Any one have a clue as to what the hell that last 30 minutes sell off was about?
That was rather wild! The Dow fell 2.4% to 8175.77 — intraday peak to trough, that was a 423 point fall.
In any great organization it is far, far safer to be wrong with the majority than to be right alone. —John Kenneth Galbraith
Asian currencies continue to sell off vs the $ on the heels of the news yesterday that South Korea said they will look into hot money inflows stemming from the $ carry trade and the Bank of Indonesia said they are looking into the foreign buying of bills. This follows the news a few weeks ago that Taiwan was limiting foreign deposit holdings and Brazil was taxing foreign inflow transactions. As I mentioned yesterday, we may have reached a short term pain threshold in terms of $ weakness and foreign countries are fighting back as they certainly won't wait for...
read more »
October 27th, 2008 at 8:22 pm
Last 8 minutes was the liquidation of a hedge fund that couldn’t meet a margin call at the Bull.
October 27th, 2008 at 8:22 pm
Panic about what would happen in Asia / Europe overnight.
Fund liquidation doesn’t make any sense because they wouldn’t do it all at once.
October 27th, 2008 at 8:23 pm
Reality.
October 27th, 2008 at 8:25 pm
I’m starting to think that if the SEC can’t figure out who is selling the market off in the final 1/2 hour each day, we should fire them all and start over.
I mean, how hard is it? You look at the large block sales and see who it is that is still selling this heavily into the close. It just isn’t rocket science folks….
Two things I want reported by someone – who are the ones who are benefiting from these CDS contracts and how much are they benefiting. Two, who is selling this market down to get Obama elected…
Also, why can’t we just null and void these CDS contracts so that the purchaser gets their premium back and the issuer is safe from having to pay out on the contract?
October 27th, 2008 at 8:25 pm
Sorry, I had to liquidate a few holdings.
October 27th, 2008 at 8:27 pm
personally, i blame the short sellers…
oh wait a minute, that’s “illegal” now
October 27th, 2008 at 8:28 pm
Actually, look at volumes over the past 10 days. They JACK in the last 30 mins / 1 hour every day. We’re in the midst of what will one day be coined “The Great American Dump-Off”, GADO for short (missed my calling as a Marketing guy, I know).
October 27th, 2008 at 8:28 pm
Stop busting, to allow the big boys to buy more at lower prices.
October 27th, 2008 at 8:29 pm
jdamon… that is stupid. Why would the SEC care about who is selling the market off? People are allowed to sell shares, even if it is at the end of the day. Why would anyone null and void CDS contracts? In fact, lets just null and void any stock transactions for this whole year, then our market will be +40% from where it is here!! Yes, problem solved. People are stupid.
October 27th, 2008 at 8:32 pm
I trace the ISSU — It was been under pressure between 1 and 2CST.. at 2:30 it broke the low and I noticed alot of ES volume come in…
It had been under pressure all afternoon and the break of .40 started the waterfall and I noticed no bids all the way down on the ES.. there is my chart…
http://charts.dacharts.com/2008-10-27/jp36.png
October 27th, 2008 at 8:36 pm
October year end mutual funds getting an early jump on window dressing….cash raising…
October 27th, 2008 at 8:38 pm
@icm63: so you got in at a bargain basement prices at 3:59, huh? tell us about it…
October 27th, 2008 at 8:39 pm
No confidence, and today was a day trader’s paradise. Once that head and shoulders was violated on the one minute everybody piled in together.
What’s amazing is the complete inability of institutions to put any buying pressure under this market. We’ve had a lot of bottom fishing both Friday and today, but the bulls are so cowed (no pun) and the sellers are so dominant that nothing’s getting going.
At least, that’s the view from the cheap seats.
October 27th, 2008 at 8:48 pm
The bigger mystery to me was what held the market up the entire day prior to the last 30 minutes?
October 27th, 2008 at 8:49 pm
Herd running on a false call? If there is no good explanation we should be nearing panic level.
October 27th, 2008 at 8:50 pm
Market was in a range most of the day, so many traders may have placed stop loss orders in case they get caught in a vicious last hour selloff. Looks like someone had to dump and that triggered a cascade of sell orders.
Nothing wrong with selling, however sloppy it is. The dramatic moves lower point out that there is not enough buying enthusiasm but there is an abundance of selling enthusiasm. Nothing more, nothing less.
October 27th, 2008 at 8:53 pm
What do you mean Barry? It is the required 400 point daily swing…. Anything less and what fun would it be?
Yeeeesh..
Andrew
October 27th, 2008 at 8:55 pm
Repeating: go in a corner, get your blankie, suck your thumb and come back in a couple of years.
The market continues to erode. Everyone wants out. Some are being forced out.
And keep some pocket change for canned cat food and a stock or two when the bell rings…
What a silly question, Barry. I expected more from you.
