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Equities Unch As Financials Lag
Given the low volume day, it is hardly surprising that markets had some unusual actions today but the consistency with which financials lagged on the day, combined with the selling pressure we saw in HYG (which has increasingly seemed to dominate credit markets recently) offers little to 'buy into' from today. ES (the e-mini S&P 500 futures contract) oscillated up and back to VWAP all day long in a very narrow range as risk assets rose modestly (helped by the seemingly Iran-driven surge in Oil more than any other). FX carry did little, TSYs rallied (and 2s10s30s dropped) modestly, as Gold dropped on the day but credit (based on the IG and HY credit indices) outperformed equities by a little (more end of day liquidity than risk appetite) as the anchor of BofA (-2.5%) and MS (-2.9%) dragged financial stocks (-0.6%) to close at their lows of the day and seemed the most important factor of the day (even as corp bonds - as thinly traded as they were, saw net buying).
Financials (in red) handily underperformed all other sectors with a late-day selling wave seeing volume pick up significantly (and after-hours selling was continuing). VIX jumped back above 22% and stabilized just under 22% as the vol steepeners we discussed last week (seasonals) start to get unwound.
HYG opened gap down after outperforming into the close on Christmas Eve as US credit markets closed early. Volumes were not as low as the broad market in the high-yield bond ETF and as is so usual recently, the moment we see HYG start to crack, a miraculous bid reappears (as is clear above) but we do note that the gap was not filled and HYG closed down even as ES was practically unch and IG and HY modestly better.
A better sense of the relative performance of assets (SPY-HYG-VXX-TLT), the SPY Arb model (above) shows the relative underperformance of the non-equity (in this case dominated by HYG) green-line portion and the afternoon convergence of this ETF-executable arb. SPY traded (much like ES) close to VWAP (suggesting machines set at low volume mode were providing the liquidity today).
All-in-all, an odd day that saw metals crumbling until Europe closed (collateral/liquidation needs?) and then stabilizing in the US afternoon as financials lost significant ground into the close.
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berkowitz lost $200mm today on sears. fund manager of the decade...
http://www.bloomberg.com/news/2011-12-27/berkowitz-s-fairholme-loses-aga...
This market will continue to make smart people look stupid and stupid people look smart. Going from manager of the decade to dog of the year says it all.
private workers vs. public unions.
college grads who studied history of "socialism" with debt with no unemployment or healthcare vs. retired vets in tea party chanting "no socialism" against obamacare while they get medicare/medicaid.
Elites don't like smart new money.
Could be a new Lego set coming.
http://youtu.be/CtQKcM48hnw
I think it's more likely a new Let-Go set is coming.
Release! Lagging Financials and Sagging Equities. The fact that financials are only lagging in the face of the fact that they have no legs, at all, is statement enough about this market. India is so rigged, it's pitiful and so coupled and co-dependent, it's pathetic.
ori
/the-plan/
too bad. i still own sears diehard tools that have lasted over a decade and a kenmore refrigerator that is over 25 years old. their brands are one of the few that give value in this throw away society.
kmart acquisition was a massive albatross...
Really? A decade? Try a lathe that lasts 50 years and you have something.
a decade is great. good luck getting three years out of a power tool. ive had two newer washers that lasted less than 2 years without maintenance calls. 50 years? built today? where?
Have a 20 year old Kenmore fridge in the garage. Runs great. 4 year old Frigidaire appliances in the kitchen are all falling apart. Sears made some great appliances. Too bad Lampert ran that place into the ground. Mine's dirty and drab and not someplace you want to be.
thank you donnieD. my sentiments exactly.
For a reclusive human being like Lampert, rumoured to have been kidnapped and released upon payment, not a surprising end.
ever hear the term 'craftsman' ...ever used a tool before?
i have a sears diehard cordless power saw, diehard inverter for my car--- and yes, many of their tools are craftsman as well, which also last forever. clearly youve missed the point of my post. any other questions tool?
Kenmore here 20+ still ticking.
Don't worry, the futures will levitate all night to make sure we gap higher and get this party started tomorrow.
They pushed all day to keep the major index numbers green. They can do better than that.
- Oil traded near the highest level in six weeks after Iran threatened to block crude transportation
- Japan’s rebound from the March earthquake and tsunami sputtered
- The S&P/Case-Shiller price index for October fell 8.4 percent from a year earlier
- Morgan Stanley (MS) will cut 580 jobs in New York City
- The euro held a three-day decline against the yen
I don’t understand..
We had the usual spate of lousy news, so why didn’t we get +2% on the S&P?
HYG was ex-div today ($0.5347). Backing that out, wasn't it up on the session?
Could this be hurting BAC?
http://finance.yahoo.com/news/U-S-appeals-court-review-BofA-reuters-1673963587.html?x=0
I was very curious how today would play out. S&P was above the 200 dma but below the the 50 week average. I guessed both would make strong barriers. Algos seem to feel the same ways about resistance and support levels as plants feel about copper or vampires feel about garlic, just won't get too close. Without outside help to push up or down the market seemed likely to stay in a narrow band. Last Friday someone 'helped' out with a last minute push, but today no one seemed interested. My end of year prediction is that the last days of 2011 stay in that narrow band to make a sweet looking table top.
I have been thinking the same exact thing. We are right there...again... Failure to break out prior to the holiday precludes us from a 'meaningful' breakout now (due to low participation) IMO. Time to take profits and sit tight to see what the new year brings.
We need this breakout on a nice high volume day, and after 1270ish look out! Support/Resistance line here is burned into my monitor, haha
Can someone explain why volume drops so much around holiday weeks? HFT makes up most of the volume these days, no? Can't the machines do their thing without minimal human supervision?
No they can't. The machines get inbetween bid/ask from actual people and shrink the spread. If very few people are trading, they may as well as turn off not to waste electricity. That's why the saying from Andrew Haldane from the Bank of England, that "HFT adds to liquidity during a monsoon and pulls liquidity away during a drought".
http://www.bankofengland.co.uk/publications/speeches/2011/speech509.pdf
Speech from Andrew Haldane.
This is the time of year when people feel guilty for taking time off from the Rat Race. At the same time, they fear something going crazy, while their back is turned and they're distracted. I'm sure everyone would like to leave the trouble to after New Year's. The problem is that the trouble might not wait that long.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
Move your accounts out of J.P. Morgue, Walls Fargone, and Bunk of Amerika.
Pay off debt; reduce, reuse, recycle.
Break the chains.
http://www.bloomberg.com/news/2011-12-28/pboc-may-suspend-sale-of-china-s-three-month-bills-tomorrow-traders-say.html
How about this one people. Chinese seems not to like chinese treasuries any longer. Fresh from bloomberg.
silver just looks really, really, horribly god awful, like the last thing I would ever buy. I think I'll buy a speck right now, with leverage, just for shits & giggles