Pump, Dump, And Pump; Black Gold Red, Stocks Green, Bonds Blue

Tyler Durden's picture

Umm yeah...close-to-close, equity indices were mixed (Dow small red - HP/IBM, NDX/SPX small green on closing rampfest) amid dismal volumes but for anyone that paid attention to the debacle in the markets today, this was another odd one. Thanks to EUR strength's correlated power (retracing last night's France loss), stocks trickled up all morning into the European close; Bernanke suggested he was not omnipotent and stocks dumped 13 S&P points (~1%) to yesterday's day-session open; and then on no news - as Greece remains unfixed and cease-fire deadlines come and go, we pumped ingloriously on small lots and stupid volume up to VWAP/unch - paused for thought - and then ran to the day's highs just after the close day-session close in S&P futures. Treasuries suffered - yields up 5-6bps on the day as our broad risk-asset proxy lifted along with modest moves in FX carry pairs and USD weakness into the close. Oil was headline-maker (away from BBY and HPQ that is) - down almost 4% from the highs yesterday but closing still green on the week just above $87 as Israel re-flared. Credit was less noisy and VIX compressed a little more to 15.11% at the close (lowest in 5 weeks).

 

S&P 500 futures pumped up into and through the open, dumped on Bernanke, then pumped into the US close after bouncing off yesterday's open...notably VWAP hardly budged today - suggesting firmly that little 'risk' was added on the day and algos in charge...

 

 

Bonds playing catch up to EUR and Stocks reality... all lined up by the late afternoon today as volume disappeared. These kind of reversion moves in Treasuries (as they finally give in to stock pressure) to equity's 'reality' normally market a short-term trend turn and given stocks move overall today, we suspect (especially heading into a very long weekend) that equities have run their course for now (but then who knows what the BIS or AAPL will tomorrow)...

 

It appears from both a credit perspective and a broad risk-asset perspective that stocks basically overshot to the downside today on Bernanke's comments and merely auctioned back up after finding some technical support (AAPL VWAP, ES day-session open yesterday, EUR yesterday's US open)...

 

AAPL failed to extend its gains from the last two days generational low...once again bouncing off VWAPs in an oh-so-natural human trading pattern...

 

While HPQ's ~12% drop knocked 12 points off the Dow (which closed -7 points), IBM's mere 0.6% drop knocked 9 points off... gotta love that index eh?

Broadly speaking, equities appeared to overshoot risk in general to the downside on Bernanke's comments and then spend the rest of the day catching back up...

 

Oil dominated the headlines in commodity-land...

 

Volume today was weak in stocks; average trade size was also small (one of the lowest of the year) which tends to reinforce the algo-based moves we saw. HYG ended small red but we did see some chunky blocks (seemingly to the sellside given the market's reaction).

It seems like most of the pros have left the building in FX and credit (and futures pits overall) unwilling to add/remove too much exposure here - perhaps explains equities excess moves today. More of the same for the rest of the week potentially as only algos and a few day-traders left to muppet stocks.

Just like yesterday's close - there was larger blocks and heavier volume into the ramp - which tends to be the pros selling into strength as opposed to starting trends and overpaying.

Charts: Bloomberg and Capital Context