Thursday, June 5, 2008

Where Have the Bulls Been Hiding?

Well, just when you think the worst is coming, investors get a little bit brave and a lot stupid.

Such was the case today after Wal-Mart and other retailers reported improved same-store sales for May and the unemployment reading came in 18,000 below expectations.

New claims filed were at 357,000, instead of the expected 375,000. Of course, everyone forgets that the four factories to be shut down by General Motors (GM) will result in more job losses and that's not even counting 19,000 UAW members across the country that have already accepted early retirement or buyout offers.

Never mind that gas prices are at their highest levels ever, a national average of $3.99 per gallon as of this morning and surely over $4.00 by now.

Dow 12,604.45 +213.97; NASDAQ 2,549.94 +46.80; S&P 500 1,404.05 +26.85; NYSE Composite 9,408.49 +195.73

Some of us - index options players - are actually giddy that the market could see fit to rise so much in just one day. Loving the volatility, it gives us more opportunity to play puts on all the shoddy corporations out there.

Maybe it's just a state of mind, but I see dark clouds over the US economy, and, unlike the knee-jerk traders on Wall Street, fail to discern any semblance of a silver lining.

Ambac and MBIA both had their credit ratings cut today, but that doesn't matter. Only 357, 000 people applied for unemployment.

On the day, advancers trampled decliners, 4808-1410. Wow! Considering that we're in the heart of a bear market, those numbers are impressive. We haven't seen anything even close to that on the opposite end of the spectrum. It's nearly a 4-1 ratio. Also somewhat surprisingly, new highs topped new lows, 203-171.

Volume was not impressive, holding at the same level as the past two sessions.

However, crude oil gained $5.47, to $127.79, and just when we thought there was some sanity left in the world. Gold fell again, losing $8.30, to $875.50. Silver gained on actual supply concerns, picking up 23 cents to $17.17. Silver has been cheap compared to the price of gold. That is beginning to correct.

Having absolutely no confidence in the integrity of our equity markets, government statistics or the news media, this whole rally thing has me thinking there are a bunch of Republicans pulling all the strings behind the scenes. Now that Barack Obama has officially become the Democratic nominee, they need a stock market rally to "prove" that the economy is in grand shape, so John McCain doesn't have to answer any tough questions about economic stimulus.

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And speaking of stimulus, those same-store sales are more than likely the result of millions of dollars of government checks that went out this past month. So, more than being just what the (Republican) doctor ordered, it should have been expected. The problem is that it's akin to putting a band-aid on a gunshot wound. It won't last long.

But fear not, by October, the powers that be will have some other trickery in store. Who wants to bet that gas will be "only" $3.40 a gallon just weeks before the elections?

Tomorrow, the Commerce Dept. releases its laughable Non-farms payroll report, which is likely what this rally was all about. The shady report will probably say only 10,000 jobs were lost in the month of May, and we'll have another 200-point rally to end the week.

Hey, tomorrow's Friday. Party on!

NYSE Volume 1,314,636,000
NASDAQ Volume 2,243,652,000

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