Relief rally holds as traders await news from Jackson Hole

Relief rally holds as traders await news from Jackson Hole

Long-awaited plus day cuts Wall Street bulls a break. Investors will now be following news coming from the Fed’s conference in Jackson Hole, Wyoming.

NASA simulated Mars Lab rocket launch. Today's Wall Street rally may not have that far to go, but at least we had fun today. (NASA image)

WASHINGTON, Aug. 26, 2015 – Finally, beleaguered traders caught a rare break in Wednesday trading action as all three major averages posted hefty gains by the closing bell. The day had been a battle earlier, with averages again opening with a healthy gain only to get slapped down again around the noon hour.

But, unlike Tuesday, Wednesday took on a more confidently bullish tone. Bulls were perhaps encouraged by thoughts that the Federal Reserve is going to leave interest rates alone for a while, given the sudden and relatively unexpected implosion of government-un capitalism in the People’s Republic of China. The money rocket really took off from its launch pad late Wednesday afternoon and was last seen heading off into the stratosphere, providing the first genuine relief rally in days.

The Fed’s annual conference, held each year at posh meeting facilities in beautiful Jackson Hole, Wy., attracts attention from media talking heads, given that plenty of international banking officials are also in attendance. That creates the possibility of actual news, or at least clarity from America’s central bank, which increasingly seems to speak in more tongues than the oligarchs who built and then abandoned the Tower of Babel because nobody knew what anybody meant.

Media types are pushing the rumor that the Fed is going to indicate, more or less, that it’s throwing in the towel on increasing interest rates this year, given the epic mess the Chinese have made of their economy—though in all candor, the U.S. economy itself has been staggering ever since 2008 and, in historical terms, has yet to experience a genuine economic recovery.

That said, with its forced buying edicts and with its threats of death sentences for sellers, China’s current Communist government has demonstrated beyond any shadow of a doubt that it is, well, a Communist government. It’s their way or the highway. Except that this time, the dire threats have seemed less effective. Capitalism, even in its modern, stunted, overregulated, crony-controlled form, is notoriously difficult to control by decree, and so it is in the People’s Paradise.

Nevertheless, the Chinese markets appeared relatively stable today, probably helping to give U.S. markets a more positive tone. The tone was positive enough that markets closed near their highs, as opposed to yesterday’s miserable, HFT-driven sucker punch, where that massive morning rally gave away to the kind of heartless, relentless and massive selling that one rarely sees.

The bulls stuck to their guns today, despite several vigorous afternoon assaults from both the bears and from the front-running HFTs, whose fraudulent behavior should be so obvious at this point that the regulators should just step in tomorrow and shut them down forever.

The HFT firm that hilariously calls itself “Virtu” has famously proclaimed that they have only had one single day of losses in years. If any hedge fund manager or even an everyday trader like yours truly ever amassed that kind of record, he or she would be hailed as this century’s real messiah.

Unfortunately, the HFTs are merely false gods who steal our money by faking stock action in order to catch the unwary—all of whom are those few individuals traders that are left, or old-fashioned technical and/or value investors who do care whether the companies they invest in have real, lasting value.

In any event, either the HFTs decided to spend a few billion of their filthy lucre today, or else they just slept in late. After several afternoon guerrilla attacks, they were on their way. We keep hoping to see perp walks in this sector, but probably not during the current administration.

The HFTs keep the Dems happy with plenty of donations. It’s how you buy off officials, and we used to think it happened only in places like Mexico. That’s fundamental transformation for you. Even better, the media satraps have got the country convinced that the Republicans are behind all this. As if.

At Wednesday’s close the bulls triumphed, pumping the Dow up some 619 points (nearly +4 percent); kicking the moribund S&P 500 up nearly 73 points—roughly +4 percent as well; and kicking the tech- and small-cap dominated NASDAQ up an earth-shattering +191.05, up 4.25 percent, an impressive gain any time of the year.

It was all lovely, felt good, and the Maven even made back in one day nearly 9 percent of his heavy August losses. A few more years of days like this, and he might even see black ink in his accounts once again.

But at least for now, that’s not gonna happen. Oil continues to sink, commodities are being stalked by the Grim Reaper, and maybe the news coming out of Jackson Hole for the next three days won’t be so hot after all. The Maven has an abiding suspicion that just as the bulls are about to light up their now more or less legal Cuban cigar to celebrate this rally, they’ll find that the HFTs have slipped them a cheaper stogie that explodes on ignition.

In other words, at the moment, cash is still a swell place to be, so let’s stay there as much as we can.


NASA simulated Mars Lab launch.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17