Equities End At Low-Of-Day In Catch-Down To Risk

Tyler Durden's picture

Europe started to bleed after the Spain bailout debacle but from the open, US markets fell. They plunged on the ISM miss, bounced to VWAP in their wonderfully efficient way, and then spent the rest of the day shaking off the idiocy of last week's window-dressing. S&P 500 futures (ES) fell from 1424 highs to close at the day's lows around 1407 (still around 10 points rich to short-term Treasuries). When the ISM hit we saw Gold rally and Stocks dump to recouple the two assets for the day but overall it was stocks that were harder hit than other risk assets today - though evidently they were also major outperformers last week, so this is catch down as opposed to over-pessimism for now. Stocks were weak today in the face of a weaker USD (correlations breaking down) and a relatively unchanged Treasury market. Gold, Copper, and Oil all closed clustered together just in the green with Silver outperforming and VIX jumped 0.75 vols to 16.6% (highest in two weeks). High-yield credit had quite a day...


S&P was unable to get back to VWAP in three pushes late on - suggesting significantly more selling pressure than normal...


Dow Transports suffered the most today...


And while Gold and stocks recoupled after ISM (black oval), as the afternoon progressed stocks slid to the lows of the day, leaving the rest of risk behind...


Materials were the hardest hit - despite stronger than expected PMIs from Asia (which clearly investors have priced in or do not believe)...


And finally, HYG lost ground early on its dividend but into the close saw a huge ramp up to VWAP on significant volume - which looked like some kind of arb catch up to stocks...?


a world of volume went through in HYG in those last few minutes... which we can;t help but notice dragged the stock up to Friday's closing VWAP...which suggests a lot of professional sellers as block size picked up notably (though it is so technically noisy in this stock)...


Charts: Bloomberg

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Mr Lennon Hendrix's picture

Risk sold the dollar and bought silver.

scatterbrains's picture

Is this a terminal wedge or a double top that the Bernank blew out briefly?


SheepDog-One's picture

And yet SP still probably 700 points rich to any reality.

Cdad's picture

But Dog...the Santa rally is coming, and hope of a fiscal cliff deal is coming, and everyone is dumping cash into Special dividends, and performance anxiety is causing a chase for yield, and Greece is soooooooo fixed again, and China is landing soooooooooo softly...and...but...and...but...

At some point, the criminal syndicate known as Wall Street really ought to listen to itself, via its conduit to the public The BlowHorn [CNBC]...and ask itself...Are we all mentally retarded or something?  We all say the dumb ass shit every day?  WTF?

BlowHorn coverage today was so totally unwatchable again...to the point of inducing actual nausea.  

Mr Lennon Hendrix's picture

You want reality?  Bonds should be selling below par.  Trade that.

TraderTimm's picture

I'm curious as to why EURUSD has a 80% correlation to BTC.

Would be funny if the ECB was involved, hah.

chump666's picture

It's not a total risk on market by any standard, fiscal cliff circle jerk or not.  Point is Asian namely China (cannot be stressed enough) is ill, their stock-market (Shanghai) is collapsing.  If Asian's continue support of USDs and sell off crap yielding short end US debt - liquidity will tighten, and rallies will either be muted it reverses pretty hard.  On FX, the last of the yeilders  like the CAD and AUD could start to tumble re: China deflation/stagflation implosion.

America is in la la land thanks to Fed and Obama, but China goes first, will sink the world.  Lets see what these a-holes in congress do next, they are such a-holes...

DowTheorist's picture

It is a primary bear market. So it shouldn't surprise us to see the market closing near the lows.


There is a technical study that confirms that the current rally may have little time left: The Dow Theory.

While under “Dow Theory” one can find many “flavors” (some of them very long term oriented, others shorter term oriented), currently there is an eery unanimity among Dow Theorists as to the existence of a primary bear market. While such unusual unanimity may be construed as a contrary indicator…:=) , it seems that the technical odds favor declining prices for the months ahead. More about that here: