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Equities Close Week Red Even As Hilsenrath Prevents Rout

Tyler Durden's picture





 

A 10 point rally off the lows, thanks to a well-timed Hilsenrath-rumor, dragged stocks up to their day-session opening levels (and unsurprisingly perfectly to VWAP) and while bonds/FX/spreads all limped along with stocks in the last hour, broad risk assets were not as excited by the rumors as the NASDAQ and S&P seemed to be. US equity indices are all lower from Friday's close (with NASDAQ least worst) but they remain +1.3% (S&P) to +3% (NASDAQ) from pre-EU-Summit levels. With the USD ripping higher (on EUR weakness as much as QE-hope fading) up over 2% on the week (with EURUSD -3% on the week and JPY the only 'major' stronger as carry unwinds hit), commodities plunged (growth questions and QE-less) ending the week at their lows (except for WTI - which traded lower on Monday) as Gold outperformed (down only 0.85% on the week). Treasury yields dropped 5bps or so today - leaking back higher into the close but ending the week down 7-9bps (notably less sanguine than stocks). Staples were th eonly green sector on the day as Tech lagged along with Industrials. While the Financials sector fell 0.8% (with a nasty leg down into the close), the majors did worse as MS and BofA caught-up with JPM's post-summit weakness. Most interestingly, the late-day surge in stocks (which saw decent volume and average trade size as we crossed VWAP) was accompanied by a collapse in volatility. VIX ended the day down 0.4 vols at 17.1% despite a 9pts loss in ES leaving it notably cheap relative to credit/equity fair-value.

Shock-horror as equities close red two days in a row after a coordinated central bank easing... all indices ended the week lower (though NASDAQ marginally) but remain up from pre-summit.

S&P 500 e-mini futures ended the day just above their 50DMA on better volume than yesterday (just below average) and a decent rise in average trade size overall...

The morning session saw stocks catching-down to yesterday's less than exuberant behavior in vol/credit/rates (upper left) recoupling for much of the middle of the day - only to lose it again into the close as stocks had a mind of their own. Correlation across broad risk assets picked up notably (more systemically) as seen in the lower right chart but the late day surge in stocks was far less impactful on broad risk assets (upper right). VIX remains an enigma wrapped in a riddle as the ramp into VWAP - on whatever rumor there was - was clearly levered by selling vol hard as VIX cracked lower and notably away from fair-value given equity/credit perspectives (lower left)...

Stocks underperformed relative to high yield credit markets as they revert to bond's less exuberant levels...

 

Across the major QE-sensitive asset classes - aside from Gold's spike and dive at the NFP print - things moved generally in sync lower (yields lower and USD higher inverted on the chart) though the ES ramp is clearly a little on its own out there...

Commodities all ended the week lower (thanks as much to USD strength as growth weakness) with Gold losing the least...

VIX and the S&P 500 were very strange today as the ramp-fest into the close was all premium-selling love-ins driving VIX lower than yesterday's lows as stocks ended notably lower on the day... just look at the crashtastic drop in VIX from around 220ET!

but the picture gets a little clearer on a multi-day basis as it seems the immediate grab for protection into NFP drove Vol very rich to equity prices - especially yesterday - and today's late day ramp (and dump in Vol was probably those ST-levered VXX players coming undone and being squeezed out by the rumor or lack of real implosion)... VIX still looks a little cheap here to us...

Financials in general remain positive still from the mid-afternoon Thursday rumor-to-news EU Summit sugar-high (except JPM that is) but today saw them continue yesterday's trend of giving back more of those ill-gotten gains...

Charts: Bloomberg and Capital Context

 

Bonus Chart: Super-Long-Run CONTEXT comparing broad risk assets (as they were correlated in the first quarter) relative to US equities continues to send very different messages (since May's disappointing NFP print the equity market seems fixated on one thing only while broad risk assets have stumbled along the bottom). This is not a 'trade' suggestion but does offer some insight into the differences between cross-market relationships over the last few months as equities seem full-of-it.

 


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Fri, 07/06/2012 - 16:35 | Link to Comment the not so migh...
the not so mighty maximiza's picture

O yes Maria play it

"Stocks came off their lows"

Fri, 07/06/2012 - 17:32 | Link to Comment narapoiddyslexia
narapoiddyslexia's picture

This is pathetic. Maria's predictable "off their lows" is now cliche. Anyone who invests "long-term buy and hold" in this market is a moron. Fuck you, Bernanke.

