein's picture

there have been many periods where gold and dollar have risen together.. gold is a currenct.. it can b e baught aswell as dollars and this is what we will see increasing more of. sure there will be selling along the way.. but DXY up doesnt mean GLD down

Sun, 05/06/2012 - 18:46 | 2401816 Tenshin Headache
Tenshin Headache's picture

Scramble for liquidity? Central bank selling?

Sun, 05/06/2012 - 18:50 | 2401827 BlandJoe24
BlandJoe24's picture

Look at what happened late last summer/early fall with gold prices.  When the S&P dropped, gold followed.  Gold drops when people must sell to meet cash needs, in part - as "ouch" said - to meet as margin calls.  This phenomena may accelerate if markets crash, as people become desperate for cash.

Sun, 05/06/2012 - 19:01 | 2401853 RoadKill
RoadKill's picture

I've tried to explain this to you Gold Bugs 1,000 times.  Gold is a bet on inflation and money printing.  If the ECB and Fed print Gold will be a good store of value - as it has been for the last 10 years.  But remember you have to pay attention both to the Monetary supply AND the vellocity of money multiple.  If the Euro breaks up and the PIGGS default - that is a massively deflationary event.  That will crush Gold & Silver and all commodities - hard and soft (IE Oil to $65).

Understand what side of the trade you are on.  Inflation, Deflation or Total Financial Collapse.  If you are in the last camp, then you don't care what PM prices do.  Buy physical and keep it in a safe under your house guarded by your family, a shit tons of AKs and 3 Dobermans.  In #3 all paper contracts and 1s and 0s are toilet paper and its about guns, stores of food, water desalination equipment, solar power etc...  But if you are in that camp STOP ASKING WHY GOLD IS GOING DOWN!!!

If you are in the SANE world - you are trying to figure out if we are going the 1970s route or the 1930s route.  In the 1970s inflation ran amock, the world couldn't grow and PMs were a good bet relative to stocks.  Of course a better bet would be to take out the biggest fixed rate loan you possibly can.  Preferrably in EUR or Yen.

I think we get massive deflation out of Europe as a half-dozen countries default one after the other and the ECB and EUR break-up.  China will have negative growth and revolts, Japan will be brought to the brink - THEN we will get massive inflation.  Then we will try and break the inflation cycle with 20% interest rates.  Or something like that.  I think we are going to have a lot of bouts of deflation / inflation over the next 10 years as we try to work this out.  So I'm remaining flexible and alert.  But personally I'm not in the survivalist camp YET!

Sun, 05/06/2012 - 19:07 | 2401870 Rip van Wrinkle
Rip van Wrinkle's picture

If half a dozen countries in Europe default, the European banking system goes with it. And the US banking system may not be far behind, Unless they print. You want cash when that happens?

Sun, 05/06/2012 - 19:22 | 2401904 RoadKill
RoadKill's picture

Not that what I want matters - but I want a replay of the US meltdown.  That ended up with SPX at 666 and gold at 700 and Plat at a big discount.  I WANT to be long triple levered short ETFs for the whole ride.  Then I want to get out at the exact bottom and go long triple levered long ETFs right as they start printing.  And if we could rinse and repeat 5x like we did last summer - that would be nice.

Now lets see if I can pull it off.  :)

Sun, 05/06/2012 - 20:44 | 2402139 GCT
GCT's picture

Spot on Roadkill.  I have gold I bought at 300.00 and still have it all for long term.  Right now I am out of gold as these elections would have screwed up the markets following Europe reports.  Now these next couple of weeks months should get real interesting.  The only thing stopping the meltdown is the election year, otherwise you may well be correct.


Mon, 05/07/2012 - 02:14 | 2402625 Psyman
Psyman's picture

The gold bugs are absolutely wrong.  Their market analysis is based on faith, and nothing more.  Gold bugs are like religious zealots.


However, buying gold is buying insurance against the possibility that global fascism and the New World Order will fail.  Keeping in mind that the global Anglo fascist military empire is backed by the collective military power of the Anglosphere, it is not a good bet to make.  I wouldn't put more than 20% of your assets into a bet against the Anglosphere.


After all, who will unseat the Anglosphere?  Nobody else has the military power to challenge us.

Sun, 05/06/2012 - 19:26 | 2401919 Non Passaran
Non Passaran's picture

Why is Gold dropping substantially?

Because to a moron, anything over 0.2% is "substantial".

Sun, 05/06/2012 - 20:26 | 2402088 jmcaule4
jmcaule4's picture

Anit-austerity governments and it's implication for future money printing in the Eurozone.

Alf Fields, King World News + More!

Mon, 05/07/2012 - 03:19 | 2402660 jmcaule4
jmcaule4's picture

S&P 500 timing system returns 289.81% over the past five years.

