NASDAQ

The last time the USD closed down (DXY -1%) on the week, and so did stocks (Dow/S&P/Nasdaq -0.25%), was the week heading into QE3 which marked the top of the US equity market for the year. With contracts rolling, the futures were roiling into the close as they were ping-ponged between new week lows and VWAP. The Dow Transports stood alone in their outperformance +1.1% (but were sliding rapidly into the close) and while most sectors were weak (Discretionary worst -1.2%), Materials outperformed (+1.66%) in a world of their own today. Silver slumped 2.4% on the week while Oil added 1% with gold flatlining since yesterday morning down around 0.5% on the week. AAPL, obviously, was the story today -7.75% in last 3 days to 10 month lows on huge volume today. EUR strength (+1.75%) dragged USD lower but was stymied by JPY weakness (-1.25%) as Treasury yields came off the week's highs to end 7-9bps higher on the week. VIX at two-week highs closed above Europe for the first time this year. Some peculiar volume and behavior in bond ETFs to note also (HYG saw biggest 2-day drop in a month) - markets feel very brittle up here.

Imagine a stock - best for the hypothetical exercise is probably a tech stock - rising for 12 years without interruption. A net gain every year, sometimes a small one, sometimes a bigger one, but nicely compounding at an annual yield of more than 17.13% (that's a devilish 666.67% in 12 years). What would people say about this stock? Would there be a steady stream of negative press trying to dissuade people from buying it? We somehow doubt it, although almost every investment that has seen a great deal of appreciation has its detractors (and sometimes they are right). When it comes to gold, one could certainly debate the merits of buying it at what appears at least on the surface as a high price. Gold bulls can only profit from examining bearish arguments, in order to see if they have merit.

• Obama, Boehner hold "frank" meeting amid "fiscal cliff" frustration (Reuters)
• Rice Ends Bid Amid Criticism (WSJ)
• EU summit delays crucial decisions (FT)
• EU moves to cap bank bonuses at 2 times annual salary (CBC)
• Europe Wins a Battle, but Not Yet the War (WSJ)
• Banks Spurn Europe Bond Rush Amid Central Bank Loan Largesse (BBG)
• German-French Sparring Over Euro Caps 2012 Crisis Fight (BBG)
• Fed begins stress tests on bank liquidity (FT)
• Draghi’s rallying cry for new EU powers (FT)
• EU Seeks Plan to Handle Failing Banks Amid Cost Concerns (BBG)
• Berlusconi says Monti has strong EU backing (FT)
• Abe Set for Japan Victory Faces 7-Month Window to Keep Hold (BBG)
• Japan's Abe would try to keep China ties calm-lawmakers (Reuters)

A well-timed leak of an Obama-Boehner meeting this evening provided enough exuberance to allow algos to lift the markets (futures and ETFs first) from 'about to break the lows' to VWAP (to the tick!). S&P 500 futures picked off VWAP perfectly and slid back. The Dow and the S&P spent the afternoon stuck at unchanged on the week before the rally-monkey saved the day (as did Financials). Treasury yields continue to bleed higher (now up around 10bps on the week). Silver dislocated (worse) from its commodity peers who have recoupled +/-0.3% on the week (even as the USD is -0.6% on the week). Gold and silver (as we noted earlier) really fell out of love from the start of the day-session but silver was starting to recover into the close. AAPL was very close to its lowest close in 10 months (but again was rescued by some rampant white house leak about a totally fruitless rumor) though ended at a critical VWAP support level. By way of record-breakers - today marked the first time that we have seen stocks negative from the day before a QE announcement to the day after (no matter what Bob Pisani tells you). Equities tumbled into the close (after ringing the bell at VWAP) ending near the lows after-hours leaving financials and energy practically unchanged on the week. VIX jumped 0.5 vols to 16.4% and HYG had a very weak day on significant volume. But apart from that...

'Twas the seconds before the open, and all through the market, not a trader was stirring... well apart from Johnny 5 and his algo friends. From our friends at Nanex, in case you missed it, there were numerous algo-inspired flash-crashes this morning right before the open... HPQ (traded down to $3 from $14 in about 100ms), S (from $5.50 to $2.75 in 150ms), GS (from $117 to $94 in 45ms) and C (from $36.00 to $20.00 in 90ms) are among the NOT fat-finger moves we saw as the charts below show. Now move along and BTFD! Bernanke has told you so...

• Fed Seen Pumping Up Assets to $4 Trillion in New Buying (BBG)
• China New Loans Trail Forecasts in Sign of Slower Growth (BBG)
• U.S. "fiscal cliff" talks picking up pace (Reuters)
• Insider-Trading Probe Widens (WSJ)
• U.K.'s Top Banker Sees Currency Risk (Hilsenrath)
• Three Arrested in Libor Probe (WSJ)
• Nine hurt as gunmen fire at Cairo protesters (Reuters)
• Egyptian President Gives Army Police Powers Ahead of Vote (BBG)
• Pax Americana ‘winding down’, says US report (FT)
• Japan Polls Show LDP, Ally Set for Big Majority (DJ)
• HSBC to pay record $1.9 billion U.S. fine in money laundering case (Reuters)

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).