Friday, August 13, 2010

Sorry Finish for Stocks

It was one of the dullest weeks for trading stocks in memory, with volumes approaching 1990s levels or worse. The apparent lack of conviction, coupled with continued poor economic news contributed to a nasty decline on all the major averages.

Monday was the only positive finish of the week, so stocks have hit the skids four straight sessions. Today's volume figures were as low as Monday's, following three consecutive down days in which volumes improved each successive session.

The July CPI was bloated at a gain of 0.3%, which, when auto and gasoline sales were stripped out, turned into a -0.1%. Deflationary forces are ever-present, though tricky to track at this juncture. While some items are improving in price, others fall on slack demand. Persistent weakness in housing and stocks has spilled over into bonds, which are soaring if you're a seller, falling precipitously in yield. The 10 and 30-year are now sliding in tandem, offering multi-year low returns.

Dow 10,303.15, -16.80 (0.16%)
NASDAQ 2,173.48, -16.79 (0.77%)
S&P 500 1,079.25, -4.36 (0.40%)
NYSE Composite 6,861.04, -20.90 (0.30%)

With trading nearly ground to a halt, decliners beat back advancers by a healthy margin, 3847-2548, belying the headline figures. There were 258 new highs to 214 new lows, though the number of new 52-week lows on the NASDAQ was nearly six times that of new highs.

NASDAQ Volume 1,623,953,000
NYSE Volume 3,819,334,750

The lackluster equity trade seemed to ensnare commodities as well, with oil falling again, though down only 35 cents, t0 $75.39. Gold gained a slim dime, to $1,214.90, while silver added 4 cents, to $18.10.

It may be the middle of summer, when trading volumes are traditionally slow, but this week was probably the lowest volume week in a year marred by an absence of trading activity. Not only have individual investors headed to the safety to cash or bonds, but larger entities have trimmed their activity as well.

None of this bodes well going forward, and with good reason. The economy is managed by buffoons in Washington and crooks on Wall Street, to the benefit of almost nobody.

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