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The Quiet Before Yellen's Storm? S&P Unable To Breach 1800 Resistance

Tyler Durden's picture




 

US equity markets traded in a narrow range ahead of tomorrow's Yellen testimony with Trannies underperforming and Nasdaq outperforming. Cross-asset-class correlations picked up from their negligible levels on Friday as JPY (and increasingly 5Y bonds) are linked at the hip with stocks. The S&P cash tested almost up to 1,800 (but failed at 1799.94) then faded. Notably from the European close, equity handily outperformed credit markets - which ended closing near their wides of the day. Treasuries ended the day modestly bid (30y -2bps) but T-Bill yields are starting to reflect debt-ceiling concerns. The USD closed unch - drifting lower from overnight strength - but gold and silver rallied on the day (though faded of early highs). Late-day ramp efforts got the S&P green but failed to cross 1,800... and VIX decoupled on the ramp.

 

The magical 1,800 line for S&P 500 cash was tried and failed twice...

 

Trannies underperformed and Nasdaq won as the Dow, S&P and Russell closed practically unchanged

 

USDJPY 102 saved the day once again

 

Stocks stuck close to bonds today too...

 

Treasury Bill markets are starting to reflect a growing fear of the debt-ceiling shenanigans... 2/20 T-Bills closed at -2bp!!

 

Credit decoupled from stocks after the European close...

 

And VIX did not play along with the late-day JPY-based surge in stocks...

 

On the day, gold and silver rallied early and faded...

 

Treasuries staged 3 rallies off unchanged...

 

Charts: Bloomberg

Bonus Chart: Cross-asset-class correlation (lower pane) picked up but as is clear there is a lot of volatility in the relationships - especially from the US open...

 

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Mon, 02/10/2014 - 17:13 | 4421102 fonzannoon
fonzannoon's picture

Nothing illustrates central planning failure more than shooting for 1,800 and ending at 1,799.4. Back to the drawing board with skynet, piece of shit....

Mon, 02/10/2014 - 17:18 | 4421118 gjp
gjp's picture

don't hold back on the sarcasm, fonz, let us know how you really feel

yes, they remain in complete control

Mon, 02/10/2014 - 17:18 | 4421125 zaphod
zaphod's picture

1,800, 1799, whatever

As long as the S&P is over 1,000 the central planners are winning. We shouldn't even be remotely in this range.

Mon, 02/10/2014 - 17:36 | 4421183 asteroids
asteroids's picture

Several days of negative correlations tells us someone is pumping up the SPY. If history is any indicator, there will be a snap back.

Mon, 02/10/2014 - 19:38 | 4421761 Wait What
Wait What's picture

you mean a snap back... higher!? i'm betting the markets cream all over themselves when the debt-ceiling drama 'gets resolved' ... again. you can bet the S&P will hit an all time high the following day.

Mon, 02/10/2014 - 17:24 | 4421137 eurogold
eurogold's picture

No worries, Yellon will soon open the floodgates with QE 5 ?

Mon, 02/10/2014 - 17:37 | 4421173 Rockatanski
Rockatanski's picture

obviously nobody knows until they do or do not BUT if they DO NOT, i suspect this is the pulling of the plug and draining the swamp.

 

 

Mon, 02/10/2014 - 17:55 | 4421271 LMAOLORI
LMAOLORI's picture

 

 

Important to Note

"Yellen served in President Bill Clinton's White House, which oversaw an aggressive period of financial industry deregulation."

Mon, 02/10/2014 - 17:34 | 4421187 BandGap
BandGap's picture

I think our new Fed Romulan beauty might just shock people a bit tomorrow.

 

Mon, 02/10/2014 - 18:44 | 4421507 Bangin7GramRocks
Bangin7GramRocks's picture

So is the massive crash already over? It felt like I must've missed it.

Mon, 02/10/2014 - 17:15 | 4421109 the not so migh...
the not so mighty maximiza's picture

debt ceiling is non issue they are going to raise it big time

Mon, 02/10/2014 - 17:20 | 4421120 Winston Churchill
Winston Churchill's picture

Why not ?

