Saturday, March 31, 2007

More Miracle Rallies Keep Equities Even

Just before noon on Friday, the Dow had lost over 100 points, with the NASDAQ and S&P following the trend lower. What the markets were reacting to was not immediately clear, though this session happened to be the finale for the 1st quarter, so there were certainly plenty of brokers and hedge funds clearing the decks.

Just as the decline was beginning to become serious, though, the trend abruptly reversed and all indices began climbing higher. By 2:30, the bulk of the activity was complete and all gauges had advanced to near break even. At the end of the day, the casual observer would conclude, by just grazing the closing figures, that it was a calm and orderly day on Wall Street. It was actually far from ordinary or calm.

Dow 12,354.35 +5.60; NASDAQ 2,421.64 +3.76; S&P 500 1,420.86 -1.67; NYSE Composite 9,261.82 -17.26

The broad indices - the S&P and NYSE Comp. - took the brunt of the blows, ending slightly lower, but the underpinnings of the market remain weak and confused. Investors are torn between conflicting economic reports, mostly positive, though with an inflationary undertone cutting into the euphoria.

When all was said and done, the day ended in no decision, mired between the recent highs and lows, apparently satisfied to wait until corporate earnings begin flowing next week. There are varying degrees of hope and trepidation in most camps, which augurs for a volatile earnings season this quarter.

Oil remained tame for at least one day, settling at $65.87, ensuring at least that the rapacious prices at the pump will continue for some time. The high price of crude - and gasoline - continues to damper enthusiasm in the U.S. economy.

Silver and gold both made small advances, but remain stuck in no-man's land, just like the U.S. equity markets.

Thursday, March 29, 2007

Soft Bounce For Stocks As Oil Jumps Again

After significant selling over the past two sessions, the Dow, NASDAQ, S&P 500 and NYSE all posted modest gains on Thursday. Volume was again moderate, but better than what it has been. Once again, the NASDAQ caught the short straw, making up less than a single point. It's interesting to note that NASDAQ stocks, of which many are young tech companies and thus, somewhat speculative, are the laggards here. Apparently, market movers want more stability than risk. We are still in a risk-averse, tepid market. Gains are going to be difficult to come by.

Dow 12,348.75 +48.39; NASDAQ 2,417.88 +0.78; S&P 500 1,422.53 +5.30; NYSE Composite 9,279.08 +60.55

Advancing issues held sway over decliners by about a 3-2 margin, and there were 237 new highs to 97 new lows, roughly in line with the past few days. As always, a sharp eye is out on the new highs-lows ratio. Nothing remains steady for very long, so when this begins to turn, we'll all be aware that something big is happening.

At the moment, market sentiment is still nervously negative. Upward momentum is far from evident and there hasn't been follow-through on many of the up days.

Today's rise was nothing short of more market pumping by institutions, who still naively believe that mammoth profits for Big Oil must be good for them. It's difficult to wrap one's mind around this kind of clubby thinking, but it exists - today is yet another example as the price of crude leapt ahead $1.95 to close at $66.03 on the NY Merc. Shameful.

Stocks should have taken another wallop, but the manipulators were in early and kept indices in the green all day long. As pointed out yesterday, Big Oil is the bane of the American consumer, and sky high gas prices will send the fragile economy into a death spiral if not contained soon.

To dispel the myth that all commodities move in unison and that markets are not rigged, gold and silver both sold off today, though the hit on gold was larger, drooping $5.30 per ounce to $667.60. Silver lost only 12 cents to fix at 13.34. Both of the shiny metals are still rangebound and nowhere near breakout or breakdown.

Hard to believe tomorrow is Friday and the end of the trading week. The tally for up days vs. down since the beginning of the correction is now close to even at 14 down, 13 up. Regardless of that tight race, the Dow, even after today's gains, is down nearly 450 points over the past 6 weeks. Those number don't lie.

Wednesday, March 28, 2007

Well-greased Skids

If the price of oil goes up much more, the Dow and other US equity indices will readily slide down that slippery slope. The traders know this, investors know this, even the oil executives know this is true and that's the #1 reason the price of oil isn't going to go through the roof.

Oil executives are not fools. They realize that in a slowing economy, they can't be out there greasing the skids with higher fuel costs (well, not too high, anyway), because there's a breaking point and we're getting pretty close to it. The big oil companies charge higher than market prices because they can. Congress and our lax regulatory agencies allow them to effectively rig prices so as to effectively maximize profits. They are not, however, the only corporations with skin in the game. After a while, some of their corporate brethren might want a piece of the greed gravy train as well. If the oil companies siphon off all of the disposable income in the economy, there's little to nothing left for the Wal-Marts, Citigroups and Microsofts of the world because the Exxon-Mobils are taking more then their fair share.

Big oil has been getting fat at the public trough for a long time, but they've really beefed up recently. And they've done so at considerable expense to everyday consumers, governmental bodies and other corporations. It's time for the oil companies to make a little less money and act a little more like responsible corporate citizens for a change (I know, it's very wishful thinking.).

The handwriting is on the wall, and has been for some time. The US economy would be in much better shape if people were spending 20% less for fuel (and not just gas, but home heating oil and natural gas, too) than they are now. The oil companies in the US are an effective monopoly or cartel and Congress should have taken action long ago to curtail their illegal price-fixing operations. Big oil can profess all they like that the refineries aren't operating at full capacity or that they have no control over the price of oil. Unfortunately for them, nobody's buying that argument any more, but it's going to take a pretty big scare on Wall Street for them to mend their ways, and that scare has begun.

Today's trading was more of what we've become accustomed to over the past six weeks: sluggish and lower, pessimism abounding, plenty of rational reasons. The elephant in the room still remains big oil. They're a drag, both in real terms and euphemistically. High fuel prices are getting old and stocks are taking a beating on it. Wealth is not very evenly distributed and there's little new money coming into the markets. Big oil is sucking the life out of the economy.

Whether the oil execs are smart enough, visionary enough, to understand how they'll be damaged in an outright recession remains to be seen. Keep an eye peeled on oil prices, which shot up another $1.15 to $64.08 today. That's now about $6-8 per barrel higher than the economy can handle. Forget about a crash in housing prices. That's a fait accompli. $3.00 per gallon gas will just be more fuel on the fire and will, without a doubt, drag the nation into a recession. While it may already be too late, some relief at the pump would be more than just welcome, it may be necessary.

