Market Snapshot: Dow Jones Soars 400 Points On European Rescue Plan #42
UPDATE: Moody's ITA downgrade took some shine off as EUR drops 60 pips and ES now 13pts off its highs. TSYs are 3-4bps lower in yields. Gold/Silver not moving much on it.
On the basis of old news, more promises, lack of any clarity, and Dexia's dump on the Belgian government, the equity markets staged a 4% rally in the last 45 minutes to end an incredible day. Our assumption is that this was simply the bounce that everyone expected as we seemed to have squeezed shorts into lunch and were limping back lower on AAPL disappointment. Quite clearly, there were a few uncomfortable equity shorts who were squeezed out rapidly and incessantly as the S&P massively outperformed credit as well as the broad basket of risk assets - even TSYs only managed to sell back to earlier day's high yields (as opposed to extending). Gold/Silver rallied (though well off week highs) as the USD dumped back near the week's lows and copper and oil rallied but again no where near as ebullient as stocks. Evidently, the equity move is exuberant at best but these squeezes seem able to maintain longer than anyone expects.
The clearest example of the exaggerated move in equities is probably against the broad-basket of risk assets known as CONTEXT which tracked very well all day but was simply unable to keep up with the covering in ES as we rallied. While it does not mean equities are absolutely expensive, it does imply there is a disconnect between risk appetites relatively speaking and would suggest equity weakness short-term (from our experience).
We had noted all day that credit was underperforming - and more noticeably that single-name credit was underperforming indices - suggesting forced long covering or horizon changes (from short to long) in macro to micro hedging. The indices in general did not initially follow ES but as the rally took hold they started to catch up (understandably so) but significantly underperformed ES as we closed.
AAPL was the story of the middle of the day as it failed to provide an iPhone 5 (all-singing-all-dancing awesomeness) and fell more than 5% at one point (testing its 200DMA) before ripping back higher to its VWAP and then a little more to close down around 0.6%. Once again - we have run out of adjectives to describe that kind of move in that market cap but whatever helped the market certainly saved a few hedge fund's years today!!
Sectorally, it is more what we would expect from a bounce day - the heavily shorted and prime-for-a-short-squeeze financials ripped almost 6.5% higher in that last 45 minutes. Amazingly, MS is now +3.25% from Friday's close, rallying 14.5% in the last 45 minutes with Goldman and Wells Fargo also making into the green on the week. In CDS land, MS opened 645/665 and closed 555/575 (still a little wider on close) in 5Y but 1Y remains 780/850 and was active today - moves in other financials were similar in style to MS (glide rally, jump wider early afternoon, then gap tighter into close) but lesser magnitude.
Enough of the superlatives...TSYs did not get quite as excited. 30Y did manage a 11bps rise in yields from today's low yields but was only just above the earlier high yields - significantly off the levels of yesterday still (as equities test them).
There was modest underperformance in the 5-7Y TSY bucket and that fits with the heaviest net-buying in corporate bond land today seen in the 3-7 and 7-12Y buckets respectively. For some perspective on the moves in the indices relative to single-names today IG was 0.5bps tighter while its fair-value widened 7.5bps (massively cheap to the index now) and HY managed a 1bps compression on the day (as opposed to 48bps decompression in intrinsics) but we do note that short-dated HY was wider all day. Just for further perspective the equity move today is equivlent to 37bps more compression in HY and 5.5bps compression in IG - another point of evidence that the rally was overdone (but that's optically clear we assume).
FX saw the USD dump as AUD ripped higher as did every other major (apart from JPY) as carry FX took off - it was initially delayed in its response but once we got going in ES it didn't take long to rip.
Precious metals and commodities all managed to rally back as the dollar lost ground with oil finding the day's highs but copper, gold, and silver all stayed well of the earlier day's highs. Silver clung to $30 at the close as oil peaked over $78.
All-in-all - an unbelievable last 45 minutes to what was making sense as a day so far with Bernanke's perspective early on. While we would prefer to fade this equity strength, we would suggest a half/third unit size as these squeezes can extend incredibly - though that seemed to be what we saw today - especially in the banks.
