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MID-DAY MUSINGS

26 October 2009 by Cullen Roche 8 Comments
  • What a dramatic turnaround this morning!  Stocks are trading with a perfect inverse correlation to the dollar.  This morning’s sharp turn in the market is the direct result of the rising dollar.
  • Could the sell-off be the result of no buyers at these high valuations?   Sellers are just hitting the bids, but the bids don’t appear to be there….
  • The rally in the dollar is impressive, however, the near 10% rally in the VIX is even more impressive.  Is short covering in the dollar resulting in a reach for downside protection?
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Comments
  • Octopus

    Mix of all the above. From a technical perspective mkt was top-heavy and divergent in the last few sessions, now we have sell signals in many indices; reasonable first target could be oct lows.

    10/26/2009 at 9:56 AM
  • Henry

    are we topping here or is it just a bear trap

    10/26/2009 at 9:59 AM
    • Cullen Roche TPC

      I am all cash with the exception of a few currency and derivative positions. The market is looking very fragile here.

      10/26/2009 at 10:04 AM
      • Octopus

        I’m 1/3 short, and if I have low cls confirmation today I’ll short another third tomorrow

        10/26/2009 at 10:10 AM
        • Cullen Roche TPC

          You’re a bigger man than me with those short positions on….

          10/26/2009 at 10:13 AM
        • Octopus

          Naaaah, I just sell it, if it goes up I buy it back… Seriously: I think that with this technical set up short is worth a try

          10/26/2009 at 10:45 AM
      • Henry

        funny how they contribute the drop to this
        U.S. Stocks Retreat on Concern Housing Tax Credit to Phase Out
        http://www.bloomberg.com/apps/news?pid=20601087&sid=aL1cGynsS0qM
        Oct. 26 (Bloomberg) — U.S. stocks fell, erasing an early rally, on concern lawmakers will phase out a tax credit for homebuyers and Bank of America Corp. will have to sell shares to pay back its government bailout. The dollar rebounded from a 14- month low against the euro and oil wiped out an early advance.

        Eleven of twelve shares in a gauge of homebuilders slid. Bank of America sank 5.7 percent on speculation government officials will force the company to raise more capital, while Fifth Third Bancorp, SunTrust Banks Inc. and U.S. Bancorp tumbled at least 3 percent after Rochdale Securities LLC analyst Dick Bove downgraded the shares.

        ————
        banks lead the weakness…but URE actually up…or unchanged.

        10/26/2009 at 10:21 AM
  • Henry

    I came across this quote which i think is very interesting
    ——
    “You know, teh only trouble with capitalism is capitalists; they’re too damn greedy.”
    -President Herbert Hoover to author Mark Sullivan

    10/26/2009 at 2:47 PM