Today being a triple (or, by some standards, a quadruple) witching day, in which stock options, futures and index options all expire, it was amusing and insightful to watch the activity of the markets and the money flows as the week progressed. Triple witching happens every quarter, in the final month of the quarter on the third Friday of the month. Usually markets are quite volatile leading up to the date, and when the expiration of options occurs in the middle of a rally or sell-off, the action can be wicked.
This week had a couple of added bonuses in the form of the AIG flap amid the continuing economic crisis and the regular FOMC meeting and their release on Wednesday. The overhang of AIG bonuses and revelations of just how much money the Fed funneled through the conduit to counterparties was fodder for Monday and Tuesday, a little early for the options players to make serious moves. In fact, most were holding or still buying, staking out positions for the kill later in the week.
On Wednesday, at 2:15 in the afternoon, the Fed announced that they would be buying up to $300 billion in Treasury Bills, in essence creating money out of thin air to buy bonds. It's a desperate strategy which has never resulted in anything other than rampant inflation. But the Fed and the government isn't worried about that now, they just want to prevent complete collapse (they don't know that they, by their very actions, are going to cause it) of the financial system.
Mind you, the financial system in this country is so horribly broken by decades of intrusion, intervention and manipulation, one can scarcely believe stock prices at any point. As they are chimeras by nature, stock prices can be moved around by people with lots and lots of money. People like the Federal Reserve, the government and major banking and trading operations on Wall Street.
So, when the Fed made their dramatic announcement on Wednesday, the traders (crooks or thieves, if you like) were at the ready, pushing the Dow Jones Industrials up 150 points in just 5 minutes time, added more after that and then sold off a bit into the close. I said, in that day's entry, that the smart money was already out and the trading rhythm of Thursday and Friday bore me out (I also made a few bucks on the moves).
On Thursday, the Dow gapped up at the open near the previous day's high, but immediately retreated and soon was touching down in negative territory, repeatedly bouncing off 7400, which developed into a serious support level for the full afternoon and into the next day. That it was plucked out by traders as a line to defend was plausible, since the high on Monday was 7428 and the close on Tuesday was 7395.
Perfectly and somewhat hauntingly, the average bounced off this level repeatedly from around 11:30 am on Thursday to just before 1:00 pm on Friday. Every time the market began to pull below that level, there was a wall of support to push prices back up. That was until just before 1:00 pm Friday, when people holding options contracts began worrying, because holding until expiration either means you get nothing or you have to buy or sell a specific equity at your strike price, so the action was just about done unwinding.
It was at that point that 7400 was breached completely in one death-dive. The Dow fell over 100 point in the next hour and change, and, after 2:00 began heading for 7250, at which point bottom fishers came in and short covering began in earnest. Eventually, however, the die had been cast. The options traders had made their money, trapped their counterparties and escaped, apparently off to enjoy the first weekend of Spring out at the Hamptons or up in Connecticut. The Dow closed, as did the other indices, close to its low of the day.
Dow 7,278.38, -122.42 (1.65%)
NASDAQ 1,457.27, -26.21 (1.77%)
S&P 500 768.54, -15.50 (1.98%)
NYSE Composite 4,832.13, -105.09 (2.13%)
For the session, internals were indicative of the general direction. Declining issues outpaced advancers, 4582-1821. New lows opened a bit more space between themselves and the paltry number of new highs, 79-10. The highs-lows are still in a range from which they can roll over, but as has been the case in the previous six or seven times its happened since October 2007, it will only be for a day or two before the bull reverts to a scared calf as ravenous bears threaten its life.
One caveat is that some stocks are looking at 52-week highs that aren't that high. The decline had already begun by this time last year, though not in great earnest. The bear market rally (whether we are still having one is now very much in doubt) could run for months, though I personally doubt that it will last even a couple more days and definitely not past mid-April. In any case, the daily new highs and new lows is a metric which has provided incredibly strong insight into market movement, at times even predicting major moves and always true.
Volume on Friday was very high, higher than even Wednesday and Thursday. Expect the trading activity to fall off somewhat over the next two weeks as traders will be listening for early signs from companies considering 1st quarter results. Of course, the severe crisis of confidence, credit and money will continue to reverberate through the canyons of Wall Street and beyond.
