Tuesday, August 30, 2011

More bad news, more advances for stocks

The data points continue to whiff but the computers don't care and they bought with two fists today because the S&P held 1200. I made the analogy last night that stocks no longer care about the underlying business activities that they represent. To make that case clear, consider what happened in DELL last week.

"On August 25, 2011 at 15:45:48, in a one second period of time, there were more than 10,000 quotes and exactly zero trades in DELL."

This wasn't a fluke or a mistake, it appears to have been a deliberate move to either prevent price discovery or manipulate price. I don't know about you but I can't type fast enough to place 1 order per second, let alone, place and cancel 10,000 orders per second.

Today's trader buys or sells based on data totally unrelated to what is happening in the economy. This is akin to choosing where to attend college based the ability of the girl's lacrosse team to beat the spread. Making a college selection like that might work for a time but eventually you may realize one day that you are studying Latin at Brown University paying $51.4k/year for that privilege.

Today's consumer confidence number fell to the lowest level since April 2009 (basically the bottom of the market) as a result of shaky markets and the Washington debate which removed any lingering confidence in our political leaders.

"The percent of respondents expecting more jobs to become available in the next six months fell to 11.4, the lowest since March 2009, from 16.9 the previous month. The proportion expecting their incomes to rise over the next six months declined to 14.3 from 15.9. The percent expecting a drop rose to 18.7, the highest since November 2009"

Fact of the day which is of particular interest for those of us in the Northeast:
"The Foreclosure Pipeline in New York is 693 months (over 57 years) and 621 Months (over 51 years) in New Jersey!"

Cheers!

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