Crude Crushed, Stocks Slump, Silver Recouples With Gold

WTI Crude dropped its most in almost five months today, losing around 2.5%, beginning its descent after Draghi somewhat disappointed a hungry markets this morning (after better-than-expected claims data). Silver (which recoupled with Gold today) and Copper also started their drops at that point and extended the losses after the ISM Services miss. Gold leaked lower (though not as much as the rest of the commodity complex) even as the USD (which had been following its typical path of strengthening through the EU day session) dropped as an expectant EUR popped on no rate cuts. Stocks started their slide at the same time but broad risk-assets were in general leading equities lower (more carry FX and commodities than Treasuries today). We had a little bounce in stocks into the European close (up to VWAP) but that quickly fell back, lost today's lows, then broke yesterday's lows heading for one-week lows and the S&P 500's 50DMA. AAPL lost its 50DMA and closed there for the first time since earnings. After some noise around the macro data (and Draghi) this morning, Treasuries were extremely flat - trading in a very narrow range all afternoon - as did FX in general but AUD kept leaking lower (down 2% on the week now) and JPY stable on the week. Equities and credit re-converged today and late in the afternoon as ES (the S&P 500 e-mini futures) caught up to the downside of broad risk assets and stabilized in the late day ahead of tomorrow's noisy and meaningless NFP print. ES volume was average as it traded closest to its 50DMA in a week (and dropped the most in 8 days today closing near its lows of the day) and VIX, while off its highs of the day, closed above 17.5% - its highest close in over a week. While stocks are short-term in line with risk-assets, over the medium-term they remain notably expensive (especially to Treasuries since last week).

Brent and WTI suffered notably today as they suffered their biggest single-day losses in almost 5 months - though the spread remained relatively stable...

Equity and credit markets - from the short-term lows of a week or so ago - have recoupled and the obvious exuberance in stocks (blue) has retraced back to the less sanguine (more realistic) credit market AGAIN!

Silver's recent underperformance has been notable. It does seem though that today's move - which appeared to get the other precious metal back in line with Gold from early January - may just have brought the forced selling or unwinding of Gold/Silver trade to an end for now as it limped higher into the close...

Short-term, equities (red below) caught up to risk-asset's (green below) weakness and this provided some stability this afternoon ahead of the NFP data tomorrow...

Stocks remain expensive relative to longer-term CONTEXT (risk-asset-proxy)...

but most specifically ion the short-term the hope for QE3/4 has driven a wedge between Treasuries and stocks that we suspect will be filled soon...

and finally, a weak end to the day for ES - unable to make it back to VWAP (light blue) which also corresponded to the pre-ISM levels - suggests some stuck longs wanted out ahead of tomorrow in a hurry amid larger than average volumes (red ovals)...

Charts: Bloomberg and Capital Context

Bonus Chart: Longer-term S&P 500 e-minis show today's close coincided with 4/27 lows (solid red vertical) and a 61.8% Fibonacci retracement fan (dark red) of the 4/23 to 4/27 swing high -

click for larger image