Thursday, April 23, 2009

End of Day 4/23 – Because you’ve got to pick a pocket or two!

One bombshell after another… We learn that of the program trading which accounts for more than 30% of all trading on the NYSE, Goldman performed more than twice the next lower program trading firm and that they solely were responsible for nearly 25% of all program trading.

If that doesn’t tell you who controls the markets, I don’t know what does. If there is a PPT surrogate, there it is, right there. Goldman, and all the large Primary Dealers need to be broken up if we ever want any hope of having free markets again.

This is a room filled with lowly “retail” stock market participants like you…

Today the DOW closed up 71 points, the S&P finished up 1%, the NDX finished up .7%, and the RUT diverged by finishing down .9%.

The CMBX indices did turn up slightly today and internally the advancing issues were about 3 to 2 over declining and 64% of the volume was up on the NYSE. The XLF gained 4.7%, IYR gained 4.2%, the dollar was lower, gold was higher, and the VIX lost 2.5%.

The data today was mostly all bad – it’s good, don’t you know, that the market holds up in the face of bad news! New home sales worse, prices down, inventory supply up; Unemployment claims up, continuing claims at a new all time record; Possible prepackaged bankruptcy for Chrysler as early as next week, and Ken Lewis told by Bernanke and Paulson to keep his big banker mouth zipped about Merrill Lynch. All in all, a rational time to invest in stocks, especially if you are eating the leftover gruel shoveled out by Goldman. I think I’d be a little less like Oliver, and a little more like Stewie:

But hey, American Express beat after the bell and so everything is roses, even if AMZN, MSFT, and AMGN aren’t so hot.

Here’s a ten day of the SPX. We’re still inside of the channel I drew yesterday and the upper boundary combined with the new lower boundary makes a pretty good symmetrical triangle. If that’s what happening, it’s difficult to tell which direction it should break. It could be a wave 2 triangle, or it could be bullish… I don’t know what game GS is going to decide to play? Do you? If I'm counting EW from the top, this still looks like it could be wave 2 of 3. All the short term stochastics are in the middle. This entire run over the past six weeks is starting to look like a rounded top formation, although it still could break either way. I think there’s probably a good play on this triangle no matter which way it breaks, just use stops in case of the ever popular trendline head fake. I’m still leaning bearish, but won’t hold short on a break above that upper trendline (Are you listening GS? A headfake will toss me out of my position and THEN you can press the sell program):

On the SPY you can see we have opposing hammers on just about flat volume. The movement usually favors the shaft of the second hammer, meaning I would expect lower, which again means that GS will take the market higher, then lower:

Same story on the DOW, a hammer just beneath the 100dma. Check out the volume pattern… starting to fall off there:

The NDX produced a nasty black hanging man doji (oh, that reminds me, where’s Paulson?), that is normally a top indication. The volume on the Q’s is actually increasing on the move up. There will have to be a gap lower at the open to confirm that as a reversal indicator, of course at Goldman’s discretion:

Same story on the RUT, except the small caps were lower today and they often lead. This is saying to me that the breadth of the market is not as good as it would appear on the surface as the run higher is primarily in the big names like AAPL (as dictated by you-know-who):

Despite rising natural gas and oil inventories tied to falling demand, oil and USO rose on the day. Here’s a USO daily chart showing a rise in prices the past three days on falling volume and a topping hammer candlestick just below the 50dma. I would not want to be long oil tonight, of course that hammer will need reversal confirmation by a move lower tomorrow, or as dictated by the commodity manipulator du jour, probably GS or MS, possibly with a twist of BS from BB:

So, in summary, like every day that the debt isn’t cleared and obscuration reigns supreme I think that tomorrow should be a down day. That’s on a fundamental basis of course. Then there are the THREE other factors to consider in the market besides the fundamentals: the psychological, the technicals, and the will of Goldman Sachs. Perhaps if we’re all nice little children and cooperate by shoveling our money at them on the long side, they will give a little porridge to keep our bellies warm for another day (before they pull the rug out from under those who they just distributed to):

Oliver! - Food, Glorious Food:

Hey, if you work at a major brokerage house you know you have to pick a pocket or two if you’re going to earn your bonus and distribute those shares, or the latest in derivative products, to the teacher’s retirement fund!

Oliver! - You've Got To Pick A Pocket Or two