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Rosenberg's Explanation For Recent Market Surge: Liquidity Pump And Short Covering

Tyler Durden's picture


It seems everyone is perplexed by the most recent irrational bout of July market action. Like clockwork, once July rolls in, the market surges, no questions asked. This year, the ramp is particularly blatant because as the attached chart demonstrates, bonds, which are a far more credible barometer of market (in)sanity, indicate the S&P is rich by at about 50 points. As this spread will most certainly converge eventually as we discussed previously, a short stock, short bond position would generate some much needed P&L in this world of deranged fractal algorithms. As to what may have caused the most recent bout of irrational exuberance, David Rosenberg has the most logical, and generic solution: excess liquidity and a short covering spree, and "nothing fundamental here."

From Breakfast with Dave


We’ve been asked repeatedly how the stock market has managed to bounce off the nearby lows with such veracity. Especially with the ongoing weakness we have seen in the incoming U.S. economic data due to the fact that the retail investor still refuses to participate and is solely focused on income-generating strategies. The answer is that the market may have been on the receiving end of another few jolts of liquidity. M2 money supply has expanded $38.5 million in the past two weeks and the M1 money multiple has risen from 0.839 to 0.862.

When we go to the weekly data from the Fed, we see that “trading assets” on commercial bank balance sheets expanded to $325 billion in the past two weeks from $297 billion. And, when we go to the Commitment of Traders report, we see that there has been a big swing in the net speculation position on the S&P 500 “E-minis” on the Mercantile Exchange (futures and options) to a net long position of 28,172 contracts from 15,155 net shorts just two weeks ago. That’s a big part of the bounce-back — prop traders and short-coverings. Nothing fundamental here, as far as we can see.


  • Last week’s 5.4% increase was the best performance since mid-July 2009 (week of July 17th). But yet, prior to last week, the S&P 500 saw the largest decline (-5% during the week of July 2nd) in eight weeks, and it was down two-weeks to boot (July 2nd and June 25th weeks).
  • Last week also saw three days of positive performance, a streak we last saw in mid-April of this year. However, prior to those three positive sessions, the S&P 500 was down five trading days in a row.
  • Last week’s increase also comes in the heels of declines in June and May, which was the worst back-to-back decline since January and February 2009
  • In Q2, we saw the worst quarter (-12%) since Q4 2008 and before that, Q3 2002. In fact, going back to 1946, a decline in the quarter of 12% or more is only a 1 in 20 event (we have only seen 12 quarters of 12%+ declines in the past 64 years).
  • For the first half of the year, we have seen three up months (February, March, April) and three down months (January, May, June).
  • The 80% increase in the stock market that we saw from March 2009 to April 2010 is the largest increase in such a short period of time since the period of May 1935 to April 1936.

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Tue, 07/13/2010 - 13:59 | 466688 Sudden Debt
Sudden Debt's picture

Tyler, a rising market isn't a bad thing you know.

If it goes up = good

If it goes down = bad (unless I'm shorting it)


Tue, 07/13/2010 - 14:04 | 466698 Slash
Slash's picture

rising market based on manipulation and short term technical nonsense =/= good

Tue, 07/13/2010 - 14:04 | 466703 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And what is your metric?



Tue, 07/13/2010 - 14:56 | 466869 unwashedmass
unwashedmass's picture


refresh my memory, what time do we buy the AUD/JPY to ride the train in the last half hour?

Tue, 07/13/2010 - 14:56 | 466870 unwashedmass
unwashedmass's picture


refresh my memory, what time do we buy the AUD/JPY to ride the train in the last half hour?

Tue, 07/13/2010 - 14:02 | 466694 ThinkAVP
ThinkAVP's picture

Marc Faber U.S. bonds worthless confetti

Marc Faber does expect a Banking crisis for this year but in the next five to ten years ..."you see we had a financial crisis basically the financial system went bust , but it was bailed out by the government , the next time when the train stops is when the government goes bankrupt
Tue, 07/13/2010 - 14:06 | 466706 Chemba
Chemba's picture

Marc Faber also believes SPX will go to 10,000 when Banana Ben goes into hyper-printing mode.

Tue, 07/13/2010 - 16:29 | 467110 equity_momo
equity_momo's picture

What does that price gold at , 10k? Im using a simple 1:1 correlation which is incredibly unfair to gold - if i use behavioural finance as a guide  - which is far more important - then gold is literally going to go off the hook.

