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Goodbye to the Rally?


Good-news selloff, other factors suggest we may head south from here.

The market rallied on great Wells Fargo (WFC) news. However, I'm skeptical (if not outright cynical) of such bullishness. I'm not the only one.

Minyan Peter, one of the best reads anywhere, seems to agree. Please consider Goldman Sachs: Green This Morning, Hurricane Tonight?

Highly Choreographed Is Right

Please read Minyan Peter's post in its entirety. His insights are always worth a complete look.

To his thoughts I'd like to add "highly choreographed" is a huge understatement. Is there anyone who didn't think Goldman would "beat the street"?

Even still, no one knows how these things will play out. Those who think they do are just fantasizing. I prefer to wait and see.

What we now know is Goldman beat by a mile. Yes - I know it was a sham, and so did Barry Ritholtz: see How to Puff Up Earnings, Goldman Sachs Style.

Buy the Sham or Sell the Sham?

But sham or not, the key question is "Buy the Sham or Sell the Sham?" because the news itself is irrelevant. The reaction to the news is what's important!

Sell the Sham

For now, the market says sell the sham. Moreover, Goldman Sachs is an interesting case study. Please consider the following chart.

Click to enlarge
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No positions in stocks mentioned.
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