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Treasuries Surge Leaving Equities Running On Fumes
Volumes in cash equities (NYSE) and futures (ES) were on the low-side for the year today but what was shocking and perhaps the sign that this rally has run out of real-money to push it higher is that fact that today saw the lowest average trade size in the S&P 500 e-mini futures contract of the year. This follows the peak (in average trade size of the entire rally) on Friday as stocks bump up against the March 2009 low up-trendline. We can't help but feel the professionals (who will tend to trade in larger size) are leaving the building rapidly with only the algos and correlations to hold this up for now (as Treasuries start to lag back down) as we note (h/t John Lohman) that this was the 6th lowest relative range in cash S&P for the year. The sell-off into the close dragged stocks back in line with broad risk (as CONTEXT had underperformed all day) as well as credit and vol markets as 10Y Treasuries rallied the most in two weeks now lower in yield for the week (and flatter). Oil outperformed as the USD meandered higher (and JPY stronger) while commodities were generally quiet. Credit was weak - led by HYG - as IG remains the up-in-quality favorite (though suffered a little from its richness today) as VIX dropped and its term structure flattened modestly led by the longer-end.
And the little extension we have seen off the QE-boxes seems to have run its course at this long-run trendline...
Equities pulled back down to catch up with correlated risk assets (CONTEXT) and credit/vol markets at the close...
Treasuries shifted rapidly as they pulled off that October swing high in yields as resistance...shifting to down in yield for the week...
Credit was weak - led by HYG (which opened high and closed notably low) and underperformed stocks (though at the close equities caught up to credit weakness) but once again we note that investment grade credit was favored and the up-in-quality rotation that we have been on about as a canary continues.
Commodities were relatively quiet today (aside from WTI which was the outperformer and most volatile) as the USD meandered as EUR leaked lower off the US open and JPY pushed higher (smelling like more carry unwinds as AUD was holding).
VIX ended the day lower (down 0.5vols, though above 15%) but the term structure flattened - led by the far dates more than that near-date vol rallies.
Charts: Capital Context
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Another no volume melt-up... tomorrow.
exactly!
i dont givea fuck about the DOW, SNP & Nasdaq!
i only see AAPL! AAPL is down, we are down , AAPL is up we are fine
Apple is worth a shitload of money... but it's CISCO 2.0... gonna be epic when it losses 80%+ of it's stock price... a whole lot of people are gonna cry cry cry.
Fumes keep you high
They are going to keep running this thing up until retail starts to get suckered back in, THEN it will crash. We already know that the market has almost no correlation with the overall economy or the financial health of the 99%. I'm a swing trader, but until I start seeing reality shows about cab drivers and dentists daytrading, I'm going to most likely keep a long bias.
check Yahoo forums. Plenty of idiots piling into Priceline and chipotle
Biff I may be wrong but alot of small fry are waking up and will not come back for now. You would be a fool to go in now anyway. We are at the highs for now. The more and more I speak with people I know they have figured out the markets are trying to suck them back in, but love the government for saving them! Go figure. More Ipads please.
Agree 100%. And in my real job I work with some of the most uninformed investors imaginable, they are refusing to get back in at this point. However, once they start to see 20-40% annual returns on the mutual funds in our crappy 401k plan, they will jump in hand over fist late 90's Nasdaq style. At that point, I will start switching to a bearish bias. Simple fact of the matter is, the banks have too much stock right now and they need some morons to sell it too. Since the morons aren't buying at this price, they'll keep running it up, on low volume, until retail jumps back in.
GSers are tagging "Muppet 187 Killa" around lower Manhattan, and crossing out the names of rival muppets.
So slow I could actually see my TNA trades print today....
A loyal Turdite makes these videos. Not spam, just funny.
http://www.youtube.com/watch?v=07oOzLWFoEc&feature=player_embedded
I've heard the big bad wolf will come and Blow, Blow, BLOW THAT MARKET UP!
You heard exactly right.
And it might be coming right now, if there is any truth to the coup d'etat information trickling out of Beijing (in spite of internet sensors and minders trying to stop information from getting out).
Washington Times has a new article up.
uhhh, that SPX leakdown starting at 3:30, then massive volume selling at 3:50 to the close was not bullish!
Cramer tells me EVERYTHING Is bullish. He can't be wrong, right?
There is a lot of cheap credit available (Thanks Ben!) to keep this thing propped up on low volume.
However, the retails will not be coming in anytime soon due to the rising price of gasoline and the daily household financial uncertainties that brings.
Result will be sharks feeding on other sharks (and muppets, of course) AFTER this current, grand game of "Chicken" is over.
hey, carl!
tyler: that investment grade credit was favored and the up-in-quality rotation that we have been on about as a canary continues.
stocks may also be favored "due to" their up-in-quality-ness, especially some "index" stocks
the R2K hasn't looked at all weak to me; nor the DAX
the up-in-quality low volume drifts into index stocks is banksterParaDice, but may here be more related to defensive posturing at these levels vis-a-vis less "quality" instruments0papier
This could actually be the next QE, money goes out of bonds into stocks, the fed buys bonds etc... Etc...
HY17 was down 1/16
pretty much unch'd pn the day
IG18 was 1.5 bps tighter ........
Amazing how rich IG18 is!
HY17 looks like some HY/HYG arb (http://twitpic.com/8zh7rk) and maybe index arb into its roll.
...But not as rich as IG88 - bounty hunters don't offer credit.
Vapors can lead to spontaneous combustion
Or just vaporize like the MF/Corzine Theft
Fumes are more volatile than substance.