NASDAQ

Cautiously optimistic. Yes, really. 

Mostly boring.

European equity resilience seems surprising, given the otherwise gloomier mood. No news still played out as being good news and even catch-up to US levels seems a doubtful explanation.

Beats me.

This week was more spaced out with pessimism followed by Spain and equities ripping higher on  no news, at least nothing major nor new.

So we’ll dedicate the week to the Fab Fours’ song, which title’s abbreviation  has always been linked to substance abuse.

Just be careful when coming down…

Whether its AAPL, GOOG, or the broad equity indices, today saw the bulls 'Baumgartnered'. Despite a valiant attempt to rally into the close, because Bernanke forbid the Dow close the week red, the NASDAQ is 4% off its Wednesday lows (-1.3% on the week) as AAPL suffers its largest 3-week decline since the March 2009 lows (closing with a $609 handle -3.6% today!) and Tech is -5.7% from QEtc. The weakness was absolutely systemic as cross-asset-class correlations were extremely high and CONTEXT (our broad risk-asset proxy) tracked lower and stabilized into the close. Gold, Copper, and Oil all ended the week clustered together down around 1.7% as the USD ended practically unchanged. Credit's mid-week epic short-squeeze lingers in traders' minds as equities underperformed. Treasury yields end the week up 9-11bps. VIX jumped back above 17% suggesting further weakness for stocks. S&P futures are dropping after-hours - closing at lows of the day - disregarding the late-day cash ramp.

Spacy week, though… Song pick of yesterday’s said it all. Somehow, things have spun out of control and the rocket started stalling and then drifting into the void…

Poor Major Tom left the capsule too early.

Regional elections in Spain over the weekend. As Rajoy denies there’s any pressure to seek help, BONOs slide. Damned if you don’t; damned if you do…

Interesting to see Core EGBs’ only muted reaction to the fading Risk sentiment, though (Bunds and UST still +15 on the week).

First “decent” Spanish auction in ages, decent being just normal, if not even boring. In absence of hard facts, outside the hypnosis trick “All will be well! Believe me…", I’d like to remain on the cautious side, though.

On EU decisisons, it could look like Good Cop / Bad Cop act, if it wasn’t clear that the players actually mean what they are saying.

Won't be EZ...

Playing in the market, with Phil. 

Divergence in thinking. 

European equities trying to decouple from EGBs and US equities, trying to trade “No news is good news”.

Low action day.

Short term trading strategy buy Spain on weekend bail-out hopes and resell rapidly might need to be deepened. Not much to chew on eventually.

AAPL slumbered today (fading at VWAPs) and GOOG stumbled on FTC settlement chatter - dragging Nasdaq to its biggest weekly loss in almost 5 months. Financials were also sold hard (following what every talking head said was 'good' earnings by JPM and WFC this morning) - leaving the sector down 3.7% from post-QEternity highs with previous darling WFC slapped down to BofA/MS levels post-QE -6.5%. Dow Transports outperformed its peers on the week (ending very slightly red) but this remains more a pairs-trade story than anything to hang a 'recovery' on. The S&P has auctioned back to the top of the post-Draghi spike - battle is commencing. Treasury yields legged down once again (long-bond down 18bps on the week at lows) but pulled off the lows after Europe closed -5bps to -14bps as the curve flattened. The USD limped lower for the last few days but ended the week +0.45%. While Oil managed a 2% rise on the week, we saw commodities getting sold today with Gold/Silver sliding (-1.44% and 2.9% respectively on the week). After an early spike down, VIX leaked back higher all day ending at the magical 16% level - up 1.5vols on the week.

• OECD: Japan Public Debt in 'Uncharted Territory' (WSJ)
• Germany holds firm on Greece as IMF pressure mounts (Reuters)
• Schäuble and Lagarde clash over austerity (FT) - it would be great if someone actually implemented austerity...
• Merkel hints at tax cuts for growth boost (FT)
• Hollande Robbed of Growth Engine as Companies Cut Investment (BBG)
• Romney Narrows Gap With Obama in Swing State Polling (BBG)
• Sluggish Growth Seen Into Next Year (WSJ)
• Softbank Founder Has 300-Year Plan in Wooing Sprint Nextel (BBG)
• Singapore Forgoes Currency Stimulus on Inflation Risk (Bloomberg) - as does China day after day
• Sharp Jabs Dominate Combative Vice-Presidential Debate (WSJ)
• Japan and China Agree to Hold Talks on Rift After Noda Call (Bloomberg)

As Monty Python might have said, apart from AAPL; what has the market done for you today? S&P 500 cash managed (somehow) to cling to a green close while the Dow and Nasdaq ended red. Critically - markets went only one way all day - from upper left to lower right as we go out at the lows of the day - back again at the Draghi cliff edge and just below pre-QE levels. AAPL was a disaster - on heavy volume - as it pushed back down towards it 100DMA (over 3% from its opening highs today!) ending at its lowest in two months with its biggest slide in 5 months (last 14 days). Risk-assets in general tracked closely as while AAPL slide from the open, equity indices manage to hold opening gap gains until Europe closed and then it went pear-shaped. The USD slid all day but didn't 'help' stocks as JPY weakened more (carry offsetting). Treasury yields plunged - 30Y now down 12bps on the week. Commodities all gained on the day - led by Oil (with gold/silver lagging). Meanwhile VIX ignored the debacle, gapping lower at the open and holding down 0.7vols at 15.6% as HYG handily outperformed on low volume.

UPDATE: Behold the massive bid in VIX futures at the close (after being held down all day as stocks slumped)

The S&P 500 futures (ES) dropped from the opening whistle, bounced a little, then fell all the way down to pre-FOMC levels and then wriggled sideways auctioning in a narrow range for the rest of the day after Europe closed. The Dow and S&P are now red for the month with their biggest 3-Day drop in almost three months as the 50DMA comes back into view. Oil prices surged early on but as the selling came in stocks so oil fell back under $92 dragging the Energy sector lower (as CVX's chicken-and-egg with oil and its outlook continues). All S&P sectors were red on the day but financials outperformed (-0.06%) along with Utilities. Stocks ended just off their lows (as CNBC is so happy to tell us) but Treasury yields closed at their lows - tumbling over 7bps from the 10Y auction. The USD (and gold and silver) were dead today amid all the chaos - with a slight gain in silver and the USD limped lower from a better start. Gold remains -1% on the week. The Russell and Nasdaq are now the worst performers post-QE (-4.4%) while Dow Transports are -4% (and Dow/S&P down around 2%). VIX trod water with a small compression into the close - ending around 16.3%. IG credit outperformed as HY tracked stocks lower.

Still long-term bullish as nobody notified us that the Fed has withdrawn QE3.

Eerily quiet after yesterday’s post-ECOFIN cacophony…

No real take-away today: sometimes you need a breather and everyone agrees.