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"Buy Bonds & Stocks In May; Buy Every Day!"

Tyler Durden's picture




 

Dow Transports were the best performing US equity index in May, rising 5.5% - the best May in 23 years (and best month since Oct 2013). The Dow and Russell 2000 also managed to scrape out gains for May. May also saw bond-buying (the best month since Jan) and gold-selling (worst month since Dec). Treasuries flattened for the 3rd month in a row as 2s30s dropped to 1 year lows. On the week, stocks soared (as "most shorted" were squeezed to death - best 2-weeks in 2014) but VIX has its best week in the last 5, bond yields tumbled and the curve flattened (10Y -8bps, 2Y +2.5bps), gold and silver were clubbed (down 3-4%) for the worst week in 8 months. Amid all this angst the USD ended unch. The S&P overtook gold YTD today but bonds remain 2014's best performer.

 

For all those still paying attention - following the worst GDP print since 2011, we have the biggest drop in consumer spending since 2009... and two consecutive all-time record highs in the S&P 500 and just shy of record highs for the Dow!!!! (thanks to a buying frenzy that started at 330ET... as always)

 

Buy in May... Buy Every Day...Stocks.. S&P 5th all-time high of last 6 days...yay! Trannies best May in 23 years

 

And Bonds...best month since January

 

And quite a week for stocks...

 

Volume was weak and getting weaker...

 

As "most shorted" stocks were squeezed to their best 2-weeks in 2014...

 

But today saw the squeezing pressure abate...

 

Which has moved the S&P 500 above Gold in 2014 (but bonds still the best performers overall)...

 

Something's odd though...

 

And VIX was totally range-bound (ending the week higher) as stocks soared...

 

Bonds saw major flattening on the week as the short-end saw yields rise 2-3bps and the long-end drop 7-8bps...

 

Ugly week for gold (worst in 8 months)...breaking most critical technical levels...

 

Amid all this angst... the USD index closed the week unchanged...

 

 

Charts: Bloomberg

Bonus Chart: And the best stock market in May was... Russia... its best month in 5 years

 

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Fri, 05/30/2014 - 16:05 | 4810711 Let them eat iPads
Let them eat iPads's picture

Sell in May is pretty gay.

Fri, 05/30/2014 - 16:08 | 4810724 Say What Again
Say What Again's picture

I have a few deep questions to ponder over the weekend.

How low can they push VXX?

What will the odds be for huge ES pumping next month?  How many moar times will we see a $3 Billion+ ES trade go down in a matter of a few seconds?  (Because you know that breaking up an order to minimize Market-Impact is soooo out-dated!!!)

And one moar question.  You know that "fed Window" everyone talks about.  Can we stick our head in that window and yell at Yellin to JUST STOP?

Fri, 05/30/2014 - 16:18 | 4810757 flacon
flacon's picture

Are you talking about VXX or $VIX? Because VXX is a stock derivative of the options derivative of the VIX which is a derivative of the options derivative of the SPX. In other words, the VIX is not tradable, but an options stock of VIX is, which is VXX but that vehicle is subject to even more manipulation... ever look at a long term chart of VXX? 

 

 

Fri, 05/30/2014 - 16:22 | 4810766 Say What Again
Say What Again's picture

Either one, take you pick.  The VXX and $VIX.X have a correlation of 98% to 99%

 

I'm really starting to think that the entity pushing up ES is not a hedge fund, not a bank...

Its one or moar sovereigns. 

The sovereigns are the new "syndicates" that Jesse Livermore & Wycoff used to talk about in the old days.  (I really do miss having lunch with those guys)

They have the ability to print money of their own, and then push that money into our markets. 
(Its the only place they can get any short term yield.)

And they have enough "money" to keep pushing a market for a VERY LONG TIME. And since they are the "syndicate" goosing the market, they will know when to get out.

This technique of market manipulation is at least 1000 years old, and was used in the US markets extensively in the early 1900's before it became outlawed.

Except now, how are you going to bring a sovereign to court for "market manipulation?"

Fri, 05/30/2014 - 16:24 | 4810787 flacon
flacon's picture

Interesting. I have not heard of that theory before. Thanks for suggesting it. 

 

A few weeks ago I had thought that easy money would be made by buying puts on VXX since one benefits double, half from the ever increasing SPX and half from the decay of VXX. However, it appears that the decay of the options puts on VXX seems to almost cancel out the decay of the underlying asset (VXX). 

 

 

Fri, 05/30/2014 - 16:27 | 4810803 Say What Again
Say What Again's picture

The other element you need to consider when buy options on VXX is that everyone knows about the decay of VXX and the inherent volatility of VXX, so the premiums on the VXX option usually negate the benefit potential.

That a fancy way of saying that PUT options on VXX will be expensive.

Fri, 05/30/2014 - 16:37 | 4810848 flacon
flacon's picture

Yep. That's what I am seeing as far as price action goes over the long term. 

Sat, 05/31/2014 - 02:41 | 4812104 SAT 800
SAT 800's picture

It's impossible to justify either options or ETF;s for individual speculators; or "investors" if you insist on deceiving yourselves.

Fri, 05/30/2014 - 16:55 | 4810905 NDXTrader
NDXTrader's picture

It's almost certainly the BOJ, the ECB and the Fed in coordination. The BOJ prints and dumps Yen and buys $ or Euro, causing the USDJPY and EURJPY to rise (what Japan wants), they take those $ and buy Spoos, Dax futures, periphery Sovereign bonds and Treasuries causing the stock markets and bond markets to rise and yields to go lower (what US and Europe want). It's win-win for them.

