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Bad News Is Great News Again; Stocks Have Best 2 Days In 4 Months

Tyler Durden's picture




 

Following the 2nd dismal jobs print in a row, it would appear the market's new "common knowledge" is that the Fed will be forced to un-taper - despite Hilsenrath's "Fed stays the course" perspective. Everything is up today (apart from the USD). The disconnects from recent correlations were extreme as stocks lost the plot against FX carry, commodities, and bonds. The best 2 days in a row for stocks in 4 months sent most indices to critical technical levels and dragged all but Trannies and the Russell back into the green on the week. Oil prices surged back above $100. Bonds rallied (and bull steepened). Gold, silver, and copper all gained notably (with silver's best week in 6 months). Buy, buy it all... apart from VIX which was monkey-hammered back to 15% (down over 2 vols). So with FX carry left in the dust, what was the ammunition for the move? a 6.3% rip squeeze in the "most shorted" stocks.

 

Major US equity indices remain negative year-to-date with the NASDAQ outperforming and Dow underperforming...

 

  • The Dow has seen its best 2-day run in 4 months and regained the 100DMA.
  • The S&P has its best 2-day run in 4 months desparately trying to recover 1,800 and its 50DMA.
  • Trannies surged by their most in 4 months in the last 2 days and touched their 50DMA.

 

Stocks on the week...

 

The initial momentum ignition was our old friend USDJPY but soon enough, stocks disconnected from FX carry and Emerging Market FX...

 

Furthermore, bonds didn't buy it...

 

Though, of course, this disconnect of Gold and Bond strength suggests the QE is back on, un-taper is here trade was on.

Treasuries were mixed on the week - 5Y -2.5bps, 30Y +7.3bps - so a notable steepening...

 

Silver's best week in 6 months.. and WTI back over $100

 

VIX did disconnect into the close modestly...

 

Wondering what fueled all this exuberance? (aside from USDJPY of course)... "most shorted" stocks are up over 6% from Wednesday's lows - more than double the market's performance...

 

 

Charts: Bloomberg

Bonus Bonus Chart: Equity markets decoupled from all other risk assets today. Perhaps the following chart of the intra-asset correlation between a basket of risk assets and US stocks sums up the loss of reality - correlation went negative...

 

 

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Fri, 02/07/2014 - 17:06 | 4413095 asscannon101
asscannon101's picture

HUZZAH!! We appear to have reached a permanently high plateau!!

Fri, 02/07/2014 - 17:07 | 4413102 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I am smelling a Lehman Bros event coming on!!!! Bring it!

Fri, 02/07/2014 - 17:13 | 4413126 rabbitusvomitus
rabbitusvomitus's picture

Hmmm, Tom Demark? Just sayin. 

Fri, 02/07/2014 - 17:16 | 4413145 Divided States ...
Divided States of America's picture

Yeah thats what I have been thinking....I stupidly bought into some puts this morning which I said I did but fortunately they are not down too much atm. Anyhow, Demark did say that there is a 4 day rally subsequent to the tankage we just had and then the wheels fall off. This is day 2 of this rebound with 1 or 2 more days to go. 2 days ago, he said the next few days were critical...I am not sure what he means by critical BUT if he was expecting a 4 day rally, well, he called it so far....which means that in 2 days, we will be at the cliff waiting to fall off.

Fri, 02/07/2014 - 17:19 | 4413152 max2205
max2205's picture

Taper or not...the Fed IS still pouring 65 bill a month into the markets.....new highs till well whenever

Fri, 02/07/2014 - 17:27 | 4413181 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

max, in our credit/debt driven economy for any value to go up it has to increase by a certain percentage as time moves on. Even thought the Fed is still pumping Yellenbux into the economy it is less. This is contraction. Other disturbances are occuring around the world like Ukraine, PR and China. 

Fri, 02/07/2014 - 18:48 | 4413505 walküre
walküre's picture

India, Indonesia, Turkey, Argentine, Venezuela.... one could almost think this currency collapse is global. No, is it?

