D&D Note (5-18-2012)
Are we near market capitulation? Meaning the point of extreme panic representing the end of a correction. Since breaking technicals today we look to have another 1% to 1.5% down to go on Monday. But watch the G8 meeting over the weekend. It’s still a politically driven global market – and the G8 leaders could come out and say something to calm markets – or spook them.
The downgrade last night of 16 Spanish banks by Moody’s weighed heavily on he markets today. Causing a concern of a run on some Spanish banks.
Facebook (FB) opened today at $42.05 up 11% then fell down to the IPO price of $38 supported strongly by the underwriters. The stock found an upward channel then sold back off down to $38 and bounced off that price by a few pennies into the close where it ended at $38.23. Remember the underwriters will not be creating a support floor come Monday.
Key numbers of the FB IPO:
IPO Price = $38.00
Opening Print = $42.05
Closing Print = $38.23
Intraday High = $45.00
Intraday Low = $38.00
A few questions are raised immediately. Was this a failed IPO? Was this in fact a properly priced IPO by the underwriters? Was this a botched IPO by Nasdaq (COMP)?
Even late in the day 128,000 orders of FB had not all still been confirmed due to a log jam of orders in the electronic channel for Nasdaq. The exchange had traded down 4.5% in result. And began trading down instantly when the Facebook IPO started getting delayed past 5 minutes. Not just retail but also the large brokers hadn’t even received confirmation on their orders or for what price. D&D’s trading terminal was even experiencing connection delays to the heavy flow of activity during the IPO.
Now Nasdaq set up a special hotline phone number to call in if your Facebook trade was never confirmed, 212-231-5100 is the number. All of this is just one more reason why you need “specialists” which are actual humans – and that is what you have on the floor of the New York Stock Exchange (NYSE) and this method has been used to success for 100-200 years.
D&D honestly hopes all readers of this blog paid head to our note of the day yesterday instructing investors to not buy Facebook today in the open market.
Zynga (ZNGA) got hit by circuit breakers on the Nasdaq due to the huge downswing in price over a short time. Normally a 5 min halt when this happens but was halted for 15 min on the Nasdaq. Traders where basically shorting Zynga has a hedge against Facebook.
Salesforce.com (CRM) continued to report better that expected earnings and closed up 8.8% on the day.
Gold continued its post FOMC minutes release rally i.e. after the FED released the minutes of their meeting it was seen that more people started raising the idea of further monetary easing… more printing of money. Gold rose $16.80 to close at $1,591.70 an ounce.
Oil slipped 46 cents to close at $92.10 a barrel.
The DOW (INDU) has now fallen about 1,000 points over the last month. We should be getting near market capitulation and could be setting up for a good summer, a lot of that will be determined by the action of the world’s central banks. Many economists now say that unless there are coordinated actions by all major central banks, monetary easing won’t work for the now global market (we saw some of this coordinated action last year and it did work).
Today the DOW ended down 42 points, The S&P 500 (SPX) fell 6 points, and the Nasdaq was down 23 points.
All eyes will be on the leaders of the G8 countries this weekend, and the central banks. It is days like today when you really start thinking, “how close to us breaking this whole system are we?” And that’s an eye opening question to ask.
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