<The market established oversold lows on January 24 (I keep talking about those January 24 lows). Next we have the bounce off those lows, which we can call an upward correction>
IMO the reason the market stabilized some here are the big repos that were conducted. However, normally these are temporary measures, a bit like putting a thumb in the dyke. Next week may be another tipping point if they aren't aggressively replaced in some manner. It could be more repos, a big coupon pass, or direct monetization (fed and foreign custodials securities bought). There are signs from the weekly custodials that the foreign CBs are much less active in supporting America's debt induced Ponzi scheme.
jessel.100megsfree3.com
Constant critical drumbeat from foreign press:
thehindubusinessline.com
Among others:
Message 20995576
Here are the key dates:
Treasury TIOs (REPOS):
Tues. 2/1 $10 billion
Wed. 2/2 $13 billion
Thurs. 2/3 $5 billion
Fri. 2/4 $8 billion
Tues. 2/8 $4 billion
Fed repos:
Mon. 1/31 6.25
2-2 4.5
2-3 9.0
2-10 7.0
On last week's market action, it is just astonishing how quickly various Bubble and synthetic economics stocks bounce back every time there is a bond rally, or the Wizards come to the rescue with their tawdry "loans". Note the money flow spikes and price recoveries, CME, MCO, MDC, BEN:
stockcharts.com[l,a]daclniay[pd20,2!b50][vc60][iUf!Lc20]&pref=G
Some of the Bully consumer stocks have been a little weaker, check SBUX, WFMI, COH;
And despite the "warnings" from the Wizards about how tough they are, there is no question that the commercials are positioned for a bond and ED rally (no longer just narrowing spreads). Logically the mechanism for this might be the typical "benefit Bully only" excuses such as the job data. A weird and dicey setup for sure, as apparently the smart money just doesn't believe anything has changed (Bully's scams and loots live on, courtesy of the Wizards). The Wizards have lost some of the mileage gained from squeezing anti-USD specs. Looks like about 60% of the long positions at the Nov tops in gold and FX have been liquidated, thus reducing risk in those plays. The commercials marginally reduced a big bet against the stock market. I think the January fund outflows are a serious sea change, and with reporting season nearly over, insiders and other Bullies are free to unload. Feb. 14th's GOOG unlock will unleash another $35 billion in potential supply, and the wild men who play such stocks were bloodied in January. Amazing though how their animal spirits seem to be alive. Probably need to wipe them out with margin calls. |
