Monday, January 31, 2011

Bulls Dance with Bernanke (the Bernank) through January

Apparently, in this new world order, international crises affect stocks for only one day.

And that day was Friday. Today's trade was "risk on" again, even as the situation in Egypt crept closer to complete anarchy, rioting and food shortages.

Not to worry, Ben Bernanke, according to the schedule, furnished the Primary Dealers with between $6 and $8 billion through outright purchase to grease the skids... er, goose, pump, ah, well, you get the picture.

Stocks went on another tear ahead, leaving Friday's sudden decline for the losers who sold. As all great analysts of today know, you don't fight the Fed or sell the dip. You buy the F-ing dip.

Since there was no news - good or bad - upon which to move markets, we find the tenor of today's trading most appropriate, since CNBC or any other financial journalist doesn't seem to feel a need to mention the beneficial nature of the Fed's QE2 program to stocks, nor the fact that it is inherently inflationary, destructive to capital and a huge Ponzi scheme.

Since this is the final day of trading for the month of January, there was probably some degree of window dressing being done by fund managers and also large dosages of red Kool-aid for all.

Wall Street is drunk with the power of money and fractional reserve banking and is officially in another universe, divorced completely from reality and interested only in fattening the wallets of their directors, themselves and their largest clients.

Egypt will fall, and maybe Saudi Arabia next, but the masters of the universe will still need to keep the stock market going higher, if only to delude millions of Americans that everything is all right. The party will go on as long as nobody removes the punch bowl from which they all drink, and making matters worse is the Ben Bernanke is both designated driver and punch bowl spiker. He has the keys to everyone's cars and an unlimited supply of monetary booze.

Party on! The Bulls are loving the frozen tundra of January, which, by way of reference, we bring the January Barometer, which preaches, "as goes January, so goes the year." And we have no reason to argue with the logic, at least until June, when QE2 is supposed to expire. Besides, the January Barometer has been wrong the past two years, so it should come back for a win in 2011, no?

Dow 11,891.93, +68.23 (0.58%)
NASDAQ 2,700.08, +13.19 (0.49%)
S&P 500 1,286.12, +9.78 (0.77%)
NYSE Composite 8,139.16, +76.52 (0.95%)

Advancing issues beat decliners 4230-2265. Oddly enough, there were only 68 new highs and 39 new lows on the NASDAQ. On the NYSE, new highs beat new lows, 125-18. Volume was well short of Friday's big number, but that's the norm here and has been for some time. Ask yourself, if there's more selling than buying, why are stocks going higher? Then hit yourself in the head with a hammer a few times. That should give you an idea of how convoluted our national markets really are.

NASDAQ Volume 1,991,840,000.00
NYSE Volume 4,939,404,000

Of course, the situation in Egypt, while good for stocks, apparently, is also good for screwing consumers at the pump. Crude futures started the day in the red, but quickly reversed course and ended the day more than 4% higher, up $4.32, to $92.19, even though the Suez Canal remains open and oil continues to flow to its destinations without interruption. There are no disruptions, except for those in the heads of people who believe we must pay more per gallon for gas, no matter what, forever and ever, amen.

And since there's an international crisis, gold should be bid up, but of course, the elitists controlling the precious metals can't have that (they want to buy more at low prices), so they sent the glittering metal down another %10.70, to $1,333.80. Silver also is desirable, though not as much, so it was allowed to rise 85 cents, to $28.17. These commodity trades make no sense unless you have your tin-foil hat firmly attached and antennae up. Otherwise, you don't get it.

While Cairo devolves into a weeping slog of hungry humanity, Wall Streeters will be anxiously awaiting the most current estimate of national shame, Friday's non-farm payroll report. We'll get the highly-discredited ADP report on Wednesday and there will be much speculation. The market experts expect the US to have added between 125,000 and 150,000 jobs in January. That number might be enough to keep up with population growth, and it's well short of anything even suggesting "growth" in job creation, but, if it falls short of the desired result, the very same experts will blame it on the weather, or snowfall, or just ignore it altogether as they usually do.

Because Uncle Benji will be delivering more Bernanke Bucks, and everything will be just fine, you just wait and see.

BTW: The Dow is up more than 300 points this month and since September 1, 2010, it's up almost 1900 points, good for a 19% gain in just five months. See? Everything is just fine.

Friday, January 28, 2011

More Blood on Wall Street than in Egypt's Streets

The events taking place in Egypt - and soon to follow in Lebanon, Syria, Algeria and elsewhere - sent shock waves down the canyons of Wall Street where even the most resolute bulls were seen to be shedding long positions and running for cover, metaphorically, of course.

Egypt is only the most prescient of what appears to be a global movement to oust corrupt governments. It may soon reach Asian nations, then Europe and eventually the United States, run by the cruelest and most virulent oligarchs in the world.

But first, the thieves must flee with their loot, as they did today, sending shares on the major indices to their steepest losses in over six months, an event long overdue. Certainly, there is more blood to be let on Wall Street, while nations around the globe yearn to be free.

A conversation last night with a friend went something like this:

Friend: The countries want democratic government.

Me: So do Americans.

Both: (Nervous laughter.)

It is true, however, that many Americans - mostly middle class types - feel shortchanged and without a true voice for their condition in the halls of the mighty. It is time that Americans awaken from their iPad-and-TV-induced stupor and seek change. We no longer wish to be ruled by a separate class of bankers and politicians who play by different rules and govern by different laws than those we are subject to. It is time for real examination of the issues of our banking class and prosecutions of those who caused the collapse of 2008 and extend its worst effects even to the present.

Perhaps the sell-off today was keyed by events in the geo-political realm, or perhaps there's more to it, under the surface. Maybe there's little will to invest in companies based in the US which pay little to no taxes and employ nary an American citizen. Perhaps the 3.2% GDP estimate announced today was not nearly enough for a population seeking better answers, better results, from their leaders.

Whatever is the case, it surely appears to be only the beginning. Our first taste of the fruits of global revolt will be gasoline at $3.50 a gallon, then $4, then more. What will be the tipping point in America? Will it come before the government shuts down the internet, as happened today in Egypt? Only time will tell.

Dow 11,823.70, -166.13 (1.39%)
NASDAQ 2,686.89, -68.39 (2.48%)
S&P 500 1,276.34, -23.20 (1.79%)
NYSE Composite 8,062.64, -144.42 (1.76%)

Declining issues led advancers by a mammoth margin, 5397-1195. The NASDAQ was witness to 101 new highs and 24 new lows. On the NYSE, there were 148 new highs and only 19 new lows. These figures are unsurprising, considering how over-inflated stocks have become in the first month of 2011.

Volume was the key to where this is all heading. It was the highest volume day of the year and probably the highest in the last three months, all heading lower. Big volume on a big losing day makes bulls turn tail and run, which is exactly what happened today.

NASDAQ Volume 2,393,749,000
NYSE Volume 6,313,925,500

The commodity complex was also highlighted as NYMEX crude gained $3.70, to $89.34, mostly in concert with the developments in the oil-rich region of North Africa and fears that the Suez Canal might be shut down. Gold reappeared as a safe haven, rising $22.30, to $1,340.70. Silver also abruptly ended its month-long decline, adding 89 cents, to $27.92.

As far as the markets are concerned, the Dow 12,000 hats can be safely put away for another few years and the cheerleading crony capitalist reporters can begin acting more like adults for a change (though we doubt this will happen).

Logically, the end to economic catastrophes, such as the one which began in 2008 and has not ended, is war, and that may be what we're seeing the beginning of in Egypt and surrounding nations. Sooner or later, the Egyptian side of the blockade of the Gaza Strip will be opened wide and when that happens, well, they may as well be the gates of hell.

This story is sure to be continued, though the likelihood of US markets continuing their collapse in a straight line is not prominent. The powers that have been running the markets for the last three years will paper this over on Monday and attempt to contain the damage. It will not do them any good, as the geopolitical issues will not hide to corruption and illiquid conditions of the major banking institutions, to say nothing of the government which supports them and adds debt and deficits by the minute.

No, this is only the beginning of more lies and stupidity.

