How was this trick done? I guess you could say once again; bad news is good. Markets opened lower until oil rallied after being lower by 4% despite a rise in inventories. Traders focused on weaker crude production which saw distillates and gasoline production weaker. Currently oil markets are 90% correlated to the stock market. And, there you have all you need to know about Wednesday.

Oh, and we know economic data doesn’t matter anymore to trading bots but today’s data was awful. PMI Services FLASH plunged to only 49.8 vs prior 53.4; New Home Sales also plummeted to only 494K vs prior 544K; and, as mentioned Crude Oil inventories rose to 3.5 million bbls from prior 2.1 million bbls but Gasoline for example fell to -2.2 million bbls from 3 million bbls. So all this horrible news didn’t affect the trading bots as the day wore on.

The drag on markets was the dismal condition of heavy weight financials and much shorted names rose off their intraday lows.

Market sectors moving higher included: S&P 500 (SPY), Tech (QQQ), Small Caps (IWM), Consumer Discretionary (XLY), Energy (XLE), Energy MLP (AMLP), Materials (XLB), Crude Oil (USO), Gold Stocks (GDX), Japan (EWJ), Russia (RSX) and not much else.

Market sectors moving lower included: Financials (XLF), Banks (KBE), Regional Banks (KRE), Volatility (VIX), Eurozone (EZU), UK (EWU), Germany (EWG), Spain (EWP), Greece (GREK), Sweden (EWD) and many more in the Eurozone.

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

Volume was heavy early in the session and then late on a short squeeze again. Breadth per the WSJ was positive although Money Flow was negative overall.