One note on today's volume. There were more trades on the NYSE than the NASDAQ, the first time that's happened in a very long time (2002 to the best of my recollection).
NYSE Volume 2,465,968,000
NASDAQ Volume 2,421,536,000
Commodities were subdued, relative to equities. Crude oil lost 55 cents, closing at 51.06. Gold was off $2.60, to $956.20. Silver tacked on another 30 cents to finish the week at $13.82. Long term holders of precious metals are sitting pretty.
As for whether the rally will resume on Monday, there's quite a bit of evidence that it will not. Stocks were boosted largely for traders to rack up profits in options, as expressed above, and the last two days of trading have both ended up losers. Since the indices had been pumped quite a bit higher in a relatively short period of time, there may be a lull in the action for the next 2-3 weeks, but then earnings and guidance will begin to dictate the direction and it's not likely to be very good. Also, there's surely going to be more money being thrown around, scandal, and other disruptions, so the mini-bull we've experienced over the past two weeks may fade fast.
Friday, March 20, 2009
Thursday, March 19, 2009
Rally Takes a Breather; Congress Claws Back at AIG
Talk about choppy trading!
Today's action was a back-and-forth between the bulls and the bears, just one day removed from options expiration on a triple witching day. Stocks opened higher, but quickly fell into the red and stayed down the rest of the session, trading in tight ranges, with neither buyers not sellers gaining much of an upper hand.
With the Dow being defended at support right around the 7400 mark, the day finally belonged to the bears, which clawed the indices back near their lows of the day at the close. Considering that the close was right at the Maginot line of support, tomorrow could easily be a day for another bull run as investors take profits and stake out new positions.
The big news of the day was once again down in the Capitol, where the house voted overwhelmingly to tax the bonuses paid out to AIG employees - about $145 million of such - at a 90% tax rate, clearly crossing a constitutional line (which hasn't seemed to matter much in Washington for about 10 years now) which expressly forbids retroactive laws. In other words, with the passage of this tax, what's to prevent congress from saying anyone or everyone owes more in taxes from last year? Or the past three years?
Washington's shamefully inept management of the financial crisis is equalled only by the hubris of Wall Street executives and their business practices. In a separate hearing, it was discovered that 13 of 23 firms which received bailout money owed back taxes. Whether it matters or not, the point is that Washington seems perfectly at home with the concept of awarding not only failure at every turn, but outright tax avoidance. That's not surprising, since Treasury Secretary Tim Geithner was confirmed by the Senate with full knowledge that he had tax issues over multiple years.
Dow 7,400.80, -85.78 (1.15%)
NASDAQ 1,483.48, -7.74 (0.52%)
S&P 500 784.04, -10.31 (1.30%)
NYSE Composite 4,937.22, -38.08 (0.77%)
For the session, declining issues took back the momentum from advancers, 3281-3084. New lows remained ahead of new highs, though the margin has shrunk to a point at which it could roll over any day. There were 67 new lows and just 16 new highs.
Volume was very strong once again, with trading at a hectic pace throughout the session.
NYSE Volume 1,951,789,000
NASDAQ Volume 2,354,656,000
While investors were dithering over nickels and dimes in stocks, commodities staged a bull run of their own. Crude oil reached another high for the year, gaining $3.47, to $51.61. The precious metals had a memorable day (actually begun yesterday afternoon, following the Fed announcement that it would be buying Treasuries) with gold ahead an outlandish $69.70, to close at $958.80, and silver ahead by $1.59, to $13.52, a 13% gain. Obviously, gold bugs view all of the bailout money being thrown around as highly inflationary, and, of course, they are correct. It could take two years for the effects of the mountains of credit and cash created in the past six months - with more to come - but surely there will be an aftereffect which will send the cost of goods to the moon.
It hardly seems worthwhile to make investments at this juncture. The stock markets are stuck in a bear-edged range for the short term and have nowhere to go but down in the long run. It's a trader's market, which apparently pleases Wall Streeters and the Washington enablers just fine.
