leo said...

Some notable points… link to full article here.

1. Whenever the S&P 500 slices to a new low, it’s time to cover shorts. Every new low in the past 18 months was met by a vigorous bounce, especially the last two.

2. Be wary of upward spasms where financials and consumer discretionary lead the way, because they typically go into these bear market rallies with the largest short positions. Also, be skeptical when the rally is led by low-quality stocks.

3. Investors seem to be enamored with the second derivative (rate of change in the rate of change) in the economic data even though bear markets usually end just in advance of a turnaround in the first derivative (the rate of change itself).

4. There seems to be confusion between an actual improvement in the economy and an improvement relative to the post-Lehman trend, when the economic indicators began to implode at annual rates of 30%-70%. Even Wily Coyote hits the ground at some point.

5. The profits recession is two-thirds of the way through; there is another one-third to go. Equity investors pay for profits, and with one-third of the downturn still ahead of us, it is difficult for us to be excited about any sustainable rally in the stock market.

J.P. Morgan Chase first-quarter profit falls 10% - MarketWatch

The company said net revenue was a record $8.3 billion, rising $5.3 billion from the first quarter of the previous year.

Dow futures climb pre-market… and the circus act continues…

Looks like it is in fact a short squeeze that’s propping up Citi shares lately. Although down 1.75% to $3.94 per share in afterhours trading, I’m hoping Citi will continue to inch upwards through options expiry this Friday… I’d bet many hedge funds are breaking out the defribillator right about now if there’s still a faint pulse… ***CLEAR!***

From WSJ…

Citigroup Inc. stock’s upward momentum may continue longer than some market professionals are expecting — and it isn’t because investors have suddenly regained faith in the banking company’s prospects.

Instead, Citigroup’s plans to issue billions of new shares won’t move forward until at least Friday, potentially prolonging a “short squeeze” that has been inflating the company’s shares.

The Securities and Exchange Commission isn’t expected to approve Citigroup’s stock-registration statement until sometime after the company announces first-quarter earnings on Friday, said people familiar with the matter. Citigroup previously told traders the approval would come in early April.