ETF Update: Bears Seem Exhausted While Bulls Are Tentatively In Control

I had not noticed the Reuters article noting the meeting of the PPT (Plunge Protection Team, or the President’s Working Group on Financial Markets) having taken place Thursday. So was Thursday’s afternoon rally and Friday’s short-squeeze off the bottom instigated by the PPT? That does circumstantially give ammo to those who suspect intervention in markets by this and previous administrations. I wouldn’t put it past them. Remember, if the government is in the market their goals aren’t necessarily to make profits but to stimulate or start buy programs which they then unload throughout the day. Keeping markets positive is a vote of confidence in their policies and they don’t care if they engineered them or not.

Turbo Tim Geithner has postponed his next bank rescue act until tomorrow perhaps to give legislators time to deal with the porkulus stimulus package before unloading more bitter medicine. It’s a must listen to BBC video interview with economist Ken Rogoff who suggests plainly that major US banks MUST be placed in receivership and anything short of that just postpones the inevitable. Based on today’s action insiders have a different opinion as they bid up bank stocks today. (You have to wonder who knows what. GE (GE) options with a $12 strike handle were bid up furiously last week.)

In the meantime, Bloomberg suggests taxpayers may be on the hook for $10 trillion.

Stocks were shaky overall throughout the day with financials and big cap tech again leading advances while most others underperformed. Volume was on the light side and breadth was unimpressive.

So, we await the porkulus stimulus bill and then we get TTT (Turbo-Tax Tim) to make his announcement as to how he’s going to save banks, Wall Street and the financial system. This will probably wind up as one of the more interesting weeks we’ve had during this bear market. Bears seem exhausted or in hibernation at least while bulls are tentatively in control.

It’s interesting that today SEC enforcement attorney Linda Thomsen resigned her post. If she had hung around she could have been busy checking on who was leaking inside information to options and stock traders regarding whatever good news is coming regarding GE. If there is some news that supports this move then please let’s hear from Queen Mary Shapiro.

In the meantime, we’ve dipped our toe in the water and taken a few positions which, as this year has gone, usually mean trouble. Or, as Bilbo Baggins famously said: “It’s a dangerous business, going out your door.”

Let’s see what happens.

We’ll be visiting again tomorrow.

Disclaimer: Among other positions the ETF Digest maintains long or short positions in: QQQQ, IEF, PST, TLT, TBT, GLD, FXE, XLE, SLX, EEM, EWZ, IFN and FXI.

Regulation Experiences: Episode 2.

State regulators are a pain for small firms’ period. Their core belief is that if you’re a small firm you are doing something wrong because why wouldn’t you be with a big firm? With that in mind the State of Hawaii chief sent his staff to my office to do a “practice” audit. Practice? Yep, that’s what the man said. It seems they had never done an audit and wanted to practice on my little firm since he assumed we must be doing something wrong anyway. I asked him why he didn’t just go to Merrill Lynch’s office since they were better equipped to deal with “practice” than me. Well, he just didn’t want to bother them it seemed. So we practiced with them for a little over a week and they didn’t lay a glove on me. Nevertheless, pretty annoying, eh?

Tomorrow: FINRA

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