Today's action was a back-and-forth between the bulls and the bears, just one day removed from options expiration on a triple witching day. Stocks opened higher, but quickly fell into the red and stayed down the rest of the session, trading in tight ranges, with neither buyers not sellers gaining much of an upper hand.
With the Dow being defended at support right around the 7400 mark, the day finally belonged to the bears, which clawed the indices back near their lows of the day at the close. Considering that the close was right at the Maginot line of support, tomorrow could easily be a day for another bull run as investors take profits and stake out new positions.
The big news of the day was once again down in the Capitol, where the house voted overwhelmingly to tax the bonuses paid out to AIG employees - about $145 million of such - at a 90% tax rate, clearly crossing a constitutional line (which hasn't seemed to matter much in Washington for about 10 years now) which expressly forbids retroactive laws. In other words, with the passage of this tax, what's to prevent congress from saying anyone or everyone owes more in taxes from last year? Or the past three years?
Washington's shamefully inept management of the financial crisis is equalled only by the hubris of Wall Street executives and their business practices. In a separate hearing, it was discovered that 13 of 23 firms which received bailout money owed back taxes. Whether it matters or not, the point is that Washington seems perfectly at home with the concept of awarding not only failure at every turn, but outright tax avoidance. That's not surprising, since Treasury Secretary Tim Geithner was confirmed by the Senate with full knowledge that he had tax issues over multiple years.
Dow 7,400.80, -85.78 (1.15%)
NASDAQ 1,483.48, -7.74 (0.52%)
S&P 500 784.04, -10.31 (1.30%)
NYSE Composite 4,937.22, -38.08 (0.77%)
For the session, declining issues took back the momentum from advancers, 3281-3084. New lows remained ahead of new highs, though the margin has shrunk to a point at which it could roll over any day. There were 67 new lows and just 16 new highs.
Volume was very strong once again, with trading at a hectic pace throughout the session.
NYSE Volume 1,951,789,000
NASDAQ Volume 2,354,656,000
While investors were dithering over nickels and dimes in stocks, commodities staged a bull run of their own. Crude oil reached another high for the year, gaining $3.47, to $51.61. The precious metals had a memorable day (actually begun yesterday afternoon, following the Fed announcement that it would be buying Treasuries) with gold ahead an outlandish $69.70, to close at $958.80, and silver ahead by $1.59, to $13.52, a 13% gain. Obviously, gold bugs view all of the bailout money being thrown around as highly inflationary, and, of course, they are correct. It could take two years for the effects of the mountains of credit and cash created in the past six months - with more to come - but surely there will be an aftereffect which will send the cost of goods to the moon.
It hardly seems worthwhile to make investments at this juncture. The stock markets are stuck in a bear-edged range for the short term and have nowhere to go but down in the long run. It's a trader's market, which apparently pleases Wall Streeters and the Washington enablers just fine.
Wednesday, March 18, 2009
Banner Day for Wall Street Crooks
One would think that with the Fed having lowered interest rates to ZERO and keeping them there, that today's Federal Open Market Committee rate policy meeting would be pretty much a non-event, and you would be right.
The committee released a terse three paragraph statement today, did not raise rates, reiterated that the economy was in the dumper and then quietly mentioned that the Federal Reserve would purchase "up to $300 billion of longer-term Treasury securities over the next six months."
Wall Street was wowed! The Dow shot up 150 points in the ten minutes after the statement was released. And why not? The Fed already has the power to create money out of thin air, so why not help out the bankrupt US Treasury (currently $11.5 Trillion in debt and growing) by buying up their bonds with their worthless paper (or, in this case, worthless electrons on a computer spreadsheet somewhere in the bowels of the Federal Reserve bank).
Glorioski! These people are out of their minds! After the worst financial meltdown in global history, the Fed and he government intend to fix it by going further and further and further into debt. This is going to bankrupt the entire nation, which, of course, is already bankrupt. Well, I guess they'll just make it worse and have it happen sooner this way. Now, not only is your 401K taking a huge hit, but the money it is denominated in (US $$) will be worth less because they are flooding the system with cash. Hallelujah! The double whammy!
