Tuesday, November 6, 2007

The Quiet Rally

There was no hoopla, no blockbuster story. No, there was little more than a murmur over the outsize gains in US equities today. Strange.

Dow 13,660.94 +117.54; NASDAQ 2,825.18 +30.00; S&P 500 1,520.27 +18.10; NYSE Composite 10,102.41 +143.59

The major averages gained in the range of 1% - usually an occasion for cheering - but the only sound was that of one hand clapping, as the price of oil grabbed headlines once again. Crude was the news, as a barrel of the slippery stuff went for $96.70 at the close of trading at the NY Mercantile Exchange, a gain of $2.72 over the previous day.

Oil at nearly $100 a barrel would normally cause markets to reel in terror, but this is no ordinary market here in the good old US of A, this is a market that's been held in abeyance by the dual forces of sub-prime mortgage fallout and a related crippling credit crisis.

So, it was a surprise to many that stocks did so well today. Well, some stocks. As expected, ExxonMobil (XOM) was the big winner on the Dow, gaining 2.72 to 90.38 at the close. 23 of 30 Dow components were in the green.

On the broader exchanges, advancing issues beat decliners by a 13-8 margin, though new lows continued to hold sway over new highs, 536-276. That's not a good sign, for now, though the margin is better than it was yesterday.

But the market gains were not embraced by investors. Rather there was an uneasy skepticism, especially since the markets creaked eerily into the red just after 11:00 am. After that, though, it was all uphill, for the rest of the day, especially in the final hour, when the Dow tacked on 70 points into the close, with heavy buying in the final few minutes. It was an oddly quiet day for such a dramatic rise.

Were it simple to discern the behind-the-scene activities of the Fed, the Treasury, the serendipitous PPT, the brokers, dealers and underwriters, this game would be to easy. But there was no driver today, no mover, no shaker. Just buying for the sake of buying.

Maybe people were just tired of selling. One would expect an urge to sell stocks might appear sooner rather than later, as the markets have been stuck in a range for some time now, and the downside still makes more sense than new highs.

The gains in gold (+13.00, $823.80) and silver (+0.60, $15.38) were also outlandish and indicative of the crumbling status of the dollar.

US stocks are surely struggling, but today served notice that without direction, people still have some degree of faith.

NYSE Volume 3,893,849,000
NASDAQ Volume 2,545,161,000

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