Idiotic Traders

Today we saw just how idiotic equity traders can be, what's left of them. The S&P ratings agency comes out and says today that not only are the 15 EU countries on downgrade watch, but the EU itself as well as just about every bank in the EU. A false rumor about the IMF spending $720 billion dollars more then they have to bailout the Eu comes along and equities rally and this is why equities follow credit because credit is where the pros are and to prove it, just look at the Context model.

ES rallies on the IMF rumor (since discredited) while Credit and all other risk assets sell off on the very real S&P threat.

Here's ES as of now looking like it's going to give back some of those ill-gotten gains.

That's 3C leading negative and note there was no positive divergence sending ES higher, just pure IMF fiction.

And just because CONTEXT is a basket, here's the truth about the real pros in trading and how they handled the IMF rumor, they are aware the IMF is already 120 bb underfunded for current commitments and instead payed attention to the S&P warning.

 Commodities refused to rally  and weren't far from their lows of the day.

 High Yield Credit sold off into the close and close to the lows of the day

And yields did close at the lows of the day.

Today's EOD action is precisely what I would call the sheep being led to the slaughter and they make it so easy.