Dividend.com: Longing for State Street
Dividend Stocks in a Coordinated 'Bear Trap'
Yesterday's sudden drop in names like Northern Trust (NTRS), Bank of New York Mellon (BK), State Street (STT) and Federated Investors (FII) came out of the blue, but it couldn't have been scripted any better.
The panic about the safety of each company's money markets and balance sheets came on the heels of the previous day's story on The Reserve Primary Fund, which had dropped below $1. This fund dropping below a dollar is a very rare occurrence, and the heavy exposure to Lehman Bonds was to blame.
It can be said that the stage was set for shorts to bite on this story, and for several hours yesterday they did, seemingly ignorant of the punishment that was soon to come their way. First came the U.K. story on banning the short-sales of financials, and then came the slowly released news bites from beleaguered companies that everything on the balance sheets was still in good shape. Finally, you had news of the new "Resolution Trust" that got the spike really going.If you are a short-term investor or hedge fund manager, you now have to think 4 steps ahead. The minute the short-selling ban news came out of the UK, you needed to start scaling out of the trade. Did you expect State Street to go from $66 to $1, and as well BK, NTRS, and FII to also go to zero in one day? The hint we were given was that the market should have been down 500-1000 points when these stocks were getting pummeled, but we were barely down 150. The timing of this trap, and the way it was set, from a market's standpoint, was as good as it gets. If you like the short side of the markets, you better know how to time things or you will not be around for very long. Be sure to visit our complete recommended list of the Best Dividend Stocks as well as a detailed explanation of our ratings system.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV