“Quad Witches, Bitches” – Stocks Crash On OpEx

CNBC was awash with “Remain Calm” comments today as yesterday’s carnage extended into today post-option-expiration misery.. “I would call this a rather stable sell-off” and stocks are “in a bit of a funk” were among them… but for those buying the well-sponsored rip post-Yellen, here’s what you get:

Quad-Witch Bitches:. The last two days are the worst since Black Monday for stocks, and just as we warned a week ago, Yellen’s confidence-inspiring rate-hike was undone by ‘technicals’ in the so-called market:

The irony will be if, regardless of what the Fed does, the subsequent move is driven not by the market’s read through of monetary policy but by the “pin” in this massive $1.1 trillion option expiry, the biggest in many years, one which if recent market action is an indicator, suggests the stop loss strike level will be taken out in the process setting the “psychological” stage for market participants who will look at the drop in the market, and equate it with a vote of no confidence in what the Fed is doing, potentially forcing the Fed to backtrack in less than 2 days!

Whether this happens remains to be seen, and we are confident the Fed’s “arm’s length” market-moving JV partner, Citadel, is currently scrambling to prevent any imminent selloff. However, considering Kolanovic’ track record of hinting at key risk inflection risk, it is quite likely that whatever the ultimate closing price on December 16 and, more importantly, December 18, volatility may very soon have an “August 24″ type event.

The “quad’s” outcome – bloodbath. 

With S&P 500 Futures breaking the 2,000 level after-hours…

Post-Yellen, bonds are outperforming notably.

Post-Fed… not exactly confidence-inspring…

The Dow is down 700 points from post-Yellen exuberance… Nasdaq broke 5,000; Dow nears 17,000; and S&P 2,000 was defended with valor…

Leaving everything Red for the week…

Trannies are down 18% YoY… the fastest accelerating drop since Lehman…

FANGs all red post-Fed…

Stocks caught down to credit markets – as credit crashes…

Equities still have a long way to go…

Treasury yields (most notably the longer-end) ripped lower after the Fed… but remain higher on the week…

With a dramatic “policy error” style flattening of the yield curve…

The USDollar rose over 1% on the week but the last 24 hours has seen some fading as carry trades were unwound en masse, driving JPY higher…

Commodities were very mixed this week. Silver, gold, and copper surged today

Silver’s best day in 11 weeks…

Crude collapsed to fresh cycle lows…

Charts: Bloomberg