Ahead of the open (20-13)
Tuesday, December 20, 2011 at 01:31AM Once again, ES led overnight +7pts, market rallied at open but early gains reversed suddenly and steeply. Volatility intra-day again unrelated to any real news. A slew of wire bits were floating around trading desks explaining the weakness, but in this view, just excuses. Recall what has been said on these pages for a long time, if the market can’t pinpoint one real deserving catalyst on a downside day, more often than not, majority of the losses are reversed the next trading day.
Today’s marginal burdens included:
*China reported another month of money flight out of country (another RRR likely coming) and real estate concerns, US politicians not passing extensions (yet), no S&P resolution, ECB’s(Draghi) reiterating no QE, Numerous articles on financial politics(ie. Basel) weighing on group. (3-4pm slide due to BAC falling below $5 exacerbated the day’s downside and/or EU finance minister’s failure to agree on topping up ESM levels), Geopolitical risks.
All in, just excuses for what is just a bid-less market with volume drying up at/ near resistance (20ma today) for a 3rd consecutive day. Without a catalytic boost, market can’t make it over “R” . Equities may feel easier to sell-off than to rally, but only because it’s a victim of no buyer demand vs. aggressive selling.
AH’s- AT&T news of ending bid should give a trade to towers (SBAC, AMT), networking (NWX) stocks ie. APKT as spending has been pretty well halted ahead of deal with T-MO.