Mutual Fund Monday Streak Broken By Absence Of POMO, As SPY Volume Plunges Below Abysmal

Tyler Durden's picture

In a surprising, and at the same time completely expected reversal, all those who thought that Monday's always close due to mutual fund inflows were stunned to see a red close. Which should not be too surprising: after all there was no POMO today - period. The only days that now have a chance of closing in the red is when the Fed is not directly involved in greasing stocks through its open market operations. Which means tomorrow should most likely end green - Tuesday and Thursday are this week's POMOs: tomorrow the Fed will buyback TIPS maturing without maturity limitation, while Thursday will see the monetization of longer-dated bonds, due 2/15/2021 – 8/15/2040. Following these two actions, the Fed will next send Amazon, Netflix and Apple to fresh quintuple digit forward PEs on October 5 and 6.

And one thing that has not changed, is that still nobody trades. NYSE volume was under 4 billion shares, which to Wall Street means just one thing: layoffs. It appears that when even the FRBNY is out, already abysmal volume gets even worse.

SPY was even worse, and at 125 million shares, this was the lowest volume day in over a month.

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VK's picture

Mutual fund monday was toasted bitchez!

Cognitive Dissonance's picture

Has anyone seen what the banks are projecting for third quarter earnings compared to 1st or 2nd?

Or maybe I should ask how many downward revisions have the banks announced regarding their own earnings?

Sudden Debt's picture

a lot of banks are letting go staff. Can't be good.

been there done that's picture

aaaahhh, but that is COST SAVINGS to their bottom line. That is most of what the rally has been built on. Lay offs are Greeaaaat!!!  Dow Gazillion!

What_Me_Worry's picture

I am anxiously awaiting Q3 from the TBTF's.  Since they can basically choose what they report in earnings it will be interesting to see what EPS they broadcast to the market.

My guess is they all show lower numbers so that they can assure that Bennie will make it rain at the next meeting.  If they all report more blow-out, made up numbers again then they kind of shoot themselves in the foot for the next round of free digits.


Rainman's picture

The boyz got a bit ahead of themselves painting the tape to dress up Q3. They'll hang tough for 3 more days. The odd September runup play didn't seem to stampede the humanoids. Better luck next time.

Sudden Debt's picture

DOW still above 10800 but the dive was pretty scary at the end.

Miramanee's picture

We call this the FCSE, or Fiat Currency Stock Exchange. Equities soar in response to trillions of new "printed" dollars. Of course, holding IBM at 56,000 in 36 months will buy you a pint of bitters at the local pub and a loaf of bread at the new wheat mart down the lane.

carbonmutant's picture

US jobless rate may rise to 10.1% by mid-2011 – San Francisco Fed

Hunch Trader's picture

That's just codespeak for 20%.

reading's picture

Ok, I read that as "Useless Job Rate" not sure my subconscious was thinking their jobless rate estimate is useless or just measuring it is useless...but either way...

system failure's picture

I think it is time for BULL capitilation to proceed with earnest...

Sudden Debt's picture

would be logical so that's why I give it a 1% chance.

RobotTrader's picture

PigMen must be making a fortune playing this rally at the expense of their biggest clients.  Most of which are probably short big.

JWN, COH, TIF all closed green today.

Even PNRA made a new high.  Who else can afford a $14 breakfast and coffee?

RobotTrader's picture

My AT & T and Verizon made new highs.  And I'm still getting about 6%, which is still 350 b.p. better than the 10-year Treasury.  And I never expected to make an extra $4/share gain on this investment in such a short time.


Samsonov's picture

6%?  Ha!  My WWE pays over 10% in dividends...just got it today.  I think I'll hold on to that sucker no matter what.

goldmiddelfinger's picture

You earn 1 percent a quarter After each record date the stock will drop One pc. data mining requires a lamp. Oh and let us know if they redeem you at par.

Samsonov's picture

I checked out the chart, and frankly I'm not seeing it.  You should know that I picked it up late August after it got crushed for non-business reasons, so in addition to the dividend, I also expect appreciation (eventually).

Your comment addresses the same exact worry that caused me to sell Q.  Imagine my disgust when it was acquired within three months.

