SPY

 On May 10, 2000 a GATA delegation consisting of Reg Howe, Frank Veneroso, Chris Powell and Bill Murphy met with Denny Hastert, The Speaker of the House in the United States Congress; Spencer Bachus, the Chairman of the House Subcommittee on Domestic and International Monetary Policy; and Dr. John Silvia, the Chief Economist of the Senate Banking Committee. We presented each of them our 100 page "Gold Derivative Banking Crisis" document and personally delivered it to the staff of every House and Senate Banking Committee member.

Finally, the market realizes that it was the patsy all along. This is what a real cliff looks like:

On December 26, 2012 at 11:02:59, the market suddenly exploded with activity (SPY dropped below 141.88 - a low set 12 days earlier on December 14). Approximately 3,800 March 2013 eMini futures contracts (S$P 500) were sold during that second. Nanex thought the sudden explosion in activity warranted a closer look. What they found was fascinating. It appears the entire market-wide move may have been carefully orchestrated. One thing for certain is that our regulators will never be able to see the big picture if their analysis tools (MIDAS) only looks at equity data. Analyzing price moves in futures and options is crucial to understanding market-wide moves in equities, and visa versa. The sad truth is that 'momentum ignition' events such as this occur all the time. See this page more details, including an animation that shows where and when these events have occurred since 2007.

To put this in the most basic terms: registration and restriction equals revolution.  Count on it.  It is not a matter of what we "want", it is a matter of what is necessary.  Without a citizenry armed with weapons of military application, we lose our last deterrent to tyranny, and thus, we lose everything.  When backed into a corner, a victim has two options: he can lie down and die, or, he can fight regardless of the odds.  Sadly, this is where we are in America; fear, servitude, subservience, or civil war.

Presenting Dave Collum's now ubiquitous and all-encompassing annual review of markets and much, much more. From Baptists, Bankers, and Bootleggers to Capitalism, Corporate Debt, Government Corruption, and the Constitution, Dave provides a one-stop-shop summary of everything relevant this year (and how it will affect next year and beyond).

After last night's craziness, equity markets anchored off the synthetics and the synthetics anchored to VWAP. We clung there at VWAP all day long in S&P 500 futures with some rumor-driven angst into the close to try and get some levitation. Much was made of VIX's decline from its opening highs, however, a look back at the week and it is obvious that this was hedgers unwinding their positions (leaving VIX still notably more worried than stocks). Equities in general collapsed down to where yesterday's risk-assets had languished and cross-asset-class correlations were very high today (which makes sense as every algo in the market was working over time to hold us together after the flash crash overnight). The USD ends the week unchanged (with AUD 1.5% weaker and SEK 1.9% stronger) and early winners and losers in commodities reverted (oil down and silver/gold up today) leaving Silver -7% on the week still! Treasury yields ended only 7bps higher on the week (well off the 15bps on Tuesday) as Financials remain the week's winners (+2.5%) and Staples the losers (-2.25%).

Despite EURUSD trading in a 10pip range all afternoon (flat), a significant divergence in VIX (bearish), and a roundtrip to unchanged in Treasuries (flat), equity markets did what they do best - levitate. Volume slipped but was not terrible (as did average trade size) suggesting this strength is hardly the stuff of professional rotation (no matter what we are told to believe). For most of the day session stocks trod water in a small range but into the close (ahead of the vote tonight), S&P 500 futures went vertical amid absolutely and utterly no news whatsoever, blowing through yesterday's closing VWAP and beyond led by financials (now +4.375% on the week). Futures kept going after the close completely wiping out yesterday's losses. Silver came off the lows of the week marginally in the afternoon but ends today down 7.2% for the week as Copper and Gold follow it lower (and WTI +3% on the week). We suspect the liftathon is a remnant of the lack of size sellers (knowing there is no liquidity to move into) who are aggressively protecting via options. Most-Shorted names are the best performers once again.

Why Did We Lose Our Rights if the Government Isn’t Even Keeping Us Safe?

