Monday, January 7, 2008

Plunge Protection Team (PPT) Saves Stocks

The markets bounced around the even line all day, with the Dow crossing no change a minimum of 12 times, but eventually, the market manipulators won out, pumping the Dow 100 points in the final 20 minutes, magically turning a losing session into a winning one.

These kinds of moves have been seen before and are somewhat old hat. They indicate the desperate straits the markets have been in since the sub-prime crisis was uncovered back in August '07.

Since that time, the indices have bounded up and down, jostled by the conflicting forces of poor economic news and massive capital injections (over $500 billion) by the Fed and the EU central bank plus a couple of remedial interest rate cuts. Still, stocks are struggling near seasonal lows with important 4th quarter earnings on tap.

Dow 12,827.49 +27.31; NASDAQ 2,499.46 -5.19; S&P 500 1,416.18 +4.55; NYSE Composite 9,462.25 Up 30.22

This is a frightened market with little to no upside potential. The Fed tried again today to jawbone about further rate cuts, but talk of a looming recession (if not already in one) continues to dominate market and economic predictions. Interest rate cuts can only do so much, and while they may encourage lending and spending by corporations, they are seen as inflationary and damaging to the already weakened US dollar.

Monday's market ups and downs were reflected in the advance-decline line, with higher issues eking out a win over decliners, 3289-3076. The persistence of new lows dominating new highs, however, remained in place and shows no sign of a turnaround soon. There were 799 new lows and an even 100 new highs.

Substantial Wealth and Riches Creation
The Path of Substantial Wealth and Riches: Your Parents' Influence on Your Finances
While stocks were see-sawing all day, commodities traders took a breather. Crude oil for February delivery fell $2.82 to $95.09. Gold was off $3.70 to $862.00, while silver sliced off 17 cents to $15.29. The metals may have gotten a little ahead of themselves, while oil prices are responding to unusually warm weather in the Northeast, which will tamper down demand for at least this week.

While the headline on the news wires and nightly newscasts will recognize the split decision at the close, few true market watchers will doubt that more down days are in the immediate future. At some point, technicians will point out the triple bottom being put in and when traders finally capitulate - ostensibly, later this month - the second leg of this young bear market will be apparent to all.

NYSE Volume 4,136,662,250
NASDAQ Volume 2,505,137,500

No comments: