Now Wait for Jobs #

Fed action gave the bulls a post announcement rally but day ended as dull as it began. Market will wait for the jobs number of Friday with that action being more definitive than today's. Tech gave back a little more percentage wise but had gained the most recently.

Turning South

The NQ100 reflects the continued pricing in tech stocks with a general perception the values in tech provide the least risk in case the growing number of market bears are correct about the length and depth of the current recession. The bears are not without the daily bad news bites to point to as evidence of the darkening investment sky. Barry Ritholtz provides daily graphs and charts to make his case that the current upward bias is merely a bull trap.

Making a case for any directional trend has to be a bit tougher on the bulls these days. Nearly every sector of the economy is strained by the debt market's readjustments. Simply being a contrarian is weak. But so is the bear's claim that rests on a notion all will be revealed over time. The bulls ally oddly enough is living in the commodity markets. There is still lots of money looking for something to chase and commodities are a perfect example of the lunacy of managers willing to pursue returns in markets with bull side stories. Until the velocity with which those speculative dollars is reversed, the stock bears will be pushing on a string. A commodity market collapse is the missing element the stock market bears need to get all points heading south. Falling housing prices, falling hard assets, and declining stocks is something everyone understands.

Sell In May

Fed watch begins today but it is widely held they will lower a quarter and say stop for awhile. The index rally has weak internal price action but generally declining volatility often times has the same look. Since it is a busy of week of data action any real move may not appear until Friday, but that action may be decisive in pointing to the May trend. The 'sell in May' voice of the tomb will be used frequently if downside action appears.

Risk Value

The DJI and the SP500 indexes look to have their first winning month since October as they try to crawl out the trading range they entered on January 4 of this year. All the aggressive Fed action along with other hand holding measures have built a base upon which these markets rest. The Fed meeting this week is viewed primarily as a win win situation since any easing will not hurt and no rate reduction will be viewed as all is well. Jobs numbers at the end of the week will also provide opportunities to over trade.

This blog tends to look at the markets as a bull/bear battle probably because of this observer's years of pit trading and the daily struggle to place the market in a direction determined by spin and price. High balls, low balls during the price discovery grind has always a means to demonstrate counter directional potential. Now commodities are a different animal and are extremely small markets when one considers open interest and daily volume. Their current run is a demonstration of what happens when everyone piles into the same upside boat. No doubt, supply and demand of actual commodity users play pivotal part, but most of the open interest is simply about making a price play. Some of these plays are years in the making such as the drive to make Ethanol an alternative fuel source. Commercial grain companies and corporate farm interests have historically played the 'save the small farm' theme to enable continued congressional advancement of price supports for grain prices. The push into Ethanol is simply a continuation of the corporate welfare that has been always been a large part of agriculture.

The bale out of Wall Street is much like the subsidisation of the farm production. 'Let the big dogs eat' is the approach when constructing the financial rescues for corporate giants but always under the excuse for saving the rest of us.

So what is anything worth without intervention? The Fed's 'protecting the up' distorts values and risk profiles because the market, the bid/offer becomes a contrivance. The current situation protects primarily the principal market makers who screwed up. The bulls believe the intervention allows the markets to return to the normal 'up' as a reflection of the true value of things. The bears believes economic strength has been diminished by the magnitude of the event and it is better to take the bale out as an opportunity to dump the assets.

Thursday's Market

Indexes gave back plenty in the last hour of trading Thursday as sellers appeared at key price levels. Techs have been the stout group lately but may be running out of steam as the week closes.
Range bound action will rope the rallies and the breaks into next week.

Tech Trying To Hold

Mixed markets with tech stocks holding the rest of the market together. After the close, NQ100 and other indexes saw 'buy the rumor sell the fact' action as traders jumped on a 10 dollar pop in AAPL and took the stock lower in after hours trade. The overall market is trying to hold in here but keeps on being haunted by general tired economic news and earnings. Bears and bulls will try to put their tag stamp on the week with the winner getting some decent follow through into next week. Whatever animal is winning by mid-week however will simply be the target of reversal in this range bound environment.

Down Today

Bears could only put limited pressure today as 2Q pricing continues to be a feature on rallies and breaks. Most of that will be over by the end of April if the overall market cannot breakout of the 08 trading range trough. Continued stories about tight credit into the rest of this year with election uncertainty will begin to place itself in front of real gains.

