Stocks Sink to End Year as Santa Claus Rally is Kidnapped by Grinch; Gold, Silver Push Higher

As trading drew to a close for 2017, a banner year for stocks was blemished buy a final bout of selling which rendered three of the four major averages lower for the week.

Only the NYSE Composite managed to eek out a gain for the shortened, four-day week, but even that was marginal, up less than a tenth of a percent. The NASDAQ was the most serious casualty, losing nearly one percent for the week. The Dow suffered its worst one-day loss since November 15.

Much of the selling came in the final hour of the session, suggesting that it was largely programmatic, a rebalancing of select funds for end-of-quarter or end-of-year purposes.

For the S&P and the Dow, the day's decline was the fifth in the past eight, though the S&P still managed to close out the week - and the year - just 21 points away from its all-time high.

Whether or not this late-month selloff continues into January 2018 is questionable, given that markets are still buoyant and money, by and large, is still on the cheap side. Thus, it would not be out of the question to see stocks gallop out of the gate on January 2nd.

Perhaps more compelling than watching stocks do an imitation of drying paint the past two weeks was the activity in precious metals, as gold and silver each took off as the year drew to a close. After being beaten down the first part of December, both metals rallied sharply down the stretch.

Silver hit a triple-bottom, six-month low of 15.67 per ounce on December 13, only to rebound to end the year at a respectable 17.01 on Friday. Gold, which was beaten down to 1240.90 (also December 13), hitting a five-month bottom, advanced smartly through the final two weeks, ending the year at 1302.50. Silver's eight percent rally and the five percent move in gold were the best two-week showings for the metals since July.

Some of the rally in metals was undoubtably due to the demise of the dollar, which closed out the year at 92.30, close to its September 8 low-point of the year, 91.35. It traded as low as 91.10 on the day but strengthened into the close.

If there's any meaning to be drawn from the past two weeks of trading, it could be that a sudden whiff of caution may have taken markets by surprise after the Republicans in congress and President Trump managed to push through a tax reform bill right after the Fed raised rates for the third time this year. After all, with Fed on a path of rising interest rates and the federal deficit poised to explode higher in the latter half of 2018, there may finally be a good, factual reason to bail out of stocks.

Despite the best efforts of a deeply-divided congress, fiscal policy is anything but disciplined. Meanwhile, the Federal Reserve is committed to massive bond dumping onto a market which can scarce absorb it.

2018 may indeed be one best described as a collision course of correcting bad monetary policy with tightening and loose fiscal policy. One cannot have the best of all things.

At the Close, Friday, December 29, 2017:
Dow: 24,719.22, -118.29 (-0.48%)
NASDAQ: 6,903.39, -46.77 (-0.67%)
S&P 500: 2,673.61, -13.93 (-0.52%)
NYSE Composite: 12,831.78, -21.31 (-0.17%)

For the Week:
Dow: -34.84 (-0.14%)
NASDAQ: -56.57 (-0.81%)
S&P 500: -9.73 (-0.36%)
NYSE Composite: +11.38 (+0.09%)

Dull Market...

As much of the Western Northern Hemisphere falls into a deep freeze (if you think it's cold in the US, try Canada... brrr), stocks seem to be following the trend, frozen into a stuttering somnambulism over the past six trading days.

To get an idea of just how sluggish the market has become, consider the overall range on the Dow since Monday, December 18 - six trading days - has been a mere 155 points. It's been even more severe on the S&P, where, over the same span, the average change has been roughly 3 1/2 points.

The lack of volatility has been a constant throughout the year, though it has been expressed even moreso in the past week, owing to the time of year and exhaustion of traders, many of whom are likely far away from their desks, taking time off to what out the final market days of the year.

Happy Holidays.

At the Close, Wednesday, December 27, 2017:
Dow: 24,774.30, +28.09 (+0.11%)
NASDAQ: 6,939.34, +3.09 (+0.04%)
S&P 500: 2,682.62, +2.12 (+0.08%)
NYSE Composite: 12,821.98, +13.08 (+0.10%)

Stocks Still on Pause as Year Winds Down

The Dow Industrials, NASDAQ, and the S&P 500 each closed lower for the fourth time in the past five sessions.

In normal times, this kind of market action would be characterized as "distribution," a code-word for institutional selling, and maybe that's exactly what it is. As the Fed and other central banks have flooded markets with liquidity, the past nine years have been anything but normal, however, so these past few days could be better explained as "turning off the computers" as stocks have reached an exhaustion level.

It's also the week between Christmas and New Year, a time for friends, family, and a generally-accepted laid-back attitude toward work. Anybody who has worked for a living knows the value of down time, and that's probably what this little pause is all about. There's no need to delve further into the ether, trying to discern a pattern or conjure up an explanation. That would be just the kind of imaginative speculation that leads to bad investment decisions.

