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Stocks Stick-Saved While Bond Bears Battered

Tyler Durden's picture





 

Treasury yields collapsed 10-12bps today with the largest decline since 9/18/11. Treasury yields in general slipped back to the lowest level in 3 weeks. The USD was slammed lower (except against CAD which pushed lower - down 2.5% on the week!). JPY strength was offset by AUD and the cross provided the ammo to lift equities back to day-session highs in the last hour (104 USDJPY was defended aggressively). Stocks broadly bounced immediately after the knnjerk selling off the NFP print, then leaked lower until 3pmET when a decidedly low volume meltup took NASDAQ and Russell back to almost unchanged on the year. Trannies outperformed, Dow underperformed (TRAN +0.65%, DOW -1% YTD). Silver and gold surged back into the green for the week with the latter closing above its 50DMA for the first time since October and its highest in a month. VIX tumbled to 12.2% as hedges were lifted and recoupled with the S&P.

 

Before we start - a close up of the day's insanity... notice the slow meltup overnight... the higher volume plunge after NFP... the pivot as Europe closed... the momentum ignition (AUDJPY) off VWAP in the last hour on low volumes...

 

From the US open, AUDJPY was in charge of stocks today...(as USDJPY 104 was defended aggressively)

 

Which lifted stocks handsomely back into the green (apart from the Dow)... but Trannies are the major outperfomer...(todsy was Trannies best day in 3 months!!!! WTF!)

 

As Healthcare takes over the top-spot post-Taper (with a huge day for homebuilder and Utilities are rates tumbled)....

 

Gold (and silver) rallied back into green for the week.. gold closed back above its 50DMA...

 

But today's big news was in the Treasury complex... as bonds ripped lower in yield...

Which dragged 2s10s curve to its flattest since Thanksgiving...

 

Spot the odd one out in FX land... CAD is getting slammed...

 

VIX dumped back to recouple with stocks as hedges were lifted...VIX closed at its lowest in 5 months

 

and short-term VIX (VXST) collapsed below 10% - its lowest on record (spiking the steepness of the term strcuture to its highest since the fiscal cliff a year ago)...

 

Charts: Bloomberg

Bonus Chart: ICPT - you just gotta laugh eh?!

 

Bonus Bonus Chart: Buy Financials 'coz of the all NIM...?

 


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Fri, 01/10/2014 - 17:12 | Link to Comment Flakmeister
Flakmeister's picture

Battered?

That is what you do to fish and chips...

Those guys got sodomized with a billy club...

Fri, 01/10/2014 - 17:15 | Link to Comment Say What Again
Say What Again's picture

So we're back to the late day / last 30 minute rampapalooza game. 

Fri, 01/10/2014 - 17:56 | Link to Comment Rainman
Rainman's picture

I really  laffing my ass off at ICPT cuz I don't own it. up 200 fiatscos ...misery and woe to them.

Fri, 01/10/2014 - 18:29 | Link to Comment Soul Glow
Soul Glow's picture

Gold will be higher than $1300 by the end of the month and it will keep moving up.  The ponzi experiment is over thus why the Fed threw in the towel and said they are going to Taper.  They are trying to balance the credit deflation with monetary expansion and they are killing the dollar.  The Indirect bidders won't continue to come to auction if this continues and they've let the Treasury know.

Stocks will keep correcting until they are 20% lower in just a matter of months.  Bonds should roll around in this price range until catastrophe hits and the Indirect Bidders fail to buy (it will happen soon).

Fri, 01/10/2014 - 20:52 | Link to Comment Haager
Haager's picture

*sigh*  No, it won't . Gold is gold, pile it up at home in case fiat becomes unusuable. If you try to own some (usually paper) for medium-term investment purposes you will get punished. Just look at the charts, draw some lines and you'll see that it's still a perfect fit for a further downtrend. Downtrend may be less strong now compared to 3-6 month ago.

I know of a lot of people expecting stocks to drop starting the 2nd half of january. I just think it's a lunatic kind of market so I'll look at luna next week, entering at the highs markets will drop. In opposition to those that are expecting a huge drop over the next 3 or more month I think we'll see just another standard correction, about 5% throughout the markets. There's nothing between now and March that would support a bigger drop.

Fri, 01/10/2014 - 17:30 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

I haven't really quite grasped the rationale . . . bond yields have been falling for 30 years.  What exactly is supposed to have changed to reverse that?

Fri, 01/10/2014 - 17:42 | Link to Comment Frank N. Beans
Frank N. Beans's picture

inflation?

Fri, 01/10/2014 - 18:09 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Shrug.  Measured the same it was in 2008 when yields were 5%.

