Oil And Treasuries Lead Stocks Higher As Credit Lags And Volume Remains Flaccid

Tyler Durden's picture

Admittedly slightly higher than yesterday's year-to-date lows in volume, today was not much better as S&P 500 e-mini futures (ES) pushed up over 1400, back to three month highs, on decent average trade size (following yesterday's low average trade size). Treasuries tracked stocks (higher in yield) but Gold and the USD disconnected (from stocks) into the US open and never really recovered. ES rolled off its highs late on and reverted perfectly to VWAP once again and rather coincidentally the 'correction' occurred just as ES priced in Gold hit the year's highs (which intriguingly is a critical cliff's edge level from a year ago). Oil's surge (and Treasury's weakness) were the main risk drivers which pushed CONTEXT to lead stocks higher as FX, credit, and PMs trod water largely. Interestingly, in ETF-land, our capital structure models were flashing red with HYG down notably and credit underperforming broadly, along with VIX (and VXX having an outside up-close day) not playing along with the rally. With VIX bouncing off 4-month lows, closing back over 16% (and up on the day), the pull to VWAP into the close on decent average trade size, the plunge in short-interest, and the underperformance broadly of credit markets (especially the ever-reliable-for-a-pump-job HYG); we'd be a little nervous up here (especially after Europe's sovereign and credit weakness today).

ES reverted nicely to VWAP amid low volumes (but notably higher average trade size with blocks coming in at the close); ending up 0.5% with VIX unch at 16%...


Credit dramatically underperforming equities...


With S&P 500 e-mini futures priced in gold at an interesting level...rolling over today into the close...

and close-up...


and Treasuries and stocks clung to one another while Gold and the USD decoupled lower (and it seemed like stocks wanted to get down there into the close)...


and while CONTEXT (based on broad risk assets) was dominated by Oil and Treasury's move today, the ETF-Structure (upper left) saw a major disconnnect (which we haven't seen recently) in HYG and VXX from SPY and TLT...


as is clear from the day's performance (inverted to make 'risk-on' action in stocks optically pleasing); VXX pushed higher and HYG lower as SPY recoupled with TLT on the close...

The last few times when HYG has closed red and SPY closed green two days-in-a-row were: 5/23 SPY fell 3.2% in next 5 days; 4/2 SPY fell 3.4% in the next 6 days; 1/12 SPY fell 0.5% the next day and rallied back 1% in the next 3.


or more clearly...


and as we noted last week, cash bonds appear a little over their skis - with the advance-decline line now rolling over...


If this HYG sell-off (which saw notable chunks of heavy volume in the afternoon) combined with the advance-decline in bonds is anything to go by, then this could get a little ugly given how low inventories are, how dire liquidity is currently, and the over-crowded nature of the trade.

Charts: Bloomberg


and Today's Bonus 'Oh Shit' chart is Priceline now -12.5% after-hours...

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bezell's picture

Markets ready for a plunge!!!!!!!

ihedgemyhedges's picture

Priceline tanking?????  Poor Robo, guess he'll just have to keep wanking off to his avatar for any after hours fun today............

slaughterer's picture

Things do not get super-ugly until HYG drops below $90.  Perhaps by Friday.  :-)

oogs66's picture

ES priced in gold, did gartman write this?

azzhatter's picture

Tyler said flacid

buzzsaw99's picture

the price is wrong bitchez!

Meesohaawnee's picture

DTO getting juicy. The fibber in chief knows 100 oil will wake the sheep. no way 3 months before this can be allowed..!! must get re elected to lead sheep to slaughter.

fuu's picture

"Shatner's knee deep in hookers and booze..."

adr's picture

Unless we get a real plunge this would be a great time to buy Priceline. All other indicators show a favored stock like PCLN will make back the plunge and then some within a few days. The exact bottom is unknown right now, it could be -17% or -19%. Just means the perfectly timed insider buys will make maximum profit.

The half life of bad news seems to be two days. By Friday missed earnings will be old news. Whatever BS rumor the financial media puts out will take every momo stock up 10% in milliseconds.

I read that today's gains were because Chesapeake beat EPS. With all the BS that happened to that company over the quarter and nat gas surging over 70%, how could they not beat?

The farce continues. Up next, Episode 11 - The Bernanke's Blue Balls. Followed by Episode 12 - The Backed Up Load Blows

Catullus's picture

First Energy took it on the chin today too. The economy sucks. They confirmed guidance for 2012. But pulled 2013 guidance and said their GDP growth assumption was 2.5% for next year. Ouch.

Earnings guidance across the board needs to be revised. Coming up on some nasty shit for back half of the year.

Meesohaawnee's picture

pcln tanking? oh well now 1500 SPY is a lock.

SmoothCoolSmoke's picture

Shorts who somehow managed to tough it out are gonna come up big.  All 3 of us !!!!!!!!!!!!!

bnbdnb's picture

Web sales/service providers keep losing money. Bubble over.

AlaricBalth's picture

If anyone has an interest. This should make for some good reading tonight.
OCC Q12012 Derivatives report.

hankwil74's picture

Oil leading stocks higher because higher energy prices are good for the average business, or because higher prices at the pump means less expendable income for the average American to spend in the economy?

slewie the pi-rat's picture


read it again;  keep trying!

Meesohaawnee's picture

7           signed.. Robotrader

CunnyFunt's picture

Did Sprott buy more silver today?

resurger's picture

WOW priceline WTF!

whoever was long that share, is Royally FUCKED!

Robslob's picture

Until next week when it recovers do to HFT bot hunger for momentum.

disabledvet's picture

My understanding is that oil in storage has been at recoerd levels going on a year now. The temptation to inflate must be beyond belief. Of course who wants to make North Dakota the richest place on earth when all the "Special Relationships" are with the Saudi's.

Richard Head's picture

Paging resident fuckwit robot trader...you have a margin call, again.

chump666's picture

topping out brutally.

S&P f's   -0.20%, Dow f's -0.15%

looks like hedge fund selling.  USD is bid.  Awaiting HK/Shanghai.  HK goes neg with USD buying.  Indexes (may/april tops breached) should start to roll over.


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