While the market has yet to make any meaningful moves to the downside, this little spat of sluggishness is probably nothing more than the result of non-chalance than anything else.

When stocks take a deep dive of more than two percent over a number of sessions, or technical levels are violated, only then may more analysis be deemed advisable. For now, it's better to have a hot toddy or two, relax with friends and family and let the markets sort themselves out over the final three days of trading, reeling from what was previously a torrid pace.

At the Close, Tuesday, December 26, 2017:
Dow: 24,746.21, -7.85 (-0.03%)
NASDAQ: 6,936.25, -23.71 (-0.34%)
S&P 500: 2,680.50, -2.84 (-0.11%)
NYSE Composite: 12,808.90, +11.46 (+0.09%)

Stocks Slide Into Christmas Break, But Finish Higher for the Week

Heading into the final week of 2017, stocks have been terrific performers for there year-to-date, with the major averages all having made multiple new highs throughout the annum.

With the exception of the Composite index, all the majors held the same pattern over the week leading up to Christmas, up sharply on Monday, followed by declines three of the next four days, Thursday being the odd up day. For the NYSE Composite, Wednesday was a gainer, while the other three fell.

Because of the outsize gains on Monday, all finished the week in the green, with the Composite leading the way, percentage-wise.

Though stocks have been superstars not only for the current year, but for the past nine years running, since the wicked days of the Great Financial Crisis (GFC) back in 2008-09, the past four days have been something of a disappointment, especially since the congress managed to push through a milestone tax reform bill and keep the government functioning for another month with a last-minute continuing resolution on Friday.

What may not be obvious to casual observers is just how stretched valuation have become. Year to date, the NASDAQ is up a whopping 28%, the Dow 23%, S&P 500 19%, and the NYSE Composite the laggard, up a mere 15%, a number which would be stellar most of the time.

Will stocks continue to climb in 2018. It's difficult to take a stand against stocks, but a small January pullback would not be out of the ordinary.

Anybody who sold this market short is likely eating cat food and living in a cardboard box, so it's doubtful any analyst will take a negative view heading into 2018. Someday, all of the smart guys on Wall Street are going to be wrong, but guessing what day that will be is a task for gamblers, not investors.

At the Close, Friday, December 22, 2017:
Dow: 24,754.06, -28.23 (-0.11%)
NASDAQ: 6,959.96, -5.40 (-0.08%)
S&P 500: 2,683.34, -1.23 (-0.05%)
NYSE Composite: 12,797.44, -2.77 (-0.02%)

For the Week:
Dow: +102.32 (+0.42%)
NASDAQ: +23.38 (+0.34%)
S&P 500: +7.53 (+0.28%)
NYSE Composite: +97.76 (+0.77%)

Stocks Churn; Bitcoin Crashing

Following Monday's start-the-week-off-right rally, stocks have gyrated about the flatline the rest of the week, signaling that a good number of major players have already left the exchanges for holidays and that the recently-completed tax reform bill has been almost completely priced into stocks.

Thus, we're left with little other than churn as the days before Christmas dwindle to none. There are likely to be few surprises on Wall Street as the week closes out, though overnight, the cryptocurrency world had plenty upon which to contemplate going forward.

Bitcoin, the gold standard of cryptos, crashed below $13,000, marking a 17% drop in less than the past 24 hours.

A number of suspect factors are to blame for its recent demise, those consisting largely of rumors and some fact, such as large "whale" investors getting out while the mania is still hot, the emergence of Hashgraph, which was of mention here yesterday, and the abrupt realization by more than a few people that Bitcoin - due primarily to the severe slowness of clearing transactions and the unwieldy large amount of computing power necessary to mine coins - is unreliable and unworkable as a currency.

Within a short time, it's highly likely that bitcoin could be trading in the hundreds of dollars rather than in the thousands. Recall that its current price was largely achieved in just the past 12 months, growing from sub-1000 at the start of the year.

Other cryptos are being mercilessly battered, led by IOTA, down nearly 40% overnight, denoting the downside of 24/7 markets.

What goes up, must come down, and that is the lesson for the day. Stocks will also suffer at some point, though betting on that happening has been a fool's game since the worrisome days of 2008-09.

For now, it looks like a quiet day of trading stocks ahead, with downside risk prominent.

