NASDAQ

UPDATE: In the last few seconds of trading ES jumped 3 points on Buffet comments about Dimon for Treasury and WSJ chatter about Fiscal Cliff progress (ES +4.25pts on day)

We have officially run out of expletives to describe the volumelessness of the equity trading markets. Today's S&P futures volume was dismal - among the lowest volume days of the year (even including holidays and half-days). Today's range was relatively narrow and while risk-assets in general were highly correlated, there was noise and the liquidity was simply not there. AAPL continued its VWAP-based slide - holding NASDAQ back overall - but with MCD's gains accounting for around half of the Dow's gains on the day (and the S&P getting lifted with every VWAP-driven jerk lower in AAPL), it seems the 'buying' interest was largely absent. Treasury yields ended lower, VIX higher (though well off its highs of the day), high-yield credit practically unchanged, and the USD very modestly lower providing just enough impetus to keep the S&P green on the day (and the month +0.15%). The Industrials and Transports have recoupled at +1.2% on the month while the NASDAQ languishes -0.77% since 11/30. Oil was probably the mover of the day with WTI -0.3% - notably awry of the +0.5% gains in Silver and Oil and +1.1% in Copper. Financials lagged and Materials led as the day came to a quiet end around VWAP with the machines well and truly in charge.

No politics, no "death crosses" - just simple fundamentals.

The technicals were in charge today as S&P futures coiled around VWAP early on, tested lows, then pushed to highs (coinciding with the 50DMA) - ending the day-session in the green. Low volume and low average trade size suggest this was not the pros filling their boots and the lack of enthusiasm among Treasury traders (despite a very late day ramp higher in yields), FX traders (EUR weakness dragged USD back to Unchanged on the week), and Oil (ending the day -2.9% on the week) didn't fill us with fear of a next leg higher (for now). Gold and stocks traded tick for tick most of the day as the precious metal toyed with $1700 again and HYG (the high-yield bond ETF) also recoupled with SPY (stocks) all day (shifting richer to its fair-value). Of course, AAPL is the name of the day with its death spiral, VWAP save, and VWAP reversion amid gigantic volume - but low average trade size (to close +1.5%). VIX ignored equity strength and closed +0.15 vols at 16.6% (very close to where it opened).

Strong start in Risk to take out new 2012 highs in Equities and trying to retrace near 2012 Credit lows, too. Core EGBs cool. Bunga Square’s rug pulling scuttled all that easy living by noon, weighting on the Periphery and boosting Core EGBs. ECB gloomy. Equity – bond divergence not a flyer yet, though… US sideways and Risk Watchers back to scanning European politics. EUR falling of the carpet.

• MSM discovers window dressing: Fund Managers Lift Results With Timely Trading Sprees (WSJ)
• White House Unyielding on Debt Limit (WSJ)
• Obama, Boehner talk; Geithner prepared to go off "cliff" (Reuters)
• Republicans urged to resist tax rises (FT)
• China looms large over Japanese poll (FT)
• As predicted here two months ago, Greek Bond Buyback Leads S&P to Cut to Selective Default (BBG)
• Japan opposition LDP set to win solid election majority – polls (BBG), but...
• Japan Opposition LDP’s Main Ally Cautions Abe on BOJ Pressure (BBG)
• U.S. and Europe Tackle Russia Trade (WSJ)
• King Seen Maintaining QE as Osborne Extends Fiscal Squeeze (BBG)
• Syria pound fall suggests currency crisis (FT)
• Irish budget seeks extra €3.5bn (FT)
• U.K. Extends Cuts Due to Poor Outlook (WSJ)
• ECB Seen Refraining From Rate Cuts as Yields Sink on Bond Plan (BBG)

What a ridonculous day. We nearly dragged the deer out - or even Donkey Kong - but the epic awesomeness of the swings in stocks today (most notably the S&P 500 - since AAPL/NASDAQ tracked lower and more consistently all day) was simply remarkable. AAPL broke all kinds of records today (losing more market cap today than 80% of the S&P 500 companies in total h/t Peter Tchir). Despite the rapid collapse on the S&P 500 into the close (as HYG pulled off its lows in a failed convergence trade) amid heavy volume, saw the S&P manage a gain on the day but down on the month (while the Dow Industrials and Transports are basically unchanged since 11/30). Rates fell and stayed near their lows for the day; commodities chopped around (as usual) but ended marginally lower from yesterday's day-session close; financials were the winners on the day but led by just great companies as BofA and Citi which staged a tick-for-tick algo liftathon odyssey of idiocy (now up around 6% on the month!!). All-in-all, the S&P remains rich to risk assets but the overflow from AAPL's collapse has likely not played out yet as taps-on-the-shoulder will be everywhere tonight.

Last night, the NASDAQ announced that Facebook (FB) will replace Infosys (INFY) in the NASDAQ-100 index. This change will become effective next Tuesday, December 11, after market close. This is merely the first swap in what is an annual Index reconstitution tradition for the tech-heavy, IPO-error prone index: next Friday, December 14, the NASDAQ will announce the official full list of new entrants and exit-ants from the index, which will take place on December 21, which usually serves as a technical buying boost for the new members, while those companies kicked out see substantial selling pressure as index funds no longer have to own the names. Below we present an analysis by Deutsche Bank's Bo Huang who lists, in order of conviction the names most likely to benefit (additions), and be punished (removals), from the reconstitution.  The names likely most likely to benefit: Kraft Foods, Regeneron, Libery Media, Analog Devices, Catamaran and Equinix. On the other hand, those holding Netflix, Apollo Group, Warner Chilcott, Green Mountain Coffee, Electronic Arts, Flextronics, or the recent Lazarus, until a month ago left for dead, Research in Motion, may want to quietly sell their holdings. They will likely have a better re-entry point after next Friday's announcement and prompt reallocation.

US equities tried to escape the draw of a strong Treasury market and weak gold market all day but kept being dragged back to reality (with a late-day dive on decent volume making the most interesting moment of the day). The day-session range was relatively low but volumes were ok as we leaked lower on the day. NASDAQ was the weakest (thanks to AAPL's push back towards it 'generational low') and TRANS outperformed - but the latter was playing catch up to the rest from yesterday's weakness (still lagging on the week). S&P futures clung to VWAP most of the afternoon in a rather uneventful day even as VIX pushed 0.5 vols higher to close above 17% for the first time in three weeks - notably divergent from stocks. EUR strength (+0.8% this week!), while modestly supportive, has largely decoupled from equity movements this week as correlations across risk assets have dropped notably.

Moments ago the SEC, with about a two year delay, decided to finally act tought, and in a parting present to the most ineffective and clueless chairman of the coopted and corrupt organization ever seen, that would be Mary Schapiro of course, lashed out at Chinese affiliates of Big Four accounting firms as well as BMO, for refusing to produce audit work papers and other documents related to China-based companies under investigation by the SEC for potential accounting fraud against U.S. investors. Of course, readers of Zero Hedge will recall what we dubbed the formation of a cottage industry exposing Chinese fraudcaps back in November of 2010 when we warned that virtually every reverse merger out of China will soon prove to be a fraud, but because of the listing fees that US exchanges would get as a result of local listing, nobody cared, and only that now extinct class of gullible and naive investors would lose their entire investments. It is now two years and one month later, and the SEC has finally acted on it.