The committee also said that the Fed and Treasury will soon be doling out another $2 Trillion of risk-free securities to their favorite deadbeat bankers, Goldman Sachs, Morgan Stanley, Bank of America, et. al. - the usual crowd of corrupt failures. The government is guaranteeing these securities against default with taxpayer money. Now, not only does the US populace own 85% of AIG, but they now ARE AIG. Mike Whitney's article, Bernanke's Witness Protection Program, puts the TALF scam in perfect perspective.
Remember, the Fed is a private bank. (For more on why this is of vital importance read James Quinn's Grand Illusion - The Federal Reserve)They will be selling these new collateralized debt obligations (CDOs) to their members. This, in the parlance of old-school honest-to-goodness economics, is known as self-dealing. All of this $2 Trillion of ADDITIONAL stimulus will accomplish nothing except to put the entire financial system of government and über-banks at further risk.
And, to make matters even better - for the inside traders, no doubt - the rally was extended another day. The Dow is up more than 900 points since last Monday. Will the madness ever end? Probably tomorrow or Friday, as soon as the cheats clean up on their options bets, which expire on Friday. The really smart money is already out. The rest will be pulled tomorrow.
Dow 7,486.58, +90.88 (1.23%)
NASDAQ 1,491.22, +29.11 (1.99%)
S&P 500 794.34, +16.22 (2.08%)
NYSE Composite 4,975.33, +107.19 (2.20%)
So, with stocks soaring, the internals showed just how unbalanced the trading was (remember, stocks were down until the Fed announcement). Advancers led decliners, 4883-1639. New lows continued to lead over new highs, but the margin is shrinking, at 116-24 on the day.
Volume was absolutely off the charts, probably the heaviest trading day of 2009. This indicates the massive nature of the fraudulent bear rally. With options expiring Friday, the money was moving with great velocity today as insiders scrambled in and out of positions in the final hour and 45 minutes.
NYSE Volume 2,077,359,000
NASDAQ Volume 2,813,044,000
There was a little island of sanity in the commodities trading pits. Oil lost $1.12, to $48.14 and has further to fall. Gold sold off in a very dramatic way, losing $27.70, to $889.10. Silver was hammered lower, losing 74 cents, to $11.94, a super buying opportunity.
There is no way the American financial system will survive more than another year of the fraud, corruption, self-dealing, inflationary money-pumping we have seen since last September. The genie is out of the bottle and it will not be put back in. Gold and silver are being held down by central bank cartels, but sooner or later, that game will end, and, as so many respected authorities on the topic of economics have said, the US dollar will be trashed, inflation will reign and gold and silver will double or triple in value. That day may be a year, two years away, though it could occur within six months or six days. Nobody knows the future, but the only way to protect yourself is to own gold and your own home.
The committee released a terse three paragraph statement today, did not raise rates, reiterated that the economy was in the dumper and then quietly mentioned that the Federal Reserve would purchase "up to $300 billion of longer-term Treasury securities over the next six months."
Wall Street was wowed! The Dow shot up 150 points in the ten minutes after the statement was released. And why not? The Fed already has the power to create money out of thin air, so why not help out the bankrupt US Treasury (currently $11.5 Trillion in debt and growing) by buying up their bonds with their worthless paper (or, in this case, worthless electrons on a computer spreadsheet somewhere in the bowels of the Federal Reserve bank).
Glorioski! These people are out of their minds! After the worst financial meltdown in global history, the Fed and he government intend to fix it by going further and further and further into debt. This is going to bankrupt the entire nation, which, of course, is already bankrupt. Well, I guess they'll just make it worse and have it happen sooner this way. Now, not only is your 401K taking a huge hit, but the money it is denominated in (US $$) will be worth less because they are flooding the system with cash. Hallelujah! The double whammy!
The committee also said that the Fed and Treasury will soon be doling out another $2 Trillion of risk-free securities to their favorite deadbeat bankers, Goldman Sachs, Morgan Stanley, Bank of America, et. al. - the usual crowd of corrupt failures. The government is guaranteeing these securities against default with taxpayer money. Now, not only does the US populace own 85% of AIG, but they now ARE AIG. Mike Whitney's article, Bernanke's Witness Protection Program, puts the TALF scam in perfect perspective.