Tue, 07/13/2010 - 14:03 | 466695 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

More proof Skynet is running the show.

Tue, 07/13/2010 - 14:27 | 466785 ABeautifulMind
ABeautifulMind's picture

Skynet is set to resume its accent with the reappearance of 0's ans 1's.  Downward stop was 1010.  Next stop, 1110.

Watch out for the cliff.

Tue, 07/13/2010 - 14:04 | 466699 scatterbrains
scatterbrains's picture

I'm not so sure..  with everything manipulated by the fed with unfathomable deep pockets I'm thinking they sell a few long end to raise the cash to buy the spy/es or if they want sell spy/es buy some long end..  inhale the market screams higher, they exhale the market dumps hard.

Tue, 07/13/2010 - 14:04 | 466700 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Whats driving the market?"

PRECUIOUS METALS!  COME ON ALREADY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The excess lquidy is being soaked up by PMs.  This by me and China.  Get some.

The doelarr devalues, and equities have an inverse relationship.  Have you forgotten?

Bank's trading assets are expanding, and what is the whole scheme based around?  You know what it is!  Gold, bitches!

"JUST CALL IT A WHOLE LOT OF VOLATILITY"..or as I like to say, Capitulation.  Call it what you want, I guess, but I like my term better.

Tue, 07/13/2010 - 16:05 | 467059 Whizbang
Whizbang's picture

Dollar isn't devaluing anytime soon friend. It's gonna be in the eighties for a while. Until china earnestly breaks it's peg on the dollar there is no point in devaluing our currency.

Tue, 07/13/2010 - 14:06 | 466709 Bankster T Cubed
Bankster T Cubed's picture

50 points?   please.....

the whole market is an absurdity and he's implying that there exists some sort of investor impact on prices?   HA!  no

it's all a fraud now.   all of it.

Tue, 07/13/2010 - 14:18 | 466742 ThinkAVP
ThinkAVP's picture

I agree, All fraud on a large scale nothing more to do than continue on with it..

Tue, 07/13/2010 - 14:07 | 466711 firstdivision
firstdivision's picture

Question of the day is that can the SPX break the 50DMA on light volume? 

Tue, 07/13/2010 - 14:11 | 466722 NOTW777
NOTW777's picture

it is nice for trading

Tue, 07/13/2010 - 14:16 | 466738 MrTrader
MrTrader's picture

Expect S&P 500 to close at 1078, after all suckers are caught into longs and happy call buying spree. Meanwhile more than a dozen macro indicators are forecasting a sharp slodown in Q3. Buy T Bonds and sell stock indices. Massive GDP revisions coming. Happy trading.

Tue, 07/13/2010 - 14:19 | 466747 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Massive GDP revisions and you say to invest in Treasuries?  Whaaaaa?

This is a CORPERATE TAKEOVER, bitchez!

Tue, 07/13/2010 - 15:24 | 466935 mephisto
mephisto's picture

You'd expect some sort of covering before retail sales. No data for 2 days, market up 2%. Some will take their money off the table. Let's see.

Tue, 07/13/2010 - 17:05 | 467190 Abiggs
Abiggs's picture


Tue, 07/13/2010 - 14:17 | 466739 dussasr
dussasr's picture

How could the market not go up when everyone is so bearish?  When the last seller has sold there are only buyers left and prices will go up...

Tue, 07/13/2010 - 14:26 | 466777 Boilermaker
Boilermaker's picture

Damn...and all this time I thought every trade had a buy and a seller.  But, you're actually saying their are only buyers.  That's freaky shit, man.  I would have though that abhorrent volumes and no seller meant that the market was a like a fucking void of disinterest.

So, I guess, when a store is completely empty, that means that all the people that aren't interested in buying something are gone so the people wanting to buy something will surely be crashing the gates.

What the fuck kind of backward and simplistic shit is this?

<forward apology if you were being which case, well played>

Tue, 07/13/2010 - 14:18 | 466744 wiskeyrunner
wiskeyrunner's picture

There has been little to no economic data, perfect time to jam up the overnight session in the futures, it's like magic!

Tue, 07/13/2010 - 14:23 | 466767 Boilermaker
Boilermaker's picture

Well, I went to bed at around midnight EST and the DOW futures were -7.  I woke up, took a shit, grabbed a cup of joe, clicked on the tube and they were +70. 