1984 Is HERE

UPDATE: In the last few seconds of trading ES jumped 3 points on Buffet comments about Dimon for Treasury and WSJ chatter about Fiscal Cliff progress (ES +4.25pts on day)

We have officially run out of expletives to describe the volumelessness of the equity trading markets. Today's S&P futures volume was dismal - among the lowest volume days of the year (even including holidays and half-days). Today's range was relatively narrow and while risk-assets in general were highly correlated, there was noise and the liquidity was simply not there. AAPL continued its VWAP-based slide - holding NASDAQ back overall - but with MCD's gains accounting for around half of the Dow's gains on the day (and the S&P getting lifted with every VWAP-driven jerk lower in AAPL), it seems the 'buying' interest was largely absent. Treasury yields ended lower, VIX higher (though well off its highs of the day), high-yield credit practically unchanged, and the USD very modestly lower providing just enough impetus to keep the S&P green on the day (and the month +0.15%). The Industrials and Transports have recoupled at +1.2% on the month while the NASDAQ languishes -0.77% since 11/30. Oil was probably the mover of the day with WTI -0.3% - notably awry of the +0.5% gains in Silver and Oil and +1.1% in Copper. Financials lagged and Materials led as the day came to a quiet end around VWAP with the machines well and truly in charge.

Tim Geithner's time is almost done, but the former NY Fed head is only one of very many whose position is expected to be replaced in Obama's second term (just so there is a non-continuous chain of command if and when the time comes for the people to demand an explanation for the state of the US economy from the talented Mr. Geithner). Who else is out and who is expected to be in? The following list attempts to cover all upcoming rotations at the top of the US cabinet. What is not attempted is a prediction of where in the private sector people such as Geithner will end up: that is considered largely self-explanatory.

At 11:00 am Eastern, the GOP's John Boehner will continue the teleprompted farce, and in not so many words, will announce there has been no progress on a Fiscal Cliff compromise. Alternatively, he may have bought some deep OTM SPY calls expiring shortly, and will misrepresent the situation behind the scenes in hopes for a quick trend reversal, just as he did back on November 16, providing the only "goalseeked" catalyst that could halt a drop in the SPX on its way to unchanged for the year, and, in collaboration with Nancy Pelosi, preventing AAPL from sliding below $400.

The technicals were in charge today as S&P futures coiled around VWAP early on, tested lows, then pushed to highs (coinciding with the 50DMA) - ending the day-session in the green. Low volume and low average trade size suggest this was not the pros filling their boots and the lack of enthusiasm among Treasury traders (despite a very late day ramp higher in yields), FX traders (EUR weakness dragged USD back to Unchanged on the week), and Oil (ending the day -2.9% on the week) didn't fill us with fear of a next leg higher (for now). Gold and stocks traded tick for tick most of the day as the precious metal toyed with $1700 again and HYG (the high-yield bond ETF) also recoupled with SPY (stocks) all day (shifting richer to its fair-value). Of course, AAPL is the name of the day with its death spiral, VWAP save, and VWAP reversion amid gigantic volume - but low average trade size (to close +1.5%). VIX ignored equity strength and closed +0.15 vols at 16.6% (very close to where it opened).

What a ridonculous day. We nearly dragged the deer out - or even Donkey Kong - but the epic awesomeness of the swings in stocks today (most notably the S&P 500 - since AAPL/NASDAQ tracked lower and more consistently all day) was simply remarkable. AAPL broke all kinds of records today (losing more market cap today than 80% of the S&P 500 companies in total h/t Peter Tchir). Despite the rapid collapse on the S&P 500 into the close (as HYG pulled off its lows in a failed convergence trade) amid heavy volume, saw the S&P manage a gain on the day but down on the month (while the Dow Industrials and Transports are basically unchanged since 11/30). Rates fell and stayed near their lows for the day; commodities chopped around (as usual) but ended marginally lower from yesterday's day-session close; financials were the winners on the day but led by just great companies as BofA and Citi which staged a tick-for-tick algo liftathon odyssey of idiocy (now up around 6% on the month!!). All-in-all, the S&P remains rich to risk assets but the overflow from AAPL's collapse has likely not played out yet as taps-on-the-shoulder will be everywhere tonight.

More Spying On Citizens than in Stasi East Germany