October 27th, 2008 at 9:03 pm
Market Ticker thinks the reason for the selloff was that the Treasury’s TIPS auction was “a disaster.”
October 27th, 2008 at 9:05 pm
It’s different this time.
October 27th, 2008 at 9:06 pm
I think I heard Art Cashin talking astrology on Bubble-vision, the gist of which is there should be a crash Monday or Tuesday this week. Absent any better theory of how to trade this market, I suspect a lot of traders are trying to go home flat.
October 27th, 2008 at 9:08 pm
Andrew is spot on, Barry. You sound like one of the Bubbleheads on CNBC (with the recent exception of Mark Haynes who is now bearish and seems sober!). The mystery is why the Dow has not accepted reality, not why it sold off at the end of the day.
Where is that whining, little question when there is a big end-of-day rally?
Let’s face it, US markets are still overvalued. P/E ratios are extremely high for the present economic conditions. Things are getting worse in the “real” economy (whatever THAT is).
Gimme a break, huh. How about analyzing reality and then commenting on the craps game they call Wall Street.
October 27th, 2008 at 9:09 pm
Sia @ 8:29
I have heard that the nullification of CDS contracts will happen before year end. Anyone who has purchased a CDS and does not own the underlying will receive back their premium.
October 27th, 2008 at 9:12 pm
That esteemed economist Dennis Kneale provided the answer today (on Kudlow) to why the stock market has been declining so much lately. The following is a direct quote:
“The stock market is wrong”.
Now you know.
. . . . .
And on the same panel, Zachary Karabell came up with a unique explanation for the market’s behavior.
He explained that the market isn’t declining because of poor earnings prospects; it is declining because the stock market is a ready source of cash for people who need cash. I have to give him credit for originality; I had never previously heard that as an explanation for a bear market.
October 27th, 2008 at 9:14 pm
Went to lunch thinking this was quite the boring day compared to the hype overnight.
October 27th, 2008 at 9:16 pm
I like the day traders call. The hunted are learning and getting organized…into loosely aligned groups.
One of the wonders of the internet that people with a common interest can easily get together. No surprise to anyone here.
They are finding competent leaders and are fighting back! THE HUNTED ARE NOW HUNTING!!!
In a pack….
The revenge of the day traders is nigh!
NWah wha ha ha haaaaaaaaaa!
It is Halloween soon is it not?
October 27th, 2008 at 9:19 pm
More to the point I made above, the bond market appears to be pricing deflation into the TIPS market. An explanation here:
http://wordout.computergeekservices.net/2008/10/27/tips-for-today/
October 27th, 2008 at 9:20 pm
Maybe you’ve heard this before:
Volatility is a characteristic of a bear market.
October 27th, 2008 at 9:23 pm
The most likely explanation is mutual fund redemptions. Mutual funds are delayed by one day, so these are retail/retirement investors responding to what happened on Friday.
No worries. There has been a half-dozen opportunities to buy futures contracts at DOW 8000 and sell them at 8500. At $2500 per pop, I’m happy to keep collecting the money.
October 27th, 2008 at 9:25 pm
Ignoring the sentiment picture (put/call, short levels, futures traders), which all tell me not to sell my QID yet, I must again point out that multi-national companies are going to get slaughtered by the dollar’s rise. At current levels, with no further rise, you will have to take foreign revenue and shave off about 1300 bps from growth y/y. For tech stocks used to adding 500-1000 bps, this is going to cause a smoldering crater. A Google or Amazon that gets half its earnings abroad, with little commodity input costs that benefit from a strong dollar, will be toast.
October 27th, 2008 at 9:25 pm
Looking at the Commitments of Traders report from last Friday, large speculators are net long S&P futures at a level that is at or near the most extreme position in at least 2 years. If the market continues to be negative, I suppose we must expect continuing margin calls on those positions.
October 27th, 2008 at 9:26 pm
Welcome to the GRAND SUPER CYCLE BEAR MARKET
BOOOOOOYAH
October 27th, 2008 at 9:29 pm
some trader (Leeson?) at Barings PLC fat fingered a trade and had to unwind it in the last 10 minutes of trading. Oh, wrong decade.
October 27th, 2008 at 9:30 pm
yes, big boys buying all the way down for 13 months.
thank god for big, dumb long-only money.
barry was only one step away from the true genius trade:
1) barry reversing, getting long.
2) noticing all his bear brethren were also getting long, and. . .
3) then reversing himself again in light of that fact.
feedback loops/ Heisenberg trump fundamentals and technicals nearly always.
not to mention 25 year credit unwinds. . .
October 27th, 2008 at 9:30 pm
Barry that was your fat arse getting pounded in…
October 27th, 2008 at 9:34 pm
Barry, your really lost on this one.
The disturbing trend, is all the globabl
indexes are plunging, and the futures
sell off over night, but come morning, before the market opens, the US futures either ramp or
the market opens alot higher relative to
other global markets.
today, they
forgot to prop it up towards the close.
