MARKET COMMENT
March 20, 2007
Michael Malone, trading analyst at Cowen & Co. opined
today that deal making is returning after a few weeks of absence signifying “a
sign that confidence is returning to the marketplace”.
Really?
I’d say its more like investors took some
kind of memory drain medication to make them forget the previous focus on and abhorrence
of risk.
We’re back to risk-taking as if
the previous concerns were just so much hooey.
So the previous method of isolating all problems, setting them aside as
a nuisance and putting cash to work are quickly [in a New York minute] back in
style.
Why?
Because there’s plenty of cash burning a hole
in money managers’ pockets and it’s nearing the end of the quarter when bonuses
are paid.
Here’s something of interest regarding the appetite for risk.
According to the NYSE margin debt hit a
record high in February at $295.87 billion versus January’s record of $285.60
billion.
Now we don’t have March’s
figures yet, but clearly the appetite for risk was pretty high then and it will
be interesting to see how it changed if at all.
Another up day on light volume which is still goes in the
books as an up day.
Now I should really point out that the NYSE has a new link
for its program trading data per this press release.
Why they haven’t transferred it to the
previous link is beyond my ability to know.
But, they do seem to love the round number of 32.0% don’t you think?
Folks must be pretty convinced that not only will the Fed
not do anything at their meeting which ends tomorrow but some expect some
soothing language as to how they stand ready to rescue markets from any
mortgage difficulty.
Further there were
rumors today that the Fed will cut in June.
Now cynical theory goes like this.
This ramp higher we’re seeing could be just some
smart money pumping markets higher so they can suck you in and sell you
stock.
But, it’s silly of me to think anything like that.
The Fed will meet tomorrow and a lot of
soothing “everything’s fine” talk will take place.
No doubt that’s already been priced in.
We have three more trading days in the week
and another five before the end of the quarter.
I wouldn’t be betting against window-dressing bulls flush with cash.
Have a pleasant evening.
Disclaimer:
Among
other positions, the ETF Digest maintains positions in: IEF, GLD, DBP, EWJ and EWA.