Stock Market Today: February 5th - 9th

New Traders: The best days of your trading life will be trend days, the worst days of yo trading life will be chop days. The way you will survive is to find a way to determine what kind of day it is, for me I use ma's and price levels.Today was an awesome day to be a day trader.

 

Sell-off continues after hours -- S&P 500 futures now down 6% on the day

S&P 500 futures were trading below the lowest level hit earlier in the stock market during Monday's wild sell off.

The cash S&P 500, which closed at 2,648, touched 2,638 in afternoon trading, and that is the level traders are watching to see if it can act as support or signal more selling.

In the futures market it was signalling selling. The S&P 500 was down 113 points, or 4.1 percent Monday in its worst day since August, 2011.

https://www.cnbc.com/2018/02/05/sel...00-futures-now-down-6-percent-on-the-day.html

 

We definitely made some history today

 

XIV, the inverse volatility, down below its Bollinger band. It went from 90 to near 150 in a little less than 4 months, but you don't really see buying in the volume.

I've been waiting a long time for it to come down, but I didn't think it would come down to 9x.xx in 2 weeks lol.

If we have another day like this tomorrow, I will really regret not taking my retirement out of stocks last week Wednesday.

 

The DOW is now actually less than 2% away from 10% correction

 

Looks like Xiv and svxy are going to be unwound. Hopefully nobody here was long Xiv or svxy. They are down over 80% AH

 

Wow. 25M shares of XIV traded after hours (it trades 6M on average during regular hours), currently $15.30 down 85%.
Like Ken34 was saying, the short-term VIX got inverted (or whatever the term is) in relation to the long-term; that is very rare in an uptrend.

 

Obscure security linked to stock volatility plummets 80% after hours, sparking worries of bigger market effect

An exchange-traded security which is supposed to be a bet on calm markets was collapsing after hours.

The VelocityShares Daily Inverse VIX Short-Term exchange-traded note (XIV) is down more than 80 percent in extended trading Monday. The security, issued by Credit Suisse, is supposed to give the opposite return of the Cboe Volatility index (VIX), the market's widely followed turbulence gauge.

The VIX doubled during regular market hours Monday, causing obvious havoc for a product seeking to track its inverse return. Though, the XIV dropped just 14 percent during regular trading.

But then after hours trading began and the security, popular with hedge funds betting on an ever-placid market, was off by 80 percent in extended trading.

The move after hours sparked fear among traders that violent declines in exchange-traded notes like this one would cause market volatility measures to spike further and weigh on the broader market.

"After-hours, the VIX reached 38 and futures more than doubled—it is not clear at this point how this will reflect on various short volatility products (e.g., some volatility ETPs traded down over 50% after hours)," wrote Marko Kolanovic, JPMorgan's quantitative and derivative strategist, in a note to clients late Monday.

The drop also raised fears of big losses from hedge funds and other investors unfortunate enough to be holding this security and unable to unwind it after hours.

Larry McDonald, founder of the Bear Traps Report, warned that such a huge spike in volatility could have a cascading effect.

"Positioning in all sorts of VIX ETFs has increased 5-fold in recent years," McDonald said in an email. "Even a spike in volatility similar to August 2015, would force VIX ETFs to buy an incredulous $37 billion exposure in short-term VIX futures. Such a spike can even get more exacerbated in case liquidity dries up as the market realizes certain structures need to rush in and cover their shorts at whatever the cost."

McDonald told CNBC that the August 2015 VIX move was roughly 45 percent, while today's move was double that.

The XIV was last seen at 20.88 in postmarket trading, down 80 percent from its close at 99.

VelocityShares declined to comment on Monday's move. Credit Suisse did not immediately offer comment.

The fund's prospectus states:

"The ETNs, and in particular the 2x Long ETNs, are intended to be trading tools for sophisticated investors to manage daily trading risks...The ETNs are riskier than securities that have intermediate or long-term investment objectives, and may not be suitable for investors who plan to hold them for longer than one day."

It is hard to tell who is exactly holding this short-term oriented security at this time. Filings from back in September show Credit Suisse, Deutsche Asset Management, Citadel Advisors, Flow Traders, and Two Sigma as the top holders.

Some hedge funds were caught holding the bag on this security. What they do next (or are forced to do) could determine what happens with the volatility trade and the overall market.

"Today's large increase of market volatility will clearly contribute to further outflows from systematic strategies in the days ahead (volatility targeting, risk parity, CTAs, short volatility)," added Kolanovic. "The total amount of these outflows may add to roughly $100 billion, as things stand."

https://www.cnbc.com/2018/02/05/xiv...linked-to-volatility-plummets-80-percent.html

 

Plunge protection team gonna be busy tomorrow.
Market testing the new Fed chair indeed.

 

that's me.... Ive heard all these stories about market corrections and walking to school in the snow up hill both ways... but I didn't know ya'll were serious

 

Never mind, we got that 10% already, I forgot that we were down a lot more than what we did at the close

 

SVXY CRAZY drop >> $107 hod down to $14.95 a/h!!

 

Nice Cy I really love to rewatch those that you uploaded during the financial crisis in 2008 and 2009

 

I actually began to pay attention to the market in 2008, so I was lucky enough to experience what a bear market is like

 

Hey everyone, I know I haven't been around for awhile but I wanted to share this. I call this free money. I've never seen it before, but I can't see trading this as anything other than absolutely picking money up off the ground.

Does anyone seriously believe we will reach /ES 1000 by March expiration?

Like I said, free money.