Bonds, Big-Tech, & Bullion Battered As Santa Claus Rally Begins Badly

Bonds, Big-Tech, & Bullion Battered As Santa Claus Rally Begins Badly

While some argue about whether the Santa Claus Rally is the week leading up to Xmas Day or the week after it, we note that the over the last 20 years the week before Xmas Day has seen positive returns 13 times (unch twice and negative just five times).

Source: Investopedia

Over the last 20 years of following the Santa Claus rally proposition, the average return was only +0.385%.

A quick look at today’s post-OpEx performance suggests this Santa Claus rally is not off to a great start. The only macro data of note today was a slight pick up in German IFO business confidence, and a dismal US homebuilder sentiment survey, but as soon as the cash market opened, Nasdaq was dumped, Dow was bid a little. By the close, The Dow was the prettiest horse in the glue factory while Nasdaq and Small Caps were the biggest losers. The last 15 mins or so saw some lipstick put on the pig as 0DTEs took profits on a good trend day…

Retail ‘favorites’ are down for the 4th straight day back to 2-month lows…

Source: Bloomberg

Amazon tumbled to its lowest since March 2020 and the rest of the FANGMAN stocks are down hard since the FOMC (NVDA, AAPL, NFLX all down around 10%)…

Source: Bloomberg

TSLA shares ended the day down after spiking higher in the pre-market after Elon Musk polled his followers and found they wanted him out as CEO

“Most Shorted” stocks tumbled further today (down for the 5th straight day – biggest 5-day drop since Sept), now at their lowest (on the downside momentum) since Feb 2020…

Source: Bloomberg

Treasuries were uniformly sold today with yields up rising from around the opening of the US market to the EU close. Yields were up 7-9bps across the curve…

Source: Bloomberg

The 10Y yield spiked up to pre-CPI-plunge stops and stalled…

Source: Bloomberg

The dollar ended basically unchanged on the day, hovering around the pre-CPI-plunge levels from last week…

Source: Bloomberg

Russia’s Ruble tumbled to its lowest since May this morning…

Source: Bloomberg

Bitcoin slipped back to 3 week lows at $16500…

Source: Bloomberg

Some argued that broad crypto weakness reflected renewed fears over Binance (even though they picked up Voyager’s assets today)…

Source: Bloomberg

Gold fell back below $1800…

Oil prices rallied on the day with WTI back up to $76…

Finally, as SpotGamma notes, last week registered the second highest level of call shorting since the week of March ’20. We think that traders will use rallies as opportunities to sell calls, which serves to slow upside momentum.

The largest takeaway on positioning for this increasingly illiquid week is that the 3800 Put Wall area is shaping up as major downside support into year end.

The Dec OPEX roll seemed to result in a concentration of puts at that strike, which is also the vicinity of the much-discussed 3835 JPM Call. This call should serve to support the market in the area just north of 3835, because dealers are long this call and therefore have positive gamma to hedge.

The net result is that if the market recaptures 3900 to the upside (or under 3700), the JPM strike becomes less important to market movement, particularly as we move past this week.

Tyler Durden
Mon, 12/19/2022 – 16:01

https://www.zerohedge.com/markets/bonds-big-tech-bullion-battered-santa-claus-rally-begins-badly