Fri, 02/07/2014 - 17:42 | 4413232 Rainman
Rainman's picture

the eurocurrency is evil and must die < just thought I'd get that off my chest >

Fri, 02/07/2014 - 17:31 | 4413202 Obchelli
Obchelli's picture

He meant if market was down another day it would break 200 DMA and then it was outright dangerouse territory.... I think under 200 DMA black hole is awaiting this market. We will have not one but multiple crashes with market closing limit down - FED will come to rescue but this time it will have opposit reaction as will be considered as an act of desperation and all their BS about how economy is on a strong footage and recovering (Escape Velocity and other garbage talk) will prove to be just that...

Fri, 02/07/2014 - 17:58 | 4413273 lasvegaspersona
lasvegaspersona's picture

Obchelli

How do you think the maker of a purely symbolic, existing only in the minds of men, currency could have trouble making more?

They will keep plugging holes as long as the world keeps pretending they can see the imaginary paper wads they are using for der plugging.

Only when the dollar fails will the Fed be unable to handle this. Until we reach that point the Fed will continue to perform these miracles for the world's people to witness in amazement.....astonishment and scandal.

Fri, 02/07/2014 - 18:39 | 4413457 CrashisOptimistic
CrashisOptimistic's picture

Exactly.  Money is meaningless, and that which is meaningless can have its definition changed at a whim.

What takes it all down is oil.  Nothing else.

Fri, 02/07/2014 - 18:00 | 4413275 Bizaro World
Bizaro World's picture

Sounds good except one thing.....the FED is the market.

Fri, 02/07/2014 - 17:24 | 4413166 Stoploss
Stoploss's picture

Looks like everybody bought today except.........

Credit... Why, those fuckers..

 

Oh, and a big fuck you NSAT&T, for fucking up my internet connection today, trying to install infrastructure that didn't exist three years ago when you lied and said it did.

Fri, 02/07/2014 - 18:07 | 4413314 lasvegaspersona
lasvegaspersona's picture

Note to Tom Denmark:

In 1929 the Fed was constrained by the fact that gold was money, or rather money was just a derivative of gold. Roosevelt 'fixed' that in March of 1933 by getting gold out of the way. Nixon fixed it even better by eliminating gold from the picture all togather.

Any discussion of similarities between the past and today must account for these changes in our monetary system. The Fed is fully able to buy dog poop and inject more money into the system. The problems will only become hard to manage when the dollar gets into trouble. Until the the Fed remains all powerful. They may be worried about their balance sheet however.

Fri, 02/07/2014 - 17:08 | 4413104 FieldingMellish
FieldingMellish's picture

Onward and upward to ever higher plateaus... this in no way at all feels anything like 1929... at all... in no way....

Fri, 02/07/2014 - 17:35 | 4413214 Wait What
Wait What's picture

it's kinda cool that you know how it felt in 1929 ol' timer. good memory, i guess.

Fri, 02/07/2014 - 18:02 | 4413276 FieldingMellish
FieldingMellish's picture

Hey! Get off of my lawn, you young punk! 

Fri, 02/07/2014 - 17:44 | 4413233 Obchelli
Obchelli's picture

Feels little worse...

Just kidding

Fri, 02/07/2014 - 18:32 | 4413423 disabledvet
disabledvet's picture

actually...i agree with this...but to understand why you have to be able to see things from something other than your own point of view.

i have called this market "whispering death" on more than one occasion because the volume is so light.

most of the time the "old timey" sayings are pure falsehoods but "never short a dull market" has been true going on 4 years now...so absolutely...short this thing...and die.

having said that my lodestar has always been and will continue to be the perspective of "how do I as a policy maker budget for this." (obviously i am not that actual person-just an author trying to take a point a view.)

we are so far "out of the slot" as a submariner would say i simply have no answer.
we're in pure "ether" here and simply put there is no guarantee (as we now know from 2008) that the massive revenues flooding into Government coffers are "real" (as in reproduceable) or based on something "fictitious" (facetious?) that can literally collapse at any time.

Obviously this is no way to balance a budget...let alone create one in the first place.
Is it Wall Street's problem that it rallies on the news of incomes actually declining?
Not if QE is meant as a bailout of China it would seem.

