An out-the-gate technical break, more of the same ol’ easily plied bearish headline fodder and foaming at the mouth mad money sentiment are being reacquainted with bargain-hunters in mid morning action. As of 10:55 ET the “Cubes” (QQQQ) and “SPYder” (SPY) are mixed from a difficult gainer of 1.45% to a slightly more hard-to-handle decliner of 0.45% but well-removed from early session “Bull TARPs.”
It’s well-beyond the point of trying to piece together what’s driving investors other than hard-hitting negative sentiment and short bouts of “Bargain-Hunting!” on those occasions where those one, two, three and four letter tickers begin to look uncontrollably silly. News this morning of Prince Alwaleed averaging in from a sub 4% to 5% stake in shares of “@$!#%! Citi” (C) is a decent reflection of the more in control grizzly risk aversion still hard at work on investor psyches and wallets.
The report of the Prince’s investment in Citigroup would typically have Wall & Main cheering over the willingness of some “still” well-heeled investor willing to bargain hunt—and as a group, they should take similar measures. Not so in Thursday’s first half. While the majors have rebounded handily off gut-wrenching early lows, shares of C remain under pressure by nearly 17% at 5.35.
Related and receiving similar treatment, General Electric (GE) announced its seeking investment, umm an injection from sovereign wealth funds out of Asia as stateside value-based hunter gatherers move deeper into hibernation. Shares of GE are off 8% at 13.30 and hitting multi-something or other dismal lows.
Weekly claims data helped provide additional pressure. In the premarket, the latest figures showed the labor market doing cruddier than expected in registering 542K versus estimates of 505K. Not helping, the prior week’s results were also revised downwards, while continuing claims jumped to 4.01M and up from 3.90M.
In other intertwined messes that make up the market, Black Gold and its proxy the US Oil Fund (USO), are lower. The pair have been conspicuously absent from this daily report in recent days. The situation has been and remains a woeful case of slippery and disappearing real demand, nasty perceptions of further cratering and a still strong Greenback (UUP). And for investors not caring about prices sliced in half at the pump—the continued pessimism has found the oil contract testing the $50-a-barrel milestone earlier this morning. Intraday, the contract has bounced, but finds itself still getting drilled by 2.80 at 50.80.
Elsewhere, one-time and not-so-long ago “Obamaistic” bids for solar stocks continue to look frighteningly frothy in hindsight. The once hot growth group has found a perfect storm of drying up subsidies, hard to find credit lines and investors, as well as lower energy prices in crippling shares of late. Add to that mix the latest disappointing report from one of the group’s leaders, Suntech Power (STP), and prices for the group (FSLR, SPWRA, LDK, JASO) continue to fizzle.
This morning STP missed by seven cents in posting earnings of $0.35 per share. More to the point of why shares are reeling by nearly 30% at 6.25, the company guided both Q4 and FY08 lower, while also reducing its CAPEX to $80M from 2008’s $300M. In a statement via Briefing, the company warned of currency pressures, unstable credit markets creating a challenging environment and order deferments demanding the company to hunker down in the short-term, with the expectation of steadily improving profitability in 2009.
And finally, it’s a game of cat and mouse or “Bull and Bear TARPs” as key lows from 2002 in the S&P500 toy with traders collective radars. So far it’s a situation of “close but no cigar”, but that hasn’t prevented another one of those amazing intraday price spikes to the upside, making sidelined bulls wish they had acted.
“Close enough for government work?” Traders will have to be their own judge and jury on that. Personally, with the VIX at 80% this morning, it certainly felt nauseating enough for a bottom. And in many instances, individual stocks of mega-capper worth (still) are so badly beaten that the dollar risk is getting increasingly close to the type associated with a hard delta bet in the options. In this case however, there’s no expiration—so we hope.
Chris Tyler
Staff Writer & Options Strategist
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