Oil Pops, Apple Drops, And Stocks Take Out More Stops

Tyler Durden's picture

Another low volume, low range, low average trade size day in stocks as recent high (stops) were run again with FX markets ruling the day in terms of volatility. The G-7's initial statement fell on deaf ears , after Draghi's early comments (on a higher EUR implying a stable Europe) pushed the USD lower against EUR, then the restatement rallied JPY and that USD weakness provided further support for US equities. New highs in the S&P (though not in the Nasdaq as AAPL slumped 2.5% because Tim Cook didn't unload all his cash into shareholders high beta pockets). Homebuilders saw their biggest gain in almost 8 months before pulling back a little in the afternoon. Oil prices continue to rise and Treasury yields bled higher (though 10Y remained below 2.00%). Gold and silver limped higher (along with the USD) after Europe's close. Credit markets (CDX) jumped tighter today (especially IG) after dislocating for the last few days - and HYG outperformed - as we suspect the credit-equity arb has become too tempting. Will SOTU be a catalyst for a pullback - VIX sure didn't think so as it dropped 0.3 vols to 12.6 - its lowest close in 3 weeks.

 

S&P 500 futures popped another set of stops and ran out of buyers - with volume (lower pane) drastically below average...

 

as the two-month trend continues...

 

Credit and equity recoupled in the short-term - though remain notably dislocated from the start of the year - as we noticed a number of sell-side shops pumping the long credit, short stocks trade looking for the convergence...

 

FX markets were large and in charge today in driving risk support - JPY rallied (solid green arrow) on the restatement of the G-7 note and EUR rallied (dotted green) on Draghi's 'Stabiliteeee' comments...

 

and commdoties all drifted higher (along with the USD oddly) in the afternoon - as Oil remains the leader...

 

AAPL was the biggest heartbreaker in stocks today - losing over 2.5%... as we warned yesterday the gap-fill, volume, and average trade size sent a darker message than crossing the chasm yesterday...

 

Homebuilders (and financials) had a great high-beta pumpathon day... Today was practically the biggest open to high day for builders in 12 months and close to close was the biggest jump in six months... why? what changed? stop run? come on....

 

as Builders are the winners post-Fiscal Cliff (and Tech the wreck)...

 

In general, risk-assets (mostly FX and Oil driven) were highly correlated to stocks today. Capital Context's ETF model saw HYG leading the way (as we noted above), but CONTEXT (the broader risk model) ended the day highly correlated (which is often a systemic indication of a lack of stock-specific flow) and well synced with stocks...

 

So Sequester On - BTFD; Currency Wars On/Off - BTFD; No News - BTFD in Builders; No News - STFR In Apple... and credit remains far less sanguine medium-term...

 

Charts: Bloomberg and Capital Context

 

Bonus Chart: Morgan Stanley's Adam Parker notes that idiosyncratic risk is considerably higher than in recent years (relative to systemic risk) - upper chart below - even as it feelslike the stock market rises inexorably - stock-selection has been a dramatic outperformer (exemplified anecdotally in the Capital Context long-short portfolio - lower chart - this year). Parker's note (and confirmed by Capital Context) is to remain market-neutral as the return of systemic risk is high...