Thursday, June 11, 2009

More Stocks Making New Highs

For the fifth consecutive day, new highs have exceeded new lows, today, by 91-69.

To some, that may sound like fairly mundane news, but to readers of this blog, it's an important turning point. Daily new lows have outnumbered new highs every day for some 21 months (with the exception of about 6 days) until last week.

So, has the spell been broken? Is the economy on the verge of recovery? Are we headed for a new bull market?

The answers, in order, are: YES, NO, and PROBABLY NOT.

Until the economy begins showing real signs of strength, such as, home prices increasing instead of declining, month-over-month; new jobs being created; corporate profits showing real improvement, not just "beat the (watered-down) street numbers"; and maybe getting the national debt under control, the US economy is in for a rough ride. While the solitary new lows-new highs indicator may be turning green, it's more likely because the new highs set in 2008, much like earnings forecasts, are of the low-bar variety. The new highs in '09 are likely well below the previous highs in '07 or '06. and, since the market was hammered so badly both in the fall of '08 and the first quarter of '09, there aren't many more new lows to be had. Some of the real losers have been delisted (see GM, etc.), while others are resting comfortably in the single digits.

As for a new bull market, well, such is the stuff of dreams and fairies. It would be more in the realm of Harry Potter to conger up a new bull market than for the economic conditions to present such a scenario. Stocks are currently overvalued, as will be seen some time later this summer or into the fall. Some selling would indeed be healthy right about now, though there is a general push-back from Wall Street, the federal government and mainstream media against any show of weakness. It's very odd, but much akin to the Japanese (or is it Chinese?) concept of "losing face," wherein one puts on the best show possible in order to appear wholesome, vibrant and strong.

Naturally, that's not what investing in equities is supposed to be about. It's supposed to consist of discounting future value, dividends and solid profitability, product lines and market share. Fundamentals of business and economy, dear Watson.

Dow 8,770.92, +31.90 (0.37%)
NASDAQ 1,862.37, +9.29 (0.50%)
S&P 500 944.89, +5.74 (0.61%)
NYSE Composite 6,163.13, +65.07 (1.07%)

As far as this week is concerned, the movement of the stock market has been kind of like a bad joke, or, watching paint dry. It's been a near-total waste of time. The big winner has been the NYSE Composite, up a whopping 80 points. The NASDAQ has put on 13 points; the S&P almost 5, and the Dow a miraculous 7 whole points!

Index traders are falling asleep at their desks, the excitement is so rare.

On the day, advancing issues outnumbered decliners, 4164-1405, though, while the disparity was large, the actual movement was tiny. You already know the score on the new highs vs. new lows, and volume was a little better than Wednesday's, which really doesn't say much. Investors worldwide are still awaiting some kind of pull-back, though it may be a long time in coming, if at all.

NYSE Volume 1,223,187,000
NASDAQ Volume 2,501,569,000

Oil hit a new high for the year, to nobody's surprise, rising $1.35, to $72.68. Gold was up as well, gaining $6.80, to $961.50, and silver added 27 cents, to $15.49. Commodity prices, outside of crude oil, have been trading up and down without much direction for the past three to four weeks, much like the stock market. The entire globe has been engulfed by an acute condition of indecisiveness, worse than any H1N1 Pandemic.

Tomorrow, we're hoping the market will be up, or down. Something to hang one's hat on would be welcome after a week of dullness.

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