I went back and had round two of my shit unsurprised by what I had just seen.

Tue, 07/13/2010 - 14:44 | 466840 Turd Ferguson
Turd Ferguson's picture


Tue, 07/13/2010 - 17:30 | 467260 Abiggs
Abiggs's picture

Please think/check before you comment - ES and corresponding carry trades were down during the Asian session only to get lifted during the European session, mimicking Sun/Mon's activity... The major difference was today's Grecian 2-year bond auction which was relatively successful (closing at under IMF's rate, bought by 9 private banks).

The main driver of today's ridiculous stock market action - currency moves, specifically EUR/USD and DX activity - AUD/JPY is a worthless indicator. It has been diverging for the last two days after failing to breach 78 while ES is rocketing upwards...


Tue, 07/13/2010 - 14:19 | 466749 ATG
ATG's picture

Dear Dave has been wrong on stocks for 17 months now.

Maybe he will finally be right today with the news on Venezuela...

Tue, 07/13/2010 - 15:18 | 466919 DavidC
DavidC's picture

I'm not quite as bad, I've only been wrong for the last year...

All time historic low interest rates, U6 unemployment very bad, 'Extend and Pretend', real estate foreclosures still looking very bad, etc etc. This is not a recovery.


Tue, 07/13/2010 - 14:19 | 466750 vidman32
vidman32's picture

Anyone else notice that the start of each new quater leads to the markets going up for about 15 days?  My bet is that we have a top in 2 days.

Thu, 07/15/2010 - 13:13 | 471396 ATG
ATG's picture

Good bet...

Tue, 07/13/2010 - 14:19 | 466751 The Franchise
The Franchise's picture

Market up = doesn't matter

Market down = doesn't matter

Trees = market's strange and manipulated moves

Forest = equity markets are irrelevant

Tue, 07/13/2010 - 14:20 | 466756 Tic tock
Tic tock's picture

Ten minutes after Treasuries are auctioned off, a portion go onto Bank capital reserves and a portion go into market-wide, sort-of, buying sprees.. as long as the Government keeps spending, the Stock market goes up. Look, pensions get saved this way..!! please, we're doing good for everyone.. who's invested in the market. The rest don't matter, there's a separate government for them, somewhere around here, someone was saying...seriously they've got their own courts and enterainment.

Crap, why not just keep the dollar for banks, M3, international trade and assorted curiosities; and hae a meaningful economy for the real-economy employed? I dunno, maybe Gold-based.

Tue, 07/13/2010 - 14:21 | 466757 Boilermaker
Boilermaker's picture

Holy fucking shit...

LOOK at the IYR 5 day chart...Yea...right...unreal

Tue, 07/13/2010 - 14:23 | 466769 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


It is at the top of its trendline from the beginning of April.

Take profits now.

Tue, 07/13/2010 - 16:42 | 467136 Boilermaker
Boilermaker's picture

I think the point might have been missed.

Tue, 07/13/2010 - 14:21 | 466758 the grateful un...
the grateful unemployed's picture

wall street isn't rocket science, not this time. the EU is not imploding, the leak in the ocean will be resolved sooner or later, the bad news is out, sentiment is oversold. Political gridlock is back rhymes with goldilocks like in the economy. fundamentals are not good, they're not bad either, or they may have bottomed. the retail investors, the chumps are deer in the headlights, and low volume is the weapon of the bull.

remember how it works, you revalue assets, on thin volume, then you leverage those paper gains out, into wealth effects, people draw that money out of their 401K and they buy expensive dinners, stay in lavish hotels, travel, and that supports the service industry, which bootstraps the whole thing higher.


if only Ben could just declare DOW 36K by fiat. I Ben Bernanke declare the Dow Jones Industrial Average to be 36000, this first day of January, 2011. short of that kind of authority, he can do what he has been doing, seeing the traders have enough excess cash to run the market higher and no fancy regulations to keep them from crushing the shorts.


This particular rally is all about sentiment and the dearth of stock vigilantes, who sell the rally as soon the chumps catch on.

Tue, 07/13/2010 - 14:23 | 466766 DMA Trader
DMA Trader's picture



Tue, 07/13/2010 - 15:01 | 466879 Slash
Slash's picture

so hang onto my SH from yesterday? or hedge it....

