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Forget 'Rotation'; 2013 Is The Great 'Risk' Recoupling So Far

Tyler Durden's picture




 

Another day, another epic European close trend reversal (or is it POMO that is driving that odd timing-based shift?). S&P 500 closes at 5-year highs. Today's ramp was brough to you by the algos that needed to enable high volume exits in AAPL and a Draghi-driven 200pip run in EUR against the USD (as the ECB head basically shut the door on rate cuts anytime soon). VIX slid lower (relatively outperforming stocks) but mid-dated VIX futures actually rose modestly today (to steepest in a year!); high yield credit ETFs tested new highs (but cash never followed) and even that collapsed again at the close; the USD dropped the most in 4 months (even as JPY weakened); and Silver surged (+2% on the week) along with gold (as oil slid in the afternoon). It appears that so far this year risk-assets in general had been less exuberant than stocks - but first Treasury yields, then VIX, and now FX markets (EURJPY today), and increasingly Gold (and Silver) are shifting to catch up to stocks. Today saw equities ramp from the end of POMO on to catch up to EUR-driven risk model perception, with AAPL trading like a penny stock (or HLF). The great recoupling of risk-assets from pre-holidays is almost complete...

 

New highs made in S&P 500 futures...

 

As only rates weren't playing along today - but what was that flash-crash in HYG at the close?

 

and VIX front-end term structure jumped to its steepest in a year!!

 

and Internals were down right ugly!!!

 

The EU Close (or is it POMO-based) trend reversals continue... As a reminder POMO begins at 1015ET and ends around 11ET - few minutes for clean-up and sure enough it appears POMO is back as the trend-reversing driver...

 

Across broad risk-assets, rates were not totally buying into the risk-on meme (especially in ETF-land) - upper left; but thanks to smash higher in EURJPY, CONTEXT (our proxy for risk assets) led the way today and sure enough stocks followed...

 

But Gold and Silver are winning on the week (beta 1x and 2x to the USD it seems)...

 

The USD was slayed today - its biggest drop in over 4 months...even as JPY weakened...

 

AAPL swung +/-3% testing the 2013's lows and dump-day VWAPs...

 

While POMO-based ramps seems unstoppable, the charts below (and the internals above) tend to indicate that there is less and less ammo to drive it as all the major 'hedge' assets have been recoupled with equities from prior to the fiscal cliff...

 

Charts: Bloomberg and Capital Context

 

The Great Recoupling of Risk Assets...

First Treasuries...

 

Then VIX (though notably it seems the longer-dated hedges are being piled into...)

 

Then FX...

 

Next Gold?

 

Bonus Chart: The Incredible Awesomeness of the Dow Transports...

 

Bonus Bonus Chart: Mega large TD Sequential Chart for S&P 500 - hit #13 Sell Signal today...

 

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Thu, 01/10/2013 - 17:10 | 3142121 HedgeAccordingly
HedgeAccordingly's picture

MOAR $AAPL - bonds hissing 

 http://hedge.ly/Xntt4d

Thu, 01/10/2013 - 17:56 | 3142347 LawsofPhysics
LawsofPhysics's picture

debt for sale!!!  Is this time really different?  Will the Fed let treasuries go bidless?  Is CONgress paying attention?

Thu, 01/10/2013 - 18:31 | 3142491 slaughterer
slaughterer's picture

Gold 1675

ES 1470

Soon they cross.

 

Thu, 01/10/2013 - 18:36 | 3142510 Bear
Bear's picture

I think you're right:

Gold 10,000

Es 1,000

Last three digits are the same

Thu, 01/10/2013 - 19:51 | 3142676 Cult_of_Reason
Cult_of_Reason's picture

Both ES and SPX have triggered DeMark Trend Exhaustion Sequential™ [red 13] sell signals today (CAC and DAX triggered them yesterday). 

We are at (or very close to) the top.

http://i50.tinypic.com/2vrvinq.png

 

Tom DeMark: Sell Around the World

http://www.bloomberg.com/video/tom-demark-sell-around-the-world-KdBPeJbXQXqvlShFYHL7Jw.html

 

Thu, 01/10/2013 - 20:08 | 3142768 Randall Cabot
Randall Cabot's picture

Official sell at 1392?

Thu, 01/10/2013 - 21:28 | 3142880 Cult_of_Reason
Cult_of_Reason's picture

According to Bloomberg TV, as of this morning before the close, SPX was "at 12 count, needed to close above Sep high and blowoff to 1492."


According to DeMark Trend Exhaustion Sequential™ indicator (based on DeMark's theory as he described it in his book), after the close today, the "official sell" 13 count signal was triggered at ~1470 ES and ~1472 SPX today (contrarily to Bloomberg reporting, blowoff to 1492 is no longer needed to trigger DeMark sell signal).

 

Thu, 01/10/2013 - 17:11 | 3142123 Tsar Pointless
Tsar Pointless's picture

Bitchez!