Sun, 05/06/2012 - 18:22 | 2401729 francis_sawyer
francis_sawyer's picture


Learn it... Know it... Live it...


Sun, 05/06/2012 - 18:18 | 2401730 lizzy36
lizzy36's picture

I have full confidence that by tomorrow Hilsenrath will "break news" about how QE3 is "still an option", and the FT will break a story about LTRO 3&4 being on deck.

Also aome story about the Chinese buying french bonds. Lots of frog bonds.

Wait for it.

Sun, 05/06/2012 - 18:26 | 2401754 EscapeKey
EscapeKey's picture

Time to print some more clownbux.

Fixed all problems last few times around (for a handful of connected insiders).

Sun, 05/06/2012 - 18:54 | 2401836 max2205
max2205's picture

Expect an awesome covering rally......

Sun, 05/06/2012 - 18:28 | 2401763 DeadFred
DeadFred's picture

At some point they will want the market to fall and it will. Is this that time is the important question. I am curious about the market's reaction. What part of this is a surprise? The probabilty of these events was obvious, at least to ZH readers, for weeks and now people are reacting as if something unusual has happened. 

Sun, 05/06/2012 - 18:40 | 2401794 i_call_you_my_base
i_call_you_my_base's picture

I was sort of thinking the same, but on the other hand, if it's a sure thing, from "their" perspective, why tip your hand? Might as well act as if it's an unknown and exploit the fact that others will believe it.

Sun, 05/06/2012 - 18:34 | 2401778 CrashisOptimistic
CrashisOptimistic's picture

Yup, 14-15 hours for someone to be marched out in front of a microphone and talk about the ECB's ability to take emergency action.

Sun, 05/06/2012 - 19:14 | 2401885 RoadKill
RoadKill's picture

We are nowhere near that level of panic yet!!  Let the Itai's and Spanish bonds open.  They prob won't break 7 on this TOMORROW.  Once those are firmly over 7 look to see if interbank lending is starting to freeze up.  That will take at least a week, probably 3-4.  Don't look for the big guns to be rolled out (LTRO 3 & 4) till the DAX is well in the mid 5s.  Fed isn't going to really start talking about QE till June and only if the SPX is down 20%.

We were down 2.5% on Thursday and Friday.  Tomorrow MAYBE we are down 1%-2%.  If these guys broke out the fire hose everytime we were down 5% they would loose all credabillity.  You have to let the PPT make some money buying low.  5% doesn't make anyone rich.

Sun, 05/06/2012 - 22:32 | 2402359 stocktivity
stocktivity's picture

CNBC will provide a day long march of talking heads.

Sun, 05/06/2012 - 19:29 | 2401942 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

I think you meant to say, by tomorrow Hilsenrath will "break wind " about QE3 etc ...

Sun, 05/06/2012 - 18:19 | 2401731 Seafarer57
Seafarer57's picture

New diversification strategy:

40% 12 Gauge slugs

40% .308 rounds

20% silver coins


Sun, 05/06/2012 - 18:55 | 2401838 Jake88
Jake88's picture

12 gauge buck shot will give more killing power in close

Sun, 05/06/2012 - 18:58 | 2401850 razorthin
razorthin's picture

10 guage suits me when hunting turkey.  And turkeys we've got.

Sun, 05/06/2012 - 18:19 | 2401732 Paul Atreides
Paul Atreides's picture

They're going to have to overclock the HFT's to keep up with this mess tomorrow...

Sun, 05/06/2012 - 18:19 | 2401736 I am Jobe
I am Jobe's picture

Waiting for Buffett and Munger to say US equities are safe.

Sun, 05/06/2012 - 18:23 | 2401749 junkyardjack
junkyardjack's picture

Exactly they should have bought gold its flying right now, oh wait...

Sun, 05/06/2012 - 18:28 | 2401762 tallen
tallen's picture

I wonder how his "productive" businesses will do when Europe explodes.

Sun, 05/06/2012 - 18:21 | 2401743 Squid Vicious
Squid Vicious's picture


Sun, 05/06/2012 - 18:22 | 2401744 Snakeeyes
Snakeeyes's picture

As Euope back slides into total Socialist chaos, the equity markets will suffer.

French Elect Socialist President and Click Ruby Heels Saying “There is No Place Like Greece” – A Pictorial Guide

Sun, 05/06/2012 - 18:53 | 2401834 DosZap
DosZap's picture

The  UK has seen a 19% increase in Frogs, rich ones, inquiring about real estate,over the  year before............their moving out while the gettins good.

New Diktaker of Fronce, wants to tax at 95% all $$$ over a million Euros.Better shut down the immigration, and start paying Frogs to repro, or they will be a Muslim state VERY soon.

