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Stocks Hold Green Close As VIX/Credit/Rates Signal Risk-Off

Tyler Durden's picture





 

From the knee-jerk spike after the ISM data, US equity markets sold off relatively calmly for the rest of the day. Headlines will crow of a gain to start the quarter and what that means empirically, the real stories are under the surface: AAPL dropped 3% from its early-day highs to end at one-month lows; VIX jumped 0.6 vols to 16.3%; HYG, the high-yield credit ETF, was weaker all day and dumped into the close on huge volume; Treasuries were bid into the close ending the day down 1-2bps; and FX carry slid all afternoon as the USD rallied from -0.4% to -0.1% at the close. Commodities were juiced by Evans' dovishness (and Iranian fears) but the spikes in Silver (and less so gold) were retraced - though they all ended outperforming USD's implied strength. Tech and Discretionary underperformed as Staples and Healthcare were the winners. Not exactly the herd of performance-chasing monkeys everyone expected eh?

 

S&P 500 futures jumped on the open, then again on the ISM pront and rolled over, accelerationg after Europe closed... found support at the unch line (on Spain rumors) but ended weak and notably south of VWAP...

 

Stocks fell back to reflect VIX's less excited view of the world...

 


Commodities (especially PMs) jumped early on ultra-dovish comments from Evans among other things...

 

Risk assets in general were in risk-off mode - both our ETF model (left) and broad risk-asset proxy (CONTEXT - right) were considerably less sanguine than stocks all day and sure enough equities converged back lower to end the day...

 

High yield credit ETF HYG dropped all day - as it has been diverging from stocks since QEternity hit. The flush into the close was on considerable volume too as it snapped back down to its NAV (lower pane)...

 

and a longer-term basis - we've seen this pattern before in high-yield credit nervousness ahead of stocks...(which notably began last time at the end of LTRO)

 

Charts: Bloomberg and Capital Context

 

Bonus Chart: AAPL's intraday slide was notable...down around 3% from its early highs... notice the VWAP orders after the close (i.e. sell orders)

 


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Mon, 10/01/2012 - 16:21 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Mr Bernanke's Wild Ride

Mon, 10/01/2012 - 16:24 | Link to Comment slaughterer
slaughterer's picture

MS is advising against new HYG positions in its latest recommendations,  I think some of their muppets are starting to see the light in that.  

Mon, 10/01/2012 - 16:57 | Link to Comment Renewable Life
Renewable Life's picture

Off Subject, but worth a rant...........

Did anyone hear that moron Woody Johnson say the he would "rather have Romney win, then the Jets"???? Whats amazing about this statement is, "dipshit" Johnson OWNS the Jets!! Could one elite billionaire, have said in one sentence something more profoudly insulting to the working class stiffs who have made him a billionaire, with their rabid obsession of NFL football, then that one???

Not only did you remind every middle class American, just WHO Mitty is all about, BUT you fucking insult the game and the Team that probably is single handily responsible for you NOT being linched and your wealth confiscated by mobs of pissed off males with no employement or future in the "new America", you Woody Johnson have helped engineer, along with your buddies like Mitty!!!  NFL football is probably the greatest social experiment in the history of human kind, at mesmerizing the masses and allowing for a controlled expression of rage and energy, without any social costs!! Actually, it does all that, AND adds GDP to the economy, not to mention the racial and economic harmony it projects to the masses thru as little as 500+ athletes and coaches!!  500 poor athletes that get to become millionaires, and it keeps in check 150 million pissed off people!! And this dumbfuck wants to insult those people and slap them across the face, and risk upsetting this perfect system, HE OWNS, so he can pay 10% less taxes a year!!!

The fucking arrogance of these POS human beings, is unmatched only by their false sense of security in the scam they have invented!! 

Be careful Woody, remember the greatest line in fight club!!!  You can fuck with the poor bastard on the street who doesnt have a pot to piss in, but NEVER fuck with the people who make your food, take care of your kids, provide security for you, and generally build the shit you need!!!!  Your POS football team is ALL that stands between you, your money, and them!!! Better get back on message, before shit gets dangerous!!

Mon, 10/01/2012 - 17:03 | Link to Comment walküre
walküre's picture

Does FEMA provide anger management classes? Rage is good. Remember, there's no honor among pirates.

Mon, 10/01/2012 - 17:36 | Link to Comment PiratePawpaw
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Not true. We're actually a rather honorable lot once you realize that the code of values we honor is our own, not theirs.

Mon, 10/01/2012 - 23:45 | Link to Comment jeff montanye
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re the post, i'm going with the eh.

Mon, 10/01/2012 - 17:27 | Link to Comment Village Smithy
Village Smithy's picture

You don't need to be a person of good character to make a shit load of money. In fact...

Mon, 10/01/2012 - 19:47 | Link to Comment Savyindallas
Savyindallas's picture

Jets suck and so does Romney--looks like Woody loses either way  -

history shows that where the greedy elites go too far  -they all end up hanging from trees. This group is no exception.

