Low Volume Meltup Leaves Russell BTFATHers Euphoric

A lack of news on deal progress in thelast 24-36 hours was not enough to stall an epic ramp in stocks to take 'most' indices back into the green on the week. The Russell is within a hair of all-time highs again (bouncing 4.6% off Wednesday's lows) but the Nasdaq closed the week -0.27% - breaking a 5-week winning streak. All equity indices are green post-shutdown but we note in sectors, the homebuilders are still -1.6% (and Discretionary with a small gain). Treasures ended the week modestly higher in yield (with Bills ignoring equities and notably higher in yield). Gold was slammed -3%, Oil and Silver -2% and Copper -1% (as the USD gained a mere 0.3% - driven by a 1% dump in JPY). VIX underperformed equity exuberance on the day but closed lower. The close saw a mini-melt-up in stocks taking us back to the highs.

Equities disconnected fro broad risk-assets from the open today...

 

Just as we tweeted...

 

 

The 330 ramp took us to the highs...

 

But only one thing is driving equities... FX carry back en masse...

 

The Russell 2000 closed within a fraction of its all-time high on falling volumes - why not?

 

It was quite a week in equity index land..

Crucially the Dow made it all the way back from its 200DMA to close above its 50DMA - exactly the same as it did on Jan 2nd... (th elast time the Congress folded)...

 

Much was made of the last 2 days being a short squeeze - while shorts did underperform, there is no clear evidence of a 'squeeze' per se and volume has been declining... in fact since the shutdown, "most shorted" names have fallen more than the market has risen (as the MoMo names lose steam)...

 

Equity indices are all gree post-shutdown thanks to today's bounce...

 

The performance across sectors since the shutdown began is relatively diverse with Homebuilders and Discretionary underperforming...

 

Equities ignored the fact that Bonds and Bills did not play along with the exuberance...

 

Protection - which has been thrown away in the last 2 days, was bid after Europe closed today as VIX suggested more than a few were looking to protect these gains across the weekend...

 

Gold was monkey-hammered...

 

Some context for the moves... seems like great rotation from gold to stocks... Bonds and Crude (growth) unch... The blue line is the level when the shutdown started...

 

Charts: Bloomberg