Female genitalia will be removed post haste.

Sun, 05/06/2012 - 18:22 | 2401746 blindman
blindman's picture

Snooks Eaglin - Reality (Formerly "Wake Up")

Sun, 05/06/2012 - 18:23 | 2401748 razorthin
razorthin's picture

WORLD QE bichez!  Or should I say the Fed will actually publicly admit they've been doing all along, and will now go full retard.

Sun, 05/06/2012 - 18:28 | 2401761 Monkeyfister
Monkeyfister's picture

Oh, EXCELLENT!!! My sweet, sweet dream of DOW 9,000 just might become reality this time!

I don't think there is any more patience or support for a QE3 anywhere outside of Bankster offices.

Another round of shipping out pallet-loads of Free Money for Banksters to set on fire, while pushing Austerity on everyone else, will be like dropping a tanker of gasoline on this fire.



Sun, 05/06/2012 - 18:31 | 2401768 navy62802
navy62802's picture

Dow futures getting CRUSHED. Rule 48 opening?

Sun, 05/06/2012 - 18:31 | 2401770 I am Jobe
I am Jobe's picture

Is there an App for that? Americans too busy watching avengers and enjoying stuffing themselves. all ok, Timmy the fuck says

Sun, 05/06/2012 - 18:37 | 2401786 CrashisOptimistic
CrashisOptimistic's picture

Oh for God's sake.  It's 1 lousy percent.

We saw down 3% days last year.  This is nothing.

But one thing worth remember is the S&P was DOWN last year.  A tiny, tiny amount and not including divvies, but it WAS down.

We have just 8-9% to give up to get back to even on the year and head down from there.  Long way to go.

Sun, 05/06/2012 - 18:38 | 2401790 razorthin
razorthin's picture

Yes, but funny how it always the stairs on the way up and the elevator on the way down.  Give it a few hours.

Sun, 05/06/2012 - 18:33 | 2401777 Hubbs
Hubbs's picture


Sun, 05/06/2012 - 18:35 | 2401780 slaughterer
slaughterer's picture

Covered EUR/USD at 1.2966.  ND and Pasok will have a majority coalition by one vote probably.  I do not want to be Stolpered.  

Sun, 05/06/2012 - 18:41 | 2401795 CrashisOptimistic
CrashisOptimistic's picture

Well, this move is not anticipation of anarchy in Greece.  It's anticipation of an anti austerity wave sweeping all of Europe.  Who cares if Greece reneges?  They already got away with the PSI default, at least somewhat.

This move is all about the evidence clear now that Europe will NOT rein in spending.  They are going to march right over the cliff.

Sun, 05/06/2012 - 18:44 | 2401806 slaughterer
slaughterer's picture

The anti-austerity movement needs super Mario to print them money.   Until that happens, no spending party.   Just a socialist dream.    

Sun, 05/06/2012 - 21:05 | 2402185 CvlDobd
CvlDobd's picture

Are you still short SHLD?

Sun, 05/06/2012 - 21:39 | 2402273 slaughterer
slaughterer's picture

Hello no.  Stopped out a long time ago.  

Sun, 05/06/2012 - 18:38 | 2401789 The Axe
The Axe's picture

Tyler, I am glad you print this shit....but if I had a 100 troy oz of gold for everytime this blog of yours reported a weekend or weeknight drop in the indexs...please.....computers and the NY Fed control the numbers, the action...and the markets.....there is no markets....they only live to feed the lie....

Sun, 05/06/2012 - 18:43 | 2401803 CrashisOptimistic
CrashisOptimistic's picture

You're mostly right, but only about the manipulation.

Recall 2011, which was a DOWN year for the S&P . . . if the manipulation was total we would not have been down 12% on the S&P in August when AAA was lost.  The recovery back to nearly even required LTRO out of the ECB and the deal in Greece.

The manipulation would never have allowed -12% in August if they'd had a choice.

So there is some merit in reporting and watching upheaval.

Sun, 05/06/2012 - 18:46 | 2401813 razorthin
razorthin's picture

"Wish I had a Mercury dime for every dime I have"

- Aurthur (edited).

Sun, 05/06/2012 - 18:43 | 2401799 Poor Grogman
Poor Grogman's picture

Full moon fever

Sun, 05/06/2012 - 18:44 | 2401804 ISEEIT
ISEEIT's picture





Sun, 05/06/2012 - 18:46 | 2401815 Caviar Emptor
Caviar Emptor's picture

Guys, this is the kind of stuff that can sink the unsinkable market. It's still morning and we got a long day ahead

Sun, 05/06/2012 - 18:46 | 2401817 TheSilverJournal
TheSilverJournal's picture

Quick! To the printing press!

