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Markets Dead Cat Bounce Back To Friday's Close
Reasonable volume but decidedly low average trade size suggests today creep higher (and late-day acceleration) to Friday's closing level for stocks and bonds was more dead-cat-bounce (DCB) than BTFD. Treasuries sold off notably but in context merely retraced 50% of the high yield to low yield range from yesterday. S&P 500 e-mini futures (ES) also retraced perfectly 50% of the high to low swing of yesterday and closed almost to the tick at Friday's closing price. The USD drifted very gently lower today (-0.08% from Friday) on Cable strength (GBP) and the ubiquitous post European-close rally in EURUSD. The late-day AUD strength was probably the most notable (just what ES needed to get the correlation-driven asset up to unch for the week). Oil bounced ebulliently off its disaster lows of yesterday with WTI now only -0.8% from Friday as Gold, Silver, and Copper are up around 1.5% on the week (though gold lagged a little today). High beta equity outperformed - Materials, Industrials, and Financials up 1.5-1.8% as the major financials managed decent bounces - though all remain weaker than yesterday's open. Notably JPM's stock popped 3% while its CDS drifted wider still ahead of Dimon's denouement tomorrow. Equities outperformed credit today once again but IG and HY did rally/squeeze into the close - though remain cheap/wide to stock's exuberance. VIX stumbled about 1.5 vols but remains above 22% as cross-asset-class correlations fell notably into the European close but picked up in the afternoon as risk-assets in general led stocks higher - rather surprisingly syncing to fair-value at the close.
ES managed to bounce perfectly to a 50% retracement and Friday's close...
as did Treasuries...
as average trade size (lower pane) continues to fall for ES...
as Financials rallied significantly but remain well off the opening highs of yesterday...
and the divergence between JPM (for example) CDS and stock is growing today...
and ES managed to jump up to its broad risk-asset-based CONTEXT at the close as cross-asset-class correlations popped...
So for now ES has run out of steam to drag it higher from other risk assets and the close at Friday's levels and perfect 50% retrace (along with low average trade size) have the smell of algos lifting for some better exits (and sure enough the last few minutes of the day saw average trade size pick up into the rally)...
Charts: Bloomberg and Capital Context
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QE 3 ends this month...my guess is the banksters jam this bitch up until the well runs dry (except for the ongoing MBS purchases).
QE3 ends this month or QE3 by the end of the month?
end of June...markets banking that Goldman Sachs is right that QE3 is coming at the June 21st FOMC meeting
Then what happens? Weeklong rally, then downward spiral? Or less than a week?
"they" can't allow the markets to self-correct because that would mean the markets would end up plunging down. This is an election year so the US markets are being used as some sort of billboard for the re-election campaign and also as a sort of Ben Bernanke scoreboard touting his almost always "up" markets and how Ben alone has helped his PPT (that's Plunge Protection Team) to trim off the worst of the markets' selloffs and push the markets back into green territory.
Plus with all the massive short interest betting that the markets will go down, there is lots of money to be made with causing short squeezes which last Friday's rally most certainly was and again today's rally was another short squeeze.
"they" are making money hand over fist off the backs of those who invest based on logic, rationality instead of ongoing pump and dump, then rinse and repeat, in an endless cycle not even based on good news or bad news, but just designed to fleece those who make investment decisions based on real news, not manipulated pump and dump HFT bot trading which now makes up something like 80% of all trades!
Oh it'll get weirder. The HFT's running the show will run the price of everything up in the meanwhile until Bill Gates, you and I are eating beans out of a can with a stick under the overpass.
So why is anyone even holding equities? Every summer, same show, something is in trouble. Throw lots of money at the trouble and figure out how to funnel behind the scenes.
A little of this, a little of that, yes, probably all of the above and more.
http://thepraiseoffolly.files.wordpress.com/2011/05/bill_the_cat_by_davinci73.jpg
Syriza begins to break under pressure? death threats? bribes???
perhaps we should expect the unexpected on this. Syriza doesnt get majority, EUR rockets on record shorts, and attetnion turns back to the US and the failed dollar experiment. Maybe this is why Eu playing it cool and no getting ECB'd
http://www.guardian.co.uk/world/greek-election-blog-2012/2012/jun/12/syr...
when called in for a favour,... this posthumous rag is good at pinpoint disinformation
jmo
would you be so kind as to rephrase sir?
You saying guardian disinfo? Of course the papers do do this but ths is a story based on an event that has taken place, so not sure im following your thesis.
I think its entirely possible things go the opposite way, you never really know.
Everyone could be wrong
No way Syriza wins......regardless of how the Greeks vote. Banksters have too much money and too much riding to let it happen.
im in two minds on this.
Either they win and the bankster crush greece to such an extent that no one would dare such a thing again.
Or like you said, the banksters crush the oposition.
guess we'll see resolution pretty soon
Either way it's too late. Too much has happened. Spain's bailout is a doozie and Greece wants the same deal if not, they leave. Spain's bailout announcements last weekend were one epic failed arrangement of bad politics and corrupt financial system. In plain sight and so botched, that everyone with a brain could see right through it.
