Wednesday, May 25, 2011

Lack of Catalyst Encourages Buyers; Rally Fizzles at Close

Mark Haines
This post is dedicated to Mark Haines, CNBC Anchor, who died unexpectedly last night at his home. Mark, 65, was one of the pioneers of televised financial news reporting, a stalwart with CNC from the beginning. Godspeed, Mark, may your surviving assets be spent in splendor by your rightful heirs.

As far as bounce-back rallies are concerned, this one rates at best a D-minus, for any number of reasons. First, there could not have been a more friendly environment to buy into; second, volume was so light a junior trader could have engineered a better bounce; third, the rally fizzled into the close, just like yesterday's 3:30 and beyond slip-slide.

Today's action was more a re-positioning of assets rather than a rally. For perspective, consider that the Dow dropped 250 points in the prior three sessions. Today's gain of less than 40 points was not even a quarter of that. The NASDAQ was down 77 points over the prior three sessions. The gains today were not meaningful.

Besides the untimely death of CNBC's Mark Haines, there was little to trade off of today, and most of it was bad news. Greece continues to twist in the wind of proposed EU austerity packages, all unacceptable and leading eventually to Greek default on their debt. Durable goods orders for April nose-dived, down 3.6% for the month, after a 4.4% gain in March. Estimates were for a 2% decline, so that was a pretty substantial miss. Investors seemed not to notice that all economic data has been either bad or horrifying the past two weeks.

Dow 12,394.66, +38.45 (0.31%)
NASDAQ 2,761.38, +15.22 (0.55%)
S&P 500 1,320.47, +4.19 (0.32%)
NYSE Composite 8,295.34, +42.88 (0.52%)

Winners took the measure of losing issues, 4336-2215. On the NASDAQ, 46 new highs, but 73 new lows. The NYSE showed 61 new highs and 35 new lows, making the combined total (the one that matters most) 106 new highs and 108 new lows, the second in the past three sessions that there have been more cumulative new lows than new highs. We are plumb out of adjectives to describe the ridiculously low volume on the markets. Sorry.

NASDAQ Volume 1,845,890,875
NYSE Volume 4,024,320,500

A weaker US dollar boosted commodities. Crude oil was up $1.55, to $101.32. AAA reports the average price of a gallon of unleaded regular gas in the US at $3.81, about 14 cents lower than two weeks ago, offering a little bit of relief for over-burdened drivers.

Gold found some life, but was eventually blunted late in the day, losing 90 cents, to $1525.20. Silver had another good day, gaining $1.20, to $37.83 the ounce.

Thursday brings the usual scariness of initial and continuing unemployment claims, plus the added bonus of the second estimate on 1st quarter GDP. The initial estimate had the US economy growing at 1.8% and the consensus is for little change to that number.

And so we bump along, grinding lower in due time.

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