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Equities Ebullient As Rest Of Market Pauses
Another interestingly odd day. One of the lowest (non-holiday) volume days of the year but a big pick up in average trade size as the S&P 500 e-mini futures shrugged off Treasury strength, USD strength, and Gold's somnambulism seemingly led by an energy sector focused on only one thing - the bounce in WTI. Copper also drifted higher even as the USD leaked modestly higher (as assume the two got some hopium-infusion from China RRR cut rumors early on and sustained momentum as liquidity disappeared in many risk markets. Credit once again was a split-decision with the CDS markets underperforming (and notably thin from our discussions) while HYG (high-yield bonds) decided to lead the way (also on one of its lowest volume days of the year). Treasuries remain in a tight range over the last few days, as EURUSD limps lower, but VIX had a high vol day with its move higher in the face or rising stock prices (up to 20% vol at one point) providing some ammo for the late day surge in stocks as it was sold hard to close -0.25 vols only around 19.5% (as implied correlation broke 71% before plunging into the close).
Stocks pushed back up towards the 50DMA amid low volumes but high average trade size (which smells susiciously like HFT pumps and institutional dumps)...
and we note that ES has limped up to a relatively imortant resistance level (and failed 3 times to break it today)...(click chart for huge version)
But relative to CONTEXT and the following Treasuries, Gold, and the USD, stocks were living in their own low-volume world today...
But HYG seemed to be the catalyst for the exuberance into the close as it ripped to new day highs (amid dismally low volume and what we assume is a plethora of retail market buy orders) even as IG and HY credit echoed yesterday's lack of follow-through...
and VIX (and implied correlation) had an interesting day - much more negative than stocks...
and WTI (and slightly less so Copper) outperformed Gold and Silver (despite an early bit of violence into the US open...
Charts: Bloomberg
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Rally on! As long as the printing continues, It's all Bullshit!
Not all equities were so ebullient. Check out>
AZO (-4.65%) (HYG component).
CMG (-5.69%)
PMs throwing their used up beta plays overboard before ....
That is EXACTLY what I was seeing...all over the markets today. Stinks of HFT mark ups and block dumps. Tech stocks were especially suspicious...very little volume in that group. Laggards were rallying late in the day...a classic sign of impending trend reversal.
I'm looking for the NASDAQ to get hit tomorrow...in a substantial way.
As always, thanks for this contextual market wrap up each evening. Really helpful.
I agree with you, and was selling into it and adding FAS puts. I also thank the author for doing these writeups, it really clarifies things for me.
Bullish.
The DOW as we all know is a pitiful gauge of economic performance. Pitiful as it is any Joe Sixpack still in the game watches it with great intensity.
The pitiful thing we are seeing in the last five years are historically low volumes which further distort how the economy is perceived.
In my days working for Wall Street firms I remember the DotCom era and it's huge volumes, daily over a billion. Today's volume was under 100 million ... at it's zenith the DOW traded on October 10, 2008 approximatley 11.5 BILLION shares. Yep, today's market is a pitiful creature on life support.
Everbody and their uncle trading currency's. Can't get enough leverage in stocks. It's kind of sexy to be flipping millions for the price of a coffee. Stocks are so 19th century.
wow....omg....low volume only gets coverage in ZH and is fully noted in the comments
amazing....thanks
nada should continue to work well in this "just right" crisis!
heck, it must be monday, somewhere!
Oil supply down? Touted as higher demand and a strenthening economy or is it just the reverse flow in the pipeline to TX.
I trade commodities like oil, gold, silver and copper with leverage. I use CFD´s for that. I think they are the perfect instrument for trading.
ALL FRENCH BANKS ARE IN DEFAULT
Two trading days til quarter end..the low volume ramp is in.
When, not if something breaks, the volatility will be amazing.
I remember this time last year when stocks traded down almost all of June and then we got the retard rally into July, before the wheels fell of in debt breach August.
Instant replay?
Today was probably close to 95% HFT algos. You can see it plain as day when you look at the charts. Once Europe closed the trading all went flat outside huge couple second jumps. Bank algos changing blocks with the Fed.
At least Fecesbook went down over 2% again. The chart in oil is complete insanity. I think this makes over 8 days straight of over $1 swings between the middle of the night and the US market open. Once the US trading opens the speculators run wild and bid crude over 1% in minutes. Somebody doesn't want crude below $80.
Next week is a short week (lite volume trading) AND we get NFP numbers. That might explain the VIX today.
somnambulism... One of my favorite words, but one that describes those I abhor who partake. Almost everyone I meet these days...
I'll have another caucasian, por favor.
BTW, Brent $150 by end of August.
VIX up and stocks up, interesting. Someone getting ready for a party?
Stocks are in their own Private Idaho!
http://www.youtube.com/watch?v=Bvp97GWeLoc
Computers (HFT) can move prices up or down on various markets for virtually zero cost.
http://maxkeiser.com/2012/06/27/computers-hft-can-move-prices-various-markets-virtually-zero-cost/
Now I find out the truth of why HFT makes up more than 95% of all trades especially on low volume trading days like today that was only 100 million shares traded on the DOW in contrast to the record volume of 11.5 billion shares traded in oct 2008.
and vision with PER is not so good:
http://agstock.blogspot.com/2012/06/per-and-sp500.html