At the Close, Thursday, December 21, 2017:
Dow: 24,782.29, +55.64 (+0.23%)
NASDAQ: 6,965.36, +4.40 (+0.06%)
S&P 500: 2,684.57, +5.32 (+0.20%)
NYSE Composite: 12,800.21, +52.66 (+0.41%)

Wall Street Yawns at Tax Reform; Hashgraph May Supercede Bitcoin

Wall Streeters aren't completely happy with the tax reform package that passed both houses of congress on Wednesday, despite howls of victory from assembled Republicans at the White House. If they had, the "sell the news" trading of the past two days would have been overwhelmed by a furious buying frenzy as US corporations see their federal tax burden reduced from 35% to 21%, below the world average.

While the politicians are happy back-slapping each other and highly paid traders on Wall Street see their tax burden increase due to the loss of some deductions for local taxes (SALT), there are bigger, less-well-defined events occurring far from DC or New York.

Bitcoin and other cryptocurrencies are all the rage, now that the CBOE has gotten into the game with bitcoin futures trading, assuring that the financial genii that DID NOT invent blockchain technology will be able to participate.

That's all the more reason that crypto is soaring, both in value and interest. The promise of the blockchain was initially to exclude current government and financial entities (banks, brokers, exchanges) from transactions, freeing up the new "money."

That has changed, but, outside that, a newer, potentially even more disruptive idea has emerged: Hashgraph, which speeds up transaction processing by light years over Bitcoin and provides even better security and privacy in a distributed ledger environment.

It's the latest development in a fast-changing game and deserves full attention to anyone who is thinking about freedom. Mike Maloney has put together an interesting look behind the scenes of the crypto world in his latest installment of the Hidden Secrets of Money (Episode 8) in Bitcoin to Hashgraph: The Crypto Revolution.

The video is over an hour long, but it should be tops on every Christmas list for thinking individuals, silver and gold bugs, heads of companies and anybody looking for better solutions than tax brackets, thousands of pages of federal tax code (estimated at over 70,000), a puzzling phalanx of rules, regulations and confusing calculations all of which are the bread and butter of the stock market and fractional reserve skimmers.

A day will come when stock prices, interest rates, and tax considerations aren't the most important financial parameters. That day is coming sooner than many people with knowledge want to accept.

Happy (Hashgraph) Holidays.

At the Close, Wednesday, December 20, 2017:
Dow: 24,726.65, -28.10 (-0.11%)
NASDAQ: 6,960.96, -2.89 (-0.04%)
S&P 500: 2,679.25, -2.22 (-0.08%)
NYSE Composite: 12,747.55, +0.01 (0.00%)

Stocks Slip As Congress Readies Tax Bill For President Trump's Signature

In what can only be described as a premature "buy the rumor, sell the news" moment, stocks gave up early gains and ended uniformly on the downside as the House and Senate passed the tax reform bill that's been the focus of news and speculation the past three weeks.

With only a minor tweaking needing to be handled by the House on Wednesday morning, the bill will travel to the president's desk for his signature, confirming a promise to have a tax bill before Christmas and essentially ending the individual mandate for the Affordable Care Act (Obamacare) by reducing the penalty for not having health insurance to zero ($0.00).

The inclusion of the mandate-crushing language in the bill was a masterstroke for Republicans, who failed to repeal (and replace) the morally-flawed Obamacare legislation earlier in the year, but manages to effectively make non-compliance a victimless violation.

While Democrats are furious over this development, which will undeniably send premiums even further into the stratosphere, those millions of people who neither can afford nor need healthcare coverage (think healthy people in their 20s through 50s) will be freed from the tyranny of a law that never should have been.

Otherwise, the tax reform legislation is great for corporations and marginally good for individuals, depending upon income level and family size. Overall, the fresh 500 pages of tax code will likely make the United States more competitive in global markets and put more money in people's pockets.

Wall Street, which has been pricing in the tax plan nearly every day in December, is poised to take its gains, take a few days off, and continue next week with a bona fide "Santa Claus rally" which will extend the gains for the year.

If stocks take the indicated course, January should commence with some serious tax-selling profit taking. After that, it's anybody's guess how much longer the bull market can continue.

At the Close, Tuesday, December 19, 2017:
Dow: 24,754.75, -37.45 (-0.15%)
NASDAQ: 6,963.85, -30.91 (-0.44%)
S&P 500: 2,681.47, -8.69 (-0.32%)
NYSE Composite: 12,747.54, -38.28 (-0.30%)

With Rubio and Corker Backing Tax Plan, Stocks Take Off

Maybe the scuttlebutt about Senators Marco Rubio (R-FL) and Bob Corker (R-TN) being persuaded to vote for the long-awaited tax reform plan circulating in the congress caused stocks to career higher on Friday, but the more likely catalyst was probably much more mundane: the expirations of options on a quad-witching day.

