ETF Update: Rally Halted By Difficulties In Citigroup And Bank Of America

Algorithms and hope reside on trading desks and hedge funds driving stock indexes now. First, we had the faux rally induced by another breech of the 50-day moving average which failed twice. Today we fell below 8K briefly on the DJIA (^DJI) and that set-off some automatic buying and a short-covering rally. This rally however was stopped in its tracks by stories from Bloomberg and CNBC that Bank of America (BAC) needs more governement help and a lot of it. Rumors of nationalization of both Citigroup (C) and Bank of America swirled with $200 billion being mentioned as the amount.

Volume was high today (Thursday) which can also follow a 90/10% down day such as yesterday. But there were some strange goings on in the after market.

Our man in Geneva, Dave Hurwitz, gives us his take on volume and breadth below:

Mutual fund or ETF cash-inflows per this report from AMG Data show little money coming to the market:

That concludes another episode of stock market thrills and spills. I’m back at my office and enjoying using my big screens versus a laptop. I can’t say we enjoyed the week since we lost money on the few small positions we employed roughly two weeks ago. But, as an old friend advises, “put that in the book and move on”.

We could be in for a Bernanke weekend with the Fed dealing with apparent difficulties with both BAC and C. This entire mess is an expensive turn-off especially when the BAC chief beats his chest that he doesn’t need any bailout money but evidently does and did. So the lies continue.

Have a great and warm weekend!

Disclaimer: The ETF Digest has no positions.

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