Dow 12,300.36 -96.93; NASDAQ 2,417.10 -20.33; S&P 500 1,417.23 -12.38; NYSE Composite 9,218.54 -70.25

After Monday's negligible trade, Tuesday and Wednesday have cost the Dow and the other indices anywhere from 1 to 1.5% for the week. After rocketing up 370 points last week, the Dow's given back more than half, 180 points, this week, but still 225 points ahead of the March 13 low point of 12,075.96. There's little doubt that number will be tested again, and soon. First quarter earnings are due to make their way to the street in a week's time, and the trickle down could easily turn into a deluge. Corporate profits have been solid, maybe too good, because companies have some tough numbers to exceed from a year ago. Many will not make the grade.

Wednesday's market internals were nearly a carbon copy of Tuesday's. declining issues were ahead of advancing ones nearly 2-1, with 207 new highs versus 91 new lows. Pessimism is spreading, however, as down volume was 3 times up volume. Traders are getting very picky and that's not generally a sign of a healthy market. The remainder of the week could turn out to be very discouraging indeed.

Today's economic events - a 2.5% rise in durable goods orders and a slackening of crude inventories were just enough to keep buyers on the sidelines. Tomorrow, the government finalizes 4Q '06 GDP, and the tepid pace of 2.2%, if confirmed, will only serve to dampen attitudes. Initial claims may have some effect, but only if it's very much a negative. Friday's miasma of reports, from Personal Income to the Chicago Purchase Manager's Index, may just tip the markets over the edge.

Of course, much more of the now non-stop nonsense emanating from our nation's capitol may prove to be the unseen straw that breaks the camels back. We have a dysfunctional executive branch being hounded by an impatient Congress, all of it heading for a nasty cataclysm. There are a lot of angry, bitter, upset people out there who are certainly not in any kind of mood for any more distasteful news. The American people are fed up and the discontent is growing.

Be prepared for some very unsettling days and weeks ahead.

A Little Dose of Reality

As opposed to yesterday's PPT-inspired afternoon rally, the US equity markets today reflected something closer to the reality of the functional economy. Once again, the NASDAQ took the brunt of the blows, but the blue chips of the Dow weren't far behind on a percentage basis.

Dow 12,397.29 -71.78; NASDAQ 2,437.43 -18.20; S&P 500 1,429.61 -7.89; NYSE Composite 9,288.79 -52.57

Declining issues overwhelmed advancers by a more than 2-1 margin and the new highs were kept to a 4-session low of 221, while only 78 issues hit new lows. The markets are still mired in a trench between recent high and low marks, awaiting some kind of economic or political news to break out one way or another.

While only the bulliest of the bulls believe that another new top can be put on this market, the bears still seem to be in semi-hibernation. Neither the China chain-reaction nor the sub-prime blow-out seemed to be enough to ignite increased downside pressure. Volume has been particularly tame on days the indices have risen, so there's at least some indication that the perma-bull mentality has been partially put to rest in some quarters.

In an interesting note on market forces, the consumer confidence reading today from the Conference Board (107.2, down a full 4 points from February's 111.2) seemed to be the main driver. That a soft indicator that market movers should be out in front of makes one wonder who's really in charge on Wall Street and whether the traders actually know what they're doing.

Don't answer that until after earnings season is well underway (April 20th should do) and the market has moved past either February's highs or March's lows.

Maybe the real answer lies not so far from the self-service pump at any of the thousands of gas stations in the US, or in the millions of utility bill envelopes on the tail end of a brutally cold winter. No wonder consumers are feeling a little less warm about their economic futures, as property taxes, auto fuel and home utilities continue to eat away at disposable income.

At least oil prices spent the day dithering about the future, gaining only 2 cents to end at $62.93, still a solid $5 higher than where it should be. Perhaps tomorrow's crude inventory reading will dispel any notions of gouging the US population into $3.00 a gallon gas any time soon. Consumers have had just about enough of high energy prices and markets and market makers may be about to wake up to that factoid.

Gold and silver barely budged. They're in a precarious position, much like stocks, with nowhere to go but lower.

Monday, March 26, 2007

Charades, Anyone?

How many times do we have to see this same pattern before we all become complete skeptics?

I pose that question in response to the unusual market movements today which saw all US Equity indices fall sharply at 10:00 am when the
Commerce Dept. reported new home sales fell 3.2% in February. The number of new homes sold in the month was the lowest since June 2000.

At the time, (yeah, they're probably in on it) said this:
Even though the data do not mean that the housing market is crashing and will pull the overall economy into recession, the broader perspective shows that housing is still in a correction and will remain a moderate drag on real GDP for several more quarters.

Yes, that's laughable, along with exhibiting very poor grammar skills. "Moderate drag" my behind.

With this quick drop-off (the Dow was down more than 114 points by 11:00 am) in mind, let's take a look at how the indices closed on Monday:

Dow 12,469.07 -11.94; NASDAQ 2,455.63 +6.70; S&P 500 1,437.50 +1.39; NYSE Composite 9,341.36 +2.96

Now, it doesn't take a genius to conclude that something, somewhere, somehow made the majority of traders feel more secure about buying stocks after noon. It's also not a reach - after the Plunge Protection Team, otherwise known as the President's Working Group on Financial Markets has been mentioned with some frequency of late - to believe there are nefarious forces at work, vainly attempting to keep struggling US stock markets afloat.

Manipulating stock markets is not new, nor is it impossible. There are people, corporations and governments which would think it virtuous to rescue the financial markets from imminent collapse. However, continual, systemic pumping of US markets to sustain a bull market that is already bordering on an absurd length of time (53 months), is quite another thing.

It's not like putting a temporary support - akin to Greenspan's famous 1% "emergency" federal funds rate - under the markets to assuage fears; it is more like extended tinkering with the wheels of commerce, which, after a while, look nothing like what they were originally. Piecemeal adjustments eventually lead to situations in which chain reactions cannot be averted, kind of like fixing various parts of an old clock. In the end, something's going to break that can't be fixed, taking down all of the other "little fixes" along the way.

In any case, whatever evil lurked below 12,350.00 on the Dow was negated by the movers of markets. In a real world, as opposed to our current bizzaro-war-on-terror-take-off-your-shoes-at-airports-world, the Dow would be hovering in the 10,800-11,500 range, and people would be really concerned about their investments. But, thanks to the PPT, no worries!

