Commodities Pop; Dow Late-Day Drop; FX Market Slop

The S&P cash got within a point or two of its closing high but between FSOC concerns about US financial stability, German court concerns over Draghi's OMT and ESM, and a large (likely CBOE-shutdown-inspired) imbalance into the close, stocks tumbled off those highs with the Dow almost back to unchanged before a small ramp into the close. While equities were on most media headlines, today was 'epic' for commodities. The biggest jumps in gold, silver, and oil prices in between five and nine months despite significant USD strength in the US day session. JPY carry was in charge early (and late as we sold off) with EUR ran the show in the middle of the day. With CBOE down for much of the morning, once it reopened it traded down with stocks up but gradually leaked higher all afternoon to end the day very slightly green. Treasuries rallied into the close to end unchanged. Another low volume day that saw the Dow unable to close above pre-Boston levels. So stocks mixed (Russell +0.6%, TRAN unch), VIX unch, Treasuries unch, EURUSD and JPYUSD unch, Oil/Copper/Gold/Silver up 2.5 to 5%!

Commodities were in charge today... and it wasn't growth...


fopr some context on commodities recently...

  • Biggest 8-day jump in gold in 21 months
  • Biggest 2-day jump in silver in 15 months
  • Biggest 2-day jump in WTI in 8 months
  • Biggest 2-day jump in Copper in 7 months


as equities were ruled by European flows... JPY-driven, and then FSOC and German news...


FX markets did slop around with Cable being the big move as it avoided a triple dip recession


S&P 500 futures had relatively low volume once again and closed perfectly at VWAP on a slight rise in average trade size... The Dow seems to be having an issue closing above the Boston news level...


Is the short-squeeze running out of gas?


Alternatively, US equity market were well ahead of other risk assets in general all day. As Capital Context's CONTEXT model shows (a proxy for broad risk-asset behavior), the late-day equity plunge was in fact more a reversion to reality...



Charts: Bloomberg and Capital Context

Congratulations to Capital Context's Dave Klein for winning the NAAIM's Wagner Prize for active portfolio management. He will be presenting the winning strategy on Monday April 29th at NAAIM's 'Uncommon Knowledge' conference in Denver.


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