MARKET WRAP – WHAT THE HECK WAS THAT?
Really curious move in stocks today. The S&P 500 soared over 2% on no real positive news. GDP was essentially in-line and jobless claims missed expectations. Futures were red to start the day, but stocks shot higher in the morning on no catalyst. I don’t always try to attribute every little move in the indices to some particular news event, but a 2% move on no real positive news is certainly odd. We did have earnings out of Bed Bath & Beyond and a small merger between Dress Barn and Tween Brands, but neither should have sent stocks rocking. Lennar reported some good news in the housing sector, but again, that shouldn’t have sent the entire market higher. The Russell rebalancing and a little bit of window dressing are the likely culprits as we see the continued rotation into relative strength names. Any thoughts on today’s rally are welcome. I’m not generally one for conspiracy theories, but today’s move was highly suspect….
Stocks closed 2.15% higher on the day. Oil closed 2.3% higher while the dollar was flat. Gold close up 0.5%, copper closed up 2.2% and the Vix got dinged for 9%.
TPC,
Aside from what you said, perhaps bulls are speculating a blow out consumer sentiment report tomorrow morning? The last minutes they pushed the market to near high of day to close at important technical levels- also suspect. The green shoots trade is still on. You said yourself that Q2 numbers can be more of the better than expected reports. The market may not sell off much at all. I now think new highs are possible. Negative news continue to be ignored and written off as lagging indicator or was baked in at March lows.
Have historical “Green Shoots trades” consist of 10 yr yields moving up over 14 bps? Cause I only remember yields rising when the market rose. Weird stuff man
lower I mean.
Looks to me like we’re starting to see the market anticipate better than expected earnings. You might want to cover that short TPC….Was a nice trade down from 950, but you’re pushing your luck IMO.
Dammit you get the point! 14+ bps drops in 10 yr yields are not consistent with recent “green shoots trading”. Doesn’t make sense!
bond auction. lower yields. it’s all good for real estate and the reflation trade.
So, if we’re going to get worse than expected revenues and better than expected EPS as has been the trend wouldn’t you think the market will catch onto this fake earnings growth? I mean, I don’t buy a stock because the company can cut costs and fire employees. I buy a stock because the revenue growth is going to be strong in the future and I expect broad corporate growth. Right?
I’m not generally one for conspiracy theories, but today’s move was highly suspect….
dude finish your thought…you suspect WHAT?
- that every single lift in the e minis was on a huge volume spike(not the way to a profitable entry)
- that every quarter gets marked up
- that the treasury changed their formulas on reporting indirect bidders and miraculously every auction went just swell this week
- that crude found a bid AGAIN, but nat gas didnt
-that GS will make record profits and dole out record bonuses
as for me, I don’t suspect anything, just the same ‘ol same ‘ol
Uformula – the lower yields are good for housing, consumers and the market in general.
Well Reg, you seem to have summed up my thoughts nicely. There’s a part of me that wants to think that this market is fair, balanced and all players are equal, but the rational side of me knows that’s just not the case. People will do damn near anything for money – especially if it’s 2% of a multi-trillion dollar market….
I think the market was oversold and now we are headed back towards 1000 on S&P, slowly but steadily. Long term sentiment is bearish but short term is bullish. May be its common sense for all the BIG money institutions to think and act positively, as long as data is not “overwhelmingly ugly”. No one wants to play down the recovery, short everything in sight and create panic all over.
I’m not the world’s greatest trader, but this kiss of the former range bottom might clear a path lower. These low volume rallies typically follow 90% down days, and the internals for a 2% rally were not good.
Then again, if GS & JPM have their finger on the scale, who knows what’s next…
ecb pumpet to the market more than 600 bln USD on wednesday…maybe the money found their way to all the asset classes
“…..GS & JPM have their finger on the scale…..” but Geppetto Obama has his hands on the back of their heads. He may not know anything about economics, but he knows, “Stock Market-up….good; Stock Market-down….baaad.” Doesn’t make for a very complicated conspiracy to imagine Barry telling them, “I cover your Bonus Butts, you give me “ups.”
After all the years I’ve been trading the Market, I still feel like the Smartest Man on Earth when a trade goes my way…….for no discernable reason whatsoever.
p.s. Does anyone keep statistics on how many “better than expected” numbers are reported? Seems like the ratio is about 9-1, “better” since BHO parked his butt in the O.O.
And another thing; if the “experts” are wrong nine out of ten times in their predictions, what kind of fool would listen to them?
Just asking………
Shooter, TPC wrote something about that earlier: http://pragcap.com/earnings-update-12
Low volume, lack of institutional participation…maybe the reason was Fed extending credit facility beyond September into year’s end?
There are no fucking jobs people. The fact that we popped 2% on a terrible jobs report is just astounding.
Keep it up GS, how’re all those bubbles you kept inflating. Ever been on the wrong side of one of them.
Keep buying stocks, you’re about to be on the other side of the bubble.
Maybe this explains:
The Federal Reserve on Thursday announced extensions of and modifications to a number of its liquidity programs. Conditions in financial markets have improved in recent months, but market functioning in many areas remains impaired and seems likely to be strained for some time. As a consequence, to promote financial stability and support the flow of credit to households and businesses, the Federal Reserve is extending a number of facilities through early 2010. At the same time, in light of the improvement in financial conditions and reduced usage of some facilities, the Federal Reserve is trimming the size and changing the terms of some facilities.
Specifically, the Board of Governors approved extension through February 1, 2010, of the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF). The expiration date for the Term Asset-Backed Securities Loan Facility (TALF) currently remains set at December 31, 2009. The Term Auction Facility (TAF) does not have a fixed expiration date.
The extension of the TSLF also required the approval of the Federal Open Market Committee (FOMC), as that facility is established under the joint authority of the Board and the FOMC.
In addition, the temporary reciprocal currency arrangements (swap lines) between the Federal Reserve and other central banks have been extended to February 1. The Federal Reserve action to extend the swap lines was taken by the FOMC.
The Federal Reserve also announced changes to certain liquidity programs in light of the improvement in financial conditions and the associated reduction in usage of some facilities. Specifically, the Federal Reserve trimmed the size of upcoming TAF auctions, because the amount of credit extended under that facility has been well below the offered amount. In view of very weak demand at TSLF Schedule 1 auctions and TSLF Options Program auctions over recent months, auctions under these programs will be suspended. The frequency of Schedule 2 TSLF auctions will be reduced to one every four weeks and the offered amount will be reduced. The authorization for the Money Market Investor Funding Facility (MMIFF) was not extended, and an additional administrative criterion was established for use of the AMLF. If necessary in view of evolving market conditions, the Federal Reserve will increase the size of TAF auctions and resume TSLF operations that have been suspended.
The TSLF lent Treasury securities to primary dealers, secured by certain other securities, for a term of 28 days rather than the usual overnight. Suspending that program seems like a minor change, but it does show the panic has subsided.
Dean, that news hit the wires at 2PM or so. The market barely budged.
There’s no conspiracy. Fund managers were window dressing. Stocks had to be bought yesterday so that the trades would settle by month-end.
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