There were certainly a boatload of long bets on individual stock and index options, and, since the market is so overtly controlled by a handful of "whales" it was simple business to boost stocks throughout the day no matter what the news of the day portended.

Anybody who doesn't believe the market is rigged to go higher - incessantly - in support of central bank plans to intercede in global markets by buying assets and printing fiat, is simply fooling themselves.

Thus, bears have been declawed, pension funds and IRA are becoming whole (or, at least less underfunded) and top stock holders have been handed capital gains on a silver platter with little to no effort or brainpower on their parts.

Since congress appears poised to pass the pending tax legislation in the coming week, investors are sure to get a gift-wrapped Christmas present in advance of the give-away holiday.

2017 will go down in history as one of the best ever for stock market investors. The major averages are well into the green and some individual stocks are boasting gains of 30, 40, 50 percent or more.

Happy Holidays. Keep Dreaming.

At the Close, Friday, December 15, 2017:
Dow: 24,651.74, +143.08 (+0.58%)
NASDAQ: 6,936.58, +80.06 (+1.17%)
S&P 500: 2,675.81, +23.80 (+0.90%)
NYSE Composite: 12,699.68, +70.61 (+0.56%)

For the Week:
Dow: +322.58 (+1.33%)
NASDAQ: +96.50 (+1.41%)
S&P 500: +24.31 (+0.92%)
NYSE Composite: +56.62 (+0.45%)

Stocks Stumble As Marco Rubio Voices Concern Over Republican Tax Plan

Appropriately, with the latest installment of the "Star Wars" franchise opening in cinema theaters around the country, Wall Street sensed a disturbance in the "force," the force being Janet Yellen and her merry band of storm trooping central bankers, the disturbance being upstart senator "little" Marco Rubio, who inadvisably pondered that he may not cast his vote in favor of the magnificent GOP tax plan that's been bandied about the halls of congress for months.

The former presidential candidate and current senator from Florida, Rubio voiced concerns over a minuscule detail in the overall grand scheme, the child tax credit, and on Friday morning made it clear that unless the amount of the credit that is deductible ($1,100 of $2,000) is increased, he's voting against the plan.

Notwithstanding Rubio's need to be seen, heard and appear important on occasion, his grandstanding is purely designed as entertainment value over the weekend for the cable news outlets. A final rollout of the bill and votes will come next week, just prior to congress' two-week holiday vacation.

Also adding to the folly is John McCain, who was hospitalized this week with complications from his cancer treatment, may not be present for a vote, should his condition worsen. Republicans cannot survive more than two defections, and Senator Bob Corker, the statist senator from Tennessee is staunchly opposed to the measure, purely out of hatred for president Trump.

Failure of the bill's passage would be a blow to Wall Street being that the measure approves a reduction of corporate taxes from 35 percent to 21 percent, something for which major corporations - many of which pay little to no federal tax already - have been lobbying for years.

Thus, with doubt overshadowing the happy passage of bellwether legislation, stocks took a notable turn for the worse on Thursday. The loss ended a string of five straight days higher on the Dow, and an overall run-up from 23,200 to beyond 24,600 over the past month.

As is the usual case, there's probably nothing about which to worry, since the Fed has Wall Street's back, front, and middle, and little tolerance for anything more than a few hundred point drop on the hallowed Dow Jones Industrial Average.

With Christmas a little more than a week away, neither congress, the Fed, nor Wall Street want to appear as Scrooges or Grinches, much less a poor likeness of Darth Vader or the death planet, especially with heavy upside bets on options and futures, which expire today. Trying not to mix metaphors - but failing badly - Friday is a quad witching day.

Happy trading, and happy Friday.

At the Close, Thursday, December 14, 2017:
Dow: 24,508.66, -76.77 (-0.31%)
NASDAQ: 6,856.53, -19.27 (-0.28%)
S&P 500: 2,652.01, -10.84 (-0.41%)
NYSE Composite: 12,629.07, -70.41 (-0.55%)

Fed Finishes Rate Hike Regimen for Year; Stocks Close Off Highs

Folks old enough to remember the comedy group Firesign Theatre might recall the famous, "Department of Redundancy Department," which is applicable to the never-ending, record-breaking after record-breaking stock market.

As Janet Yellen dispatches her final 0.25% rate increase to the federal funds rate, the markets did what they usually (always) do.

At the end of the day, the surprise was that the major indices closed well off the highs of the day, making for an interesting setup for Thursday.

At the Close, Wednesday, December 13, 2017:
Dow: 24,585.43, +80.63 (+0.33%)
NASDAQ: 6,875.80, +13.48 (+0.20%)
S&P 500: 2,662.85, -1.26 (-0.05%)
NYSE Composite: 12,699.54, +1.76 (+0.01%)