October 27th, 2008 at 9:35 pm
gamez up playaz!!!
October 27th, 2008 at 9:36 pm
Barry that was your fat arse getting pounded in…
Posted by: ZBear | Oct 27, 2008 9:30:33 PM
////////////////////////////////////
well, barry must be 50% long then.
So now he complains when the market sells off.
October 27th, 2008 at 9:38 pm
I bet it was longs being shaken out.
October 27th, 2008 at 9:38 pm
It really is the end of the world as we know it and there is no longer (if there ever was) reason to be invested. It’s a trader’s market and come the end of the day, positions with profits are harvested, baled, and stored for the long winter ahead.
October 27th, 2008 at 9:42 pm
bernanke and paulson were both in the bathroom puking up, could not be bothered to place the usual day-saving trade
October 27th, 2008 at 9:43 pm
Who’s selling down the market to get Obama elected? According to the latest Republican talking point, it’s LUCIFER himself. That’s right, Satan, the anti-Christ. SATAN. So cross yourself and get ready for things to get hot hot hot!
October 27th, 2008 at 9:44 pm
‘Also, why can’t we just null and void these CDS contracts so that the purchaser gets their premium back and the issuer is safe from having to pay out on the contract?’
Anyone who thinks someone can void all CDS contracts has not put much thought into the subject. Aside from the whole legally binding nature of the contract and all there is a bigger reason.
Lets suppose I have $1B in GM bonds and I entered into CDS contract with AIG. They guarantee my principle and I pay then $100,000 per month. Since I have hedged my risk, and have no principle at risk, I take my other $3B and make some other investments leaving very little to cover my GM bond because again, my principle is insured and I have much less risk…
No suppose some well meaning government comes along and makes my CDS contract void. Well, no that my principle is at risk I need to raise capital to make sure I meet my capital ratios, but the rest of my capital is invested.
So I have to liquidate other investments to raise money for a cushion on my previously insured bond. Since that well meaning government did not just cancel my CDS but all $62 trillion worth of them, and because everyone else is in the same boat as me we all have to sell investments at the same time and down the rabbit hole we all go…
You think your investments are hurting now, wait till they void the CDS contracts…
October 27th, 2008 at 9:45 pm
It has nada to do with the dow. 850 on the S&P500 is a key psychological level.
I know of this Chrysler dealer in a very upscale town north of LA on the coast who just landed a coveted Hyundai dealership. The only one in his demographic area. Neither his bank, nor any others he contacted, will give him a floor loan (i.e., you will need cash to buy a car). That’s gonna hurt!
If the stock market is six months ahead of the economy, then it must go down, because credit is not available anywhere and that’s, well, gonna hurt. (Forget LIBOR spreads – watch actual businesses to see if they can borrow.)
We are in a deep pile of doodoo and I might predict that 850 on the S&P500 is a support line soon to become a resistance line.
October 27th, 2008 at 9:45 pm
“Two, who is selling this market down to get Obama elected…”
LOL!
Ain’t us, the common folks, right?
So, it’s gotta be big money. Perhaps, just perhaps, they decided they had enough of the Repub bullshit?
Just look at how they’ve handled the bailout thus far. Who needs the same clowns in office for four more years?
October 27th, 2008 at 9:49 pm
I-Man Say:
I actually liked today’s tape up until that last 20 minute dump. Couple of things going on that I see:
Triple top pattern @ 880 on the SPX. Tried to form a base around 860 late last week… tested 880 3 times today, finally broke out, nice rally but couldnt hold. Back down to 860.
But here’s where it gets “dirty”: liquidation selling started around 3:40pm, triggering stops, and attracting the short term momentum traders (who are some of the only people making money right now… wish I was one of them) who are nimble enough to catch 5-10-15 min swings.
Even if we open down tomorrow, we will probably end up closing higher, or at least testing today’s close. Light volume will exagerate the volatility also, but I still believe the lows to be set, but if test them we must (yoda ref) then test them we must.
It didnt feel like the last few minutes today were “clean” tape, just an aberration.
Who is really putting new short positions on right here???
October 27th, 2008 at 9:50 pm
“That esteemed economist Dennis Kneale provided the answer today (on Kudlow) to why the stock market has been declining so much lately. The following is a direct quote:
“The stock market is wrong”. ”
Kneale is correct in saying the market is wrong…should be lower by now.
October 27th, 2008 at 9:50 pm
no one wanted to be christopher columbus until the first one blinked, then hell rained down–fragile freaking market
October 27th, 2008 at 9:51 pm
no one wanted to be christopher columbus until the first one blinked, then hell rained down–fragile freaking market
October 27th, 2008 at 9:52 pm
barry ..please have NO patience for the rude lack of substance posts ..cut them off erase their posts is my vote…no warning ..
