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Market Snapshot: Equities Odd One Out Again

Tyler Durden's picture




 

Shrugging off Italy's rating downgrade (somewhat expected but continued negative outlook), funding stress in Europe (Libor levitating and Swiss/French banks divergent), cuts in global growth expectations (IMF and World Bank), concerns over systemic risk contagion (ESRB and World Bank), and escalating rhetoric in Sino-US trade wars, US equities have managed to reach up to Friday's highs as rumors of AAPL being added to the Dow seemed enough for hapless traders.

But, like a broken record, we note that the new highs in ES are being accompanied by new lows in 2s10s30s, near day's low yields in TSYs, day's highs in gold and silver, and multi-day lows in copper - all seems to make perfect sense...

Aggregating many of the risk-on drivers, CONTEXT is clearly telling a different story from US equities and now as Europe closes (having benefited from the modest and now ubiquitous ramp into 1130ET), we are seeing sectors begin to disperse significantly with Utilities outperforming - hardly a signal of broad strength.

 

Chart: Capital Context

SPY also looks expensive relative to HYG, VXX, and TLT and while today's roll in CDS markets puts some odd technicals into play, we note the skew remains wider (i.e. indices are trading wide of their fair-value in the new series) suggesting investors are looking to roll their hedges/protection/shorts as opposed to buying into this strength.

Chart: Bloomberg

The main support for ES seemed to be the general shenanigans in FX markets with swissy losing ground and very volatile on re-peg rumors. JPY remains strongest relative to the USD - repatriation never really a signal of strength as carry gets unwound. The dollar (DXY) is still 0.7% higher from Friday.

It seems to us that there is significant evidence that this strength in US equities is not well supported up at these levels and while it made some sense to fill the gap from Friday's close (and hope seems to remain for Bernanke to save the day) - the USD is not crashing (though we admit gold is rallying) and TSYs are not signalling anything along the lines of a large-scale "Twist" - no matter how hard Goldman tries to pressure Bernanke to throwing the kitchen sink at it.

 

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Tue, 09/20/2011 - 12:21 | 1689118 John Law Lives
John Law Lives's picture

"But, like a broken record, we note that the new highs in ES are being accompanied by new lows in 2s10s30s, near day's low yields in TSYs, day's highs in gold and silver, and multi-day lows in copper - all seems to make perfect sense..."

It does. The Chairsatan decided to levitate the ES, and The Chairsatan gets what he wants.

Tue, 09/20/2011 - 12:23 | 1689130 LeonardoFibonacci
LeonardoFibonacci's picture

I guess No Doomsday today.  Let's all go back to bed

Tue, 09/20/2011 - 12:26 | 1689145 fdisk
fdisk's picture

Yeap, everything is fine, sell GOLD, buy Banks.. :)

Tue, 09/20/2011 - 12:56 | 1689275 junkyardjack
junkyardjack's picture

Buy BAC, their stock is not allowed to go under $6.97.  At some point a short squeeze has to commence. Just get out before they go bankrupt

Tue, 09/20/2011 - 13:16 | 1689354 GeneMarchbanks
GeneMarchbanks's picture

RED. Bad joke and no avatar.

Tue, 09/20/2011 - 12:34 | 1689180 SheepDog-One
SheepDog-One's picture

*UGH*...youre growing very tedious with your 1 same post on every article.

Tue, 09/20/2011 - 15:38 | 1689132 Pinto Currency
Pinto Currency's picture

-

What if the odd one out was the Treasury market held at artificially low yields by Fed printing and buying.  See the Merval Index in Argentina in 2001 / 2002.  Argentinian equities went much higher as the Peso went into crisis.  

Real assets include stocks although they  underperform compared to gold and silver during crises.

 

The dangerous asset classes are currencies and bonds during currency crises.

Tue, 09/20/2011 - 12:24 | 1689139 RSloane
RSloane's picture

"Aggregating many of the risk-on drivers.."

