Low Volume Squeeze Takes Stocks To Green On Week

Tyler Durden's picture

S&P 500 e-mini futures (ES) traded up to almost perfectly recapture their 415ET close from last Friday after a 15-point, 30-minute ramp out of the gates at the US day-session open recouped five days of losses - as once again - we go nowhere quickly. Just for clarity: China GDP disappointed and provided no signal for massive stimulus; JPM announced bigger than expected losses, cheating on CDS marks, and exposed just how large their CIO was relative to income; Consumer sentiment printed at its worst this year; and QE-crimping inflation printed hotter than expectations - and we get a more-than-30 point rally in the S&P. Whether the fuel was JPM squeeze or another big European bank biting the liquidity dust and repatriating cajillions of EUR to cover costs (or Austria needing some cash for a debt payment), what was clear was equity market's outperformance of every other asset class - with the late day surge for a green weekly close particularly noteworthy. Apart from unch on the week, ES also managed to close right at its 50DMA, revert up to credit's more sanguine behavior intra-week, and up to VIX's relative outpeformance on the week (as VIX ended the week with its steepest term-structure in over 4 months). Treasuries ended the week 6-9bps lower in yield at the long-end (2-3bps at the short end) but the USD's plunge, on the absolute rampfest in EURUSD, took it back to unch for the week. Despite the USD unch-ness, Oil and Copper surged (on the day to help the week) up 2.5-3% on the week while even Gold and Silver managed a high beta performance ending the week up around 0.5%. ES ended the day notably rich to broad risk assets - and wil need some more weakness in TSYs and carry crosses to extend this - for now, the steepness of the volatility slope, velocity of squeeze, and richness of stocks to risk makes us a little nervous carrying longs here.

Credit markets have been more sanguine this week and it appears today's open was a crack wider in spreads to catch-down with stocks which then enabled the two markets to auction higher all day - with stocks (as they always tend to) over shooting at the close...

And also stocks catching up to the ever-present short-dated vol-selling rally-monkeys...

 

which left VIX with its steepest term-structure (short-dated vol the most complacent relative to long-dated vol) in four months...

leaving equities on their own today - against HYG/VXX/TLT (credit/vol/rates) in the upper left; and broad risk assets (upper right)...

FX markets were chaotic...with today's mega-gap up (down on the chart) in EURUSD extremely evident...

but commodities accelerated from the middle of yesterday...

and while the Dow Industrials, Dow Transports, and the S&P 500 cash indices all closed very marginally green on the week, the NASDAAPL ended down 1%...

For a sense of where ES traded this week, we note that the VWAP from Sunday's open is 1337.5 (that is the volume-weighted average of every trade done this week in ES) from a Friday close at 1352.5 to today's close at 1352. The USD also closed the week unch but Treasuries rallied as did Oil, Gold, and Silver - quite a week.

Charts: Bloomberg and Capital Context

Bonus Chart: It would be remiss of us to not point out the biggest jump in JPM in almost 4 months on a big surge in volume - closing in on its 200DMA and longer-term resistance...

and while CDS has squeezed tighter for JPM, it is still not quite as exuberant as the stock was today (suggesting the stock is around $1.50 rich at the moment)...


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CClarity's picture

OT - but since when in Maria in love with Herb Greenberg?  Just bizarre on CNBC right now.  Really weird . . . and whiny.  Knickers in a serious twist.

That said, back to this article - the credit markets are still flashing a big problem despite the equity pump today.

HelluvaEngineer's picture

He's always been a great tipper.

CClarity's picture

Spitzer certainly came off smarter, more cogent, and more credible than Maria who was barking emotionally and on a diatribe.  Not that I think faborably of her, but this was really weird.

HD's picture

Indeed. This is not the first time Maria has had her ass handed to her on her own show - she's a talking head, not a journalist.

As I typed this, she actually said, "children are our future"...  Such profound thoughts Maria. God help her if her earpiece ever stops working.

smiler03's picture

You four above me are no better than the Kardashian watching fellow Americans that you constanty berate.

My comment on the article is "Thank God there's no BAD NEWS!"

Jake88's picture

He also came off way more sane than the angry out of control Bartiromo who was completely incapable of even explaining her case. She was bouncing up and down and making crazy faces. She's an idiot. Her looks are gone they should dump the looney.

otto skorzeny's picture

somebody should pimp her out-put her on a c-and-c diet(cocaine and cristal) diet and get her down to 110 lbs

otto skorzeny's picture

Maria "I'm aware that facts matter"- puh-leaze bitch-you're on CNBC. Spitzer was set up because he was on the trail of The 12 Tribes

LongSoupLine's picture

It's all horseshit...period.

Muppet of the Universe's picture

Low volume = high.

High volume = low.

