Crude Carnage Resumes But Stocks Bounce As Hindenburg Omen Strikes

Following yesterday's dead-cat-bounce, oil prices resumed their downward push today, closing just shy of the flush lows on Friday back to a $66 handle for WTI. Gold also slipped modestly with copper and silver flat as the USD surged higher (+0.75% on the day). Stocks just melted up all day long (supported by USDJPY pushing to new cycle highs over 119), stop-hunting the whole way (with the S&P breaking back above its 5-day moving-average and back into the green on the week briefly). Yesterday's losers (Trannies and Small Caps) were today's BTFD winners. Treasury yields rose notably once again (up 11-13bps on the week) as we suspect oil-producers are selling to help support their collapsing currencies. VIX closed below 13 - slammed into the close to scrape the S&P back above its 5DMA.

 

Victory, the S&P 500 is back above its 5DMA... (thanks to VIX)

 

Because when u absolutely have to have the SPX close above its 5DMA... Slam the VIX!!

 

As the S&P (and Dow) broke back into the green for the week... but could not hold it

 

With the US Open to EU Close ramp where all the gains were...

 

As USDJPY could not hold it...

 

So VIX was slammed

 

As we predicted

 

Energy stocks remain winners with Utes on the week (even as oil drops and Treasury yields rise)...

 

But things are not all they appear under the surface - there is enough anomalous highs vs lows and advancers vs decliners to trigger the Hindenburg Omen. Despite numerous false alarms, the last one - as Fed QE effect slowed - was a dramatic signal indeed...

 

And we note that CoT has not been keeping up with the index surge...

 

Treasury yields continue to increase notably this week.. which smells a lot like either rate locks for floods of new issuance (which we are not seeing) or...

 

Oil-Producers selling TSYs to recieve USDs so they can sell USDs to support their local currencies...

 

narrowing the divergence with stocks...

 

But the USD surged all day against the majors...

 

Oil prices resumed their downtrend (down 12% from initial OPEC leaks) as gold remains flat since then...

 

Charts: Bloomberg

Bonus Chart: Radioshack plunged 20% to record lows on news of covenant breach claim (5Y CDS implied 99.97% chance of BK)