Sleepy Day

by Larry Levin

When the market (finally) closed, it was a mirror image of Friday's late action; that is to say, it closed on its low. Until that final slide, however, the day was quite slow and range bound. Oh yeah, that's what happens when it goes up - my bad. For at least four hours (and one could argue 5 1/2-hours) the S&P 500, Dow, and Nasdaq all attempted to extend Friday's amazing late rally. With the low volume it could not, which ushered in the late sell-off.

Yesterday I wrote, "Although there is only one data point Monday the 24th, existing home sales, the rest of the week is full of news including GDP late in the week. For more than a week the economic data has been light. Will this be enough to take European problems off the front burner?" The early data tried to extend the early pop but that pesky European news just won't go away yet, and was surely the cause of the weak close.

Existing home sales were better than expected but we all know why - don't we? The government cheese ran out and the late buyers were trying to go all the free cheese they could grab before it was too late. Even the NAR admits it.

According to the National Association of Realtors...

Buyers responding to the homebuyer tax credit and favorable affordability conditions boosted existing-home sales in March, marking the beginning of an expected spring surge, according to the National Association of Realtors.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009.

The early weakness on Globex was due to a major bank failure in Spain, reportedly holding assets of about .6% of GDP, that was taken over by the Bank of Spain. Later in the day we learned that three regional banks "merged" in a preemptive move to stave off more failures.

Reuters:

MADRID, May 24 (Reuters) - Three Spanish regional savings banks, led by Caja de Ahorros de Mediterraneo said on Monday they have reached a preliminary agreement to merge some of their operations.

The agreement, which also includes Caja de Ahorros de Asturias and Caja de Ahorros y Monte de Piedad de Extremadura, would aim to create a joint banking group that allows to "strengthen solvency and assets of the participating banks."

Now I know this looks like a case of contagious bank failures spreading - I would argue that's impossible. Why? Well, come on...Tax-Cheatin-Timmy of the profligate spending US Treasury is somewhere in Europe to fix all that heals them. No problems!



Previous Day's Trading Room Results:

Trade Date: 5/24/10

E-Mini S&P Trades*
(before fees and commissions):

1) VA sell @ 10:38am at 1083.50 = +0.75 & +.50 (2 lots)

2) Algorithm positions (11)

3) “Reading the Tape” positions (7) …combined Secret’s, Algo, & “Reading the Tape” total +1.75



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