Stocks Tumble And Bonds Grumble Despite Dovish Hawks

The 100-day moving average (100DMA) and VWAP (as usual) appeared to be the key pivots today as equity markets plunged lower on the open after drifting lower overnight as the liquidity-suck-out circles the global market's drain. At their worst, the S&P 500 was 7.5% off its recent highs but the Fed hawks came out in full dovish mode and provided just enough headline-fodder to slam VIX lower (as it appeared to over-react to the upside at the open) and drag the S&P back above its 100DMA. Some (prematurely) proclaimed the day a victory for the bulls as we didn't close at the lows but the last few minutes of the day saw equities roll back over, VIX rising, credit widening, and commodities fading (even as the USD closed the day unchanged from Friday). Treasuries - the center of most people's attention in recent days - had an interesting day (30Y -1.5bps, belly +3-4bps), especially into the close as stocks sold off (bonds rallied in safe-haven mode as opposed to un-taper mode). The S&P 500 faded and closed below its 100DMA for the first time in 2013... as it seems the time for jawboning os over.

The S&P 500 futures closed perfectly at VWAP... (it seems based on on-balance volume that there were serious sellers as we ramped above VWAP)...

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What saved us the last few times we crossed the 100DMA?

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The clear bounce was driven by first Kocherlakota and then uber-hawk Fisher sounding the all-clear and shifting dovish... but as is clear, the time for jawboning is over...

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and homebuilders can't get a break...

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VIX appeared to overshoot the open and then overshoot the bounce but recovered into the close - smells like hedging piling in and then covering underlying exposures into the ramp...

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