These Charts Scared (not just that though) the Stock Market into a 700-Point Drop Tuesday (translations included)
It's still on a downward trajectory-a little bounce yesterday and today-Credit Suisse is still basically at same place (price-wise) as it was in the cap although back over $3 bucks and at that level the moves of pennies exacerbate the % of up and down-make no mistake..this will be the 'excuse' they use.
The Dow Jones Industrial Average plunged 697 points by the closing bell Tuesday, wiping out all of its gains this year. Here’s a rundown of what happened.
At 2 p.m. ET today, the Federal Reserve will release the minutes of the Federal Open Market Committee (FOMC) meeting it held on January 31 and February 1.
that is here:
Fed Officials See Peak in Interest Rates This Year, Minutes Show
The minutes from the FOMC meeting, released Wednesday afternoon, showed that most Fed officials supported slowing the pace of interest rate increases as they assessed the incoming economic and inflation data. Most notably, a strong jobs report, accelerating retail sales, and a new inflation number have come out since the FOMC meeting. The January jobs report showed a 517,000 increase in nonfarm payrolls, up from 223,000 jobs in December. (and they don't tell you that an entire year's worth of seasonal adjustments are put into the January report…instead of doing it month by month (this was changed 2 years ago I think but the end result is still the same..a bloated # in January(s) so that when February's #s come out it will show a big drop so that they can say "see we are getting a cooling off of the labor markets so we can stop sooner now")'
https://www.barrons.com/articles/fed-meeting-minutes-release-today-b19c6099
The stock market is particularly skittish on the day prior to the release of those minutes, out of concern that an overly hawkish tone on interest rates will tank stocks. Given that skittishness, all the stock market needed for a major selloff was a trigger. It got that when Bloomberg News published this headline at 1:36 a.m. in the morning: Morgan Stanley Says S&P 500 Could Drop 26% in Months (and see below for teh Zero Days to Expiration Options). Morgan Stanley’s opinion matters for two main reasons: it has just shy of 16,000 stockbrokers (a/k/a “Financial Advisors”) who typically pitch the firm’s playbook to their clients; and it is a major prime broker to hedge funds who will get a boost from a negative outlook if they are shorting stocks. The gist of the negative sentiment coming from an analytics team at Morgan Stanley, led by Michael Wilson, is this according to the Bloomberg article: “While recent data suggest the economy might be able to dodge a recession, they’ve also taken the possibility of a Federal Reserve pivot off the table, according to a team led by Michael Wilson. That doesn’t bode well for stocks as the sharp rally this year has left them the most expensive since 2007 by the measure of equity risk premium, which has entered a level known as the ‘death zone,’ the strategist said.”
Another problem for stocks is that yields on some U.S. Treasury securities are at the highest level in more than 15 years. Take a look at cap #2. It shows that the 6-month U.S. Treasury bill is currently yielding more than 5 percent, a situation that last occurred in 2007. Not to put too fine a point on it, but 2007 marked the beginning of the worst financial crisis since the Great Depression. By September 2008, century-old names on Wall Street were blowing up and leaving their shareholders with unprecedented losses. Speaking of Wall Street, Cap #3 is a chart showing how some key mega banks and insurance companies fared in the market selloff on Tuesday. We’ve put a yellow circle around those showing losses at the close of 3 percent or greater – a hint that contagion from Credit Suisse and interconnected derivative counterparties might be coming into play. (Ticker symbols are as follows: C – Citigroup; JPM – JPMorgan Chase; MS – Morgan Stanley; GS – Goldman Sachs; CS – Credit Suisse; DB – Deutsche Bank; PRU – Prudential Financial; AMP – Ameriprise Financial.)
Credit Suisse is looking a lot like Citigroup looked in the financial crash of 2008. In 2008, Citigroup’s stock price was in collapse and it had been lying to investors about its exposure to subprime debt-(and they all have the same problem they just don't call it subprime now-muh ESG and diversity credit expansion etc.).In the current situation, Credit Suisse’s stock price has erased all of its gains going back approximately four decades and its Chairman, Axel Lehmann, is under investigation by the Swiss financial regulator, FINMA, for potentially lying about the run on the bank’s assets being over-, (and in Shitibank's case if you back out the reverse stock split it enacted in 2013 it is still a $5 buck stock-and the only reason they did that was becasue most institutional investors will not buy any stocks under $5 so it's now at it's highest point since July of last year 50.04+0.20 (+0.40%) is last price today) There was also negative sentiment coming from an upward move in the VIX yesterday. The VIX (a/k/a the CBOE Volatility Index), telegraphs the market’s expectations for near-term price changes in the S&P 500 stock index. It is also known as the “fear index.” The VIX typically rises when stock prices fall and fear increases. It has been on an upward trajectory since February 2.
https://wallstreetonparade.com/2023/02/these-charts-scared-the-stock-market-into-a-700-point-drop-yesterday/
MktFag posits that the wild swings have moar to do with the system piling into Zero Days to Expiration Options on the SPX (S&P500) but the system will throw in any excuse to not say that between 40- and 50% on the daily volume on the SPX consists of these-have to make a decision on the same day you buy them- options.
Also see this from last week and has some background on the VIX on how it's been "managed"
>>18367436, >>18367785 pb JPMorgan’s Kolanovic Warns of ‘Volmageddon 2.0’ Risk in Options: potential Flash Crash due to over-sized zero days to expiry option over-use translation for non-finacial anons included
The other thing is that the Algo's ('bot trading) all had/have massive selling programmed into it's strategies for the coming week for the S&P500 (SPX) cap#4 highlights the CTAs (uses a managed futures strategy to capture performance of the markets) have outsized selling programmed into not only this week but the next month and very little buying on 'Up' days so watch out-the overall market is still overleveraged-the blue line on Cap#5 and the market hasn't really dropped much-in a massive way so this is why they have these big differences in selling vs buying..basically it will not take much to get bigger than Tuesday's drop to occur-based on what they report.
They are still in deep denial-from last week's Goldman Sachs report
February 15th
Why this yield curve may not signal a U.S. recession
https://www.goldmansachs.com/insights/pages/why-this-yield-curve-may-not-signal-a-us-recession.html