TrimTabs Asks: Who Is Responsible For The Non-Stop Market Rally Since March; Gives Some Suggestions

Tyler Durden's picture

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Shocker's picture

Marc Faber and Gerald Celente both are spot on.

Oso's picture

"-A stronger dollar will be positive for equities based on historical market data"

 

wtf?  right away this discredits Faber.  Using historical market data when the USD is now a funding currency makes zero sense.  And not to mention the outrageous dollar vs everything else correlation that happened til last week.

The problem with R-tards looking at historical data is that they decide to give it precedent over logic and common sense, and they close their eyes to WHAT IS HAPPENING IN THE REAL WORLD.

chumbawamba's picture

Where do I get me some TrimTabs?  I'd like to go on a post-holiday diet.

I am a fatter Chumbawamba.

WaterWings's picture

Don't go to the gym next week. Just put some of your stockpiled canned food into a backpack and walk around the block 80 times. All the slaves from Wall-E will have all the treadmills and stairsteppers on a 15-minute wait the first half of January while they try to figure out how it works. Actually, go for the sad comedy:

http://www.youtube.com/watch?v=GWqEhUUVyYk

SilverIsKing's picture

Not sure if this had been posted on ZH:

Bankers Get $4 Trillion Gift From Barney Frank: David Reilly

http://www.bloomberg.com/apps/news?pid=20601039&sid=a48c8UpUMxKQ

Rainman's picture

Yes, it's been posted by commenters a couple times. I'm hoping Tyler/Marla take it further. A stunning sneak mega bailout buried in a 1200 page Bwaney Bill.

Horrifying....primarily because our government masters believe it will take that much money to keep bailing the banks in 2010.....and their willingness to do it is even more horrifying.

Anonymous's picture

Who is buying? Simple answer - the shorts! its been one huge short squeeze.

Anonymous's picture

please think before you post. Shorts? look at the data, not much shorting going on in the last 9 months

Anonymous's picture

It's only a little suspicious that an economic illiterate like Obama would be able to almost exactly pick the market bottom.

His incoherent "profits and earnings ratio" statement came just days before the market started shooting up like a meteor.

tewkatz's picture

I think it was also something like, 'this is a great time to buy stocks' and I remember laughing that a prez would be giving stock advice...that was, what, a 40+% rise ago?

Chopshop's picture

yeah, maybe OB was actually looking at chart.

hmmm, 3.6.09 high wave candlestick on the INX ... 14:00 - 16:00 full-fledged breakout by the XBD ... week after Warren's letter to shareholders ... innumerable methodologies all actually signaling from the close of March 9th that there an extremely high possibility of 3 - 8 trading days before a Primary wave 1 (circle) bottom.

So yeah, Obama and our PPT overlords definitely timed their buying to actual charts and, gulp, social mood.

i know; how gauche.

kane1559's picture

Higher offering levels may explain some of the rally.  The Fed has manipulated credit markets thereby decreasing spreads thereby decreasing discount rates.  The IG index has come down from ~300bps in March to ~85bps today, while the HY Index has come down from ~1400bps to about ~500bps today.   A back of the envelope DCF calculation demonstrates that such a move could explain 20-30% of the rally. 

Anonymous's picture

Yes, government-sponsored mispricing of risk on an extreme scale. Ain't it wunnerful?

Cursive's picture

FRB buying equities?  That's a no-brainer.  The BOJ openly admits to such.  Given the outrageousness of the FBR's actions since September 2008, by the time it is revealed, we will have moved on.  This is the meat of the article, though:

 

We plan to stay neutral (0% long) on U.S. equities in our model portfolio.  As we discussed Tuesday, real-time income tax data shows no sign of a recovery in the U.S. economy.
 
But we do not want to be short mostly because investment demand is favorable. The TrimTabs Demand Index (TTDI), which uses 21 flow and sentiment variables to assess overall investment demand was 58.9 on Tuesday, December 29.  While this reading is well below the interim high of 77.1 on Friday, December 18, it is still above the neutrality line of 50.  The index is so bullish mostly because indicators that tend to be leading—notably excess margin debt and the cash balance of equity mutual funds—are indicative of greed.

Liberdadedescolha's picture

Feel free to check this chart.

http://1.bp.blogspot.com/_LZb5jzrUPyk/SzzLjEgiZdI/AAAAAAAAAHQ/zbGkLAddJh...

