All week, the rest of the world sent overnight warnings. U.S. gamblers took it as their opportunity to double down.
This is 2014 deja vu - except from a higher altitude and far more leverage...
Rewind two weeks:
ZH: VIX ETFs Are Now Net Short
"back in June, it would only tax a 5 vol VIX spike to result in a selloff; since then the number has declined to only 3"
"In the first phase VIX spikes moderately due to adverse fundamental news and then stabilizes for a few days at an elevated level. The VIX ETP investors follow their play-book of selling volatility expecting a mean reversion. However, if at this point, the fundamentals were to deteriorate further, it would create an air-pocket phenomenon where the subsequent spike in VIX could be amplified."
Yesterday:
ZH: WTF Chart of the Day: Inverse Volatility Largest Flows Ever
This, had the largest inflows ever this week. Obviously...
The volatility curve is now in backwardation for the first time since April. Which means that the volatility short squeeze is now on...
The reflation trade got smoked
Momentum stocks and China Tech gave back ALL of January's melt-up gains this week:
The Crypto ponzi fraud makes Bernie Madoff look like a rank amateur. Why is he still in jail anyways?
He should be helping Jimmy Altucher with his next venture:
Fear spiked at the end of the day today
Only a couple of large caps left
This portends badly for next week...
Bueller?
The last time we saw this was...let's see...2008:
Remember this thing? The minimum volatility fund.
Below this are all of the trailing stop losses home gamers set for "safety". Multiplied times 5,000 ETFs...
"Apple sold 77.3 million iPhones in the holiday quarter, falling well short of analysts’ average expectations of 80 million and failing to reach last year’s quarterly total of 78.3 million...Apple’s forecast was also lighter than expected — Apple expects to sell 50 million iPhones this quarter, while analysts on average expected 59 million"
Guidance was only off by 16%. And that's "Ok"
MW: Dow Biggest Point Drop Since October 10th, 2008 aka. "Lehman"
The good news is that at this elevation, Dow points do not convey the same percentage. The bad news is that there is still 12% back to the 50 week moving average. Meaning the casino is still record overbought.