Iranian Dictator's picture

This is playing out just like 07'-08'. Everyone chasing yield, going ape shit over crappy stocks paying high yields. Fast forward a few months. Stocks crushed, dividends cut. Rinse and repeat.

hamurobby's picture

Congrats on making money, keep tight stops.

Iranian Dictator's picture

LOL. Sounds like when everyone was excited about WaMu paying 11% dividend. RIGHT BEFORE IT WENT BANKRUPT!!! Don't be a sucker. 

rapacious rachel wants to know's picture
rapacious rachel wants to know (not verified) Sep 27, 2010 3:22 PM

gonna be interesting to see if this bold prediction is correct

Rylie's picture

I was not sure where to put this but I know people here would be interested.


Bartanist's picture

LOL... this time gold is different. It is the answer to everything because the US dollar and every other currency will go to zero... or maybe not.

Traianus Augustus's picture

POMO to the rescue TOMO!!!

RobotTrader's picture

Who would have figured that in the midst of the worst recession in recent history, the best performing sector YTD is Travel and Tourism?

Best Performing Stocks   Symbol Company Name Percent Change   Chart   YTBLA YTB International Inc 100.00%     TZOO Travelzoo Inc 97.30%     PCLN Inc 79.32%     OWW Orbitz Worldwide Inc 57.77%     EXPE Expedia Inc 51.53%     LONG Elong Inc 39.24%     TA TravelCenters of America L... 25.20%     DTG Dollar Thrifty Auto Group... 16.69%     HTZ Hertz Global Holdings Inc 11.82%     CTRP International Lt... 6.47%    
goldmiddelfinger's picture

 I traded TA on the long side in mid 2009. It topped out at $8.75. It's down 62pc last 52 weeks. Odious data mining is kids play.

Sudden Debt's picture

most people are having a crappy time at work. So those 4 weeks vacation where you can watch monokini 19 year old girls is mandatory to survive.

If I wouldn't have been on vacation this year, I would have gone nuts. And thats pretty much the same for most people.

When I came back, I booked my sky holiday for januari the same week.


tmosley's picture

People expatriating, and living in hotels.

Pillage's picture

what a wonderful use of my tax dollars Obama, buy some Amazon! Get some Oracle too so Larry Ellison can unload on the taxpayer.

Sudden Debt's picture

you forgot Adobe Pillage :) EVERYBODY needs photoshop! :)


goldmiddelfinger's picture

Forget Prechter. This Elliot Wave Video will make your hair stand:

SPX 100.






batting500's picture

Great that the top trendline is right here at 1150 on SPX, if the market can break that level then the Elliot Wavers need to look at a recount of the waves but if they are correct then all hell breaks lose.


Good Luck all...

ZeroPower's picture

I was intently listening to the video until he said we will be looking for lows of 100-250 on the SPX.

If that were to happen, the sheer destruction of capital markets would basically send EVERYTHING to a stand still. If you think the gov is ever going to let that happen, then you have also drank the (other) kool aid.

Magua's picture

The only buyers in this market are mutual funds that still get monthly flows from retail buyers who forgot to change their future 401k buys (got to be getting less and less) and the second derivative POMO flows.

Pretty soon all the trading will be between HFTs, and then the real meltdown can occur. Might be time to start nibbling at the VIX, buy some popcorn, and get ready for the show.

Chartist's picture

when did 4 billion shares traded become an abysmal day?

Traianus Augustus's picture

When they are all traded by the Fed.

Pillage's picture


Pumpanddump's picture

The Fed is slowly acquiring US companies through a massive hostile takeover, otherwise known as POMO's.

Vampyroteuthis infernalis's picture

Even with POMO, there is a liquidity limit when no retail investors are putting money into the market. We just may be reaching that limit.

Minion's picture

Volume leads price......... to keep any rising price trend going in the absense of increasing dividends, new money needs to flow in as speculation of future income or tomorrow's greater fools.  Whoever they are, they're getting spread pretty thin..........

brxn's picture

Normally on ZH I am seeing commentary and posts referencing the low volume as a telltale sign when the markets go UP for no apparent reason.   Today, low volume and everything was mostly down ... what is the difference?

Grand Supercycle's picture

S&P 500 FINANCIALS INDEX - an important chart:

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