Market Analysis

Check Mate

While key indices are now making new highs every day it belies the action underneath: One of dearth. More precisely: Participants are lacking. Yes you can jam up a market on no volume and very successfully so apparently:


Apparently it doesn’t take much time to do it either, just a quick jam job in the morning and then camping in a tight range all day:

SPY 5 min

Throw in the occasional sell day and you are ok. What’s it all produce? Nothing really. Trading volumes are starting to hurt the banks:

Goldman Sachs Group Inc. (GS) President Gary Cohn said low volatility and interest rates that are holding in tight ranges have resulted in an “abnormal” trading market.

“The environment for all the firms is quite difficult right now,” Cohn, 53, said today at an investor conference in New York. “What drives activity in our business is volatility. If markets never move or don’t move, our clients really don’t need to transact.”

Citigroup Inc. (C) Chief Financial Officer John Gerspach, 60, said yesterday that second-quarter trading revenue could fall as much as 25 percent from year-earlier levels, and JPMorgan Chase & Co. (JPM) estimated a 20 percent drop earlier this month. Cohn stopped short of forecasting the decline for New York-based Goldman Sachs.

Traders are not much enjoying this compressed action either. It’s a tricky time in the market one that requires patience and discipline. So ironically the banks could benefit from a correction, but alas it’s not forthcoming. Dennis Gartman says so. Or is he? I get confused:


Oh I kid Dennis. It’s a silly market right now. But we know who buys stocks at these prices. The corporate executives who are having a really tough time to operate in an environment that shows little growth despite all the liquidity thrown at it:

retail sales

And so they must make things look better than they are. Reduce the float and buy stocks at all time highs:

Stock Buybacks quarterly

Sure, the snake is eating itself while shrinking Capex and employee headcount where possible:


Well done. The onset of summer is here, with the $VIX near historic lows and banks are thirsting for volatility. Something tells me they’ll get it sooner or later. In the meantime mindless algos are playing chess until one of them check mates:




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