MARKET WRAP – CHALK ANOTHER ONE UP FOR THE BULLS
Despite meager losses the bulls have to come away from today feeling pretty satisfied. The S&P closed at the flatline after being down almost 1% earlier in the day. Investors are using every dip to pour more money into this market. It now appears obvious that fund managers are chasing the year-end performance and using any dip to boost their poor performance. The market has an almost irrational feel to it right now. A “can’t lose” feel. That generally worries me, but with strong seasonal trends and greedy fund managers at the helm until the end of 2009 you just never know what will happen in the near-term. Daily Futures has all the action:
U.S. Economy
The U.S. Labor Department said that the consumer price index was up .3% in October, slightly more than expected. From a year ago, consumer prices were down .2%. The December 2010 eurodollars were up .02 at 98.795.
The U.S. Census Bureau said that housing starts were at an annual rate of 529,000 in October, down 10.6% on the month and much weaker than expected. January lumber closed down $9.00 at $230.50 after closing limit-up the previous two days.
The Mortgage Bankers Association said that its index of mortgage applications was down 2.5% last week, to 611.7.
St. Louis Federal Reserve President, James Bullard, said that interest rates may not go up until early-2012.
Grains and Cotton
Rain continues to pester Missouri, Illinois, Indiana, and Ohio. December corn dropped 4 cents to $3.98. December soybean meal, however, closed up $1.80 at $310.50, its highest close in three months.
Sugar
According to Bloomberg news, farmers in India are withholding their sugar from the mills in anticipation of higher prices ahead. March sugar closed up .20 at 23.30 ahead of tomorrow afternoon’s USDA report.
Orange juice
The Florida Department of Citrus said that there were 103.53 million gallons of frozen orange juice concentrate in inventory on November 7th, up 6% from a year ago. January orange juice ended up .0045 at $1.1285.
Energies
The U.S. Department of Energy (DOE) said that crude oil supplies were down 900,000 barrels last week to 336.8 million barrels. Supplies of gasoline were down 1.7 million barrels due to low imports and heating oil supplies were up 300,000 barrels. December crude oil ended up .44 at $79.58.
The DOE also said that refinery use slipped from 79.9% to 79.4% of capacity last week. Over the past four weeks, gasoline demand was down .4% from a year ago while distillate demand was down 11.4% from a year ago.
Metals
December gold closed up $1.80 at another new contract high of $1,141.20.
Currencies
Statistics Canada said that consumer prices were up .1% in October from a year ago, the first annual gain in five months.
Eurostat said that construction output was down 1.1% in the EU-27 in September.
An index of leading indicators in Australia was up .9% in September, stronger than expected.
Source: Daily Futures
This market doesn’t feel irrational. It feels downright rigged.
That’s because it IS rigged.
With no selling pressure, and low volume, GS et al can make it do whatever they want it to.
TPC, On these light churn days when the market is down only neglibly, you can almost set your clock to the fact that the market will recoup most of its losses in the last 10-20 minutes of trading. It’s almost uncanny how everything seems to reverse and the trend line ramps up at a 45 degree angle to close the day. I do believe herding fund managers are buying the dips, but that buying should be distributed throughtout the day. How much of this underlying bid to the market is coming from program trading?
If you buy at 10:30 every morning you can make a small fortune in this market. It really is a cant lose market.
Another blog I read suggests you look at the 15 minute interval charts of today and yesterday and you can see virtually the same afternoon trading patterns. The odds of this happening in a supposedly “random” trading environment are, well, you get the idea. You cannot be watching the market closely and not conclude that the action is overwhelmingly be driven by program buying.
a few thoughts of recent market action:
1) Very small volume could make a big up move. It means no sell pressure. Fund managers may try to balance their intention to buy or sell: if they sell now, they are afraid to miss the tradional Dec melt up; if they do not sell, but somebody else does, they need to follow. The market manipulators( could be GS or whoever) really take advantage this kind of psychology very well, so they hold up the market especially in the bad news day. I remember TPC has a post about ” who is buying”, it appears everybody knows sb is trying to support the market. So as long as the fund managers see this kind of market manipulating continue, they will not sell.
Problem for the manipulator is : nobody buy either. Fund managers are holding what they have,not really buy the dip( a little disagree with TPC) because if fund managers really buy the dip, without selling pressure, the upside move should be much faster and bigger than it has been since Nov. The low volume in Nov is different from that of Aug. In Aug, people were expecting Sep and Oct traditional correction time, but Dec is suppose to be up month. If the fund managers want to buy dip, the volume should be much higher or the move should be much significant that it is.
So the Manipulator could be either very arrogant that they could control very well, just as GS said they did the God’s job, or they are a bit worry because they bought too much stocks to support the market.
2) I have been paying paticular attention to bank stocks. Since Sep, they underperformed the market. And you can see a lot funds sold bank stock in Q3, which include Paulson and SAC, evern GS sold WFC. WFC was really weak recently.
It seems to me the funds sold the risky stocks for conservative ones, which is the end of a typical false bull or bull market.
3) The uncertainty of 2010 is obvious, will every fund managers wait till the end of 2009 to sell or will they sell slowly in Dec?
4) THe Q3 beat expectation game not performed well, so you see the little correction started in mid of Oct. Will the Q4 “beat expectation” game work? I really doubt. Especially with the banks’s market weekness since Sep, I do not think banks will have a very good Q4.
5) Today’s housing start could be a temporary. But the purchase index of mortgage application dropped to lowest since 1997, this is after the tax credit extension. It could imply that Nov home sale number will not pick up even with the tax credit extension. that number will be released end of Dec, will that worry market at that particular sensitive time?
Nice thoughts. thanx
Interesting comments, hfm, thanks.
that buying toward the last hour is an effort to prop up the market…nevertheless, I see some resemblance of the last couple times…AUGUST 24th, SEPT 21st, OCT 19th…I am expecting 1-2 more sideways trading & a drop. Could take place as soon as Friday OE. In addition to that, the bollinger bands start to level out
with any other times, lower permit would have spark a sell off….not today…housing related companies are up…HD, URE, LOW, FRE…
“Meanwhile, building permits came in at an annualized rate of 552,000, which is a slower pace than the annualized rate of 580,000 that economists, on average, had forecast.”
Look like this thing hit earlier than I thought ….
NYSE NASDAQ
Advances 1,673 (43%) 1,052 (37%)
Declines 2,074 (53%) 1,645 (58%)