The old expression, “In for a penny, in for a pound” is the government’s chosen
path. Once involved in direct market interference and manipulation there’s no
turning back. Let’s remember Bernanke studied the Depression and published his
views on how that condition can be prevented in the future. Don’t expect him not
to put his theories to the test in real time with our money. All us peons can do
is stand back and see if it all works. That said they’re engaged in the
following:
· Buying commercial paper directly to unlock the freeze and
ease credit.
· Increasing TAF [Treasury Auction Facility] to $900 billion
with more to come.
· Coordinated global rate cuts.
· Rates to Fed
primary dealers already featuring a stealth rate cut of 50 BPS via auctions.
· Naturally, the ongoing suspicion that authorities will start buying stocks
to arrest the slide. Again, once you’ve gone down this path there’s nothing you
won’t do.
And, all this from a republican administration which some
thought was conservative but in fact are just a bunch of east coast country club
republicans and academicians.
Today was a replay of the past handful of
trading days--down and dirty. Volume was still heavy and breadth abysmal.
ETF Blog reader and Digest subscriber David Hurwitz
always has some interesting insight to lend. The following is his analysis of
yesterday’s action.
The Hurwitz
View
NYSE Last Hour Analysis
|
|
|
|
|
|
|
10/6/2008 |
Time of Day |
Average Percent of Daily Volume |
Shares Traded (Million) |
Percent of Day |
|
|
|
|
09:30 -15:00 |
76.5 |
5,660 |
71.8 |
|
|
|
|
15:00 - Close |
23.5 |
2,218 |
28.2 |
Total |
100.0 |
7,878 |
7,878
|
“Thus, on an average NYSE trading
day, the last hour contributes about 23.5 % of total daily volume. Today, the
last hour contributed 28.2 % of today’s volume. So today’s last hour delivered
367,000 shares more volume than average but not in my view an extraordinary
burst that might characterize a significant turnaround in market direction, in
this case upwards.
The Average Percent of Daily Volume is based on a
multi-month study I performed in which NYSE cumulative daily volume was captured
at every half hour. This permitted determining the average volume traded on the
NYSE each half hour and thus cumulatively through the day.”
Some argue that there’s plenty of cash on the sidelines
and there is, some $3 trillion. With the markets oversold, that’s a lot of
buying power. Markets are forward-looking and investors aren’t seeing any reason
on the horizon yet to assume greater risk-taking. When they do they’ll start
buying but be careful of bear market rallies that are just flash in the pans.
Capitulation? Well, if one measure is high traffic and questions we
receive from the public, especially financial advisors, we must be getting
close. It makes sense doesn’t it? When times are good investors and advisors sit
back confident in their own well-planned portfolio structures and performance.
Such is not one of those times.
This blog is truncated as I must go to
the dentist on an emergency visit…..ugh!
Have a pleasant evening.
Disclaimer: Among other issues the ETF Digest maintains long or short
positions in: SDS, QID, SIJ, SMN, SCC, SRS,
XLY,
IYR, SDP,
XLU,
GLD and
DGP.
