Federal reserves....
Yep - GM (my largest short by far) reported sales down some 32%, 5% worse than the worst prognostication, and it was up for the day. FNM (another core short) was up, even though both mortgage apps and re-fi's fell sharply. Both were pretty representative of the overall market the past week or so, where the fundamental news has been dismal, yet the markets have gone up.
My computer was down to barely running just one market minder late this afternoon with everything else shut down (%&$%@!# Comcast). I was forced to do orders by phone so was unable to watch all the things I normally keep an eye on, but to me the rally still appears to be a very artificially propped up affair where the lack of any pull back has been enough for periodic running of the shorts.
The close today was strong enough that when combined with the exuberance about MSFT (why, I don't know since all the ruling did was reaffirm old news) will likely produce a strong beginning to the week Monday, but I have very serious doubts about the rally surviving the week. I cannot remember how many times I saw +1000 ticks this week, but it was a bunch, with no offsetting -1000 ticks, yet the markets made relatively little headway - that spells distribution (and manipulation). The p/c ratio is back to very low levels and the VIX is back to the low 30's, both of which should indicate a top. The confidence of the bulls is reaching extreme levels, and that also signals a top.
Fundamentally, to say that the economic news has been dismal is an understatement, with the economic slowdown that began last quarter beginning to accelerate. In the middle-east, the wheels are grinding ever closer toward a showdown with Iraq and Sharon may have to call for new elections with a potential for a new government that is more aggressive in dealing with the terrorists, arafat and hamas. South America and Japan are close to imploding and Europe is slowing faster than we are while their Central Bank is still fighting inflation.
Putting it all together, we might get a little higher next week but I still think the rally is about done, with a sharp downturn ahead. I badly missed the both the duration and the strength of this rally (never underestimate the PPT), but my fundamental predictions for both earnings season and the economy have been correct. I believe the fundamentals are strongly negative enough that they will prevail and the markets will turn back to the downside soon.
My congratulations to Zeev and the other bulls here for a very good call on the markets. This has been my first negative week in a good while, and it has not been fun so hopefully I will return to good fundamental trading and stop violating all my trading rules.
Good luck to all.
mlsoft
Market Data 
Markets 
AI