Fri, 07/06/2012 - 17:48 | Link to Comment dannyboy
dannyboy's picture

Only been a week and they already missing Sack! Potter better step up his game if he wants to keep his job at the PPT. lmao

Fri, 07/06/2012 - 16:42 | Link to Comment John Law Lives
John Law Lives's picture

So much for the "stock market" promoting fair and open price discovery.

100% FUBAR.

Fri, 07/06/2012 - 17:53 | Link to Comment unununium
unununium's picture

Hilsenrath does not move markets.

Hilsenrath provides cover for market moves.

Fri, 07/06/2012 - 16:42 | Link to Comment Ignatius J Reilly
Ignatius J Reilly's picture

Feel my Hilsenrath!

Fri, 07/06/2012 - 17:21 | Link to Comment barliman
barliman's picture

 

Just some idle Friday afternoon speculation ...

Isn't there some law somewhere Mr. Hilsenrath is running afoul of by not holding his rumors till after the markets close?

barliman

Fri, 07/06/2012 - 17:43 | Link to Comment Ignatius J Reilly
Ignatius J Reilly's picture

Isn't he above the law?

Fri, 07/06/2012 - 19:08 | Link to Comment barliman
barliman's picture

 

When there is no law ...

... is there any need to be above it?

My thought , in this specific instance, is Mr. Hilsenrath could easily be catogorized as a "market maker" and is subject to the same laws that prohibit others from making statements (particularly unsupported statements) during trading hours.

Are there no ambitious U.S. Attorneys left who would like to distinguish themselves in the public eye by "taking on Wall Street manipulators in the name of the little people"?

You can get a grand jury to indict a ham sandwich ... Mr. Hilsenrath would be far easier.

One would even get to insist he "name his sources" or be found in contempt of court.

barliman

Fri, 07/06/2012 - 20:50 | Link to Comment Ignatius J Reilly
Ignatius J Reilly's picture

From your keyboard to divine ears....

In the meantime I'll keep planning for the zombie apocalypse.

Fri, 07/06/2012 - 16:44 | Link to Comment AvoidingTaxation
AvoidingTaxation's picture

Where is Marla?

Fri, 07/06/2012 - 17:25 | Link to Comment Vic Vinegar
Vic Vinegar's picture

I dunno.  Probably listening to some bad techno music somewhere.

Since you asked: (1) how can you have been around so long and yet wonder this and (2) what do you think of getting in on QRM?  Seems like a good short-term play.

Fri, 07/06/2012 - 16:47 | Link to Comment Hype Alert
Hype Alert's picture

Must be a first, entering a recession (as if we ever left) with the VIX at 17.    Talk about slowly boiling the frog.

Fri, 07/06/2012 - 16:57 | Link to Comment Mugatu
Mugatu's picture

Get ready for the rumor machine to run all next week.  Whenever the market dares to go down, we have to have some rumor save the day. 

Fri, 07/06/2012 - 17:08 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

screwed down tight

Fri, 07/06/2012 - 17:18 | Link to Comment IMA5U
IMA5U's picture

we're doomed

 

sell everything

Fri, 07/06/2012 - 17:20 | Link to Comment RobotTrader
RobotTrader's picture

Bears must be pulling their hair out.  Wonder what they will say if we make new highs this summer.

 

Millions of put buyers have gone broke reading all the doom and gloom articles and making bearish bets.

Fri, 07/06/2012 - 17:25 | Link to Comment barliman
barliman's picture

 

I admire your dexterity!

Taking it in the ass, sucking banker dick and posting your "master's voice" all at the same time ...

Amazing. Simply amazing.

barliman

Fri, 07/06/2012 - 18:21 | Link to Comment Vic Vinegar
Vic Vinegar's picture

I don't admire your trollishness.

RT has been talking about equities for a long time now.  And this week he's been talking about his trip to Hawaii.

I haven't seen anything from him re: 'taking it in the ass' or 'sucking banker dick'.  But maybe that's how you read his comments.  I guess we all see things through our own prism.  LOL

Fri, 07/06/2012 - 19:29 | Link to Comment barliman
barliman's picture

 

Long before you knew ZH existed ...

... RobotTrader had established himself as a toolworking fool whose main purpose on ZH was to spout the Wall Street and SCOAMF (but I repeat myself) lines about "green shoots" and other shite.

