Competing To Liquidate

Markets continue the retreat as little interest in buying is evident due to the general malaise engulfing trading. After the close, AAPL announced Jobs was taking a leave of absence and ' the cult' immediately barfed on their MacBooks. Certainly the company is more than one guy. At least it should be after the stocks breaks -56% last year and another -8% this year. Either the stuff is good right here on the product and the discount, or it is not. AAPL and other successful companies represent issues not of liquidity, but whether any of the connecting elements which feed from the financial sector back to stocks, are solvent. Either the Fed and Treasury are going to be successful right here in the first quarter or there is going to be an unbelievable drag on prospects for reclaiming any ground. Restoring national wealth will be Herculean task, leaving most unable to recover for a decade.

The reluctance of Congress to grant the second round of TARP is well founded. It is a legitimate question to ask just what has all this liquidity done. And if it has done nothing but stabilize several financial corporate institutions while the rest of the nations jobs and wealth tanks, the money should just be returned.

Winning this battle is having a plan that the geniuses in Washington and Wall Street have demonstrated is worth their over compensation. This is all about delivering financial conditions transparent enough where markets can develop trading strategies competing to take risk rather than competing to liquidate.

More Where That Came From

Bernanke in London told basically every one that 'there is more where that came from' with regards to additional stimulus. Markets are nervous and having all agree to the ' no one knows where these markets are going ' song, a trader has to take a shot on the buy side here. The Fed and Treasury are trying to monetize the long positions it would seem for at least for a 25% retracement from the lows. While they certainly do not have a target, they are going to make it increasingly hard not to place some of the liquidity into equities. With the size of the equity pool, that could be a significant position spread over players who in turn are spreading out risk with a discounted market and a long term time horizon. May not bring the bull back, but would certainly diminish bear prospects.

First Quarter Trading Really Begins

Volatility should kick up this week as the markets begin to establish first quarter battle scars. Despite the yearly romps in October, the first three months of the year are never without plenty of action. Monday saw commodity prices begin the week with sharp losses as notions of deflation were being pondered by specs. Whatever the direction, commodities will follow the stock market this quarter since equities will be the barometer for the world's efforts in defeating the pervasive dismal sentiment infecting alternative mattress strategies. Monetizing long positions requires more lifting than the Fed and Treasury have done, but the new administration's call to arms may cause the bears to think twice.

Just Move Higher

Stock indexes fell on low volume as various reasons failed to identify anything important happening today. Though bad unemployment data by ADP has put fear into Friday's number, the action is really about constructing a daily support pattern traders can build on. Today actually may help the cause of the bulls if the market can chop through a bearish number on Friday. No great runs, just move up.

Fed Panics

Well the FOMC minutes definitely showed real panic by the Fed about the dire economic conditions facing the nation. The question of coarse is whether conditions interpreted as so miserable can lead to anything but sideways action at the best for these markets. Acknowledging severe conditions does provide some honest tranparency to current financial problems. One wishes the same transparency would be used by the Treasury and Fed as to just where all the bail out money has gone. Information they both refuse to release.

Volume remains low and internals softening up as the markets wait for Friday's jobs number.

You Go First

Still no shows for trading so far this year. Lots of stimulating going on but little in the way of supreme confidence on how the next market play will assemble and become a run. The blitz of liquidity to fund the rescue of the nations banking and investment institutions, along with various other corporate entities, has created a fog hovering over the notion of zero interest rates. Hard to find data supporting big stock rallies while institutional preferences are to hoard cash. Cash given to them with little performance criteria and few incentives to do anything but invest in sure things. Which of coarse are things such as money market mutual funds guaranteed by the G. This ' you go first' lending and investment courage is typical of the talentless industries of banking and insurance. Even with every legislative advantage to conduct business long before the current mess, they still screwed it up.

New Year Action

DJIA, SP500 and NQ100 indexes all had solid rallies today as the best guesses for market direction played the odds on higher. It is hard to fade early action this year since bearish attitudes have clearly never been higher. Any redemptions aside, this market could rally substantially and still be no good in the end. Traders will follow early price action with the reasoning that it is hard to get motivated about downside potential after the death dive of last year. Trading institutions are leaning on the massive governmental rescue and putting trades on which are leveraged by excessive liquidity on the one side and the ability to purchase the best of the highest rated knocked down debt on the other. These trades have a longer time horizon but will pay well if the worst is over. The only caution today was the extremely light volume. The beginning of solid moves are built on sharp volume spikes. As today illustrated, much of the heavy lifting is being done without broad participation. Getting fund managers to deploy funds early and to flap those wings and scream like the chickens they are will take more than bull trap action this year. You cannot fool those guys all the time.

Markets 2008

This will be the last post of 2008 for BaseOp2 as the year of every possible directional swing comes to a close. While the individual and institutional investors struggle to comprehend the magnitude of hurt put on the money pile worldwide, the deep bid/offer index markets of the US continue to provide the mechanics for sorting out value. Legging into recovery will occur as professional trading strategies along with the support of governmental intervention discover what value combinations will be the underpinnings for market recovery. New rules will be part of the 2009 trading environment with less leverage, but just as much opportunity for those able to decipher risk points to buy and sell in building winning performances.

It is tough to be courageous in these markets, and is made harder when relying on those elements of the market to recover, banks and brokerage, which failed us so. They survived in large part putting transactional deals together which had no value other than passing paper. It is easy to build daily routines in business and in life which offer no challenge, create nothing of value, and ultimately fail to build wealth to power good works.

Dull Again

Not much to say today. Like yesterday, today's volume was diminished as zero rates collided with zero interest in equities. Maybe these are bargains of a lifetime but investors have little taste to partake when every five days some new disaster story hits the wires. Managers to manufactures, technology to banks, they all seem to flinch every time the morning trading bell rings.

Avoiding Road To Empty

The Fed had run out of room on interest rates so they basically told the world they would do whatever it takes to manage the current economic disaster. Gee, I hope that is enough because if it is not, we are all in for a long road to empty. Technical programs run here are happy with the rally but a couple of indicators still say not so fast.