click for updated futures

 

Nikkei and Hang Seng up almost 2%, Euro Stoxx and Dax also up 2, with the benchmark Spanish IBEX equity index up nearly 3% — all apparently on hopes for the next bailout (not as suggested by Kernan on CNBC, the Walker recall vote).

US Futures deep in the green, with the Dow up triple digits.

At a lunch yesterday, I described why there was more work to the downside, but I didn’t dare get short for fear of some central bank intervention that could cause a 5-10% recovery rally (not in a single day, obviously). We haven’t gotten that bailout yet, but the possibility remains.

The key issue for asset managers of the tactical persuasion is whether this is merely an oversold relief rally, or the start of something more significant. The answer to that will be determined by the quality and participation levels of the move off of these very oversold levels. Watch the market breadth, the volume and where we close relative to the highs and lows for some small measure of insight.

Be back shortly . . .

 

 

Category: Bailouts, Markets, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Snapback Rally”

  1. [...] continuing saga in Europe. Here are some analysts projections of today’s meeting. $ES_F up 12 points in early trading. My guess. They make a deal, which becomes no [...]

  2. Mike in Nola says:

    Agree with you. Most of the NYB’s (New York Boys) expect rich Uncles Ben and Mario to save them. That’s in addition to all the EU fantasy bailout rumors that will emerge. Will probably have hopium/algo driven bounces til reality sets back in.

    Reality being things like Fedex cutting it’s fleet because business is dropping off. If you had to choose one barometer of the economy, that’s probably it. It covers both business and retail.
    http://www.bloomberg.com/news/2012-06-04/fedex-to-take-134-million-charge-as-24-cargo-jets-are-retired.html

  3. Mike in Nola says:

    Forgot to mention the possibility of the wicked stepmother, Angela, dashing all the hopes of a bailout.

  4. CANDollar says:

    Technically it looks like a short term bottom. Don’t fight the tape.

  5. dead hobo says:

    I still planning to stay in cash until the end of the month, more or less, and then re-evaluate. Greece has its moment coming up in a week and a half. I suspect they will split the baby and expect them to offer to stay in the euro if the EU gives them a lot of money. This will drag out the drama for another few weeks unless the EU actually has a real plan to deal with Greek stalling.

    I also think QE is off the table since there are no bank issues in the US to worry about. The liquidity is not needed. The Fed is responsible for prices and employment. QE is the enemy of both since its chief purpose is to raise asset prices, including oil due to purchases into oil funds which directly raise the price of oil. High oil prices raise all other prices directly or indirectly and negatively impact employment. The Fed hasn’t shown much insight into this obvious relationship as of yet, but there’s always hope.

    (Note: it’s NOT speculators that are causing the oil price problems … it’s ETF fund buyers and hoarders who hope for a quick flip. The problem is NOT in the trading pits, it’s fund buyers. ETF buyers only make money if the price rises. Speculators make money on volatility and couldn’t care less which direction the price is moving. Oceans of cash from fund buyers raise the price of oil just like oceans of cash from fund buyers raise the price of equities. It’s frustrating to know that a large number of idiots still can’t see this relationship and believe the lies promoted by oil funds.)

    Thus, I think that the end of June, more or less, will reveal the end game of the falling markets and the recovery will begin there. Unless the Fed does something stupid and announces another bond buying scheme using printed money. Then … to the moon Alice.

  6. Robert M says:

    Looks like five waves down to complete a one(small).
    On another note I have been barraged by fbook requests, some phish some real, that I do not care for. I requested that people I know take me off their fbook page if they have put me on. I received the following response which explains not only by antipathy towards what they do but the reality of the business model,
    “if you’re not paying for it, then you are not the customer, you are the product being sold.”

  7. dead hobo says:

    To put it another way, the oil ETF funds are doing OPEC’s work for them and are the best friend Iran and the rest of OPEC ever had.

  8. Mike in Nola says:

    @dead: I think you are splitting hairs: The oil ETF buyers are speculators :)

  9. mark says:

    When BR posted, the corresponding small move in the US treasury market suggested it was mostly short covering in the stock market. Draghi was a drag and as of now, the 10yr is now down to 1.56 and the short covering is looking like it may not last the day.

  10. dead hobo says:

    Mike in Nola Says:
    June 6th, 2012 at 8:46 am

    @dead: I think you are splitting hairs: The oil ETF buyers are speculators :)

    reply:
    ———–
    Thank you for making that observation so I can add this.

    Semantically, there is a difference … but only because everyone who wants the oil funds to operate undisturbed uses the term ‘speculator’ to create confusion. Traditionally, speculators were the middle ground to buyers and sellers of commodity contracts. They added liquidity and profited from volatility. These are all pit traders, or the modern equivalent … buyers, sellers, speculators.

    Fairly recently, a 4th element arrived … the ETF trader. ETFs buyers profit only if the price rises. These are speculators in broad sense, but not in the traditional sense. With an ETF, all who buy want the price to rise. There is no equal but offsetting power to take the other side. All ETF oil buyers want the price to rise indefinitely so the price of oil can be treated like an interest bearing savings account. Oceans of money going into funds cause the price to rise since ETF fund buyers want the highest price possible, not the lowest price … which is what actual oil buyers want. ETF oil buyers want the price to rise and they make it happen.

    Those who like this system (probably fund managers since assets managers always make money) like to point to traditional speculators when people notice their middleman effect on the price of oil. Then they shriek innocence. The stupidity of media, pundits, and the average investor carries their lies the rest of the way.

  11. streeteye says:

    @Mike in Nola Wondering if FedEx still has an overnight docs business or if the Internet killed it yet.

  12. Mike in Nola says:

    @streeteye: has occured to me that it will face some of the same problems as the USPS. But, if you order a Kindle or iPhone, you need the physical product. Similarly, for documents that need a signature, like the power of attorney I’m doing for a friend and that needs to be in NC quickly, you still have to use Fedex. I expect that with all the hanky panky that’s been going on, any smart businessman will want hard copies with signatures more than ever.

    While there are some conventions about using the internet to digitally sign documents, I haven’t seen any widespread adoption.