Dow's Big Bear Market Rally Led Higher By Overvalued Boeing Shares

Monday's rally had everybody singing the praises of Treasury Secretary Mnuchin and the "on hold" status of trade negotiations with China. Supposedly, this gave the markets an "all clear" signal to buy more risk assets at elevated price levels (remember, the Dow is only off 6-7% from the all-time high of 26,616.71, January 26).

On the surface, a 300-point gain on the Dow provides a reason to cheer the market and the economy. Underneath the hood, however, the gears are grinding, sparks are coming from various frayed electrical components and the engine is sputtering and coughing. Any description of the US economy as anything better than sputtering should be viewed with resolute skepticism.

The big move on the Dow was fueled mostly by a rise in Boeing (BA), which was up 3.61% and is trading at the nosebleed level of 363 per share. For perspective, two years ago Boeing was trading at 127 per share. So, that's a triple for a company that is one of the more mature companies in America. Absurdly, Boeing is carrying a simple PE ratio of 27, a number normally reserved for high-growth companies.

Meanwhile, the seeming were out in force, disregarding the reality of a slowing, or, at best, sputtering economy (despite what you're reading or hearing) and stocks still well below the previous highs earlier in the year.

Monday's rally was nothing more than a media-inspired bear market rally. It had all the elements: only a few stocks led the way, the media was cheerleading all along, it was on a Monday.

Whatever your perspective of the market, there is little evidence that it is not massively overbought at any level above Dow 20,000. Trade wisely.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26
5/16/18	24,768.93	+62.52	+605.78
5/17/18	24,713.98	-54.95	+550.73
5/18/18	24,715.09	+1.11	+551.84
5/21/18	25,013.29	+298.20	+850.04

At the Close, Monday, May 21, 2018:
Dow Jones Industrial Average: 25,013.29, +298.20 (+1.21%)
NASDAQ: 7,394.04, +39.70 (+0.54%)
S&P 500: 2,733.01, +20.04 (+0.74%)
NYSE Composite: 12,804.01, +86.59 (+0.68%)

Weekend Wrap: Stocks Stuck In Limbo As Rise In Yields and Oil is Relentless

Anybody looking for volatility on Friday's options expiry was sorely disappointed with the rangebound markets and little change as a dull week came to an even duller finish.

What did move dramatically for the week was bond yields and oil, both of which spiked at the expense of the equity markets, all quite predictable.

As the case for a bear market in stocks continues to grow every day the January 26 high on the Dow of 26,616.71 gets further and further away, so the denial of the Wall Street crowd and pension fund maniacs which know nothing other than stocks, stocks, and more stocks, all the time, everywhere.

As the Money Daily Dow Scorecard below clearly shows, the 30 blue chip stocks were down for the week, though the losses were contained. None of the indices fell by more than one percent, the nearest to that the NASDAQ, with a loss of 0.66%.

Since the early February selloff, stocks have gone exactly nowhere, a point of emphasis for the bears who contend that despite the narrative of "full employment," a growing economy (2-3% is barely keeping pace with inflation; real growth is somewhere in the range of -3 to -5 percent), tax breaks and a strong dollar, undermining the false bravado of the bulls is oil soaring over $71/barrel for WTI crude and notching above $89/barrel this week for Brent crude, plus the 10-year note spiking to 3.11%.

Rising bond yields - which compete with stocks in the relative risk paradigm - and rising fuel prices make a very challenging environment for stock holders, especially those trying to beat the indices, which shouldn't be a tough job, though it has become so as everything is falling and the component parts are falling faster.

Stock pickers may find their task all the more challenging by crowded trades in favored sectors. Tech and consumer non-durables have been hammered recently, but the energy sector has fared much better, up something on the order of 8% on the year. Basic materials have been a disappointment for the most part, and dividend-carrying stocks are, again, barely keeping up with inflation.

It's a no-win market just about everywhere for those who only can go long, so the bears once again have the upper hand.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26
5/16/18	24,768.93	+62.52	+605.78
5/17/18	24,713.98	-54.95	+550.73
5/18/18	24,715.09	+1.11	+551.84

At the Close, Friday, May 18, 2018:
Dow Jones Industrial Average: 24,715.09, +1.11 (0.00%)
NASDAQ: 7,354.34, -28.13 (-0.38%)
S&P 500: 2,712.97, -7.16 (-0.26%)
NYSE Composite: 12,717.42, -30.41 (-0.24%)

For the Week:
Dow: -116.08 (-0.47%)
NASDAQ: -48.54 (-0.66%)
S&P 500: -14.75 (-0.54%)
NYSE Composite: -44.40 (-0.35%)

Stocks Stalled As Bull-Bear Debate Intensifies

Equities traded in tight ranges on the main exchanges Thursday, with the bears winning the day, albeit marginally.

The small boost from retail stocks earlier in the week failed to extend to the general market. Cisco Sytems (CSCO) and Wal-Mart (WMT) each weighed heavily on the market despite both companies meeting analyst exceptions for first quarter earnings.