Sun, 05/06/2012 - 20:38 | 2402124 Squid Vicious
Squid Vicious's picture

Get Ben Shalom on the fy-att phone pronto!

Sun, 05/06/2012 - 18:46 | 2401819 mist929292
mist929292's picture

Drop in gold and silver is reflective of the rise of the USD (as mentioned in article).  This is a trend that has thuroughly annoyed me since August.  Euro in trouble = Dollar up = Gold down.  Afterall the euro and the dollar have become the ridiculous currecny see-saw. Although gold is likely up in euro terms, nobody really seems to notice.

Sun, 05/06/2012 - 18:52 | 2401829 razorthin
razorthin's picture

Yes, and yet when the mini Euro crises are over they allow equities to levitate whilst keeping both feet on PMs.  That's why it is an equity bubble right now despite the stagnating nominal value.

Sun, 05/06/2012 - 18:46 | 2401820 mailll
mailll's picture

Has the much anticipated economic collapse begun?

Sun, 05/06/2012 - 18:58 | 2401847 The Fonz...befo...
The Fonz...before shark jump's picture

Wow trillions of dollars of qe just doesn't buy you what it used to

Sun, 05/06/2012 - 18:58 | 2401849 Jake88
Jake88's picture

Hey what's wrong with everyone. JBTFD. Bad news is good news.  How quickly everyone forgets.

Sun, 05/06/2012 - 19:03 | 2401857 q99x2
q99x2's picture

That is a good start. Hope the hell we get a real correction out of this. Been waiting long enough. 6 months!

Sun, 05/06/2012 - 19:03 | 2401858 JD59
JD59's picture

The Bradley sideograph model shows that the market will go down and bottom in Jan 2013.

Sun, 05/06/2012 - 19:28 | 2401933 RoadKill
RoadKill's picture

But what about the pulledoutofmyass model?

Sun, 05/06/2012 - 19:06 | 2401868 John Law Lives
John Law Lives's picture

Look for more rumors of QE3 to hit the wires any moment now...

Sun, 05/06/2012 - 19:13 | 2401883 insanelysane
insanelysane's picture

Tomorrow morning the phone is gonna be ringing first thing and it will be Mr. Margin calling.  One needs to wonder if Corzine was able to borrow some money from the wife's side of the family and bought more Greek debt.

Sun, 05/06/2012 - 19:18 | 2401896 jaglavek
jaglavek's picture

Tiiiiiimmmmmbbbbbeeeeerrrrrrr Bitchez

Sun, 05/06/2012 - 19:25 | 2401922 luna_man
luna_man's picture



Take the guess work out of it!...Stay tuned into MY MAIN MAN!!

Remember, One Eye, An Ear and Nostril at ALL TIMES!!

Sun, 05/06/2012 - 19:46 | 2401989 Vamp-Squid
Vamp-Squid's picture

The equity markets are about to find out what happens when you get a three month uninterrupted rally based on a false recovery and presumed decoupling. Recoupling....complete.

Sun, 05/06/2012 - 19:59 | 2402024 ISEEIT
ISEEIT's picture

People are funny.

Sun, 05/06/2012 - 20:27 | 2402086 jmcaule4
jmcaule4's picture

Anit-austerity governments and it's implication for future money printing in the Eurozone.

Alf Fields, King World News + More!

Sun, 05/06/2012 - 20:56 | 2402168 midgetrannyporn
midgetrannyporn's picture

Any decline in usa markets will be only so much as the central planners i.e. kleptocrats will allow &/or cause. There is no market, there is only the bernank.

Mon, 05/07/2012 - 02:10 | 2402623 Psyman
Psyman's picture

There is only fascism and the Anglosphere's global military empire.  And its power is unchallenged world wide.  Until that changes, stay long fascism.

Sun, 05/06/2012 - 21:45 | 2402287 FreeNewEnergy
FreeNewEnergy's picture

Long riots and police batons.

Sun, 05/06/2012 - 23:06 | 2402427 Tom Green Swedish
Tom Green Swedish's picture

Why the heck did it even go up 85 percent since 2009? Comical.

Mon, 05/07/2012 - 02:08 | 2402621 Psyman
Psyman's picture

Buy the dip.  Fundamentals and charts mean nothing.


All market analysis must be done within the context of the fascist global American military empire.  Do we still have the strongest military on Earth and the reserve currency?


Yes?  Then buy the fucking dip, dipshit.

Mon, 05/07/2012 - 03:20 | 2402661 jmcaule4
jmcaule4's picture

S&P 500 timing system returns 289.81% over the past five years.

Do NOT follow this link or you will be banned from the site!