Just got my new alert from Dennis Slothower Stealth Stock Alert:
Here is a piece of it:
"While it looked clear that the election might be the turning point for the “buy the rumor – sell the fact” rally, it looks like the investment banks may have collaborated to keep prices up through the November G20 meetings yesterday.
The sell-off today is even more remarkable given that the Fed injected the single largest POMO since they started this liquidity injection practice back in August. Today’s POMO also represents the first of the official QE2 money and amounted to $7.2 billion. (Don’t forget that this kind of permanent liquidity is often leveraged 20 times or so).
And yet the markets sold off hard.
The banks are the recipients of this essentially free money. However, they don’t necessarily have to immediately invest their new cash in asset bubbles (they often do and I am sure the Fed wants them to over the long run). The banks can hold on to this new money for a while and work the futures market playing the short side if it looks like too many players are on one side of the boat, i.e., the “long” side. There is plenty of time for them to go back to the cash market and pump up stocks again – once they have ripped off the heads of a few thousand options traders.
Definitely too many players were on the “long” side of the boat heading into this week. It was probably just too tempting for the investment banks to steal candy from the little kids playing the futures markets (both equity and commodities)."
Good posts-Would not surprise me for them to start shorting the market. Wall Street is known for two traits: Greedy and opportunistic! If they can't make money driving the market up anymore then why not drive it down for a couple weeks, kill the longs then reverse direction and take it higher for year end to kill the shorts again?
Good post. I have been saying for weeks that the banks do not have to use the money to buy stocks.....they just have been. Suckers think the POMO schedule is a stock market guide....trading with 20/20.....yea right!
Banks can use the money to bu gold, other commodities, short.....whatever.
EXACTLY RIGHT STEALTH-
HERE IS THE REST OF NEWSLETTER INFO:
"Sentiment readings are literally off the charts this week with the AAII small investor bullish sentiment survey surging 9% to 57.6%. This is the highest bullish sentiment has been since January 18, 2007. The historical average is 39%.
Think this reading is rather distorted now given what the Fed has done but the real question is will the primary dealers jump all over this?"
Another piece from same newsletter:
"HOW DUMB IS SMART MONEY? RECORD INSIDER SELLING"
"Congratulations to Cisco insiders who sold 6,620,750 shares of Cisco, or 60% of their holdings over the last 6 months. Cisco was crushed today falling over 15 percent on the opening. It pays to know what really is happening on the inside of a company.
It is also worthy to note in spite of the Fed’s QE2 program, last week's corporate insider selling of all stocks (not just S&P) hit an all time record of $4.5 billion.
So why is so called smart money unloading their stocks even when the Fed is pumping billions into the stock market?
"Insider selling at Standard & Poor’s 500 Index companies reached a record in the past week as executives took advantage of a two-year high in the stock-market to sell their shares."
Honestly, why aren’t these corporate insiders buying stocks, with interest rates at zero and the Fed pouring billions of dollars of stimulus at the economy? How smart is selling stocks and bonds to move into a cash position that pays no returns at all?
What do corporate insiders know about their corporate earnings coming up in 2011 that we don’t know? Haven’t we been told there is no chance of a double dip recession?
Meanwhile, from a contrarian perspective, so called “less informed” money or small investors have rarely been this bullish."