Mirror

by Larry Levin


Traders looked into the market's mirror this morning and asked - "Mirror, mirror, on the wall, when will this rally fall?" The answer came quickly, "TODAY!" Yes sir, today's auction resulted in a mirror image of Wednesday: straight (almost) down.

Although the market immediately dropped from a higher gap open, it traded sideways for hours as it waited for the commentary of Ben Shalom Bernanke. Known as "The Chopper" by his central banking buddies for his penchant of printing US dollars at a mad pace and figuratively showing the banking system with them from his "helicopter" with "Bernanke Bucks," Helicopter-Ben was on the same theme today.

In short he said something like this..."Err, ahhhh, the economy kinda sucks right now and...ahhh, the reports that traders follow, well, aahhhhhh - yeah, they suck too. They just don't seem to be showing any sign of improvement. Soooo (now rocking from heel to toe waiving his arms front to back)...it looks like I'll be moving forward with QE 2.0 soon and throwing more 'Bernanke Bucks' out of my 'Helo.' I know it didn't work for $#i* before, but...ahhh, we're gonna do better this time. How? Oh! Well, just trust me. I'm from the government and I'm here to help."

Here were the official words of Zimbabwe-Ben himself, “we also recognize that the economic outlook remains unusually uncertain,” Bernanke said today in testimony to the Senate Banking Committee. “We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed to foster a return to full utilization of our nation’s productive potential in a context of price stability.”

In other news, the Financial Regulatory Bill was signed today. In part of his speech, president Obama said, "There will be no more tax funded bailouts. Period."

Really? Did it take a 2,300 page Bill or just a president who said NO. Bailout? NO! FDIC backed loans? NO! Suspension of FASB 157? NO!

So, since president Obama said, "There will be no more tax funded bailouts. Period." can I assume that the massive bailout of AIG is over? Has the money train from the Treasury to Fannie Mae and Freddie Mac stopped running? Has the FDIC ended its guarantees of insanely large amounts of bank debt?

Of course, the answers are all no. This Bill will do little to nothing to stop the next financial crisis and the president will bailout whichever bank or insurer comes with hat in hand first. Bet on it.




Previous Day's Trading Room Results:

Trade Date: 7/21/10

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


1) FT buy @ 10:12am at 1075.25 = +0.75 (1 lot)

2) VA buy @ 10:34am at 1075.25 = +2.00 (1 lot)

3) FT sell @ 2:12pm at 1064.50 = -0.25 (1 lot)

4) Algorithm positions (14)

5) Reading the Tape” positions (31) combined Secret’s, Algo, & Reading the Tape”total +20.00



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