The Dow just tumbled back into the red for October but it is Trannies, Small Caps, and Nasdaq that are bloodbathing this month as risk-parity deleveraging slams US equity markets below critical technical levels…
The Ides of October…
Trannies now up only 1.5% YTD…
As the major US equity indices break below critical support…
Small Caps crash below the 200DMA…
The S&P broke notably below its 50DMA…
And Nasdaq has broken significantly below its 100DMA…
With aggregate stock and bond returns now significantly negative for 5 of the last 6 days…
With bonds and stocks selling off…
As Risk-Parity funds continue to delever…
And as Bloomberg’s Michael Regan notes, massive volumes in S&P 500 puts are part of the reason why equities extended losses so sharply in early trading. Check out the volume in puts expiring Dec. 21 with a strike price of 2,850. The white line is today, while the red line is average volume:
(h/t Gaurav Panchal in London for pointing out.)
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