Stocks inched up Thursday for the 10th day out of 12 trading sessions in 2012, pushing various technical indicators deeper into oversold territory and reaching levels not seen in many cases since late last April, when stocks were putting in their bull market high. Volume and breadth were pathetic. Up volume accounted for only 65% of total volume on the NYSE.
All that matters, apparently, is that the European Central Bank dumped just over €200 billion in three-year money into the system a few weeks into a long-term refinancing operation to supply capital to banks. While not exactly like the quantitative easing done by the Federal Reserve a few times, this LTRO looks, smells and tastes just like the Fed's QE1 and QE2 to the Wall Street fat cats worried about their bonuses.
And they're using every trick in the book to juice the market higher. But here's the thing: Regular investors aren't buying what Wall Street is selling.
Just look at Thursday's action.
Investors ignored a batch of mostly bad news. There was a disappointing Philly Fed manufacturing report. Greece continued its efforts to negotiate a voluntary debt reduction with its bondholders, many of whom, as you know, are hedge funds that have undertaken a "basis trade" using credit default swaps and are poised to cash out no matter what happens (and therefore have an interest in holding out for the absolute best possible deal).
And there was some disappointing earnings news, too, in what is shaping up to be the worst earnings season (based on positive earnings surprises) since 2001, according to Sundial Capital Research.
In response, Wall Streeters are buying now, asking questions later, and are beginning to foam at the mouth as they push their bets to try to encourage a buying frenzy. This, in turn, is pushing sentiment measures based on things like options trading, analyst sentiment or the relative volume in the Nasdaq vs. the NYSE to extremes.
Boy, are they pushing. TrimTabs compiled a list of data points showing the extreme optimism on Wall Street:
Despite all this, average investors are staying on the sidelines. TrimTabs estimates that U.S. equity funds have received only $3.3 billion in new cash so far this month, which is historically a very heavy month for inflows. Compare that with the $932 billion that flowed into checking and savings accounts, eight times the $117 billion that went into stocks and bond funds as well as ETFs.
Thus the low-volume, narrow-breadth, low-volatility grind higher we've witnessed so far this month. But here's the thing. The half-life of extraordinary monetary policy efforts is falling fast. Very fast.
It lasted for a year starting in March 2009 -- that was QE 1.5, when efforts announced in November 2008 were expanded -- thanks to the tailwinds from the market discounting the end of the recession and the end of the financial crisis. It lasted about seven months when QE2 was teased in August 2010 and was helped by the calming of the eurozone crisis after the first Greek bailout.
Now we're already in the third month of this new European variety of central bank largess.
Yet the economy faces a number of headwinds that are not going away: There are sovereign debt issues, fiscal austerity, rising trade protectionism, the debt-ceiling debate, the rise and fall and rise again of crude oil, a stalling of earnings growth, a whiff of inflation, moribund banks, a spate of elections, and mixed economic reports with sentiment high but job growth and housing still anemic.
Until this dynamic changes, we're stuck in the mud. The Fed, or the ECB, might try to pull us out with lifelines of cheap cash -- but that is now just making the problem worse by fueling inflationary concerns. Just look at the rise in shelter costs due to a tight rental market, a major component of the Consumer Price Index.
Wall Street isn't looking that far ahead, I guess. But folks on Main Street, the ones who are watching at-the-pump prices rise again as those holiday bills come due, or are trying to find a nice rental home, already know what's coming. And it's not good.
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A record TIPs sale recently @ NEGATIVE YIELD..........
When investors PAY for the privilege of stashing cash in government securities....something's up in the proverbial henhouse.
......but all you sheeple just keep on buying into the daily dose of compost being spread on the masses.
Considering his bearish views the past three months, I can imagine he doesn't want to end up having made the the wrong call, trumpeting all the negatives and now saying the rally is a manipulation as well. Sour grapes? He could be right, but at this point things really could go either way. There are cautious signs to be optimistic as well. The political outcome this year is going to be important, however, to the health of the market over the next few years, and despite the traditional thinking of some, a Republican win in this election would not be better for the market. The party's extremism and hysterical (not factual) propaganda has caused the worst political/governmental dysfunction of our lifetimes, and derailed the market over the past year. That it's held up even this well has been impressive, a sign it's truly wanting to move higher. Hopefully, in this election year, we won't forget which party brought us the Great Recession, after eight years of irresponsible recklessness, deregulation, and economic ideological extremism which has proven to be a massive failure.
Manipulation on Wall Street.....corruption in Congress....of course not, this is just unrestrained free enterprise and capitalism at its best, irrespective of what a conspiracy obsessed media might tell us, I mean, the next thing you might hear is that gas prices are being manipulated, c'mon, who are you kidding.
Now, if you will accept that there are those with sufficient power ($$$$$) to control the ups and downs of the market, how do you survive in this environment? Well, you can try to time your buys/sells to anticipate what the string pullers are doing....lotsaluck with that. Or you can stay out of the market, but what to do with that money, stuff it in a mattress? Seems to me that those who could unduly influence market movements would do so to reap the benefits of short term gains on these induced swings, but still have an overall long term goal of advancing the market upward. To do otherwise would be counter productive, for without a long term upturn in the market, investors would eventually abandon it, thus eliminating the opportunity for future short term adventurism. So, if you are looking for short term rewards, perhaps the market is not the place for you, not much better than a roulette wheel in Vegas. On the other hand, if you are thinking long term, the possibility of manipulation may not be as damaging as you might have first thought, but then, what the hell do I know. Of course, as they all say, past performance is no guarantee or future results, and the only experts are those who honestly admit that they really don't know what the hell is going on....and have a very good day
Jeez!!! There are a lot of paranoids who write on these forums!
All I am going to say is I listen to whatever anybody has to say about the market as information only, and not fact. I don't own any mutual funds or go through a broker anymore, because that is where I have gotten screwed in the past....fool me once, shame on you...fool me twice, shame on me. And yes...I have been fooled twice.
I buy (and sell) common stocks based on valuation, common sense, and horse spit. And since I do it myself, you won't hear me whining. When I finally decided to be responsible for myself, win or lose, I started winning (not whinning) more often than not.
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