Bernanke Balks, Risk Goes Off and On Like a Light Switch


The Bernanke got everyone excited Wednesday, the market rallied , but still closed near the lows. Then on Thursday he took away the punch bowel a bit, so the market, realizing it may not be on the government teet anymore sold off. JP Morgan $JPM reported, got everyone excited, gapped up but then couldn’t wait to close the day on the lows. Friday it continued its sell off and closed down almost one percent. Citi $C, was  no better.

Bank of America $BAC broke $10 yesterday, but closed exactly on the round number.


The financials had an impressive rally off the September lows, but now look to be giving up the goose in here. The remaining” titans of toxicity”, $GS, $BAC and $MS still have not reported and we still see a slew of regional banks reporting over the coming weeks. It will be interesting to see where the financials go from here. Every stock has a price and as much I see the sector as a fledgling bag of crap, I will have no problem getting heavily long at some point for a trade.

The parlor game of banks borrowing at zero and loaning back to the Treasury and making the vig may be over and the idea of loaning to Joe Sixpack is not nearly as compelling or risk free to these spoiled bank CEO’s. My friend Howard Lindzon wrote a little piece on this this morning and I so agree.

The chart on the S&P has been going from the lower left to the upper right on the charts, while the $XLF is doing the opposite. I still maintain that the market doesn’t need the financials to make new highs, but it certainly would help and get us there faster. I’m in no rush.

As far as the general market goes, I think we go higher. The summer may chop us around, but I see higher levels by year end, maybe 1400+. Money is still way to cheap and institutions are drowning  in liquidity. I have inherently bearish DNA and I am always looking over my shoulder when I’m long, but the market isn’t the economy.

Apple $AAPL reports next week and a good number will easily validate and reinforce the what happened to Google $GOOG last week and may put the sector in serious motion for the rest of the summer.

There is always Washington and Europe to upset the apple cart and earnings go full thrust next week, so we may see some volatility, but I think we go up.

Good luck.

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