Weakness at the open last night extended lower during Europe's early
session - testing the 11-month trendline levels for the S&P 500. As
the US day session opened we bounced gloriously on the shoulders of
JPY-driven mania (and absolutely and utterly no news) but as usual that
lasted only as long as POMO and the markets stumbled along for the rest
of the day - until IB raised margins and then the high volume dump
started.
All equity indices dived and VIX surged by its most in over 3 months above 19%.
Away from the schizophrenia in stocks, FX markets were quiet after an
early eruption in vol (USD -0.25% on the day); Treasury yields were
1-3bps lower (but off their best levels); Silver spiked near the open
(as did Gold) and held gains.
Stocks close at their lows with an ugly dump.
Did IB just burst the bubble?
The S&P 500 closed below its 50DMA (down 10 of last 13 days) and
is 3.5% off its all-time highs with the biggest 1-day drop in 6 weeks...
Bonds and Precious Metals outperforming post Shutdown (red line)...
VIX jumped its most in almost 4 months but was leading stocks lower
earlier in the day. S&P futures are extending losses from the cash
close.
Remember we are very close to that 11-month trendline break here...
The IB margin hike appeared to drive FX carry traders crazy and
USDJPY collapsed (with JPY surging back below 97 to 7 week highs against
the USD) - Abe will not be happy...
Charts: Bloomberg
Bonus Chart - Still think fundamentals (and not marginal leverage) drives stocks? Think again...
