This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

JPMorgan, S&P Downgrades Hit Markets: Dave's Daily

JPMorgan (JPM) reported worse-than-expected results, knocking stocks lower. Thereafter rumors and leaks started that S&P was going to lower credit ratings for eurozone countries including France. This is something that's been bandied about for quite awhile. S&P probably planned to do this Friday "after" the close of trading giving investors a three day weekend to digest it. But, leaks from S&P and calls to associated governments about to be downgraded got out and stocks were sold early.

The rating agencies remain a fee conflicted lot just as they were in 1998 on Long Term Capital, 2002 Enron and pals and of course the CDO nonsense. They said they would change after each occasion but never have and won't given their fees. Ask Warren Buffett, owner of 12% of Moody's, if he wants them to change their business model.

The French response to this was rather mild for now. I was expecting a raid on S&P headquarters or baguettes being thrown by the French army but that didn't happen. The only comment from the finance ministry was: "well, we're as good as the U.S." Gawd!!!

What has been interesting, and could have been "the tell" for this market is the light ultra-light volume we've been seeing on the recent stock melt-up. Further, we were getting overbought at least short-term. Banks and financials overall have rallied sharply since the year began. JPM threw cold water on the bull's parade. But let me tell ya...bulls are a resilient bunch.

Other news of perhaps only pedestrian interest was Consumer Sentiment soared to 74 from 69.9. These results came before today's other more chilling events.

Trim Tabs ( must watch) tells us where the flow of money went in 2011. Hint: it went under the mattress to the tune of $889 billion. This is pretty unsurprising but dramatic evidence of investor flight. And this type of behavior is one reason why trading volume is light and dominated primarily by HFTs and machines. Finally, it also explains why the stock market didn't blow a gasket to the downside Friday since all those going ashore have gone.

Gold was modestly lower, the euro much lower, crude oil flat, grains lower and base metals unchanged overall.

After some time S&P started dribbling the country downgrades out one at a time. The entire downgrade list became available not until after 5PM ET and is HERE. One thing perhaps many investors don't realize is this action will cause another chain of events including more bank downgrades and a restructuring of the EFSF (European Financial Stability Facility) and ESM (European Financial Stability Mechanism) given credit rating downgrades of some sovereigns like Italy.

Volume picked-up steam Friday on the news from JP Morgan (JPM) and S&P but it's still below the three month average of 213M shares for SPY. Breadth per the WSJ was negative reversing some overbought conditions.

Follow our pithy comments on twitter and become join the banter with me on facebook.

SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

IWM - The iShares Russell 2000 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the small capitalization sector of the U.S. equity market as represented by the Russell 2000 Index. The index represents the approximately 2,000 smallest companies in the Russell 3000 Index.
See more details

QQQ - PowerShares Capital Management LLC is passionate about our goal of delivering the highest quality investment management available through one of the more benefit-rich investment vehicles ever created, the exchange-traded fund.PowerShares QQQ¿, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®.

See more details

Continue to U.S. Sector, Stocks & Bond ETFs
1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
KBE $36.34 0.06%
KRE $45.57 0.18%
EWQ $24.94 0.61%
EWP $30.19 -0.72%
EWI $14.21 1.14%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs