Why U.S. Stocks Have Been So Easy to Maneuver Higher

Today’s commentary at Rick’s Picks took a sanguine view of U.S. equity markets: “With a closet Marxist in the White House for four more years and the U.S. economy headed into something worse than recession, we should view any significant stock-market rally as a golden opportunity to bet against the house. Under the circumstances, yesterday’s 107-point tumescence in the Dow offered a tempting opening.  Not quite yet, though.  Our coldy mechanical technical indicators say stocks could go at least somewhat higher before they become engorged to the bursting point. Speaking more subjectively, any market-watcher with olfactories could tell you that the broad averages, currently hovering within easy distance of new all-time highs, stink worse than a clam’s crotch. Consider the backdrop: taxes on income and investment are about to rise steeply; public spending outside of Washington is imploding; corporate earnings have been deflating since summer; new hiring will be asphyxiated by 2000 pages of Obamacare; and America’s fraudulent housing ‘recovery’ is about to breathe its last.”

With the above as backdrop, the following discussion ensued in the forum. Like Rick, “Red Will Danaher” spent many years on the trading floor, where front-running and other forms of skullduggery were not merely common, but pervasive. Both see the stock market’s buoyancy as an unsustainable fraud:

RWD: A few observations and points of interest. Although your Hidden Pivot tehnical analysis is not volume oriented, I’m sure you’d agree that the volume profile of the entire “rally off the bottom” has been pitiful. This most recent “rally” has been in line with that and has been a joke in terms of volume. Typical markup madness in front of and through a Holiday so that the masses aren’t talking about the recent plunge and are feeling better. This one, though, took the cake in terms of a dearth of volume and, as you and many of us noted, most of the “rally” was achieved by rigging overnight futures buying — courtesy, no doubt, of a Plunge Proection Team member. You know, most big players love to buy big when liquidity is the thinnest right?

The other thing that I wanted to mention is that ZeroHedge has about 2 to 3 pages of almost pure Kryptonite as far as…true believers [of the bull market] would be concerned. So much for the “amazing earnings miracle” that that group likes to focus on. So concentrated, but so easy to ignore for some. “It’s that time of year when 2013 outlooks and strategy pieces bog down an otherwise already overloaded inbox,” notes a post at ZeroHedge. “Some are wise; some not so much. We thought the following four wise fun facts noted from Morgan Stanley’s Adam Parker would brighten-up an otherwise dull Wednesday evening. Full details below but: just 10 S&P 500 stocks accounted for 88% of 2012 EPS growth; those same 10 will account for only 34% of the growth next year; 5 stocks are projected to account for one-quarter of the entire S&P 500’s EPS growth in 2013; and of the 20 firms expected to grow earnings faster in 2013 than in 2012, 8 of them will be swinging from major slumps to miraculous gains. It seems that once the fiscal cliff is behind us then the whole world is fixed, equities can initiate ramp-mode, and analysts’ expectations have a chance of coming true. Parker, however, like us remains more stoic of reality with his 1434 end-2013 S&P 500 target (with downside 1135 possible).”

&&&&&&&

Rick: Interesting observations, RWD. It’s true that only relative nickels and dimes have been needed to push the broad averages steadily higher since the March 2009 bottom. The reason for this is that nearly all upward progress through bands of supply, along with occasional, breathtaking, volume-less spasms, are the product of manufactured short-squeezes.

In the interim, with few long-term sellers other than corporate insiders, stocks can remain effortlessly aloft more or less indefinitely, waiting opportunistically for the next news item capable of triggering a short squeeze. Until recently, Europe’s monthly bailout announcements were a reliable catalyst for short-covering mania. But when U.S. stocks shrugged last week following ostensibly bullish news concerning Greece, it became clear that stimulating even fleeting euphoria with this tactic is no longer possible.

It helps that supply has been greatly lightened by the desertion of individual investors from the stock market. What’s left is an institutional Ponzi game, and I doubt that the dominant players require help from any Plunge Protection Team, since the firms are able to create their own good fortune by running index futures higher in the wee hours, then selling into the catch-up, short-squeeze surges that are certain to follow on the opening bell. All that is required to succeed is an absence of particularly bad news.

Of course, this fraud cannot continue forever. But with every central bank in the world joining in the Fed’s last-gasp credit blowout, it is impossible to predict when the ruinous epiphany will come.

 

 

 

12 comments on “Why U.S. Stocks Have Been So Easy to Maneuver Higher
  1. Pete says:

    “With a closet Marxist in the White House for four more years”

    LMAO!

    Don’t forget Obama is also the Anti-Christ and an Alien from planet Hawaii.

  2. mh505 says:

    To call Obama a Marxist is not only absurd but it soils the name of one of the greatest thinkers of the 19th century. Obama, if anything – and there is a good argument to be made that the man is just an empty shell -, can only be called a right-wing radical

  3. JosephConrad says:

    Foreign investment in th stock market (at the behest of the U.S.) is holding up results. Without this foreign buyin, the market would tank at 5,000. And let us not forget who’s reporting the numbers!

