Speech

 

 

by Larry Levin

Tuesday’s market was very slow as it rested after a 4-day slide.  Traders were also waiting on a speech from Chairman Ben Bernanke that was scheduled for very late in the afternoon.  When the transcript of it was read on television, traders learned that there was no mention of more largesse coming from the Fed but soon after there was a twist: the speech was changed.
 
Would there be a mention of more bank handouts?  Would the Fed Chairman admit his actions are causing commodity inflation?  Would pigs fly?  Alas, all three answers are no.  The only thing we heard from the Chairman were a collection of half-truths and outright lies so there is no point in transcribing his speech.  When traders finally realized that The Ben Bernank wasn’t going to shower them with new goodies, the market slid hard into the close.  Moreover, even Goldman Sachs said in the evening that QE3 should not be expected unless the market suffers a major setback.  In my opinion, that would be roughly a 15-20% fall from the high.
 
From the AP we read (partially) Bernanke expects the economy to pick up in the second half of the year, but he acknowledged that the pace of the growth remains "frustratingly slow from the perspective of millions of unemployed and underemployed workers."
 
Some investors had been hoping Bernanke would announce additional measures to support the economy. Major indexes fell after it became clear that Bernanke was not wavering from his view that the U.S. economy is growing gradually and does not need more stimulus. The Fed's $600 billion bond-buying program, which is aimed at keeping interest rates low, is ending at the end of June.
 
"People are getting skittish," said Brian Wenzinger, a portfolio manager at Aronson Johnson Ortiz in Philadelphia. "Housing is getting worse, and they're rethinking a possible double-dip recession." But, Wenzinger added, the relatively small drop in the stock market was a positive sign following several days of steep losses.
 
Looks like we may have an active summer in the markets this year, for a change.

 

 

Trade Date: 6/7/11

E-Mini S&P Trades*

(before fees and commissions):

1. No “Secrets” trades filled today.
2.  Algorithm positions (3)
3.  “Reading the Tape” positions (7) …combined Secret’s, Algo, & “Reading the Tape” total… +6.25

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