Late Update - by request our short-squeeze indicator shows two moments today that were good setups for notable potential squeezes - as the Goldman Short-Interest index hugely underperformed (which is good for shorts) and then greatly outperformed (squeezed) as the rallies came on...obviously not foolproof but nevertheless useful for some context.
Charts: Bloomberg
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Let's not even talk about this... I'm just not ready, man. Someone tell me this much, has our collective Western culture gotten so dumbed down that this is now, not only acceptable, but the norm?
Next asshole to use the word "free" within six paragraphs of the word 'market" ... and I'll just... I'll I'll lose it.
Obviously because 42 is the answer to the universe.
We might have hit a near term low today, which will be followed by a month or two long rally. It goes against my every instinct to say that, which is why it's probably right.
I highly doubt that. I think you got half a day more...at the most. And if the metals reverse and head up, which I think they will do tomorrow, it is game over for the S&P.
Zero hour is very, very close.
Give me a few more days to buy some more "junk" silver.
How about a EU fast track approval for Turkey full membership?
That should give us at least a month. But it would obliterate Turkey in the process.
The silver trade is ripe for a short squeeze. I'm not sure you have a few more days in the paper market for silver, anyway.
As for Turkey...seriously, who cares?
This is still a bear market, but you'd better understand THEY INTEND TO SQUEEZE EVERY SINGLE SHORT DRY on the way down. They know exactly who the shorts are and what cards they are holding. If you play, you lose. You are public enemy #1. They can f#ck you and everyone will applaud.
I think you mean that when it's not totally rigged and crooked, it has a downward bias.
I can live with that.
Sorry, but silver is probably heading back to 17 per once all the ass-holes buying phyz at 20% over spot realize their massive mistake.
Not kidding and you can neg all you like, but check with me in 6 mo to a year and you'll kick yourself.
As always, time will tell. I suspect a rally is forthcoming, I just thought we would get closer to 1020 S&P, and we still might, but I think a rally is close at hand. Short term rally, but it will be a chance to make some quick money, and then roll over into puts for the collapse, which will take out the 2009 lows on the way down.
Patience my friend. 2 million put options on the S&P for shocktober means 1 of 2 things. Either TPTB are gearing up for some serious profits, or they are trying to fool everyone trying to ride their coat tails into getting sheared. Either way, there is about to be some movement and it never goes in a straight line.
Yep, patience is the key. I did sell my CMG puts today for a tidy profit. Not a home run, I came in a little late, but not bad. Still holding my March LULU puts for now, we'll see what happens the next couple of days. If it looks like this is the rally I'm expecting, I'll sell the puts and buy some index calls. If my forecast is correct, I see potential for a fairly enthusiastic rally for a couple of months. But again, I'll see how the next day or two looks before committing any capital one way or the other. In this environment, practice patience and keep your powder dry for the big moves.
Now that the dust has settled a little, I think it's possible this afternoon was just a bone-crushing short squeeze. I'm gonna sit tight, for now. Maybe we will drop down to 1010-1020. If we drop to 1020, that's the point I'll go long. If we bounce from here, well... I don't know. Fuck it. It's late and my brain is too fried for this shit.
So long and thanks for all the fish.
What do you get when you multiply 6 x 9?
Is 42 your front chainring?
Market has gone full retard. :|
I don't think "Full Retard" fully describes the market. It's more like a multiple personality disorder coupled with manic depressive and seasonal affective disorder with a dash of schizophrenia for how it responds to the (rumor) voices in its head.
No Tourette's?
No.. that's what people think you have when they walk by your office as you stare at the market and hear your expressions of complete and absolute bewilderment. Something along the lines of "WHAT THE SHIT, MOTHER FUCK, CRACK ASS.. STUPID FUCKIN... AAAAAAAAHHHH!!"
I see.
It's only when you hear that on the subway that it's Tourette's
Oh, now I understand. The market has been elected to congress.
Yeah, why even try to apply rational analysis to this horseshit? You want analysis: It's horseshit. There is your analysis.
It was a rumor that Mayor Bloomberg ordered the police to arrest anybody south of 14th Street not wearing $2,000 shoes as OCCUPY WALL STREET protesters.
After reading this I'm inclined to cheer him on : http://occupywallst.org/forum/proposed-list-of-demands-for-occupy-wall-s...
