Deja Deja... oh forget it. S&P failed to make its all-time highs. We dipped (on heavy volume) and wiggled all the way back on no volume in stocks. Healthcare and Utilities lead the week but high-beta momo-monkeys chased homebuilders on the day. Wherever you looked today - apart from stocks - risk assets were being sold. VIX is higher on the day (and 2.5 vols disconnected from stocks); high-yield and investment-grade credit markets are ending near their worst level of the week - suggesting the S&P is 20 points rich; Treasuries ended off their low yields but stil down 7bps on the week and notably more post-Cyprus (with stocks in the green post Cyprus). The USD strengthened further during the EU session and flatlined in the US afternoon (with EURJPY leading the way down and not supportive at all of the equity rally). Apple lost its 50DMA again, dropping 2.2%. Equity volume was extremely low (cash and futures) and average trade size the lowest of the year. The phrase of the day is - irrational divergence.
Divergence #1 - Longer-term - Stocks from Macro Data and Macro Risk
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Divergence #2: Stocks From Credit...
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Divergence #3 - Stocks From VIX (protection)...
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Divergence #4 and Divergence #5 - Stocks From Bonds... and Stocks From FX Carry
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So what is 'helping' stocks... well it appears when everything else fails - lever WTI!!
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Because with average trade size at the lows of the year in S&P 500 futures...
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...this seems all about algos keeping us green for quarter-end dressing cover - because market breadth was not following at all...
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Gold and Silver recovered from an early spike lower.
And the Greatest CONVERGENCE of all... S&P 500 in 2012 and the S&P 500 in 2013... come on!!!
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Charts: Bloomberg
Bonus Chart: The Nikkei 225 (in USD)...
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