Tuesday, May 19, 2009

Who leaked the BAC information?

I'll leave Denninger to comment on it:

From this chart it is clear that "someone" (or a handful of someones) knew of this offering before the market closed.

The volume that started showing up at 2:00 PM - to the downside - was VERY significant and the selling picked up bigtime going into the bell.

This sort of information leak and trading on it before it is disclosed is illegal.

What's even worse is that an hour after this news "broke" Bank of America still hasn't issued a press release on the matter...

Oh, and it gets better. What happened yesterday?

LONDON (MarketWatch) -- Bank of America was upgraded to buy from neutral and added to the conviction buy list at Goldman Sachs, which says the stock overhang should start to abate and that the bank may earn 25 cents a share during the second quarter, well above consensus estimates of a penny a share. "Our optimism is based on another solid mortgage and capital markets quarter, given observable activity levels since March," the broker said.

The stock overhang should start to abate?

I want to know who ran the book for this secondary and further, I want to know if Goldman was one of the firms selling into this.

What I do know, because I have a real-time squawk feed with commentary, is that Goldman was very quietly selling S&P futures in the back of the pit this afternoon.

It's obvious this news was leaked by the prints all over the market today. The banks, led the market lower, and when BAC traded down to $10.44 in the afterhours, someone decided to stock up on the financials that were being sold, and they bought them in size before the BAC secondary news was leaked.

The same hands that were probably shorting the same numbers earlier, and into the close!

The market always leaves it's footprints!

Now today, HPQ was trading down a couple dollars after reporting earnings. Anyone working at the paper companies will tell you that brown paper (cardboard) business has turned up substantially, but they are down on white paper. We know that HPQ makes their money on ink. So Wall Street will connect these dots even though they are wrong. Because anyone that works at a paper company, will also tell you that white paper business is now picking up because of Government paper for Census workers. So does that mean, that when white paper picks up, HPQ is selling more ink?

The point is, you really don't know. But Wall Street always pretends they have an information edge, when the edge they have, as we have seen in BAC is not of the intellectual side, but that of the inside!

But if you want to take a look at technology, take a look at VMW. This stock hasn't been able to come in at all the past week, irrespective of the market's action.

It trades as though someone on the inside has an edge.