Stocks Jump On Biggest Short-Squeeze Since Brexit As Dollar Dumps

Bounce...

 

While stocks bounced, the headline of the day deserves to the PBOC - which drained liquidity for the 5th day in a row and finally engineered a snap squeeze higher in Yuan...

 

And the second biggest headline belongs to this - Today was the biggest short-squeeze since the June 2016 rebound from Brexit...

 

China stocks roundtripped overnight giving back early session gains despite the one-way street in yuan...

 

European stocks bounced then faded also...

 

Positive tone from Trump (and China) on trade talks sparked the biggest short squeeze since June 2016 but headlines of China stealing tech IP took the shine off a little... Small Caps ripped (on the short-squeeze, up over 2%) as S&P and Dow jumped and then flatlined for most of the day...

Futures show US equity indices testing the stops at last Wednesday highs (before the plunge)...

 

We note that despite the mega squeeze, The Dow struggled to hold/break above yesterday's highs until the closing ramp...

 

No big selling at the close today...in fact hardly any selling at all...

 

Before we move on - let's note that we have seen these sudden short-squeezes before...

 

VIX tumbled back below 20 today...

 

And the term structure flattened to almost uninverted...

 

FANG Stocks bounced to one week highs...

 

AAPL rallied ahead of earnings...

 

Notably, bonds and stocks were bid from the cash open, decoupling yields from equity prices...

 

The short-end outperformed on the day...

 

And Breakevens collapsed today as oil plunged...

 

 

As Yuan surged, the Dollar tumbled to start the month...the biggest single-day drop for the dollar since March...

 

Bear in mind that we have seen this kind of Yuan squeeze before... a few times...

 

Cable also spiked - back above 1.30 on headlines about EU financial linkage progress - which were denied...

 

Cryptos rallied along with gold as the dollar dumped...

 

Silver soared and black gold was battered today...

 

Dollar weakness helped send gold higher, breaking above its 100DMA...and Silver back above its 50DMA...

 

Despite the spike in Yuan today, gold remains well managed...

 

While gold gained, crude was clubbed like a baby seal to a $63 handle... nearing a bear market down around 18% from the highs...

 

Finally, of course it could just be a coincidence, but it looks like oil prices reversed as the price of barrel reached 5 oz of silver - the same level they plunged at in 2014...