Tuesday, April 26, 2011

After the Ramp, Amazon Pigs Go to Slaughter

There's an old market adage, one oft-repeated by the notorious Jim Cramer of CNBC infamy, and it goes, Bulls make money, Bears make money, Pigs get slaughtered.

Today's top candidates for pig of the day were the anti-silver whore banks who shorted silver with May or June 40 puts (almost a sure slaughter there), the naive investors who purchased any of the momo-stocks - Apple, Netflix, Cipolte Mexican, etc. - and those who held their recently-purchased shares of Amazon (AMZN).

The winner - though all may be declared winners, by losing at a later date - for today has to be the Amazon playas who ignored the warnings of today's market action (from above 186 to a low of 181 against the backdrop of an accelerating market rally) and held on, hoping for another blowout quarter from the world's biggest bookseller.

Oops! Amazon reported just after the closing bell that it missed analyst targets by a pretty wide shot, coming in at 44 cents per share, when the market was looking for 61 cents. Some - most likely the fast talkers on Fast Money - will take solace in the fact that they beat revenue forecasts and were beaten up by increased operating costs, but it's earnings that matter, profits, son.

Amazon got the ramp-up treatment just this past Wednesday, soaring, on no particular news or for any good reason, from 178-and-change to just below 185, before noon. On Thursday and Monday, the stock drifted at the high end of the range until it was absolutely belted today during the regular session.

What changed? Precisely nothing, except that somebody got played, and good, and you can bet your last download on your Kindle that it wasn't anybody working at Goldman Sachs or Merrill Lynch or JP Morgan. Nope, the small investor who thought he/she had it all figured out got creamed and once again is left holding the bag (that bag being of the Firesign Theatre variety, and those who don't understand the 1970s reference, grow up!).

Amazon closed the day at 182.30, a loss of 3.12, and was trading below 180 in the after-hours. It's a pretty good bet that it opens tomorrow gapped lower, and trends South from there.

As for the rest of the market, it proved once again that nobody knows anything (other than Ben Bernanke and Jaime Dimon, that is) about short-term moves in the stock market, because, for all intents and purposes, this is an overbought, frothy market top, but this writer and many others have been calling tops for months. We are all equally fallible and ignorant in the face of SIRP and QE2. We are confident tomorrow, when the Fed announces no change in rate policy and Ben Bernanke makes history with a post-nothing-announcement news conference, will be either up, down or flat.

Dow 12,595.37, +115.49 (0.93%)
NASDAQ 2,847.54, +21.66 (0.77%)
S&P 500 1,347.24, +11.99 (0.90%)
NYSE Composite 8,554.99, +69.74 (0.82%)

Advancing issues, as one might have guess, clobbered decliners, 4561-2055. On the NASDAQ, new highs totaled 158, new lows, 28. There were 318 new highs and just six new lows on the NYSE. Volume was good on the NASDAQ, still depressed on the NYSE.

NASDAQ Volume 2,070,959,125
NYSE Volume 4,391,299,000

Commodities had a storied session, especially the precious metals. After making ferocious moves for months, the expected pull-back has begun. Gold lost $5.60, closing in NY at $1,503.50, but silver took a major hit, down $2.10, to $45.05. Crude oil lost a mere seven cents, to finish the session at $112.21. Food-related commodities were mostly lower.

The math on this is pretty straightforward. Since the global banking cartel can't allow gold and silver to defeat their paper monies, they suppress the precious metals with massive short positions in the fluid, over-leveraged paper market. Since most people don't own gold or silver, they can beat the price down when necessary, though physical holders won't actually care much about day-to-day movement since the trend has been up for the past decade and shows no signs of abatement. Oil stays high, as everybody has to put fuel into vehicles or distributed energy and since dead humans don't drive much, the cost of food must not rise severely.

It's all about oil, has been for many years and isn't going to change soon. That's why wise guys and gals like gold and silver. It's a hedge, it's real money and you can't eat it out of existence.

Tomorrow, the great and glorious Ben Bernanke will quiver and quake through a non-eventful press conference after the "no change" FOMC policy announcement. Maybe Ben will offer some tidbit about how he can stop inflation in 15 minutes or some other rubbish. Most likely, however, it will be snoozing as usual and the market will go... somewhere.

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