"Dead Cat Bounce" Or "Pause That Refreshes"

Tyler Durden's picture

While the off-the-lows mentality of today's market performance was heralded by most as a signal that the BTFD'rs are back, we gently remind them that the Nikkei (futures) did not bounce at all... In fact S&P futures bounced to a rather eerily perfect 38.2% Fibonacci retracement of the overnight plunge and then faded into the close. All the major indices managed to get back to unchanged on the day (but the S&P 500 was the last to make it and instantly turned around once it did). Credit markets opened gap wider and did not bounce back anything like stocks. Treasuries sold off modestly from their pre-opening levels then drifted lower in yield into the close (ending down 2-3bps on the day but up 6-7bps on the week). The USD weakened most of the day and commodities gained on the day with gold and silver now up over 2% on the week. VIX fell from the open to the close but ended the day higher as we suspect hedges were lifted and exposure reduced into the bounce.

 

Dead Cat Bounce? 38.2% retrace...

 

The S&P 500 managed to get back perfectly unchanged before fading away into the close...

 

Stocks played catch down to credit...

 

Still a way to go to catch down to the hedgers...

 

Good day for commodities in general...

 

helped by USD weakness (as EUR strength and JPY strength - repatriation? - held it down)...

 

Where's the bounce?

 

Charts: Bloomberg and Capital Context