With crude prices at multi-year highs and India promising to save its oil companies it is perhaps not entirely surprising that all the attention in this opposite world pushed the Energy sector (most notably the biggest names) to lead the market higher on low volumes today. Sadly, Chevron and Exxon accounted for 40 of the Dow's 48 point gain and the S&P energy sector gained an impressive 1.8% as the rest sat around close to unchanged (and Staples lower). Treasuries began selling off from the Asian open last night with the belly 6-7bps higher in yield on the day (-3-5bps on the week). The USD strengthened (as JPY weakness resumed - providing the oomph ignition for stocks) but soon after this morning's home sales data miss, the USD slid back to unchanged on the day (and week). Gold and Silver were slammed lower right before the US open, stabilized, and then leaked lower into the US close (but remain +1.25% on the week). WTI broke down modestly after the pitc lose but remains +2.8% at $109.50 as the US closes). VIX traded up to 17.1% before dropping back to 16.1% as stocks ripped and despite the late-day weakness ended down modestly. 330RAMP was missing as all indices gave back considerable gains into the close with Trannies red (and S&P at its 100DMA again).
The Energy sector dominated the market today (and Staples were hit)...
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And Trannies are hurting...
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The S&P 500 futures closed perfectly at VWAP dumping into the cash close... on a low volume day...
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Treasuries were sold today (starting as Asia opened)...
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FX markets jerked at the home sales data and teh USD drifted lower from overnight strength all day...
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and commodities had their early WTF moment...
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It was perhaps unsurprising we get a bounce at these levels... a significant trendline and 100DMA (but volume was well below average in S&P futures and NYSE)
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but BofA warns this is merely a corrective bounce before we see new lows...
S&P500 Sep E-mini futures are setting up for a corrective rally higher.
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The completing 5-wave decline from 1705, bullish momentum divergences and the confluence of support between 1629.00/1624.25 (retracement and 9m trendline) all point to a near-term base and turn higher. HOWEVER, while gains are likely to extend to 1656/1665, potentially as far as 1680, gains are corrective before new lows.
The lack of capitulation/panic from a variety of sentiment indicators (such as the VIX) says the larger risk-off environment has more room to run.
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From a Treasuries perspective, this means TYU3 could see a near-term pullback, particularly as intra-day momentum rolls lower from overbought. A break of 125-09, the very short-term pivot, opens 124-22, but once the larger risk-off environment resumes, TYU3 should resume higher for 126-04, ahead of 126-23, and, POTENTIALLY, as far as 127-10/14, before a larger top develops.
Of course today's bounce remains a 'blip' compared to the macro and credit reality...
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The bounce off the 100DMA in the S&P 500 futures was the weakest we have seen in nine months as it closed a mere 1 point above that critical level...
Charts: Bloomberg and BofAML