Which does bring up the question "what is taper again"?
Is the Fed sure it's not in fact "tightening" because it sure looks and feels that way to me.

Of course i am not Privy to the "day to day" as they say...but talk about needing perfect policy responses.

Here's the current and "usual level of precision" in case anyone is wondering:
http://www.youtube.com/watch?v=s-5bI3FtdTs

Fri, 02/07/2014 - 17:10 | 4413108 TheRideNeverEnds
TheRideNeverEnds's picture

A new paradigm if you will. 

Fri, 02/07/2014 - 17:35 | 4413211 XRAYD
XRAYD's picture

The lack of income missing from the QE job creation mandate, has been replaced by the non-mamdated suck-up-to-the-1% "wealth effect" with stock surge.  There should be a law about this, but Newton is dead and Darwin is alive and kicking (arse)!

Fri, 02/07/2014 - 18:08 | 4413325 SDShack
SDShack's picture

It's called the Trickle Up Effect.

Fri, 02/07/2014 - 17:52 | 4413253 Boeing Boy
Boeing Boy's picture

There has been no taper, January 2014 saw the fed's balance sheet increase by another 100BN USD.

 

So this can only mean even moar printing to come..

Fri, 02/07/2014 - 18:30 | 4413421 Cattender
Cattender's picture

i can't describe accurately with words the HATE i feel towards Wall St...

Fri, 02/07/2014 - 17:07 | 4413101 FieldingMellish
FieldingMellish's picture

Love a double bonus chart at the end of the week.

Fri, 02/07/2014 - 17:08 | 4413110 nink
nink's picture

BAD NEWS = GOOD NEWS = BAIL OUT.    I think we are on a winner 

Fri, 02/07/2014 - 17:10 | 4413118 Lastline
Lastline's picture

This time is different.. uhHuh

Fri, 02/07/2014 - 17:10 | 4413121 AmericasCicero
AmericasCicero's picture

Calling Irving Fisher!

Fri, 02/07/2014 - 17:10 | 4413122 thismarketisrigged
thismarketisrigged's picture

there is no such thing as good news= bad news and vice versa

 

it is what the fucking piece of shit fed and wall st determine it to be, which is always positive.

 

in a few weeks these bastards will pump the market up another 10 percent on a debt ceiling deal that was never priced into the market on the downside to begin with.

 

this shit is absurd.

Fri, 02/07/2014 - 17:44 | 4413237 Obchelli
Obchelli's picture

You read my mind.

It's like Greece "problems" actualy contributed to 2000 dow up points when problem was resolved avery other day

Sat, 02/08/2014 - 11:39 | 4414913 20-20 Hindsight
20-20 Hindsight's picture

I'm glad some people are finally getting it.  BTFATH!  That simple.  

Fri, 02/07/2014 - 17:22 | 4413124 khakuda
khakuda's picture

From Team America World Police, all I have to say to describe it is...

Matt.  Damon.  http://www.funnyordie.com/videos/dd8c6a67c3/matt-damon-in-team-america

Fri, 02/07/2014 - 17:41 | 4413225 Wait What
Wait What's picture

I always wondered why they called it the 'screen actor's guild' and not the 'film actor's guild'. S.A.G. != F.A.G.?

Fri, 02/07/2014 - 20:11 | 4413834 TBT or not TBT
TBT or not TBT's picture

Investors: I need you tell me you'll never die!
"Markets": Uh...I promise I'll never die?

Fri, 02/07/2014 - 17:11 | 4413125 Cdad
Cdad's picture

It was a perfectly contrived session today...gentle...ever upward...just missing "by that much" the 1800 level.  Bravo, you idiots within the criminal syndicate known as Wall Street. 

golf................clap.........

Fri, 02/07/2014 - 17:13 | 4413130 Itch
Itch's picture

Interesting how it all turned on the head of a fucking milli-pin!! 

Fri, 02/07/2014 - 17:42 | 4413230 The_Ungrateful_Yid
The_Ungrateful_Yid's picture

Hi, I'm Janet Yellen.

