Tuesday, March 17, 2009

The luck of the Irish, AIG, housing starts,

The rally caps were evident on Tuesday as all the traders pushed the market higher so they could enjoy a St. Patrick's day happy hour. The technicians and traders seem to be seizing on every small uptick in data to push the markets higher. If we rally again tomorrow we could continue to go higher in the very short-term, but be aware that this is option expiration and that can lead to some crazy trading at the end of the week.

People seem to be grasping at straws indicating that the rally was due to an uptick in housing starts. If anyone bought stocks today because of the housing start data they should have their stock accounts closed and control handed to a sane 3rd party. Yes, the number did move up slightly in February but it was almost all due to new condo construction (who in there right mind is building condos today?) and the number remains down 50%+ from the levels just one year ago.

AIG remains a disaster and the news continues to disappoint, but lost in the parade of bailouts and bonuses is the fact that if you were day trading this penny stock you could have probably retired on the moves this past week. The stock has gone from 35 cents to 96 cents IN A WEEK! How in the world could that happen with all of the bad news out there?

Well, as I've said, the one thing that Secretary Geithner has made clear is that he is not a fan of admitting a mistake. Despite all of the backlash, it is apparent that the government is not going to let AIG go bankrupt this week. Thus, the stock has soared. I won't speculate where the stock is going, but I think AIG's equity may eventually prove to nearly worthless.

Finally, this would be very funny if it wasn't our money they were talking about...

"American International Group Inc., the insurer under fire for handing out bonuses after its $173 billion government bailout, budgeted $57 million in “retention” pay for employees who will be dismissed". $57 million in RETENTION for people that were to be dismissed? AIG really is starting to act like a branch of the Federal Government :)

Finally, a bit of innovation from Europe. These kids built a camera for $100, strapped it to a balloon and sent their camera to the edge of space. Unfortunately, in the US their balloon would have been shot down by a border patrol drone. Here's the link to the story...

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