Thursday, January 27, 2011

Unemployment Up, Durable Orders Slip, But Markets Stable

Just in case anybody thinks that Bernanke's QE2 program isn't working perfectly (in other words, shoveling billions of dollars to the nation's largest banks), a quick recap of today's headlines and the resultant market moves should suffice to argue that US stock markets have permanently divorced themselves from reality.

Initial jobless claims came in at 454,000 in the most recent week. The market was looking for 400,000. Oops! The official reason for the rise from last week's reported 403,000, and the highest number since October was snow. OK, we're officially not buying that.

Durable orders for December declined by 2.5%. Analysts were expecting a gain of 1.5%. After all, Christmas falls in December, and everybody got a Lexus, right?

As tensions mount in Egypt in advance of tomorrow's largest protest to date - led by former IAEA chief Mohamed ElBaradei - the US State Department has advised president Hosni Mubarak to remain calm, though the days of the strongman leader seem to be numbered. In the aftermath of the Tunesian revolution, Algeria and Yemen, along with Egypt, appear to be on the brink of revolt.

Apparently, this spate of less-than-encouraging news was insufficient for equity investors to seek investments with less risk. Maybe they - or the computers controlling the trading - are standing pat, awaiting the first announcement of 4th quarter GDP tomorrow at 8:30 am. The official estimate is that the US economy grew at a 3.8% annualized rate, after the third quarter came in at 2.6%. Those hoping for a strong GDP number may wish to recall that residential real estate nearly ground to a halt in the 4th quarter, due to the fruadclosure scandal and that's not a big positive. The number ought to be interesting, just to see how far the government will go to convince everyone that the recovery is real and continuing, when the facts say the recession never actually ended and the only place in the country feeling particularly good about things in in lower Manhattan.

Dow 11,989.83, +4.39 (0.04%)
NASDAQ 2,755.28, +15.78 (0.58%)
S&P 500 1,299.54, +2.91 (0.22%)
NYSE Composite 8,207.06, +13.42 (0.16%)

Major indices were all marginally higher on the day, though the psychological barriers at Dow 12,000 and S&P 1300 remained difficult to breach. Both indices briefly advanced into the beyond, but generally flatlined below those levels for the bulk of the session. Internals suggest an unconvinced market sentiment, with 3454 stocks advancing and 2964 declining.

There were 159 new highs and 14 new lows on the NASDAQ, while on the NYSE new highs led new lows, 252-9. Volume was slight, as usual.

NASDAQ Volume 2,033,972,000
NYSE Volume 4,773,436,000

Commodities were mostly beaten down, as NYMEX crude dipped another $1.69, continuing the recent trend, to $85.64. Gold also remained under pressure, dropping another $14.60, to $1,318.40, back to October, 2010 levels. Silver dropped 10 cents, to $27.03, well off the December highs of $31.

The disconnect between the markets and reality is palpable. The wheels came off a long time ago, but the sputtering US economy has yet to be reflected by the Fed-fueled stock markets. Something's got to give, and when it does, it should be big.

After hours, Amazon (AMZN) released 4th quarter earnings and investors were not amused, sending the stock down to 166.74 a loss of 17.71 (-9.60%) at 5:00 pm EDT.

Wednesday, January 26, 2011

27 Months of ZIRP

For those not in the know, ZIRP stands for Zero Interest Rate Policy, the policy which the FOMC of the Federal Reserve reiterated again today, ensuring that the federal funds rate will remain at zero at least until March 15, the date of their next meeting, unless some exogenous event - unlikely - forces their hand in the interim.

The zero per cent federal funds rate obviously applies to banks only, those borrowing from the Federal Reserve. Sadly, you and I cannot receive such largesse. Were that the case, the conditions under which most Americans suffer - high debt and high rates - would be greatly alleviated.

Alas, that is not the mandate of the Fed, however. Their goal is - despite what they or their slaves in congress might tell us - to nuke the toxic assets and malinvestments made by the big national banks into some far away wasteland, never to be heard of or seen again. The problem is that the banks are not happy with the condition. They wish to have their cake and eat it too. Not only have they been made whole for their subprime scandals and toxic mortgage mistakes by the Fed, but they continue to hold onto these assets as though they are magic candy, sending out delinquency notices and foreclosing on families who cannot meet their demands for payment.

Would the banks simply stop playing their charade on the American public and just take the losses as they should, our economy could get moving again and interest rates would rise to some acceptable level - maybe three to four per cent - where everybody would be happy. Of course, that would necessitate some degree of pain to the likes of Citigroup, JP Morgan Chase and the rotten Bank of America (could they please change their name? It makes all of us US citizens look bad.) and that would simply not be acceptable.

This two-year old Fed policy of zero per cent interest on federal funds has been a complete failure. The economy continues to limp along, though money flows freely to Wall Street and the banks, on a daily, regular basis. Meanwhile, real unemployment remains at 18-20% (Great Depression levels), the federal government continues to run extraordinary deficits ($1.5 trillion for fiscal 2011), and homes remain unaffordable to the majority of Americans. If the banks would write down and write off their bad loans, the real estate market would crash, making homes more affordable than ever.

But it won't happen. Not with a nitwit in the White House and a gaggle of othr equally worthless politicians demanding the status quo remain in play. No banks go down, which means no growth in the economy.

So be it.

We've had ZIRP since December 2008, and will have it for the rest of his year, probably. The Fed has long ago run out of good ideas with which to fix a broken economy. Now would be a good time to abolish it.

Dow 11,985.44, +8.25 (0.07%)
NASDAQ 2,739.50, +20.25 (0.74%)
S&P 500 1,296.63, +5.45 (0.42%)
NYSE Composite 8,193.64, +52.51 (0.64%)

Advancers finished well ahead of declining issues, 4128-1605. On the NASDAQ, there were 160 new highs and just 13 new lows. The numbers on the NYSE were similar, 241-11. Volume was just a tad better on the NASDAQ. The NYSE might just as well have been closed. The Dow punctured the 12,000 mark, but couldn't hold it; party hats were deferred until another day.

NASDAQ Volume 2,047,729,500
NYSE Volume 4,812,036,000

The new March front end oil contract got bid up $1.14, to $87.33, a price that is largely unsustainable. NYMEX crude should be sitting at $70 or less per barrel. Anything above that acts as a tax on consumers and slows the economy further. Gold was actually higher, though only by 70 cents, to $1,333.00. Silver gained 32 cents, to $27.13, and seems to be stabilizing along with gold at these levels.

The Fed says there's no inflation (except for food and fuel). Obviously, they live in a different world than ours, where one neither has to eat, stay warm or drive a car. No wonder they're keeping interest rates at ZERO. It matches their collective IQ.

Tuesday, January 25, 2011

Stick Save, and a Beauty!

The US stock markets are such a massive fraud. Not that other stock markets aren't, I simply don't know them well enough, though I can take a measured guess that there's some degree of flipidation or flamenomics in play. After all, these stock marketeers are all tied in with the TBTF banks in their own countries.

So what if the entire global banking system is just a huge fraud played upon the middle and lower classes by an elite upper class? Well, we would expect high prices, shoddy service, broken promises, an unsustainable drain from the most productive class element, working people. Were that not enough, the banks in America have brought us much more, as in blatant fraud, bailouts with taxpayer money, record bonuses for executives, voodoo accounting by which they artificially inflate their own earnings, all the time while they are technically insolvent.

Well, then what?

That would be a government overthrown in Tunesia, the nation of Iceland already defaulted, riots in Egypt and Ireland about to go ballistic, insurance companies suing banks, banks walking away from houses they don't want to own, states and municipalities suffering from reduced tax revenues, investigations into pension funds (though like all investigations conducted by government agencies, the result is usually negligible and never is any individual held civilly or criminally culpable), outlandish, never-before-seen federal deficits, an interest rate permanently plugged at ZERO, and a myriad of other social developments such as tent cities, rising bank robberies, wider social distress and general disagreement with government policies.

There isn't room in the blogosphere to represent the kind of damage being done by the Federal Reserve and Chinese central bank's endless money and credit creation (same thing), but the stock markets, supposedly acting as a barometer measuring corporate strength - while falsely implying that America is somehow better for this - are absurdly manipulated, controlled and corrupted.

