When we were down yesterday, you saw a lot of action that was totally driven by hedge funds and options programs. You had tremendous pressure on some big-cap stocks to get pushed to strikes. You see it today in DuPont
(DD)
and Exxon
(XOM)
and Microsoft
(MSFT)
(slated for $30?) and General Electric
(GE)
now to the 37.5 strike after the upgrade.
You had raids in all of the ag and oil and mineral ETFs executed by short hedge funds. And you also got a series of margin calls in overlevered hedge funds playing the gold and minerals trades.
Somehow that toxic brew translated in a discrediting of the up-420 day the day before.
It is incredible to me that people are willing to call tops or bottoms on a given day because of the way stocks trade on options expiration week, the most meaningless week of the month and the one that is never a tell.
Here's what I see happening. When you don't have hedge fund liquidations, which I think we had this a.m. on oil and mineral and infrastructure plays, you see lift.
This market is being driven by margin clerks, not for retail but for every hedge fund that has borrowed money.
But the most important thing you need to know is that this market is technically driven, and I do not want anyone to attribute much to this "action"; they should attribute a great deal to the end of the Fannie Mae
(FNM)
/Freddie Mac
(FRE)
anti-ideological antipathy and a sense from the Treasury secretary that, at last, the fundamentals aren't sound.
Random musings: The delayed reaction to Morgan Stanley's
(MS)
good quarter shows you how little you can rely on a given day. ... Housing stocks have been such up stocks that I am beginning to think the fact that none have gone out of business means that they may actually make it.
At the time of publication, Cramer had no positions in stocks mentioned in this post.
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