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.