WASHINGTON, Aug. 27, 2015 – It’s 3:15 p.m. as we write this, and at this point, Thursday’s stock trading pattern looks a lot like Tuesday’s head-fake disappointment for the bulls. As you may recall, that’s when the market skyrocketed up in an attempt to recover from Monday’s epic disaster, only to crash to earth late in the day when the Powers of Darkness intervened to lay on another heavy loss.
After blasting up over 300 points this morning, the Dow Jones Industrials (DJI) again hung in the stratosphere for a time before what Dave Fry calls the “Sell Express” arrived more or less promptly around 2:45 p.m. as sellers, short sellers and (no doubt) those fun-loving high-frequency trading (HFT) criminals decided to victimize the funds and remaining individual investors who were hoping to recoup a bit more of their recent horrendous losses.
Whatever constitutes today’s class of bears, down we went again, falling through the +100 mark on the DJI and by more or less equal proportions on the other major averages. The bulls are trying to fight back as we punch today’s piece out, but the bears seem determined, at least for now, to take the ball away before today’s closing bell.
Two interesting points came to light today. First of all, although it’s been known for a few days, word is finally getting out that the Chinese government has been dumping big chunks of its massive hoard of U.S. Treasurys, to the tune of $1 billion or more and counting.
Seems like they’re those wily, all-knowing Communists are reasoning that it’s better to raise actual dollars to fund whatever the hell it is that they’re trying to do right now the better to perform swift triage on their tanking stock markets and economy. They’d be better off letting the yuan float, frankly. But they’re apparently not into that scene, so they need to hit on the U.S. for suddenly valuable dollars instead. (What was it these people were saying about making the yuan a world-reserve currency since the dollar obviously sucked?)
This could be another reason why the Fed is temporarily backing away from that interest rate hike, at least early this fall. That’s because the Chinese Treasury move is having the perverse effect of driving the 10-year Treasury bond’s interest rate up without Fed intervention of any kind, effectively raising interest rates for mortgages and other such things anyway. Until things calm down over there, why should the Fed add a raise of its own, stifling the currently positive U.S. housing market? Housing is about the only thing that’s still got its engines running here, after all. Could the Fed, after endless protestations, actually be forced to commence QE Round 4? Some think so. We’re not so sure. Stay tuned.
In addition to the Chinese collapse and aftermath, we noted this morning that for whatever reason, the nearly comatose price of West Texas Intermediate (WTI) crude seemed suddenly to get hit with a huge pair of defibrillator paddles this morning, positively rocket-sledding ahead by a whopping $3.30 bbl., taking it back over $40 per share (actual quote: $41.97) since what seems like forever, at least to traders who still stubbornly remain in the oil patch.
As of this writing, the Maven has no clue as to why this Lazarus-like move in crude oil has occurred, though we’re still looking. It sure as heck has gotten us a few bucks back on our eviscerated refinery stocks. Problem is, we’ll need a whole lot more days like today just to get back to even in that sector. Talk about bad timing.
That’s about all the thoughts we have right now. To be perfectly honest, the bulls are trying to take Thursday back again, with the Dow now up over 200 points at 3:40 p.m. EDT, so we have got to get back to our trading software and see if we can scalp a trade or two before the close, if it makes any sense to do so.
21st century markets? Well, as Yeats once opined, this is no country for old men, at least men as old as the Maven. Trading this HFT and crony-capitalist dominated crap game these days is about as easy for an aging Boomer as it is learning how to operate your ISP’s remote control when you’re trying to watch a movie on your flatscreen.
At least with the remote control, you can consult any 5-year old for help. On Wall Street 2015, there is no help. They just want to take your money. All of it. Charts, points, figures, price-earnings ratios, all fail before the mindless, headline-driven algorithms, spoofing and front-running those fun-loving HFTs use to steal the public’s money without ever incurring a loss.
In Vegas, everyone knows the house is geared to win, and there’s very little chance to win a jackpot. But at least sometimes somebody still beats the House. With the HFTs currently serving as Wall Street’s House, nobody but the House ever wins. It’s a sobering thought.