Ebola in NYC, no problem. Crappy housing data, all good. School shooting in WA, buying opportunity... and that is how the S&P 500 broke back above its 100-day-moving-average (proving the world is fixed again), and had its biggest low-to-high swing since Dec 2011. It wasn't all great BTFD news today though as small caps underperformed - though still green (just like last Friday), and only Trannies and Russell are green in October. Despite equity exuberance, Treasuries rallied modestly today (ending the week up 8-9bps on the week). HY credit slightly underperformed stocks but compressed 27bps - the biggest weekly drop in spreads since July 2013. The USD rose for the first time in 3 weeks led by JPY and EUR weakness. Oil fell once again, copper rose (since China data), gold and silver mirrored USD's gains. VIX closed down 5 from last week's close just above 16, but like small cap, and JPY carry, decoupled this afternoon. The last 2 weeks were the biggest squeeze of "most shorted" stocks since July 2013.
For old time's sake... as we await the very last POMO (or not) on Monday...
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Before we start... next week is last POMO and a press-conference-less FOMC statement... so why aren't bonds loving the growth implied by stocks? Especially if as everyone claims last week saw the capitulation of shorts... We note the 3 blue boxes where equity traders were wrong footed... and now we are back at that level...
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Small Caps notably underperformed today...
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The S&P had its best week since Jan 2013 and biggest 2-week low-to-high swing since Dec 2011...
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Ripping back above its 100DMA...(and almost 50DMA)
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On the week, Nasdaqwas the winner...
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And off the Bullard lows...
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Only Trannies and Russell 2000 are green for October though...
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And here is the last 24 hours...
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VIX dropped from 21.99 last friday to just above 16 - but notably decoupled
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So looks like longs are hedging into the ramps and the rally is short covering as "most shorted" stocks have the best 2 weeks in 15 months...
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HY Credit's best week in 15 months...
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Treasuries were unchanged today but ended the week 8-9bps higher in yield...
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The USD rose for the first week in 3 led by JPY and EUR weakness
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JPY carry decoupled from stocks...
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VIX decoupled (but was punched lower to ensure S&P success above its 100DMA)
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USD strength weighed on commodities as gold and silver mirrored its move. Oil slipped further ending just above $81 and copper rallied after China PMI data...
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Charts: Bloomberg
Bonus Chart: Thank the lord for QE3...
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