Before we get to their chart and commentary, their view is the market closed down because of a QE-OFF rumor on TWITTER! First of all, we have been documenting the F_E_D's slow boil of the frog method of slowly acclimating the market to the idea, setting up yardsticks like employment as a measure of whether we need QE or not and then manipulating employment data to walk themselves out of QE, all along having had given the market plenty of notice.
The fact the F_E_D was getting ready to make exit plans is something I have been documenting since Sept. 13, 2012 when QE3 was released, that was the first move when they talked about changing QE from a time based (no wiggle room) program to an economic based (lots of wiggle room as economic reports are easy to manipulate), then they actually did it and then tied it to jobs and then created a trend of better jobs reports.
When you look at the market, breadth, 3C, long term leading indicators, you can see there has been a flight to safety and distribution since the 2013 rally started, why since then? Because Wall St. understood as of Sept. 13th also what the F_E_D's intensions were, this is the reason this was the only F_E_D QE or other accommodative policy program that was announced and the market didn't rally, but instead fell. It fell to the November 16 lows and we have had a rally of some kind ever since and they have been unwinding everything including (and this is why I followed treasuries so closely for so long), the FX carry trade they finance their positions with.
In effect, the market fell 8% after QE3 was announced and the first rally after, they have been selling in to the entire time, buying protection and moving to Safe Haven assets.
So now to the other site's analysis.
They start with "Treasuries had an odd day", yes, that would be odd. Yields move the opposite of treasuries, we are looking at yields above similar to TLT's timeframe. Why would Treasuries fall after an auction went better than expected and especially if the market is scared that QE might end? Treasuries are exactly what they'd buy, even if it was just based on normal arbitrage-market down, treasuries up.
However if you read the last post, there's nothing strange at all in how Treasuries acted today. The SPX could barely generate any interest as evident by the TICK, at the same time SPX was pressured by a breakout in TLT, that's when there was a quick distribution move to send TLT lower and still the SPX fell.
Imagine if TLT was allowed to continue higher with stronger momentum off the breakout as we were seeing (the first breakout market wide that actually had increasing volume! NEW SPX highs couldn't do it, Dow 15k couldn't do it, but treasuries breaking a very slight resistance zone to the upside kicked volume up about 400% above average.).
So even with TLT falling in the afternoon, the SPX still couldn't get a grasp, imagine what would have happened if not only TLT had not been manipulated back down to help the SPX from collasping, but TLT actually moved much higher as it was poised to do, imagine how low the SPX would have closed then. Next imagine the orders on the open tomorrow, we'd likely have a circuit breaker.
I was asked, no I don't think this was manipulation at any cost to keep the market up, I think this was a realization that with no built in future demand (shorts-as their covering creates buying and helps keep declines orderly), I think they (and I believe it was the PPT from the NY F_E_D's trading desk) were trying to manage an event that could have spun out of control very quickly. Rather than trying to hold the market up, I think they were trying to prevent absolute chaos.
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