Thu, 01/10/2013 - 17:11 | 3142125 Boilermaker
Boilermaker's picture

IN YO FACE!!!!

Thu, 01/10/2013 - 17:12 | 3142132 pragmatic hobo
pragmatic hobo's picture

I don't know ... I thought the internals, at least the NYSE, sucked today ...

Thu, 01/10/2013 - 17:14 | 3142142 AccreditedEYE
AccreditedEYE's picture

Just BTFD. I'm sure we'll get one tomorrow and then on to new highs. There is no other choice. The way out is UP not down.

Thu, 01/10/2013 - 17:18 | 3142170 gjp
gjp's picture

The way out of what?  Sounds like the way in (to the capital-destroying quagmire) even deeper to me?

Thu, 01/10/2013 - 17:19 | 3142180 Boilermaker
Boilermaker's picture

The way out of having citizen with pitch forks and torches storming your mansion.

Thu, 01/10/2013 - 17:26 | 3142206 AccreditedEYE
AccreditedEYE's picture

You think crashes are only in the DOWN direction? Have you researched Zimbabwe?

Thu, 01/10/2013 - 17:29 | 3142227 gjp
gjp's picture

Yeah I get it, but it's not like the nominal gains are going to do anybody any good.  Destroying the currency (which is the only way up and is the Zim model you refer to) won't be good for anyone.

Thu, 01/10/2013 - 17:38 | 3142247 AccreditedEYE
AccreditedEYE's picture

Friend, I'm not SAYING it's going to be good for anyone. Tyler's been posting economic fact here for yrs.. policy makers and THE MARKET aren't listening. All I've been trying to say is get on the "buy something" bandwagon.

Thu, 01/10/2013 - 17:43 | 3142289 michiganmaven
michiganmaven's picture

I agree to a point - the point being profits... I understand form a currency standpoint the Zimbabwe aregument.. I get it and I agree... but the problem is their markets are NOT developed... they are NOT a powerhouse of commerce... thus how would you think of end user demand in the US economy when our currency goes to hell and imports stop due to no demand.. THAT is where the downside equity risk lies. 

 

Of course some will argue that "international profits" will be good cause of currency translation and intially they are correct but look at the trade data - if WE stop buying then bye bye China which in turn goes bye bye Australia, Russia, Brazil... Europe doesnt need any help they are already dead basically.

This is why the Fed is going to keep rates low until the consumer spends. The Fed knows they need CREDIT to expand demand... they will do whatever it takes in the short run - forget the long run issues.

Thu, 01/10/2013 - 20:12 | 3142779 Randall Cabot
Randall Cabot's picture

What happened in Zimbabwe?

Thu, 01/10/2013 - 17:29 | 3142228 FL_Conservative
FL_Conservative's picture

Let me just say, on behalf of the board, fuck you and your ignorant stooge, Bernanke.

Thu, 01/10/2013 - 17:32 | 3142242 AccreditedEYE
AccreditedEYE's picture

As many have said before me, don't hate the player hate the game. I didn't want this to happen, ask for this to happen. Things are being done TO ME. I am responding best I can to keep my head above water. Are you saying buying GOLD is bad? Silver? Ammo? All I'm saying is buy stuff.

Thu, 01/10/2013 - 17:40 | 3142269 FL_Conservative
FL_Conservative's picture

My rant is not at YOU, but this fucked up manipulation some refer to as a market and the dildo that's behind the wheel.  I've got plenty of PM's and working on the others.

Thu, 01/10/2013 - 17:42 | 3142280 AccreditedEYE
AccreditedEYE's picture

excellent. good luck to you man.

Thu, 01/10/2013 - 17:16 | 3142159 LongSoupLine
LongSoupLine's picture

Die from the flu Bernanke you fuck.

Thu, 01/10/2013 - 18:17 | 3142431 Panafrican Funk...
Panafrican Funktron Robot's picture

I rather see him get continuously embarrassed by the effects of a novovirus infection on national television at least a few times.  Think Bush puking on the Japs.  It was comforting.  

Thu, 01/10/2013 - 17:17 | 3142160 AccreditedEYE
AccreditedEYE's picture

but what was that flash-crash in HYG at the close? Correction to keep the uptrend intact. Just Buy. 

Thu, 01/10/2013 - 17:18 | 3142171 ekm
ekm's picture

Funny enough, WTI Crude oil price on Jan 11, 2008 was $92.69. Today is $93.67.

 

From Jan 2008 until Jul 2008 WTI went from $92 to $145 than crapped.

 

Thu, 01/10/2013 - 17:39 | 3142271 michiganmaven
michiganmaven's picture

So are you agreeing with Bernanke when he says inflation is "contained"? 

Thu, 01/10/2013 - 18:46 | 3142539 ekm
ekm's picture

Bullshit

Crude oil is in hyperinflaiton

Thu, 01/10/2013 - 17:26 | 3142212 BlueStreet
BlueStreet's picture

AAPL below 20 day for 5th straight day.  

