The markets held up well today.
We were playing for the bounce in oil and we got the bounce in oil ahead of tomorrow's inventories but it was pretty much a commodity rally and we hate those. We did get a nice move up by the Transports, who weren't buying the "bounce" in crude and neither should you because there was nothing driving it other than the urge to paint $130 on the NYMEX.
RL had surprisingly good results and boosted the retail sector but that doesn't matter ahead of the GDP tomorrow so we kept playing it close to the vest with not too many picks, We shorted RIMM and FSLR into the close as both seemed irrationally exuberant as the rally based on oil, materials and agriculture stocks puts us right back to where we were near the end of April, when tech (and RIMM) were struggling.
On the whole, it looks like the Nasdaq is simply consolidating under the 200 dma at 2,500 and as long as we hold 2,400 we can remain bullish. We MUST have Nasdaq leadership to confirm a healthy rotation pattern out of commodities but, as we were discussing in member chat yesterday, I'm still looking for a pullback ahead of Q2 earnings in July as I think those are going to be the real catalysts on which we base our summer rally.
Corn fell to it's lowest price in more than a week after the U.S. government announced plans to allow livestock grazing on protected land, reducing demand for grain in animal feed. About 24 million acres held in the Conservation Reserve Program will be available later this year, U.S. Agriculture Secretary Ed Schafer said yesterday. The move may add as much as 18 million metric tons to feed supplies, the Department of Agriculture said. “The corn crop is already late, and that means we will need to have cool weather this summer for pollination and an extended growing season'' to boost yields, Schultz of Gottsch Enterprises said. “Anything that threatens the crop will renew the rally.''
Meanwhile the dollar hit a two-week high against the Yen, this should be good for our TM play this morning as well as our SNE and other Japanese exporters (see, I told you not to worry). You have to wonder what chart the exporters were looking at yesterday that caused them to freak out in the first place…
According to the WSJ, Barry Diller has joined me in denouncing the market manipulators after his company took a wild ride on unfounded rumors that IACI would by EXPE. “I am so suspect of current markets and the hedge funds and momentum selling/buying. I think there is a plot behind everything.” said Diller. Consider the anatomy of this rumor: it started out four hours ago at Web site Briefing.com, which traders check specifically to learn about rumors. It was then picked up by MarketWatch.com, then Reuters, which led The Guardian to pick it up. It then made its way to the Associated Press, where CNNMoney.com published it. It got all that way but no one actually heard from Mr. Diller himself until someone asked him about the Expedia rumor in the afternoon. In the meantime, traders bought roughly 20,000 call options, Reuters quoted option analytics firm Trade Alert as saying. That is nine times the normal daily volume.
Cross Profit has an excellent article detailing how MarketWatch relied on inaccurate figures from another article to blast IMB and notes that this is a very dangerous trend in journalism as cutbacks in the MSM result in poor fact-checking from once-reliable sources, leading to further cofusion in the markets.
Meanwhile, the master manipulators at GS are being sued by shareholders of TASR along with MER and six other firms who are accused of "stock-price manipulation through illegal short selling." “The defendants have substantially injured plaintiffs, while at the same time reaping enormous profits, by knowingly and intentionally creating, loaning and selling unauthorized counterfeit shares of Taser stock,'' the shareholders said in a complaint filed yesterday in state court in Atlanta. Hopefully this will lead to a "stunning" victory!
Along those lines, here's an excellent scene from "Boston Legal" where James Spader points out what's wrong with the Supreme Court, in front of the Supreme Court.
