US Markets 'Dead-Cat-Bounce' As 'Smart Money' Collapses To Lehman Lows

What goes down, dead-cat-bounces back up on negligible volume... because...

China opened ugly but was rescued into the close of the afternoon session...

It is not entirely surprising that European markets bounced today...

European bank stocks were the most oversold in over a decade as of last night's close...

 

US Markets also 'dead-cat-bounced' after Nasdaq's RSI reached extreme oversold levels again...

 

Nasdaq led the way with an incredible 3.5% surge (best day since March)...before another weak close...

 

For some context with yesterday's tumble, we see futures started to rally the moment the cash markets closed yesterday...

 

But US stocks remain down on the week...

 

And October is still ugly...

 

The Dow surged over 500 points desperate to get back to its 200DMA - but failed...

 

And as stocks dead-cat-bounce for the umpteenth time in this October onslaught, Bloomberg's Smart Money Flow Index (which aggregate opening and closing price trends) has collapsed to its weakest since Lehman...

As Bloomberg notes, regardless of its predictive value, the index is useful for its reflective value: it paints a picture of how the U.S. stock market has tended to be much stronger at the open than the close this year. Perhaps that lends credence to the theories that the return of volatility in 2018 has created de-risking by market makers and systematic quant strategies that react to price swings, rather than discretionary bearish selling.

The equal-weight S&P 500 has seen a notable regime shift from the 'bounce off the 200DMA' uptrend...

And hedge funds are really suffering as their favorite stocks have collapsed once again...

 

For a sense of just how chaotic things have become in US markets - here is the Nasdaq 100's realized volatility...

 

Another day, another big short-squeeze...

 

FANG Stocks surged today, after yesterday's bloodbath, but were unable to get near to retracing the losses...

 

Although some incredible market cap moves in AMZN and so on...

 

A day after posting its worst day relative to staples since the financial crisis, the consumer discretionary sector is having its second best day of the decade versus its safer

 

 

Financials had a positive day after 5 straight down days...

 

Blackrock's HY Bond ETF discount is at its highest since 2016 (as liquidity preferences dominate the ETF flows over cash)...

NOTE - HYG also dropped into discount to NAV

Treasury yields were higher on the day as yesterday's belly outperformance was unwound...

 

Thanks to Euro weakness (driven by Brexit comments from Draghi), the US Dollar jumped to new cycle highs...

 

Cable dropped notably on the day after Draghi and kneejerked late on after headlines that May's group cannot agree (not exactly earth shattering news)

 

Offshore Yuan mini-flash-crashed overnight and ended the day weaker...

 

Cryptos were modestly higher on the day leaving Bitcoin barely green for the week...

 

Despite further dollar gains, WTI managed gains as PMs faded very modestly...

 

WTI Futures bounced off their 200DMA for the 3rd day in a row...

 

Finally, we note that the commodity with the real PhD in economics - Lumber - is trading at Nov 2016 lows...

Which fits with the plunge in actual hard economic data and the collapse in financial conditions...

S&P 2,300?