Fri, 01/10/2014 - 20:03 | Link to Comment Flakmeister
Flakmeister's picture

Think of bond yields as a stellar radius and oil supply as the hydrostatic pressure from fusion. Things will oscillate about an equilibrium until the fuel needed to fuse to provide the pressure is depleted (as they have for many years)

Bond yields, aka, the radius collapses and the star explodes in a super nova...

We are still in the red giant stage, but the singularity is coming...

Fri, 01/10/2014 - 17:14 | Link to Comment Obchelli
Obchelli's picture

Fed absolutely winning and reaching all their goals.

Without even spooking equity market they easily reached 16 basis Point drop in 10 year treasury in couple of sessions.

Financials didn't have single down day since Taper...Despite market occasionally down... Just little 4 cent drop today..

This is happening in Face of Alcoa, Sears, K-Mart missing Big, Target scandal, Christy scandal and today's Horrible Job number...

If market had even fraction of fairness Dow would be down 500 points at least but...

 

So all the speculation that Fed is about to lose control is not materializing at all...

What a bunch of criminals - makes it so much more painful to watch when you see criminal way of conducting business is winning hands down kind of rub it in your face and there is no justice to punish this MORONS and no hope justice will ever be served…

 

 

There is no Market just smirking face of bearded SATAN with wry smile on his face…

Fri, 01/10/2014 - 17:24 | Link to Comment NOTaREALmerican
NOTaREALmerican's picture

Re:  If market had even fraction of fairness Dow would be down 500 points at least

An unmanipulated market would be a fake market.   If it wasn't manipulated what would the smart-n-savvy people be doing instead?

Fri, 01/10/2014 - 17:30 | Link to Comment Hindenburg...Oh Man
Hindenburg...Oh Man's picture

I was thinking the same thing: horrible earnings season so far, big miss on jobs, but the market has held in there and even finishes in the green today. The financial news talking heads and guests are only upset to the extent that the market isn't up another 5 percent YTD as was ordained. Blame the job numbers on the weather. Don't really talk about the dropping participation rate. 

It's interesting to see the overnight melt up of futures, day-after-day as well. Even if the market corrects down, it starts at an articifically elevated position based on a low volume melt up.

 

Fri, 01/10/2014 - 17:37 | Link to Comment Obchelli
Obchelli's picture

And bad weather only started when? In mid december? And all this idiots like Zandi, and Goolsby calling number BS... and Outlier

And said to ignore it...

Fri, 01/10/2014 - 17:40 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

They said to ignore it.

FX and bonds said it's real.

Who do you believe?

Fri, 01/10/2014 - 17:21 | Link to Comment HUGE_Gamma
HUGE_Gamma's picture

I'm headed to Colorado this weekend for "Skiing"

-Dr. Evil

Fri, 01/10/2014 - 17:39 | Link to Comment Rainman
Rainman's picture

I saw what you did there

Fri, 01/10/2014 - 17:22 | Link to Comment Serfs Up
Serfs Up's picture

Whatever.

 

Nothing matters anymore.

 

Either you join their fantasy club, or you go mad.  Your choice.

Fri, 01/10/2014 - 17:26 | Link to Comment GolfHatesMe
GolfHatesMe's picture

Totally agree.  Thinking is not welcomed here and is punished exponentially.

Fri, 01/10/2014 - 18:03 | Link to Comment infinity8
infinity8's picture

Anyone else here seen "Visioneers" with Galifanakis? I feel more and more like I might spontaneously explode.

Fri, 01/10/2014 - 17:22 | Link to Comment ebworthen
ebworthen's picture

The great lie will continue.

Welcome to Fantasy Island.

Fri, 01/10/2014 - 17:23 | Link to Comment fooshorter
fooshorter's picture

I came here for the BONUS BONUS CHART!!!!

 


Fri, 01/10/2014 - 17:29 | Link to Comment HUGE_Gamma
HUGE_Gamma's picture

I came here for the BONUS BONUS BONUS CHART!!!!

Fri, 01/10/2014 - 17:36 | Link to Comment ebworthen
ebworthen's picture

Here's your bonus, bonus, bonus chart:

http://news.yahoo.com/photos/chart-shows-federal-food-stamp-participation-since-1969-photo-192904743--finance.html

(Food Stamp participation since 1969, opens in new window/tab)

Hey, it's only costing 1-month of QE so...

Fri, 01/10/2014 - 18:12 | Link to Comment HUGE_Gamma
HUGE_Gamma's picture

the problem with food stamps is that people usedt to be able to get by on bread/pasta/water/milk

now.. these people "NEED" all the processed pre packaged junk food &^*!

Fri, 01/10/2014 - 17:40 | Link to Comment Yen Cross
Yen Cross's picture

 dup

Fri, 01/10/2014 - 17:29 | Link to Comment Yen Cross
Yen Cross's picture

      The fucking 'Yellowstone Caldera' could erupt, and stocks would be up as long as yields are below 3% and the usd is cheap. Bad news is good news. Same as it ever was, with all this POMO & reverse REPO fiat sloshing around.

