Dollar Drops, Yields Pop As Small Caps Squeeze To New Record High

Interest rates and stocks are going...

 

Stocks opened confidently (after for once trading sideways overnight), then slipped into the European close (Italian headlines) before ramping into the last hour when Navarro headlines spooked stocks and bonds...

 

The post-Navarro weakness in stocks took all but Small Caps back into the red for the week...

 

Russell 2000 broke to a new record high...

 

On the back of a major short squeeze once again...

 

Big Bank stocks were mixed after ramping on the European close (not helped by Italian bank weakness), they slid into the close after Navarro headlines...

 

Small bank stocks underperformed as Small Caps soared to record highs...

 

TSLA bonds pushed lower in price once again but the stock managed gains on the back of Soros buying converts in Q1...

 

Treasury yields traded in a narrow range but the trend was higher...

 

But 10Y pushed to a new cycle high this afternoon after Navarro headlines...

 

The long-end of the US Breakevens curve has now inverted...

 

But all eyes were on Italy where BTP spreads exploded on "Debt Cancellation" talk..

 

The Dollar ended the day modestly lower, also trading in a very narrow range on the day - and unable to make a higher high...

 

The Argentine Peso slipped lower again today after yesterday's huge intervention...

 

Cryptocurrencies were largely flat on the day but Bitcoin Cash slipped lower after its fork...

 

Commodities all made gains on the day but WTI remain sthe big winner on the week and gold the laggard...

 

Finally consider that Small Caps are being touted as domestically focused - amid fears of global trade wars etc... - but US domestic economic data is dismal...

 

Comments

Keltner Channel Surf Traderone Wed, 05/16/2018 - 16:23 Permalink

Aw, that ES is too 'easy' and I like to be challenged (i.e., crushed every third day) :)

TZA is either a triple-leveraged short Russell 2000 ETF, designed by geek-heads to go to zero (unless 1:5 reverse split every other year), crushing more amateur traders than any ETF save the VIX stuff, or an acronym for persistent small-cap short-sellers:  "Tears Zealots Asunder"

In reply to by Traderone

Traderone Wed, 05/16/2018 - 16:12 Permalink

Anyone who reads Order Flow will know that there was some excellent contextual levels from which to trade from both the long and short side today (IBH .IBL etc)

 The late day pullback to yesterdays high was a nice opportunity because shorts became trapped there. How do they exit? yep, they gotta buy. 

Keltner Channel Surf D.r. Funk Wed, 05/16/2018 - 16:36 Permalink

BTW, 'Most Shorted', by-and-large, can be considered a proxy for the Russell, given that's where most of the easiest shorts to push around lie.  When the Tylers report 'most shorted' action, 99% of the time IWM will be similarly flogged/goosed.

In truth, I'm thinking it was more of a strong dollar play we've seen for years in the Russell, given fewer of these co's have overseas revenues (though that's obviously changing a bit).

See, Funk, you can learn a bit from 'old guys.'  "Fifty is the new twenty", which means when you reach our age, you still won't be able to shave with Occam's Razor (still owe you that as an X-mas gift ...)

In reply to by D.r. Funk

D.r. Funk Keltner Channel Surf Wed, 05/16/2018 - 18:21 Permalink

I realize from time - to - time a correlation or datapoint will be exaggerated by the tylers but I still feel "most shorted" is a direct targeting of infamous high flyers or leaders known to be flagrantly valued or whatever, which then forces some covering-anxiety or overall perception

Are you going to wrap my razor inside Schroedinger's Box?

In reply to by Keltner Channel Surf

Keltner Channel Surf D.r. Funk Wed, 05/16/2018 - 18:42 Permalink

Actually, a quick glance at Tyler's graph #4 above suggests 'most shorted' is indeed a subset of the Russell, given how much in lock-step the shape of the respective lines are, most-flogged a bit above the larger set.

As for the 'razor', I'd never do that, as I've long suspected S's Cat died at his own hands, simply as the quickest way to get away from theoretical physicists, even for a moment, and wouldn't want to provide another suicide method, along with the classic flask of poison.

In reply to by D.r. Funk

666D Chess Wed, 05/16/2018 - 16:15 Permalink

So apparently now raising interest rates are bullish for stocks as well. I remember not long ago cynically recommending a dude that wanted to start trading to always go long the Dow and always short gold and that he would never lose money... Well I think I should start following my own advice. I've come to the conclusion that the US stock market is truly unsinkable. Anything is bullish for stocks since Donald Trumpchild took office, even a Russian ICBM detonating over New York or a worldwide pandemic of smallpox would be bullish for stocks. 

DingleBarryObummer 666D Chess Wed, 05/16/2018 - 16:20 Permalink

At a certain point the insider whales will exit, the "masters of the universe" will take away the punch-bowl, and then whales will swoop back in and buy everything up for pennies on the dollar.  When that is, only the insiders know, and the insiders aren't going to give away the correct info.  The will only release dis-info.

That's just one peasants theory.

In reply to by 666D Chess

davatankool 666D Chess Wed, 05/16/2018 - 16:22 Permalink

I have warned you guys, higher yield wont crash the stocks, it may causes a small correction (if any), wallst will quickly buy all the dips and make it rally even higher.

the reason - the rate hike cycle in tact.

they anticipating and capitalizing it.

the only reason stocks will crash is the other way around, lower yields which indicates slower economy, fed not hiking rate as expected....slower inflation.

10yield hit almost 3.1% today, dow still going higher.

the next correction wont not be here until July IMO.

 

In reply to by 666D Chess

Aaronson.Jones… Wed, 05/16/2018 - 17:38 Permalink

I know there are a lot of sellers here, myself included, & we should be happy with this buying; we get better prices! If we can have some more buying tomorrow, I will be licking my lips (disclaimer: licking of lips doesn't always result in trading opportunity/ profits :-)).

Ink Pusher Wed, 05/16/2018 - 18:23 Permalink

By Monday's close the carnage will be more than evident after the faltering Italian numbers have been thoroughly scrutinized and applied.

There's no fuckin' way these projected yields can be sustained into Q4 and someone has missed the boat.

 

Exponere Mendaces Wed, 05/16/2018 - 19:08 Permalink

BCash is a piece of shit, and so are the few dev(s) that work on it.

To wit: https://twitter.com/verretor/status/996702463586598912

After their fork, which Lyin' Ver says is an "upgrade, not a fork" (What a retard), nodes aren't able to sync properly. Good job, numbnuts. This is after another error they had a while back on another altfork -- that didn't activate properly due to a +1 error in their code. (Counting using an index)

Fucking idiots, BCashers, and their devs too.