Dow Crashes Over 400 Points, VIX Tops 30 As Risk-Parity Plunges

Dow futures are now almost 600 points from their pre-opening highs as US equity markets stumble hard with soaring VIX and bond yields...

The Dow is collapsing... (after retracing 50% of its plunge)

XIV and The Dow are in perfect sync once again...

VIX is back above 30...

The S&P 500 has found support at its 100DMA for now...

And while it appears that the spike in yields triggered the weakness in stocks; as stocks sink, bond shave found a safe-haven bid...

But rate volatility is surging...

As Risk Parity Funds are forced to delever...

This is one of the biggest RP strategy drops ever...

This is far from over...

Comments

eclectic syncretist Cloud9.5 Thu, 02/08/2018 - 11:45 Permalink

A week or two ago if it went down 100 points it was a "plunge", or "freefall", or "collapse", so after going down 400 points I'm OK with this headline, although I'm surprised it's isn't something more along the lines of "skyscraper jump inducing catastrophe" or end-of-the-world-as-we-know-it implosion".

In reply to by Cloud9.5

zebra77a Bemused Observer Thu, 02/08/2018 - 12:01 Permalink

don't buy the fear hype. This suckers gonna rally, Rule #1 in the playbook, scare out the longs and suck in the shorts right before you rally the snot out of this.  It's about burning as many as possible on both sides for that Maximum Pain sweet spot.

Hint : CallcontractEquityPool vs PutContractEquityPool

Has everyone forgotten the basics (double bottom / double top)?

As soon as the fearmonger press goes full doomtard buy call contracts with both fists. <easy> :D

In reply to by Bemused Observer

mailll Bemused Observer Thu, 02/08/2018 - 12:03 Permalink

The word CRASH just makes any financial headline seem dramatic.  On Monday, an 1175 point drop was a 4.61% drop.  A crash is usually defined as a downturn of 10% or more over the course of one or two days.  Even Fridays (666 point drop) and Mondays (1175 point drop) downturns only amounted to about 7%, so it's technically still not a crash.  Not even a correction.

In reply to by Bemused Observer

Countrybunkererd toady Thu, 02/08/2018 - 11:58 Permalink

It would give me some comfort if I knew the PPT was like the NASA scientists of the 60's sitting in a room with their high and tight haircuts and black rimmed glasses.  We don't have those abilities anymore.  Case in point, they are going to lunch and will flip the switch for AI-autopilot.  I expect small and tight jig saw teeth until about 1:00.  Of course, I was wrong before, back in 1985.

In reply to by toady

canbroker Thu, 02/08/2018 - 11:40 Permalink

I told my clients to stay in the market until rates start to rise so i have not been shaken out in the last 10 years. So as rates started to move up i started to leave.

Bemused Observer CHoward Thu, 02/08/2018 - 11:58 Permalink

You've already had that.

It isn't the big moves in one direction that are concerning, it's the SWINGS. Wild, increasingly large and crazy moves like that are a sign of instability, and the moves get bigger right before the final collapse.

So when the market declines by 1000, it might not be a crash. But if it then spikes back up shortly after to regain and EXCEED the prior high, only to decline back into negative territory, and this shit keeps up, you better run like hell.

In reply to by CHoward