Electile Dysfunction - Market Just Couldn't Keep It Up

Tyler Durden's picture

The early day surge in stocks and commodities (and sell-off in bonds) managed to get S&P 500 futures up to their 50DMA and the pre-NFP levels (which coincides with Bernanke's Bottom). Volume surged on the way up there and once hit we faded all the way back to VWAP (surprise!) retracing the knee-jerk spike as no news was discounted back out (and equities reverted to where risk-assets in general had been waiting). Commodities followed a similar path up but held on to their gains - especially Gold. Somewhat worryingly (given their dominance in fund holdings) for the market, GOOG and AAPL were both red. Today seemed much more about algos and technicals than about election bets - especially given the somewhat anti-consensus moves early on - and on the basis of that, the fade into the close suggests risk-reduction was the game plan for the big boys, even though we end the day in the green in the major indices. The USD is practically unchanged on the week with stocks and commodities up and TSYs down.


S&P 500 futures knee-jerk ramp followed by leak back to VWAP perfectly


Leaving stocks bouncing down from Bernanke's Bottom once again...


and Financials unchanged since QE3 and Healthcare the only sector in the green...


and early equity exuberance faded bacdk to reality across the rates. volatility, and credit markets...


Bonds and Stocks recoupled from yesterday's divergence but Gold outperformed...


Commodities spiked higher as Europe closed and held those gains...



Treasuries are set to rally if seasonals are anything to by - and the rally is even more impressive in election years (blue) relative to all years (green)...


but as Citi note - the difference between a Democratic victory and Republican victory is notable...


And equity market complacency in the short-term is remarkably high in options land - and we note that VIX options term structure is its flattest in over 15 months - as the front of the curve rises (not back-end dropping) dominated by short-term hedging around the election (VIX near is 19.24%, VIX far is 17.42% - i.e. Inverted)...



It may seem odd to claim today was not a risk-on day - as we are being taught by the mainstream media - but ion the basis of the no volume ramp and higher volume leak back, the technical levels of the peak, the weakness in critical leaders (GOOG and AAPL), and strength in Gold (safety) suggests this was not about any size looking to add - in fact we would argue the spike was much more useful for those looking to exit on size.

As Maria B might say 'off the highs'...

Charts: Bloomberg and Capital Context

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lolmao500's picture

If you believe Krugman, the coming riots are bullish!

LongSoupLine's picture

Yep ACP...all those rats in the flooded sewers and tunnels had to go somewhere. 


This is just the beginning.

TruthInSunshine's picture

If Obamney wins, I'm going uber long Webvan and

Winston Churchill's picture


Cold snap will kill them.

Or we could just raze NYC , just like London in 1666,sure got rid of the

plague outbreak.Never did believe that Pudding Lane story.

The trend is your friend's picture

all the breakage will add to gdp.  we should just destroy everything so we have an economic boom

cougar_w's picture

I never got past the title.

Best. Evar.

Ignatius J Reilly's picture

can't wait for WB7 to work his magic on this.

Rainman's picture

'electile dysfunction '.....I saw what he did there and it's not funny.

cougar_w's picture

Maybe he is a she. Makez moar senze now. :)

VonManstein's picture

"Today seemed much more about algos and technicals than about election bets"


couldnt agree more

Cdad's picture

Eh hem...Maria "has anyone seen my professional journalistic curiousity" Bartiromo NEVER says we're "off the highs"...but only "we off the lows."

Caviar Emptor's picture

"we're down but is this the bottom?' never "we're up but is this the top?"

cougar_w's picture

It's all subtle sex play. She's a closet "bottom" and probably read 50 Shades of Grey in one all-night session.

Zer0head's picture

go long tear gas, LRADs and rubber bullits

LongSoupLine's picture

Just another day of hanging chad algos at battle.


I'm sure mutual fund outflows were aggressive as well...the game is rigged and the real "smart money" is dead nuts on to it.

Fuck you Bernanke...and your PD's.  Fucking dicks.

Mercury's picture

Electile Dysfunction - Market Just Couldn't Keep It Up 


Not to worry.  The 'P' key on the Fed's keyboard has a picture of a little purple pill on it.

Yen Cross's picture

  Market= Broke Dick Dog...

q99x2's picture

The flattest vix in over 15 months shows how well the FEDs software system is working.

falak pema's picture

watch Gold and EurUSD move up  again. Has Nate Silver got anything to do with it?

Mr Lennon Hendrix's picture

Yes I am sure the DJ will fall to 6k any minute.....

....any minute now.....

Lost Wages's picture

Tomorrow Bernanke can open up the spigots again and not look "political."

cougar_w's picture

indeed. for all the good it will do him.