All in all it was a nice day of consolidation yesterday. Volume was right in line with Monday to avoid any distribution. Tuesday's spinning top candle represents a little hesitation/indecision and should lead way to a bit of a pullback (PLEASE PULL BACK!) Uh, yeah......sorry about that, but that seems to be the view I'm seeing from a very liquid and ready to go (left behind?) sideline. To put all this in perspective Monday was also the 8th 90% up day since the March 9 lows. And that's pretty impressive. Speaks to the breadth of the rally, and the desire for risk amongst money managers now. Everything has been backstopped to the ump tenth degree so much so that one can't feel to scared to take a shot on the long side. The deafening, tunnel vision inducing beating we took all fall and winter though still haunts many, and emboldens others to continue in their pessimistic view of things. Well I've added a new average to my line up (150sma,) and looking at the SP500 and Dow it confirms for me that both of those (pullbacks on the way please!) are heading for their 200dma moving averages now.....not later. The news about the stress test should give us said pullback into some support at the major averages we've crossed up through. The scariest of which would break the regression channel we are in but would have the 86dma as support along with the 38.2% retracement level. 817-823 would be that level for the SP500. Even a 50% retracement would be 789. So Doug Kass may be right in his view of a generational bottom being reached back on March 9th. Bring on the pullbacks! Please?
A further sign of strength can be seen in the fact that 92% of the SP500 companies are above their 50dma. Unless of course you are hoping for a pullback then you may chide about how overbought we are. I can't argue with that logic either. There is a Bespoke snippet in the shared items to the right which speaks to this data point.
Keeping my eyes on the Chrysler situation. Cliff Asness of AQR penned a piece about the hostility towards the non-TARP participants in the debt structure. This situation speaks directly to the sanctity of a contract, bankruptcy laws, and a host of other things that several other authors will ink much, much more about as we speak. As Gasparino says, "this situation is fluid." The Asness piece is in the shared items section.
The GM story is equally messed up as they are now talking about a 1 for 100 reverse split. That's an old shell company/ penny stock tactic. Our government wouldn't pull the 'ol "pump and dump" tactic on us would they? Surely not those stand up characters!
An ambitious person would immediately form a company and call it American Collateral. The company would function as the nation's largest repo fleet. Operations in all states. Protecting the American tax payer's investment. The repo man would no longer be despised but deemed a patriot in the communities eyes. And those that would be so foolish as to fight with the repo man when he comes to claim what is ours. Well, that person would be charged with interfering with a federal manner. Repo man will now be a government position? Only in America baby! **I've heard nothing of this.....this was just a tangent my brain went off on when considering the nightmare these car companies have put us/themselves all in.
The Reserve Primary Fund has been brought up on fraud charges. You'll recall the whole breaking the buck fiasco shortly after they choked on 800m of Lehman debt Sep. 15, 2008. In the shared items section.
COW is a situation that has caught my eye. It tracks the DJ-AIG Livestock Index. Pork and Beef. I'm going to dub it the double hammer set up. And it goes like this: 4/27 was an exhaustion gap to the downside catalysed by the swine flu news breaking. The action of that day created a hammer candle formation and the low of 29.04 clearly serves as support and lends itself as the stop loss on this trade. I derive the double hammer from the fact that the weekly candle for that week resulted in a hammer as well. The body on that candle was a little large, but this is art not science so just stay with me here. The psychological profile of this trade lends itself to a sly contrarian play. The hammers are in the correct context as they showed themselves in a steep downtrend. Don't be confused though there is still risk, because this thing is still in a massive downtrend. That won't stop me from trying to pick the bottom though! We have a clear stop loss of 29. So judging by the all time highs of 50 that gives us .85 down and possibly 20.15 up. Which is nice.
Bernanke said to congress Tuesday that the economy would turn up later this year. Many others are starting to step out and say we may already be out of the recession. I can buy that because if you wait on the NBER and the masses to confirm that you'll be about a year too late.
And IBD said today was a distribution day for the Nasdaq......barely. One good thing is the Dow got to drop a day off it's count of 4. March 30 comes off leaving the Dow with 3 distribution days. And the SP500, Nasdaq, and NYSE composite stand with 2.
Most over used term now : Green shoots. If you are talking with someone and they use this term, or if you read this in another article.......run the other way. These people are followers, and the writings and ramblings of the pundits have filtered into their thought. To the point their thought has become unoriginal. Plus light at the end of the tunnel sounds so much more intriguing with a hint of danger. Green shoots growing in the light at the end of the tunnel......now I just may have something there! Beats the hell out of Kudlow's mustard seeds!
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