Today's action is a pure case of intraday manipulation. Let's forget the past two paragraphs for a moment. They're there, they're real, but they apparently don't matter to stocks, because, if they did, stocks would not have staged the dramatic recovery it did today, most of it in the last fifteen minutes of trading.

Just for the record, at the lows for the day, the Dow was down more than 80 points, the S&P was off 10, the NASDAQ down 23. Now, look at the close. The only things that changed were the prices of these "securities." The lows of the day were met around 2:30 - 3:00 pm. In the final hour of trading, stocks went straight up.

The news of the day, in fact, was largely negative. The Case-Shiller index of residential home prices fell for the fifth consecutive month.

Dow 11,977.19, -3.33 (0.03%)
NASDAQ 2,719.25, +1.70 (0.06%)
S&P 500 1,291.18, +0.34 (0.03%)
NYSE Composite 8,141.13, -16.29 (0.20%)

3308 stocks fell; 3193 gained. On the NASDAQ, there were 63 new highs and 23 new lows, the gap compressing once again. The NYSE had 103 new highs; 18 new lows. Volume... well, same old story.

NASDAQ Volume 1,949,290,625.00
NYSE Volume 5,169,361,500

Commodities really complete the story. Consider all that's been reported here in the last few paragraphs. It's all real. Would anyone in their right mind believe that this is an environment ripe for inflation. There are 15 million working-age Americans out of work. 43 million Americans are on food stamps. The Fed will have to print maybe another $10 trillion, maybe more, over the next three years to keep the carousel turning. It's simply not going to happen, or, if it does, will end in disaster.

But the commodity trade over the past week has been flashing those same old deflationary signals again, all on the backs of oversupply and slack demand. Americans, and to a large extent, the populations of other nations, are being squeezed, and their ability to continue to grease the skids of commerce is waning.

Crude was off again, down $1.68, to $86.19, a two-month low. Gold continued what is now a full-blown exodus, losing $12.20, to $1,332.30. Silver fell 52 cents, to $26.80. energy and food also fell, nearly across the board. There's more than enough of everything. So why are we paying through the nose for it?

Everything will follow home prices. Everything, because if the value of a roof over one's head is discounted, then what, really what, has any value?

Price discovery will eventually set free all assets to their rightful holders.

Monday, January 24, 2011

Being Wrong for so Long Might Be Right

Just as the financial sentiment seemed to be turning, the Fed POMO'd another $8.8 billion today (who's counting, anyway?) to launch the markets off into the stratosphere.

There will be no correction for the time being, as I've been calling for, as this is not a rational market. Nor is this a free market, or a trusted market; it is a Ponzi market, underwritten by taxpayer dollars via the Federal Reserve, which buys bonds from the Treasury.

I've been out of stocks since July of 2007. I missed the collapse and am now missing the huge comeback, but I'm not concerned. There are other, safer places to hide/invest than in semi-worthless pieces of paper.

For those not yet convinced, today was a bright one. Equities were up smartly at the open and continued to pile on gains throughout the day. All the big money was putting down markers, via options, for the next ramp up, due before February 18. Then they will stage a sell-off, rinse and repeat. It's how things work when a few insiders control 90% of the 70% of trades done by machines and the Fed keeps handing them monopoly money to facilitate more trading.

So be it. Or not (my Murphy's Law sense tells me that the moment I relent, the collapse will occur).

Dow 11,980.52 108.68 (0.92%)
NASDAQ 2,717.55 28.01 (1.04%)
S&P 500 1,290.84 7.49 (0.58%)
NYSE Compos 8,157.42 51.67 (0.64%)

Advancers decimated decliners, 4454-2089. On the NASDAQ, there were 81 new highs and 18 new lows. On the NYSE, 130 new highs and 17 new lows. Despite the apparent panic buying of equities, volume was again mysteriously missing, as were avid day-traders (the approach now being pushed by none other than nationally-syndicated political talk-show host and self-appointed "Great American," Bill Cunningham. I rest my case.

NASDAQ Volume 1,926,345,875
NYSE Volume 4,484,331,500

Amazingly, crude oil didn't pop off another couple of bucks along with the market. Instead, crude futures were sold off by $1.24, to finish at $87.87, the lowest price since early December. Gold also had no luck catching much of a bid, as stories of a gold bubble are rampant within the mainstream media. Gold did finish marginally higher, up $3.50, to $1,344.50, though there's a feeling that the selling isn't over with just yet.

On a brighter note for gold-bugs, there is growing concern that there's far too much "paper" gold in vehicles like the GLD and other derivatives, which far outstrip the actual metal on hand and deliveries are being delayed or bought out at premium. The same, to a lesser extent, applies to silver, which fell another 11 cents, to $27.32, though it was much lower midday.

That's all for now.

Friday, January 21, 2011

A Day of Little Consequence

Besides GE beating 4th quarter estimates soundly and Bank of America missing badly (though the mainstream media call the earnings nember "confusing"), it was a pretty dull session.

Dow 11,871.84, +49.04 (0.41%)
NASDAQ 2,689.54, -14.75 (0.55%)
S&P 500 1,283.35, +3.09 (0.24%)
NYSE Composite 8,105.75, +29.03 (0.36%)
NASDAQ Volume 1,936,012,000.00
NYSE Volume 5,191,208,500

Declining issues held a 3321-3166 advantage over advancers. NASDAQ, the only major index to finish lower, recorded 53 new highs and 23 new lows. The numbers were 77 and 12 on the NYSE, respectively.

Oil dropped 48 cents, to $89.11. Gold continued an extended decline, losing $5.50, to $1,341.00. Silver fell 5 cents, to $27.43. All trends seem to remain in place for a top and correction, soon.

Americans continue to decline in education, living standards and general decency. These trends can be reversed, though it takes work, another thing seemingly in decline in the USA.

Thursday, January 20, 2011

Another Dip for Equity Speculators

As we've heard from countless pundits and analysts, stocks are cheap and headed higher in 2011.

The market, however, and continued unemployment and rising homelessness, tell us that American consumers are all but tapped out and seething over higher fuel and now, food prices. Ben Bernanke's great experiment with QE2, now well into its third month, continues to shovel money at the Primary Dealers, who, in turn, speculate and control the stock markets.

When they wish to sell, they do. When they desire gains, they simply hit the "BUY" button and spend the money the Fed has lavished upon them, which is why today's decline was simply wiped away and turned into a smallish dip. The speculators have all of their bets covered and will crush anybody, short or long, standing in the line of fire.

Stocks were getting creamed earlier in the day before the pretenders of recovery decided to give the market a little boost with some controlled buying. The Dow was down as much as 80 points before recovering into the close with only a small loss, though little could be done to stem the tide against Apple and other tech stocks on the NASDAQ, which suffered through another drubbing, the second in as many days. The NASDAQ, probably the most inflated of the major indices, has lost 62 points over the course of the last two sessions, but that's only the very beginning of what appears to be a massive exodus from high-flying tech names, since the index is up more than 600 points since September, 2010.

Dow 11,822.80, -2.49 (0.02%)
NASDAQ 2,704.29, -21.07 (0.77%)
S&P 500 1,280.26, -1.66 (0.13%)
NYSE Composite 8,076.72, -28.20 (0.35%)

Despite the marginal losses overall, especially on the Dow and S&P, the A/D line told a more sinister story. Declining issues beat back advancers by better than a 2:1 margin. Losers beat winners, 4359-2107. On The NASDAQ, there were 36 new highs to 22 new lows, the convergence now notable and significant of a major turning point. On the NYSE, new highs held sway over new lows, 44-24, also close to doing a complete reversal. Volume picked up again today, marking the best of the week, which is bad news for holders of stocks, generally.

NASDAQ Volume 2,277,221,500.00
NYSE Volume 5,579,977,500

What moved markets and commodities on the day was a set of data points out of China, where inflation is running at a 4.6% rate (probably higher) and the government is under increasing pressure to keep a lid on rising food prices. Unlike in the USA, where higher prices for things we put in our bodies is simply a sign of "recovery" and passed along to the consumer, in China people have a tendency to get a little bit crazier when they are facing wholesale starvation. If China doesn't clamp down hard on rising prices, there will be riots and military movements inside the Great Wall.

