Stocks Dump Into Close After Help From Oil And Bonds All Day

Tyler Durden's picture

Early weakness in Treasuries (rising yields) and an acceleration in WTI prices back over $80 provided the 'contextual' support for an almost perfect 38.2% retracement bounce in S&P 500 e-mini futures today. Key support/resistance at the 1330 level was restested on dismal volume with a late-day surge but average trade size and activity picked up rather notably into the bell and ES cracked back almost 7 points to a 'mysterious' VWAP close. HYG outperformed today (as did VXX - and implicitly VIX which closed around 18% dropping 2 vols) but it appeared medium-term that equities were reverting to HYG's less sanguine view of the last month rather than HYG really leading. Financials were strong performers but all of those gains were at the open with XLF (and JPM which was unable to break VWAP in the afternoon) unch from 930ET and MS/GS/BAC/C all down 0.7% to 1.6% from the open (with a late day give back). Gold, Silver, and Copper are pretty much unchanged from the 4pmET close levels of yesterday while WTI is up over 2% closing back above $80. The long-bond underperformed +7bps on the day but outperformed on the week (as the 7Y and 10Y underperformed on the week) and provided the support for equity's levitation but this seemed as much QE-hope unwind as any implicit weakness. FX markets were dead with slight strength in AUD and EUR and weakness in JPY as USD basically trod water +0.8% on the week.

S&P 500 e-mini futures perfectly hit the Fibonacci 38.2% retracement and sold back off (and although the chart doesn't show it, ES drifted all the way back to the light blue line which is VWAP)...

And while HYG outperformed (red) over the last two days, on a longer-term scale, it appears equities (green) have merely retraced back to a QE-hope-less level (and we note that HYG is now back at fair with it intrinsics - lower pane)...

 

as WTI was the big performer on the day but Silver and Oil were weak on the week...

which given the USD only gained 0.8% (and dead today) is quite notable...

and while 30Y underperformed today, it remains the modest winner on the week (though the entire Treasury complex is higher in yield on the week)...

and as is clear from CONTEXT (our prxy for risk assets) the push in yields and Oil provided the impetus for stocks to rise but once they reached their convergence, equities tumbled and reverted rapidly to VWAP into the close - a dismal end to a hopeful day...

Charts: Bloomberg and Capital Context

Bonus Chart: ES dumped rapidly to VWAP in the after-hours session...

and JPM Intraday was unable to break its VWAP all afternoon suggesting plenty of selling pressure from pros...