Besides, crude oil for May delivery is only 62.91 (+0.63 today). Gold and silver were also up and hey, Georgetown's in the Final Four. What's to worry? Be happy.

For more on the President's Working Group on Financial Markets, either Google that term or the term Plunge Protection Team or read this interesting article at the link below (fair warning: it's a PDF):
Move Over Adam Smith: The Visible Hand of Uncle Sam

Mod Market: Updating...

"Cars and girls are easy come by in this day and age,
Laughing, joking, drinking, smoking,
Till I've spent my wage."

-- The Yardbirds, Over, Under, Sideways, Down, 1966

The year was 1966. Gasoline was 35¢ a gallon. A new car would set you back around $1500. The Dow was trading in triple digits. The British rock invasion was well underway. Life was good; you could spend your paycheck on booze, cigarettes and loose women and not worry about next week.

How times change. Gas and cars are now 8-12 times more expensive. $1000 invested in the Dow in 1966 would be worth $18,000 today. No wonder we're not all millionaires. While the Dow and stocks in general have outpaced inflation, they barely did so. Which brings us to Friday's close...

Dow 12, 481.01 +19.87; NASDAQ 2,456.18 +4.44; S&P 500 1,436.11 +1.57; NYSE Composite 9,338.40 +24.58

The major indices showed nifty gains for the week, though they're still below the mid-February highs. It's the way this market has been for over a month now, a corrective phase that's yet to play out fully. Friday's volume was the weakest of the week, underscoring the relatively tame gains. Traders are still uncertain of the direction here and skeptical of future gains.

Somewhat depressing for traders - and everyone else for that matter - is the continuing high price of gasoline at the pump, and the recent one-day spike (from $56 to over $60) when the crude oil futures turned over from April to May. Apparently, those controlling the price of oil are afraid that Global Warming will kill us all, and are trying to beat the environment to the punch.

This market continues to bounce around: over, under, sideways, but mostly, down.

Thursday, March 22, 2007

Split Thursday as Oil Pumps Higher

There's just no turning the suckers away from the blue chips of the Dow it seems. While the other major indices were slightly lower, the Dow gained a little, just to keep hopes alive.

The major news came from the oil fields today, where crude for May delivery added 2.08 to end the day at $61.69. It seems that our beloved oil barons can't get enough of our greenbacks. Sooner or later, the price of oil and gasoline will cause a major implosion in the economy, unless, of course, it already has and nobody's admitting it yet.

Dow 12,461.14 +13.62; NASDAQ 2,451.74 -4.18; S & P 500 1,434.54 -0.50; NYSE Composite 9,313.82 -3.91

But whatever happens with the price of oil and the health of the economy still doesn't seem to be worth enough attention to slow down stocks. Naturally, interest rates staying in the same position they've been for nearly a year can spark a 150+ point rally.

Considering the folly of the people pushing stocks ever higher, one can only gawk at the valuations. Regardless of the relative health or malaise of the overall economy (it's OK, but not great), investors seem bent on buying no matter the cost. There's a problem there, in that folly is almost always followed by disaster, and that could just be looming with the spate of corporate earnings about to be announced.

We'll know more in about two weeks when corporations begin rolling out their 1st quarter results. There was a little taste of that today as Motorola warned investors that they would return results below estimates. Boo-hoo. More to come.

Wednesday, March 21, 2007

Fed Does Nothing, Stocks, Oil Skyrocket

The Federal Open Markets Committee, the arm of the Federal Reserve that regulates interest rates, decided to do nothing today, keeping the federal funds rate steady at 5.25%. Upon the release of the non-news announcement, every trader on Wall Street apparently began buying everything they could in the 1 1/2 hours remaining in the session.

The Dow shot up 175 points in the 45 minutes after the Fed non-movement. Never has there been so much ado about nothing. Shakespeare would have been proud!

If this is the reaction that the markets are going to display towards what is essentially a non-event (and they do it time and again), one wonders what some real news might produce.

Dow 12,447.52 +159.42; NASDAQ 2,455.92 +47.71; S&P 500 1,435.04 +24.10; NYSE Composite 9,317.73 +159.46

It was as though somebody (Ben Bernanke) waved a magic wand over Wall Street and all the problems of the past 6 months were magically wiped away. Maybe it's the nation's penchant for selective short term memory loss, but it was just four weeks ago that the Dow lost more than 400 points, and less than 2 weeks ago that the sub-prime mortgage lending blowup began (and hasn't ended). Why, it was less than a week ago that the Producer Price Index (PPI) rose by more than double what the experts had been predicting.

Maybe there are a lot of suckers out there. Maybe the correction is really over after just a 6-8% decline on the major indices. Maybe after 52 months of a steadily rising bull market, a one month respite is all this market can handle.

Maybe I'm wrong, but there certainly seems to be a great deal of really, really, stupid money out there. Stupid isn't even the right word to describe today's trade. Insane, criminally insane, might be closer to the truth.

Advancers trounced declining issues by nearly a 5-1 margin. New highs outpaced new lows 380 to 71. That's a pair of numbers which would normally have me shouting "turnaround" but the drama of today's metoric rise is lost on me. I'll call the end of the correction when it actually ends, not when some monstrosity of market mockery says it's over.

Amid all the late afternoon hoopla over the Fed's indecision, nobody noticed (or cared) that oil was up sharply, as the April contract expired yesterday at $56.60. Today's new May futures contract has oil at $59.61, only a $3/barrel increase in one day. Yes, sir, there certainly is a load of stupid, ignorant, moronic money out there, and most of it is in the form of Mr. and Mrs. Average Joe American's retirement plans.

Good luck with that!

Tuesday, March 20, 2007

More Gains for Stocks

US indices registered their second straight day of gains in anticipation of the FOMC policy statement Wednesday afternoon. Essentially, the market is celebrating the Fed doing nothing, so the adage, "no news is good news" is applicable to this market.

The Fed governors, as is their wont, will have a teleconference tomorrow and proudly announce that the economy is in good shape, nothing to see here, all's well, and traders will go back to doing what they do best, i.e., buying and selling stocks. It's a little like a Samuel Beckett play over three days, but with a lot less drama. Or, put another way, with nothing better to do, investors buy stocks. Would that it were always so easy.

Tuesday's gains were roughly half of Monday's and they were made on fairly modest volume, indicating that there's no big rush to snap up bargains here, as some of the more bullish analysts would have you believe. There's got to be more than a non-movement by the Fed to really incite buyers. At least that's what the charts and market internals are saying.

