While everyone is loudly patting themselves on the back for getting the electronic exchanges open and enabling a few proud men to wriggle out of positions (or into them) into month-end, we can't help but notice the overall weak tone of equities. The S&P 500 cash markets proclaim a very small green close but after-hours futures are getting hammered. The Dow is only -10pts (but with IBM and HD alone accounting for 25 points of gain!), The Nasdaq is leaking painfully as AAPL traded down exactly as we thought - inched back above VWAP and tumbled into the close -1.5%. Broad risk-assets, which had been indicating a lower move in US equities, kept on sliding and stocks stayed with them all day as correlations picked back up. Treasury yields are 4-6bps lower than Friday's close, the USD is down around -0.12%, but Gold and Silver are up 0.6% on the week now. Oil slipped (after a European close spike and dike) and Copper slid from the US open. The main story of today is the crash in S&P 500 futures after-hours to the lows of the day (down 8 points from its cash close).
Selling was not as severe in the capital structure (VXX/HYG/TLT) as SPY caught up with our model by the close (left) but broad risk assets slid all day and stocks stayed closely in sync until the close when things went absolutely pear-shaped...
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just look at the volume and movement after the cash market close!! look at the volume explosion at the close (with the market perfectly wriggled up to VWAP in the pre-close in a linear ramp - just as it did in the pre-open!) - If you do not truly believe these markets are broken after seeing this - then we have a bucket of unicorn tears that grow new subway lines if dropped in the ocean we'd like to sell you...
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To leave ES at Draghi's Elbow...
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Seems like our note yesterday on the disconnect between gold and stocks rang a bell eh? Here is the month of October - recouple, decouple, recouple...
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and Year-to-Date - Gold and Silver remain the winners BUT European equities (EuroSTOXX) are now outperforming US equities (Dow) for the year...
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Chart: Bloomberg and Capital Context
Bonus Chart: NFLX surged to cover the Q2 gap but fell back notably from its highs (still closed up 13.5%! because Icahn bought a truckload of calls!)
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