Monday, August 29, 2011

Barometer: AAPL

8:33 am (Hawaii) Less than 90 minutes left in the session and the indices are up big. However, I'm not chasing here. AAPL is up to 389 — anybody remember the Steve Jobs retirement dip to 352 last week? — and that seems great. But look at the volume. Horrendous. Less than half of last week's trade, which tells me that traders and investors are cautious and it's mostly machines that are bidding price up and down in most equities.

What else is higher on very low volume? BIDU, GOOG, LULU, even LVS. But momentum vehicles like NFLX (slightly up) and GSVC (-2.1%) are also middling. This market looks and feels fake to me.

Financials are heavy green. My Debt Spiral list is entirely green, led by NBG (+36%) on the Greek bank news. FAZ is down nearly 11% to below 53. By my rule of thumb, FAZ has been a buy below 55 in the past month. But this is why I don't dip into these waters often. Anything can happen overnight, over a weekend, and finnies explode despite a real core of toxic assets. The roots of the system are rotting and dying, and nothing changes that in a week, a month, a year, maybe a decade. The will to stop this financial meteorite from destroying our monetary system as we know it just doesn't exist. In other words, I won't touch finnies, and when they run out of momo, I'll park a little bit in FAZ.

If 0% interest turns out to be QE3 and we have another meltup-on-low-volume rally, I'll probably miss a chunk of the gains. But fundamentally, what has changed? Not a single constructive solution back home. As Brother Turd Ferguson forecasted, with London on holiday, thin trading has spot gold and silver down slightly today. DGP is down 3.5% (64.98) and AGQ is down 4.7% (213.73). I'm prepared to buy on this dip, not sure if I'll do it yet. I remain all cash for now.

Update 9:27 am As I noted earlier, thin volume today has a very sketchy feel for a lot of watchers. Here's a note from Karl Denninger at Market Ticker.

Nobody is talking about this. That's 27 - twenty-seven contracts - on the bid at 1146.75. During the trading day. There's less than a thousand up and down the stack through the entire visible portion.

This is a tiny fraction of normal liquidity and those sub-100 numbers are more-akin to what you expect in the middle of the night when everyone's sleeping!

All that's left is the computers. The humans have gone home.

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