'Goldilocks' Is Dead - Stocks Plunge Most Since Lehman Before Sudden Buying-Panic

Remember January's "Goldilocks" market?

Well it's gone...

The Short-Vol trade implosion has now spread to the rest of the world and all other asset classes.

China had one of its ugliest weeks ever...

 

Europe was ugly...

But US equities were a bloodbath...even wuith the sudden mysterious buyer of last resort who panic-bid stocks up (after the S&P broke below its 200DMA)...

We've seen this pattern before.

Dow futures were lifted 1000 points off the lows today...

 

Also of note is that this panic-bid lifted the major equities out of correction...

 

Stocks were on target for their worst week for US equities since Lehman in Oct 2008... (worst 2-week drop since Feb 2009)

 

But after the S&P hit its 200DMA, everything bounced miraculously...

 

All major indices remain red in 2018...

 

The Dow saw well over 12,000 points worth of intraday swings this week...

 

This the worst swing in momentum... ever...

 

And the biggest swing in equity flows ever...record inflow 2 weeks ago to record outflow from equity funds this week

VIX was notably higher on the week...

 

Tagging 40 today before dumping...

 

Risk started to spread to other asset classes too...

 

The biggest drawdowns so far:

  • XIV (Inverse VIX ETF) -96.5%
  • Bitcoin -65% (from Jan highs)
  • China 'Big Caps' SSE50 -15%
  • Shanghai Composite -14.6%
  • EM Stocks -13.5%
  • WTI Crude -12.9%
  • Nikkei 225 -12.6%
  • Dow -12.2%
  • S&P -11.8%
  • Nasdaq -11.7%
  • DAX -11.6%
  • FANG Stocks -11.1%
  • EM Debt -9.9%
  • EU Stocks (BE500) -8.7%
  • Mexico Stocks -8.1%
  • 30Y UST Futures -7.7%
  • Brazilian Real -6.3%
  • Risk Parity Fund proxy -6.2%
  • HY Bonds (HYG) -4.5%
  • Gold -4.2%
  • Euro -2.5%
  • Offshore Yuan -1.9%

This is the worst 10-day drop for aggregate bond and stocks returns since Feb 2009...

 

Credit markets started to scream today as spreads spiked...

 

Flashing another big red flag that this is far from over...

 

Lots of chatter about how "bonds are blowing out" and driving equities lower... well no! only the 30Y is wider on the week! and the short-end is well lower in yield on the week...

 

The key that is crushing stocks is the 2.85% region...

 

The Dollar Index was up most in 2 months this week, hovering at pre-Mnuchin Massacre levels...

 

Some crazy moves this week in Offshore Yuan...

 

Dollar strength sent commodities lower on the week with crude and copper the biggest laggards...

(NOTE WTI futures were hit every day this week around the US cash open)

WTI dropped below $60 and broke below its 50DMA...

 

Cryptos actually rebounded notably in the second half of the week after the US regulatory hearings went better than expected, with Litecoin leading...

 

Interestingly Bitcoin and VIX decoupled as the stress remained in equity markets...

 

CNBC's Bob Pisani is "very encouraged" by today's action.

 

Comments

7thGenMO stant Fri, 02/09/2018 - 17:23 Permalink

A thanks to all the stackers out there because, IMHO, it is possible The Fed saw the "vertical market" down in USD vs. Constitutional, hard money and is now forced to yank hard on the reins (higher rates) to prevent a USD collapse.  Now, my unscientific opinion is somewhat based on all the folks out here in District 12 who I see running around in $70,000 F-250's with the quad cab and alloy wheels who can barely pay the rent on a place that costs much less than their ride.

You stackers should also be thankful that The Wise Man of the East (Putin) is also a stacker and perhaps all who stack are collectively calling The Fed's pitiful hand. 

In reply to by stant

Deep Snorkeler Hammer823 Fri, 02/09/2018 - 16:40 Permalink

Trumpian Prosperity is at a Permanent Plateau

Good stocks are cheap at these prices.

Hysterical selling has played itself out. 

Some very intelligent people are buying stocks.

Lots of cash on the sidelines.

Now is the time to show the bots who's in charge.

Safe deposit boxes have not been sealed by the IRS.

Your wife sold one of your kidneys.

 

 

In reply to by Hammer823

Keltner Channel Surf Fri, 02/09/2018 - 16:04 Permalink

“Gartman”       from   “Taxman”      by  The Beatles

When he tells me how it will be, it’s a put for him, nine calls for me
‘Cause he’s the Gart-Man, yeah, he’s the Gart-Man

Though client gains appear quite small, they’re thankful to have any at all
‘Cause he’s the Gart-Man, yeah, he’s the Gart-Man

If he hates the grains, I’ll buy some wheat
If he likes small stocks, I’ll fade Pink Sheets
If I hear he’s sold, I’ll take a LEAP
If he stays flat, I’ll straddle like a freak
Gart-Man!

{insert mean-reverting, Ravi Shankar-inspired guitar solo}

Don't ask him currencies to explore  (Ah,  Mr. Euro)
If you don't want to lose some more  (Ah,  Mr. Yen)
Cause he’s the Gart-Man, yeah, he’s the Gart-Man

Now my advice when he shorts SPY:  Beware, 500 names will rise
‘Cause he’s the Gart-Man, hell yes, Denny Gartman

His trades are working for no one but me

Keltner Channel Surf mkkby Fri, 02/09/2018 - 16:30 Permalink

Not only that, but most indices were at key weekly mean-revert levels, so you had enough hexadecimal buyers to make Cabbage Patch Kids in the 90s seems passé. 

Still, it can't be a coincidence:  fucking Gartman getting short, more of an "omen" than Lee Remick getting tricycled down the stairs ...  (Aussie ZH-ers are likely flash-backing to that early Go-Betweens tune 'Lee Remick':  She was in The Omen with Gregory Peck, She got killed, what the heck)

In reply to by mkkby