So, today we saw a nice take down in the AM followed by a quick short squeeze and tons of on again off again rumours about a debt deal — this action can pretty much be viewed as the governments playing puppet master with the equity markets as usual as to the men in DC, the stock market IS the economy. Once we hit the 200 day moving averages in June, the M2 mysteriously jumped the largest amount in one week since Lehman Brothers and we got our vertical HFT rally in response. Now we are sitting at an impasse — it’s clear Washington will sacrifice the USD for a breakout in the QQQ, so be watchful of the YTD high in the QQQ at $59.36 — I would not buy this pump job index over $59.36 but would cover your shorts if we break above this resistance level. We are likely to move higher to squeeze the last rational investor out of his short position before moving lower… Either that, or the US continues to sacrifice the USD for the betterment of the offshore global corporations that represent the DOW and S&P 500 — so yes, there is a huge conflict of interest between the corporations in the stock market and the US citizens right now, and looking for big business to hire actual Americans is beyond silly.
For traders what all of this means is that a weaker economy gives the Fed an excuse to hand the global corporations listed on our exchanges more free money via printing. IF the economy somehow improves, then stocks could move higher in tandem, but given the lofty valuations of the QQQ and IWM I would much rather own commodities than stocks, which is why the principles of blowing a Russell 2000 bubble is so utterly perverse. Maybe Mr. Bernanke is just naive to the fact that printing money only benefits the large cap companies because they earn more money when the Euro strengthens, or maybe he just works for the elites. You be the judge on that one, but what matters to my readers is how to invest here and I am sticking with my long commodity and short technology stock thesis for now. Bernanke’s pump and dump will eventually give one way or another — he can either print the stock market higher, or let it crash… It’s all up to him and to our leaders in Washington, which is why today’s markets are no where near “free” or rational.
Last night in after hours trading the QQQ hit a low of around $58.30 only to pop hard to around yesterday’s highs of $59.25 or so… which coincides with YTD highs (and BTW our 7/7/2011 short signal at www.hedgephone.com)….
I am remaining bearish on the technology and small cap indexes here as I don’t buy any of the “recovery” or “web.20″ Koo-laid…. I liked Koo-laid back when they still had it in stock at the local grocery store, but like many trends, Koolaid is not even a major player in beverages anymore and your metaphor today is the internet and it’s totally over-hyped right here. Granted, many companies are excelling online and their is better growth here, but Jim Jones served up a mean brew of Koolaid too, and right now Obama/Geethner/Barnacle are doing the same.
Larry Summers pumped the tech bubble yesterday (without pumping the tech bubble) as well saying that more and more people are on the internet and growing a business is much easier on line — while I agree with him for the most part I also think that most Americans view him as a bigger A$%hole than the “Winkelry” but then again WTFDIK.
Look, I agree with statement that the internet is cool and a good business tool — that’s why I create edgy content for my readers online that is hopefully controversial and outside of their comfort zone. However, the main fact of the matter here is that Wall Street is “jacking” Main street again with the OPEN, LNKD, Z, NFLX (275.81 ↓-1.99%), AMZN (213.21 ↓-1.09%) bubble again… It’s 1999 all over again… Except they already repealed Glass Steagall this time!
I fully expect Web Bubble 2.0 to be volatile and that some companies will do well while the bubble will pop for others. I am sceptical of Zillow on valuation but less so of QPSA (9.16 ↓-7.75%) for example at a much cheaper multiple as to me the real risk is valuation. That said, anything can happen and with scam stocks you always have to expect growth in unexpected are — YHOO seems like a much better deal than OPEN, QPSA, CRM, LNKD, etc… QPSA will likely face cash issues soon but I view their hail Mary buyout of Myyearbook.com to be an interesting play on the web 2.0 craze and somewhat inspiring to me personally — It looks like a better deal than buying LNKD common at this point, so what the hay!
Cramer is the ultimate stock pumper and promoter of overvalued equities is the colourful son of a travelling salesman and always entertaining. Last night he had Chipotle (CMG 328.22 ↓-0.55%)’s CEO on air to explain why PE ratios and valuations don’t matter — we couldn’t disagree more, but we do admire Jim’s recent move toward lower PE stocks like MSFT as at least his viewers can learn how to value equities rather than following him like he’s David Koresh.
So in any event, we are reloading some of our short positions here, and will be watching our stops (set at 7/7/2011 levels) and will be getting ready to jump back into silver should we hold the post manipulation channel highs…
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.