Everyone can see this trainwreck is unstoppable now.

All aboard !

Mon, 02/10/2014 - 17:17 | 4421122 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

Yup.

 

And because its a done deal, various partys can feel comfortable yelling out even more outrageous shit than last time.  Lew and Obama will be screaming "AMERICAS GONNA DEFAULT!!!! ARRRRG!" at the top of their lungs. 

Mon, 02/10/2014 - 17:49 | 4421246 cougar_w
cougar_w's picture

They might even manage to get rid of the idea altogether.

Mon, 02/10/2014 - 17:18 | 4421119 mayhem_korner
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Resident algo programming:

=IF(YELLEN_WORD_COUNT>0,!RAMP!,!RAMP!)

Mon, 02/10/2014 - 17:21 | 4421126 ebworthen
ebworthen's picture

CNBC reporting that Employers with 50-99 employees won't have to provide coverage for employees (and only 70% at that) until 2016.

That's right "folks"; pay up!  Bailed out InsuraBanksterCo needs your premium dollars to provide next to nothing!

Yellen the clown cannot save the audience members being trampled by the elephants under the big top U.S. Circus.

Mon, 02/10/2014 - 18:23 | 4421415 Offthebeach
Offthebeach's picture

Some frogs are boiled later then others.

Mon, 02/10/2014 - 17:22 | 4421131 mayhem_korner
mayhem_korner's picture

T-Bill yields are starting to reflect debt-ceiling concerns

 

Should I call some RINO congressman to sabre-rattle so I can cash in on some Eurodollar puts?

Mon, 02/10/2014 - 17:22 | 4421133 BullyBearish
BullyBearish's picture

Tomorrow: Lack of POMO will be mitigated by not one, but FOUR Fed Heads telling us how good things are going to be: Plosser, Fisher, Lacker and Yellen (twice)!!

Mon, 02/10/2014 - 17:22 | 4421134 Australian Economist
Australian Economist's picture

Good day for me, up about 6% overall d(^_^)b

Mon, 02/10/2014 - 18:35 | 4421470 cougar_w
cougar_w's picture

Good enough to put on the beer hat, from the looks of it.

Mon, 02/10/2014 - 17:22 | 4421139 disabledvet
disabledvet's picture

Here's my bonus bonus chart: http://seekingalpha.com/symbol/GM?source=search_general&s=gm

The word in Tesla is that the car is good for twenty years. "Free fuel for life" to go with that twenty.
IF this is in fact true this would blow a hole in the commodity space that would last decades.

And i yes I know this is crazy to say...but "that kid does have a Space Program too."

The only internal combustion vehicle i would buy here is a Ford F-150.
If Ford comes out with an all electric Ford Ranger for 5 grand...it's lights out for pretty much the entire industry.

Mon, 02/10/2014 - 17:56 | 4421264 halfawake
halfawake's picture

big oil would never allow that. unless they controlled the sun, first.

Mon, 02/10/2014 - 18:50 | 4421539 cougar_w
cougar_w's picture

5 grand won't even buy the batteries -- which batteries come from China -- but only as long as the Chinese are willing to sell them to us -- which is only as long as their own housing bubble doesn't implode taking out most of their economy.

I pay $1400 for the Lithium batteries for my electric bike. That's probably all you need for most things, and probably as close as you will ever get to a Tesla:

http://madscienceunlimited.com/thebike/img/blackbird_mk2.jpg

The mo'fo rocks like a big dog.

Mon, 02/10/2014 - 17:28 | 4421149 assistedliving
assistedliving's picture

Yellen shall be tested.  down 200 tom/500 for the week

Mon, 02/10/2014 - 17:32 | 4421177 gatorengineer
gatorengineer's picture

I dont have wet dreams that good, I have been conditioned to expect your numbers are right but the direction is wrong.  Real question is do we get $1300 gold tomorrow.....