Slow

All tech today on extremely light volume. VIX is now just above 20 which is either the sign that the bulls are right about the worst being over or that the bears are correct in claiming today's action demonstrates a slow downward pattern that will last for months. But the VIX may just be low enough now to signal a larger than expected sell-off in stocks is in the offing.

Bull Bear Politics

It must be the political season, but there seems to be a bit more partisanship between the bulls and bears these days. Each with their own data to support it, the long and short speak of either the continuation of the decades long upward trend in stocks or the emerging bear break. Billions have been chipped into the bull side as the Fed and Treasury seek to stem any systemic downside brought about in part by the failings of Wall Street and as a result are ironically helping to preserve an obscene compensation structure whose excesses helped create the credit disaster. From the broadcast market pimps to the insiders gaming earnings expectations, the spin moves across the globe daily.

The bears have taken on a buyside monster which has massive forces in reserve to keep raiders at bay. There chief argument that bottoms do not appear until time and capitulation have bowed everyman may be right, but appears weak because it relies on the broker's logo, 'trust me'. The bulls have been riding a horse since at least 1982 and have legions of fund managers and little folk as members convinced of their unquestionable trading prowess, as long as the market does not go down. Their skills and those of what appears to be a group of extremely frightened policy makers have dropped a dam of money into a price area identifiable as the current bottom. As to whether it will hold, no one knows. Continued bad job numbers with unwavering tight credit will create an environment tough to fix and another repricing event would probably take place at lower levels.

Bear Dreams

Well, like every great directional play, you get a couple chances to load up. For true bears, this is the opportunity to give the bulls some of this and some of that, laughing with hands turned out.
As the bears claim, and there are many smart ones currently, this market is not only no good, it is early in the no good. The bulls however claim low stock prices in certain sectors provide enough cash to reclaim bragging rights to the major direction of the market. Now, the bulls can win by working the sideways market over time. There are no such directional victories for the bears if they cannot repudiate these powerful rallies. Down means way down.

GOOG It

IBM on the close yesterday and GOOG today. The analysts that cover these stocks must get paid for being surprised. The bigger the surprise the bigger the better the payoff. They also must use the same system for measuring earnings as the brokerage firms use for measuring risks. This gaming of the expectations game plays on with the bulls and bears also. The bears believe the downside has just begun because, well, the break has just begun. What with the bulls getting help from every bureaucracy flooding the financial system with enough cash to make bad habits good, it is hard for the bear to get beyond down wave number one. Now they have to fight off GOOG tomorrow as the market tries to run up the hill while waiting for CITI numbers.

Range Test

Indexes under moderate sell pressure just before day session begins. They have been up in this territory a few times and failed each time. The Jan 15th highs for the DJI, SP500, NQ100 are 12777, 1427 and 1971.75 respectively. Close over those areas with some upside volume and a the base has been completed. Otherwise range bound action will prevail for months.

Great Joy

Great joy, all is well. The market will once again soar to new highs. There is nothing that can stop it now. New highs for everyone. Well, the bulls believe this anyway. The bears, and there are plenty, smell something burning and it is them. The gaming of earnings is being used to further any advances but what is new. Bulls have once again a great opportunity to move out the base area tomorrow.

Early Up

Bears on the run early with not a bad as we thought data from Intel and JP Morgan helping. Moderate buy strength indicates there are decent early sellers. Techs need to outperform on rally to confirm another leg for a bottom.

Hip To Be Bear

No question now that it is hip to be bear. Even the market pimps on the various market news channels who have shamelessly promoted everything on the buyside for years are convinced the darker side of the economy will prevail. Slapping the face of the overall market may be the analytical insight currently in fashion but it just may be that 'very bearish' will look more like 'very boring and sideways'. In almost every type of particular market downturn which has already been pounded repeatedly by the facts, the result is dull. This will be a challenge to the several trading operations such as the high frequency boys and steep trenders, but adaptive long haulers will find plenty to trade around.

Pros Ponder

Markets on the defensive this AM trying to find support as earnings begin to be announced through out the week. Seemingly a more professional trade right now with the greatest potential surprise being a substantial rally. Political landscape does not seem to offer much since the common view is that none of the candidates would be able to create anything as dismal as the current economic environment on their watch. Though that would be a bad bet. Ugly thoughts are keeping many trenders from stepping-in as the nagging thought of a some dark economic storm strong enough to rip into great companies, 'boomers' economic nest eggs, and all that is holy, has many thinking twice. Since thinking is not always good for Wall Street the following chant is always helpful; "Up is good, Down is bad." This the algorithm used by many of the leading stock market mavens before clicking on the confirm buy button.

