THE RETURN OF THE BIZARRO MARKET
Light volume, holiday, no news….perfect day to gun the futures market, right? I am reading all sorts of reports about mergers and oversold conditions, but there is simply no reason for today’s 2% move in the major indices. The futures were slightly positive heading into the open and for some odd reason the futures got gunned on 3 separate occasions at 9:45 CST, 10 CST, and 10:30 CST. I wish I could say that the re-emergence of merger Monday was the culprit, but the futures would have been ramping before the open if this were the case.
Adding to the confusion is the positive dollar which is being shunned by the equity and energy markets today. Tech, which is particularly dollar sensitive, is a market leader today. But no one is benefiting from the no news rally more than the banks which are now trading almost 3% higher on the day. If you don’t think the trading profits at each of the big i-banks and money center banks are going to be thru the roof again I suggest you head back to the drawing board. The bizarro market is back.
TPC,
Does this mean you are going long for Q3 earnings? Banks likely to have blowout profits again. Would you go long any financials right now?
Blatant manipulation. Where is the SEC?
Yeah, earnings ex-Losses should be good in Q3.
It makes sense TPC – they’re using the bailout money to gun the futures. They’re running a ponzi scheme where they use the Fed cash to generate trading profits.
Gray,
I certainly won’t be short heading into earnings. I haven’t run my final earnings analysis yet, but I’ll post my results as soon as I do….
The central bank is now considering dealing with money market funds because it does not think the primary dealers have the balance sheet capacity to provide more than about $100 billion, the Financial Times said.
TPC – Do you still see this rally to continue? Where is the liquidity going to come from after this 50%+ liquidity rally?
I don’t know about the futures market but it’s “buy on Yom Kippur” today in the equity. Somehow, this market tends to go higher on no-news days. But in the end, there was still a lot of selling. As we approach to the end of the quarter, it’ll be interesting to see how this plays out.
“Markets buoyed by Xerox purchase”
…that’s odd. Xerox lost 14% today, so I suppose that its shareholders weren’t paying attention to the “big picture”.
Naa,
It’s hard to imagine a situation in which earnings overall disappoint. That is the next big catalyst. The market could stumble along over the next week or two, but once earnings come in we are going to get another confirmation that things are “better than expected”.
TPC are you sure about that? Are you going to go ultra long into Q3 earnings? I have a hard time seeing Goldman Sachs at 240 and AAPL at 220 and Ford at 10, but hey I guess it is possible…but eventually the better than expected earnings trade won’t work. Besides, I wouldn’t be surprised to see eager longs try and buy up the market before earnings so they may ride the better than expected train…
James,
As I mentioned above, I haven’t run the hard numbers yet, but yes, a leveraged long position into earnings looks likely based on my preliminary results….I know it will be mostly fake, i.e., cost cutting with very little revenue growth, but better than expected is better than expected on Wall Street. The analysts are still way behind the curve….
Hi TPC, it would be very helpful to know what time each article was posted in addition to the date. Thanks.
John, I’ll look into it, but TPC + website code = broken website in most cases. I’ll get some help from someone smarter than myself….
Thanks TPC. Also any guess on the upside as the following said limited-
The market is reaching a critical juncture as we approach 10,000 on the Dow and the momentum appears to be waning. A major seasonal trend appears to be taking hold of the housing market and few catalysts appear on the near-term horizon that could push the major averages substantially higher after the incredible rally we’ve seen.
Through the roof profits for the banks…I would expect nothing less. It’s easy to make money in the markets when you know where it’s going. The past 6 months have been crony capitalism’s finest hour in history. One of the major reasons for the little exercise we’ve seen the past 7 months is to recapitalize the banks squeezing shorts again and again and again and so forth and at the same time jacking up the national retirement account we call the stock market. We all know how prez transperancy just hates it when a few people make hoards while the rest suffer in a declining market. It fits perfectly with Obama’s view of the world and it fits perfectly with the democratic playbook. No matter that the US market is all but dead participation-wise becuase few want to deal with a government-run market. Problem may be that all that money thrown at stocks by the administration may not translate into the votes they thought it would if fundraising of late is any indication. As far as earnings this quarter go..all I can say is:
ADBE – missed/stock down
ORCL – missed/stock down
RIMM – missed/stock down
In a normal market these companies are often good indicators of what’s to come. Obviously things are different now and we are not dealing with a balanced field as far as the importance of each industry to the fed and blanket economic prosperity across all industries. Some stocks may rally but a larger number may not compared to last season. NKE earnings ought to be interesting.
Byron Wien said 1,200 by year end, hard to believe but possible with so much printed money and programs with unprinted money with Fed accounting entries.