This divergence on RSI will be dadly on the new year, January for start.

Everyone a nice year.
http://midasfinancialmarkets.blogspot.com/

Leo Kolivakis's picture

The folks at TrimTabs claim to be looking at liquidity but they are ignoring the huge sovereign wealth funds in the world, including Norwegian Petroleum Fund, China's CIC, and a ton of other huge funds. Add to this natural global pension flows into stocks every quarter and the trillions from investment banks and hedge funds flush with cash taking leveraged bets, and you see why risk assets are up across the board. The financial world awash with liquidity and asset bubbles will percolate in 2010.

Anonymous's picture

"It is unlikely many pension managers were bold enough to boost stock allocation to take advantage of the market rebound since March.

In fact, some pulled money out of the stock market before it began recovering. Northrop Grumman, for instance, held about half its pension assets in stocks in recent years. Sometime in 2008 it cut the target stock allocation to a minimum of 15% from 45%. So by the end of last year, the allocation had fallen to 22%."

http://online.wsj.com/article/SB1000142405274870424750457460462022245651...

Sovereign wealth funds are not going to prop up
the market for years to come, and from all
indications, pension funds did not head into stocks
this year. Sorry Leo, this was the government,
and I have a feeling you'll be the one still
at the party long after the punchbowl has been
taken away and everyone has gone home.

I'll take Trimtabs research over your endless
inability to see that this will not go on forever.

Anonymous's picture

blah blah blah blah blah

heard that bullshit almost every single day of the last 10 years

vanderrook's picture

As far as we know, it is not illegal for the Federal Reserve or the U.S. Treasury to buy S&P 500 futures.

There's a possible RICO indictment here somewhere; fortunately, these organizations are operating with the backing of "legitimate law" and the Pope's blessing.

Possible counts could include, but wouldn't be limited to:

wire fraud, counterfeiting, theft, embezzlement, securities fraud, bribery, extortion, etc.

 

Ripped Chunk's picture

Huh!?!?!?   All SOP in the "new book"

Anonymous's picture

Section 14 of the Federal Reserve Act lays out a pretty short list of things that the Federal Reserve is allowed to purchase outright. Mostly, it's short term duration stuff (6 months or less) and notes that are issued by US govt agencies.

That's different than their Section 13 granted rights to lend against anything they feel like in a time of emergency.

Is there a different portion of the Federal Reserve Act that gives them the right to buy whatever they want?

Rick64's picture

The SEC is on it. Not much gets by those guys.

merehuman's picture

o yes . Thank the Regulators for a job well done. Without them, who knows, our market may have become criminalized!

Anonymous's picture

Remember the words of Obama:

"We will do everything to repair the system".

Everything..........

Rigging the market works, until the day the investors/morons at the NYSE understand that the emperor has no clothes.

Anonymous's picture

BREAKING:

FED merged with Kinko's.

New name: "Stinko's"

WaterWings's picture

The stock price always goes up when we own 80%.

Where's Cramer with his noise buttons!

HappyWarrior's picture

 

"The stock market is certainly not too big for the Fed to handle. The foreign exchange and government

   securities markets are vastly larger. Daily trading volume in the New York foreign exchange market is

   $130 billion. The daily volume for Treasury Securities is about $110 billion. The combined value of

   daily equity trading on the New York Exchange, the American Stock Exchange and the NASDAQ

   over-the-counter market ranges between $7 billion and $10 billion."

 

-- Former Federal Reserve governor, Robert Heller in the Wall Street Journal on October 27, 1989

 

Anonymous's picture

Ahhh Sir Barney Frank, Harvard class of 1974. I recall sitting with Barnsie in those days... we would muse about taxation, government theft, and other things...Being a Harvard man he knew well that the government would provide endless riches for he and our classmates on the Wall street. We are entitled to it , you see. A special breed; a special class. One of our classmates, Lawrence Summers, a delicious pederast himself, would tell us of amazing machines that would replicate the 100$ bill over and over without sweat or toil. One fellow a tall Moorish sort, Barrack, would tell us of his fancy notion to nationalize the entire free market of our 50 States. W dare not dream such fanciful thoughts. Dear Professor Bernhake chided our lack of free thinking and progressive notions. But we could only dream of such a society. Ahhh Harvard harvard harvard

Cognitive Dissonance's picture

A ponzi is only called a Ponzi when there are "victims" with money lost. While I vehemently disagree with any type of market manipulation what-so-ever, regardless of its source, I challenge anyone to find an average Joe who has money in a 401(k), IRA, cash brokerage account, mutual funds, pension or individual stocks who isn't extremely happy that half or more of their losses have been recouped over the past 9 months.

