Market Update and Market Education

Hopefully this post will give you both. First we know the Primary dealers saw a poor acceptance of their issues. There's the idea that the Primary Dealers enter trades in anticipation of POMO as well or in anticipation of free money. A poor showing at the POMO can cause them to pull those trades, sometimes when we see positive divergences into falling or lateral price, it's possible we are seeing such pre-positioning. In any case, the market fell after the sub/accepted ration was announced. Here's a chart I grabbed from Zero Hedge showing JPM bidding up the Russell 2k-so now you know who else is in the loop of back scratchers.

Note the time that buying began-at least on this chart, there may have been significant trades not shown. Also look who the buyer was at the far right under "Broker". Those are some pretty big blocks.

Now lets look at the charts of the DIA, SPY and QQQQ

 Of the 3, the DIA is the only one showing a positive divergence into the 11:30-12:00 lows, this in my estimation has more to do with keeping the Dow above $12,000 as the Congress-woman so notably mentioned yesterday during the hearing on TARP/HAMP. As if things in the US are better because the Dow is over 12k-this is right out of the Fed's talking points.

 While the Q's have been doing well today, I'm guessing NFLX earnings had something to do with that (up 15% today) the fact is, there was no positive divergence at the lows, just confirmation of the price trend.

Finally the SPY, again, no positive divergence, just near perfect confirmation of the price trend. Note how much 3C fell in all 3 in keeping with price.

Now, the Russell 2k's IWM

The IWM fell, 3C went higher, this is a positive divergence and that buying by JPM was most certainly accounting for it. As I've said before the Fed has a fascination or obsession with the Russell which I can understand as it is one of the broader measures of US equities.

No conspiracy theories here, you just saw it for yourself.