Commodities reacted strongly to China's inflation data, as they should have. Oil moved lower by $2.00, to $88.86, its lowest level in two weeks. Gold was pounded lower by $23.70, to $1,346.50, a two-month low, but likely only a temporary setback. Silver was punished mercilessly, losing more than 4.5%, down $1.33, to $27.47. Surely, the gold and silver trade is once again in the hands of the major world banking interests, who are resolute - though highly unsuccessful - in keeping prices of the precious metals down. But they will on occasion carry the day, or week, though for the multitude of investors who swear by gold and silver, these continued declines appear as buying opportunities.

Friday marks option expiration for a multitude of stocks and that derivative market will influce trading on the final session of the week. Monday now appears as the best possible continuation of the down-trend.

Wednesday, January 19, 2011

NASDAQ Sells the News

On Monday, we heard that Apple CEO Steve Jobs was going to take a six-month medical leave of absence. On Tuesday, after the closing bell, Apple announced another smashing quarter with great earnings and revenue. On Wednesday, Apple stock got hit with the classic "sell the news" earnings aftermath sell-off.

The decline actually began with the Jobs press release on Tuesday morning, but after earning were released and the stock was initially rebounding, it opened lower on Wednesday and dragged the rest of the NASDAQ down 40 points. Though Apple has only lost 10 points over the past two days, the damage is being felt in other big tech names such as Cisco (CSCO), Dell (DELL), Amazon (AMZN) and Google (GOOG). Of course, it's far too early to tell, but, considering the way stocks have appreciated over the past 4 1/2 months, this could be the beginning of a significant correction, one probably overdue and timed perfectly for post-earnings profit-taking. As usual, the smart money may be getting out while the getting is good.

With tech sliding, the rest of the market didn't fare well, though major industrials on the Dow maintained a sense of stability. Another point of focus should be stock options, which expire on Friday. After that, markets could be in for a free-for-all.

Dow 11,825.29, -12.64 (0.11%)
NASDAQ 2,725.36, -40.49 (1.46%)
S&P 500 1,281.92, -13.10 (1.01%)
NYSE Composite 8,104.92, -85.99 (1.05%)

Losers beat gainers by an unhealthy margin, 5161-1411, indicating that the decline, though well-masked on Apple's move, was certainly not contained to tech stocks alone. On the NASDAQ, there were 147 new highs, but just 12 new lows. The NYSE reported 186 new highs and a mere 22 new lows, though the high-low indicator is somewhat of a lagging one, especially after a huge rally such as that seen since September. It will take a while for new highs to fall off in the case of a real correction and an even longer time period for fresh new lows to be plumbed. Volume was at its best level of the week, another disturbing data point.

NASDAQ Volume 2,106,258,500.00
NYSE Volume 5,298,377,000

Crude oil was relatively flat, dipping 52 cents on the front-end futures contract, to $90.86. Gold gained late in the day, up $2.70, to $1370.40 at last look. Silver continued to slide, however, down 12 cents, to $28.76.

Thursday will be a big day for earnings, with nearly 100 companies reporting, including big names such as Capital One (COF), Southwest Airlines (LUV), Morgan Stanley (MS), Coach (COH), Freeport-McMoRan (FCX) and Advanced Micro Devices (AMD).

Stay tuned. This may become interesting again.

Tuesday, January 18, 2011

Fed Leaves Big Tip

On Tuesday, the Federal Reserve purchased $1.74 billion in Treasury inflation-protected securities, otherwise known as TIPS, in an outright purchase as part of the $600+ billion QE2 program. The extra gobs of money created a nifty rise in securities - doesn't it always? - as the major stock indices rose to new highs. It is looking like January will see a positive "January Effect," a term that will be bandied about over the next two weeks if the markets are able to hold onto the gains made thus far or improve upon them.

The January Effect, as it is known to traders, is the theoretical assumption that as the markets go in January, so will they go the remainder of the year. This gauge is supposedly right something along the lines of 85% of the time if January is positive. Over the past two years - both of which saw falling equity prices - the "effect" was not seen, as both 2009 and 2010 turned in impressive upside performances.

While it might not correlate to downside Januaries, two consecutive years of non-conformation raises the issue of whether Fed meddling has rendered all "old" measures of anticipated returns nil. With this January off like gangbusters, what is the chance of ending the year lower? Well, we've got 11 more months to find out, but, if the Fed continues its inflationary policies, stocks will most likely end the year higher, if only to keep pace with the "moderate" inflation, which could turn into "unwieldy" in the second half of the year or sooner.

Wall Street is certainly having its way on the easy money train of late, and while it's probably not too late to jump on the bandwagon for some quick-turn profits, there still is considerable risk, even though nobody will admit to it.

Upward we go, as earnings this week will flow like mother's milk.

Dow 11,837.93, +50.55 (0.43%)
NASDAQ 2,765.85, +10.55 (0.38%)
S&P 500 1,295.02, +1.78 (0.14%)
NYSE Composite 8,190.91, +16.79 (0.21%)

Considering today's gains, the A/D line did not come in heavily on the side of advancers, which nonetheless beat decliners, 3464-3073. On the NASDAQ, new highs overwhelmed new lows, 269-12. On the NYSE, the beat was not quite as robust, with new highs checking in at 304, against 47 new lows. Volume was fairly strong, but not solid enough from which to draw any conclusions about future direction.

NASDAQ Volume 2,032,031,375
NYSE Volume 5,828,719,500

The front-end (February) crude oil contract on the NYMEX was nearly flat, losing 16 cents, to $91.38. Oil remains at elevated levels. Gold rebounded from last week's drubbing, picking up $7.70, to $1,368.20, with silver adding 58 cents, to $28.91.

There doesn't seem to be any downside to buying equities these days. Even in the case of Apple (APPL), where founder and CEO Steve Jobs announced a six-month medical leave of absence, the stock fell more than 7 points during the session, but recovered back most of that in after-hours trading as the company posted numbers in excess of Street estimates. IBM also reported and beat, while Citigroup announced a 50% miss (.04 cents on expectations of .08) prior to the opening bell.

Friday, January 14, 2011

Stocks Extend Gains for 7th Straight Week

In its latest POMO, the Fed purchased another $7.3 billion in bonds from the Primary Dealers on Friday, which, of course, made buying yesterday's dip the right move for equity traders.

Stocks rallied sharply off a quiet beginning, with all major indices getting a diagonal lift throughout the day. The market has now overextended an already extended position, as new highs were hit in all the majors. Those calling for a pull-back thus far have been sorely disappointed and probably are feeling a bit embarrassed at doubting the power of the Fed and fiat money created out of thin air.

Leading the way were bank and computer chip firms after JP Morgan Chase (JPM) and Intel (INTC) both reported earnings better-than street estimates.

Investors took December retail sales (up 0.5%), capacity utilization (76%) and industrial production (+0.8%) as positive signs that the recovery was continuing apace. A higher-than-normal CPI, which came in at 0.5%, did little to contain the enthusiasm.

Dow 11,787.38, +55.48 (0.47%)
NASDAQ 2,755.30, +20.01 (0.73%)
S&P 500 1,293.24, +9.48 (0.74%)
NYSE Composite 8,174.12, +54.69 (0.67%)

Advancing issues far outpaced decliners, 3972-2547. There were 233 new highs and 112 new lows on the NASDAQ; On the NYSE, there were 234 new highs and 153 new lows, the lows dominated by Municipal Bond funds, which have been hard hit in the aftermath of Meredith Whitney's call that there will be hundreds of municipal defaults this year. Nobody seems to be doubting her as states and cities struggle with bloated budgets and slim tax receipts.

Volume was at its best level of the week, a fitting conclusion to a week characterized by high drama and low reactions.

NASDAQ Volume 2,030,708,125.00
NYSE Volume 5,228,476,000

Oil tacked on a 14 cent gain, to $91.54, but the precious metals were savaged again. Gold traded down $26.50, to $1,360.50, its lowest level in some months, while silver was whipsawed lower by 94 cents, coming in at $28.32. The level of complacency in all trading areas - outside of the muni bond complex - is stunning. There simply is no risk aversion, a recipe for disaster, which the Fed has so far been able to contain.

