Thursday, June 23, 2011

The Old Dump and Pump

Stock traders - not investors - love action like today's on the US stock markets.

At the open the major indices plunged on news that the IEA and the United States would jointly release 60 million barrels of strategic reserves - 30 by the US, 30 by the IEA - to make up for supply shortages from the Lybian conflict. Furthering the desperate mood was the usual horrific chorus from Initial Unemployment Claims which came in much higher than anticipated (by idiots) at 429,000, plus, the prior week's claims were adjusted upward from 414K to 420K.

The revision should come without explanation. The BLS, who mangles the numbers, has revised claims upward just about every week for the past year-and-a-half, but those seeking an end to the jobs problems in America are surely going to have to wait longer.

Now, with all that bad news baked in, stocks were down precipitously, with the Dow off by more than 200 points for much of the session. But, lo and behold, just before 3:00 pm, word came from Europe that everything between Greece, the IMF and the ECB was just hunky-dorey. Greece would get their loans, the people would riot (a two-day general strike is already planned for next week), but all the bankers would be paid in full.

With that, the markets shaved a good 2/3rds off their losses, with the NASDAQ actually finishing in positive territory. Is this a stable economy, a stable market?

We will leave that question unanswered, hoping that bigger, brighter minds might offer some clues.

In any case, a lot of people got slaughtered, but you can bet your bottom dollar (if you still have one) that the bankster types at Goldman Sachs, JP MOrgan and Morgan Stanley had field days.

It's all good. Until it's not.

Dow 12,050.00, -59.67 (0.49%)
NASDAQ 2,686.75, +17.56 (0.66%)
S&P 500 1,283.50, -3.64 (0.28%)
NYSE Composite 8,054.08, -47.76 (0.59%)

Declining issues still led advancers, 3611-2936. On the NASDAQ, there were 42 new highs and 71 new lows. The NYSE had just 28 new highs and 49 new lows. Uh-oh, our key indicator has flipped bearish again, so maybe the Greece bailout isn't all that important to the US. Or maybe it is? The combined total of 70 new highs and 120 new lows puts things back into perspective, despite the obviously-rigged nature of the equity markets. Volume was actually a little spunky for a change. After all, it takes a lot of trading to move stocks around so much.

NASDAQ Volume 2,070,676,500
NYSE Volume 4,946,733,500

With the news of new supply coming on the market (at a rate of 2 million barrels a day), WTI crude futures fell $4.39, to $91.02, and traded under $90 briefly in the morning. One might think this was all about oil, but maybe it was really about gold, the enemy of central bankers worldwide, which made a new record close yesterday and appeared ready to vault towards $1600 per ounce. It didn't happen, as the morning downdraft took apart all long trades. Gold was decimated, losing $26.90, to $1521.10, wiping out a month's worth of gains. Silver was not spared, losing $1.07, to $35.27. It was a pretty ugly day for everyone, but particularly for commodities traders.

Hot fun in the Summertime. Rigged markets are so much fun!

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