..just a chop shop
Tuesday, November 30, 2010 at 07:24AM If you watch the underlying tape (Shadowlist) today, you wonder what all the commotion/ excitement was about?. This includes a precipitous fall to November lows after a ‘brief relief’ overnight (ES to 1193) from Irish bailout to the sharp bounce off ES 1172) to an almost par close.
The opening slide didn’t take individual equities down and the reversal continued this theme as it was purely a POMO driven’ ES reversal trade keeping the market stuffed in a technical range in what seems like a month long unwind of the >15% rally. This is the same premise noted in last week’s holiday trade ,..” suggesting no aggressive selling and just a lack of buyers. Considering the high beta nature of the list from momentum to commodity names, it’s even more of an outperformance and evidence of longs holding and/or ‘stock picking’, despite all the market negative noise”. At this point, you wonder if traders with any conviction for upside and/or downside to conclude 2010 will reappear from holidays. Usually a nice reversal as today’s would almost guarantee some follow through to start the next trading day, but it’s not the case here as the reversal was purely a ‘futures’ pump.
The Irish bailout put up more questions regarding ‘crisis mechanisms’ in the future than resolve any imminent concerns. Now, the ECB’s meeting (Thurs.) comes into ‘big’ focus (exit strategy speak). Also, a few bond auctions with other kids on the block in Portugal/Spain will be watched closely. Investor sentiment has not changed one bit and the only hope is eco’ figures this week turn some heads away from European perpherials and/or ECB provides some relief.