Fri, 01/10/2014 - 17:45 | Link to Comment GolfHatesMe
GolfHatesMe's picture

As long as it missed 33 Liberty

Fri, 01/10/2014 - 17:30 | Link to Comment EuropeanBankster
EuropeanBankster's picture

Can anyone explain the move in VIX? Closed 12.14.. down 5,8 %?

Fri, 01/10/2014 - 17:32 | Link to Comment Hindenburg...Oh Man
Hindenburg...Oh Man's picture

My facetious explanation is that it merely represents the fact that we are in an entirely riskless market---just play and get paid. No one loses, only those stupid enough to short. 

Fri, 01/10/2014 - 18:06 | Link to Comment Rainman
Rainman's picture

Sad and True .

Fri, 01/10/2014 - 17:38 | Link to Comment ebworthen
ebworthen's picture

Bad news is good news.

Fri, 01/10/2014 - 18:17 | Link to Comment infinity8
infinity8's picture

I'm so confused. I figured the tiny taper would flip that in the new year to "good news is bad news" because then they might taper more. So, they'd shaddap already with the "jobs and housing recoveries". Maybe that's behind the bad jobs #? Start talking bad news to sow "hope" for "untaper"? Which way is up?

Fri, 01/10/2014 - 17:46 | Link to Comment GolfHatesMe
GolfHatesMe's picture

Kevin Henry

Fri, 01/10/2014 - 17:34 | Link to Comment disabledvet
disabledvet's picture

h/t Steve Hansen. "taught me everything i need to know about economics"...all of it on Seeking Alpha and then Econintersect. "banks can and indeed do fail." http://www.youtube.com/watch?v=v7WlyuI7xGI "and now he knows now markets work."

Fri, 01/10/2014 - 17:43 | Link to Comment Traianus Augustus
Traianus Augustus's picture

Please...there is nobody else out there but the Bankstas!!!!

Fri, 01/10/2014 - 18:03 | Link to Comment Tsar Pointless
Tsar Pointless's picture

And that's the way, uh-huh, uh-huh, they like it, uh-huh, uh-huh.

Fri, 01/10/2014 - 17:46 | Link to Comment papaswamp
papaswamp's picture

Someone made a huge bet for no taper in January....huge. Gold and FX seem to be betting the same way.

Fri, 01/10/2014 - 17:51 | Link to Comment HUGE_Gamma
HUGE_Gamma's picture

this situation increases uncertainty a great deal.. every FOMC meeting will be based on "will they increase/maintain/lower".. and then everyone will second guess them based on some data point.

stocks will only rally- regardless

Fri, 01/10/2014 - 17:50 | Link to Comment MickV
MickV's picture

They are closing the gap down in ES @1845, and the gap in VIX @ 11.54, which was not quite closed in the last VIX plunge. Meanwhile gaps 700 points down sit open for years. I guess nature only hates vacuums to the upside.

Fri, 01/10/2014 - 21:39 | Link to Comment OC Sure
OC Sure's picture

 

 

 

 

 

 

High Frequency Trading is irrelevant to the trader who understands how to follow the market's foot prints that always lead to the diamonds in the sand. May I gloat?

"For the 30yr Bond, pessimism coincides well with the extreme bullish sentiment in stocks. Beginning in mid November the c/p ratio has been below .80 for 5 weeks in a row. That is rare. Sentiment in long rates is now extremely bearish. 20 points higher, earlier this year, the ratio indicated extreme optimism at the end of April, mid-June and again at the end of July. Bonds are most likely bottoming in here and are a better play on the buy side as this area is a fall back to the apex of the monthly triangle from the end of 2008 to mid 2011. Look for extreme optimism before being a better seller again. Maybe when the headlines claim why long rates just have to go down instead of up?" -

 

http://www.zerohedge.com/news/2014-01-02/trading-technicals-bond-bears-beware-defensive-posture#comment-4294593   

"So the 30 year nearby has a thowback rally into the 140 area and then resumes the bear at a kiss off the line from the 2012 and 2013 tops?" -

 

http://www.zerohedge.com/news/2014-01-09/bill-gross-2014-investment-outlook-all-about-inflation#comment-4315470  

"Is your feed showing a 5 tick gap down from 129.05 to 129 at 10:15 this morning? That is rare for zb without an impetus at that time (at least not one publicized). That gap got filled post auction and is now struggling to hold as support. It is interesting. ...Lumber likes lower rates and appears to be closing limit up and well bid." -

 

http://www.zerohedge.com/news/2014-01-09/strong-30-year-reopening-concludes-treasury-auctions-week#comment-4316220  

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