Larry Levin’s Blog: Rally Time Understanding that besides day trading techniques , we need supportive information which helps guide our trading, I just keep sharing with you guys who care about day trading the daily blogs of Larry Levin – a big name in the floor traders. As you see the topic we will discuss this time is “Rally Time”.
Today there was quite a rally in the markets. The Dow closed up over 300-points, with all the other indices up an equivalent percentage. The news must have been great so without further ado, just have a look!
The first economic data that hit the tape was the New Home Sales report and it wasn’t good. It stunk. Bloomberg said that the following “Bad news is building out of the housing sector”.
The report on existing home sales last week showed surprising contraction as does today’s report on new home sales where the annual sales rate fell to 298,000 units, down 0.7 percent in the month.
There is some news we should take note from the report which includes significant downward revisions of 12,000 to June, now at 300,000, and of 6,000 to May, now at 315,000. Prices of existing homes contracted in July as they did for the median price on new homes, down a steep 6.3 percent in the month to $222,000.
“ The outlook for the new home market and for home builders remains so difficult. Low interest rates may be a big plus, but are being more than offset by heavy supply of low priced existing homes, by appraisal uncertainties, and by continuing tightness in the credit market.”
Let’s have a look at The Richmond Fed data. THAT report didn’t go well.
The Richmond Fed’s report said that “In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — declined nine points to -10 from July’s reading of -1.
Among the index’s components, shipments lost sixteen points to -17, and new orders dropped six points to finish at -11, while the jobs index inched down three points to 1”.
Also other indicators suggested additional softening. The index for capacity utilization declined eight points to -14 and the backlogs of orders fell seven points to end at -25.
Additionally, while our gauges for inventories were virtually unchanged in August, the delivery times index moved down twelve points to end at -4. The finished goods inventory index held steady at 17 in August, while the raw materials inventories index added one point to finish at 19.”
Since the incompetent Fraud Street economists missed both reports by a wide margin, with the latter report being 100% worse than expected and the worst data since 2009, one would expect a negative reaction in equities. Ohhh, but this is Fraud Street, not the Wall Street hype of supply and demand that you have been told about over the decades.
Apparently the news was so bad that the hyenas of Fraud Street went into a feeding frenzy – eating as many short sellers as the pack could tear apart. Why would the nasty hyenas do such a thing? The answer lies with Ben S. Bernanke and the J-Hole symposium of the central banking mafia.
“ What’s not to like in these reports?” says the banking mafia. “This now cinches the response we want from our puppet Bernanke: more free money for us via QE3.” Boo-YA, baby! More horrific economic data and the markets take off like a rocket shot.
Trade well and follow the trend, not the so-called “experts.” Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banksters.