Tue, 07/13/2010 - 15:20 | 466926 the grateful un...
the grateful unemployed's picture

took off the double bull levered play and buy it back in a day or two if the action suits, we are at the 200 ma on the DJIA, and the 50ma is nearly 100 pts below the 200ma. best bull case a midday drop below the 50ma and close at or above to give us the hammer. 1300 SP is my bullish objective. 

Tue, 07/13/2010 - 14:21 | 466759 DMA Trader
DMA Trader's picture

all the rally from 09 march to today  was on light volume. 

since when is volume a thing to care on trying to make money. 

just ignore it. 

pure price action.

who cares if the rally is on light or huge volume

price is what we pay.

Tue, 07/13/2010 - 14:24 | 466776 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Price is fixed.  Until it isn't.....

Move along.....

Tue, 07/13/2010 - 14:24 | 466771 ATG
ATG's picture

Maybe all those ships and Marines by Costa Rica are getting ready for a hat trick with Iran and Venezuela the same moonless night...

Tue, 07/13/2010 - 14:25 | 466778 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Some advice; do not use google today from your home computer ;)

Tue, 07/13/2010 - 14:26 | 466780 traderjoe
traderjoe's picture

Poor small business survey, record monthly budget deficit, higher trade deficit, CSX down almost 3%, AA up small (both as catalysts for the "earnings driven rally), Portugal downgrade, relatively weak bond auction, etc. - rally 'em 150 points! Was there a good data point that I missed today?

It just doesn't matter what we think. There's an agenda, and unlimited money behind it. Just wonder if/how/when it will ever stop...

Tue, 07/13/2010 - 17:39 | 467280 Abiggs
Abiggs's picture

"relatively weak bond auction" - I hope you're not referring to the Greek auction because that is about the best auction/news they have had all year - did you miss the eur/usd confirmation that followed?

FYI and I am not bullish by any stretch of the imagination but come on, Greece achieved a lower rate than the IMF rate...

Tue, 07/13/2010 - 14:31 | 466799 PicassoInActions
PicassoInActions's picture

We need to send all bankers to china, line them up around the great chiness wall and order a firing squat to proceed.


Tue, 07/13/2010 - 14:36 | 466813 bruiserND
bruiserND's picture

Fundamentals follow the technicals.

At what point does ZH trade both the Bull side as well as the Bear side of the equation ?

For 2 solid years all you point to is how the game is rigged and Armageddon is the only thing on the horizon.

Are you at all capable of acknowledging a Bullish argument under any circumstances?


Tue, 07/13/2010 - 14:50 | 466849 Turd Ferguson
Turd Ferguson's picture

Perhaps, for our enjoyment, you wouldn't mind stating the "bullish argument"?


Tue, 07/13/2010 - 15:00 | 466877 Iam Rich
Iam Rich's picture

Thinking the same thing, just pondering the wording...but I think turd says it all.  However, for my sake, just the very bestest super bullish argument that will be obvious even to me.

Tue, 07/13/2010 - 15:42 | 466992 ColonelCooper
ColonelCooper's picture

Yes.  Please.  Go all bullshit, I mean bullish for us.

Tue, 07/13/2010 - 15:10 | 466903 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Gold, Bruisers!

Tue, 07/13/2010 - 15:12 | 466910 mtguy
mtguy's picture

Hey bruiser,

Here's a bullish argument for you: Gold

You might also want to know that just because we think (sorry for speaking for anyone else) think the markets are manipulated, doesn't mean at least some of us have "ridden the horse" since March '09. It simply means we have no conviction and thus will move and dart around, taking some easy money plays and then sitting back on the sidelines with our profits (which I've been buying gold with for the last few years). FYI I'm not naturally a gold bug. It is just that right now it seems the best place to park some assets while the shit is hitting the fan.

So you go there big fella, go long, follow Wall Street's advice and have fun with the3rd major bear market in 10 years when it erupts. Oh, what was that bullish argument again?

Tue, 07/13/2010 - 15:17 | 466917 traderjoe
traderjoe's picture

Bruiser, I think of that question all the time. I'd really like to hear the bullish case. I can tick of any number of bearish factors (I won't go through them here since you've likely heard them all before). 