Mon, 10/01/2012 - 23:54 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Reneweable - bad logic used in your argument. You are either a paid OB troll, or you are too stupid to realize the class warfare rant of MSM is a manufactured, Alinsky_ite message. .

Most critical thinkers and also those who just know that a free luch is never free, realize that Obama and his fellow Alinskyites are incredibly incompetent and trying to move toward a socialized version of Europe in the US.

 

Mon, 10/01/2012 - 16:27 | Link to Comment slaughterer
slaughterer's picture

AAPL was such a POS today, and the reason is obvious: bulltard PMs cashing in to distribute the profits elsewhere.  AAPL cannot really yield attractive gains for the rest of the year.  One would be better off in other high-beta securities. There is a long list of possibilities that tempt the HF cockroaches.  

Mon, 10/01/2012 - 16:28 | Link to Comment LawsofPhysics
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Post election puts?  Seems like now would be the right time to buy.

Mon, 10/01/2012 - 16:30 | Link to Comment SemperFord
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I agree that once Obummer is re-elected they will crash it but will they wait until the end of his other term like with Bush?

Mon, 10/01/2012 - 16:43 | Link to Comment seek
seek's picture

TPTB have proven to be almost magical in their ability to keep things moving, but god himself can't keep this crap market together through 2016 without a major dump or two on the way.

Mon, 10/01/2012 - 16:35 | Link to Comment slaughterer
slaughterer's picture

Oh, Obummer.  My thesis is that Wall Street is paying Mitt to lose.  They like Obummer better.  Obummer is too stupid to reap the profits of his own power-politics.  Goldman does not want to split its profits with an ex-Bainie.  

Mon, 10/01/2012 - 17:01 | Link to Comment otto skorzeny
otto skorzeny's picture

the whole thing really stinks. the fix is in-like an 80's Maywood trotter race.

Mon, 10/01/2012 - 17:46 | Link to Comment DosZap
DosZap's picture

Oh, Obummer. My thesis is that Wall Street is paying Mitt to lose. They like Obummer better. Obummer is too stupid to reap the profits of his own power-politics. Goldman does not want to split its profits with an ex-Bainie

I agree Odumber will likely win, but not for your reasons.Pulling a Clinton, and not getting absentee Ballots to the troops on time ,to be counted,1 million FREE taxpayer paid cell phones(in a key swing state), and all the free handouts,and the MSM in his back pocket, along with 90% of all news outlets.

It really is amazing to think with all the way it is, and has been for 4 yrs, he should be even close.........much less likely win.God help us..............time for exit strategy, and or relocation stateside.

We will see the REAL O if he wins, we have only gotten a taste of the fecal sandwiches awaiting.

Mon, 10/01/2012 - 16:36 | Link to Comment slaughterer
slaughterer's picture

Man oh man, AAPL totally sucked crap today.  How long will it take for all those HFs to sell AAPL to retail idiots?  

Mon, 10/01/2012 - 16:38 | Link to Comment ArrestBobRubin
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Hello? It's spelled P-P-T

Mon, 10/01/2012 - 16:50 | Link to Comment walküre
walküre's picture

Classic pump and dump pattern.

Jerk the entire index higher pre market +80, suck in the muppets then end the day at +77.

Rhetorical questions. Who can do this, who has made money today and who is going home shrugging it off and thinking they "got in" a bit too early but still holding their position?

Mon, 10/01/2012 - 17:03 | Link to Comment otto skorzeny
otto skorzeny's picture

this market is controlled in the post-close/pre-open time slot on leaked info.

Mon, 10/01/2012 - 17:15 | Link to Comment walküre
walküre's picture

They drive the market up to create this illusion of a "leaked" info effect. That's what is needed to get investors to pile in. Investors and their funds across the world waiting for the NY market to open on Monday morning. They all read the same headlines, the same narrative simultaneously across the world. Check any business related website or the business section of any newspaper online in every country on the planet. Read what they are reporting on at the same time. All news is packaged and streamlined. There's no difference between that and sending out spam emails to buy penny stock. Just on a much much larger scale and with the impression of credibility. At the end of the day though it is all manipulated, all the same, all the time. It is a massive propaganda effort to suck in the investment community. Now, I'm not suggesting that this is a brand new phenomenon. To suggest that would endorse the equity markets as legitimate and unmanipulated since their inception. I'm sure that's not true. The whole idea of selling paper to investors is to convert worthless shares into real currency. Create the illusion that investors are part of something bigger. Obviously these gimmicks are all created in the same fashion any ponzi market is created. Eventually they collapse which seems to always coincide with economic recession as a desired background to explain the massive losses to investors. When in fact the reason a market crashes is that the ponzi has run its course and a combination of lacking new buyers and everyone in the game is fully invested and eager to sell. Quite simple.

It must drive them absolutely bonkers that they're not able to regain the "confidence" of investors to buy back into the ponzi only 4 short years after the last engineered crash. Who would have thought the internet was THAT informative that it would pull away the Emperor's clothes and declare the whole thing a fraud? Good luck Wall Street. You're gonna need lots of it even with a psychopathic moneychanger in the driver's seat.

