Amazing stuff today....

BenDover Bernanke basically promises the market 50 bips.

But the story wasn't his speech. It was the early break of the embargo ONCE AGAIN to certain "favored" market participants who put on trades AHEAD OF THE RELEASE, which itself was made BEFORE IT WAS SUPPOSED TO BE DONE.

Again - WHERE ARE THE COPS?

Now you know why I have been FLAT at the end of the day, and why I've been daytrading with VERY TIGHT STOPS during the daytime. Expensive? Yes. Very. The commissions going to my broker are something else, but the vast majority of the gains I've made since Christmas are still in my account.

The CNBull****? SHAMEFUL.

Oh sure, they'll run with the leaked story and do what they can to pump the markets, but never do you hear them complain about the blatant lawlessness in front-running via embargoed information that is leaked to certain "favored" parties!

There's an old saying - "Don't Fight The Fed".

Ok.

How about "don't believe our markets are any better than those in Argentina, Peru, the Maldives and various tin-pot dictatorships, where certain preferred patrons (cough-cough) get advance notice so they can front-run?"

Let me guess which Presidential Candidates will call for some handcuffs to be deployed - that'd be NONE, right?

Then, as if one illegally-leaked piece of news wasn't enough (as the pump wore off) we had #2 - BAC supposedly in "advanced talks" to acquire Countrywide (CFC).

Both firms declined comment but the money quote from the "leak" was that one of the sources was in WASHINGTON DC - not New York (or California, where CFC is headquartered.)

WASHINGTON?!

Oh, so let me guess. Bernanke and Paulson don't want to see CFC implode, and they're fixing to. So we arrange a "friendly" acquisition to prevent that.

But where does this leave the common shareholders?

Well from the market's reaction you'd think that Jesus came and walked on water!

Not necessarily.

First off, at $5/share, BAC might have wanted to buy. But NOW, at significantly north of $8? Hmmmm.... that doesn't look so good any more, does it? I think not.

So we got a little problem here - BAC may have been "priced out" by the market!

Or was that the deal contemplated in the first place?

My money is on "NOT" to that one. That is, I expect that the deal here is likely something similar to "BAC buys the servicing business and acquires rights to the name", effectively cutting the head off the horse, and and the rest of the firm is left out on the tree to die!

That's the ONLY way they can shed the liabilities - if you acquire the whole firm you're acquiring a ticking bomb. Getting regulatory approval so that the FHLB doesn't get screwed could be fun tho..... so I'm not at all sure how this plays out.

We shall see.....

Me?

After a series of disastrous trades this morning in the futures market where flags kept breaking the wrong way (heh, I should have learned after the first one and stopped, right?) I started scalping the moves as BenDover was speaking. Getting popped in and out, but I'm so damn gunshy right now that I really don't care about the commissions - clawing your way back from that sort of screwup to a bit over even on the day (all costs in) is almost intoxicating, and I accomplished it today.

There was no "position trade" deal you could make today that worked, except being long before the open - which was a definite high-wire act. The right move in the end, but a high wire act.

This is the sort of bounce and "screw around" market that I expected for the next week or two, by the way. In the technical last night I talked about the probability of a "complex" pattern in the market on the retrace here, and that's exactly what we're getting. This is likely to continue for a while.

Beware the rest of this week and next going into OpEx......

Here's the technical!