Dow 12,288.10 +61.93; NASDAQ 2,408.21 +13.80; S&P 500 1,410.94 +8.88; NYSE Composite 9,158.27 +67.27

All of the data lined up today in the bulls' favor. Advancing issues outflanked decliners by an 11-5 margin, and new highs overwhelmed new lows by an overall 247-82. Regarding that last reading, it's going to stay that way until there's another batch of selling and a retest of the 12,050-12,100 level on the Dow.

The correction that's now reached 5 weeks has run out of horror stories and selling scenarios. While the recent news and economic reports haven't been particularly stellar, neither have they been gloomy. Mostly, there's been a general dearth of news, positive or negative, giving most of the investors entertaining worrisome thoughts of closing positions pause.

With the Fed unlikely to do or say anything market-moving, the pause will likely continue, making this third full week of March one of the slowest of the young year.

Helping stocks regain some of their lost footing is the price of oil, which gained a mere 14 cents today, closing at $56.73, a relatively tame number. Another 3 or 4 dollar fall in crude could actually spark a rally, though nobody is basing any hopes on such an occurrence.

Gold gained 4.70 to $659.00 and silver added 0.14 to $13.37, but the precious metals remain stuck in what has become a ten-month old rut. Gold hit a multi-year high of $741 late last April. Since then, it's dropped below $600 briefly a couple of times, has yet to pierce the $700 mark and still isn't close. That's the problem with hedges such as metals. Sometimes there's nothing much to hedge.

Monday, March 19, 2007

Another Big Monday for the Dow

After ending last week with modest losses, the Dow and other major US equity indices raged higher on Monday, with blue chips in the lead. The tenor of the trade was eerily similar to last Monday's in which the Dow headed higher before noon, leveled off and sold off slightly into the close.

The only difference was that there was no late afternoon selling. The Dow remained close to its highs for the day from 11:30 onward.

Dow 12,226.17 +115.76; NASDAQ 2,394.41 +21.75; S&P 500 1,402.06 +15.11; NYSE Composite 9,091.00 +107.99

Volume showed a less-than-enthusiastic buying crowd, though advancing issues swamped declining ones by a 5-2 margin. Last week's trend in the new highs-new lows metric has now completely reversed for the third time in four weeks, with new highs posting a 209-96 advantage on the day.

With the Fed set to issue a statement on interest rate policy on Wednesday, today's buyers seemed confident that last week's alarming PPI numbers were muted by the tame CPI reading and that inflation is still not a problem. That said, there's almost nobody on Wall Street who thinks the Fed will either raise or lower rates this week.

The market may have to search for a catalyst as the only other meaningful data out this week (beyond the scores of the NCCA tournament games) are in the housing sector, a market segment that's already seen more than its fair share of battering over the past month.

So, investors will have to do what every good investor must in times like these: wait for signals. The problem is that there may not be many signs being flashed on the exchanges until quarterly earnings begin rolling out in three weeks. It will be interesting to see what traders occupy themselves with, barring any meaningful news or earth-shaking announcements.

In what's possibly been the best news of all for this shaky market, the price of a barrel of crude oil continued to fall on Monday, closing down another 52 cents to $56.59. Gold and silver, the precious metals usually-referred to as the best defense against inflation, posted negligible gains.

If we continue to follow the recent market pattern, today's gain will become rather meaningless by mid-week. Monday's mirthful mood could turn into more frustration by Friday as the correction continues into week 5.

Friday, March 16, 2007

Stocks Sag Again at Week's End

US equities lost ground in Friday's session, culminating in the third down week in the last four. Today's losses were contained, with the Dow losing just less than 50 points while the NASDAQ and S&P were only down single digits. The Dow was down 166 points for the week. By contrast, the NASDAQ lost only 16. Blue chips are beginning to feel the pain of a weakening economy. Only 9 of the 30 Dow components showed gains on Friday, the highest being a mere 21 cents by both Wal-Mart and Hewlett-Packard.

Dow 12,110.41 -49.27; NASDAQ 2,372.66 -6.04; S&P 500 1,386.95 -5.33; NYSE Composite 8,982.73 -22.52

Market internals were mixed, as declining issues outpaced advancers by better than a 3-2 margin. New highs stayed ahead of new lows, barely, 145-112.

While sub-prime mortgage lending woes taking the better part of the headlines this week, the undercurrents of inflation, reduced investment flows and upcoming 1st quarter earnings and economic reports are keeping investor sentiment in an extremely cautious posture. With only 2 weeks left in the 1st quarter, if market performance is any gauge, we're in for a rough ride the remainder of the year.

While there are still analysts out there touting stocks and sounding cherry, they're voices are becoming fewer and the commentary increasingly couched in more restrained language. The long running of the bulls is over (officially ended on February 20), and the reality of the correction and the possibility of a protracted bear market is beginning to sink in.

The price of crude continued its week-long slide, losing another 44 cents on Friday to end the week at $57.11. Gold closed at 653.90, +6.80; silver finished the week at 13.22, +0.14. A slowing economy would not augur higher petroleum prices, proving that there indeed is a silver lining inside every dark cloud.

Thursday, March 15, 2007

Climbing the Worry Wall

US indices groped higher on Thursday, the 7th winning session of the last 17, dating back to the Dow's all-time closing high of 12,786.64 on February 20. And therein lies the story. Though the markets have not lately shown a preponderance of down days, the average is lower by more than 600 points in just over three weeks.

Today's slight gains were indicative of an unsure market.

Dow 12,159.68 +26.28; NASDAQ 2,378.70 +6.96; S&P 500 1,392.28 +5.11; NYSE Composite 9,005.25 +46.64

The Producer Price Index (PPI) for February increased by 1.3%, well beyond the market estimate of 0.5%. Food costs showed their largest monthly increase in more than three years. Core PPI rose 0.4 percent. The Labor Department's CPI will be released tomorrow. The reading raised more inflation concerns and speculation of a possible Fed rate increase. The FOMC of the Federal Reserve Board meets next week to decide on interest rates, though consensus opinion says the committee will keep the federal funds rate steady at 5.25% - the rate member banks pay on overnight loans from the Federal Reserve.

The FOMC last raised rates - to their current level - in June of 2006. In their five meetings since, they have made no change to the federal funds rate.