The only bullish case I've heard that has any ring of possibility to it is that the BRIC consumers will start becoming middle class (an argument that has been made for years BTW). I've also heard some rumblings about US consumers, etc. but that doesn't make much sense given the debt overhang. Or perhaps there will be a shortage of US housing in a couple of years with the demographics (perhaps some markets, but not others). 

Most people seem to argue that the economy will grow simply because it always has. This seems to be an ad hominem argument (if I understand that term). 

So, I really am not challenging you, trying to challenge myself - what is the bullish case?

Tue, 07/13/2010 - 15:56 | 467032 mtguy
mtguy's picture

That's right T.J. Are the consumers really going to turn back on the spigots? Given that they've "saved" (wh/ also means paying down debts) the last few stimulus checks as opposed to buying, doesn't bode well going forward without some serious increases in employment. Housing is going to take a few years IMHO, given the huge stated inventories, the shadow inventory and increasing foreclosures. The only way we've seen the employment rate look better is when people have stopped looking and drop out of the numbers. Oh, and I almost forgot, government hiring. Unfortunately, (actually no, fortunately) the census is nearly complete, so there goes a couple hundred more jobs...

Bruiser, you hven't been listening to Speaker Palooser have you? Ya know, "increasing unemployment benefits is the best thing we can do to create jobs and stimulate the economy" BTW, as an aside, I'm wondering if anybody knows the drugs she takes as I'd like some for my bug-out bag in case I need to hallucinate while on the run?

PS. I don't want them if it makes my face skin as tight as hers! Looks like it hurts to smile and I frankly, like to smile.

Tue, 07/13/2010 - 16:14 | 467081 bruiserND
bruiserND's picture

Ad hominem doesn't apply TraderJoe

1 : appealing to feelings or prejudices rather than intellect
2 : marked by or being an attack on an opponent's character rather than by an answer to the contentions made

 Equities represent a companies "float". A finite thing. In 2010 a good thing.

Fiat currency in 2010 represent an infinite thing .

A bad thing.

To hedge against global printing presses gone mad... buy equities .

To hedge against currency debasement;buy equities.

145 milion shares traded today on the NYSE.

In 1975 "break even" for Wall Street was 15 million shares.  

Tue, 07/13/2010 - 17:56 | 467316 Abiggs
Abiggs's picture

Bruiser, I tend to agree that most of the folks here lack objectivity - casualties of group think, but your points are a bit off. The bear rally that you've seen from 1000 on the S&P has been a simple product of currency movements (specifically DX and EUR/USD). Today's Grecian bond auction and a week trade balance extended the the rally. Unfortunately for the bulls, 1.27 and 1,110 are very strong resistances. I also wouldn't be surprised to see it top at 1,100 similar to the 1,000 (where no noticible technical levels exist).

Also, stocks are not a guard against currency debasement as you think; see Japan and Argentina for both economic cases. And the increase in trading volume is a product of electronic exchange migration not demand...

Wed, 07/14/2010 - 00:16 | 467702 bruiserND
bruiserND's picture

We'll see soon...won't we ?

Do I get apologies and gold stars if it's 10,600 tomorrow?

All the "flagged as junk" after my remarks say that there are no contrarians at ZH.

Tue, 07/13/2010 - 14:37 | 466818 InconvenientCou...
InconvenientCounterParty's picture

Market discovery is a bitch when Fed >> Bank collusion to manipulate the equity markets comes out, as I believe it must. One good high-profile whistle blower is all it would take. The broken trust will seize the whole beeatch up. U.S against the world? uh oh.

reserve currency


bye bye

Tue, 07/13/2010 - 14:43 | 466832 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Great short post, let me say this, in the spirit of this blog....

How 'bout the doelarr collapses before the "President's Working Group on Financial Markets" goes

Tue, 07/13/2010 - 14:50 | 466857 Turd Ferguson
Turd Ferguson's picture

Hey, Jimi, I'm sure you saw the cap on the gold price today. You might get another look at 1185 later this week. 

However, lots and lots of August options expiring two weeks from today. Its going to get really funky, really soon.

Tue, 07/13/2010 - 15:02 | 466884 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think their game is running thin.  The Beta test thrown down by the Brothers Nobel Kkkrugman and Stieglitz was a dud; if the Fed is going to make a move for a Corporatocracy, they have to do it now.  In order to do this, they need leverage.  They are running out of time, and peak oil is on their heels; the doelarr is in an oblong box above a six foot hole.

But if you think so.....

How are you thinking $1185?

Will the price swing be that violent?

I do not doubt violent capitulation, but that is very violent!

Now that I look at the charts, I think you are right.

So Turd, when will the major break to the upside Happen?

August First!  :D

Tue, 07/13/2010 - 15:36 | 466980 Turd Ferguson
Turd Ferguson's picture

You know, Jimi, the last three weeks in the gold market reek of desperation. An interesting confluence of Evil Empire selling then covering, bullshit headlines and msm misinformation. Taken together, it certainly seems a deliberate attempt to shave 6-8% off of price and, at least temporarily, paint the charts.

Why? Hard to say for sure. I do know that there was a lot of hand-wringing over the July options expiry, and July had relatively small open interest. Are the last three weeks' action an attempt to dissuade delivery in August, where the open interest in options and futures is almost exponentially greater? Maybe?

The August options expire two weeks from today. From 1200-1250, there are 53,103 open option contracts, puts and calls. One thing is certain, you can bet your ass that the next two weeks are going to be volatile. 

Tue, 07/13/2010 - 16:31 | 467108 MachoMan
MachoMan's picture

Exactly.  They might be able to appear to be treading water, but their ability to continue the charade wanes each day organic economic recovery fails to occur.  I think on the back side of the collapse, the money (and power) vacuum will be insufficient to sustain the same type of governmental organization we recognize today (including military size/hegemony).  Ultimately, their time to strike and fully realize many of the changes we fear, decreases daily.  Confusion, stalemate, and inaction actually have become our allies, as there must be proactive steps taken to ensure the ponzi stays alive.

If collapse is our only form of redress, then let's get out the foam pointy fingers and annoying stick clapping things and root for the home team.

Tue, 07/13/2010 - 14:46 | 466848 wiskeyrunner
wiskeyrunner's picture

Thats why the major manipulators are all cut from the same cloth if you know what I mean. Bernanke,Greenspan,Rubin,Summers,Blankfein,Geithner.

Tue, 07/13/2010 - 14:43 | 466835 wiskeyrunner
wiskeyrunner's picture

Option exp week is always up 9 times out of 10. The volume is low and it's one giant circle jerk as the banks take turn rowing the markets. When the banks report there profits 90% coming from trading they have to lift the market or else thoese profits came from shorting.


We all know the Federal Reserve thru the NY location does the heavy lifting then lets GS,JPM cash in. It's all a giant fraud enriching a few, all at the tax payers expence. Goldman gets the profits you get the bill.

Tue, 07/13/2010 - 15:28 | 466956 bruiserND
bruiserND's picture

Isn't that what ALL markets are all about ALL of the time, " enriching a few " ?

2,000 DOW points in 90 days is lots of opportunity for both the Bulls AND the Bears .

I assume I am typing to an audience of gazillionaires instead of a bunch of bitter, judgemental, cry-baby children without any accomplishments of their ownother than issuing critical opinions .

Tue, 07/13/2010 - 16:07 | 467022 Turd Ferguson
Turd Ferguson's picture

Is this the "bullish argument"? Just wondering...

Wed, 07/14/2010 - 00:19 | 467704 bruiserND
bruiserND's picture

It's all you need

Tue, 07/13/2010 - 16:45 | 467140 MachoMan
MachoMan's picture

No, actually, conceptually there should be normalization of profits in markets with perfect competition.  In essence, everyone benefits.

Further, in most markets, winners and losers are decided upon some semblance of merit rather than colocation, greasing of palms, and fraud (allegedly).  It reminds me of the opening scene in "The Last Boy Scout" where the football player is running down the field and when he's about to be tackled, pulls out a gun and starts shooting other players until he scores a touchdown.  The stock "market" is nothing short of a complete bastardization and usurpation of the term.  I believe the archives of this site prove me correct, including but not limited to, the number of winning trading days of a select few every quarter.

If you want to set up a tent with a sign that says "200lb. man-eating chicken" and park a 200lb man in there with a bucket of KFC, be my guest, but don't call it a market.  It's insulting to the traditional term.

Tue, 07/13/2010 - 15:04 | 466886 Mako
Mako's picture

My spidey sense sure did work fairly well a week or so ago.   Had a feeling everyone was piling in below 1040. 