Thursday, January 13, 2011

No POMO, No Follow-through, BTFD

For the uninitiated, BTFD is an acronym for Buy The F---ing Dip, as relates to stocks in the Bernanke free-money era in which we are currently ensconced. Today's dip, though not great, may be yet another buying opportunity for the momentum-chasers still convinced that buying stocks presents the best profit potential with limits to the downside.

One can hardly argue with the reasoning of the Mo-mo crowd over the past 4 1/2 months, as stocks have been on a tear since Labor day, 2010, and are up whopping amounts from their March 9, 2009 lows. Since it's still smartest to buy low and sell high, any decline, no matter how tiny, represents another chance to cash in on short-term trades, especially those of long duration, which today means a day or longer.

What may have riled markets today were a raft of displeasing data, beginning with a ramp up in initial unemployment claims, reported at 445,000 for the week, as opposed to the "expected" 415,000 and prior week of 410,000. Those figures are seasonally adjusted, with non-seasonally adjusted coming in some 230,000 higher, thus laying sufficient ground that the BLS figures are mostly for show and have not been trustworthy since the early days of the Bush administration.

While the mainstream media continues to drone on about the nascent recovery of the US economy, more than just casual observers are noting that said recovery has never much existed on Main Street and the various stimuli applied to the economy have benefited most Wall Street bankers and politicians who favor the status quo over real action or reform.

On top of the sorry-looking unemployment claims numbers came a PPI that was not very surprising, up 1.1% in December, with the core, which excludes food and energy, up a mere 0.2%, again unsurprising since just about anyone who drives or eats - and that would include just about everybody - has seen rocketing prices at the pump and the checkout counters in supermarkets. Food and fuel prices are accelerating far faster than the economy is growing, which is the express intent of Ben Bernanke's QE efforts, so we are now seeing the first signs of runaway inflation, with surely more to follow.

Stocks took a nose dive at the open, recovered, fell again and then raced higher into the close on short-covering by deft day-traders, which is just about everyone these days. Buy and hold and the former principles of investing have long ago been thrown unceremoniously out the window along with transparency and fair markets. The pre-planned hike by the Fed and Wall Street is working according to plan, and that plan is to squeeze every last dollar out of the middle class until they are on the verge of bankruptcy, starvation or revolt, or a combination of all three.

It is widely assumed that once the middle class is put under such dire conditions, the Fed will ease off the monetary gas pedal and all will return to the normalcy of peace, prosperity, milk, honey, wine and roses. This is assuming much, including that the bankers and other .01% of the population that benefits from the deprivation of the middle class will be sated and allow prices to lower and people to eat, breathe and drive freely without undue economic or political restraint. That is a rather large and unwieldy assumption and the Fed is asking for major trouble should they not know when to apply the brakes, which, if we are to take the nearly 100 years of Fed history as a guide, will not occur as planned, sending the economy careening into a wall of higher prices, stagnant wages, permanent high unemployment and lowered standards of living. Of course, this is all well and good, if you are a globalist, which our leaders in congress, the White House, on wall Street and at the Fed most certainly are.

Dow 11,731.90, -23.54 (0.20%)
NASDAQ 2,735.29, -2.04 (0.07%)
S&P 500 1,283.76, -2.20 (0.17%)
NYSE Composite 8,119.43, -3.55 (0.04%)

As one would expect, declining issues led the charge over advancers, 3530-2909. There were 208 new highs and 10 new lows on the NASDAQ; on the NYSE, 246 new highs to 108 new lows was something out of the ordinary, with the new lows ramping up to levels not seen this year. Volume remained stagnant at low levels as usual.

NASDAQ Volume 1,960,601,750
NYSE Volume 4,822,930,000

Commodities trended lower, except in the agriculture space, where all grains were higher. Crude oil for February delivery shed 46 cents on the NYMEX, to $91.40, still at elevated levels despite storms slowing the rate of travel for the past three weeks. Gold took a major hit, down $14.00 late in the day, to $1374.00. Silver also was bombarded by selling, losing 91 cents, to $28.74. The metals, not conforming to a massive drop in the dollar index - off 0.85, to 79.20, are telling us nothing about current conditions except that the markets simply aren't making much sense right now. Stocks normally would have been up on such a large (>1.0%) move, though the effects of the unemployment condition and inflation gauge may have ameliorated such effect.

Global populations are in for a double-kick of inflation, with energy and food prices leading the way. If this is somehow good for global growth - a starving, immobile mass of humanity - it is beyond the scope of most economic experts. It is only in this new age of never-ending money supply inflation that the world now turns, for better or for worse, 'til death, taxes or $4/gallon gasoline do we part.

Wednesday, January 12, 2011

Stocks Head Higher on Portugal Good News

Stocks got a big boost today without assistance from the Fed, though it is reasonable to assume that the more then $15 billion in POMOs over the previous two days should have given the big banks enough ammo to fire away at will at equities.

Some of the excitement seemed to be baked into Portugal's raising a billion or so Euros in a treasury auction with participation by China and Japan. The duo with money from the Orient seems intent on buying up whatever they can of the failing states of Europe. More power to them though these investments seem less than shrewd.

What the market didn't (or maybe they did) take into account was the excessive rise in import prices, up 1.1% in December after a similar rise in October and a 1.5% increase in November. With imports flashing inflation were traders more giddy with anticipation over rising prices for all assets, including equities, or do they believe that this is yet another "manageable" situation that has nothing at all to do with QE2? It's hard not to see the effects of the Fed's non-stop printing of greenbacks anywhere else on the planet. They are exporting inflation worldwide, with food prices up everywhere, especially in developing countries, which can least afford it.

Elsewhere, Wells-Fargo upgraded the entire banking sector, which is something akin to declaring yourself the winner of a golf tournament which you organized, scored, competed in and handicapped. It just reeks of self-dealing, but, other market participants seem inclined to go along, as the indices popped to new highs.

In the housing market, home price declines are accelerating and have reached a level more severe than during the Great Depression. Various reasons include high foreclosure rates, underwater mortgages, high unemployment and a glut of homes on the market.

Dow 11,755.44, +83.56 (0.72%)
NASDAQ 2,737.33, +20.50 (0.75%)
S&P 500 1,285.96, +11.48 (0.90%)
NYSE Composite 8,122.98, +104.30 (1.30%)

Naturally, advancing issued far outpaced decliners, 4617-1925. On the NASDAQ, there were 288 new highs and 8 new lows. On the NYSE, 310 and 42, respectively. Volume was low again, though after a year and a half of this thin market, is now being reported as "normal," being part of the "new normal" group-think.

NASDAQ Volume 1,887,035,375
NYSE Volume 4,782,270,000

Crude oil moderated a bit, but still managed to gain 75 cents, to $91.86. Gold had a gain of $1.50, to $1,385.80, and silver added five cents, to $29.54.

The Street seems to be well ahead of itself on the upper end of a four-month plus rally which has taken the Dow up 1740 points since the end of August. The S&P and NASDAQ have performed in similar fashion, the NASDAQ being the best of all the indices in percentage terms.

With 4th quarter earnings about to roll out in earnest next week, one wonders how much more lift there can be with markets already at elevated levels. We'll find out soon enough whether January's rise is sustainable or merely pushing on a string.

Tuesday, January 11, 2011

Stocks Move Forward on POMO of $7.8 Billion

Like it or not, the Federal Reserve continues to pump fresh money into the hands of the Primary Dealers, keeping the markets propped up in a thoroughly unconventional manner. Monday's POMO of $7.79 billion Outright Coupon Purchase, was followed again today by a slightly larger Outright Coupon Purchase POMO of $7.802 billion.

While the Fed and the PDs do their thing t make America great (or line their own pockets with taxpayer dollars, as the case may be), stocks have just kind of languished around, levitating today just above the flat line.

Dow 11,671.88, +34.43 (0.30%)
NASDAQ 2,716.83, +9.03 (0.33%)
S&P 500 1,274.48, +4.73 (0.37%)
NYSE Composite 8,018.68, +52.59 (0.66%)
NASDAQ Volume 1,907,460,750
NYSE Volume 4,489,686,000

Meanwhile, New York City braces for another wicked snowstorm, scheduled to hit the city and other large metro areas overnight. Should the Big Apple receive another foot of snow that they're unable to deal with, the stock market - for the reason that traders may not be able to make it to lower Manhattan and the lack of a Wednesday POMO - might experience a little bit of a time out and stocks may drift lower.

