An Apple A Day Once Again Kept The Market Crash Away (Until After-Hours)

Tyler Durden's picture

Despite a grumpy open in the major cash equity indices - which opened pretty much in line with where S&P futures had closed on Friday morning - equity indices provided some BTFD reassurance for any and everyone who wanted to get on TV today. In sad reality, a lot of this equity index performance was due to Apple's 2% rally off pre-open lows, as it made new highs and vol continued to push higher. Financials, Industrials, and Materials all underperformed on the day (and Utes outperformed but still lost 0.5%). The majors were hurt most once again but remain notably expensive still to their credit-market perspective. On an admittedly quiet volume day (with Europe closed), the credit market (especially HYG) underperformed equity's resilience open to close but an after-hours reality check dragged ES down to VWAP once again on notably above average trade size and volume for the day. VIX managed top almost reach 19%, leaked back under 18 before pushing back up to near its highs of the day by the close - breaking back above its 50DMA (as the Dow broke below its 50DMA but the S&P remains above). Treasuries shrugged off the equity resilience and stayed in very narrow range near their low yields as stocks diverged once again (until after hours). FX markets were very quiet with JPY crosses getting some action as EUR and AUD managed to drag the USD down a little. Commodities were mixed off Thursday's close with Copper the major loser and Gold outperforming. Oil managed a decent intraday recovery today most notably back over $102. The weakness after-hours in ES (the S&P 500 e-mini future) is worrisome as its lost the support of AAPL and its options. At the cash market close, ES peaked for the day at 1382.75 and has since drifted back all the way to 1374.25 - just shy of the day's lows.

Credit remains the notable underperformer - back at multi-month wides now - while broad equity indices remain supported by Apple's heft (note the correction in ES coincided with a convergence with HY credit - blue arrow - and yet as cash markets opened today and Apple helped support equities. IG underperformed today - as it caught up to its fair-value intrinsics level and markets got to react to the significant compression in TSY yields from Friday. High yield remains troublesome for those saying buy-the-dip as given its cheapness and high-beta nature, it should be a natural place to jump in - and yet it is not and HYG has given up six months of carry in the last month or so...

 

Equities tried to pull away (the orange oval above and green oval below) but failed with the reversion after-hours as Treasuries stood their ground for equities to revert to (even though Treasuries limped higher in yield this afternoon by a bp or two)...

 

Financials underperformed today but remain notably rich still to credit market perspectives...

FX markets were quiet but EURUSD weakness (and swap-spread implied sterength) has pulled the pair back into short-term balance (though the rally into what was an imaginary European close was odd)...

Commodities were mixed but Copper is the clear lower and gold the strongest post NFP. Oil managed a decent recovery intraday back over $102...

Broadly speaking risk assets sold off (right hand side below) though there was some rotation from JPY carry trades doing better in the morning to TSY/2s10s30s carry and Oil doing better in the afternoon - which supported the equity rally. Correlations remain very low and as the left hand chart below shows - across the index capital structure HYG/VXX/TLT (credit/vol/rates) were notably less sanguine that stocks today...

And to make it clear just what happened after-hours for all those equity buy-the-dippers - ES reverted to VWAP and beyond with a ugly close...

Charts: Bloomberg

 

Bonus Chart: YTD performance of an equal-weighted S&P 500 relative to the normal cap-weighted S&P 500 has now reached its lows as the last 3 days have seen significant weakness of the equal-weighted (as large cap AAPL has dominated cap-weighted performance). Furthermore, as the chart shows, the 250bps of outperformance since mid-Feb coincides perfectly with AAPL's disconnect and parabolic rise...