Unfortunately, with nearly everyone listening to the same radio station (WII-FM) we have devolved into a "What's In It For Me" (WII-FM) society. Many politicians, business leaders and average Joes, while half drunk and feeling they can speak honestly, will confess they're actually grateful, even relieved, the government did intervene in the markets, pushing them up.

I heard someone the other day spout a rather remarkable statement that pretty much sums it all up. "You can't worry about tommorrow's meal when you're starving today." The ultimate rationalization for doing what ever it takes to eat today, including destroying tomorrow.

SteveNYC's picture

You are right. Just goes to show how dependent on the government this country has become. Makes Europe look good.

Anonymous's picture

Hell, with the capricious, despotic manner in which the last SEC chair on a daily basis outlawed shorting of the stocks of the corporations his buddies "ran" (i.e., used as Ponzi fronts and stole from), we don't only make Europe look good we make Pakistan look good! We make Pakistan look like Switzerland. Learn from the Cherokee: America is a scam run for the wealthy. The Federal government is just the arm of the mafia that won.

Anonymous's picture

Not to take away from your point, but the Cherokee probably took a different lesson: all their wealth and assimilation (the Cherokee were probably the Native American tribe furthest on the road to adopting white culture as their own; there were even Cherokee slaveholders) weren't enough to protect them against the executive power of the state.

Anonymous's picture

How is that a different lesson? It's exactly the same, just drives home the point that there's nothing you can do to prevent the theft, even signing contracts, winning Supreme Court cases, and assimilating to the mafia's tacit "social contract".

Daedal's picture

A ponzi is only called a Ponzi when there are "victims" with money lost.I challenge anyone to find an average Joe who has money in a 401(k), IRA, cash brokerage account, mutual funds, pension or individual stocks who isn't extremely happy that half or more of their losses have been recouped over the past 9 months.

I'm not following? Kevin Bacon didn't have any realized losses until this year but that doesn't mean he wasn't part of a Ponzi scheme just because his statement stated he was experiencing a positive return.

Likewise, I'm sure when  Mr. Bacon saw his statements he was satisfied with the amount of bacon Madoff was bringing him. Nonetheless, the Ponzi scheme was in full bloom at that point.

Just because the Fed propped up 401k's doesn't mean that these very people will not be withdrawing a heavily devalued dollar once they start collecting their 401k's or whether or not they will face a much higher tax bracket upon doing so. Your conclusion applies aptly:

The ultimate rationalization for doing what ever it takes to eat today, including destroying tomorrow.

Cognitive Dissonance's picture

"A ponzi is only called a Ponzi when there are "victims" with money lost."

I wasn't speaking legally but rhetorically. People often determine what is good or bad based upon how they are affected. Very few people have the capacity to step away from their own self interest and actually take a stand that would hurt or harm themselves.

Why haven't "we the people" put up more of a fuss about the blatant governmental and corporate corruption that's being revealed on a daily basis?  Because the average person has made a mostly unconscious calculation that as bad as the corruption is, they are (directly or indirectly) benefiting from the corruption.

People seem to believe, correctly or not, that if the crooks are making money for themselves, "we the people" will also make some money. This perception of mutual benefit has been brilliantly supported by the artificially engineered stock market rise.

This is the perverse reason why for centuries the powers that be have very shrewdly connected the people's well being with the king's well being. Kill the king and you destroy yourself. This may or may not be the actual outcome if you kill the king but it's not facts we're dealing with here, it's perceptions and beliefs. Control the mind and you control the body.

Daedal's picture

This is the perverse reason why for centuries the powers that be have very shrewdly connected the people's well being with the king's well being. Kill the king and you destroy yourself.

Spot on -- I can't help but draw a comparison between your example and our nanny state. How can we fight the system if we get incentive checks (welfare, food stamps, cash for clunkers, social security, etc etc) not to do so?

trav777's picture

The dollar ponzi helps all of us out.

If we destroyed the FIRE economy, we'd all actually have to - shudder - WORK and produce things.