They should drift lower no matter what happens, as the indices are nearing a five-month rally without a break, also unusual, but not in this environment.

Advancing issues dominated decliners, 4016-2457, volume was light and there were 226 new highs on the NASDAQ, to just 12 new lows. On the NYSE, the numbers were 237-8, in favor of new highs.

Oil caught another big bid today, gaining $1.86, to $91.11 on the front-end NYMEX contract. Gold rolled up a gain of $10.20, to $1,384.30, while silver rocketed 64 cents higher, to $29.50. Outside of the commodities space, there simply wasn't much action, as has been the case for most of the past six weeks, though with earnings starting to trickle out - Alcoa (AA) started out with an .02 beat of Street estimates yesterday after the bell - that should provide some excitement, though computers - those machines actually executing 70-80% of all trades - are notoriously unemotional.

Some day, something may change. In the meantime, it's not how one reacts to news and events, but how well prepared one is for all contingencies.

Monday, January 10, 2011

More of the Same Old Broken Market

Instead of sounding like a broken record, just the brutal number, and note that stocks were well into the red (Dow down 100 points) early on, but just kept climbing all day.

Dow 11,637.45, -37.31 (0.32%)
NASDAQ 2,707.80, +4.63 (0.17%)
S&P 500 1,269.75, -1.75 (0.14%)
NYSE Composite 7,966.09, -14.23 (0.18%)

Advancing issues actually beat decliners, 3545-3074. NASDAQ new highs: 158; new lows: 10. NTSE new highs: 132; new lows: 13. Volume was horrible. This is a dead market with dead money.

NASDAQ Volume 1,887,066,625.00
NYSE Volume 4,552,878,000

Oil futures were priced higher because of a BP spill in the Trans-Atlantic Pipeline, proving that even when the oil companies screw up, they screw us. NYMEX crude was up $1.22, to $89.25. Gold gained $5.20, to $1,374.10. Silver was up 19 cents, to $28.86.

I have to kick my tenants out of a house I was renting to them. Apparently, the Lease/Purchase deal I made with them for $400/month (no, that's not a typo) was not good enough. They haven't paid January rent. Unbelievable.

I also un-friended (that is not a word... dis-friended?) a guy I knew from high school on Facebook. He's an overbearing bully who is one of those people who is always right, no matter what. In high school he was just overbearing. The bully part probably came from being married, having kids and needing numerous operations.

I decided to quit communicating with him because of unsatisfactory feelings every time I made contact. His loss, I suppose. Facebook is a joke in many regards because people aren't all open and cheery and sharing. Most people are somewhat secretive and tend to argue. Facebook will become more of a battleground than a "social" network. Dis-friending will be a new trend in 2011.

Friday, January 7, 2011

Banks Lose in Mass. Case; Jobs Short; Predictions 2011, Part 3

Outside of the first fifteen minutes of trading on Monday, the markets for 2011 have been essentially flat, and with good reason, as they were customarily topped out by the end of December, Monday's (January 3rd) exuberant explosion to the upside a mere phantom rally based on nothing other than bloated expectations.

what everyone anxiously held their collective breaths for - December non-farm payroll data - was released just as usual, though the results were anything but. The number printed at 109,000 new jobs over the month, well below expectations, but the "official" unemployment rate fell to 9.4%, the lowest in something like a year and a half, but pure farce, based upon some 500,000 former workers ceasing to collect unemployment insurance.

Since the Bureau of Labor Statistics is quickly becoming known as an Orwellian Bureau of Disinformation for their gently-massaged, highly-suspect numbers from month to month, the rosy outlook from the 0.4% drop in the unemployment rate merely masks the reality of half a million Americans being switched from once-productive members of society to then-unemployed to now permanent membership of the underclass of welfare and food stamp recipients.

Stocks took a bit of a nose-dive on the news, and traded in the red the entire session, though recovered some of the ground late in the day. There was nothing to lift stocks except the unhappy comedy of whirring computers and drugged-up Americans believing anything being said on the great gizmo of propaganda tube.

We now have two or three different economies co-existing in the nation. There's the super-rich, who could give a damn about anything other than profits and skimming, who are seldom seen in public but variously fund and plunder from the other classes. There's an upper-middle class of suburban Americans who, though stretched thin by taxes, utilities and inflation, still have enough in the tank to keep believing in the American dream.

Those two groups probably account for maybe 35% of the nation's population, many of them part of the corporate culture, others either working for some form of government entity or drawing retirement benefits from one. Down below is the other 65% of the population, the massive, but shrinking, middle class, which has seen upward mobility destroyed by decades of debt and wage stagnation, their incomes reduced by the dual forces of inflation and a weakening dollar. They are becoming an endangered species, being dragged closer and closer to a wall of insolvency wherein lives the impoverished underclass, though many, thanks to food stamps, rent subsidies and outright handouts from the government live as well as the middle class, without the stress of having to work, pay taxes or any other kind of bill.

This end group is what America is quickly becoming: a dumbed-down horde of mindless babblers, poorly educated and without hope for anything but a dismal future. Those in their twenties or thirties wonder when the next shoe will drop, when their job will be cut, not when they will be promoted or receive the largesse of a raise. Those are the disillusioned, while their elders have already given up. In a world dominated by crooked politicians and ruthless bankers, democracy has been overwhelmed by neo-feudalism, cleverly disguised as a functioning society. Those below the arc of the curve, the 65%ers, have had their rights stripped away, their futures blunted, their wealth taken by the power of the state. For them, and for most of us on the fringe, the future never looked so stark, bleak and devoid of hope.

Wall Street, however, where prosperity is measured by the minute in point-gains and losses, might as well be off in another universe, it is so far removed, perceptually and philosophically, from the rest of the culture. They own, we rent. They take, we give. They win, we lose. The times are indeed precarious.

Dow 11,674.76, -22.55 (0.19%)
NASDAQ 2,703.17, -6.72 (0.25%)
S&P 500 1,271.50, -2.35 (0.18%)
NYSE Composite 7,980.32, -20.58 (0.26%)

Aligned with the headline number, losers beat gainers, 3884-2595. On the NASDAQ, there were 148 new highs and just 8 new lows. On the NYSE, the numbers were similar, with 141 new highs and 9 new lows. Volume was lower than any other day this week as the rats jump off the ship.

NASDAQ Volume 1,991,273,500
NYSE Volume 5,659,220,000

Crude oil futures finished down again, losing 35 cents, to $88.03. Gold continued to stall, down $2.80, to $1,368.90. Silver was in even worse shape, losing 45 cents, to $28.67.

In Massachusetts, the state's Supreme Court, in what promises to be a landmark decision, threw out foreclosures brought by US Bancorp and Wells Fargo, saying that the jumbled maze of mortgage assignments and security pooling agreements does not constitute proof of ownership of a note and mortgage, thus making the plaintiffs in the action, the banks, without legal standing to foreclose. In other words, the court told the banks, "no note, no mortgage and no foreclosure. See ya," and dismissed the actions.

The ruling was a notable win for advocates of homeowners and middle class Americans and a potentially-fatal wound to the banks.

Predictions 2011: Stocks, Bonds, Politics and Social Trends

Stocks will languish in 2011, and share prices on January 1st, this past Monday, could well mark the highs of the year, since they were at the height of a four-month-long rally. Rather than another banner year like 2009 and 2010, truth will come out at last, that the economy isn't really recovering all that well, stimulus will have to come to an end at some point and valuations will be ratcheted downward. Corporate earnings will be hard-pressed to match year-ago figures, putting top-end pressure on securities.

Depending on data and also what Republicans in congress do about the debt ceiling, the situation could become even more dire than it already is, though the impression is that it's in everybody's best interest to just keep moving along until 2012, when the presidential and congressional elections will bring out the worst in everyone.

The following are the trading ranges I envisage for the major indices:
Dow: 9250-12000
NASDAQ: 2100-2750
S&P 500: 875-1300
NYSE Comp: 5650-8100

Bonds can't go much higher in yield for fer of exploding deficits and they surely won't decline radically in what appears to be an inflationary environment. The curve will flatten as longer-dated maturities remain calm while the short end inflates on the yield curve. Short term rates have been held down too low for too long, but they're there for a reason, and a big move is not expected.