October 27th, 2008 at 9:53 pm
“Barry that was your fat arse getting pounded in…
Posted by: ZBear | Oct 27, 2008 9:30:33 PM”
HAHAHAHHAHAH
October 27th, 2008 at 9:55 pm
I agree with whomever stated mutual fund redemptions.
More specifically I would state that this bear isn’t even close to be being done. Not to state that there won’t be rallies here and there.
my worthless thoughts are the following… The market peak started to go down once we realized there was a housing problem. We peaked in July, Countrywide stated problems in august (or close too), peak in October. From that point on, the market totally discounted that fact that we have a GLOBAL MONEY BUBBLE and thought it was a credit bubble.
as the “sands of the hour glass” continue “the days of our lives” start to realize that this is more than a housing problem.
The problem of this mother of all money bubbles is the consumer is our economy, we/they are demoralized with the housing hiccup, false debt wealth, shoes have fallen but more will fall. The market wants to believe that earnings won’t be affect to much (for the most part, companies that aren’t tied to consumer won’t be for the next quarter) however eventually the consumer will effect the corporate earnings.
Money bubble, next up… HELOCS, Commercial real estate, credit cards, and whatever else that debt is tied too…
as many state deflation is upon us, and it MUST HAPPEN.
Give me a break, median household income has increased what in the past 10 years? $500 give or take some???
How much more has stuff cost us in the last 10 years? I’ll let others think about that.
Screw the wealth holders let the deflation take place, it will only cripple those who defy us in the globe as the producers of natural resources will default in the next two years and we will have cheap global real estate. Wait, wait wait, this whole paragraph would be my plan for our country vision because we would be better off in 10 years.
Earth and water…
at the rate our brightest minds have lead us, we will be left with nothing but a 20 trillion deficit 10 tril gdp and a poverty line that has increase to affect households with 50k a year in income…
Wait our wealthy will be fat and happy. Inflation, money always gravitates towards money.
some will be fine others won’t but this COUNTRY has ZERO vision except socializing the losses of the wealthy.
Continuing the inflation tax…
one for all and all for one.
October 27th, 2008 at 9:56 pm
Today put the F.U. in Fluctuation
October 27th, 2008 at 9:58 pm
Almost an identical pattern happened on Friday, when the DJIA cash market dropped 200 points in the last 8 minutes.
I think it was driven by the futes, as JP noted above.
October 27th, 2008 at 9:59 pm
The PPT has no more credit. It can only do intraday interventions.
October 27th, 2008 at 9:59 pm
Ponzi finance imploding is the explanation.
October 27th, 2008 at 10:02 pm
Barry,
Currencies are imploding, Countries/Governments are imploding, Banks/Hedge funds are imploding, Corporations and their P/E’s are imploding. And you think your 8200 DJ/860 SP is gonna hold… Only in NY!
Good Luck with that…
October 27th, 2008 at 10:07 pm
knockout derivatives? Notice how S&P futures are down big almost every morning now? Hmmm..
No seriously, its as if stocks are trading on the premise that any day now, the DOW will be at 6,500 and the S&P at 700. Every rally is sold. Whether its forced deleveraging, margin calls, or plain old fear and throwing in the towel, I dont know.
It is worrisome. We need a day to really purge and open down 800 points, then Ill feel much better getting long more stock
October 27th, 2008 at 10:13 pm
three white birds
a stick of dynamite
one expired train ticket
if you missed the bus you are now dead in the water
October 27th, 2008 at 10:15 pm
How’s that bottom call been working out for you there Barry?
October 27th, 2008 at 10:19 pm
More down to come and Next Victim of Turmoil is Your Salary sucker
http://www.nytimes.com/2008/10/15/business/economy/15leonhardt.html
What, then, will the next stage of the downturn be about? It is likely to revolve around the worst slump in worker pay since — you knew this was coming — the Great Depression. This slump won’t be anywhere near as bad as the one during the Depression, but it also won’t be like anything the country has experienced in a long time.
Income for the median household — the one in the dead middle of the income distribution — will probably be lower in 2010 than it was, amazingly enough, a full decade earlier. That hasn’t happened since the 1930s. Already, median pay today is slightly lower than it was in 2000, and by 2010, could end up more than 5 percent lower than its old peak.
So it’s reasonable to expect that the great pay slump of the early 21st century is going to have a big effect on the next several years. Falling pay will weigh on living standards, consumer spending and economic growth and will help set the political atmosphere that awaits the next president.
October 27th, 2008 at 10:22 pm
Investors..REMEMBER.. don’t fight the FED… and DON’T fight deleveraging hedge funds..
October 27th, 2008 at 10:28 pm
The Onion has the real story:
“WASHINGTON—According to an FCC report released Monday, a new $300 million Microsoft ad campaign is responsible for causing televisions all across the country to unexpectedly crash.”
