Thursday, February 21, 2008

The Bear's "straws"

Tuesday night, Hewlett Packard (HPQ 47.44) had blow-out earnings. But the bears, tried to find fault with the report. Slowing ink sales! So they pressed the stock down at the open, and buyers, had HPQ at 45.50 on their games. So now no-one is going to use ink?

It's the same with Apple. (AAPL 123.82). Enough already with the iPod story, or cutting the price of the iPod shuffle. This brings people into the store, and let's them start using iTunes. Like HPQ cutting the price of the lower margin printer, and selling the ink. But Wall Street is petrified of their own shadow. Fearful. Scared. Worried.

Maybe they should use a Garmin (GRMN 64.47) navigation device to get out of the funk. They had blow-out earnings yesterday, but Wall Street was worried about pricing. Excuse me, but is there anything in technology that goes up in price? How do you think we get hedonically adjusted CPI numbers?

Buy the stocks from the fearful, scared and worried. And they want stocks that the fearful are selling.

And they want it in size.

Remember when Wall Street said that Research in Motion (RIMM 97.91) would be hurt because of all the lay-offs in financial services? They guided up. Where is that straw man?

It's the same in the market. They are giving stocks away, and the viewpoint is so short sighted, that every time someone attempts to buy in size, the pundits think it is the PPT, or another market manipulator. Take a look at this piece by Mr. Practical at

If you watch the market close enough, tick by tick everyday, you notice things. They start to add up and you can’t avoid the feeling that the markets are tainted, manipulated. If not, they have gotten really, really stupid.

I mention these things from time to time, the most interesting being that every rally is futures led. Buyers are not buying stocks because they like the fundamentals, buyers are just buying futures because they want in the market. Or do they even know what they want?

Another was yesterday. The Russell 2000 ETF, IWM, is closed through a transparent auction process. Nearly everyday this auction process is to buy in a large way. Sellers do fill, but the buying normally outweighs the selling. Yesterday was especially interesting: a buy order for a million shares of IWM popped into the auction cue very early, around an hour before the close. Not too many noticed, however, and by the time the auction completed the closing rotation, the IWM popped to a closing price of 70.73, a huge $0.50 higher than where you could buy it one second before and where you could buy it one second after.

Maybe there are some who aren't so fearful, scared and worried. And if the PPT is buying, it means they want to break the bear's back.

And it shouldn't be too hard. It's made of straw. Look how much play that .50 got!


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