 

Look for 12-8 / 13.  btfd until then.

after this, prepare for the worst shitstorm 2012 has seen.  July Aug are statistically BAD trading periods, and statistically BAD economic periods.

A strong ARB bet would be long energy, metals pinch, and short market.  Don't expect bonds to blow up much.  They have a, pattern, they often are looking to fulfill.

ACP's picture

Ja sehr, look for at least another 25 es points of hot liquidity driven pump action into EOM.

Winston Smith 2009's picture

"It's all horseshit...period."

Hmmm, which of the multi-year series of revealed scandals, frauds and manipulations led you to that conclusion? (sarcasm)

Marginal Call's picture

Low volume means stops are the primary source of liquidity.  Period.   The market is going to go where the existing contracts have to close when no new volume is coming in.  It doesn't take much to set it off when the shorts outnumber the longs 5 to 1 in existing inventory. 

 

 

Bizaro World's picture

I feel sick......absolutely revolting. When this all ends, it will be catastrophic.

BW

crawldaddy's picture

the market now has become nothing but a system to be played with and temporarily manipulated. It has NOTHING to do with investing, or raising capital or anything else it was originally intended to do.

 

Winston Smith 2009's picture

"the market now has become nothing but a system to be played with and temporarily manipulated"

Exactly.  Here's a set of news headlines exactly in the order they are shown together on the mainstream news media web site:

-----

Don't look to China to save the economy this time - China's rapid-fire economy is slowing down, at a bad time: Europe is in recession and the U.S. recovery is stalling.

Ghost towns show China's downturn (video)

Dow surges 204 on economic optimism

-----

What a f'ing bad joke!

rocker's picture

Bloomberg reported the market went up on optimism that China will do stimulus to help their ailments. LOL

JPMorgan reported that some traders might have trading looses not reported yet.

SnobGobbler's picture

china does not do stimulus, they do eraser..eraser... "chinese banks are national, all those losses are for dumb end-fighting globalists; not smooth-talking-not-on-the-good ole'-boy list; they do their own thing.  truth, they fake their shit, ours is contrived; manipulated and perpetuated to confuse, since the're fighting for your money...i mean servitude.... i mean extinction.... please let TSA pick your bones before your flight to hell...

ReactionToClosedMinds's picture

I used to think (sometimes it seemed in my own mind) that CNBC was bad ....except for Santelli .... but the  more I watch Bloomberg ..... I keep feeling like I drank Jim Jones kool-aid and waiting for the Bloomberg hangover.   I think they ought to put the bottom scroll out to pasture ... it is so tired and useless and stale and repetitive .... 

I mean maybe CNBC is better than Bloomberg at this point ... I don;t know.  Neil Cavuto has them all beat .... at least he asks real questions and wonders what is really going on

 

gmrpeabody's picture

I used to think (sometimes it seemed in my own mind)

I'm speechless....

poor fella's picture

I for one can't wait for the computer written headline, "DOW SURGING ON NEWS!" causing the algos to ramp, hence another HEADLINE ABOUT SURGING MARKETS - CAUSING MARKETS TO SURGE!!! CAUSING AP HEADLINES TO PUMP HIGHER ALGOS SURGING AHHHA AHHHH AHAHHH AHHHAH Five news stories every second about new highs! Text messages and twitter sizzle!! YES YESS YESSS YESSS!!!! SURGING surges of WEALTH!!  INFINATE wealth!!! OMG!!!! SURGING GODS OF GOODNESS!!!!!!!!!!!!   THE WHOLE FUCKING WORLD COULD RETIRE TODAY!!!!!!!!!!!!!! OIL HITS 400/BARREL ON ECONOMIC NEWS THAT MARKETS ARE HIGHER!!!!!!! IT'S A GLOBAL ORGASM OF DECIMALS!!!     ooops:  malloc() error

Whatever.... Nobody ever said <RESET> had to occur on a down day  ;) 


q99x2's picture

It is not being manipulated Art Cashin knew exactly what it would do today. And then at the end Pasani says, "Art Cashin an exclusive only on CNBC." What's being manipulated CNBC was purchased by the same people that own the market.

ZeroAvatar's picture

And yet the DOW is UP 203 points. Un. Fucking. Believable.  It's just surreal.  Skynet, I see you!

Muppet of the Universe's picture

GODDAMNIT ITS SO SIMPLE.  BTFD.

Winston Churchill's picture

This sort of ramp on a bad news day is only reserved for the new royalty.

Was the Chairsatan speaking today,or did  Dimon get elevated instead

of stretched.

ReactionToClosedMinds's picture

yeah ... is that the 'real' trade going on?  sh*t gonna happen soon ...?