October 27th, 2008 at 10:30 pm
Call it a cornered bull in a bear market…
October 27th, 2008 at 10:30 pm
poor barry, a bear getting crushed in a bear market..hussman etc are too.
No bear market is over till all knife catchers w/ all kinda signals (like monthly RSI..LOL) get duly dispatched.
welcome to the party, barry.
October 27th, 2008 at 10:37 pm
Bob Pisani provided a trenchant explanation for the sell off in the last half hour:
“ABSENCE OF BUYERS”
It’s insights like this that explain why he makes the big bucks.
October 27th, 2008 at 10:38 pm
It’s simply hilarious watching people who cannot reason try to. They come up with all sorts of whacko excuses for the behaviour of a bunch of headless chooks.
And as if it mattered.
October 27th, 2008 at 10:41 pm
Didn’t the Stevens conviction news break around that time? You mean the wealthy and powerful might not actually be above the law after all? Might have been a shitload of Republicans deciding it was time to cash out what’s left of their portfolios and book a flight to Paraguay.
October 27th, 2008 at 10:42 pm
Sia @ 8:29:13 PM
“In fact, let’s just null and void any stock transactions for this whole year, then our market will be +40% from where it is here!! Yes, problem solved.”
That’s the best idea I’ve heard so far.
October 27th, 2008 at 10:44 pm
I think it’s time for a mea cupla about your bottom call Barry!
October 27th, 2008 at 10:47 pm
Al Czervic @ 10:41:24 PM
“Didn’t the Stevens conviction news break around that time?”
I’m not so sure that the connection is necessarily so far-fetched. I think that a lot of money managers are concerned about the anti-business and high-tax policies that could result from 60 D’s in the Senate.
October 27th, 2008 at 10:49 pm
Dear pindick anonymous posters mocking BR:
Barry is a big boy who can defend himself. As for me, why don’t you go away, or post your un-witty diatribes with a real name and email address.
October 27th, 2008 at 10:54 pm
Nothing’s changed, the patient will still die, all that happened was that it was made a longer and slower death.
Dow 7250
October 27th, 2008 at 10:54 pm
Perhaps the last minute Wall Street sell off was a cash-raising margin call high-dive by investors in the two Dubai islands, the Palm Jumeirah and the Palm Jebel Ali or “the region’s largest shopping mall opens. Covering an area of more than 50 soccer fields, Dubai Mall will have more than 1,200 shops; one of the world’s largest indoor gaming arcades; an Olympic-size ice rink; the world’s largest indoor Gold Souk; and one of the world’s biggest aquariums, which will be home to more than 33,000 types of sea life, including over 400 sharks.”
Source: Stefania Bianchi, Mirna Sleiman and Stefania Bianchi report from Dubai for Zawya Dow Jones.
http://blogs.wsj.com/economics/
October 27th, 2008 at 10:56 pm
Why do you pissants keep harping on Barry’s positioning?
He has clearly stated that he legs in. He has clearly stated that he holds for several months at least.
It has not even been a month since he started buying in.
As I understand it, it’s not a bottom call. The market goes down enough and he puts some money to work.
Why is that so hard for you pissants to understand?
October 27th, 2008 at 10:59 pm
Bear market..get use to it!
October 27th, 2008 at 11:00 pm
the PPT…please
who the hell do you think is walking off with the spoils of this multi trillion $ heist?
you this just…uuh.. ‘happened’?
reeeeallly???
yeah right
October 27th, 2008 at 11:01 pm
Mel Brooks explains the definitive reason behind the sell off:
http://www.youtube.com/watch?v=vcZ9ku_wInw
October 27th, 2008 at 11:05 pm
Okay, this prob isn’t the place for this, but if not, bring the flames and point me in the right direction.
I’m in a mutual fund for about a third of my cash at the beginning of the summer (got suckered in despite my instincts by a lazy and short sighted advisor). Do I wait and hope that someday in the next 30 years, we get back to even, or do I eat the loss now before it gets worse?
Any thoughts appreciated. any flames ignored.
October 27th, 2008 at 11:07 pm
Barry,
Your Oct 10 call still holds, but your averaging down calls are starting to make you look pretty silly. You shouldn’t have jumped on Hussmans jock before he actually turned bullish. He’s still fully hedged and I’m sure you’re wishing you were too.
October 27th, 2008 at 11:12 pm
Anniversary of Black Tuesday preparatory sell off…
October 27th, 2008 at 11:14 pm
Fed should be printing the bailout money as opposed to borrowing it. The crowding out is putting trmendous stress on all asset classes within an already over leveraged system that is itself in the process of a massive deleveriging. A 50bps cut will do nothing to stop the deflationary spiral that is now in full force.
October 27th, 2008 at 11:14 pm
i don’t care i’ll have my bonus, i work for wall street.
)
October 27th, 2008 at 11:20 pm
just a question: anyone sees positive divergence in the Nasdaq, or is it just me?
