Tuesday, May 25, 2010

What's Going On?

Earlier today, I was simply asking, what is going on? Again, no uptick, no position limits, futures pinning, levered ETFs, CDS in a scare-driven world causes way too much control for a trillion dollar cash market into the hands of a small number of large players controlling a few hundred million to a billion (if that) in the futures. The markets are broken.

There is just no way that the Naz should have finished the day down yesterday. Dow -- sure, the banks were weak all day. S&P, ditto, plus more exposure to Euro driven weakness. My biggest concerns are not any macro economic issues, or earnings issues or poor policy out of key central banks -- the markets simply remain broken, due to repealed market rules.

People should consider names like MSFT, GOOG, T and/or things with very good downside capture numbers. Like all other market shocks/corrections, this too shall pass, but I'm fearing that we may need the EU to adopt a unified approach to Germany's decision on naked short selling as well as naked CDS. This is an all too familiar echo back to the 2008/2009 markets here when FAS 157 was still in full force.

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