Despite the scary inflation news, investors bid up stocks, though not with great enthusiasm. With residential real estate now in a prolonged decline, capital inflows may be affected as middle to upper income investors express caution with other investments. The expected volatility tied to quadruple options expirations on Friday failed to materialize, seemingly having played itself out during Wednesday's wild ride.

Advancing issues outdid decliners by better than 2-1, and the measure of new highs to new lows flipped back to the positive, 154-88.

Crude oil continued to lose value, dipping 61 cents to $57.55. Gold and silver both notched gains; gold was up $4.60, silver added 25 cents.

Wednesday, March 14, 2007

Not-So-High Noon Sparks Rally

US markets, following the lead of markets in Asia and Europe, were battered during the lunch hour - usually a relatively quiet time for Wall Street - but staged a remarkable rally to close higher. The Dow, which had been vacillating around the no change line all morning, suddenly fell a full 50 points between 12:00 and 12:15 pm Eastern, with the other indices manifesting similar patterns.

The Dow would soon afterwards drop 130 points into the red, but around 1:00 began on a steady, miracle march higher which appeared out of nowhere, on no news, without reason. The rally led the indices into positive territory, though hardly enough to erase yesterday's battering or economic concerns.

Dow 12,133.40 +57.44; NASDAQ 2,371.74 +21.17; S&P 500 1,387.17 +9.22; NYSE Composite 8,958.60 +31.72

While overall breadth was positive, it was hardly so, with advancing issues beating decliners by about a 5-4 margin. What makes skeptics of analysts are days like today with numbers like this: New highs: 95; new lows: 266. That particular metric, which rolled over into the negative yesterday, is shouting out the direction of this market. Today's suspect rally notwithstanding, the market continues to drift lower as the housing market dries up and the US economy heads into a slow-growth (at best) period.

The sub-prime contagion has spread now into stocks beyond financials. Both H&R Block (HRB) and General Motors (GM) were beaten down early in the day by investors due to exposure concerns. Block, the nation's largest preparer of tax returns, also makes short-term, high-interest loans based on tax refunds while GM announced that they would spend up to $1 billion to cover losses by their part-owned GMAC lending arm.

H&R Block was down more than 1.5 points (>7%), but rallied sharply to end in the green. GM was down 91 cents before recovering to close -.26.

Much of today's trade was based on spin and speculation over the depth of the sub-prime problem, but moreso in anticipation of Friday's quadruple witching day, when index options, stock options, index futures, and single stock futures are set to expire. There was a higher than usual interest in arbitrage of stocks and futures today. Many were caught in a bear trap at midday as stocks sunk, then quickly rallied on short covering. It was a day-trader's day, for sure.

Some traders hunted and bagged what they consider bargains, though coming days may prove they were in the market prematurely. The Dow slipped below 12,000 briefly and that downdraft will no doubt be retested.

Oil bounced around all day, eventually closing up 23 cents to $58.16. Gold lost another 6.90, to end up at 642.50. Silver lost .13 to 12.83. Both precious metals are headed for bargain territory. Silver is just about at its interim support level, and a fall through $12.75 could spark further selling into the $10-12 level; gold may have further to fall, with support in the $600-625 range.

After today's spectacular trading range of nearly 200 points (almost 400 over the last three sessions), just about anything could happen on Thursday and Friday. Stay close to that trade button.

Tuesday, March 13, 2007

Sub-prime Submersion

As noted yesterday, dark clouds appeared over Wall Street in the form of defaulting sub-prime lenders, notably, New Century Financial (NEW), and sent the indices reeling on Tuesday.

New Century, which specialized in sub-prime mortgage loans, said on Monday that it may not be able to meet financial obligations of more than $8 billion. Trading on the shares were halted at 1.66 Monday, a loss of more than 96% from its high of 51.97, reached about a year ago. The stock briefly traded higher than 60 in December 2004. Trading continued to be suspended on the issue throughout Tuesday as the NYSE considered delisting and a criminal probe was initiated.

It was a truly horrible day to own stocks. The Dow, S&P, NASDAQ and NYSE Composite all opened lower and continued selling throughout the session, closing at or near the lows of the day.

Dow 12,075.96 -242.66; NASDAQ 2,350.57 -51.72; S&P 500 1,377.95 -28.65; NYSE Composite 8,926.28 -194.05

According to, shares of Bear Stearns (BSC), Lehman (LEH) and Morgan Stanley (MS) experienced losses of 6% or more on exposure to the bad debts of the beleaguered sub-prime market.

Apparently, the damage from mortgage defaults is more severe than those involved have been letting on. It's been suggested that as many as 25% of sub-prime mortgages initiated between 2003 and early 2006 - at the height of the real estate boom - may result in foreclosure and default.

The fault lies not only in the borrowers, whose desire to own an American home outstripped their ability to pay, but in the lenders, whose shady dealings and unethical practices put people who could scarcely afford them into homes with little or no down payment.

The terms of some of these loans are so onerous as to make normal lenders shriek with horror. Interest only loans with increasing principle were all the rage near the end of the boom. Another contributing factor was the rampant speculation on housing which pushed prices beyond normal affordability.

Real estate prices in some of the more overheated markets, such as Southern California, Washington, D.C., Boston and Florida, will take years to weed out the excesses. Homes that typically were selling in the range of 400,000-500,000 in 2005, today will fetch little more than half that amount, leaving many homeowners upside down - mortgage balances higher than the value of their homes. With unappetizing options of staying put and paying or selling at a loss, there are serious grumblings in suburbia.

Of course, with every loser there is a winner or two. Those homeowners who sold at the top of the market and downsized are likely ahead by tens of thousands of dollars. But there's little to no free cash floating around for investment in stocks, and that's crippling Wall Street today and will have a longer term affect as the housing bust deepens.

As this correction and mortgage blow-up extends, more days like this should be expected. Suburban middle and upper-middle class homeowners with little disposable income is not going to boost the economy. On the heels 4th quarter 2006 GDP growth of merely 2.2%, the 1st quarter of 2007 isn't shaping up to be much better. When economic indicators - like today's stalled retail numbers - begin to show little to no growth or outright declines, the other shoe shall have fallen.

Almost unnoticed amid the carnage was another decline in the price of oil, which lost 98 cents to close at $57.93, its lowest close in 3 weeks. Gold and silver continued their long, slow, clumsy, rangebound trade. Gold ended fixed at 649.40, -0.90. Silver ended the day at 12.96, a loss of 13 cents.