Tired

The news continues to be lousy on just about everything a trader would think important and could get worse if the earnings reports this week turn out to be wanting. Downside action on Friday was deep on orderly liquidation but without strong sell strength. That does not make the bull feel any better but it could prove important if the market is able to turn around. Bears will aim for 1315.75, 1777.25, 12266 for the SP500, NQ100 and DJI respectively which are the April 1st lows.

Moderate Sell Strength Today

Indexes on the run today chased by GE news and for failing to get beyond the one big rally day of April 1st. Look for bears to spin today's price action and for the bulls to hold onto the base building takes time story. A look at internals shows moderate sell strength on the break and a VIX that could only rally a buck fifty. All points more to sideways to slower markets as prices work through current config.

GE

GE putting pressure on markets this AM with bad earnings. Sell strength is moderate/strong as of this post with indexes readying a defense of April 1st rally. VIX will get a pop early and may have a rally if the bale whistle blows, but vol will be short lived.

Leaking Vol

April 1st was the biggest mover of the month and since then the volatility has been leaking steadily. The bearish attitude about the economy in general and real data indicate the bulls may have to wrap their argument around a slow evolving base. Technical indicators still without any push either way.

Hedge This

Reports still flow in about the bad performances of the super hedge managers which really began in the third quarter of last year. Once again, the story is about a group of eggheaded PhD'd non-traders, crushed by illiquid strategies that were obviously not as correlated as they thought with positions the size of a mountain range. Monkeys with darts could utilize the same office space and claim the paper on the floor would be worth more than the paper these geniuses bought. The truth is these guys got tremendously greedy and lazy as they made markets with theoretical constructs in order to carry massive positions in pursuit of alpha. What a joke. Big fails and real big fails every time.

Bull/Bear Stall

SP500, DJI, and NQ100 have stalled over the last four closes after the big rally of April 1st. This will play into the bear's hands for at least a scare since the only action of the last few days has been 2Q pricing by funds. Spec action is being seen primarily in tech stocks as there is noticeable caution over the broad market.

Direction Uncertain

Indexes looking to close over the February highs for some sign of strength as the attempt to complete a yearly bottom continues. Model internals still without much bull or bear strength and trade could easily turn to a strategy of being patient and fading the week's general direction.

Offsetting Bad Paper

Job number was negative but market will slug out direction with a bit more upside resistance in place. There is some pricing going on in the indexes as the second quarter gets underway and it will be determined if the current support fades once the pricing is completed. Program technical internals weaker this AM but could easily turn into strong negatives.

Yesterday's hearing on the JP Morgan/Bear Stearns intervention indicated an effort to avoid some sort of meltdown in the markets at the time but merely conjecture no data. Collectively the panel has as much knowledge about markets and market making at the dopes who leveraged themselves into disaster. What is known is there is still a ton of bad paper on the books with an economy that has weakened to the point where economic productivity may not offset the situation for some period of time. Not good for the overall markets.

Deal Details Coming

Hard for market to go anywhere today, not because Bernanke dropped the R word, but rather because he told the Senate panel that the particulars regarding Bear Stearns would be discussed on Thusday by the larger group of the bail out participants. He admitted not being to versed on the every facet of the bargain give away, which seems a little disconcerting but not a surprise. Market will have to listen to the explanations tomorrow and figure out the important parts.

Ben's Stock Picks

Solid rally today gives the rounding bottom club a sense that victory may be at hand in the ever struggling war between up trenders and down trenders. The long suffering NQ100 took out seven weeks of highs and the SP500 took out the last 4 weeks. Declaring a jubilee on the indebted, the Fed has saved the world, as Wall Street has come to know it, and now much glory can be praised on Mr. Bernanke. First however, he will have to endure congressional questioning tomorrow as to how the Bear Stearns deal came about. The idea of Ben nervously agreeing with the big shots is not to hard to imagine with the JP Morgan suggesting a BSC per share range of greater than zero but less than 30. Then someone whispering in the Fed Chairman's ear and he then asking all around, "how does two dollars a share sound?" Meeting adjourned.

Morning Rally

Indexes will attempt to sustain a rally again with the DJI and SP500 already taking out last week's lows. Belief is Wall Street has gotten what it wanted out of the Fed and bulls think the worst is probably over on write downs. Bears thinking lending curbs will cut-off upside for sometime to come and bear market has some distance to travel. Moderate buy strength this AM