Remember, the Fed is a private bank. (For more on why this is of vital importance read James Quinn's Grand Illusion - The Federal Reserve)They will be selling these new collateralized debt obligations (CDOs) to their members. This, in the parlance of old-school honest-to-goodness economics, is known as self-dealing. All of this $2 Trillion of ADDITIONAL stimulus will accomplish nothing except to put the entire financial system of government and über-banks at further risk.
And, to make matters even better - for the inside traders, no doubt - the rally was extended another day. The Dow is up more than 900 points since last Monday. Will the madness ever end? Probably tomorrow or Friday, as soon as the cheats clean up on their options bets, which expire on Friday. The really smart money is already out. The rest will be pulled tomorrow.
Dow 7,486.58, +90.88 (1.23%)
NASDAQ 1,491.22, +29.11 (1.99%)
S&P 500 794.34, +16.22 (2.08%)
NYSE Composite 4,975.33, +107.19 (2.20%)
So, with stocks soaring, the internals showed just how unbalanced the trading was (remember, stocks were down until the Fed announcement). Advancers led decliners, 4883-1639. New lows continued to lead over new highs, but the margin is shrinking, at 116-24 on the day.
Volume was absolutely off the charts, probably the heaviest trading day of 2009. This indicates the massive nature of the fraudulent bear rally. With options expiring Friday, the money was moving with great velocity today as insiders scrambled in and out of positions in the final hour and 45 minutes.
NYSE Volume 2,077,359,000
NASDAQ Volume 2,813,044,000
There was a little island of sanity in the commodities trading pits. Oil lost $1.12, to $48.14 and has further to fall. Gold sold off in a very dramatic way, losing $27.70, to $889.10. Silver was hammered lower, losing 74 cents, to $11.94, a super buying opportunity.
There is no way the American financial system will survive more than another year of the fraud, corruption, self-dealing, inflationary money-pumping we have seen since last September. The genie is out of the bottle and it will not be put back in. Gold and silver are being held down by central bank cartels, but sooner or later, that game will end, and, as so many respected authorities on the topic of economics have said, the US dollar will be trashed, inflation will reign and gold and silver will double or triple in value. That day may be a year, two years away, though it could occur within six months or six days. Nobody knows the future, but the only way to protect yourself is to own gold and your own home.
Tuesday, March 17, 2009
Rally Gets Back on Track
After taking a hiatus Monday - genuflecting to congress and Andrew Cuomo - investors continued their spirited bear market rally on Tuesday, racking up huge gains on all indices. The NASDAQ, yesterday's big loser, was the day's top performer.
Stocks took a little while to get going in the morning, though as soon as it became clear that the politicians were blowing a lot of hot air over the AIG bonuses, and that AIG would not budge from its position that its employees earned and deserved those bonuses, stocks resumed their inexorable rise.
I have to admit to naivety and a total misread on the AIG issue. Neither Wall Street nor Washington is in reality the least bit concerned over revelations of the insurance giant's counterparties to the $170 billion of government largesse and the bonuses are nothing more than a side show. This bull run will continue at least until options are played out this Friday. After that, where it goes is anybody's guess, but one thing's for sure, the American public is being taken to the cleaners by the main protagonists in this economic drama: the politicians and Wall Street's masters of the universe.
Using their media shills to maximum effectiveness, the public has been sufficiently pacified to believe that all is well in the American and world economy. Never mind those trillions of dollars of derivatives overhanging everything like the Sword of Damacles or the fact that AIG paid off on credit default insurance to the very same companies which were receiving government assistance (and now claim they no longer need any help).
The greatest fraud ever perpetrated has nearly run its course. Nobody has been indicted. None of the major players have even lost their jobs. Only in America can one lose billions of dollars, nearly implode the entire financial system and not only not get fired, but be the beneficiary of enormous bonuses paid for by the very people you are robbing. It's incredible, but true.
Just like Americans muddled through 8 years of the George Bush administration's abuse and shredding of the constitution, so too will they have their livelihoods and retirements yanked away from them without a fight. Washington and Wall Street win. We elected some. Others were merely put in place and pleasured by those elected officials. The money spent by financial firms in lobby activity is proof of government's complicity in the grand fraud.
