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Low-Volume Melt-Up Fails To Stall Small Caps Worst Streak In Over 2 Years

Tyler Durden's picture




 

Despite a low-volume melt-up in stocks off yesterday's European close lows, US equities closed lower on the week with small caps once again the laggards. Even as stocks closed red, the costs of protection in credit and equity markets tumbled as the last 2 days volumeless liftathon in stocks took place against the background of very modest Treasury selling - this has the stench of high-yield bond exposure being significantly reduced (and synthetic hedges being lifted) - something we saw Wednesday into the close. The USDollar rose the most in 15 months today (up for the 12th week in a row - longest streak since Bretton Woods) led by Cable and EUR weakness. Jobs data losses in bonds today were largely reversed with TSY yields ending the week down 7-9bps. Commodities were ugly with silver and oil (under $90) joined at the hip and gold closing below $1200 for first time this year. The Russell 2000 closed lower for the 5th week in a row, the worst streak since Aug 2011.

 

Spot The Ramp Day (by looking only at the lower pane's relative volume chart)

 

How markets reacted to the Jobs Data - Bonds unch, Gold down, Crude down, Stocks up (for now)

 

Trannies scarmbled back to green on the week but the rest closed red with Russell lagging... Dow's first 200pt gain since March 4th...

 

Despite an epic surge off yesterday's European close lows...

 

Just looking across the corporate bond-equity-vol complex, we see notable Treasury buying, and protection (HY and VIX) unwinds in the last 2 days which are exactly the paradoxical moves we would expect from a major liquidation of high-yield credit exposure in a fund... of course this is interpreted by the machines as bullish (VIX/HY) and stock indices are lifted (on no 'real' volume) but in fact it is anything but as the reality of the cash market unwinds spreads to the primary issuance and finally stock markets...

 

and close up today..

 

VIX definitely saw more selling (unwind hedge) exposure than mere stocks alone would have expected...

 

The USD index rose 1.25% today...led by EUR and GBP weakness

 

The most in 15 months..

 

Silver and Oil (back under $90) moved in lockstep once again with various flushes on the week but all commodities closed lower against the strong USD..

 

Gold closed below $1200 for the first time this year...

 

Treasury yields closed the week 7-9bps lower (reversing most of today's jobs reaction losses)

 

Charts:Bloomberg

 

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Fri, 10/03/2014 - 16:14 | 5286163 Squid Viscous
Squid Viscous's picture

another epic day to buy horse-shit stocks like TWTR and sell PM's and steel, coal, iron-ore etc... lol

 

Fri, 10/03/2014 - 16:16 | 5286203 xtop23
xtop23's picture

JFC blow up already

Fri, 10/03/2014 - 16:20 | 5286212 enforcer92677
enforcer92677's picture

Testing the high one more time.  Then you get your wish. 

 

OR ECB does a multi trillion euro QE.  Which will delay things again.  Hope not.  Want the crash too.

Fri, 10/03/2014 - 16:27 | 5286246 Divided States ...
Divided States of America's picture

I knew it....JPM up big...the data breach is BULLISH!

Nice, Obola to have a conference on Ebola soon...lets see if he wears the hazmat suit.

Fri, 10/03/2014 - 16:21 | 5286218 FieldingMellish
FieldingMellish's picture

Not for many, many years.

Fri, 10/03/2014 - 16:32 | 5286226 Squid Viscous
Squid Viscous's picture

Sunset is at 6:35... better hurry. And no I won't push the fucking elevator button for you, "already" lol such a NY j adverb... "enough already"

Fri, 10/03/2014 - 18:31 | 5286749 xtop23
xtop23's picture

It's a pretty common expression on the west coast as well.

+1 for accurately naming the appropriate part of speech. You must have watched schoolhouse rock as a youngster. You certainly didn't learn that in our nation's schools.

Fri, 10/03/2014 - 16:18 | 5286210 Buckaroo Banzai
Buckaroo Banzai's picture

Russell 2000 having a bad year? Who cares, Russell Wilson looks like he's gonna win another Super Bowl.