Fri, 02/07/2014 - 17:15 | 4413131 soopy
soopy's picture

Yeah... how'd that 'fade/risk-off' trade work out for you?

http://www.zerohedge.com/news/2014-02-06/how-read-and-trade-tomorrows-jo...

I also believe the number has the potential to print solidly, but where I differ from most is that I believe a strong ‘risk-on’ reaction should be strongly faded.
...
Certainly, the ‘knee-jerk’ reaction to a strong headline print would likely make stocks surge and Treasuries sell-off, but I believe active traders should fade those moves. After all, should such a payroll release occur, it does little to change the US or global economic backdrop.

...

For all these reasons, use the number tomorrow to put on ‘risk-off’ trades; even if there is a ‘risk-on’ knee-jerk re-pricing at 8:30 due to a (seemingly) strong number.   

Fri, 02/07/2014 - 17:15 | 4413133 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

I'm going to start buying a long index whenever ZH posts an interday message regarding a market drop--they pretty much called the market bottom today, and it was a constant melt up from then on...i think that the NASDAQ e mini was up 2 percent today. Jesus. 

Fri, 02/07/2014 - 17:19 | 4413150 soopy
soopy's picture

I don't know if they 'called it', but they have been one of the best contrarian trading indicators out there. For the last 5 years.

Fri, 02/07/2014 - 18:38 | 4413451 disabledvet
disabledvet's picture

with only one contrarian indicator.
if you go "by the book" as they say "the Fed has won."
(the "dual mandate" of inflation-deminimus- and unemployment...falling.)

http://www.youtube.com/watch?v=LaVIIoRKBlk

Fri, 02/07/2014 - 17:16 | 4413138 ebworthen
ebworthen's picture

Re:  Bonus Bonus Chart:

Negative correlation = finger(s) on the scales.

Fri, 02/07/2014 - 17:15 | 4413139 pragmatic hobo
pragmatic hobo's picture

when volume is low the market goes up ... especially on friday ...

Fri, 02/07/2014 - 17:18 | 4413146 Millivanilli
Millivanilli's picture

Murka don't need no damn jobs.   All we need to do is invest in the market and get rich.   

 

COUGH!

Fri, 02/07/2014 - 17:24 | 4413172 Spastica Rex
Spastica Rex's picture

The DJIA will reach singularity at the moment when all the unnecessary eaters are dead.

The rest will live forever as beings of pure energy with pleasures and amusements undreamed of by physical man.

Stock market heaven.

Fri, 02/07/2014 - 17:29 | 4413186 NOTaREALmerican
NOTaREALmerican's picture

Re:   All we need to do is invest in the market and get rich.   

Actually, for the top 10% - 30 million people, this is true.

The bottom 80% are just drones.   The middle 20 -> 10% are hoping they'll make it to the top 10%.

The predator society many people have dreamed of for the last 50+ years has arrived.  Hope they are all part of the 10%. 

Fri, 02/07/2014 - 17:19 | 4413151 Obchelli
Obchelli's picture

Big question is who stopped initial reaction on NFP number when S&P futures where down 21 points from top in a seconds. Who backstoped this? Rally today is just rub in your face BS. Sensing how weak market of late is I went short immediately after number - probably I'm an idiot...

Fri, 02/07/2014 - 17:45 | 4413239 Wait What
Wait What's picture

"Who backstopped this?"

You must have forgotten that PPT was still around.

shorting this market = your funeral.

Fri, 02/07/2014 - 17:48 | 4413245 Obchelli
Obchelli's picture

I'm already dead. 

 

Posting from my i-coffin

Fri, 02/07/2014 - 18:47 | 4413486 CrashisOptimistic
CrashisOptimistic's picture

 

Once again, let me say this.  Loudly.

 

STOP TRADING.  PERIOD.  THERE IS NO MARKET.

Fri, 02/07/2014 - 20:15 | 4413855 TBT or not TBT
TBT or not TBT's picture

Buy pallets of liquor. Park your car outside.