:|
You forgot "demand 42: happy days reruns will be returned immediately to their rightful place...just after MASH reruns..while Cheers reruns will assume THEIR rightful place BEFORE MASH reruns."
Aye, too many socialists on there... it's so obvious what's going to happen if the 99%er people get their way. It won't be less government libertarianism. It will be socialism... :(
I tried to post this, but comments not uploading now:
If you trade in this 'market' your money will be taken from you for free lol
Irrational exuberance? As my "idol" Alan Greenspan would say.
It's all about power. TPTB cannot afford to lose right now or they will lose everything. So they will pull every trick, every stunt possible, no matter whether it is obvious or not. They don't care at this point. It's life or death for them. A cornered and dying animal can fight with surprising strength and visciousness. Expect no less.
That said, moving the market for an hour is not "moving the markets." They just bought themselves another day is all. The entire system could crash at any time.
TPTB are not worried about losing. They are worried about what life will look like after they win. They would like it to be more normal than most predictions. Normal or not, they'll be on top.
I respectfully disagree with your observation: "moving the market for an hour is not "moving the markets."
Do you know what they got done in that hour? The derivatives? The leverage? How many thousand stocks follow the DJIA when it moves one way or the other? How short were they when they covered at the low of the day, How long when they sold at the top? How much in profits did they remove from our wallets?
They don't call them TPTB because they don't know what they are doing.
free
(1)
(2)
(3)
(4)
(5)
(6)
(7)
market.
How's that?
Allow me to make the correction. MANIPULATED MARKET. I hope this correction will set your mind at ease.
Fade reality.
Hookers and blow just showed up at CNBC's studios.
This time through the front door! Woohoo!
When are those f*ckers going to leave the market alone !
Reminds me of Sisyphus rolling his public money-ball up the taxpayer hill to see it collapse all over again. Stupid.
"When are those f*ckers going to leave the market alone !"
When you leave.
Collateralized Viagra...
http://www.teluglobe.com/inthenews/usa/this-is-absolutely-scary
Look at this from 2008: http://www.fool.com/investing/dividends-income/2008/10/07/holding-strong...
HAHAHAHAHAHAHAHAHAHAHAH!!!!!!
That's fantastic. I wonder when they deleted all the comments that most likely were there at some point.
Well if the webpage stays down and my automatic payment doesn't get deducted and they use it as an excuse to hit me with a fee or raise my rate, I'll just stop paying them. Before I do that I might just take a few hundres out of a couple ATMs. Maybe I'll help the economy by buying a new car on the credit card.
All bets are off with the bank of scum.
Apocalypse paused while the world goes to the restroom...will resume shortly
Yeah well... that's just like, your opinion... man...
Is that the chant of "collapse! collapse! collapse!" I heard from "the protesters"?
belgium has a government?
Please, in the interest of humanity, stop using that word so carelessly.
He's angling for a Rory.
Yes, it is the Dexia board.
Bag of crap disguised as.......... Best....deal....ever.
Glad, I'm out for at least a few days. Sold at peak vix on options. I've seen this shit before.
Fool me once, shame on you. Fool me again, I AIN'T GONNA BE FOOLED AGAIN, BITCHES.
I thought you were going to go bushly on me for a second, but you pulled it out with a nice bitches at the end there.
Congrats on your VIX exit.
Bush said "bitches" after every sentence he spoke. But he said it silently to himself.
This is getting beyond any comprehension... total madness.
nah. tyler called this weeks ago~~~the volatility and called: "buy cheap straddles"! which i, as an old [but no longer] options guy figure = buy calls when the market is sold down, buy puts when rallies start getting pooped
pretty aresome, really; fade the bullies; these are nice swings for this, and spreading & hedging is permitted
You know what.
This choreographed nonsense fails to impress me at this point.
It's a giant Wheel Of Fortune being spun by an old hag in a sequined dress.
Madonna?
Susan Sarandon.
