After the worst week for stocks in years, and following a significantly oversold condition, it will hardly come as a surprise that the mean reversion algos (if only to the upside), as well as the markets themselves (derivative trading on the NYSE Euronext decided to break early this morning just to give some more comfort that excessive selling would not be tolerated) are doing all they can to ramp equities around the globe, and futures in the US as high as possible on as little as possible volume. And sure enough, having traded with a modestly bullish bias overnight and rising back over 2000, the E-Mini has seen the now traditional low volume spike in the last few minutes, pushing it up over 15 points with the expectation being that the generic algo ramp in USDJPY ahead of the US open should allow futures to begin today’s regular session solidly in the green, even if it is unclear if the modest rebound in the dollar and crude will sustain, or – like on every day in the past week – roll over quickly after the open. Also, we hope someone at Liberty 33 tells the 10Y that futures are soaring: at 2.13% the 10Y is pricing in nothing but bad economic news as far as the eye can see.
Speaking on oil, Brent gained more than $1, after earlier dropping to lowest since July 13, 2009. There was some bullish sentiment when Libya declared force majeure at oil ports, although that will hardly last once algos process that the combined capacity that is offline is a paltry 580k b/d capacity. WTI trades ~$58.50, climbs more $2 also off 5-yr low, on the same “catalyst.” Expect both fading as the realization that OPEC isn’t kidding about $40 barrel oil filters through.
Finally, as we showed last night, this is what, via Nanex, a direct intervention to push crude higher – because central banks finally realized that plunging oil may be “unambiguously good” for the economy but is increasingly bad for markets – looks like: presenting the well-known “flash smash”, coming to every central-bank traded asset class near you.