Tuesday, June 7, 2011

Classic Bear Market Session Ends with Disappointment from the Chairman

There's nothing that makes a bear market more palatable than a recognizable chart pattern, and today's charts were the perfect examples.

To wit: up in the early going and down into the close, and that's exactly what the markets offered up today. There is no doubt that the bear market which began in August-October 2007 is alive and well and ready to take more money prisoner. Albeit the long interruption from March 2009 to May 2011, the long rally was nothing more than a cyclical upturn aided by trillions of dollars in free cash flow, courtesy the Federal Reserve.

Now that QE2 is coming to an abrupt end, the bears once again have their claws sharpened and are gnashing their teeth in anticipation of a tasty fete of equity fare.

Fittingly, the day ended with Fed Chairman Ben Bernanke droning on in his monotone about world economic conditions and how the Fed is powerless to do anything about the weather. Yes, he did mention the weather. In essence, his speech before the International Monetary Conference in Atlanta offered nothing to the market; there was no new policy, no mention of further stimulus. In show biz parlance, he bombed, mightily.

Stocks were up early but began selling off around 2:00 pm, wiping out all gains by the close, except in the broad NYSE composite.

It was the fifth straight decline for the Dow, S&P and NASDAQ and a sure sign of more trouble for the embattled US economy ahead.

Dow 12,070.81, -19.15 (0.16%)
NASDAQ 2,701.56, -1.00 (0.04%)
S&P 500 1,284.94, -1.23 (0.10%)
NYSE Composite 8,131.69, +15.82 (0.19%)

Advancers finished slightly ahead of losers, 3174-2454, but new highs succumbed to the downdraft of new lows. On the NASDAQ, 21 new highs, 112 new lows. The NYSE was witness to 37 new highs and 60 new lows, making to combined total 58 new highs and 172 new lows, the forth straight session in which the new lows have outnumbered new highs, and a sure sign that the market is in a correction, soon to become known as the resumption of the bear market.

Volume was scant, though that in and of itself is nothing of a surprise. It exemplifies the general weakness in equities.

NASDAQ Volume 1,861,762,125
NYSE Volume 3,681,650,000

NYMEX crude oil futures for WTI gained 8 cents, closing at $99.09. Gold lost 30 cents, to $1543.60, while silver picked up 39 cents on the bid, at $37.19.

It's a slow week, though it is only the beginning of what appears to be shaping up as one slow, hot summer of declines. There is no catalyst for buying stocks. It is, however, a great time to stock up on gold, silver and other necessary household items one might need in case of emergency, like banks closing or a false flag terror scare or the end of the Euro, which is almost a certainty. The only thing uncertain about the demise of the Euro as a currency is the timing, but rest assured, when it does happen, it will send the global economy into a tailspin.

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