Bank of America, commodities, China send market into swan dive

Here we go again. Let's add the yo-yo to this metaphor. Photo: unattributed

WASHINGTON, April 17, 2013 – Another short column today due to some ongoing time conflicts. But there’s nothing much to report this morning as the market looks set to attempt a reprise of Monday’s disaster after yesterday’s post-Boston Marathon bout of unexplainable irrational exuberance. Yes, after nearly making back Monday’s severe hammering, urged on by the waterfall drop in gold and exacerbated by the terrorist mass murdering in Beantown, yesterday’s market almost seemed to be reliving those heady days just prior to the 1999-2000 dot.bomb collapse, making back roughly two-thirds of Monday’s near-collapse in prices. 

But this morning, we’re back to our old bear-raid-style tricks, which are actually driven, more likely, by the jumpy, brain-dead algorithms driving high frequency trading (HFT) machines. Building on somewhat anemic quarterly earnings by megabanks JP Morgan (JPM) and Wells Fargo (WFC) who saw mortgage lending pull back somewhat—and neglecting to remember yesterday’s uncommonly swell report from Citigroup (C), futures are getting pummeled this morning by a surprisingly lumpy report from Bank of America (BAC) plus rumblings from China that the indebtedness of local jurisdictions—not to mention the low quality of that debt—is threatening a worse financial catastrophe than America’s 2007-2009 mass mortgage and CDS collapse. 

Our analogy for today’s market action involves the perpetual back-and-forth fate of your average yo-yo. Pictured here are versions of the colorful and ergonomic ‘Zombie’ model yo-yo being offered at the site of a Brit outfit that calls itself AERO-YO. Zombie? Hmm. That’s yet another good analogy for this market which lately has defied any kind of rational analysis.

Already vulnerable for a variety of reasons, including sheer toppiness, the averages look to plunge this morning once again. And this whipsawing is really beginning to get to the Maven. We’re likely to slip in a couple of short ETFs this morning (likely SDS, the double-short S&P and/or the volatile FAZ, or triple-short financials) and get out of more marginal positions. It’s really beginning to look like this year’s “sell in May” mode may already be in force. You can’t get in the way of this stuff unless you’re a really big “playah.” We’re not, so we tend to stand aside, heading for hiding places in utilities, moneymarket funds, and maybe a couple of preferred stock ETFs like PGX and PFF. 

Candidly, in a real market tumble, nothing is exempt from being hit. But utilities, preferred ETFs, perhaps a high-yielding REIT or two, and that low-yielding old standby, the moneymarket fund, are all pretty good places to hide, given the good-to-great yields you’ll get wile-u-wait. 

We’re about ready to jump in now and do what we can before we head off to our daylong extracurricular activities. You should consider doing the same or something similar. When this kind of market starts happening, up and down, up and down, it’s getting wobbly and a correction is likely not far off. You and the Maven don’t need to be the bag-holders for this one. 

SEE RELATED: U.S. markets set to rebound, gold set for stunning bounce

Have a good one.

UPDATE: At 9:35, the Dow was already off 106 points, with the S&P down about 15 and the tech-heavy NASDAQ off a whopping 30 points. 

Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He intends to nibble on the preferred stocks mentioned above as the occasion warrants.

Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.

SEE RELATED: Gold bugs busted decisively, massive panic selling ensues

Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.

References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.


Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.

Follow Terry on Twitter @terryp17



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Terry Ponick

Now writing on investing, politics, music, movies and theater for the Washington Times Communities, Terry was formerly the longtime music and culture critic for the Washington Times print edition (1994-2009) before moving online with Communities in 2010.  



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