Thursday, August 21, 2008

A Day (and Week) to Forget

Trading volume this week has been so dreadfully slow that many on Wall Street have already made their way towards the Hamptons or other relaxing locales. If you're searching for value in this dreadful environment, maybe you should do the same because whatever transpires on the markets this week will be of little importance a month down the road.

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On Thursday, volume hit a low for the year with far less than 1 billion shares changing hands on the NYSE. A normally "slow" day is 1.2 billion shares. The reasons for the slowdown are pretty obvious. Being the second last week of unofficial summer, there are fewer people trading stocks. Add to that the current conditions which lend themselves to taking profit and running away and you have the general idea.

If this kind of non-trading persists after Labor Day, it might actually be the beginning of a horrible trend, though it's probably more the good weather than the bad economic conditions at this point.

Nevertheless, there were a few relatively ugly economic reports on the day, not the least of which was the Commerce Board's Index of Leading Economic Indicators, which fell by 0.7% in July. It was the second decrease in the past three months and worse than expected.

What's worse than the US decline is news from the same organization that similar indices have fallen in Spain, Germany, France, the UK, South Korea, Japan, Mexico and Australia as well. Remember that global recession I've been warning about for the past few months, the one in which all asset classes fall? Well, there's some proof that it's already here.

Dow 11,430.21 +12.78; NASDAQ 2,380.38 -8.70; S&P 500 1,277.72 +3.18; NYSE Composite 8,314.14 +37.23

Amazingly, three of the four major stock indices we track were up, with the NASDAQ the notable exception.

The internals shed more light on the situation, as declining issues outnumbered advancers, 3603-2573, and new lows held sway over new highs, 242-49.

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Commodities made the most of it, with oil pumping up $5.62, to 121.18, gold gaining $22.70, to $839.00 and silver rising 69 cents, to $13.84.

Somebody please inform these speculators in the commodity pits about this global recession thing. Obviously, they did not receive the memo. Oddly enough, the fat rise in the price of oil is being attributed to tensions between the US and Russia over the Georgian conflict. That's entirely laughable, since there are no real tensions of which to speak. Considering the morally bankrupt and militarily-overstretched position of the United States, Russia can and will do as it pleases in its former colony. The posturing by the US, and, to some lesser extent, various European nations, is just for show. All parties know there's no possibility of anyone threatening the Russians with any kind of force.

Politics and media manipulation aside, this is a week better spent working on a tan rather than your portfolio.

NYSE Volume 912,306,000
NASDAQ Volume 1,558,441,000

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