Instead we prefer to speculate and gamble.

Gresham's Law - counterfeit is cheaper

WaterWings's picture

Ding! Then I could quit my job as the overnight mall security and stamp license plates instead.

Yes, the FIRE economy is a slow burn; lots of smokescreen.

Tomified's picture

No Victims? What about technical and fundamental traders who have seen every bearish pattern busted and ridiculous valuations? What about those who believe in free markets? What about  taxpayers, whose money is being shoveled to the upper echelons (those who own stocks)?

Definitely a Ponzi scheme. Everyone is all money good, only as long as it keeps going up. Should enough of them decide to withdraw their money, then losses all around are humongous. Either that or taxpayers become the last bagholder, just as they are with MBS.

 

 

Cognitive Dissonance's picture

"No Victims?"

I didn't say there are "no victims." I was talking about how people view crime based upon their own self interest. I'm speaking big picture here. Take a few steps back and look at human behavior with regard to what is considered good and bad. Most people have a severe deficit of empathy unless they themselves have been hurt.

I really wish people would take the time to read something a few times, let it sink in, give it some thought and then respond. Invariably people reading something the first time let their preconceived notions and points of view distort what they are reading. We all do it regardless of whether we admit it or not.

Anonymous's picture

Technical trading ought to be renamed "circle-jerking". Tell me what value technical trading adds to the economy.

Spot on with the fundamental traders, though. Seen any of them lately, or are they all buying gold, guns and grassland?

h3m1ngw4y's picture

i suggest you read the following:

http://www.safehaven.com/article/19444/trading-for-everyone

 please notice the following quote

Trading builds honor and integrity like few other things can. Why? You are completely at the mercy of your own decisions. When you make a trade that doesn't work out, and it happens often as losing is a major part of trading, you have no one to blame but yourself. Sadly we live in an era where personal responsibility and accountability are dying, people prefer to blame others for their own poor decisions.

so please put this into the context of your writing.

i like the idea beeing the only person responsible for my own actions. if you dont like the rigged markets, nobody is telling you to trade them.

if i make poor decisions, its my doing. by accepting this i choose freedom of decision over greed.

if you think otherwise (how the markets should work) you are part of the problem not the solution

nope-1004's picture

A ponzi is only called a Ponzi when there are "victims" with money lost.

 

A ponzi is only a PONZI when it becomes public knowledge that covert manipulation of financials was taking place.  A ponzi can still be called a ponzi if someone cashes out and wins, but by your definition, a victim who loses money is where the definition lies.

I disagree.  The economy today is one big PONZI.  Gov't intervention in equities, gov't backing insolvent balance sheets, PPT, manipulation of Gold, and desire to lower the price of oil (so that the mid east doesn't gain power) are all components of todays PONZI.

 

But if you want to stick to the "victim" definition, then didn't we all lose money when Ben backed the banks?  Aren't we all victims?

PONZI baby!

Cognitive Dissonance's picture

I'm not speaking legally or morally. I'm simply pointing out how people are conflicted and often incapable of seeing things from a disinterested point of view. I'm talking about human nature here, not legal definitions or actual damages.

It is in the best interest of a corrupt power structure to encourage selfishness in the people, usually through scarcity of resources. As long as people are chasing their own selfish motivations, they will not band together against the governments tyranny. This is what's going on in the world today. Selfish interests pursued by the citizens means more government and corporate corruption and tyranny.

The act of reaching out to work with others means you must stop (at least for a moment) pursuing your own self interests. This is why governments pit their own citizens against each other. We are so busy fighting for the last few scraps of food we don't take a moment to understand why we only have a few scraps of food. Divide and conquer externally morphs into divide and control internally.

Anonymous's picture

Which gives us the answer to why the gubmint would juice the markets - it's not so much about the money poured in - it's more about keeping the game going (not letting the people figure out the magnitude of the scam) so that they can retain power/stay out of jail, etc.

Anonymous's picture

check back with us by sept. 2010, and we'll see how many are still smiling.

Rick64's picture

I agree that most people are happy that the market recovered, but the way they did it was with taxpayer money giving unfair advantages to a few Banks and no transparency at all. Then they over did it to an extent where nobody believes their is any credibility to an actual recovery. They could have toned it down and let a little reality in. I think most people realize that some of it was necessary but overdone at the taxpayers expense.