Low Volume Melt-Ups Resume

Tyler Durden's picture

Cash and Futures S&P 500 managed to close back above the 200DMA after a dismally low-volume melt-up supported by a reversion to fair-value in HYG but diverging from most other asset classes. Having pulled away from Treasuries, Gold, and the USD, stocks (led by financials) roamed higher on lower and lower comparable volumes to manage their best gain in a week with a generally low average trade size overall. Credit markets were quiet and reluctant to follow stocks but were reracked up (though IG underperformed HY's exuberance). However, the pop in JNK and HYG dragged them from the quite notably cheap levels they were at up to their intrinsic value and they anchored there (so not really a confirming strong rally). HY and HYG are in line also. Oil and Copper dropped early and then leaked back higher for the rest of the day as Silver and Gold end close to unch for the week - with the USD also close to unch as EURUSD round-tripped its gains from yesterday. Treasuries lagged the move in stocks but leaked higher in yield also in the afternoon - except notably 5Y which outperformed (reminding us of the 7Y outperformance aberration yesterday) as we suspect end-of-Twist is being priced in. After the day-session close, ES limped back towards VWAP on heavier volume and average trade size but didn't make it as we note VIX fell back below 25% (down 1.25 vols today) ending the day a little rich still to equity/credit fair-value. Lots of rumor-driven knee-jerks today but once the momentum had set in for stocks, we limped along to crack that 200DMA giving hope before Draghi's reality check tomorrow.


HYG (more than VXX and TLT) were very supportive of SPY today (as is clear in the upper right model) - but reverted back rapidly (to VWAP on heavy volume) from their now rich-to-intrinsics and rich-to-SPY level right at the close. Broad risk assets were not as exuberantly hopeful as stocks as the data hit this morning (upper right chart) but were dragged along as momentum lifted all boats in the afternoon. Correlations came and went (lower right chart) - most notably came back to relatively high levels by the close which portends a much more systemic move in markets (one way or the other). VIX (lower left) remains a little rich to equity/credit model's reality but round-tripped from some early weakness in risk assets by the close...

Comparatively - gold, treasuries, and the USD did little relative to the liftathon in stocks...

HYG certainly wanted to get back up to its fair-value today, extended the momentum beyond it in the late day, but snapped back to reality into the close. IG underperformed as maybe some pressure from cheap overlays remained but volumes were light so we suspect this was more reracks in HY than very active trading...

ES managed to regain the 200DMA but we note that (just as with JPM and MS) the closing VWAP level from Friday was very important...Look at where ES stalled today...

and for JPM, that closing VWAP seemed important too (same with MS, C, GS, XLF, and SPY)

and GS (just to show the seeming importance of the magical algos that levitate stocks wherever you wish them to go)...

Charts: Bloomberg and Capital Context

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Comay Mierda's picture

didnt you hear? merkel fixed everything

magpie's picture

Helmut Kohl's patented method of "sitting out" and stalling now given Europe-wide coverage by Angela. You go, girl. 

Ghordius's picture

great sitter, he could outsit rhinos and elephants. he could set on an issue until it died of old age and was forgotten by all.

though when he smelled a chance of reunification he suddently blurred into cheeta accelleration

The Monkey's picture

They are probalby asking themselves by now, "where are the bears??"

SmokeThatHog's picture

Failing what exactly?  15 ticks?  I guess you're going to tell me that inflation is coming tomorrow now.

francis_sawyer's picture

Algos preparing flag day celebrations...

BandGap's picture

This meaning what exactly? I know what a low volume melt-up is, but in the context of today's events is this supposed to be reassuring or just mean the bots were busy?

junkyardjack's picture

Just follow the price, stocks appear to be bottoming out.  Unless some new bad news comes out expect a rally...

BandGap's picture

WTF did I get dinged for, asking a question?

I haven't been active in this market for 2+ years, it is batshit crazy. Just wondering what the batshit read is on an uptick with minimal volume.

valley chick's picture

don't let the down ding bother you...think we all have been ding down at some point.  :)

BandGap's picture

Is that some sort of double entendre?

Great, more confusion.

SilverTree's picture

Ignore the Vote up!/Vote downs!