There's a difference between taking off your socks and shoes and wading through a shallow stream without knowing the placement of rocks and, at the brink of starvation, running through a T-rex nest to get a few bits of scrap meat.

Tue, 09/20/2011 - 12:28 | 1689158 John Law Lives
John Law Lives's picture

The DJIA has ramped 700+ points from its intraday lows of 10,789.87 on September 12... and the macroeconomic news reported in the US during that time has been almost uniformly bad. Gee, nothing like broken markets to make people cynical. FUBAR. http://finance.yahoo.com/q/hp?s=%5EDJI+Historical+Prices

Tue, 09/20/2011 - 12:28 | 1689159 vast-dom
Tue, 09/20/2011 - 12:28 | 1689160 mynhair
mynhair's picture

With no sign of life in volume today, will hold off til tomorrow to play.

That first 5 minutes of SPY volume was so pathetic, not expecting any increase in vol.

Tue, 09/20/2011 - 12:29 | 1689161 DogSlime
DogSlime's picture

How the hell?  This whole fucking thing is nuts.

A few years ago, the kind of news that has come out during the last 24 hours alone would have been enough to crash the markets, but nowadays equities RISE on this news???

The whole thing is a sad joke.

I despair.

 

Tue, 09/20/2011 - 12:30 | 1689164 Al Huxley
Al Huxley's picture

When you think of equities, think Will Farrell in 'Old School'.

Tue, 09/20/2011 - 12:32 | 1689174 max2205
max2205's picture

Yep Dow Jones put in APPL at the highs....typical

Tue, 09/20/2011 - 12:33 | 1689179 GittyUP
GittyUP's picture

Macro bad but micro news is still pretty good.   Obv investors see earnings holding up next 6-9 month.  Whether they are right or wrong is another thing....   But the explanation is pretty clear on why ES is up. 

Tue, 09/20/2011 - 12:34 | 1689181 Don Birnam
Don Birnam's picture

"[R]umors of AAPL being added to the Dow..."

The Dow Jones Index Oversight Committee.

The most predictable latecomers/top signallers on the face of the Earth.

Tue, 09/20/2011 - 12:39 | 1689208 Dr. Engali
Dr. Engali's picture

When that happens is the day I short it.

Tue, 09/20/2011 - 12:51 | 1689258 SheepDog-One
SheepDog-One's picture

Thats another 'miracle of the DOW'...the historical DOW chart is complete BS, as when the components fail they hand pick another one to replace it. So the chart means nothing at all.

Tue, 09/20/2011 - 12:34 | 1689184 TradingJoe
TradingJoe's picture

Expect the un expected to dissapoint!

Tue, 09/20/2011 - 12:40 | 1689212 SheepDog-One
SheepDog-One's picture

TradingJoe, I dont expect them to shift from 'Carrot and Stick' to actual delivery of QE3 at all, way too sweet a gig this carrot and stick markets! 

Im going to laugh my ass off as Bernank says tomorrow 'Well, check back with us on the next FOMC meeting....which will now be THREE days long'!

Gotta love the carrot and stick out in front of the retard markets.

On one hand, I hate these people and would love to see them hanged, then another part of me gives a standing applause...gotta love The Joker after all no matter what an asshole he is.

Tue, 09/20/2011 - 12:43 | 1689235 TradingJoe
TradingJoe's picture

I totally agree, but is this "strategy" going to "work" for ever? I highly doubt it Sheep! At some point "they" will lose "it"! Tired and "dissapointed" WS might decide on its own that its time to "let it go",eh?

if im wrong I stand to lose few grant in puts but my PMs will make it up big in the mid to long term so yes I think sooner rather then later somehting s gotta give!

Tue, 09/20/2011 - 12:52 | 1689242 SheepDog-One
SheepDog-One's picture

Oh sure, at some point whenever theyve planned for they pull the rug out, we'll be in a world war that day, so no one will care what happens with 'stock markets' when theyre suddenly dodging bullets in their own neighborhood.