October 27th, 2008 at 11:21 pm
Institutional short sellers want their collateral back for shares sold short. Contract says:
“9.3 Subject to Borrower’s obligations under Section 9.1, if at any time the Market Value of all Collateral for Loans to Borrower [short seller] shall be greater than the Margin Percentage of the Market Value of all the outstanding Loaned Securities subject to such Loans (a “Margin Excess”), [sort seller] may, by notice to Lender, demand that Lender transfer to [short seller] such amount of the Collateral selected by [short seller] so that the Market Value of the Collateral for such Loans, after deduction of such amounts, shall thereupon not exceed the Margin Percentage of the Market Value of the Loaned Securities.”
http://tinyurl.com/3svq94
Mark to market is based on market price at a specific time:
“Recommendations
Following lengthy and detailed analysis from both the lending and borrowing sides of the community, the Best Practice Committee would like to make the following recommendations:
Borrower capability to match lender pricing source within suitable margins thereby negating current pricing source discrepancies.
…
Wherever possible the following marked prices should be taken:
US – Close of business previous day
UK/Europe – Close of business previous day
Asia Pacific – Close of business same day ”
Have a machine do it:
“Adoption and effective utilization of automated marks / exposure management platforms.”
http://tinyurl.com/5rzkpe
It is possible to have shares held for such time as it is necessary to dump them on the market (to move the price):
“Putting securities ‘on hold’ (referred to in the market as ‘icing’ securities) is the practice whereby the lender will reserve securities at the request of a [short seller] on the borrower’s expected need to borrow those securities at a future date. This occurs where the [short seller] must be sure that the securities will be available before committing to a trade that will require them.”
http://tinyurl.com/4brnw4
October 27th, 2008 at 11:36 pm
barry et all -
it’s not hedge fund liquidations – hedge funds don’t sell on the close – MUTUTAL FUNDS do.
normally, when a mutual fund has sizable redemptions, they get a sell side dealer to leg the trade into the close (where they are benchmarked) for them (and stop them out at the closing price)… it seems nowadays no one on the sell side wants to take the risk of missing the closing benchmark – with the sick swings…
hence, today’s MOC massacre.
October 27th, 2008 at 11:38 pm
All I know is the stock market is like the housing market is like tulips in Holland. Ya have to sell ‘em before everyone else thinks they’re worthless.
October 27th, 2008 at 11:40 pm
Perhaps the last minute sell off was premature ejaculation…er…premature capitulation.
October 27th, 2008 at 11:43 pm
Thursday GDP, Friday Halloween, Tuesday Election Day. Pick your poison? Halloween Massacre anyone?
October 27th, 2008 at 11:45 pm
“The economy, stupid!” – James Carville
Please note that the economy drives the stock market, the stock market does not drive the economy. This simple truth calls into question two decades of Fed policy to lower interest rates in response to whining by their friends on Wall Street over the health of the stock market while wholly ignoring the erosion of the actual economy.
October 27th, 2008 at 11:47 pm
@ Michael C.: Actually, anything different than the strategy you mention is kind of difficult to imagine, if you’re realistically trying to make money in the market. Legging in is the only strategy to employ in a market like this. Can you imagine – drawing a line in the sand and dumping all your cash reserves in on one day? Ridiculous. Remember the old story about the two bucks standing on the bluff overlooking the field of does…
October 27th, 2008 at 11:52 pm
Markets go up, markets go down.
The last half hour was a “down”.
All ya need to know.
October 27th, 2008 at 11:53 pm
Bankers get trillions
Jefferson’s warning fulfilled
Then murder for beans.
October 28th, 2008 at 12:04 am
Winston, didn’t you mean this:
http://www.youtube.com/watch?v=s4uvLXCUhVg
??
“We have no digniteee!”
October 28th, 2008 at 12:12 am
The last hour corporations cannot buy back stock, people who have not met their margin calls are sold out and mutual funds need to raise cash.
Whenever there is a hedge fund in trouble the final selling is done at the end of the day as they sold all during the day but didn’t get enough sold to meet the margin or cash calls, so either they dump or the broker dumps.
Those of you old enough to have lived through the 70’s bear market might remember the relentless selling, day, after day. People just wanted out.
I think it is a combination of all of these forces that is causing this.
Went to a dinner party Saturday with people who normally brag about their portfolios and now are stunned by their losses. I guess they don’t read Minyanville because those guys have been predicting this meltdown for a few years.
October 28th, 2008 at 12:14 am
And I forgot to add if there is no Obama rally, then we are really headed into the shitter.
October 28th, 2008 at 12:18 am
Seriously:
You should notice what happens in currency markets. The great carry trade unwinding means that all rally attemps must fail. The carry trade unwinding equals deleverage process and stock market (commodities, real estate, you name it) sell-off.
