Oil Algos Seize On Rumors

Wednesday featured market moving rumors passing as news.

The day started with little news until a story regarding Iraq calling for another OPEC meeting in May. Non-member Russia denied this would happen. Oil inventories rose 2.1 million barrels but was said to beat most estimates. Oil prices fell nearly 3% until the phony news rallied prices 3% with algos seizing on any sliver of positive news to squeeze early shorts.

Something we’ve discussed on many postings is the WS analysts’ ongoing behavior of posting much lowered earnings estimates that consistently let these estimates be routinely beating. Such was the experience with Yahoo’s (YHOO) earnings—a serial non-GAAP release. The news featured GAAP revenue of $1.08 billion, down $1.22 billion from the quarter a year ago. GAAP EPS slight beat on earnings while non-GAAP earnings fell. That’s the way we roll nowadays.

Stocks rallied overall on non-GAAP earnings and rising oil prices.

It’s a carnival atmosphere on Wall Street these days.

Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).

Volume once again was very light and breadth per the WSJ was positive but money flow was negative.

Chart Of The Day

This post is shortened by interference from many interruptions.

One thing is clear, ultra- low volume combined with severely overbought conditions (see McClellan Summation Index)

Let’s see what happens.