In his morning note UBS’s Art Cashin beautifully captures the sheer insanity that was yesterday’s trading day.
In case you missed it, there was blood everywhere. The Dow fell 152.9 points, the S&P fell 23.3 points, and the NASDAQ fell 74.6 points.
The only bright spot was the Twitter IPO, which had everyone and their mother loving the NYSE, talking smack about the NASDAQ, and buying buying buying.
Here’s Cashin’s play-by-play, which sounds like something straight off ESPN:
Early Rally Collapses Into An Ugly Close — The bulls thought they had data on their side Thursday morning. The ECB had cut rates, sparking a rally across Europe. In the U.S., GDP spiked to 2.8% instead of the expected 1.9%. (A deeper look revealed 0.8% came from inventory build-up — stuff that was built and then put in the warehouse rather than being sold to a client.)
That “good” news sparked only a mild uptick rally (very mild in the case of the Nasdaq).
Most of America got swept up in the media events surrounding the Twitter opening. Ironically, just as Twitter was opening, the averages were reversing into negative territory.
Once stocks hit the minus column, selling began to accelerate — aggressively so in the Nasdaq and the Russell. They managed to find some support around 11:15. The bulls regrouped and tried to restart the rally.
That rally attempt failed shortly after noon at about the same level as the last rebound attempt before the 11:15 bottom. Here’s what I wrote at midday:
Twitter dominated the airwaves and lots of trader talk. Trading suggests it was well-placed for lock up.
Floor rumours suggest that 75% may have been allocated to top 25 accounts in the nation.
Internal market divergences continue to nag. Nasdaq and Russell get slammed again in what appears to be flight from both risk and momentum. Bulls need to continue to defend 1755 in S&P and then punch up through 1777/1779 to regain full momentum.
Run rate gains thanks in part to Twitter. At 12:30, the projection for the close of 730/810 million on NYSE.
(More Twitter action and a nasty selloff in the final hour swelled the volume to over 900 million.)
That 1755 support level in the S&P would turn out to be a major battleground as the day wore on.
As noted, stocks began to sink again — slowly at first but accelerating as they moved lower. Some media types tried to pin the new downdraft on rumours or statements out of Washington on new budget standoffs. Trading types saw the selling as internal and self-reinforcing.
At 2:00, the S&P began to test that 1755 support. Apparently, they didn’t study for the test and the “support” evaporated almost instantly and a minor air pocket opened.
This time they managed to circle the wagons around 1750. The rebound, however, found that the former 1755 support had turned into resistance — and rather fierce resistance at that.
When the attempt to punch above 1755 failed around 3:00, the selling resumed and turned a bit ugly on increased volume. To demonstrate the level of ugliness, let’s convert all the closes to equivalent Dow points. The Dow -152; the S&P -208; the Russell -280 and Nasdaq -300. Now that’s ugly.
Sounds like you were right on the floor right?
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