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MV Weather Report: Bears Looking Like Greased Lightning


Rain or shine, we review the day's biggest stock stories.

For the past month, we've been talking about the impact of the bond market on stocks. Today was no exception: The market whipsawed after a weak 10-year bond auction. The results of the auction were as followed: The high yield was 3.99%, the bid-to-cover was 2.63, and there were 34.2% indirect bidders.

The market immediately sold off on the news -- though it had already been down for the day in anticipation of the auction. The reason: High interest rates aren't good for the economy (think refinancing, the housing market, banks).

The Buzz & Banter was buzzing (if you will) on this action. Here's one from Professor Fil Zucchi:

"The 10-year Treasury auction was a total train wreck. Watch for Bernanke to step up the printing, which will only make things worse of course, in order to appease our sorry excuse for a Congress."

There were some standout winners on the day: Research in Motion (RIMM) (as buzzed by Todd), as well as Mastercard (MA), Potash (POT), and Transocean (RIG). But both the agriculture stocks and oil also traded strong for the day. The losers were the banks, led by Goldman Sachs (GS), big-beta Google (GOOG), Baidu (BIDU), and Apple (AAPL).

After a sharp move down -- the S&P 500 went as low as 927 -- we saw the buy-on-the-dip crew arrive. The market rallied into the close, up to 939. It seems they can't get the market above 950 -- but they also can't get the market to go lower.

Here's a Buzz by Professor Jeff Cooper about the current market environment which I find dead-on accurate: We have been experiencing some thunderstorms -- the kind that this California guy isn't used to.

"When you go out it the rain, what's the worst that can happen? How many of us expected the market to reverse immediately after wiping your eyes when you saw the futes up as much as 12 points pre-open? You may not have been lookin to chase 'em, but were you brave enough to stick your face into the fire and fade 'em. There was no edge to do so until the edge quickly sharpened--that something else was going on -- especially after S&P 937 was violated.

"This morning's up spike looks like Sparky was at work again. Again? Remember the last half hour on Monday when lightning struck. Is it any wonder that shorts have been singed and are playing close to the vest. So close in fact that a trading bro of mine reports that a straw pole of his shows that many of traders looking to be short are flat and watching....and waiting.

"Be that as it may, from my perch, a turn down of the Weekly Swing chart that illicit a lack of buy interest and/or more selling will confirm the idea of a meaningful correction playing out."

The market has yet to turn the weekly swing chart down. But there's growing consensus that 950 S&P is the top for this bear-market rally. If that's so, wasn't today's bond auction the perfect fuel for Boo's fire?
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No positions in stocks mentioned.

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