The bankers have nothing left in their bag of tricks. Greece is their Trafalgar.
War happens. That's what happens if he wins. Just say it out loud.
Dead cat bounce? Nah.
Just another pump job. And oh so unexpected!
drop a pallet of silver
on the cat..
flat cats
don't bounce
Haven't you heard the news? There's a Head and Shoulders Bottom forming...all the cool kids are talkling about it. Better buy everything?
Wtf?
NO WAY MOFO
ok sure sure sure, YES!
A one eyed money can spy the double shoulder
and the coming drop.
but THE CRAMER spent good air time
talking about how some chick and fibionocci
were gonna take the markets up eleven percent.
with or without QE3
HAS CRAMER EVER BEEN WRONG????
(do i really need to put up the /sarc tag?)
Excellent work as usual, Capital Context, thx.
hmmm, and tell me again why there's no retail left in this stinking pig?
Dead cat bounce???
Seriously? That's the reason for a round trip since yesterday? With all the macro issues at play including the Fed's direct hand???
You have to be shitting me.
I'd send my resume out and get a regular job after a day like today but hate wasting the postage.
and chopping down innocent trees...
Gotta watch out for the Bargain Bin stocks like BofA. Easy to shrt squeeze in here should these low priced dogs start drifting higher "look out above." Since they're still a huge component of the S&P moves in companies like this move the index abnormally higher. Same with Microsoft and Intel and Oracle (which had made noises about buying HP a while back. Being run by a former HP CEO-Hurd I believe.) we're still in a cyclical recovery...don't be fooled by the total shit nature of it. Right now the USA is a raft of stability in a world flying apart. Throw in continued massive "WW II levels" of war financing along with twin revolutions of battery powered and nat gas powered tech coming on line simultaneously and those who "kept a steady hand" and waiting for the Spring to raise cash can now move right back in "and be chased by follower money" yet again. Still believe in yet more municipal defaults however as it will take at least a decade for the collapse in property and sales tax revenue to stop from having an impact.
Agree on Bofa. All shorts are dangerous here, but not because there is any value. It's all ass backwards because there is so much liquidity sloshing around and nothing to buy and hold with any conviction.
Yeah right.
A stock that doubled in a couple weeks is a bargain bin stock? BofA seems to swing 20% either way on a weekly basis. The bank is functionally bankrupt, but the appearance of a well run and powerful organization must be maintained.
"Right now the USA is a raft of stability in a world flying apart."
You must not get out much. The USA is crumbling. Every day more and more middle class people lose their jobs and will NEVER be employed at the same wage level again. The only stability granted is from the government in the form of social welfare payments to keep the peace.
"twin revolutions of battery powered and nat gas powered tech coming on line simultaneously"
Do you honestly think that Speculators will allow the price of nat gas to remain in the $2-3 range if there would be a massive increase in the demand for it? The price was run up to $14 on nothing but pure speculation of future demand that never materialized, and the massive price jump set off a drilling boom that has destabilized the entire nat gas sector. The story of 2013 will be thousands of nat gas drillers filing for bankruptcy. If the wholesale price of nat gas goes above $7 middle class people can not afford to heat their homes, FACT.
There will never be a battery powered revolution. Batteries will never be cost efficient to deploy on a massive scale. The power requirements for charging batteries on a scale to replace ICE, is not possible with our current power grid. Power usage of that scale would cause electric rates to skyrocket north of $10 per KWH. People wouldn't be able to afford to even run a refrigerator, let alone pay to charge up their car.
"Still believe in yet more municipal defaults however as it will take at least a decade for the collapse in property and sales tax revenue to stop from having an impact."
The massive cost of public pensions due the the vast increase in retired government workers far outpaces the losses in property tax revenue. Within 10 years no city will be able to afford to have a school open, or have a fire or police force. 100% of tax revenue will be taken up by retirement benefits. My city is already using 45% of its revenue to pay for pensions.
Rallies and dips on tap for the summer. Measured by the SPX, I expect the high range to be just under 1400, and low range.....we've seen it at 1270. Maybe as low as 1300 once or twice more until mid September. Probably higher then in the fall (autumn, that is).
Seems like a bullish set up, bears getting beat out
The excellent Andy Hoffman from his latest rant...
"...Last night was a PERFECT example- hence this morning's commentary. Per the red line below, gold was MASSIVELY CAPPED at the VERY KEY ROUND NUMBER of $1,600/oz all day, but surged at the close, while the Dow plummeted to a 142 point loss! This represented the third time "Cartel Rule #1" was broken in the past two weeks - "thou shalt not let PMs rise when the Dow plunges," and not only that, gold closed at EXACTLY $1,600, a double-whammy against the Cartel.
So what did they do? They immediately walked gold down, hitting it still harder when the New York "Globex" electronic trading session commenced at 6:00 PM EST. By 7:00 PM - following one of the most fundamentally and technically impressive days gold has had all year - with NO OTHER MARKETS BUDGING - gold was down $11/oz, nearly twice the $6/oz gains it made in the ENTIRE DAY'S trading."
Surely this is why the US markets surged today...
http://www.foxbusiness.com/government/2012/06/12/may-budget-deficit-up-f...
"The U.S. government posted a budget deficit of $125 billion in May, more than twice the level registered in the same month last year."
Nothing like a massive monthly deficit to excite the vacuum tubes.
Europes looking worse today than yesterday and the market goes up? WTF?
That little piece of non news just before 11:00am was worth 100 points on the Dow. The lift occured as soon as it was aired. Gave the crooks reason to squeeze and fear did the rest.
...same old, same old for the last two months!
It's all propaganda, all the time. It was funny to watch how the Europeans botched their announcements over the weekend in regards to Spain.
They're getting more desperate by the day.
http://www.zerohedge.com/news/end-may-nyse-short-interest-soared-november-2011-levels-leading-epic-short-squeeze#comment-2519779
Another short squeeze based on hope and change for more QE as promised by Goldman Sachs at the Fed's next FOMC meeting a week from Thursday.
Easily explained, money from European fixed income looking for a safe place. US equities are one way to avoid the EU financial wall which is in the making. However, it is like it is because there is nothing better. Treasuries performed even better, well, a short term love affair or one night stand.
"Dead Cat Bounce" isn't that a rock band from Toledo?
Long term SP500 and Dow look very bearish.
http://bullandbearmash.com/index/sp-500/weekly/
I think I've seen the exact same daily chart about 100 times in the past year. Today was a PPT intervention Fed backed primary dealer buy spree.
The worthless basket stocks all did well. The stair step pattern of the Fed HTF program is plainly there to see. Every time the program is run the market goes on 15-30 minute stair step jumps.
It's all bullshit, all to keep the market from dropping below 12k and to keep oil above $80.
The only rule in the world to day is, KEEP THE MATRIX RUNNING, NEVER LET THEM PULL THE PLUG.
total PPT, with HFT bot algo trades making up 80 to 90%, and it's easy to do by going for another repeat of Friday's classic short squeeze. Rinse and repeat, pump up over night futures, etc.
The stair step pattern of the Fed HTF program is plainly there to see. Every time the program is run the market goes on 15-30 minute stair step jumps.have been long a momo play (ARNA) las t couple of days.......noticed the stair step pattern today........plainly visible....
NYSE Summation Index now firmly in an uptrend.
http://stockcharts.com/freecharts/McSumNYSE.html
If this is yet another intermediate low to be bought with both fists, thousands of "end of the world" experts will have missed it again.
Yes because the economy is the stock market, right Robo?
Funny how the higher the stock market goes, the lower the standard of living for actual working Americans.
But why work, just invest in Apple and retire. Because everyone has a spare $500k to throw into a mutual fund!!!!
Earnings are fake, sales are faked, profits are a lie. The stock market is a scam. The true physical economy is 1/4 of the claimed GDP. The rest is nothing but a hypothecated accounting fudge.
No, it always comes down to cash flow. You can cook the books as you want, it is all about cash flow.
Ok without getting to horny about the long awaited short squeeze, Asian markets need to continue a short squeeze into their session, which they have been unable to do. As long as you have 10s been sold out of Asia and USD (long) position bought. There WILL not be a major uptrend rally, forget it. Markets are capped, shorts reset within the tight ranges.
Last session it was all HFTs gaming with smart/dumb money buying dips. Momo's are waiting for the Fed money drop, which is most likely overstated. But miss what is happening in Asia, who are the creditors of the world, with India about to become junk, IMF is starting to panic on Japan, Indonesia (the extra I in the BRICS) is done. Sth Korea is done and China is crashing.
So, no bull market, if you are American-centric with your trades. You are are done.
I agree, Asia is pretty vulnerable, Europe is a complete mess and the US. Investing in our times is about crap. Either you buy crap, less crap or the best you can get i.e. less crappy crap.
haha true, we are in crap overload. But yeah, wtach Asia if you trade in the markets. They are buying USDs and selling 10yr USTs. American markets are in la la land.
ZH is right, amazing dead cat bounce, almost precise on the 50% re-trace. It's a HFT wonderland, problem is that machines cut trades and momo's will sell on rallies.
It's capped for another sell off.
dead cat bounce meaning - Durden says: my shorts are not working(again).Charts above explaining why I went short and the bottom and I hope it turns downward pretty soon.
USD bids are in...
hahahaha
in slewienomics:
here kitty kitty
have a bowl of cat crunchies
don't pay any attention
to the monster box of eagles
suspended over your dish...
here kitty kitty...
squashed cats
don't bounce....
Market makers knew they could manipulate the market easily early this week, so might as well run it up and take profits from delusional bulls before slamming it to the ground before Greece's election this weekend. I can hardly believe the level of delusion it takes to be in this market, considering the vast amount of events that could cause a market crash at any minute. Indicators are fine, but they don't usually predict wars very well, or surprises that were hidden by 2nd world banks trying to stay afloat.
Asia is selling, as per usual dumping the 10s and buying the USDs Nice.
Now a perfect forward/discount indicator for US markets.
It's sell on open. futures getting smashed nicely