Tuesday, June 15, 2010

Goldman Sachs propping market?

Interesting observation yesterday at Dave's Daily about Goldman Sachs, which has four IPOs on the slate this week. 
Remember, there are serious IPOs to get done this week especially with the CBOE coming to market. GS is the lead manager and some rumors were circulating they were in the S&P futures pit buying to prop markets on Thursday and perhaps again late Friday. It isn’t uncommon for this kind of stuff to happen when you want to place a lucrative underwriting deal. The syndicate will get together and support the market as best they can. With volume light, and big fees on the line, it wouldn’t be a surprise. In fact, GS is the lead underwriter for 4 of 5 IPOs this week as per Briefing.com.
Maybe I'm becoming a bit too skeptical. After all, if you're long in this two-day rally (or has it been four days?), you're making money. If you're in 100% cash like I am, you're watching from the bleachers. But there's probably something to Dave's point. Yes, Goldman can and will prop up any market. They have the clout. I'd just want to be clear out of the way when the propping is done. 

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