S&P Stalls At Critical Resistance Again Despite Massive Short-Squeeze

Tyler Durden Wed, 07/15/2020 - 16:00 The last two days have seen the biggest short-squeeze in 3 months - a massive 8%-plus swing from yesterday's lows...Source: BloombergDoes make u wonder...As vaccine headlines from Moderna that in reality offered nothing new sparked a panic-bid for Small Cap stocks that was then accelerated by more vaccine headline from Europe...0610ET *POSITIVE NEWS COMING ON OXFORD COVID-19 VACCINE: ITV'S PESTONThe headlines sent serial insider-seller MRNA shares screaming higher...Fed by over 50,000 fresh young Robinhood'rs diving in today...Holy smokes ~50,000 Robinhood accounts added Moderna to their holdings in the last 4 hours via @robintrack pic.twitter.com/JPDgDKjqlU— Sarah Ponczek (@SarahPonczek) July 15, 2020But the S&P 500 was unable to break a crucial support level around 3230.78 (2019 close) after testing it four times intraday......its 2019 close and the interim lows in January...Despite Nasdaq's massive outperformance YTD, the last few days continue to see the big-tech index underperforming the other majors......and that has sent expectations for future volatility soaring to their highest relative to the S&P since 2004... Source: BloombergThe Virus Fear trade collapsed, erasing the second wave derisking...Source: BloombergBanks ended the day higher after Goldman crushed it... but note that Goldman's early gains were almost entirely erased and WFC and C were bid as GS slid...Source: BloombergTreasury yields were mixed today (long-end very modestly higher in yield vs short-end flat to marginally lower) but all yields remain lower on the week, despite the equity exuberance (with the belly outperforming)...Source: Bloomberg10Y roundtripped just like on Monday, bid during the US session...Source: BloombergThe Dollar fell for the second day in a row, despite a rebound in the US session...Source: Bloomberg  Source: BloombergCopper was lower today (for a change) as oil prices jumped after DOE confirmed API's big crude draw...Source: BloombergWTI ramped back above $41, shrugging of OPEC+ output increase headlines...Silver also had a big day, with futures pushing up towards $20...Gold was bid today, marginally, with a post European close rally once again, erasing overnight losses...Source: BloombergWhich combined to push the Gold/Silver ratio down to its lowest since February...Source: BloombergFinally, we note that companies in the MSCI USA Index now represent a record 65.3% of the MSCI World Index...Source: BloombergAnd given that dominance, it seems odd that US equity markets are now trading at the same level of risk as Emerging Markets...US equities are trading more and more like an emerging market pic.twitter.com/81n3L7Mv7n— Variant Perception Research (@VrntPerception) July 13, 2020As @Not_Jim_Cramer notes, US markets achieve banana republic volatility. Either this mean reverts, or there will be one helluva valuation adjustment.

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