Investors on Vacatiom - Government is Not

Treasury CrisisWell, just as I noted at the end of the last post I wrote this morning, never rule out the possibility of a closing run up. In our current trading conditions and with such low volume, markets can be moved and manipulated very easily. The problem is, is that the volume is getting lighter and lighter. This is one of several reasons why I believe this is not the initial "bull run up" that many believe it is. History has shown us that, in most cases, the initial move back up has some of the strongest gains as well as the largest buying volume. In our current case, the volume is only getting worse. Look at today, 189M, compared to a 384M average. That's almost half, on a Monday! Frankly, I believe more and more investors are becoming timid to trade in this market, considering the recent very unorthodox movements of the market and the fear of manipulation.

Despite the near 100 point down day the Dow sustained for most of the day, during the last minutes of trading, we were able to see yet another rally, which actually closed the Dow barely in positive territory. However, The NASDAQ remained relatively weak as did the S&P. More and more concerns are brewing about the movement of interest rates and the fate of the bonds. With the bankruptcy of GM and seeing the many problems that secured bond holders are going through, confidence in bonds are struggling. This is the last thing we need in an already very fragile economy. If problems continue in the bond markets and more doubts of the Treasury's ability to sustain confidence grows, it could cause some monumental problems in the economy.

The stock market can continue to go up, but with no volume behind it, it will only set up the market for a bigger failure. Until we can see more trending movement in the indices, it makes it a very dangerous environment to trade in. It is funny, but as you talk to real working professionals, they all seem to agree how uncomfortable the current market is. We seemed to be surrounded by nothing but bad news in our businesses and economic data, yet their remains so much optimism with government officials and in the stock market. I continue to hold my current holdings in my Zecco.com account until I get some very crucial data later this week. Happy Trading.

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14 comments:

  1. Anonymous Says:

    While we continue to appreciate your valuable posts, it appears there is no new Premium Podcast for about a week now. We pay $10 a month, so I think it's reasonable that we expect the frequency and quality of the Podcast to be as least as good as the free posts.

  2. Finance Fanatic Says:

    Anon,
    I apologize for the delay in the podcast post (one is going up tonight), I always try to include privy data that I do not include on the post. Many times I do three a week, so I apologize for the delay.

  3. Craig Says:

    FF, what is the best short idea at this time? Isn't AAPL overpriced? Thanks.

  4. Finance Fanatic Says:

    Craig,
    It's hard not to look at a lot of equities and say their not over priced at this point. Yes, I do feel apple is overbought, especially with the recent extra love they received from a rumored Job's return. I think for the amount of real estate GS owns, they are way too overpriced. I believe commodities and oil are a bit overbought, however, it may take a couple more weeks for them to start trending downward. Many of the longside ETFS (like tech, , URE, and FXI) I believe should also be good buys here soon. This craziness just needs to settle down a bit.

  5. Anonymous Says:

    you mean:

    "Many of the longside ETFS (like tech, , URE, and FXI) I believe should also be good "shorts" here soon."

    you meant shorts not buys, right?

  6. Finance Fanatic Says:

    correct Anon, thanks for the clarification.

  7. Anonymous Says:

    FF,
    I look forward to your posts, but of late it just seems like you don't have much to offer.
    No discussions on positions you are contemplating or what you are looking at. Only meaningless repetitive commentary about low volume, disappointing economic data(although the markets and the smart money completely disagrees with you and rallies)

    I think we continue to coast well over the 200 day moving average and coast to 1100 on the S&P ....there is still a lot of money coming in from the sidelines who were late to the party and they start buying at pullbacks (Not PPT mind you)

    I still wouldnt be short here ...we still have room before beginning a down trend (not crash)

    The only thing you should be shorting right now is the US treasuries ....that trade has worked great for me last couple of weeks as "I continue to see green in my zecco.com account".

    thanks
    J.C.

  8. Finance Fanatic Says:

    JC,
    I am not updating on my current positions, because I havent really been taking any (it seems as I'm not the only one, with the low volume) Sometimes the best move is to wait. Obviously, there is some very unorthodox movements in the markets right now, which is common in times of crisis. However, I believe the wait won't be long, but I would rather not get caught in the middle of manipulation. And in no way will I be going long at this point and risk some severe profit loss. I apologize if it seems repetitious at times.

  9. Anonymous Says:

    "there is still a lot of money coming in from the sidelines who were late to the party and they start buying at pullbacks"

    not really that much if you look at the volume, and buyside (excluding PPT and TARP banks) has been the losing side for past week.

    Money inflow from retail was strong admittedly in May, but no longer the case now.

  10. Anonymous Says:

    FF, What are you current positions?

  11. Chris Says:

    pay for the podcast and you will know. don't expect free advice

  12. McBalls Says:

    chris, are u a paying member? are the podcasts worth a grain of salt

  13. Chris Says:

    Actually to really know whether the podcasts are good or not, FF could release those podcasts he made few months ago for free on his current blogs. He always love to say things such as, "like I forsee way back in March".

    Is he the real deal? Or is he like a broken record that other pple suggest? I can't make the evaluation as I don't subscribe to the podcasts

  14. Henry Lames Says:

    When I was working at essayhelp24.com, I usually dealt with podcasts. I succeeded in my job, but now as I have no access to them, i can't say anything.