October 28th, 2008 at 12:22 am
If we ban all Long purchases and Short sales – but keep options open – we’ll still have the $VIX and the market should just “Quiver” in one area…..
I don’t know if you allow posting a great site – Dr Duru – it is always a good read:
http://www.drduru.com/money/081027_SECNoShortListImpact.htm
October 28th, 2008 at 12:23 am
Appreciation of yen is key indicator…
October 28th, 2008 at 12:25 am
wunsacon,
Odd, but that was my second choice. But I had to place Obama-phobia ahead of le revolution.
October 28th, 2008 at 12:31 am
dave,
“I know of this Chrysler dealer in a very upscale town north of LA on the coast who just landed a coveted Hyundai dealership. The only one in his demographic area. Neither his bank, nor any others he contacted, will give him a floor loan”
I know of an auto group that owns five major dealerships, and the local bank has pulled their interest-only floor financing, even though they never missed a payment and are profitable. They have tried to acquire financing with other banks, but to no avail. They have tons of vehicles in their inventories, and tell me if they do not establish new financing, they will be forced to close down all five dealerships.
This is some crazy shit folks.
.
October 28th, 2008 at 12:36 am
What the hell ?
I closed my bracket.
.
October 28th, 2008 at 12:51 am
8175.77? Did you say 8175.77?
http://www.youtube.com/watch?v=kkvsi1OeUfc
October 28th, 2008 at 1:06 am
Oh boy, Winston. I give up. I’m afraid I can’t connect the dots “Dow 8175.77″ and “Hunter Thompson”. Like Palin in the Couric interview, I’m going to need a lifeline.
October 28th, 2008 at 1:09 am
The dollar/yen and the euro/yen tanked, which caused the sell-off? As the yen keeps appreciating against these two currencies, the stock market sells off.
Next time on CNBC, tell Liesman he needs to follow these two relationships.
October 28th, 2008 at 1:13 am
It works like this:
Hmmm………Sell!
No, wait a minute…….Buy!
Well, okay, then, wtf, ……. Sell.
October 28th, 2008 at 1:17 am
It looked to me like an intentional effort to shake out the longs. Suspicious because most stock market sectors were hit at the same time.
October 28th, 2008 at 1:19 am
That was a classic pump ‘n dump.
October 28th, 2008 at 1:31 am
Wunsacon,
It’s late and I’m getting about as weird as a Hunter S. subplot, but Barry’s: “The Dow fell 2.4% to 8175.77 — intraday peak to trough, that was a 423 point fall,” reminded me of the drug-induced delutional paranoia of the words, “We can’t stop here. This is bat country.”
60’s generation way of saying, “Turn those machines back on!”
October 28th, 2008 at 1:34 am
this has been a most entertaining discussion! LOL
October 28th, 2008 at 1:45 am
I am so glad I have not been exposed to this as I have been in the stable fund since February. I see more to come or at least grinding sideways for awhile, but hey, what do I know.
Jesse W.
http://www.subprimeblogger.com
October 28th, 2008 at 2:02 am
Ah, Winston. I see the connection….(”now”).
I started looking at the profile of the Youtube user who posted that and saw a whole bunch of other videos on drug use. Ya had me scratching my head.
October 28th, 2008 at 2:03 am
Wait until the spring when the next bubble pops, I personally know quite a few people that are using one credit card to pay the monthly bill on another and vice versa, 4 times over. They will max out all of the cards by spring and wait and see what happens then.
No more use of the home as a revolving charge account has caused this and if you think the current situation is bleak, you will be surprised at how low this market will be in March or April 2009.
That will be the bottom, but why bother, we will go sideways from there for years.
Good luck everyone.
October 28th, 2008 at 2:08 am
Wait until the spring when the next bubble pops, I personally know quite a few people that are using one credit card to pay the monthly bill on another and vice versa, 4 times over. They will max out all of the cards by spring and wait and see what happens then.
No more use of the home as a revolving charge account has caused this and if you think the current situation is bleak, you will be surprised at how low this market will be in March or April 2009.
That will be the bottom, but why bother, we will go sideways from there for years.
Good luck everyone.
October 28th, 2008 at 2:13 am
Looks like we’ve hit a bottom here – at least judging by all the posts here mocking Barry for getting some money into this market. Add that to the media coverage of this, columnists talking about a new paradigm in Western economies, and the general pessimism and this appears to me a stone cold lock.
Kind of the reverse of people mocking guys like Buffet at the height of the tech boom.
This market is gonna rocket up over the next 6 months.
It’s amazing how quickly the idiots come out in times like these to castigate their betters. Like what we’ve seen over the last week is really relevant to whether Barry made the right call. If the markets are still hammered 6 months from now then I’ll be first to call Barry an idiot.
October 28th, 2008 at 2:29 am
Whats the worry about??
The Panic is contained.
