Gold And Stocks Recouple As VIX And Credit Shrug

Tyler Durden's picture

S&P 500 (henceforth - under the Un-Patriot Act - to be known as the Moodys & Fitch 500 at least until such time as Moodys too downgrades the US) futures scrambled up to fill yesterday's day-session gap-down open and then pressed on to run stops to new highs. The Dow did not make new highs - but managed a third day in a row of greater-than-100 point swings and tested back above the magic 14,000 level. Credit markets were absolutely not buying it. VIX was not playing along either (though did compress). Treasury yields rose but nothing on par with stock's surge. The USD fall very modestly - not supportive of stocks. And sure enough, after running those highs, S&P 500 futures cracked back lower into the close with the Dow losing 14,000. A gain of around 0.8 to 1% on the day for stocks with reasonable volume as early haters like JCP and AAPL surged handily on the day by the close. The S&P 500 ended the day recoupling perfectly with Gold on the week...

Quite a 3-day run for the Dow...

 

and the last few days in ES too...

 

as HY Credit tells a very different story over the past few days (and no, it's not LBO fears - single-names are not the driver; and no - it's not rotation, as rate duration is negligible still in general and HY is notably cheaper as an asset class than stocks now)... hedgers seem active - even if sellers of cash HY remain stuck...

 

and VIX remains unamused...

 

as Gold and the S&P recoupled on the week...

 

FX markets were a tail of what goes up/down must come down/up as EUR retraced its losses and JPY retraced its gains...

 

So, it seems that equity buyers up here are the greater fool - since, if you are bullish you would be loading the boat with HY credit (higher yield and cheaper) as opposed to stocks...

 

Source: Bloomberg and Capital Context

Capital Context (@CapitalContext) LLC is the leader in integrating credit-market data to actively trade equity markets. From our world-renowned intraday 'CONTEXT' and 'SPY Arb' models to the daily long-short equity portfolio, sector-weight updates and tactical asset-allocation strategies, Capital Context offers sophisticated hedge-fund strategies to the active trading community.

 

Bonus Chart: JCP's miracle recovery (as massive vol compression trades went through to help it on its way to recent VWAPs)... maybe they should face technical default every day?

 

and AAPL's levitation to January's closing VWAP...