Jay_Son's picture

I heard the rumor pushing up EUR/USD was that the Russians were buying euros to diversify their foreign currency holdings...

hettygreen's picture

Obviously there are still masochists who are shorting this market or, with equal stupidity, jumping in long because of years and years of Pavlovian BTFD conditioning. Pathetic.

It will be interesting though when the numbers of lunatic gamblers throwing in the towel and joining a twelve step program eventually reaches critical mass. Then we'll get to see some real fireworks.

Meesohaawnee's picture

Dead on Crawdaddy.. Its just a propaganda mechanism now. A complete total joke. One man. .Then only way they can create the illusion that things arent as dreadful as they are is to effectively ban shorting and hijack the market whats left of it.. Traders have been chased away because nobody other than ben's robots will go long.  My bet was this day was planned for a while. They needed something to divert the attention away from Jamie. Didnt want to get the sheep's pantie' s in n a bunch when they turn the 5 oclock news on tonight. They HAD to program the algos for a nice run up. Ben and obummer know 80% of the public's knowledge about how things are going is the 5 seconds they get tonight on how the Dow did. So , they see today and think. . "oh things must be great, JPM no problem"  There are no investors, no traders, just a giant donkey kong game.

ZippyBananaPants's picture

Who cares about this crap.    

 

Is J. Lo really leaving Idol?

 

Tsar Pointless's picture

I know, right?

AND Steven Tyler, too?

We'll have three all-new hosts for the next season!

Now THAT'S news I can use!

GernB's picture

Anyone who invests in the market and wants to know where current values are because they are a clue to where valuations may go next. 

hugovanderbubble's picture

thanks for the stuff.

hugovanderbubble's picture

SPAIN DOWGRADED BY MOODYS to BBB, one more step to close to D¡+

poor fella's picture

If it's not an 'F' it's passing, right!? That's what my brokers tell me..

kengland's picture
Low Volume Squeeze Takes Stocks To Green

 

Wow...such breathtaking work. As if this hasn't been the case for the last 3 years give or take a few months. Like calling the weather in AZ. Pretty tough to do

Cult_of_Reason's picture

Re: "China GDP disappointed and provided no signal for massive stimulus; JPM announced bigger than expected losses, cheating on CDS marks, and exposed just how large their CIO was relative to income; Consumer sentiment printed at its worst this year; and QE-crimping inflation printed hotter than expectations - and we get a more-than-30 point rally in the S&P."

I've been thinking exactly the same, but then I realized, today's sudden violent ramp and short squeeze panic were well planned in advance and orchestrated by JPM (btw, same price action signature today as it was when Dimon surprised the market and announced the dividend).

It really does not matter what China GDP or Consumer Sentiment were, they have enough of free money from the Fed to move the market in any direction they want it to go -- to lull the punters into a false sense of one direction, take the stops out, and then making the market take off in another.

 

Mr Lennon Hendrix's picture

Money managers must have taken the day off since their bosses were all on vacation at the Grove.

adr's picture

The insanity machines have taken over. Just like a few years ago when I noticed the volume in corn contracts all of a sudden jumped over 1000% and then the price started setting records, trading volume has exploded in other commodities.

More volume is going on in one day of gasoline futures than what used to happen in a month. Just like always this volume isn't helping find a true market based price, but only bidding the contracts higher for profit.

Its like someone WANTS inflation, and won't stop till we get more of it.

Muppet of the Universe's picture

Look man, the machines make the market readable.  Reliable, and dependable.  & as long as this market can stay out of bearitory, then we have a fair idea of how it will behave.  It's when QE stops and the machine enters a bear market, that things become...  untested, and extremely, dangerous...

Shizzmoney's picture

Its like someone WANTS inflation, and won't stop till we get more of it.

 

Paging China, paging China....

The Monkey's picture

There is no way to know these days how much of the price is based on real supply and demand fundamentals, and how much has been dictated by the speculation that comes with easy credit. But a few things we can surmise at this point:

1) When monetary policy has been used excessively to "stabilize" prices, then we create an artificial incentive for greater supply (higher prices than dictated by natual demand). Higher price is also an incentive to reduce demand (increase efficiency or pursue an alternative) or stockpile.

2) By attempting to stabilize price inflation via monetary policy, central banks set up conditions conducive to price deflation. All you need is an initiating event to unwind the bubble.

3) There is likely a large bubble behind price that needs to be unwound. If the Fed and other central banks hit the gas hard now, they will create conditions for an even larger speculative bubble with a larger distortion between supply and demand..

The Fed and other central banks are creating conditions for deflation, not inflation. We are 4 years into this. The shell game cannot go on forever. At some point in the near future the slack will need to come out.

sudzee's picture

I see visa and mastercard just settled another fraud for 7.5 billion.

smiler03's picture

I can crash every exchange in the world by gambling £4000. It never fails.