Aug 122010

Institutions led selling in relative volume yesterday but eased up on the deltas a bit as compared to the broad market. Overnight they have moderated the volume signalling maybe they think we may be a bit oversold. The Euro and cross have flattened and we have no help from treasuries. The only flight to quality to speak of has been in gold which at this point is a pretty crowded trade. Junk as well. I have always loved junk and think corporate bond ratings are the oldest scam in the markets, but I’m a contrarian first and foremost and when everyone is buying junk, bet the other way. We are universally short junk as that little yield chasing play has run its course and we will soon see a big correction there IMO. In other news Cisco misses and GM seeks the biggest IPO in history. Is it bullish for common shareholders though? Tough to say but again I’m not convinced. Everyone is looking for the Fed to provide the answers but I think maybe the market may be waking up to the fact that the free markets themselves are enough to save us. Eventually they will get the message one way or another. Though claims was a miss I think the Fed sell-off was overcooked and traders will treat claims as priced in this morning and lean on earnings and the interest rate backstop supporting some risk appetite. I don’t expect anything major but I do think even if we flush that the major support in the mid 60s will hold. If we should happen to drop lower than that I would buy the mid 50s basically blind in the dark. Lol. I think we will see some strength return to the broad market but I will reserve any further speculation until we see how CPI and Retail Sales look tomorrow. We may see some institutional holding pattern activity waiting for the same today…

 Posted by at 9:09 am

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