Food and fuel prices will rise, Lady Gaga will dominate the cultural landscape as will "leaving it behind," a trend based on people fully giving up on the entire system of low wages, high taxes and costs out of control. Oil will not break above $100/barrel as it would be catastrophic and truly cause a depression. Again, that may wait until 2012.

In politics, the Republicans and Democrats will both try to appear adult, measured and in control, when in reality they have no idea what they're doing. 2011 will be another year of massive policy and monetary mistakes which won't be fully appreciated for years. The mortgage/foreclosure mess will cycle out of control and there may actually be prosecutions for some big Wall Street types, though not the top honchos. Any litigation will be for show.

There may be riots (some may already be occurring) over housing, food, jobs, welfare and anything the underclass needs to get by on, and an occasional murder, for vengeance, could take out a rich banker or two.

Mostly, it will be a year of hand-ringing over nothing. Industrious types will find new ways to make a living, while more and more people will fall into poverty, real poverty, not the kind displayed on TV. Tent cities could begin to become more than an eyesore, but a health issue as well, and we'll still be in Iraq and Afghanistan fighting wars for no good reason. China will continue to ascend as America's decline accelerates.

Thursday, January 6, 2011

Sideways Into Friday on December Jobs Data

Since the big gap-up run-up at the open on Monday, stocks have gone essentially sideways, as yet indeterminate as to the direction of the new year, with a new congress, but, unfortunately, the old guard still running the show down at Wall and Broad. Since the big new year's burst Monday morning, the Dow has traded in a very narrow 100-point range.

The show, duller than normal, is exhibiting the kind of trade flow that unsure markets normally do, up one minute, down the next, awaiting the next data flow, pivot point, news or rumor. That pivot or data point could come as early as tomorrow, and probably was delivered a little in advance, today, when, after being loudly trumpeted as the strongest holiday shopping season since 2007, retail sales for December missed analyst expectations.

This kind of "actual" numbers reporting should have been expected, considering the happy-faced lunatics which masquerade as journalists on the major cable and network news shows. They were fed a large baloney sandwich by wall Street in December, and, after gnawing through every last crumb, puked up the residuals to the moronic American consumer. On the news, the markets, instead of a quick reversal, merely glossed over and continued to trade along choppily.

Maybe it will take unbelievably horrible news to finally end the fraudulent rally that has consumed every last remnant of market confidence over the past four months. Then again, tomorrow's December jobs number may have been the plan to tank stocks and retail paper profits all along. We'll know by 8:30 am tomorrow. Until then, we can only wheeze, curse and vomit at the charade trading stocks has become.

Dow 11,697.31, -25.58 (0.22%)
NASDAQ 2,709.89, +7.69 (0.28%)
S&P 500 1,273.85, -2.71 (0.21%)
NYSE Composite 8,000.90, -39.14 (0.49%)

Declining stocks held sway over advancers, 3878-2615. NASDAQ new highs: 189; new lows: 9; NYSE new highs: 199; new lows: 6. Volume was moderate.

NASDAQ Volume 2,118,538,500.00
NYSE Volume 5,440,849,500

Oil for February delivery fell another $1.81, to $88.38. Gold dipped $2.00, to $1,371.70. Silver lost 7 cents, to $29.13.

Unemployment data for the most recent week showed an increase of initial claims, to 409,000, after a revised figure of 391,000 in the previous week. If there were post-holiday layoffs, which there always are, they will be reflected next week. Tomorrow's non-farm payroll report, as dubious as the numbers always appear to be, may, nonetheless, be a market mover.

Wednesday, January 5, 2011

Stocks Bounce Back; Slaughter of PMs Continues; Predictions 2011, Part 2

After unexpectedly rosy employment data from ADP - showing US employment gains of 295,000 in December - failed to lift market futures, the major indices opened with a decidedly negative bias, sending the Dow down by nearly 40 points at the open with the others in tow.

As it turns out, however, the open, or just minutes into trading, witnessed the lows of the day, as unusual an event as a hole-in-one perhaps, or as a Democrat (or a Republican, for that matter) voting to cut spending.

Stocks levitated into positive territory until about the noon hour, then lazily spent the rest of the session moderating around the highs. A bit of a spark at the end of the day caused them all to close very close to or at their highs. So, we have a market that does nothing but go up, endlessly, it appears, run by HFTs (high frequency traders) and their trusty computer algorithms. It should be obvious - though it is not - to anyone who's studied markets and/or finance for more than 20 minutes that such a system cannot endure.

Meanwhile, the same Ponzi schemers traders have managed to make gold and silver look like the worst investments since 17th century tulip bulbs, smacking the two widely-held precious metals down for the second consecutive day. A glance at kitko daily charts clearly indicates that the manipulations by JP Morgan and HSBC are still in place, with their boundless short position being unwound during the US sessions, allowing them to BTD (Buy the Dip) as they surpress the spot price to a level at which they can semi-comfortably unload.

Nobody really knows how large the short positions of these two banks really are, or, worse yet, the extent of manipulation in gold, but if the past two days - and especially today, as the metals receded while oil spiked, breaking the correlated commodity trade - offer any kind of guide, they must be into it up to their stuffed shirt pockets.

We are currently in an inverted market in which the worst, riskiest and most speculative investments - paper money, stocks - continue to rise unabated and the most intrinsic, solid and stable investments (also those with a stellar track record the past 10 years) - gold and silver - are being shunned by the kleptocracy. All the while the Wall Street swindlers are telling you to buy equities and sell your gold and silver, because, according to them, they're "in a bubble," constitutes the worst form of the shell game, because as you sell your gold and silver to buy stocks from them, they are buying, yes, sir! gold and silver.

The best strategy these days is to play along with them, buying when they force the price of PMs lower, because, if they're doing it out of desperation, the prices are sure to rise. Demand for physical gold and silver (not ETFs or "holdings") is at historic highs and will remain there as long as there is artificial suppression and unrelenting money printing by central banks.

Dow 11,722.89, +31.71 (0.27%)
NASDAQ 2,702.20, +20.95 (0.78%)
S&P 500 1,276.56, +6.36 (0.50%)
NYSE Composite 8,040.04, +17.86 (0.22%)

In a reversal from Tuesday's trade, advancing issues led decliners, 4116-2407. NASDAQ new highs: 148; new lows: 8. NYSE new highs: 175; new lows: 8. The diminishing number of new highs (as compared to Tuesday, a down market day) and the bottoming out of new lows continues to scream "sell, sell, sell" louder than even Jim Cramer's mindless sound effects. The levitation is nearly at an end, there are fewer and fewer stocks left to pump, left the pumpers lift the actual dead and dying weight at or near bottoms.

These new high-low figures are at extremes and the small number of stocks making new highs indicates a market top as does the paucity of analysts willing to put near-term objectives out in front of their faces. Normally, a sell-off would be imminent, though with the controlled nature of the US markets, almost anything could happen.

NASDAQ Volume 2,072,631,625
NYSE Volume 5,273,362,500

Oil bounced back up over the $90 mark, closing at $90.30, a gain of 92 cents on the day. Gold fell $5.10, to $1,373.70, while silver shed another 31 cents, to $29.20, though both were much lower mid-day.

Predictions 2011: Part 2

When we left on on Monday, the discussion had turned to unemployment, which we said would run past 10% in 2011. What wasn't said was that the corollary, employment, would continue to show faint signs of life, though what the BLS and the government number crunchers also won't tell anyone is that high-paying jobs in tech, manufacturing and other businesses are still being downsized, only to be replaced by low-wage service jobs. Essentially, the middle class is being downsized by enormous corporate interests which have a vested interest in boosting their bottom lines.

In essence, over the past 40 years, America has gone from being one of the most productive economies evre seen on the face of this planet, to being one of the most destructive, in terms of lost opportunity, capacity utilization and middle class wealth destruction. This shift away from productive, capital-building enterprises to service-related companies with the emphasis toward domestic consumption will only accelerate in the coming year unless radical changes are made to our tax laws and industrial policy, a thing that currently does not exist.


