For only the 5th time in the last 25 years, the S&P closed up over 1% on Humphrey-Hawkins testimony day. Today's screamfest seems all about a growing "common knowledge" that the economy is weaker than everyone hoped and Yellen will untaper as soon as possible (despite her saying the absolute opposite of that). Stocks surged (S&P's best 4-day run in over 2 years); Credit spreads collapsed. Gold soared to 3-month highs (+5% from Taper). The USD roller-coastered notably on JPY & EUR weakness. While bonds sold off (not un-tapery) the move was very modest (and bond yields have dislocated notably from stocks). Of course, USDJPY was in charge keeping the S&P over 1,800; and Nasdaq in the green year-to-date - Mission Accomplished (but Dow lost 16k into the close). A massive squeeze of shorts in the last few days has doubled the market's impressive performance. VIX tested down to almost 14%. Why not BTFATH, Yellen said there was no bubble so we are good to go?
Fun-durr-mentals - USDJPY provided the crucial momentum ignition three times and finally stocks caught on and searched for technical levels to find stops... notably EM FX did not play after Europe closed
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The S&P saw almost its best 4-day swing from low-to-high since December 2011!!
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And the Nasdaq is now up 0.5% in 2014...
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But Healthcare and Utilities are the biggest winners snce the taper... (as discretionary managed to pull back up to unchanged)...
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Stocks and bonds recoupled intraday as taper vs un-taper correlations broke down notably - the last 2 days have seen 5s30s flatten 5bps - thebiggest drop in 3 weeks
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But Stocks decoupled from bonds (and macro data) as bad news is great news for stocks once again...
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Of course, the "smash your fucking face in" rally in the "most shorted" stocks of the last few days provided the ammunition...
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Gold has been on a tear - up 7 of the last 8 days and back up to 3-month highs...
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and gold remains the winner since the taper (+4.9%)
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The USD had a rollercoaster day - a big surge on the Yellen testimony release at 830, then recovery as she started speaking at 10, and it just went higher as Janet kept talking (so now we get USD strength on an un-taper?? - looks like JPY and EUR weakness were in charge)
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Given today's performance (and the last few days) perhaps Axel Merk's cartoon sums it all up (despite the actual words on staying the course from the dovish Yellen)...
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Charts: Bloomberg
Bonus Chart: Who was the consistent 15,000 contract e-mini S&P 500 futures (that's $1.35 billion notional) buyer that kept propping up the market every time we faded? (h/t AY!)
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Bonus Bonus Chart: There has been a number of comments today about DeMark's 1929 Analog...oh the bravado whan the market rallies - but - as the following two charts show, it is worryingly playing out exactly as it did before with the last few days' surge marking a bounce top...
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