There’s something rotten in the markets

On Tuesday morning the Dow futures was down 540 points just before the opening of trading. By 10:30 am the Dow index was miraculously down 3 points.

Over the course of the trading day the Dow moved 1,167. That type of volatility you only see on bitcoin. The index closed up 567 points, but the strange indicator on the Street was that the e-mini futures for the Dow were +920 at the close. These two numbers are normally in the same range and not 360 point difference.

Wednesday morning saw the e-mini futures down 250 points at 6 AM and improve to -86 points at 7:30 AM.

However, looking at the markets — including dollar strength, precious metals and bitcoin — it looks like there is much forced selling by funds that have to liquidate assets before announcing the fund is closing.

I wrote yesterday about the VIX index, which for much of the Trump presidency hovered around 10 suddenly exploded to over 50 on Friday.

I still believe the trigger for Friday’s 666 point decline was the release of the FISA memo by the House of Representatives committee. The idea of corruption and felonious behavior at the top of the Obama Administration  was hinted by all the congressmen who had read the memo.

So once the VIX started to rise on Friday, the funds that we caught short on the VIX had to liquidate other assets to cover the options contract. This selling cascade poured into Monday’s trading.

As I wrote yesterday, there were forces in the stock market futures to bolster Tuesday’s market open after Monday closed down over 1,000 points. My colleague John Crudele and I both see the Plunge Protection Team had a hand in bolstering Tuesday’s open.