Thu, 01/10/2013 - 17:31 | 3142236 adr
adr's picture

I don't think anybody really buys "the economy is getting better" line anymore. The thing is I don't think anyone that makes thier living exclusively from the market cares.

Demand can go to zero, but as long as their is ammo to juice stocks higher, they don't care. The casino could be on fire, but the gambler on a hot streak won't stop, always time for one more roll, COME ON BABY, DADDY NEEDS A NEW YACHT!!!

Exactly how it happenned in 2007 and 1999. If you had an ounce of intelligence, you knew the party was over, but you just couldn't pull away. Being up 503% just isn't good enough if 504% is just around the corner.

The only metric anyone can point to for improvement in the economy is the stock market. I have watched every fundamental in my business category plummet to new lows in 2012. Business is a disaster with everyone hoping for a turnaround. Hope is a fools game.

Fools chasing fools. When you constantly search for the greatest fool, it will most likely end up being you.

Thu, 01/10/2013 - 17:48 | 3142310 Tsar Pointless
Tsar Pointless's picture

Oh, no. Don't kid yourself - some people still really do buy "the economy is getting better" line.

Obamapologists do. Just as Bushiters bought the "we're winning the war on terror" meme 10 years ago.

These people have NO IDEA how similar they are.

Just look at the Obamapologists' reaction to the incessant drone warfare being carried out in Pakistan. They're all for it.

The majority of Amerikkkans are drones.

Thu, 01/10/2013 - 21:02 | 3142947 tip e. canoe
tip e. canoe's picture

"I don't think anybody really buys "the economy is getting better" line anymore."

talk to a RE agent or someone trying to sell their house.

Thu, 01/10/2013 - 17:38 | 3142263 michiganmaven
michiganmaven's picture

Boy even margin increases cant stop small caps... rally on !! ignore all facts !!! 

Thu, 01/10/2013 - 18:28 | 3142477 chump666
chump666's picture

The stock bulls (commentators) have lost the plot, all this talk about breakouts.  Silly.  The rally is a retrace rally from Nov 2012 Obama's election sell off, in which the S&P is now hitting 2012 highs, the Dow is lagging, Nasdaq more so.  For the S&P to breakout from here would be unlikely.  The rally is only re-coupling with Asia and Europe that have consistently rallied without a correction. And that's a bad thing.  So, I would be looking at Asia, then Europe for cyclical selling to effect the S&P, the current ramp was all China, after their export number fudge.

The money printers are idiots and dangerous f*ckers, getting oil bid, which is the number one inflation driver and geopolitical war primer.

 

Thu, 01/10/2013 - 19:24 | 3142641 ReptilianSlaveMaster
ReptilianSlaveMaster's picture

Just buy the muda fukin dip and stop complainning

Thu, 01/10/2013 - 20:18 | 3142798 chump666
chump666's picture

No one is a-hole, unless you are leveraged to hell which is Wall Street or you are a HFT scalping machine.  BTFD is the dumbest term ever thought up. 

Thank you.

Thu, 01/10/2013 - 19:35 | 3142674 DowTheorist
DowTheorist's picture

The divergency between the S&P and TRIN is worrisome.

 

However, volume at vital pivot points has been bullish. More about this here:

 

http://www.dowtheoryinvestment.com/2013/01/dow-theory-update-for-jan-9-s...

Moreover,  technically the market is in a bullish mode (primary trend bullish, which may last on average 1 year). So the saying "don't fight the trend" is to be heeded by, at the very least, not shorting this market. Maybe stocks are "smelling" inflation or the eroding of the USD. Long-term bonds are weak and spell trouble for the USD. Whatever it is, the trend for stocks is up.

The Dow Theory signaled on January 2 a primary bull market. Bearing in mind that over 70% of primary bull market signals end up in profits, I'd certainly wouldn't short this market.

 

http://www.dowtheoryinvestment.com/2013/01/dow-theory-special-issue-asse...

Thu, 01/10/2013 - 23:08 | 3143292 mercenaryomics
mercenaryomics's picture

Fellow ZHers (and Tyler should he be observing):

I can't even quantify how much I've learned from observing ZH over the past two/three years, I just know its been tremendous.

But what must a young and relatively new ZH pupil do to gain a better understanding of what is being covered in the charts? 

To clarify - I'm familiar with economics/econometrics/statistics, but the terminology loses me. (What would differentiate “hedge assets" from some other type? What is "vix front-end term structure?")

Do any of you finance/technical persons have suggestions on what I should read in order to understand (what I assume would be defined as) technical market analysis like what is above?  

Thanks in advance. 

 

Fri, 01/11/2013 - 01:43 | 3143486 Itch
Itch's picture

You dont need to understand it, it wont help you, its non-actionable low-level data that just happens to be complicated. As a rule of thumb, and especially with econonomics, just becasue you dont understand something does not mean it has value. Put your energies into learning something useful, hopefully something non-random.

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