Omicrout

Omicrout

The market peaked intraday just ahead of Powell and Yellen’s hearing as it became clear that the Fed Chair was not going to walk-back his hawkish position. Things escalated from there with stagflationary-fear-inducing comments from Fed’s Williams. And then the big kahuna ‘Omicron in the US’ headline took stocks down again.

Small Caps were the worst performer today. S&P did its best to cling to unchanged but failed badly joining the rest of the majors with a decent loss for the day with everything closing at the lows…

Since the start of the Omicron scare, Small Caps are down over 7% and Nasdaq down over 2%…

All the major US equity indices crashed through (or to) key technical levels. S&P is right at its 50DMA, Small Caps crashed below the 200DMA. Nasdaq is testing down to its 50DMA, and The Dow has collapsed below its 200DMA…

The median stock price is down over 9% from its highs (Value Line Geometric) suggesting the S&P has plenty of room to fall from here…

Source: Bloomberg

AAPL, MSFT, and GOOGL managed to hold on to some gains today (as flight to mega-cap safety continued but not like yesterday)…

Source: Bloomberg

But broadly speaking, Tech/Software stocks were monkey-hammered…

Source: Bloomberg

Credit markets have cracked wide open with Leverage Loan prices tumbling to 7-month-lows…

Source: Bloomberg

…and US HY Corporate bond prices are at 13-month lows…

Source: Bloomberg

Treasury yields ended the day lower across the curve (with the long-end outperforming) as the Powell, Williams, Omicron triple whammy ripped yields lower…

Source: Bloomberg

30Y yields dropped to their lowest since the start of the year…

Source: Bloomberg

The yield curve flattened even further…

Source: Bloomberg

The dollar ended the day unchanged after quite a volatile day…

Source: Bloomberg

As the Lira hyperinflates, Turkey’s CDS spiked to its highest Since Oct 2020…

Source: Bloomberg

Crytpos roundtripped back to unchanged after overnight gains. Ethereum stabilized relative to Bitcoin at its relative peak from May…

Source: Bloomberg

Gold managed modest gains today, but was unable to get back above $1800…

Crude was clubbed like a baby seal as overnight hope for relief on Omicron and OPEC+ faded fast and big inventory builds for US products didn’t help. WTI closed with a $65 handle for the first time since early August…

Finally, the market is now pricing a 50% chance of a May 2022 rate-hike and June 2022 is practically a lock…

And Powell didn’t give any hints today that he wants to jawbone the market more dovish.

Bloomberg’s Cameron Crise offers some ominous words of warning after today’s action. Since 1990 there have only been 17 sessions that have had a bigger intraday rally from the previous day’s close and ended down on the day. The most recent was April 7th of last year, which admittedly was in the early stages of the fabulous Covid rally.

The others, however, make relatively grim company: 2 observations in 1998 as the Russia/LTCM crisis was boiling, 2 in 2001-02, 11 in 2008-09 (8 in October of 2008 alone!), and August 2015 — the time of the ‘China devaluation’ scare.

Investor demand for U.S. technology stocks amid the pandemic took the Nasdaq 100 to a relative record against the Dow Jones Industrial Average… Was that the top?

VIX exploded higher today, testing 30… its highest since March… (VVIX is also surging, suggesting more uncertainty ahead)

And the real fear indicator – implied correlation – has exploded higher off multi-year lows (signaling a demand for systemic hedge overlays)…

Trade accordingly.

Tyler Durden
Wed, 12/01/2021 – 16:00

Share DeepPol