Current market mood is jaded, as companies that have reported acceptable earnings for the first quarter have been routinely punished by the market, with immediate selloffs the norm on receipt of news, whether good or bad. That kind of action is a pretty good indicator of distribution, an otherwise gentler term for profit-taking.

Heading into the tail end of the week, the Dow is looking considerably weaker than at the start, with Monday, May 14, the culmination of an eight-day winning streak, possibly marking the high-point of the month.

Friday is an options expiration day, so, some volatility is to be expected, though it's equally likely that many punters have already closed out their positions, which could leave the market with little upside. As odds go, the day looks very much like a toss-up, though a move of more than 150 points either way on the Dow is unlikely unless the herd gets a signal to scramble.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26
5/16/18	24,768.93	+62.52	+605.78
5/17/18	24,713.98	-54.95	+550.73

At the Close, Thursday, May 17, 2018:
Dow Jones Industrial Average: 24,713.98, -54.95 (-0.22%)
NASDAQ: 7,382.47, -15.82 (-0.21%)
S&P 500: 2,720.13, -2.33 (-0.09%)
NYSE Composite: 12,747.83, +4.03 (+0.03%)

How To Deal With A Bully: Retailers Gang Up On Amazon

Wednesday, it was Macy's (M) reporting solid sales growth in the first quarter, fueling some interest in retail stocks overall.

Thursday morning, Wal-Mart is reporting 33% growth in online sales for the first quarter, proving that Americans will go where service and price are balanced, as the nation's largest retailer continues to roll out its innovative "ship-to-store" option and discounted shipping (free two-day delivery).

Amazon, the king of online retailing, may have succeeded in killing off and/or absorbing some smaller chain store retailers and accelerating the demise of dinosaurs like Sears, but they're certainly not going to mash down the biggest companies, such as Macy's, JC Penney, and Wal-Mart. While Seattle-based Amazon can build as many warehouses and fulfillment centers to facilitate faster, more efficient delivery, it is still hampered by its lack of bona fide retail locations, though its recent acquisition of Whole Foods will change that to varying degrees in different sectors and geographical locations.

Wal-Mart, which has a significant footprint in the retail food space, probably isn't worried about the emergence of Whole Foods poaching its customers, because Whole Foods is largely a near-luxury brand, selling organics and other higher-priced goods, while Wal-Mart customers are accustomed to low-priced, competitive products.

The recent resurgence of retail in the face of the Amazon effect should buoy some stocks and create an environment that will only become increasingly competitive, both online and in the real, brick-and-mortar world. As retailing evolves into 21st-century standards, don't expect first-mover Amazon to extend its gains, though its presence will certainly be dominant. Innovation by those playin catch-up with the newer technology should prove to level the playing field somewhat in coming years.

Macy's earnings beat managed to squeeze some upside out of stocks on Wednesday. Thursday's rise or fall will have much to do with Was-Mart's success story, though it may not provide enough of a catalyst to pull the entire market higher.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26
5/16/18	24,768.93	+62.52	+605.78

At the Close, Wednesday, May 16, 2018:
Dow Jones Industrial Average: 24,768.93, +62.52 (+0.25%)
NASDAQ: 7,398.30, +46.67 (+0.63%)
S&P 500: 2,722.46, +11.01 (+0.41%)
NYSE Composite: 12,743.80, +39.17 (+0.31%)

Dow's 8-Day Rally Ends Abruptly; Bonds,Technicals The Likely Causes

Naming retailers as culprits for ending the recent uptick in stocks on Tuesday probably doesn't quite hit the mark, even though stock futures continued to slide after April retail sales data was produced at 8:30 am EDT, prior to the market opening.

Overall, retail sales improved by 0.3% over the month, matching lowered expectations after a surprise gain of 0.8% in March. Whether traders were somewhat disappointed in the number is a matter of some speculation, better left with a question mark than a definitive answer.

What did likely spook the markets was the abrupt rise in bond yields, as the 10-year-note zapped higher to yield 3.07% during the day, a number not seen since 2011. The 2-year yield saw 2.60%, its highest level since 2008.

These are concerning numbers to stock hawkers because they are considered fairly risk free methods of making money, whereas stocks - even those offering dividends - imply risk, as stock prices rise and fall.

With the February's recent turn in markets still fresh in the mind, there are more than a few traders taking money off the equity table and moving it toward the relative safety of bonds. Besides, after eight days of gains, the market was pretty well priced out, so profit-taking commenced. The herd being what it is, the selling turned into a small stampede.

Another concern is the continued high price of crude oil. WTI crude held steady at 71.17 in New York, though pockets of $3.00+ per gallon regular gas began to appear across the filling stations of America. The national average stands at $2.87/gallon, which is beginning to squeeze middle class budgets, especially those with long commutes and larger, less-fuel-economiic vehicles.

Unless bond yields and the price of gas come down quickly, today's 197-point decline could turn worse in coming days and weeks.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26

At the Close, Tuesday, May 15, 2018:
Dow Jones Industrial Average: 24,706.41, -193.00 (-0.78%)
NASDAQ: 7,351.63, -59.69 (-0.81%)
S&P 500: 2,711.45, -18.68 (-0.68%)
NYSE Composite: 12,704.56, -67.47 (-0.53%)