What's Behind The Rally

A strong mid-morning rally. While ISM a tad better than expected helped at 10 AM ET, and pending home sales were also "less worse" than expected, don't kid yourself.

This rally is mostly due to traders buying financials in front of the FASB mark to market vote tomorrow.

How are we doing?

Yesterday, I looked at autos and housing, and concluded there was still precious little sign of real improvement, though there are some signs of a bottom.

Another way to look for improvement is to follow the money: look at tax receipts, and corporate activity like insider buying and buybacks.

Unfortunately, there is little sign of improvement here as well.

Charles Biderman at TrimTabs tells me that:

1) Corporate activity is low: insider buying is down 70 percent, while announced corporate buybacks are down 80 percent compared to the same period last year. Insiders not buying at prices this low?

2) Cash takeovers are "nonexistent."

3) Tax receipts are down about 5 percent year over year, when adjusted for the tax cut of $800 per family (starts April 1).

4) Corporations are selling a lot of stock and bonds: new corporate offerings are over $2 billion for the third week in a row.

Last week's biggest secondaries included AMB Property (41.2 million shares at $12.15), Simon Properties (17.25 m shares at $31.50, and $650 million in senior notes), and NBT Bancorp (about 1.5 m shares at $22 a share). Two REITs and a bank.

But the offerings are broadening out. This week, American Electric Power says it's planning to offer 50 million common shares (about $1.25 billion). Yesterday, Ingersoll Rand sold $655 million in 5-year notes.

Today, Teradyne is selling a $175 million convertible.

Get the idea? Lots of new stock and bonds being floated, insiders are not buying despite low prices, tax receipts are down.

For people who follow the money, the bottom remains elusive.




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