Stocks Surge On Endless Easy Money Promises As Italy Is Long Forgotten

Tyler Durden's picture

Stocks surged their most in 2013 today on slightly above-average volume as the Dow pushed towards its all-time closing highs and Transports went vertical (up 3.5% in Feb). While it no longer matters, it is worth noting that Treasuries and FX markets were not partaking as a broad basket of risk-assets suggests the S&P going out 20 points rich to reality. Materials are stil -1.5% on the month and Staples are leading +2.4%. In the last hour, the S&P even left behind its main driver - VIX - as the 'fear' index could not break below 14.5%. Of most notice today was the fact that equities have retraced all of their losses from the Italian election headlines and recoupled with gold on the week. The high-yield bond ETF HYG rose along with stocks but also notably the underlying HY bond market actually saw selling pressure as HYG's intrinsic value dropped markedly. Late on, trade size rose notably as S&P futures touched the under-side of the 3-month up-trend channel.

Equities and Gold recouple at pre-Italy levels...

 

Professional activity (h/t @eminiwatch) as we approached the underside of the 3-month uptrend channel...

 

which is clear in the performance of the Nasdaq at the close...

as even VIX gave up early..

 

Sectorally, Materials aren't confirming this cycle (and Staples are the big winners in Feb)...

 

Credit and equity markets moved higher together on the day at the index level but the underlying cash markets did not play along at all... We last saw this disconnect in the last week of Jan when HY began its decline...

Summing up today's equity market action in one chart - th ered line is the S&P 500, the green line represents the performance of Capital Context's CONTEXT model (based on FX, Rates, curves, credit, commodities, and swaps) - it appears equities had quite a day on their own...

 

Charts: Bloomberg and Capital Context

 

Bonus Chart: Gold and Stocks have recoupled post-QE2

 

Bonus Bonus Chart: AAPL had a hell of day... closed at yesterday's VWAP (and who still claims this market is not dominated by machines