Americans soldier on in the most over-regulated, overtaxed, slavish parody of democracy that has ever existed. It took nearly forty years of deceit, corruption and apathy, but we finally have arrived at the final destination: the death of the land of the free and the home of the brave. It has been abruptly replaced with land of the fleece and the home of the knave.
Dow 7,395.70, +178.73 (2.48%)
NASDAQ 1,462.11, +58.09 (4.14%)
S&P 500 778.12, +24.23 (3.21%)
NYSE Composite 4,868.14, +139.23 (2.94%)
Advancers bettered decliners by a wide margin, 4997-1506, but new lows did not roll over, still ahead of new highs on the day, 111-13. Volume ramped up mightily in the final half-hour, keeping in line with recent trading activity, though a touch lower overall.
NYSE Volume 1,492,070,000
NASDAQ Volume 2,105,405,000
Oil gained $1.81, to close near the highs, at $49.16. Gold dipped $5.20, to $916.80. Silver followed lower, down 22 cents, to $12.67, At least some markets are making sense, though the price of oil is going far too high, much too quickly, considering the demand destruction caused by conservation, last year's gouging and the current weak economic conditions.
With options expiration approaching, the rally could end abruptly, though the general mood on Wall Street is currently one without fear, determined to run up to resistance, which next appears around 8000 on the Dow.
Stocks took a little while to get going in the morning, though as soon as it became clear that the politicians were blowing a lot of hot air over the AIG bonuses, and that AIG would not budge from its position that its employees earned and deserved those bonuses, stocks resumed their inexorable rise.
I have to admit to naivety and a total misread on the AIG issue. Neither Wall Street nor Washington is in reality the least bit concerned over revelations of the insurance giant's counterparties to the $170 billion of government largesse and the bonuses are nothing more than a side show. This bull run will continue at least until options are played out this Friday. After that, where it goes is anybody's guess, but one thing's for sure, the American public is being taken to the cleaners by the main protagonists in this economic drama: the politicians and Wall Street's masters of the universe.
Using their media shills to maximum effectiveness, the public has been sufficiently pacified to believe that all is well in the American and world economy. Never mind those trillions of dollars of derivatives overhanging everything like the Sword of Damacles or the fact that AIG paid off on credit default insurance to the very same companies which were receiving government assistance (and now claim they no longer need any help).
The greatest fraud ever perpetrated has nearly run its course. Nobody has been indicted. None of the major players have even lost their jobs. Only in America can one lose billions of dollars, nearly implode the entire financial system and not only not get fired, but be the beneficiary of enormous bonuses paid for by the very people you are robbing. It's incredible, but true.
Just like Americans muddled through 8 years of the George Bush administration's abuse and shredding of the constitution, so too will they have their livelihoods and retirements yanked away from them without a fight. Washington and Wall Street win. We elected some. Others were merely put in place and pleasured by those elected officials. The money spent by financial firms in lobby activity is proof of government's complicity in the grand fraud.
Americans soldier on in the most over-regulated, overtaxed, slavish parody of democracy that has ever existed. It took nearly forty years of deceit, corruption and apathy, but we finally have arrived at the final destination: the death of the land of the free and the home of the brave. It has been abruptly replaced with land of the fleece and the home of the knave.
Dow 7,395.70, +178.73 (2.48%)
NASDAQ 1,462.11, +58.09 (4.14%)
S&P 500 778.12, +24.23 (3.21%)
NYSE Composite 4,868.14, +139.23 (2.94%)
Advancers bettered decliners by a wide margin, 4997-1506, but new lows did not roll over, still ahead of new highs on the day, 111-13. Volume ramped up mightily in the final half-hour, keeping in line with recent trading activity, though a touch lower overall.
NYSE Volume 1,492,070,000
NASDAQ Volume 2,105,405,000
Oil gained $1.81, to close near the highs, at $49.16. Gold dipped $5.20, to $916.80. Silver followed lower, down 22 cents, to $12.67, At least some markets are making sense, though the price of oil is going far too high, much too quickly, considering the demand destruction caused by conservation, last year's gouging and the current weak economic conditions.
With options expiration approaching, the rally could end abruptly, though the general mood on Wall Street is currently one without fear, determined to run up to resistance, which next appears around 8000 on the Dow.
