Stephen Eubanks: Everyone Is Looking for Bad News

Choice quotes from our weekly Wednesday afternoon chat with Stephen Eubanks, founder and principal of MrTopStep and Eubiquity Capital:

"These [momentum names reporting earnings] are all stocks that have had huge runs, and even good news gets hit and you're not being rewarded for taking the risk." "Everyone is looking for bad news; no one is looking for good news. The shorts are the ones that have the problem." "There is a lot of wood to chop up there in that 1250-1260 area [on the S&P 500]. Can we get through it and have a slam-dunk rally into the end of the year? The way that guys are trying to play catch-up, yes. There are a lot of things that can happen, but a lot of the good news, so far, is probably baked into the cake." "My number one question is: how come the VIX is only pricing downside risk?" "As much as you want to come in and potentially be bearish on the market, there is one outlier stock that can hold up the index, especially in the Dow." "That pair trade of long S&Ps and short the TLT and short bonds looks like it's coming into some sort of convergence here. Bonds could attract some interest because stocks have run so much." "It's a really interesting dynamic--how guys are trying to get into the market right now. It's almost like they are being forced in because either they are short or it's a game of catch-up." "I'll be probably one of the only guys that says financials are undervalued and you've got some of the best performance in front of you in that sector."

Be sure to listen to the audio for the complete conversation and tune in again next Wednesday afternoon for more discussion with Stephen Eubanks on market movement and sentiment. MrTopStep is a service for investors that provides real-time access to a network of floor traders from the pits of various exchanges, giving insight on order flow, market color, and technical biases. For more, check out www.mrtopstep.com.