In Europe it's almost certain that the Fed is loaning the ECB money through swaps to further support sovereign debt

Sat, 05/31/2014 - 02:41 | 4812105 SAT 800
SAT 800's picture

It's nonsense. get a grip.

Fri, 05/30/2014 - 16:31 | 4810822 Unknown Poster
Unknown Poster's picture

The ES move might be isolated, or it might be coordinated with VXX, SPY and the underlying stocks. Nanex dug into one event: Nanex ~ 26-Dec-2012 ~ Orchestrating Chaos

 

Fri, 05/30/2014 - 16:41 | 4810855 Wait What
Wait What's picture

unpossible! that's some tinfoil-hat-wearing-talk right there. who could possibly have a stake in crushing vol to unseen historical levels? /s

Tue, 05/13/2014 - 17:33 | 4756540 Wait What
Fri, 05/30/2014 - 16:18 | 4810762 PontifexMaximus
PontifexMaximus's picture

Who is on the other side of the table?

Fri, 05/30/2014 - 16:30 | 4810810 slingshot
slingshot's picture

65k ES block at 1920 at 4pm  every day a large block at close this was the largest       have no idea why?

Sat, 05/31/2014 - 02:39 | 4812103 SAT 800
SAT 800's picture

You'll find out next week.

Sat, 05/31/2014 - 02:37 | 4812101 SAT 800
SAT 800's picture

driving by looking in the rear view mirror. Bonds have already topped; Silver will rally from here; invest accordingly.

Fri, 05/30/2014 - 16:07 | 4810721 101 years and c...
101 years and counting's picture

the ponzi can stay irrational longer than you can stay solvent.  especially when econ Phd's print money for bankers.

Fri, 05/30/2014 - 16:09 | 4810728 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

Nice slow and steady march back up for gold at the end of the day. The powers-that-be were too busy buying stocks to waste any more time on gold for today.

Fri, 05/30/2014 - 16:12 | 4810747 papaswamp
papaswamp's picture

Price had to come down so the banks could buy more physical since they owe Germany so much.

Fri, 05/30/2014 - 16:25 | 4810786 Say What Again
Say What Again's picture

I think there is more truth to that comment than sarcasm.

As I stated above, its clear to me that the sovereigns are at work in this market in a BIG way.

Sat, 05/31/2014 - 02:43 | 4812107 SAT 800
SAT 800's picture

Yeah, yeah. blah, blah, blah.

Fri, 05/30/2014 - 16:10 | 4810731 thismarketisrigged
thismarketisrigged's picture

how many days in may was the s&p down more than 5 pts? im being serious, was it even 3 times total?

 

expect the same bullshit for june

Fri, 05/30/2014 - 16:11 | 4810739 papaswamp
papaswamp's picture

Holy shit when this thing breaks its going to be spectacular.

Fri, 05/30/2014 - 16:11 | 4810744 Tsar Pointless
Tsar Pointless's picture

Tyler stole my line.

Buy in May, buy every day!TM

Fri, 05/30/2014 - 16:15 | 4810753 esum
esum's picture

yes we can .... repeat until brain drips out of nostrils.... if there was any to begin with.... thank you for giving us negrodomus.....

Fri, 05/30/2014 - 16:27 | 4810804 SheepDog-One
SheepDog-One's picture

Just disgustipating.

Fri, 05/30/2014 - 16:45 | 4810878 SheepDog-One
SheepDog-One's picture

And how is May any different than any other 'must close green every day' month over the last several years? No market loss has been allowed to stay for longer than the next open, fucking bullshit.

Fri, 05/30/2014 - 17:38 | 4811011 papaswamp
papaswamp's picture

The more rapid and bizarre the events...the closer to collapse. They are trying make as much as possible before the whole thing comes down.....it will be a doozy.

Fri, 05/30/2014 - 18:22 | 4811148 SheepDog-One
SheepDog-One's picture

Well I hold out for hope you're right, seems the more bizarre thugs become the more normal they are though. Here's a topic for discussion, if NYC and L.A. were nuked tomorrow....how much would S&P gain Monday?

Fri, 05/30/2014 - 17:07 | 4810946 toadold
toadold's picture

As I've said before I'll say again go long on popcorn, tinfoil, and booze. Maybe diest soda and sugar free Cool-aid.

Fri, 05/30/2014 - 17:31 | 4810994 disabledvet
disabledvet's picture

Operation Barbarossa is a go.

If Japan suddenly collapses Great Britain is gonna get hit...perhaps quite hard...and this I think is already having dramatic consequences on Europe's "periphery."

Still no inventory build in the US which is a major growth negative (recessionary. No confidence in the recovery meme from business owners.)
Incredibly this has been true pretty much throughout "the so called recovery."

Elon Musk and Tesla have been huge winners. The cost of producing that hundred thousand dollar car is collapsing.

Fri, 05/30/2014 - 17:43 | 4811020 papaswamp
papaswamp's picture

I think we will see a build because the consumer is not consuming much. Thus something must be done to keep the gdp up. Q2 might make 2.8-3...Q3 though, when the build is over and so is consumer demand will be lucky to see 1%.

Fri, 05/30/2014 - 17:49 | 4811037 khakuda
khakuda's picture

I'm waiting for the guy to come out and say that with the 10 year at below 2.5%, the PE on the market should be 40x.  Any day now.

Fri, 05/30/2014 - 19:20 | 4811327 db51
db51's picture

W T Fucking hell.   I'm convinced this charade will, as Buzz Lightyear says.....last to Infinity, and BEYOMD!   Unfucking believable.

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