Declining issues outpaced advancing ones by a nearly 5-1 margin, while the measure of new highs to new lows flipped over, an ominous signal going forward. There were a combined 154 new highs to 225 new lows on the NYSE and NASDAQ.

New lows must reach a number beyond 350 before a bottom can even be considered close. We're not there yet. In fact, the Dow is still above the March 5 interim low of 12,039.11. There's more - probably much more - selling to come.

Monday, March 12, 2007

Three in a Row for the Dow, but Trouble is Brewing

Could the markets be on to something? The Dow Jones Industrials rose for the third consecutive session on Monday, adding 42 points and with that, completing a 2% gain off the lows of last week.

Dow 12,318.62 +42.30; NASDAQ 2,402.29 +14.74; S&P 500 1,406.60 +3.75; NYSE Composite 9,120.93 +25.94

As we see from the numbers above, the other indices tagged along for the ride. And what a nice ride it was, though most investors thought better of it. To say that the volume was thin would be overstating the case. Especially on the NASDAQ, it was nothing short of anemic.

But the markets made the best of it, putting on the bravest of brave faces and likely cheering the drop in the price of oil, which fell 1.14 to $58.91, a welcome number for anyone who owns (or is paying off a 6-year loan on) a car.

In the absence of any noteworthy news, little things could make a huge difference in this directionless market. Some of the smallest things are little movements in interest rates, which are heading higher thanks no doubt to the seeming end of easy money, particularly in the mortgage arena. There, a company called New Century Financial Corp. is about to go completely belly up, taking down $8 billion in bad money with it.

What worries Wall Street is that New Century's collapse could cause a tsunami in financial markets. The company specialized in sub-prime loans, or more succinctly, mortgage loans to people who probably shouldn't have them. CNNMoney has a good article on the subject.

New Century originated many of these sub-prime loans, packaged them up and resold them to other willing buyers on Wall Street. Among the companies with financial agreements with New Century are some which should know better, like Morgan Stanley, Credit Suisse, Goldman Sachs and others. These giants will be able to absorb whatever shock might occur in a default or bankruptcy by New Century, which seems all but certain, but the damage will spread.

Lenders will tighten up requirements for home buyers, interest rates may hitch up a bit, people get worried and everyone goes home losers. At a time when the economy is cooling off to a significant degree, the last thing the suits on Wall Street need is a soft real estate market, rising interest rates and sour-pussed bankers.

There's a bit of unraveling about to happen and it will only fuel selling into an already unsteady market. Get ready for another 3-4% decline on the major indices over the next few weeks. I've said it was coming and here it is, on a silver sub-prime platter.

Saturday, March 10, 2007

Much Ado About Nothing

Friday's lackluster employment report contributed to a day of see-sawing on the major exchanges and fairly flat results. The report came in just below expectations of 100,000 new jobs and the market was unimpressed overall.

Dow 12,276.32 +15.62; NASDAQ 2,387.55 -0.18; S&P 500 1,402.85 +0.96; NYSE Composite 9,094.88 +16.34

Traders chose to wait until Monday to seek direction and clues, though March is more a month in which more people watch college basketball than the Big Board and little economic news is on the horizon. The markets will have to fend for themselves for most of the week, as PPI and CPI figures won't be out until Thursday and Friday, which is also a triple-witching day.

Oil took a welcome dip of -1.59 to close out the week at 60.05/bbl., but not even that welcome news was enough to spark the indices, a troubling sign for equities.

Gold and silver were also marginally lower. Monday and Tuesday could become volatile should any direction be ascertained. Stay tuned and close to the trade button.

Thursday, March 8, 2007

One for the Bulls

Thursday will look like a fairly positive day on paper, but without the assistance of a daily chart, one would never know what really happened. The markets generally behaved just as the Dow did, gapping higher at the open then settling into a narrow 30-40 point range before selling off on heavy volume in the last 1 1/2 hours.

It appeared to be organized buying by the brokerages without much outside interest.

The upside trade was more pronounced on the NYSE than on the NASDAQ, where advancers beat decliners by a 3-1 margin. On the NASDAQ it was only 3-2. Still, the numbers look fairly solid all around. New highs outnumbered new lows 177-104.

Any hesitancy was likely attributable to tomorrow's much-anticipated monthly non-farm employment data for February. Investors stood pat rather than placing serious bets. With tomorrow being the end of the week, traders may not be ready to jump into what's still a troubled scenario. The wounds from last Tuesday's near-meltdown are still fresh.

Dow 12,260.70 +68.25; NASDAQ 2,387.73 +13.09; S&P 500 1,401.89 +9.92; NYSE Composite 9078.65 +79.45

It's worth remembering that today's higher close was only the third in the last 12 sessions. That little nugget is still firmly planted in the back of many a trader's brain. The markets will need a number of consecutive trading days or a test of resistance around the 12,350 range or both before confidence is restored.

With no support in this range, the next congestion point is likely to be around 11,450-11,500, which is why anyone with an eye for charts is a little worried. There's no support between here and there.

The good news for US equities is that foreign markets were also higher on the day. The bad news is that everybody would like to play follow the leader, but haven't yet determined who's leading.

Oil, gold and silver barely budged, though oil was slightly lower while the metals were up, an encouraging sign.

Tomorrow will be important not only for the labor news but whether the markets can string two winning days together.

Wednesday, March 7, 2007

Blind Men Leading the Clueless: Late Day Selling Sinks US Equities

Yes, indeed, the dead cat bounced yesterday, but it lost its legs in the process. The follow-up to Tuesday's one-sided trade up was a complete dud. While the Dow briefly traded nearly 50 points higher, at the end of the day the sellers took all US equity indices back into red territory.

Dow 12,192.45 -15.14; NASDAQ 2,374.64 -10.50; S&P 500 1,391.97 -3.44; NYSE Composite 8,999.20 -6.81

The short leg today signify little buying interest. Any other explanation should be viewed with appropriate skepticism. Following the meltdown of Feb. 27, yesterday's rally was simply relief, as I said clearly and emphatically yesterday.

But here's a direct quote from (I believe), which posts directly to the market overview page on Yahoo! Finance, a site that is probably the most frequented of any in the financial world.

Since yesterday's huge rally was based as little on fundamentals as was last week's meltdown, and indicative of short covering activity amid an increasingly pessimistic mindset, today's breather wasn't overly disconcerting. In fact, some semblance of stabilization provides some hope that a bottom may have been put in place.

