Stocks Jump For 6th Straight Day As Dollar, Yield Curve Dump

CPI's 'miss' prompted another day of 'bad is good' as wage growth slowed and stocks (and bonds) ripped...

Goldilocks is back, bitches...

 

Buy it all... (Small Caps showed the first signs of momo lag after Europe closed)...

 

On the week, it's all fun and games with Nasdaq leading...

 

Despite all the excitement The Dow remains red for 2018...The S&P managed to hold green for the year today...

 

S&P Small Cap 600 ramped to a new record intraday high...Quadruple Top, anyone?

 

VIX tumbled to a 12 handle...

Bank stocks love the collapsing yield curve...

 

Now where have we seen that pattern before?

 

Tesla Bonds ain't loving it...

 

So - to summarize - The Dow is up over 1200 points in the last 7 trading days... and 30Y Treasury yields are unchanged.

SPOT THE ODD ONE OUT!!

Meanwhile, the Treasury curve continues to collapse... 30Y Yields are now lower on the week...

 

5s30s broke below 30bps for the first time since 2007

 

2s30s tumbled 5bps to 47bps! 2s10s flattened 4bps to 43bps...

and 7s10s flattened 2bps to 2.5bps!!

 

The Dollar looks like it broke its momo run...biggest drop in 2 months

 

And then there's Malaysia where stocks ramped as FX did not... who do you trust?

 

Cryptos were treading water most of the day until they suddenly kneejerked lower for no good reason...Unconfirmed chatter was that MtGox custodian was dumping 2000BTC blocks...

 

Dollar weakness helped the entire commodity space...

 

WTI closed above $71 and RBOB extended its gains post-Trump...

Either Copper needs to rip, Gold needs to dip, or 10Y notes are due a big rally...

Comments

Give Me Some Truth Dutch1206 Thu, 05/10/2018 - 16:17 Permalink

if the stock markets did crash, what would happen to the pension funds that are so heavily invested in stocks?

What would happen to the size of the “contributions” city and state governments would have to make to keep these pensions solvent, and keep people getting their checks?

Two questions that answer why stock “markets” will never be allowed to crash.

In reply to by Dutch1206

D.r. Funk Dutch1206 Thu, 05/10/2018 - 17:56 Permalink

Why do the Complete-morons feel the compunction to come out when im not around

At least wait for the unbelievable crack we have in place to be breached (Which it won't)

Before going clown-hyperbole again

itgoestothepsychology. werefuckingwinningrightnowmoron. there'saclearindexbreakpointinplace. throwyourselfinadumpsterfirewhereyoubelong

Dow nas spy crack is in place folks

In reply to by Dutch1206

Keltner Channel Surf D.r. Funk Thu, 05/10/2018 - 18:47 Permalink

SPY, DIA and QQQ/COMP sit at weekly volatility stops, important ‘dots’ that I suspect your charts lack, ‘ceiling’ levels that will either hold, or be broken through, perhaps ‘one last time’, folks with your stance will hope.

Unfortunately, Funk, I’ve never seen markets dive on such low volume, and though the Daily envelope tops could portend another interim high ‘n’ dive situation, my lovely Russell looks suspiciously poised for another classic frothy-mouthed rabies ramp, which could first be labeled a ‘tariff’ play, before being re-christened an ‘oh shit’ moment when it keeps going.  

I’ve seen this before Funk.  I believe there’s a solid 45% chance of ‘surprise’ new high in all indices ramp on vapor volume led by my precocious, guttersnipe small-caps.  It’ll be binary: either smash to new highs, or immediately dump to new 2018 lows.  I don’t really see anything in between, though given I trade based on 5-min squiggles, even if I’m ‘wrong’ it won’t impact the bottom line, like predicting 2019’s ending Premier League Table now.  Don’t build more than a 5-share TZA position until a week or so, just to be safe …

In reply to by D.r. Funk

Quivering Lip Thu, 05/10/2018 - 16:15 Permalink

Come on people everything is tits.

Remember higher gas prices are good. Apple getting into banking with Goldman is good. Used car prices going lower is good. Higher insurance prices are good. Yield curve flattening is good. Small caps (R2K) that don't make money, making new highs is good. Twatter president who now believes unemployment numbers are real is good. Greatest economy of all time for the 1% of the 1% is good. 

If I've missed anything don't worry, it's all GOOD

 

adr Thu, 05/10/2018 - 16:17 Permalink

So oil and gas went up because the dollar went down?

So why did oil and gas go up all year so far when the dollar was climbing?

Oh, I get it. Oil goes up when the dollar goes down, but goes up when the dollar goes up for other reasons.

Fuck Wall Street.

Keltner Channel Surf Thu, 05/10/2018 - 16:17 Permalink

Trader’s Corner:  Multiple Time-Frame Mean-Reversion

An analogy I’ve used for the volatility envelope action in multiple frames we’ve been seeing for years in the major indices is that it’s akin to an inner watch movement:  tons of little gears, of varying sizes and shapes, some ‘zigging’ while others zag, but all part of the same story, like the characters in a novel.

Recent days’ action provides a telling example, and some cash-only retail traders who prefer to operate in medium time periods (15 min to Hourly) may find extreme levels on longer charts (Daily/Weekly) can wreak havoc on ‘typical’ intraday reversion, crushing standard setups.  To greatly oversimplify, it’s assumed longer charts are tackled more by deep-pocketed larger players who may hold overnight, and can survive wide stops and still pay their electric bills.  With patience that can extend out several months, it’s my belief that weekly chart mavens are the chief bane of shorter-term traders, often providing that relentless mid-chart bid, or consistent upper wicks, on the Hourlies.  

So, let’s back up a moment and describe a very general backdrop for envelopes in multiple time frames:  embracing the heresy that markets aren’t ‘rigged’ but instead simply the bottom-up zero-sum composite of participants and, therefore, assuming algorithms are mean-reverting in all time frames similarly (like the ‘self-similarity with increased magnification’ seen in a Mandelbrot Set), based on a 20-EMA centre and volatility-driven outer envelopes, then the three general moves are:  a) from center toward outer bands; b) outer bands back to EMA; c) break-through of envelope extremes, bringing the next higher envelope (or time frame) levels into play.

When key Daily, Weekly (and Monthly) envelope limits are in close proximity, with breaches occurring, as we’ve seen the past week, trading for shorter term chartists can seem especially erratic, as the ‘big boys’ battle to hit ultimate targets, take profits, begin reversal positioning, as well as bust stops to longer chart levels.  PTLOs (Profit-Taking Limit Orders) placed along the way (as no one knows if we’ll go a bit past targets, or turn around early) can create volume bursts, leading 2-min traders to shout “this is it!” and enter reversals, only to be squeezed/crushed for several more hours (or days), but sudden steep reversals are just as common.

(For specifics, this week’s Russell action began at the Daily 1.0E Bollinger, rose quickly to poke above the Daily 2.0 and, as Thursday began, saw the following higher levels in shouting distance, in order:  2.0 Daily Keltner, 2.0 Monthly Keltner, 2.0 Weekly Bollinger, all with varying players positioned to take profits, reverse, or bust.  SPY/DIA started near their Daily EMAs and today approached Daily 2.0 Bollingers and Weekly 1.0s/volatility stops, etc.)

A few general rules to live by for fledgling intraday index M-R traders:

  • ALWAYS have charts up with Daily/Weekly/Monthly key levels, regardless of your chosen trigger time frame.
  • Realize that, counter-intuitively, LOWER, not HIGHER volume is more a warning against early longer frame chart reversals (higher volume often accompanies a reversal, as final-push and inverse positioning trades occur together)
  • ‘It ain’t over till it’s over’:  don’t be tempted to ‘guess’ and go all in on a reversal as final institutional targets are being hit, remember that Daily/Weekly Bollingers/Keltners, calculated from MOVING targets, shift themselves, and cause ‘optical illusions’ when viewed like a short chart:  getting in ‘early’ before an outer band that can print MUCH higher at week’s end may leave a logical stop MUCH greater than your standard intraday hourly trade could bear.

This week provides is a great example in ALL indices for traders to study your ‘below the chart’ indicators in varying frames to confirm which, if any, helped forecast the immediate completion of these standard moves, bother inter- and intra-day.

In the end, while the final bursts to Weekly levels are among the most rewarding and reliable profit-makers for intraday operators, guessing on a monthly top using weeklies has crushed more than a few retail traders.  So … don’t be afraid to ride along, clinging to the manatee’s back, but also don’t be a hero and get swallowed in his wake.

Happy Trading.

 

Keltner Channel Surf Citizen_x Thu, 05/10/2018 - 19:39 Permalink

"If you don't eat your meat, you can't have any pudding"

You're a slave-driver, Cx, I've already done ~200, hard to be motivated for more in the current wasteland here :)

Still, I do have a new Sabbath "Supernaut" parody, but need a big down day for it to make sense to post, and am working, with reduced motivation, on a 'Motorcyle Mama' parody ("SuperCycle Mama", what else?) and one for Ride's 'Vapour Trail' ("Vapor Volume") I'm not quite satisfied with.

Downloaded the Morris Albert "Feelings" 'lyrics', if they can be called that, and got a few ideas ("Sheer drops, rolling down through SPY’s base"), and have sized up Keith Carradine's 'I'm Easy', to be called "I'm Sleazy", about trading from the long side.

Perhaps if old-timers like you return to re-grace this page regularly, my creative juices would return ...

In reply to by Citizen_x

wmbz Thu, 05/10/2018 - 16:27 Permalink

Nice to see that the Stawk market is back on an even keel.

In a nice fair "free trading market" like we have, this is how it works. It goes up all the time. No manipulation necessary!

This shit has passed well beyond the twilight zone.

moonmac Thu, 05/10/2018 - 22:04 Permalink

Wall Street was very happy with Helicopter Ben. They were even more ecstatic about Jumbo Jet Janet. So how will they feel when Gyroplane Jerome's little plane starts flying all the Liquidity Airdrops?