We exposed the ugly truth below the surface of Santa's rally yesterday [5], but today it just got even more fantastical...
The "Arms Index" or "TRIN" is a technical analysis indicator that compares advancing and declining stock issues and trading volume as an indicator of overall market sentiment.
Remember, you have to believe (in The Fed) to receive (from The Market) before these jaws of doom will snap shut one way or the other.
And it's not FANGs that are dragging the index higher...
[6]
And in case you are wondering what is driving the divergence (which is all top-down index buying), it's this...
[7]
Tick for tick correlation with crude off the OPEX-lows from Friday.
Driving panic-buying into Energy stocks...
[8]
But credit ain't buying it...
[9]
Because the run in crude was one big stop-run gap-fill...
[10]
On the back of what everyone knows is year-end normal drawdowns [11] as oil companies dump inventory to avoid overly burdensome taxation on stocks at year-end. In other words, this is actually a lower draw than normal... and will reverse dramatically after year-end.
[12]
Don't you just love fundamentals?
Charts: Bloomberg