Hillary Clinton [now try to get that image out of your head]
But they're purple sequins! That makes all of the difference.
http://30.media.tumblr.com/tumblr_led5794IJa1qag36no1_400.jpg
Holy crap, does she have an appointment to conquor a make believe kingdom after that get together?!?!
i'll just take tina turner on the Big Wheel
& purple sequinz, BiCheZ!
and when the rescue plan fails as its designed to, the market will fall 800 points.
Nothing to see here, same old same old.... haven't we been down this road about 6 or 7 times already?
Too violent by half was that 'rally'. Hope the hedgies took advantage.
one more bounce, suck in the last of the bulls who haven't lost enough money... come to papa... Meat's back on the menu BOIZ!
One more bounce works for me; still have some dead money to unload (GOV).
SHEER FUCKING IDIOCY!
And the CNBC WEBsite market recap headline is...Stocks Rebound Sharply on EU Bank Aid Plan
Plan, did they say PLAN! There's no stinking plan (or badges - best I could find)....http://www.youtube.com/watch?v=CGcVhoHdRFo
There's a plan, all right. Dueling press releases.
BTW, I just have to ask this rhetorical question since no one else has: WHY DOESN'T GOLD EVER GET THE PARABOLIC MARKET ALGO-DRIVEN RAMP?
If this market rally was real, Gold would have soared. Let's see, Europe is going to recap their banks with money they don't have by taking on board toxic assets on balance sheets that are toxic themselves on the heels of European taxpayers that are in a depression.....
You get the point. It all makes sense. Right?
Gold will not soar. It is a barbaric relic that has no value beyond jewlery. Get used to its downward drop back to its industrial value.
Please short it. Go all in. Please.
Hahaha.
Silver bounced quickly. Gold is lagging but could potentially go back to $1700 ish end of the week. How come it hit $1679 overnight last night?
'tis tradition.
Right up there with "how can gold be worth more than platinum" I imagine.
Hahahahahahahahahahahahahaha!
F'ing ha!
Those who understand need no explanation
For those who don't....... No explanation can be given
We are all saved I tell you .......SAVED! /sarc
All I can to is laugh
K@
Hope coughing up that hairball didn't hurt, sounded painful.
Kool!! Thanks for making me laugh! :)
What was the buying volume in the last 30 minutes?
Selling pressure remained higher. Markets were oversold, bounce was due.
World is not ending today, DEXIA is not Lehman. DEXIA didn't go tits up. Lehman could have been saved in 2008 (which many experts suggested at the time) and markets would not have tanked the way they did in 2008 and 2009.
Next few days will tell what is going on. MS up 12% because MS is not gonna go bust on the Greek derivative trade?
So many possibilities, so little time to discuss it all. Just remember who is controlling the "market" and that the "market" is absolutely no reflection of the real economy.
Now, why would something be saved, when it was murdered for a reason? As for the next few days giving a tell, well, they will be every bit as fictional as the last few, so other than the next storyline emerging (with a few double/triple/quadruple head fakes), I wouldn't put much faith in them.
DEXIA is a MSM distraction. Away from BoA being Lehman.
Synthetic Derivatives Bitchez!
QE Europe. That would be for the entire Continent--except for those "little countries" of course. Hehehehehe. "Little Countries"...do they come any other way?
the move seemed mechanized, coordinated, yes, almost not human at all.
HFT hft hft hft, HFT, ppt ppt ppt ppt,
crack that whip... LIMIT UP LIMIT DOWN round and round
sob sob sob sob, mkts open and fair and orderly,
rule 442, 332, 112, plunge protect 45 min soar,
ha ha ha hahh, shish boom bah.
investors sell 70 B hide out, no fairth in the PONXI mkts....lol
What about this STL bank of america thing? That has my interest. How valid is the youtube video and random articles?
Hate to be a pinhead, Tyler, but I think it's plan #41.
Oh, you people and your zero-based indexes!
like the post, but zh can be a bit schizophrenic. complain about the algo momo chasers not trading on data, then say the jump is from the euro rescue rumor. nonsense. it's because if you do the charts on a weekly we were due for a rally.
also please use the hourly macd indicator as to where the short squeeze is going to happen or end. rather good with the wilders rsi
looks like everything will be ok. tiss tiss
I just got more silver bitches, let them roll in those paper stocks and money. let them have more and more paper. We all know there is plenty of trees.