Mon, 10/01/2012 - 17:24 | Link to Comment Village Smithy
Village Smithy's picture

There may be hope. These algo driven spikes are being faded more and followed through on less. At a certain point the spikes will be replaced with with pure high volume fades. At that point it's mean reversion time.

Mon, 10/01/2012 - 18:00 | Link to Comment Meesohaawnee
Meesohaawnee's picture

if they would just allow natural corrections to occur they might actually get people to get in and make it real. No corrections. no dice . no "real" market performs how it has the last 4 years. You may have had 2? serious corrections.

Mon, 10/01/2012 - 20:09 | Link to Comment chump666
chump666's picture

longs will crash the HFTs and then vice versa.  Should be delicious to watch and make cash from...

Mario and Bernanke have their puts, but a major sell might even break them...might.

Mon, 10/01/2012 - 17:46 | Link to Comment EclecticParrot
EclecticParrot's picture

I realize everyone comes from different camps with respect to trading (swing vs. cash-to-cash daytrading), but I thought today was classic, easy money.  It's long been a pattern for the HFTs to load up at 9:55 and wait to react to important 10:00 econ releases (ISM, PMI, etc.), pushing the 10:05 to 10:15 period hard depending on how much the figure missed/topped expectations, how many shorts/stops they uncovered through quote stuffing, etc.  By simply waiting until 10:15 and using any standard tech indicators (MACD, TSI, inverse hammer candle), there's usually either a continuation or fade trade after their shenanigans subside.

Today's fade to 1:45 (save one "buy-the-new-low" fake-out) was rather smooth and relentless, as was the classic 2-3 pm march back up toward VWAP (to balance the books and sucker in more longs) before the semi-final dump to 3:30 before the final daily half-hour algo battle ensues, which I prefer to avoid (no 3:51 sprint to VWAP today).

Mon, 10/01/2012 - 18:49 | Link to Comment walküre
walküre's picture

Until there's a glitch in the matrix and you try and try to figure it out and before you know it, your money is gone.

The house always wins in the end. Time is on their side.

Mon, 10/01/2012 - 20:17 | Link to Comment chump666
chump666's picture

Yes a HFT flush occurs after the morning meltup.  Smart money just looks for the HFT supports, usually with this bull market it's been on the 50MA.  If the interventionist, goverments and insane central banks can pump the good news.  Then we have a nice sustained meltup.  This has been all Aug/Sept.  Impressive.  But doomed.  Profit taking has to occur at some-point. It will be game of who pulls from the support lines and who sells further into other supports first i.e a f*cking a crash.  Which is looking likely.  I have no faith in HFTs holding ranges, they now offer/bid (reverse bid offers) in a pure micro second to second madness.  But the longs will freak first.  When?  Any-day. If the interventionist/s try and hold the floodgates, I think the pressure is too much.  That being too much sh*t will be flung in all directions.

So...fingers cross for a doomsday trade.

Mon, 10/01/2012 - 16:58 | Link to Comment kornholio
kornholio's picture

Bullish

Mon, 10/01/2012 - 18:24 | Link to Comment orangegeek
orangegeek's picture

Apple is starting to slide and so is the NASDAQ100.

 

http://bullandbearmash.com/chart/nasdaq-100-daily-october-01-2012/

 

Q3 earnings arriving soon - not sure how much longer these markets will be up.

Mon, 10/01/2012 - 18:25 | Link to Comment 3rdgrader
3rdgrader's picture

Quick, someone put on a black turtleneck and spout out some b.s...

Mon, 10/01/2012 - 19:25 | Link to Comment chump666
chump666's picture

Sept correction fizzled, it's all Oct now...

99% of the market is long.

Should be an absolute slaughter.

Tue, 10/02/2012 - 01:50 | Link to Comment polo007
polo007's picture

http://www.forbes.com/sites/investor/2012/10/01/five-stocks-to-buy-for-bond-ageddon/print/

One hiccup of liquidity, where bond buyers pull back from lending the U.S. cash for nothing, and these bonds would be turned into dead president cash.

This freshly minted cash would then flee into hard assets, and off goes a new asset bubble.

But where will this cash go? Euros? Yen?

In fact, the cash has nowhere to go… it has to be sucked up by liquid assets. Stocks.

Equities in huge multinationals are a currency hedge as well as a good inflation hedge. Big stocks have plenty of transparency and a very long trading record.

So investors keen to position themselves to survive “bond-ageddon” should realise the place to look is the giant market cap goliaths–ones paying dividends.

Here are some to put in your portfolio if you think the dam of cash will break.

Kellogg, Exxon, Wal-Mart, Time Warner, Dow Chemical

What a boring list. However, boring will be very attractive when bond prices start to melt.

The timing is, of course, very tricky. These impossible situations can drag on and on long past a point you would feel it was possible for them to continue. The sign to watch for is when the Fed starts to take new corporate debt onto its balance sheet.

Then the final episode of the great unwind will have begun. Monetising corporate debt is the last throw of the reflationary dice and will signpost one last, desperate attempt to keep the old system alive.

Yet even when it does, the sun will come up in the morning and life will go on as if nothing is happening, such is the chronic way the world changes.

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