Fri, 10/03/2014 - 16:24 | 5286229 StackShinyStuff
StackShinyStuff's picture

Or do the opposite at the end of the day...

Fri, 10/03/2014 - 16:17 | 5286206 fockewulf190
fockewulf190's picture

Bought more Gold.  Bought more Silver.  Both in physical form.  Phyzz is flying off the shelves over here in Germany.  Keep lowering the price.  I´m ready for more.

Fri, 10/03/2014 - 16:26 | 5286244 StackShinyStuff
StackShinyStuff's picture

Yup - just did the same

Fri, 10/03/2014 - 16:41 | 5286313 JuliaS
JuliaS's picture

Bought some red wine. Drank it.

Fri, 10/03/2014 - 16:22 | 5286223 wmbz
wmbz's picture

Keep wacking down the PM's just fine with me. I love the discounts!

Fri, 10/03/2014 - 16:23 | 5286225 Keltner Channel Surf
Keltner Channel Surf's picture

Paradoxically, from a day-trading perspective, despite the Russell’s overall carnage through mid-week, the easiest trades (with fewer gut-churning stop runs) for IWM were actually on the long side: Thursday afternoon’s balloon-like lift heralded by a huge volume spike, and today’s open (though you had to catch the pullback right before the first 15m candle closed to get the most out of it).   Has volatility truly returned?  Promising, but we’ll need to see a lot more evidence . . 

Fri, 10/03/2014 - 16:24 | 5286230 qazwsx
qazwsx's picture

Triple bottom in gold comming up.

Fri, 10/03/2014 - 16:28 | 5286255 Bell's 2 hearted
Bell's 2 hearted's picture

is that a "Kim Kardashian"?

Fri, 10/03/2014 - 16:27 | 5286247 Bell's 2 hearted
Bell's 2 hearted's picture

"the background of very modest Treasury selling - this has the stench of high-yield bond exposure being significantly reduced"

 

hy = fuel for buybacks

 

tick tock tick tock tick tock ...

Fri, 10/03/2014 - 16:28 | 5286251 starman
starman's picture

Boy lotsa traders wanted that vix security today.

 

Fri, 10/03/2014 - 16:33 | 5286275 debtor of last ...
debtor of last resort's picture

Hard assets saying goodbye to paper, and both are saying goodbye to 'investors'.

Fri, 10/03/2014 - 16:32 | 5286279 Rainman
Rainman's picture

Nice volume chart ... I'll bet my tinfoil hat ' somebody ' got the 5.9 number after hours yesterday.

oh well ..Steal today, Repent tomorrow ( Yom Kippur )

Fri, 10/03/2014 - 16:37 | 5286295 kolya111
kolya111's picture

To the tune of Yellowcard's "Believe"

Think about all the printers inside the Fed
Think about all the ink that they have bled
Stocks climbing higher through every fire, time's not running out
And you know that they're not going to be coming down
    ever
'Cuz the printing will never stop
Central banks are strong and you are not

Everything is gonna be alright
Everything is gonna be alright
Everything is gonna be alright
Be Bullish! Believe.

Think about all the chances that you had, to say
"Buy all the stocks for me on margin, today"
But always fearing, never hearing voices calling out
"Buy the dip now, let your fears go, indices will move up
    again"
And yet you still have time today
We'll get back to the all-time high some way

Everything is gonna be alright
Everything is gonna be alright
Everything is gonna be alright
Be Bullish! Believe.

Fri, 10/03/2014 - 18:31 | 5286753 Rough-Trader
Rough-Trader's picture

Wait for the fucking idiot Wilson to come up and say that it's a jewish plot to lift S&P higher.

The guy is so deluded that he must be taking drugs for scitzophrenic paranoia.

Sat, 10/04/2014 - 08:07 | 5288101 craus
craus's picture

After Fed put us thru this correction, I won't be shorting SPY like in 2011 after QE.

The Fed is never going away. Just trade what the Fed has herded us to trade.

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