MARKET COMMENT
Dave Fry at ETF Digest, March 12, 2009
Do you believe in the tooth fairy? Or, Santa Claus?? How about Standard & Poo??? Why anyone would find anything valid these discredited rating organizations say is beyond understanding except for one thing—markets were still oversold and TPTB (the powers that be) don’t have anything else to pump you up with. But, it’s not you they’re pumping, it’s trading desk profits. Da Boyz will take whatever information suits their purpose to launch program trades. Today the headline read that Standard & Poo’s GE rating cut wasn’t as bad as feared. Then, under intense political pressure, the FASB may cave on mark to market rules for banks and others meaning they can hide their crap longer.
If it weren’t real money (“your tax dollars at work” on the trading desks) it would be funny. Nevertheless, Da Boyz liked this news whether it’s manipulative or not.
It was a 90/10 day for volume and breadth on NYSE but not for the NASDAQ. I shouldn’t complain too much about volume but it isn’t that spectacular frankly. That’s because mutual funds have little cash and individuals aren’t phoning brokers with buy orders. The money is coming in from a few remaining hedge funds and trading desks.
It’s the run of the bulls but the herds smaller. Does that matter? Yes and no since rallies often start with just a few participants. Clearly, TPTB are making a concerted effort this week to get things pumped up. Somebody put a gag on Obama for a few days, Bernanke did his part, the FASB is being manipulated to hide the trash under the carpet, “always late but never wanting to hurt a pal” Standard & Poo did it’s job for GE and with markets still long-term oversold a rally was always a strong likelihood.
It was generally the case before the mortgage derivative explosion that mark to market issues that banks and other financial institutions carried many investments at cost. But, those assets actually had real value and weren’t toxic waste. To force the FASB to alter reality is the ultimate manipulative strong arm tactic. It may buy some time, but the toxic waste dump is still there poisoning the asset pool.
We head into Friday the 13th again without too much news other than what the TPTB may conjure up for us.
By the way, with podcast pal Greg Newton on the road I’ll be doing an interview tomorrow with Teresa Lo of InVivo Analytics tomorrow. It should be interesting.
Let’s see how Da Boyz can finish the week.
Have a great weekend!
Disclaimer: Among other issues the ETF Digest maintains positions in: IEF, TLT, GLD, FXE and DBB.
The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward.
Elvis Costello – Pump it up
