Best Week Of 2016 For Stocks Amid Biggest Short-Squeeze In A Year

Come on... stocks are up large... everything must be awesome!!

 

This was S&P and Dow Transports best week of the year... (Dow Industrials best week in 3 months, Nasdaq and Small Caps best week in 4 months)

Today's moves were capped at the European close...

 

Trannies are up 5 weeks in a row - the same after The Oct 2014 Bullard Bounce...

 

Let's just look across assets this week:

  • US equities Up 2.5% to 3.5%
  • US Treasuries ~Unchanged
  • Oil ~Unchanged
  • Gold ~Unchanged
  • USDJPY -0.5%
  • IG Credit ~Unchanged

 

Homebuilders outperformed (despite weak Starts and Permits data, weak sentiment, weak mortgage applications and weak architecture billings), and Financials and Energy had their best week of the year...

 

But Credit markets did not play along with financial stocks...

 

The Wednesday panic spike in stocks appears to have been some kind of market-neutral liquidation as "Weak Momentum" stocks soared relative to "Strong Momentum" stocks...

 

And shorts were massively squeezed also... this was the biggest short-squeeze week since the first week of Feb 2015

 

And something very odd was going on in The VIX ETF complex...

 

Icahn Enterprises plunged after S&P shifted to negative watch, implying a junk rating looms...

 

Treasury yields see-sawed all week (shortened week), ending with 10Y practically unchanged and the short-end up 2-3bps...

 

USDJPY's tumble was the biggest news this week but EUR weakness helped USD Index rise 0.75% on the week...

 

Modest USD strength on the week left gold and silver lower. Copper and crude outperformed, after crude plunged to unch on the week early on today...

 

The crude futures roll today sparked panic-buying in the March contract into the close which ramped the cash-roll higher...

 

Notably Oil VIX plunged on the week (from over 80 to almost 60)...

 

 

Charts: Bloomberg