Now, I have a couple of problems with this. First, it's sugarcoating the past two weeks+ of trading in which the Dow has fallen in 9 of the last 11 sessions. The other indices have generally followed suit. February 27 was not an isolated event, even if it was somewhat contrived. Second, I don't know exactly how the author squares "short covering activity amid an increasingly pessimistic mindset" with "based as little on fundamentals as was last week's meltdown..." because if there is an increasingly pessimistic mindset, shorts wouldn't bother to cover and last Tuesday's meltdown was based on fundamentals - a fundamentally overbought market.

Third, that last line is a true gem and should end up in the annals of other official-sounding gibberish. "Some hope that a bottom may have been put in place" is like saying, "we're happy none of the survivors were killed," or "sure Kennedy was killed but Connally was only injured." Serious damage was done last week and it wasn't exactly unforeseen. Anyone hoping that a bottom is now in place is really pushing the envelope of stupidity right into the face of investors they hope are clueless.

There's more evidence that corporate media thinks the American public is stupid. As if we needed any more proof, writers Robin Farzad and David Henry penned the cover story for this week's edition (dated March 12, 2007) of BusinessWeek. In it they and their editors actually have the raw nerve to use this as a sub-head: "Volatility is back. Ominous signs loom. But the outlook for U.S. markets is surprisingly upbeat."

For them, maybe, but there are thousands of people with money in 401k's and other investments who aren't exactly rejoicing over a 400-point one-day drop on the Dow. The trading sessions which preceded and followed that ugly Tuesday aren't exactly joy-inspiring either.

The authors cite a glut of private equity money and other cash sitting on the sidelines and the fact that overseas markets still seem riskier than US stocks as examples for the "upbeat" feel. They also cite that the market was up on Feb. 28, as another reason not to worry, which certainly is reassuring, especially when it was down the following day, the day after that and so on...

These authors have an amazing nerve to think they can accurately read the market's signals and then tell us everything is OK. It truly is the blind leading the clueless.

Meanwhile, reports that the housing bubble has burst into full-blown collapse are beginning to emerge. It's not just sub-prime loans that are going bust, but buyers who purchased homes via adjustable rate vehicles at grossly inflated prices with little or no equity are being dragged into foreclosure as well. It's simple math. If you bought a home in 2003, 2004, 2005 or 2006 for $500,000 and today it's only going to fetch $400,000, you lose. And it's happening all over the country, but especially in Florida and California, which just happen to be two of the largest real estate markets in the USA.

The real culprits are interest-only adjustable-rate mortgages, which spread like wildfire through the mortgage industry as housing prices ramped beyond the reach of most Americans. Insidious lending practices let the buying boom continue, until every last loser with a job had his or her own home, affordable or not (most times, not).

Well, if our homes don't kill us, we can count on our cars taking every last nickel. Oil was up another $1.13 today to close at $61.82. The beneficent big oil companies just can't get enough, can they?

Gold gained 6.70 to 652.90; silver followed dutifully along, rising 12 cents to $13.11 per Troy ounce.

Tuesday, March 6, 2007

Did That Dead Cat Bounce? Yes, Indeed!

Is this how downtrends end? With a one-day wonder resurgence that erases any doubt that the US economy, American resolve and corporate equities are safe investments, the markets have made a bold statement.

Too bad it's impossible to believe.

The Dow added 157 points, the NASDAQ was up 44.46, the S&P gained 21.29 and the NYSE Composite index grew by 168. These were solid gains all around, led by the NYSE Composite and the NASDAQ's 1.9% improvement, but one good day, after a series of bad ones, does not a bull market make. The trend is still to the downside. The Dow, for example, is still nearly 600 points below it's high of 12,795.93, achieved less then a month ago. It's broken through the 50 day moving average and today's gain - albeit impressive - leaves it more than 300 points below that mark.

Further, the big 416-point drop last Tuesday was preceded by four consecutive down sessions. Today's winner was only the 2nd positive close of the last 10 sessions. Bulls, hard-headed as they are, usually need to be hit over the head with a mallet before they stop charging ahead, so maybe more evidence is needed. Give them a couple more weeks.

The advance-decline and volume numbers for today were real shockers. This was no ordinary buying spree. Every sucker in the universe was taking the plunge, a sign that cooler heads (Bears, shorts and put options players) are about to take more of their money.

Gainers outnumbered losers by a 4-1 margin, but the volume figures were extraordinary. Dow volume checked in at only 5-6% on the combined averages. Up volume of 94% signals just one thing - this is nothing more than a dead cat bounce on a temporarily oversold condition. Everybody moving at once is never a good sign because the chances of everybody being right are slim to none.

This market will likely give today's gains back by the end of the week. If this mini-rally gets legs and moves another step forward, it may take until the end of next week to unwind, but unwind it will. The market is not in any condition to regroup and head for higher ground. This correction is still in its earliest stage. We can call today the beginning of stage two, in which those who did not lose enough to be wary in phase one will be eaten alive.

New highs reversed the recent trend, though not by much, winning the day by a slim margin of 123-108. That's encouraging for the Bulls, but nothing to write home about.

Oil, gold and silver were up marginally. Commodities are still stuck in somewhat overbought ranges and cannot move higher when the global economy is in a cooling period or slowing down, which it is. For bulls of all persuasions, however, today was needed relief. But, like all relief rallies, they are usually dramatic and short-lived. This was no exception.

Monday, March 5, 2007

Wider and Deeper

The US stock markets are in a protracted downturn that isn't likely to end soon, though the measure of the carnage on the NASDAQ has already nearly reached my expectations (7-9%).

People (like headline writers for major news services) usually search to find reasons behind the numbers, but in this current case, there need be no rationale. Stocks are falling because people are selling, plain and simple. A combination of certain perceptions, including, a) a slowing economy (real), b) overvaluation of stocks (again, real), and c) fear that the future may not be so bright (perceived, and only possibly real), have all contributed to the sell-off of the past week.

These perceptions are not about to change soon. Only revaluation (i.e., lower stock prices) is going to solve the problem and that means lower we must go. There's little confidence on Wall Street or Main St. right now and it's being reflected in the indices on an everyday basis.

Today was no exception as we saw the Dow hang in positive territory until capitulation in mid-afternoon. The NASDAQ and S&P 500 spent most of their day in the red.