Fri, 02/07/2014 - 17:25 | 4413168 Spungo
Spungo's picture

What are you looking at when you say the volume is low? SPY's volume is average or slightly above average. QQQ is fairly average.

Fri, 02/07/2014 - 17:23 | 4413169 NOTaREALmerican
NOTaREALmerican's picture

Jeezz,  and our hope was so high only a few days ago for the crash which would teach the pathological optimists the truth.

Fri, 02/07/2014 - 17:31 | 4413201 El Hosel
El Hosel's picture

Rip the most shorted stocks, butt pluck the Vix Algo Fever... And The Federallies are flush with cash after the EM panic bond rally, same shit different day.

Fri, 02/07/2014 - 18:41 | 4413471 disabledvet
disabledvet's picture

really?

"just another day at the office"?

somebody is shorting....

Fri, 02/07/2014 - 17:30 | 4413187 eucalyptus
eucalyptus's picture

i'm just going to lock myself in my closet. nothing makes sense anymore in this world

Fri, 02/07/2014 - 17:35 | 4413209 Charles Nelson ...
Charles Nelson Reilly's picture

time for another red pill then bro - http://www.youtube.com/watch?v=zE7PKRjrid4

 

Fri, 02/07/2014 - 17:30 | 4413197 Wait What
Wait What's picture

As predictable as a Bernanke-fueled stock market. only a fool would bet 'they're going to let it go' when they can pull the 10 yr rate off the 3% ledge with little more than a 5% move in stocks. people (and by extension HFT programmed by humans) are so predictable.

Fri, 02/07/2014 - 17:43 | 4413231 lasvegaspersona
lasvegaspersona's picture

I believe these explanations as much as I believe the explanations given last month which are now 'non-operative'.

I guess I'm having a hard time believing anything. I just watch the markets in amazement as they rise like a beautiful balloon...oh is that an acacia they are rising into?

Fri, 02/07/2014 - 17:42 | 4413234 Iam Yue2
Iam Yue2's picture

" Mkt rally on view that EM washout is over for now."

http://t.co/k5A2t6ylvP

Fri, 02/07/2014 - 17:47 | 4413243 coastalwn
coastalwn's picture

rip  .... squeeze.... sounds soo sexual..... 

Fri, 02/07/2014 - 17:49 | 4413252 BullyBearish
BullyBearish's picture

Just remember it has never failed: when the situation is tenuous and news is bad, they'll let the shorts build up and use them to propel the market UP.  Consider this: when you are absolutely certain it's a drop-dead, no-brainer time to put on a huge short...go long!  They'll stairstep this market down gently as they continue to reduce liquidity...and you'll wonder, "how'd they do that?"

Fri, 02/07/2014 - 17:56 | 4413270 Castiel123
Castiel123's picture

I was watching a basket of stocks, bonds, and commodities today via a mobile phone app, and I commented to my wife, "That's odd, everything is UP (except the VIX). I never see EVERYTHING go up. That's very strange."

Glad to see that I wasn't the only one who noticed.

Next up...... Everything goes DOWN.

Fri, 02/07/2014 - 18:46 | 4413498 Haager
Haager's picture

Oh, it happens quite regularly, followed by a flush on everything a couple of days later. Looks like we enter a small bear-market now, with the SPX somewhere at 1600 afterwards (optimists view).

Fri, 02/07/2014 - 18:10 | 4413324 Haager
Haager's picture

Damn rubber-cats.

Fri, 02/07/2014 - 22:08 | 4413339 HROLLER
HROLLER's picture

.

Fri, 02/07/2014 - 18:50 | 4413502 Castiel123
Castiel123's picture

Fri, 02/07/2014 - 18:53 | 4413528 benbushiii
benbushiii's picture

Perhaps all the brokers KNEW who was short and squeezed them?  This seems to be common place occurrence over the last couple of years.  What a great game!!!  They know who is short through the borrow, get long in both the stocks and options then commence a short squeeze.  No manipulation here.

Fri, 02/07/2014 - 18:55 | 4413539 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

Zerohedge called the daily bottom again with its "the markets are falling" post. 

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