Hanky Panky & B Bernanke are in control.
regards
October 28th, 2008 at 4:45 am
High volatility…
We know markets are likely to either surge or tank.
Traders position according to their expectation and re-position as they lose their nerve or the facts seem to change. Early and late in the day are most likely to see the big swings / reversals.
As for the meaning of it all, if there is one, it must come down to probabilities and what the known unknowns are. After the last weeks and the deluge of scary (good) analysis from all quarters, most of us are scared sh-tless. We know the bad news and we are fully feared-up on the bad possibilities. Many have just given up. So, do we surge or tank from here on?
I think the odds are favouring BR.
October 28th, 2008 at 5:47 am
@bidrec : IMHO you are right, it’s all about automated de-leveraging.
Mark-to-market rules have computers deleverage automatically at the end of the day.
I also have an analyst friend talking about deposit bank’s equity funds. Those funds have rules regarding maximum tolerated volatility of the equities they invest in. Those rules trigger automated sell-offs in non-speculative funds when the volatility is high.
And the VIX is quite high :
http://lacrisepourlesnuls.blogspot.com/2008/10/vix-panique-aige-sur-les-bourses.html
October 28th, 2008 at 5:48 am
Whaaaa, whaaaa, whaaaa !!! I’m sure it’s Bush’s fault once again. Geesh!!!
October 28th, 2008 at 5:50 am
It was HAL (2001, A Space Odyssey) making sure that the Fed will cut rates.
Hmmmmmm.
October 28th, 2008 at 6:24 am
I blame the fact that the specialist system has been replaced by computers. Stocks now trade like commodities…the old specialist system prevented the huge, quick swings which come out of nowhere now.
October 28th, 2008 at 7:37 am
…….Like what we’ve seen over the last week is really relevant to whether Barry made the right call. If the markets are still hammered 6 months from now then I’ll be first to call Barry an idiot.
Posted by: John | Oct 28, 2008 2:13:12 AM
you are assumming that Barry is bullish out 6 months from now.??
I’d rather doubt it, unless I hear it from the Bull’s mouth himself.
If we have made a bottom, this has to be another 1987 type of bear market, quick and over with and onto a new bull market.
October 28th, 2008 at 8:36 am
Barry, just because you are the most bullish perma-bear around doesn’t mean everyone else is wrong to sell. Of course funds would pick to sell during the strongest part of the day. I think you are getting clouded in your judgment. I know this isn’t your strong point, but stop whinning.
October 28th, 2008 at 9:09 am
its the scumbag quants like Citadel etc.
October 28th, 2008 at 9:10 am
I assumed it was leakage of the Obama assassination plot.
That didn’t seem credible to me. “First, we rob a gun store…”
Anybody spent much time in a Tennessee gun store? You’re better off trying to parachute into Ft. Knox.
Everybody in there is going to be an expert marksman, graduate of Jeff Cooper’s training school, carrying state-of-the-art.
October 28th, 2008 at 10:16 am
The great unwind continues. I see DJIA 6900 before too long and pray that holds. If not look out below.
October 28th, 2008 at 11:02 am
Barry, the TIPS Auction was a disaster.
October 28th, 2008 at 11:13 am
@ Posted by: wunsacommie | Oct 28, 2008 5:48:36 AM
First, it’s your fault, because it seems you voted for him or support(ed) him. Certainly with good intentions. I’m confident of that. But, “good intentions” is never “good enough”.
Second, what triggered your remark? My Palin/Couric joke? The GOP is going to split into the (a) rational Goldwater camp and (b) the wingnuts, led by Palin. Enjoy your choice.
Cheers.
October 28th, 2008 at 11:31 am
“If we have made a bottom, this has to be another 1987 type of bear market, quick and over with and onto a new bull market.”
Quick? We’ve been at this bear for about a year now. This would be about normal.
October 28th, 2008 at 12:19 pm
brian @9:44
>>Lets suppose I have $1B in GM bonds and I entered into CDS contract with AIG.
Just because you own a piece of paper doesn’t mean your hedged. It just means you own a piece of paper.
The CDS market is THE problem that needs resolved.
October 28th, 2008 at 12:49 pm
I dunno, why catch a falling knife? There hasn’t even been a hint of a trend that prices have bottomed, much less are back on the uptick.
I applaud Barry’s brass sack for diving into the rough surf, I just hope the riptide doesn’t pull him out.
The larger underlying conditions of the financial and currncey markets (and their respective governments) loom too large over this market to even try to fundamentally try and value a given stock, much decide its b8uy time. That consumer index number is about right. There’s still not enough balance sheet transparency to set the credit markets right, andthe government is trying to spend us into oblivion. In a proper world, all the Fed auctions should be implosions.
Cash is king.
October 28th, 2008 at 1:28 pm
When the DOW was up almost 200, Maria Bartiromo was in a pre-orgasmic swoon, but by the final bell, she looked like she shat her panties.