Plunge 'Protected': BoJ-Buying, FedSpeak Bailout Friday's 'Bullard Bomb'

Plunge ‘Protected’: BoJ-Buying, FedSpeak Bailout Friday’s ‘Bullard Bomb’

Last week ended this way…

So someone had to do something!

h/t

Japan’s Plunge Protection Team stepped in to rescue markets overnight as The Bank of Japan purchased 70.1b yen of ETFs Monday after the Topix declined by 2.5% in morning trading. That was the first “intervention” since April 21st…

Then The White House called America’s Plunge Protection Team in, as Fed Speakers unleashed their double-talk, sending US equities rebounding dramatically from overnight lows…

Erasing all of Friday’s Bullard-Bomb losses…

On the day, Small Caps were the huge outperformer. Nasdaq the laggard but still managed solid gains…

Dow’s best day in 3 months, S&P’s best day in a month (why?)

Russell 2000 and S&P 500 both bounced off their 50DMAs today…

Notably the Nasdaq/Russell ratio found support AGAIN at a key level…

Source: Bloomberg

Funny how these short-squeezes happen right on cue with magical capital being deployed massively and broadly…

Source: Bloomberg

Value roared back just as HFs had rotated back to Growth…

Source: Bloomberg

VIX was monkeyhammered lower today, but was unable to break below 18…

Bonds were clubbed like a baby seal on the day with a massive rise in yields off overnight lows. 2s and 5s remain around 10bps higher post-FOMC, 30Y around 8ps lower and 10Y unch…

Source: Bloomberg

10Y yields soared back 14bps off overnight lows, erasing Friday’s drop and back at pre-FOMC levels…

Source: Bloomberg

But 30Y yields spiked a massive 19bps off the overnight lows!!

Source: Bloomberg

The yield curve perfectly erased Friday’s flattening…

Source: Bloomberg

5Y Breakevens pushed back up to the post-FOMC spike lows…

Source: Bloomberg

Cryptos were crushed again by China crackdown headlines…

Source: Bloomberg

Bitcoin tested back below $32k again holding key support…

Source: Bloomberg

Bitcoin also formed a death cross, meaning its average price over the last 50 days fell below that of its 200-day moving average. The indicator is typically seen as a closely-watched technical measure that could offer a hint at more pain to come…

Source: Bloomberg

but… there’s reason to believe the formation this time around might not be as bearish of a signal given that the 200-day moving average is still rising, according to Matt Maley, chief market strategist for Miller Tabak + Co.

“When it starts declining, that will be more compelling,” he said.

Indeed, Bitcoin’s marking of a death cross in March 2020 proved no impediment to gains as it turned higher and formed a golden cross (when the pattern is reversed) two months later. But a death cross in November 2019 saw the coin trading lower one month later.

Meanwhile, the dollar also gave back all of Friday’s spike gains…

Source: Bloomberg

Commodities also bounced across the board led by oil and gold…

Source: Bloomberg

Oil prices surged with WTI topping $73…

Finally, is Dr.Copper or Dr.Crude right about what happens next?

Source: Bloomberg

So to summarize – S&P, ‘most shorted, stocks, the yield curve, 10Y yields, breakeven rates, gold, and the dollar, are all back at Thursdays close almost to the tick. It seems Friday’s quad witch malarkey was to blame.

Source: Bloomberg

The question is – what happens now?



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