Thursday, May 9, 2013

A rumor and a reaction

Stocks took a nosedive at around 1:30PM on the strength of the US Dollar as it topped 100 Yen.  But selling accelerated on unsubstantiated rumors that an article by John Hilsenrath of the WSJ was about to be released intimating that Fed asset purchases may be curtailed "sooner rather than later".  Here's a five minute chart of the day comparing

- UUP Powershares DB US Dollar Index Bullish Fund
- SPY SPDRs S&P 500 ETF
- USO United States Oil Fund ETF
- DBB Powershares DB Multi Sector Commodity Trust Metals Fund ETF:

(click on chart for larger image)
 
The seeming lack of definition on the DBB chart immediately above is because it trades on relatively light volume.

Not pictured was the reaction in the Treasury market as the classic "risk off" trade that anyone in these markets has become accustomed to in the last four years kicked in with lightning speed.

Besides the fact that the market reaction validated current inter market relationships this short term move speaks volumes on what is propping up this market.  And it isn't corporate earnings!