Tuesday was another highly volatile day and therefore great for trading. Very late in Monday's trade we saw an unusually large drop of 20 S&P points; however, that move was peanuts compared to Tuesday's rumor-fueled EXPLOSION of 47-points!
So what caused the massive reversal? Another rumor. One of the worst banks in Europe is Dexia, a Belgian and French bank (yes, it gets complicated) that is incredibly debt laden. The story in the FT, which was just reporting a rumor, read that the countries of Belgium and France are about to approve (maybe) a good bank/bad bank split up of Dexia. So once again politicians are willing to screw taxpayers (they will surely be the "owners" of the bad bank) to save the banking mafia.
In the FT we read...In the final 45 minutes of trading, the S&P rebounded from a loss of 1.8 per cent to close up 2.3 per cent at 1,123.94. Bank stocks led the rebound with the S&P financials index rising 4.1 per cent and reversing an early drop of 2.9 per cent. That helped the S&P avoid closing down more than 20 per cent from its April high, which is the threshold for a bear market.
So what caused the massive reversal? Another rumor. One of the worst banks in Europe is Dexia, a Belgian and French bank (yes, it gets complicated) that is incredibly debt laden. The story in the FT, which was just reporting a rumor, read that the countries of Belgium and France are about to approve (maybe) a good bank/bad bank split up of Dexia. So once again politicians are willing to screw taxpayers (they will surely be the "owners" of the bad bank) to save the banking mafia.
In the FT we read...In the final 45 minutes of trading, the S&P rebounded from a loss of 1.8 per cent to close up 2.3 per cent at 1,123.94. Bank stocks led the rebound with the S&P financials index rising 4.1 per cent and reversing an early drop of 2.9 per cent. That helped the S&P avoid closing down more than 20 per cent from its April high, which is the threshold for a bear market.
"Positive European headlines have been few and far between, and, ultimately, today's rally was spurred by a headline (read: rumor) and not the actual implementation of a policy decision," said Dan Greenhaus, chief global strategist at BTIG.
Kick the can down the road boys...kick that can.
Of course this rumor, if eventually true, would surely have some baggage along with it - like downgrades. If the Belgian and French governments are going to open up the free-money-for-bankster spigots, then I believe the rating agencies will downgrade them. And that possibility alone could keep this whole thing just a rumor.
Nevertheless, it made for a great trading day that should carry over into Wednesday and beyond.
Oh, and speaking of downgrades....and not rumors...ITALY was downgraded. Said another way, it is a FACT. Moody’s dropped Italy's credit rating three notches from Aa2 to A2, with a negative outlook.
Moody's said...The main drivers that prompted the rating downgrade are:
(1) The material increase in long-term funding risks for euro area sovereigns with high levels of public debt, such as Italy, as a result of the sustained and non-cyclical erosion of confidence in the wholesale finance environment for euro sovereigns, due to the current sovereign debt crisis.
(2) The increased downside risks to economic growth due to macroeconomic structural weaknesses and a weakening global outlook.
(3) The implementation risks and time needed to achieve the government's fiscal consolidation targets to reverse the adverse trend observed in the public debt, due to economic and political uncertainties.
When will France be downgraded? When it "rescues" the Dexia banksters?
The Italian downgrade came when the market was closed. Isn't it interesting how rumors ALWAYS come when the market is open but all bad stuff comes out after the market closes? And how did the market react? Let's recap: the rumor caused a FORTY SEVEN handle rally, but the factual Italian downgrade has (so far) caused a 5-point drop from the close.
Kick the can down the road boys...kick that can.
Of course this rumor, if eventually true, would surely have some baggage along with it - like downgrades. If the Belgian and French governments are going to open up the free-money-for-bankster spigots, then I believe the rating agencies will downgrade them. And that possibility alone could keep this whole thing just a rumor.
Nevertheless, it made for a great trading day that should carry over into Wednesday and beyond.
Oh, and speaking of downgrades....and not rumors...ITALY was downgraded. Said another way, it is a FACT. Moody’s dropped Italy's credit rating three notches from Aa2 to A2, with a negative outlook.
Moody's said...The main drivers that prompted the rating downgrade are:
(1) The material increase in long-term funding risks for euro area sovereigns with high levels of public debt, such as Italy, as a result of the sustained and non-cyclical erosion of confidence in the wholesale finance environment for euro sovereigns, due to the current sovereign debt crisis.
(2) The increased downside risks to economic growth due to macroeconomic structural weaknesses and a weakening global outlook.
(3) The implementation risks and time needed to achieve the government's fiscal consolidation targets to reverse the adverse trend observed in the public debt, due to economic and political uncertainties.
When will France be downgraded? When it "rescues" the Dexia banksters?
The Italian downgrade came when the market was closed. Isn't it interesting how rumors ALWAYS come when the market is open but all bad stuff comes out after the market closes? And how did the market react? Let's recap: the rumor caused a FORTY SEVEN handle rally, but the factual Italian downgrade has (so far) caused a 5-point drop from the close.
Yes, bull$#it rumors are good for a 9-1 move over reality.
Trade Date: 10/4/11
E-Mini S&P Trades*
(before fees and commissions):
E-Mini S&P Trades*
(before fees and commissions):
1.No "Secrets" trades were filled.
2. Algorithm positions (18)
3. "Reading the Tape" positions (18) ...combined Secret's, Algo, & "Reading the Tape" total...+49.50
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