Tue, 07/13/2010 - 15:12 | 466909 DavidC
DavidC's picture

'...with such veracity.'

Shouldn't that be '...with such ferocity.'?

Veracity is 'the quality of being true, honest or accurate'.


Tue, 07/13/2010 - 15:14 | 466912 firstdivision
firstdivision's picture

If we clove above that 50DMA then the algos will be on a massive run to 1100 no problem.

Tue, 07/13/2010 - 15:27 | 466952 godfader
godfader's picture

Nothing is greater than the human desire to "explain" price movements ex-ante. Rosenberg is at the forefront of trying to explain the unexplainable. Who cares WHY the market is going up or down? All that matters is if we're on the right or wrong side of the move.

Tue, 07/13/2010 - 15:42 | 466993 -Michelle-
-Michelle-'s picture

Perhaps in the short-term.

Tue, 07/13/2010 - 15:47 | 467006 KevinB
KevinB's picture

M2 money supply has expanded $38.5 million in the past two weeks

Um, excuse me? $38.5 million? On an M2 base of $8.5 trillion?! That's not even a rounding error, it's five spots from the decimal point. Even if he meant $38.5 billion, that's still less than 1/2 of 1%.

I like Rosie but this explanation seems weak. If you're going to talk about "sell in May and go away", why not add in the traditional "summer rally" as a complete explanation.

Wed, 07/14/2010 - 06:09 | 467768 Ned Zeppelin
Ned Zeppelin's picture

Gotta agree. The explanation is weak. I see no inconsistency in his overall position simply arguing the equities are resuming their light volume meltup, treasuries have begun to fall in synch, etc. It's the same old thing all over again.  I also really think the looming QE2 has people thinking there's a March 2009 Express coming down the track and they can catch the train early.

Tue, 07/13/2010 - 15:49 | 467009 Instant Karma
Instant Karma's picture

I'm long TBT and GS as money shifts from bonds to stocks. Also long USO.

Tue, 07/13/2010 - 15:50 | 467013 Instant Karma
Instant Karma's picture

Was short gold, looked toppy. Blech!

Tue, 07/13/2010 - 16:11 | 467072 Grand Supercycle
Grand Supercycle's picture


As warned about earlier, DOW/SP500 remains bullish for now ...

But it's only a counter trend rally.

Tue, 07/13/2010 - 17:56 | 467317 Tearsinrain
Tearsinrain's picture

And what's to be made of this headline from the UK Telegraph (July 11)

Secret gold swap has spooked the market It takes a lot to spook the solid old gold market. But when it emerged last week that one or more banks had lent 380 tonnes of gold to the Bank of International Settlements in return for foreign currencies, there was widespread surprise and confusion--


Wed, 07/14/2010 - 00:24 | 467706 Mark Noonan
Mark Noonan's picture

My step-son and to-be daughter-in-law just bought a house for $118,000.  It originally sold in 2006 for $460,000.  You can't see that and think, "hey, things are looking up, I think I'll buy stocks". 

What is making people buy stocks is entirely beyond me.  I mean, if you're clever enough to figure out when it will rise for no reason, then that is good for you - buy and then sell when the suckers have all bought after you did.  But don't try to sell me on the notion that there's some sort of fundamental good news out there which justifies putting money anywhere other than the mattress.

Wed, 07/14/2010 - 04:55 | 467754 Pondmaster
Pondmaster's picture

Putting money into real tangible assets beats the matress .

This consumer has spent a pile in last 18 months . New small car Jan 2009 , $14,500 , small new kitchen added in our small home ( kitchen was in lower walkout level ) $8,000. Replacement car for wifes which was totaled out by a bambie $15,000 . new deep well for home ( water polluted at 30 foot depth ) $4,000.  I see little to no point in saving in a "bank next door" . Near zero % for normal depsoits 1-9k , fees that suck up what little is made in int. , then taxes on top o that . Better to stash cash , pay with cash , no paper trail, no deposits /income to claim in case of medical catastrophe. My Mom lost all assets due to poor financial planning pre fathers death ( a nursing home sucked every dime, plus a second home sweet cottage on a beautiful lake in northern state .) Cash bitchez !! No paper trail !!!!!!!!!  

Sat, 08/14/2010 - 10:46 | 521619 herry
herry's picture

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