Monday, March 16, 2009
Fear Factor: AIG, Cuomo, Obama Kill Rally
After jawboning the economy higher last week with announcements from Citigroup, Bank of America and JP Morgan CEOs that their respective banking enterprises were making money, Tim Geithner's appearance on the Charlie Rose show and Sunday's 60 Minutes interview with Fed Chair Ben Bernanke, the greed and avarice that is still alive and well on Wall Street finally put an end to the madness on Monday.
Amid reports that failed insurance black hole AIG had been using government bailout monies to make payments to foreign and American financial institutions - in the form of credit default swaps payouts and other payments - and also planned to pay out over $1.2 billion in bonuses, first the President, and later, NY Attorney General Andrew Cuomo issued stern statements that AIG must come clean and stop paying bonuses with taxpayer money.
Cuomo demanded a list of names of AIG bonus recipients. The AG threatened to issue subpoenas for the names if he was not in receipt of the list by the close of trading (4:00 pm).
President Obama ordered Treasury Secretary Timothy Geithner to use "every single legal avenue" available to block the bonuses.
While all of this was swirling through the news wires and trading desks, stocks (except for the NASDAQ, which was up only briefly) were well on their way to a 5th straight day of gains. The plan, or so it seemed, was to make outsize profits in call options on a wide variety of stocks and indices. With options expiring on Friday, today and Tuesday, appeared to be prime times to cash in on the recent rally.
Case in point on the options front was the trade in JP Morgan, which was up as high as 25.27 today (up 1.52), but finished with a 0.66 loss, at 23.09. Trading in the March 24 and 25 options was a wild ride. Ditto General Electric, which popped up over 10.00, but closed up just 0.04 at 9.66.
All of that changed shortly before 2:00 pm, when the Dow reached its high of the day at 7392, nearly a 750 point rise in less than five days. From there, it was straight down as Wall Street and savvy investors figured that the jig was up on AIG and the major banking scam that makes Bernie Madoff look like a rank amateur.
As I've said countless times on this blog, AIG is a black hole, with no money to pay off TRILLIONS OF DOLLARS WORTH OF CREDIT DEFAULT SWAPS COVERING NEAR-WORTHLESS SECURITIZED DEBT.
Wall Street's unending greed has finally ignited a public backlash to which the politicians are responding. This monumental struggle - between the bandits (Wall St.) and the benefactors (Washington) - is more than likely to get much worse before it gets better, culminating not just in subpoenas, but in trials, convictions and hopefully, jail time for many of the CEOs still running the defaulted banks.
Make no doubt about it, this is the beginning of the end. The final phase of the market meltdown begins today. There has not yet been a final capitulation, but it is sure to come, probably before the end of summer, if not sooner.
By the end of the session, stocks had given up all of their gains, except on the NYSE Composite, which finished marginally higher. As happens so often during bear market rallies, complacent bulls were mauled today by the most ferocious bears the market has ever experienced. Anyone who did not get out today could greet tomorrow's opening with a huge gap down at the open, completely shut out of profits. By Monday of next week - if not sooner - the Dow should almost certainly be trading below 7000 again.
One week of manufactured "happy news" cannot replace months of honestly bad reports. Mostly ignored were today's economic reports: The New York State Empire Manufacturing Index for March fell to its lowest level ever, at -38.2. Capacity utilization continued to decline, from 71.9% in January to 70.9% in February. Industrial production took another hit last month, falling 1.4%.
Dow 7,216.97, -7.01 (0.10%)
Nasdaq 1,404.02, -27.48 (1.92%)
S&P 500 753.89, -2.66 (0.35%)
NYSE Composite 4,728.91, +7.91 (0.17%)
Market internals finished in line with the turmoil. Advancing issues outpaced declining ones, by the slightest of margins, 3476-3073. New lows were again subdued in number, but held their edge over new highs, 101-14.
Volume was roughly the same as last week's levels, indicating that the rally may have more gas in the tank, or that the buying of stocks was replaced by selling late in the day.
NYSE Volume 1,898,380,000
Nasdaq Volume 2,159,946,000
Oil finished up just a nickel, at $46.30. The precious metals were both losers, with gold off $8.10, to $922.00 and silver down 33 cents, to $12.89.
