Dow Fails To Hold 23,000 As Yield Curve Carnage Continues

The Dow is now up 17% YTD - crushing bonds and bullion - NOTE everything changed when China’s central bank decided that it would remove a reserve requirement for financial institutions trading in FX forwards for clients by cutting it to zero from 20% currently..

 

But let's not spoil the party!

Dow 23,000...

 

1200 points in 27 days...

 

The Dow is now the most overbought in 8 months (and the past three times, the rally has stalled)...

 

We have never seen a divergence between VIX and The Dow this wide for this long...

 

Additionally, as BofA notes, the S&P 500 has only traded 1% or more in either direction 8 times so far in 2017, tied with 1965 (full year) for the third  fewest in history.

The only years with fewer moves in excess of +/-1% were 1964 (3 times) and 1963 (6 times).

For comparison the most +/-1% moves occurred during the height of the Great Depression in 1932 (181 times), and the most in recent history was during the GFC in 2008 (134 times). The above stat is yet another striking depiction of today’s historic low vol environment.

*  *  *

Anyway - moving on from all that malarkey.

Small Caps and Trannies were notably weaker today as The Dow did what it does...

 

VIX was very illiquid again and actually rallied along with stocks today... Dow was ramped back to 23,000 once again into the close but failed to hold it...

 

Small Caps stumbled notably today...(worst day in 6 weeks)

 

This is the widest divergence between stocks and vol since the 2015 China deval collapse...

 

PG&E soared after headlines about arrest in the CA wildfires BUT then dropped when clarified as a different arsonist..

 

NFLX was a big 'sell the news' event...

 

Trump Tax Reform hope has left the building...

 

Banks had an ugly after a hopeful pre-market earnings from MS and GS...

 

And finally started to rollover as the yield curve collapse continues...

 

Treasuries were mixed today with the long-end rallying but short-end seing yields rise further with yet more dramatic curve flattening...

 

The bond market bloodbathery continues to crush the dreams of the 'recovery-hypers'...

 

FX markets were volatile today...

 

With a big reversal in the dollar...

 

As the Peso and Loonie dumped early on NAFTA disagreements then surged after NAFTA negotiators claimed "success" in round 4...and talks will extend beyond 2017 deadline

 

Gold and Silver were lower today...

 

WTI and RBOB both gained ahead of tonight's API data (WTI barely but RBOB solid)

 

Finally - for good measure - 'Industrial' Production remains well below 2014 highs... but the 'Industrial' Average is soaring to new record highs...

Comments

spastic_colon Tue, 10/17/2017 - 16:08 Permalink

who would have thunk that a day when GS erased 40+ points from the dow that another compononent would stick save it UNH eT. Al. its almost as if it is pre-programmed / sany bets on IBM's results today...........didnt think so.......i meant any bets on the size of the buyback announcement

Kaiser Sousa Tue, 10/17/2017 - 16:04 Permalink

boy, what a nail biter today watching the Fed & ESF in the last 30 minutes of “trading” pushing the Dow Jones Propaganda Index back over 23,000 after it gave it up 2 minutes after it reached that level earlier this morning & then “sideway's shuffled" all day long???u should have seen that CNBS drunk Art Cashin sitting on set with that stupid fuckin “Dow 23,000" hat on his fucking bowling ball head…fucking ridiculous…meanwhile in other “market” moving news,a new prime time network show is being launched this year...its based on female litigants agreeing to have their cases tried and ultimately decided based on which one of the 2 is the best Twerker…They’re calling it “Judge Booty”.DEATH TO THE MONEYCHANGERS.

D.r. Funk Tue, 10/17/2017 - 16:13 Permalink

Vix intraday has been different the last two sessions. Yesterday was both out of character and odd. Today a holding pattern most of session. (stark contrast to the heavy heavy perceptible cliche inv-vol forcing) Noteworthy. Of consequence na. See if 2nd half of october provides a spike event

Keltner Channel Surf D.r. Funk Tue, 10/17/2017 - 16:25 Permalink

I fear the holding pattern may continue until Trump names his Fed Chair nominee.  Even the Junior Miners were relatively flat today, and it took him saying “I like them all” when asked about a current favorite candidate (As he wiped tzatziki sauce off his tie, standing next to Tsipras) for these firecrackers to even pop back to Unch.If “we control the horizontal” is true, then I’m afraid the ‘outer limits’ may not get very far vertically, at least for a spell …

In reply to by D.r. Funk

adr Tue, 10/17/2017 - 16:16 Permalink

And to think, three months ago the November gasoline contract was trading at $1.22.They really know how to screw everyone don't they.DEATH TO WALL STREET!!!!!!!!

Ben A Drill Tue, 10/17/2017 - 16:24 Permalink

Declining revenue for IBM for 11 straight quarters. Everything is Awesome! 1929 blow off top already here. WWIII just weeks away. Yet no draft, no call up of our national guard. We are truly fucked. And the Government is letting this happen just like WWII.

Our government knows that terrorists are here. Las Vegas is just the starting point. Wild fires in NW California. The wind just didn't do that. Those fires were acts of terrorism.

Road construction everywhere so bottle necks in traffic so people can't escape the city's.

This is all pre planned.

Honest John Honest Sam Tue, 10/17/2017 - 19:09 Permalink

Funny you should mention car isurance.  I complained to my agent that I was getting these stupid $20 checks twice a year.  Not worth my while to take it to the bank.  I told him to give me the policy that doesn't give me this rebate for not having an accident.  My 6-month rate went down from $550 to $330!  You don't get Nuthin for Nuthin.  HONEST

In reply to by Honest Sam