Village Smithy's picture

When you say "reassuring" does that mean you are long and you want info that supports that? If so, this isn't it. It's more of a as you said "bots were busy" day just soaking up all the free money the PDs have available to them and pushing things higher so they can exit or place short positions at better prices. But as you also said, "this is a batshit market" so tomorrow anything is possible.

eclectic syncretist's picture

In general a move on low volume is not considered as meaningful as a move on high volume. High volume up days and lower volume down days are considered bullish.  See for instance the 5yr chart volume for GLD


Now compare that to XLF


The other guideline is that it takes high volumes to put a stock up and keep it there, but declines have no such volume dependence.

PS - today's up day is part of a larger down trend and normal market action.  The trend is down.

Everybodys All American's picture

Trading higher on little to no volume is suspect and has been suspected to be manipulation by whoever. Trading higher in the context of heavy volume is considered conviction of the buyers typically. Something we have not seen for some time. Without conviction the markets generally resort to selling pressure at some point. What you see is more conviction by sellers than by buyers especially on the downward moves in the market. Todays action is but one data point and would indicate the buyers are still few and far between and this may just be a bounce that you need to sell into and not become locked in on the hope of higher highs. Hope this helps. In the words of Art Cashman ... stay nimble.

Oldwood's picture

The stock market really is in another world. Everything leaks upward where in my world, everything that leaks is downward!

resurger's picture

can humans beat the machine?

veyron's picture

full of hot air ...

XtraBullish's picture

Stocks for the Long Term! Short fiat of all sizes and shapes and put it into FB on a scale-in between $2 and $4 with a stop at $1.75. What you make you can use as the joint retainer for the class-action suit against Morgan Stanley. BUY BUY BUY!

john39's picture

The criminals can do whatever they want in these so called markets. Just look what they did on the Shanghai exchange this week with the two references to June 4, 1989. Surpised this event was not discussed because it clearly demonstrated outside control of the Shanghai exchange, and was instantly banned from comment in China.

John Law Lives's picture

"Low Volume Melt-Ups Resume"

Translation:  The prey managed to draw another few gasps of breath before the bear chomps down harder and finishes it off...


Yardfarmer's picture

a seemingly unending and tedious exercise in pumping bilge from the hold of a sinking ship. I think I'll go watch the weeds grow out on the hillside.  a much more rewarding activity.

BandGap's picture

I got the Snog T meh chick, and liked it.


Dave Thomas's picture

Damn, I got the Adult Diaper ad again! Lucky bastard!

cbxer55's picture

I keep getting the damn adult diaper ad myself! Wonder why, I've never ever browsed the damn things. I like the gold-digger chick ads myself, placing sweet young things with "established gentleman"!  LOL

Dave Thomas's picture

Better than the Chase Sapphire I guess.

WineSorbet's picture

Once again ZH readers are shocked, SHOCKED that the market went up on manipulation.

trebuchet's picture

Friday close important since london closed since friday, mon-tues was a round trip.

let the london rumours begin

LongSoupLine's picture

Just another day of crooked manipulation by the TBTF's using their HFT algo bots.

orangegeek's picture

Low volume in an up market - that's bad and normal in a bear market retracement.



Conman's picture

Tomorrows gonna be high volume count on that. Up or down is the Q.

Mark123's picture

It is assumed that a company's value is based on the price of the last share traded multiplied by the entire float.


So, if you control the excahnge, and have unlimited access to digital credit, and some of the fastest computers on earth....do you suppose that the market can be manipulated (rhetorical question)?


The only problem with this game is if the big players start to reduce their holdings (at the artificially high levels).  That is not allowed, unless you are an insider!!!!

Everybodys All American's picture

All eyes are on the village idiot Bernanke Thursday. Can't wait to hear this stammering fool come up with excuses for his "brilliant" plan failing thus far. In bygone years he would be laughed out of the room and now in this era the idiot is Time's Man of the Year. Instead of recalling the Wisconsin governor we should have been recalling Ben Bernanke.

slewie the pi-rat's picture

slewie had a $333 spin on a $.50 bet this morning;  fiery dragons everywhere!  the chinese were patting me on the back for hours! 

they didn't see me hit the 4 jacks in the non-smoking room playing video poker

free coffee, too

chicken dinner tonight,  BiCheZ!

CvlDobd's picture

I heart E Minis!

Grand Supercycle's picture

Previous USDX retracement & SPX rally warning is now confirmed & good (counter trend) equity upside expected.