When RobotTrader's "words of wisdom" are revealed to be golden showers of horse piss ... he disappears from ZH for an extended period of time.

You are unique. Either you are someone who has been reading ZH for over a year and has not awakened to the idea that EVERYTHING in the global markets is shite ...

... or you are one of the SCOAMF's "social media" tools that joined up about a year ago to attempt damage control.

Because even the few early supporters of RT learned along the way what an unmitigated whore of Wall Street he has and always will be.

barliman

Fri, 07/06/2012 - 20:21 | Link to Comment John Law Lives
John Law Lives's picture

I wondered why ZH once gave RT the privilege of posting charts and graphs etc. on this site.  I figured RT was a ZH prop to stir the pot on this site.  However, I don't think too many regulars here take to heart much of what RT posts these days.

Fri, 07/06/2012 - 18:25 | Link to Comment fuu
fuu's picture

Hapless short sellers howling over the weekend?

Fri, 07/06/2012 - 17:26 | Link to Comment El Oregonian
El Oregonian's picture

I love chart porn...

Fri, 07/06/2012 - 17:41 | Link to Comment Meesohaawnee
Meesohaawnee's picture

you make new highs it has nothing to do with fundamentals but bernake stealin from grannie and givin it to the hedgies. I dont see any thing to play happy happy joy joy about it.. pretty damn disgusting in my world.

Fri, 07/06/2012 - 17:58 | Link to Comment sablya
sablya's picture

The VIX has me all twisted up inside.  Is it manipulation to pretend that fear levels are below normal and everything is ok?  Are fear levels *really* below normal at this time, when things are really hairy on all sides?  I just don't get it.

Fri, 07/06/2012 - 18:44 | Link to Comment razorthin
razorthin's picture

Fukk but the market wants 1250 on the spx.  They should just back off and let it happen.  Then I think they will get their year end election rally.  Propping it up will just make it fail at the wrong time for Obama.  As if that matters. 

It would take an outright QE announcement (not just a rumor) to turn the monthly stochastic back up at these inflated levels.  Better off letting it reset.  That is the only way new highs can be made by year end unless Ben grows some full retard balls.

Fri, 07/06/2012 - 18:30 | Link to Comment riley martini
riley martini's picture

Hilensrath probably bailed out some insiders weely option bet . Two hours before option  ex. so easy a monkey could do it , a corrupt thieving monkey. Why would anyone  want a transparent FED. with such honorable crooks watching the peoples money.

Fri, 07/06/2012 - 18:59 | Link to Comment q99x2
q99x2's picture

The last chart gives me the willies.

Fri, 07/06/2012 - 21:12 | Link to Comment ebworthen
ebworthen's picture

Run silent, run deep.

Sat, 07/07/2012 - 00:37 | Link to Comment hedgehog9999
hedgehog9999's picture

Monday will be an interesting day. It was obviously a ramp on ES which was not followed by OIL and gold  while the USD was spiking. Typical Central Bank manipulation of selected instruments.

The perverse thing is that shorts covered in a hurry and longs piled in the last hour generating a textbook ABC correction on the indices......

Expect a wide gap down on Monday, trapping longs on the tracks and shorts off the train......

There is no news in Europe of any positive significance, they blew their wad Yesterday with nothing earthshaking from a bullish perspective....

Meanwhile the unemployment #s were worst than expected and the worldwide recession is gathering steam......

See you at SPX 1200+ or so, then you'll see the mother of all ramps and maybe QE3.....just in time for Obummers' sprint to the finish line......

Sat, 07/07/2012 - 07:58 | Link to Comment dcb
dcb's picture

not sure I agree with your analysis, but more an true algo day.

it was up from the open because of how the channel is drawn and being at the bottom or ourside of the descending channel.  it is no accident that the open was exactly on the top line of the ascending channel of skf (the inverse of uyg.

hoam many times do you have to trade and draw charts to see things happen over and over. It's the programming stupid!!!

Sat, 07/07/2012 - 10:46 | Link to Comment Hype Alert
Hype Alert's picture

Hilsenrath spreads a rumor and then writes in his Saturday article that Freddie and Fannie securities jumped (after his "leak") thus confirming that investors believe it too.  Much like when a popular analyst states a stock will go up and people buy on the recommendation and the next day he congratulates himself on being right.

Sun, 07/08/2012 - 00:49 | Link to Comment e92335i08
e92335i08's picture

Great charts!!!! Please post these everyday!

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