Mon, 02/10/2014 - 18:34 | 4421338 Ham-bone
Ham-bone's picture

2014 is 1000 tons (20%+) short of covering current demand...and gold closed on the knife edge of $1275 (break out or break down point)...gold poised for some fireworks.  Only way to meet that demand is to crash the price by another 30% to disgorge another 1000+ tons from the ETF's, as was done in '13 (or said otherwise, another 500 tons from the remaining 790 tons of GLD inventory, among others) although this will cause futher declines in scrap / mining...So, to get 1000 more tons from ETF's will likely cause a furhter 500 ton scrap/mining output decline.  Law of diminishing returns hitting hard. 

Another option for central planners to beat down demand via further global gold buying bans / heightened taxations (a la India?)

The more logical manner to meet / manage the demand would be a signifcantly higher price...however unlikely it is.

Seems tomorrow is either the blast off point or the shut down point of the gold market..as the manipulation has run out of room to maneuver.

Mon, 02/10/2014 - 17:31 | 4421163 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

the index that i often follow...the nasdaq e mini 100...was up 2.15 percent on fri.....55 percent rise today. what correction? what bubble? all i can deduce is that the market assumes a taper-taper...but will not get it

Mon, 02/10/2014 - 17:30 | 4421166 wmbz
wmbz's picture

No worries, old Jack Yellen is at the wheel now. Any problems on the horizon will be delt with post hast. Turn that 65b into 100b with a key stroke.  

Mon, 02/10/2014 - 17:33 | 4421172 gatorengineer
gatorengineer's picture

Not sure what the worry is, there will be a giant whipsaw tomorrow, preview of the sound bites "soft patch", "weather", "improving', "options open", "uncertainty over fiscal policy", and last but not least "whatever it takes".  I defy anyone to be able to do a shot everytime one of those go off.

Mon, 02/10/2014 - 17:39 | 4421200 Karl von Bahnhof
Karl von Bahnhof's picture

Wait for it!

Mon, 02/10/2014 - 17:46 | 4421228 Babaloo
Babaloo's picture

If t-bill yields were really starting to "reflect debt-ceiling concerns," you wouldn't have seen one month (give or take a week) bill yields fall 4-5 bps.

Those maturities would have increased in yield as money market funds and other holders would have sold them in order to not be holding defaulted securities.

Mon, 02/10/2014 - 17:48 | 4421235 Colonel Klink
Colonel Klink's picture

Yuck Fellen!

Mon, 02/10/2014 - 17:49 | 4421238 JohnnyBlaze
JohnnyBlaze's picture

Took my first dip in options the last week. 

 

Bought some UVXY 150 March Calls.  Does anyone know how to get banker semen out of your ass?  I got a nice 38% drop so far.  Got fucking irritated about it and bought some 150 Sept calls as well.  If this pos goes up any further I am going to buy some Jan calls.  Fuck it.  I love it in the ass.  It felt suprisingly good.  Just messy.

Mon, 02/10/2014 - 17:51 | 4421254 halfawake
halfawake's picture

I, for one, will be going all in btfd. She's going to unload $150b QE. 1900 by march.

Mon, 02/10/2014 - 18:18 | 4421392 Dr. Venkman
Dr. Venkman's picture

If 10 days into her reign she does that, the S&P might as well go to 2500. By sundown.

Mon, 02/10/2014 - 18:10 | 4421358 GrinandBearit
GrinandBearit's picture

After this article, the SPX will breakout above 1800 tomorrow with gusto.

I've noticed that ZH is mostly a contrary indicator.  Just look at what ZH did to gold last year. 

Mon, 02/10/2014 - 18:22 | 4421418 El Hosel
El Hosel's picture

The story and "the Market Reaction" have surely been scripted ahead of time.... Hard to imagine anything other than Goldiloks for Cinderyellen.
Gold and Vix down, stocks up, the Banksters in charge like happy endings.

Mon, 02/10/2014 - 19:12 | 4421651 gwar5
gwar5's picture

"If the taper doesn't fit, you must hurriedly quit."

 

Mon, 02/10/2014 - 19:12 | 4421662 gwar5
gwar5's picture

"If the taper doesn't fit, you must hurriedly quit."

 

Mon, 02/10/2014 - 19:13 | 4421670 bubblemania
bubblemania's picture

BubbleJew will save the day!

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