Again, the Central Banksters win.

Tue, 09/20/2011 - 12:40 | 1689186 Dr. Engali
Dr. Engali's picture

The every day person judges everything by the dow. Therefore we could have a nuclear attack and as long as the dow stays above 11,000 the sheeple will go back to sleep. My question is..when does  the redemption selling start?

Tue, 09/20/2011 - 12:48 | 1689224 SheepDog-One
SheepDog-One's picture

Right, the DOW is probably the MOST irrelevant thing we can look at, but in their genius theyve conditioned the sheeple public to hear on the radio on the way home 'The DOW closed up +100', and therefore all is well in the world! No matter how shitty work was, no matter how broke their family is....all is well, the DOW closed up, so has to be well.

Total genius I tells ya.

Tue, 09/20/2011 - 12:41 | 1689225 SmoothCoolSmoke
SmoothCoolSmoke's picture

So true, and the Dow is the easist index to manipulate.

Tue, 09/20/2011 - 12:37 | 1689199 BenG
BenG's picture

Crazy, crazy, and yeah, did I say crazy?!

Tue, 09/20/2011 - 12:42 | 1689226 CvlDobd
CvlDobd's picture

I'm taking this copper breakdown very seriously. XLU has me scratching my head a bit. I think I'll hold off until Friday and make my utilities call from the weekly chart.

Thanks for this update.

Tue, 09/20/2011 - 12:45 | 1689240 rajc
rajc's picture

does anyone know how to construct the so called basket (model) that capital context uses. i was looking for wegiths etc for each of the asset used in the model.

 

thank you

Tue, 09/20/2011 - 13:03 | 1689308 mynhair
mynhair's picture

It's a secret.  But don't worry, AVL is on sale in the lobby!

Tue, 09/20/2011 - 12:46 | 1689243 LongSoupLine
LongSoupLine's picture

Coordinated Criminal Circlejerk.  Middle class to provide clean-up services.

Tue, 09/20/2011 - 13:00 | 1689293 Dick Darlington
Dick Darlington's picture

EU-dictatorship cought red handed. Lies, lies and more damn lies. Of course everybody knew it was just a stunt to manage perception and "boost" fake CONfidence.

THE European Union's bank stress tests used out of date macroeconomic assumptions that didn't reflect the severe turmoil wracking sovereign debt markets when the tests were completed, according to a confidential document prepared by senior EU finance officials that urges regulators to use more timely scenarios in next year's tests.

http://www.theaustralian.com.au/business/financial-services/eu-stress-te...

Tue, 09/20/2011 - 13:17 | 1689356 lemarche
lemarche's picture

which brings the question, who is trading the equity markets like this???!

Tue, 09/20/2011 - 14:53 | 1689691 adr
adr's picture

If you look at the tape it is all rapid buying and selling with new bids always a little higher than the last high.

Right now it is just computers buying and selling shares. The few longs that know the plan are holding a few shares to sell at a predetermined price. News doesn't matter only the programming intended to get certain stocks to certain levels. When flesh and blood traders aren't dabbling in the market the computer program's goal is easy to spot.

For the second week in a row the exact same push is being made day after day. There is no solid reasoning why many of the stocks rising 10% in a week should be doing so.

Tue, 09/20/2011 - 13:18 | 1689363 papaswamp
papaswamp's picture

Japan about to get a new dose of radioactive contamination as Typhoon Roke moves over crippled Nuke plant.? Counter clockwise rotation will take contamination inland and south. http://t.co/TDGFsquG

Tue, 09/20/2011 - 13:21 | 1689372 YesWeKahn
YesWeKahn's picture

It's PPT.

Tue, 09/20/2011 - 13:31 | 1689404 Belarus
Belarus's picture

perfect sense non-sense, bitchez.

Tue, 09/20/2011 - 17:33 | 1690183 msmith
msmith's picture

Equities are set to return to the downside again soon http://bit.ly/nlr4c9

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