  4. JonnyJames says:

    Someone needs to talk to Paul Craig Roberts, Rick needs to ask somebody, ignorance is not very attractive, unless you are an American who believes that Ds are different than Rs and that we live in a “democracy”.

    Obama a “closet Marxist”? I suppose Miltion Friedman and Alan Greenspan are “closet Marxists” as well.
    I wonder if Goldman Sachs, being one of Obama’s chief campaign contributors are “closet Marxists”.

    I doubt Mr. Ackerman even knows who Karl Marx was and never heard of the third volume of Capital.

    Yeah and Obama is a Muslim from Kenya, that’s why he kisses the Zionists’ asses, bows and scrapes to Israel and bombs several Muslim countries.

    If it aint clear by now that Obama is a bankster puppet war criminal then don’t comment about it.

  5. JonnyJames says:

    Someone needs to talk to Paul Craig Roberts, Rick needs to ask somebody about things he knows nothing about – ignorance is not very attractive, unless you are an American who believes that Ds are different than Rs and that we live in a “democracy”.

    Obama a “closet Marxist”? I suppose Miltion Friedman and Alan Greenspan are “closet Marxists” as well.
    I wonder if Goldman Sachs, being one of Obama’s chief campaign contributors are “closet Marxists”. Everyone loves to name drop dead economists – Marx, Keynes etc. yet few know what they are talking about.
    I doubt Mr. Ackerman read the first volume of Capital and never heard of the third volume of Capital.

    Yeah and Obama is a Muslim from Kenya, that’s why he kisses the Zionists’ asses, bows and scrapes to Israel and bombs several Muslim countries.

    If it aint clear by now that Obama is a bankster puppet war criminal then you have no business commenting.

  6. JonnyJames says:

    sorry for duplicate above.

    ZIRP, QE, cash for trash, HFTs, fraud, subsidies, manipulation, dereg, non enforcement of law etc. etc.

    As Black said a couple of years ago: the entire financial system is criminogenic.

  7. General Rasta, SLA says:

    “With a closet Marxist in the White House for four more years…..”

    market manipulation by the gov’t to the favor of corporations isn’t Marxism or Communism …. IT IS FASCISM.

    fascism/corporatism isn’t capitalism….. it is capitalism’s ugly dirty cousin. FASCISM is when the corporations own the gov’t, Communism is when the gov’t owns the corporations.

    YES, there IS a difference and YES, it does MAKE a difference.

    someone should clue Rick in on his idiocy and glaringly obvious VILE political leanings

  8. bit chin says:

    Interesting point there Rasta.

    The term ‘fascism’ or ‘Marxist’ are both equally inadequate in describing the politics of today. Yet both terms were coined through the evolution of societal movements which coloured our perceptions of the words. I’d like to think that ‘political science’, that good ol’ psycho-anal trick developed by Bernays in the thirties, continued to evolve to use left and right in an attempt to divide and conquer us. To use the term ‘Marxist’ to describe greed, corruption or complicity seems as absurd as calling Hitler a ‘socialist’. Yet, Hitler was a socialist and Marx’s Russia went on to become known as one of the most corrupt countries on the planet.

    What does that tell us about labels? They can be misleading – Look inside the jar!

  9. Jan says:

    The simple fact that he would call Obama a closet marxist demonstrates that he’s woefully ignorant. Maybe he knows how predict stock moves, but either he doesn’t knwo anything about Obama, or he doesn’t know anything about Marxist.

  10. bit chin says:

    Speaking of inside the jar, Rick and RWD’s dialogue explains some of the tacit undertones of trading this minefield with caution.

    & regarding Rick’s political terms for Obaha, I figure it to be in character with the usual irreverent humour I often see at his site. You can’t take it all that seriously, all of the time, eh? Obamy probably is a closet Marxist. He probably has a closet where he keeps a pin-up picture of Marx – right next to a bust of Hemingway. He is probably going to work with the next American equivalent of Hegel to evolve the next round of his socialist policies just as a McCarthy-ist clan of paranoid fundamentalists go on the rampage in retaliation (you can probably tell through my being flippant at this point, that I don’t really know that much about American social history – but hey, they’re just words, right?)

  11. tsuki says:

    ““Bloody lousy”? Nice try, Martin, but even you can’t get to the left of Obama, a guy whose pantheon of heroes surely includes the Chicago Seven, the Shining Path, Eldridge Cleaver, Bill Ayers and every jihadist at Guantanamo. If he has disappointed you nonetheless, it’s only because he has been politically constrained from following his heart. However, with four more years to execute Alinsky’s entire playbook, let’s see how far he can stretch Obamacare, for starters.”

    This is why I cannot take Rick Ackerman seriously. What a loon.

  12. jarrollin says:

    Thank God my astute brethren her caught the Marxism quip and called it out as nonsense. Marx was a huge advocate for the proletariat and a force to be reckoned with for the PTB. Obama could care crap for workers and is part of the PTB. People need to learn words before they use them.

Access The Max Keiser Podcast
Weekly Downloads, live Q & A Session and exclusive video posts from Max and Stacy

Subscribe Learn More
Buy Gold Online
Buy Gold Online
Watch the latest Keiser Reports:

Watch our Google Hangouts: