Fed Cat Bounce

Tyler Durden's picture

Investors, or perhaps algos, it appears are shocked that the Fed is just as dovish as it has always been (despite endless speeches since Yellen's six month comment - but will not tapering the taper) and today's minutes sparked a short-squeeze loaded VIX-slamming jerk higher to get the Dow back to unchanged from the FOMC statement (S&P back to unch on the month and Nasdaq back to unch on the year). Bond yields ripped lower (the best FOMC minutes day since the Fed announced QE3 expectations) with the short-end outperforming (unwinding only 50% of the flattening post-FOMC) and long-end selling off. Gold and silver had been fading early but rallied on the FOMC minutes (back above $1310). Oil pushed on to $103.50 and copper rallied back to unch (supported by PBOC buying rumors). Credit markets were diverging notably before the FOMC jerk but remain wider on the week. Just as the initial squeeze euphoria ("most shorted" stocks had their best day in 2 months) was fading, the 330 Ramp in JPY occurred and lifted stocks to the highs of the day.

 

  • Biotechs +4% - best day in 12 months
  • VIX -8% - biggest drop a month (2 day -12%)
  • "Most Shorted" +2.1% - stocks best day in 2 months
  • FB +7% (but rest of momos only smaller gains)
  • Nasdaq +1.7% (best in 4 weeks) and back above its 100DMA

Right on time - 330RAMP CAPITAL showed up to try and keep the momentum...

 

As AUDJPY ruled the market once again...

 

The S&P did not make it back to unch from the FOMC (but the Dow and Trannies did)...

 

Nasdaq is back in the green for 2014...(and Russell very close)

 

 

Momo high growth high multiple names bounced but remains down between 10 and 18% from the FOMC...

 

As "most shorted" names rallied the most...

 

VIX cracked 0.5 vols instantly and broke below 14 - but was notably less exuberant about the late day surge...

 

Today was the "most shorted" names best day in 2 months

 

The short-end of the bond curve rallied the most today as the entire complex jerked lower in yields.

 

 This steepened the curve but only retraces half the major flattening that occurred...

 

Credit markets were widening notably this morning but were snapped tighter on the FOMC minutes. It looks like the 330 ramp squeezed the last of the credit shorts back to unch on the week...

 

Commodities all rallied post FOMC...

 

We leave it to Bill Miller (yes that Bill Miller) to end today's market update...

"the conditions for a bad market don't exist"

Trade accordingly...

Charts: Bloomberg

Bonus Chart: "Growth" has retraced only 25% of its relative underperformance to "Value" since the FOMC...