Low-Volume Melt-Up Fails To Stall Small Caps Worst Streak In Over 2 Years

Despite a low-volume melt-up in stocks off yesterday's European close lows, US equities closed lower on the week with small caps once again the laggards. Even as stocks closed red, the costs of protection in credit and equity markets tumbled as the last 2 days volumeless liftathon in stocks took place against the background of very modest Treasury selling – this has the stench of high-yield bond exposure being significantyly reduced (and synthetic hedges being lifted) – something we saw Wednesday into the close. The USDollar rose the most in 15 months today (up for the 12th week in a row – longest streak since Bretton Woods) led by Cable and EUR weakness. Jobs data losses in bonds today were largely reversed with TSY yields ending the week dopwn 7-9bps. Commodities were ugly with silver and oil (under $90) joined at the hip and gold closing below $1200 for first time this year. The Russell 2000 closed lower for the 5th week in a row, the worst streak since Aug 2011.

Spot The Ramp Day (by looking only at the lower pane's relative volume chart)

Trannies scarmbled back to green on the week but the rest closed red with Russell lagging… Dow's first 200pt gain since March 4th…

Despite an epic surge off yesterday's European close lows…

Just looking across the corporate bond-equity-vol complex, we see notable Treasury buying, and protection (HY and VIX) unwinds in the last 2 days which are exactly the paradoxical moves we would expect from a major liquidation of high-yield credit exposure in a fund… of course this is interpreted by the machines as bullish (VIX/HY) and stock indices are lifted (on no 'real' volume) but in fact it is anything but as the reality of the cash market unwinds spreads to the primary issuance and finally stock markets…

and close up today..

VIX definitely saw more selling (unwind hedge) exposure than mere stocks alone would have expected…

The USD index rose 1.25% today…led by EUR and GBP weakness

The most in 15 months..

Silver and Oil (back under $90) moved in lockstep once again with various flushes on the week but all commodities closed lower against the strong USD..