Tomorrow morning should be fascinating, with February PPI announced prior to the open - at 8:30 am - along with February figures for New Home Sales and Building Permits.
Amid reports that failed insurance black hole AIG had been using government bailout monies to make payments to foreign and American financial institutions - in the form of credit default swaps payouts and other payments - and also planned to pay out over $1.2 billion in bonuses, first the President, and later, NY Attorney General Andrew Cuomo issued stern statements that AIG must come clean and stop paying bonuses with taxpayer money.
Cuomo demanded a list of names of AIG bonus recipients. The AG threatened to issue subpoenas for the names if he was not in receipt of the list by the close of trading (4:00 pm).
President Obama ordered Treasury Secretary Timothy Geithner to use "every single legal avenue" available to block the bonuses.
While all of this was swirling through the news wires and trading desks, stocks (except for the NASDAQ, which was up only briefly) were well on their way to a 5th straight day of gains. The plan, or so it seemed, was to make outsize profits in call options on a wide variety of stocks and indices. With options expiring on Friday, today and Tuesday, appeared to be prime times to cash in on the recent rally.
Case in point on the options front was the trade in JP Morgan, which was up as high as 25.27 today (up 1.52), but finished with a 0.66 loss, at 23.09. Trading in the March 24 and 25 options was a wild ride. Ditto General Electric, which popped up over 10.00, but closed up just 0.04 at 9.66.
All of that changed shortly before 2:00 pm, when the Dow reached its high of the day at 7392, nearly a 750 point rise in less than five days. From there, it was straight down as Wall Street and savvy investors figured that the jig was up on AIG and the major banking scam that makes Bernie Madoff look like a rank amateur.
As I've said countless times on this blog, AIG is a black hole, with no money to pay off TRILLIONS OF DOLLARS WORTH OF CREDIT DEFAULT SWAPS COVERING NEAR-WORTHLESS SECURITIZED DEBT.
Wall Street's unending greed has finally ignited a public backlash to which the politicians are responding. This monumental struggle - between the bandits (Wall St.) and the benefactors (Washington) - is more than likely to get much worse before it gets better, culminating not just in subpoenas, but in trials, convictions and hopefully, jail time for many of the CEOs still running the defaulted banks.
Make no doubt about it, this is the beginning of the end. The final phase of the market meltdown begins today. There has not yet been a final capitulation, but it is sure to come, probably before the end of summer, if not sooner.
By the end of the session, stocks had given up all of their gains, except on the NYSE Composite, which finished marginally higher. As happens so often during bear market rallies, complacent bulls were mauled today by the most ferocious bears the market has ever experienced. Anyone who did not get out today could greet tomorrow's opening with a huge gap down at the open, completely shut out of profits. By Monday of next week - if not sooner - the Dow should almost certainly be trading below 7000 again.
One week of manufactured "happy news" cannot replace months of honestly bad reports. Mostly ignored were today's economic reports: The New York State Empire Manufacturing Index for March fell to its lowest level ever, at -38.2. Capacity utilization continued to decline, from 71.9% in January to 70.9% in February. Industrial production took another hit last month, falling 1.4%.
Dow 7,216.97, -7.01 (0.10%)
Nasdaq 1,404.02, -27.48 (1.92%)
S&P 500 753.89, -2.66 (0.35%)
NYSE Composite 4,728.91, +7.91 (0.17%)
Market internals finished in line with the turmoil. Advancing issues outpaced declining ones, by the slightest of margins, 3476-3073. New lows were again subdued in number, but held their edge over new highs, 101-14.
Volume was roughly the same as last week's levels, indicating that the rally may have more gas in the tank, or that the buying of stocks was replaced by selling late in the day.
NYSE Volume 1,898,380,000
Nasdaq Volume 2,159,946,000
Oil finished up just a nickel, at $46.30. The precious metals were both losers, with gold off $8.10, to $922.00 and silver down 33 cents, to $12.89.
Tomorrow morning should be fascinating, with February PPI announced prior to the open - at 8:30 am - along with February figures for New Home Sales and Building Permits.
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