Getting real tired of this market. Jerk up, jerk down. Too many jerks out there. Program trading run wild, in my opinion, way too many black boxes combined with credit problems and some portfolio liquidation. The action seems increasingly artificial to me. But I always seem to be attracted to the hard trade. Rationally, that’s good. Emotionally, not so much. Anyway, bought some TCK (Teck Cominco, a base metal - zinc, copper - and coal miner), added to my SU position. Like we’re going to be overflowing with oil? I think not.

And yes, I know that isn’t Latin. Noli nothis permittere te terere. The school I attended as a child, where I started learning Latin, just had its 600th. anniversary dinner on the 13th. November. Not a typo, founded 7th. September, 1408.

Edit: Action looking better. Bought some tech stocks - ADBE, EMC, CSCO, MSFT. For a trade.

Edit: Huge wave of (presumably) redemption selling by funds at the close. Took me back to my entry. Short term bearish but intermediate term bullish. J6P is bailing.

Don Coxe has always said that the news that is worth trading is on page 16, not the front page. Today’s page 16 news that could have serious consequences is the outbreak of fighting between Russia and Georgia. The Belfast Telegraph:

A convoy of Russian tanks and troops is reportedly moving toward South Ossetia’s capital as Russian Prime Minister Vladimir Putin declares ‘the war has started’.

Tech stocks are being jammed today, well, because they can be. Ostensibly, because the price of oil is falling. I suppose it is dumb to point out that tech stocks have rallied anyway since oil broke out above 100 in March. However, this kind of violent action has a tendency to feed on itself, as over-leveraged players blow up or are forced to liquidate positions by margin calls. Watch out, as usual.

My suspicion is that the collapse of commodities is the beginning of the end. It shows that the liquidity crunch and economic slowdown have gone global.

Stock market action has become a series of violent whipsaws as the quant funds chase their tails. Tech stocks remain the darlings, apparently immune from economic weakness. Credit spreads are widening, with the KDP High Yield Index at 70.39, vs. a 52-week low of 70.14. The iTraxx Europe crossover is rising fast. Treasuries are strong, lots of foreign demand. The TED spread remains elevated, at 1.13 as I write.

Another record month for foreclosures in California (which is 40-45% of the US by value). Would-be flippers are snatching up the bank-owned properties at a rapid clip, causing median prices to crater, down 37.7% in the last year, although volumes are up. Watch for the CAR to switch back to average price. Many signs of weakness in commercial real estate. The GSEs are haemorrhaging, both Fannie and Freddie announcing huge losses. Fannie also announced this morning that it was ending Alt-A lending (no and low-doc, principally). Liar’s loans finally going away, also the recent legislation ended DPA (the “Down Payment Assistance” that allowed sellers to fund down payments, channeled through a non-profit). Good luck, you flippers.

I continue to be more than a little frustrated at continued high valuations of the tech stocks, the NASDAQ 100 to be specific. Amazon included in operating earnings the sale of a subsidiary in Europe, and is now trading up 15%. This is a retailer, looking into a recession, and already trading at a P/E around 70. Added to which, forecasting a sharp reduction in gross margins in the coming quarter.

But the mechanical monkeys jam it up anyway. Because they can, I guess. Bill Fleckenstein calls this kind of action “muscle memory,” just unthinking reflex left over from the bubble eras. Personally, I think of it as the actions of black box traders, just mechanical monkeys doing the same thing over and over, without understanding.

The stock market thrashes around under the control of the program traders; it is expiration week, after all. The economic news is poor - producer prices up 9.2% year-over-year, nominal retail sales up 0.1%, which means a fall in real terms. The SEC is restricting short-selling of shares of the GSEs and the brokers, which is another sign of panic - and by the way, shows the SEC’s real mission of protecting the industry from its customers. Financial stocks are up a bit, but the real energy continues to be focused on the over-loved and over-priced technology stocks, which are still well above their March lows (as represented by the Nasdaq 100, anyway). Oil fell today, although it needs to fall a lot more to make any economic difference.

The market is still ludicrously overpriced. Must be that dark energy holding it up, countering the force of gravity. Do dark pools contain dark energy?

Edit: And for a chuckle. Well half a chuckle, half a sigh. Recession-Plagued Nation Demands New Bubble To Invest In. A little too close to the truth, I fear.