Dow 12,050.41 -63.69; Nasdaq 2,340.68 -27.32; S&P 500 1,374.12 -13.05

The real carnage was on the NYSE Composite, which lost 120 points today (1.34%). Market metrics established that the correction is broadening and deepening. Overall NYSE and NASDAQ advance-decline lines ran roughly 5-1 in favor of the losers. NYSE volume was 10-1 in the red. But the most compelling data to confirm the ongoing train wreck were the 189 new lows which swamped the 98 new highs. That number had been relatively flat until Friday, at which time the new lows took over leadership.

The new lows will have to reach more than 300 combined before we can begin to take sight on a bottom, so there's much further to go.

Watching the tape today was a painful, gut-wrenching experience for most investors, except for the brilliant few who had already departed. There's still time to get out, however, before a simple loss becomes a life-changing event. As I've repeatedly noted, we are only in the early phase of this downturn and while I may be wrong about the actual bottom for the Dow, I've already been proven vulnerable on the depth of NASDAQ losses. The upcoming earnings season should prove to be a doozy and we're still 5-6 weeks away from that. Prudence would prescribe selling now, not later.

Perhaps the only good news on the day was that oil for April delivery closed down 1.57 to 60.07. Lower oil and gas prices would be welcome relief and surely more representative of the actual supply-demand scenario. Gold and silver were also lower again, signaling that there truly is no safe haven.

The Dow has lost nearly 600 points in just the last 5 sessions. If that isn't enough of a departure signal for you, maybe being hit by the actual train will do. It's very clear that another 1000 points will be sacrificed over the next 3-5 weeks. Caveat emptor.

Friday, March 2, 2007

What a Week: Devaluing Corporate America

Our country is under attack, not by terrorists or a foreign army, but by foreigners, after all, who own most of our debt and a lot of the very same stocks they sold this week.

Corporate America took a nearly 5% devaluation in the course of trading this week. It wasn't a happy sight, nor was the close of trading today, with all three major indices closing at - or very close to - their lows. Such a close does not bode well for Monday.

Assessing the damage, Friday's numbers:
Dow: 12,114.10 -120.24; NASDAQ: 2,368.00 -36.21; S&P 500: 1,387.17 -16.00

And for the week:
Dow: -533.38 (-4.22%); NASDAQ: -147.1 (-5.83%); S&P 500: -64.02 (-4.41%)

What's surprising (at least to me) is the extent of the selling on the NASDAQ. I'd assumed that since the NASDAQ had not recovered from 2000 as well as the other indices, that it would be less prone to massive meltdowns, but the numbers don't lie: techs took a beating this week, nearly half again as much in percentage losses of the other major exchanges.

I can't put my finger on just what it is, but making the NASDAQ the whipping boy in this downtown doesn't exactly add up. Perhaps the market - or some entity acting as a proxy for the market - is trying to make the case that stocks on the junior circuit just aren't as stable and capable of handling bad news, that they are overvalued to an exaggerated degree, or that the NASDAQ is an inherently unsafe haven for investment money.

Call me cynical, but when 28 of the 30 Dow components show losses, as they did on Friday, I'd consider that to be a vulnerable situation. Of course, there's a degree of crossover, as some of the Dow stocks are listed on the NASDAQ, but that still doesn't account for the disparity.

Perusing the Dow components, one after another sports a p/e in the teens, dividend yield of less than 3% and a long history of positive earnings. With that in mind, perhaps there was somewhat of a flight to quality, with investors seeking safe haven in the Blue Chips. If that is indeed the case and we are in the initial stages of a serious correction, I may be out ahead of myself. Over the next 2-4 weeks, we should see the Dow - and the S&P - running a little colder than the NASDAQ. Eventually, bargains will emerge in the beaten down techs as the downtrend lengthens and broadens.

At some point - probably mid-to-late April - we will hear the term shooting the generals at which point I would suggest buying unduly depressed NASDAQ stocks with gusto. The aforementioned term comes from military parlance, and envisions the end-point of a war, when the well-protected leaders are finally rousted and dispatched. So it may be with the Dow stocks which look safe for now, but will eventually capitulate near the end of the correction.

The commodity markets also deserve a glance. Oil was off 36 cents to close at $61.64. I'd like to say that the price of crude has topped or is capped around $62-64, but that would be nothing more than wishful thinking. The charts show that oil isn't about to rise dramatically any time soon unless there is a politically-unstabilizing event or more outright manipulation of the price. With heavy driving months of Spring and Summer approaching, the price is expected to rise, but supply-demand dynamics and a slowing economy may derail such a movement. We can only hope that the charts, which indicate a retracement back into the 50s in the cards, are more prescient than the news media and crude hucksters who preach "driving season" economics.

Gold got slammed again, down 21.00/oz. to 644.10. Silver tagged along again, failing from its breakout at 14.35. Today, the price of silver slumped 0.69 to close at 12.96. Safe haven, my foot! You'd be better off stuffing mattresses.

Thursday, March 1, 2007

Oopsie, Daisy, We Almost Did It Again

US equity markets opened in an ugly mood today. Gapping lower at the open the Dow quickly sold off over 200 points but quickly recovered all except 50 points, all in the first half hour of trading. The other indices followed roughly the same pattern.

From there, the markets dawdled just below the even line for most of the day, briefly going positive in late afternoon before selling off into the close.

All told, it wasn't very pretty.

This is a market that wants to sell off, knows it is going to sell off and will sell off. There's no impetus for further upside movement and jittery brokers know it. Volumes showed a heavy bias on the negative again today. New lows are beginning to proliferate; 176 today, topping out new highs by a slight margin.

Dow 12,234.34 Down 34.29; NASDAQ 2,404.21 Down 11.94; S&P 500 1,403.17 Down 3.65

Oil persisted in reflecting unreal expectations for future demand, tacking on another quarter to even out at $62.00 per barrel. The price is pure fantasy on the part of futures traders and is in now way reflective of actual supply-demand dynamics. The price of oil - and refined, of gas - is pure fiction, built on greed and monopolist politics. It's a surfeit of corporate and international culture that is out of control and continues to plague markets as the single most dangerous threat to stabilized markets in the world.

The oil gambit is doomed to failure, however, as are all frauds and schemes. Eventually, markets will adjust to what they consider unfair arrangements and move to alternatives. And alternatives are emerging at a more rapid pace than the oil organizers care to admit.

Gold took a beating again, and today, silver followed dutifully along, though silver's loss was less than half in magnitude to gold's injury of -7.40. The metals, like everything else, looks stuck, waiting for the other shoe to drop

...which could happen at any time.