robo
Well-known member
Big Cat Birchtree on the Prowl:
8-23-06
Stocks: What Everyone Knows Isn't Worth Knowing
The game of cat and mouse proceeded smoothly on Wall Street Wednesday. Except in this case, the mice were the bears who are ever-willing to sell the market short. The cats used a meaningless and completely anticipated housing report as an excuse to rachet prices down to entice the mice into going for the bait.
This "meaningless" report was one which Wall Street normally completely ignores. And, in fact, everyone already knew what the report was going to say, so it was no surprise to the market. But, on a day when the short interest was being invited to play, the media chimed in with their headlines: "US stocks slide on weak housing data, Iran standoff". The journalists can always be counted on to give the wrong reasons for stock prices to slide and Wednesday was no exception. Reuters even quoted a permabear to solidfy their bearish stance (this analyst has been bearish since the Dow was below 1000):
"The housing market doesn't seem to be cooling; it actually seems to be getting frigid," said Michael Metz, chief investment strategist at Oppenheimer & Co. in New York. "The weak data, combined with Iran, was more than enough to send the market lower."
And, thus, the trap was baited and the shorts fell right into it, selling into the hole. Just before the NYSE close, the cats came out and prices jumped back up, cutting their losses by half. After the NYSE close, the cats continued to take the cheese from the mice in the futures session. By the regular close in Chicago, the Dow's losses had been cut by well more than half. In fact, overnight futures are at a substantial premium to the cash market. If that premium is maintained overnight, the shorts will find they will have some substantial losses in their short positions and will be forced to pay up just to get out. It appears the mice will never win at this rigged game, but they just keep coming back for more!
8-23-06
Stocks: What Everyone Knows Isn't Worth Knowing
The game of cat and mouse proceeded smoothly on Wall Street Wednesday. Except in this case, the mice were the bears who are ever-willing to sell the market short. The cats used a meaningless and completely anticipated housing report as an excuse to rachet prices down to entice the mice into going for the bait.
This "meaningless" report was one which Wall Street normally completely ignores. And, in fact, everyone already knew what the report was going to say, so it was no surprise to the market. But, on a day when the short interest was being invited to play, the media chimed in with their headlines: "US stocks slide on weak housing data, Iran standoff". The journalists can always be counted on to give the wrong reasons for stock prices to slide and Wednesday was no exception. Reuters even quoted a permabear to solidfy their bearish stance (this analyst has been bearish since the Dow was below 1000):
"The housing market doesn't seem to be cooling; it actually seems to be getting frigid," said Michael Metz, chief investment strategist at Oppenheimer & Co. in New York. "The weak data, combined with Iran, was more than enough to send the market lower."
And, thus, the trap was baited and the shorts fell right into it, selling into the hole. Just before the NYSE close, the cats came out and prices jumped back up, cutting their losses by half. After the NYSE close, the cats continued to take the cheese from the mice in the futures session. By the regular close in Chicago, the Dow's losses had been cut by well more than half. In fact, overnight futures are at a substantial premium to the cash market. If that premium is maintained overnight, the shorts will find they will have some substantial losses in their short positions and will be forced to pay up just to get out. It appears the mice will never win at this rigged game, but they just keep coming back for more!
But things have turned down a bit since.