The race to the bottom of the fiat money pit will continue unabated in 2011, and probably accelerate in the second half of the year as the Fed's Zero Interest Rate Policy (ZIRP) and 2nd round of Quantitative Easing (QE2) continue to keep the economy like a patient in traction. The patient will be reported as doing better, though still unable to move on its own. Thus, when the Fed's latest ploy (QE2) runs out in June, there will be need for further stimulus and it will have to be n the form of expanding the money supply, slipping it into the balance sheets of the illiquid banks and letting the proceeds sit on the bloated balance sheet of the Federal Reserve.

While Europe has openly stressed austerity, there's little evidence that it's doing anything different than what our own Fed is doing, as they go from one bailout to another - from Greece, to Ireland, to Portugal, Spain, Italy. The issues in the EU are so extreme and dangerous, the US dollar will look like a good bet by comparison. But the real strengthening currencies will be in developing nations like India, China, Malaysia, Korea and those with raw materials, like (surprisingly) Peru, Brazil, Ecuador, Indonesia and the mainstays, Canada (though they're stressed as well) and Australia. Any nation displaying fiscal discipline would serve as a good place to hedge US dollars, though they are difficult to find.

As the world becomes an increasingly dangerous place, deployment of capital will seek alternatives to the developed world, but inflation in growing economies could offset any currency gains. It's a strange and fast-paced trade in currencies, not for the inexperienced or those with limited capital to put at risk. The US dollar will fare well against almost all other competing currencies. Destruction of the world's reserve currency takes time, and a year is just a small part of the breaking tableau.


Tying back to the constant hum of government printing presses, increased monetary stimulus will eventually find an outlet in hard goods and raw materials. Food prices already are at record levels in many parts of the world, energy continues to feel demand strains, though the relatively slow pace of growth and the inexorable pull of political power worldwide will put a brake on some of this trade. While climate concerns top the list as far as grains and most foodstuffs are concerned, manipulation in metals - precious and otherwise - may cause violent swings and price dislocations. In an environment created to obfuscate and confuse price discovery mechanisms, an absolute rise in prices is definitely not a slam dunk, though the inflationary push seems to point in that direction.

Eventually, price will meet demand, or lack thereof, and some equilibrium found before riots and starvation become the norm. Your best bets for 2011 are still gold and silver, with the latter being the favored instrument as it seeks to re-establish the 15-1 gold-silver ratio. Both should appreciate well in excess of 15%, so $1500 gold should be an easy target and silver may bust right through $40 per ounce in rapid manner.

As far as oil is concerned, apart from the rigged and artificial aspects of how it is traded, crude prices cannot exceed $100 for very long, if they even reach them. Absolute price inflation will crimp demand, and, thus, set the wheel back to "go" again, so don't expect oil prices to skyrocket or decline much at all. Stable prices would be best for all parties (except those selling the stuff, short term), and that's what we may get. There's about a 30% chance oil prices actually fall on slack demand, back under $75, but not much further, though a price around $60 per barrel would go a long way toward global growth, though the supply/demand numbers simply don't add up well for that to be much more than a wing and many prayers.

Besides gold and silver, rare earth investments are tricky and unless you discover a mother lode of ytterbium in your back yard, best avoided as another needless paper chase and probably over-hyped. All well-stocked commodity cabinets should have the requisite PMs, plus canned foods and bottled water in case of the absolute end. Guns if you got 'em, ammo if you have the guns.

Friday: Stocks, indices, politics and cultural trends to watch.

Tuesday, January 4, 2011

Market Correction Begins, Stalls as Gold and Silver are Unloaded

Stocks sold off in the morning and recovered somewhat in the afternoon, with the Dow the only index to post a gain at the close. The volume was quite a bit better than recently, which, if you're in the bullish camp, is not a good sign, as this was controlled selling followed by short covering, in earnest.

As was stated yesterday, stocks are wickedly overpriced and due for a retracement or at least a pullback of 7-10% from yesterday's close. However, considering the forces at work behind the market, nothing would come as a surprise these days as these markets are anything but orderly.

The real story of the day was in commodities, as everything - from wheat to oil - sold off viciously. More on that later.

Dow 11,691.18, +20.43 (0.18%)
NASDAQ 2,681.25, -10.27 (0.38%)
S&P 500 1,270.20, -1.69 (0.13%)
NYSE Composite 8,022.18, -21.79 (0.27%)

Declining issues beat advancing issues by a wide margin, 4262-2248. There were 146 new highs on the NASDAQ, and just 3 new lows. On the NYSE, new highs buried new lows, 200-9. As mentioned yesterday, these numbers are at extremes, cannot be maintained and the fallout is likely to be severe, unless we're entering some new Twilight Zone of prosperity, complete with flying unicorns, fairy princesses and mushrooms made of gold.

NASDAQ Volume 2,034,894,250
NYSE Volume 5,395,944,500

In the commodity space, it was sell or be damned. Crude oil for February delivery - the front end NYMEX contract - lost $2.17, closing at $89.38, though it traded lower during the day. It would not be a shock to see oil head back into the low $80 range, being that the busy holiday season is over and the oil barons have skewered the driving public once again.

Gold was unmercifully slaughtered, losing $44.10 (-3%), to finish at $1,378.80. Silver was even more battered, losing over 5%, down $1.62, to $29.51. The precious metals r being routinely pumped and dumped by large hedge players, most notorious of the bunch, JP Morgan and HSBC, who are being sued for manipulation of the silver market. This move in the PMs is nothing to get excited about, for now. A reversal was due, but not to the extent of today's move. Given time, both gold and silver will attain new heights as the kleptocracy running Wall Street and the US government becomes more desperate every day.

One should not be persuaded to sell any gold or silver in this environment, as the metals have proven to be quite volatile and able to replace huge losses in a matter of weeks, or even days.

Please note: Part 2 of 2011 Predictions will appear tomorrow, with Part 3 on Friday

Monday, January 3, 2011

Predictions 2011, Part 1

Before commencing with the annual predictions of where everything is supposed to go in 2011 - up, down, sideways or otherwise, a quick recap of the market on the first trading day of the new year is in order.

As expected, traders - con men all - made sure 2011 got off to a roaring start, with a gap up at the open sending the Dow Jones Industrials up almost 100 points moments into the session. While the gains were outsized as compared to recent run-ups, trading volume remains a viable concern, both short and long-term. Today's volume, while a 60% improvement over those of the last week, is still averaging a size that were the stock market a real roller coaster, volume couldn't get on the ride due to being too short.

It should also be pointed out that the estimates made here - wholly on anecdotal presumptions - have now been duly christened by some valuable researchers - Smithers & Co. - which notes S&P listed stocks some 73% overvalued as of December 10. With the S&P up another 2.5% since then, this data suggests that the stock market is headed for a crash of epic proportions. Based on measurements that ceased functioning around the time of Ben Bernanke's Jackson Hole speech last summer (where he first mentioned QE2), many stocks could experience declines of 50% or more in coming months.

Naturally, nobody is talking about valuation, since the Fed and Wall Street have famously destroyed all methods of honest price discovery and computers are doing most of the trading these days, but stocks are already wickedly overpriced and heading higher. Notice how silent Bernanke is concerning the markets, with no "irrational exuberance" kind of talk. The Fed is desperate to get the moribund economy off its back and the banks back to health. Destroying the currency through money printing and the markets through wild speculation via HFT computers are the only games in town now, and destined to fail spectacularly.

The daily charts and the massive monetary infusions (a $7.8 billion POMO today) tell the entire story: stocks ramp up in the morning, closing off gains for all but insiders, then meander lazily to an insignificant close. This pattern has been the most prominent over the past four months and continued in grand style today.

Dow 11,670.75, +93.24 (0.81%)
NASDAQ 2,691.52, +38.65 (1.46%)
S&P 500 1,271.87, +14.23 (1.13%)
NYSE Composite 8,043.96, +79.94 (1.00%)

As expected, advancers overwhelmed declining issues, 4948-1661. NASDAQ new highs: 296; new lows: 6. On the NYSE, there were 375 new highs and only 2 new lows. These numbers, if not there already, are at extremes and shorting would normally be child's play were it not for the unusual state of US equity markets, pumped daily with new money. There will be an unwinding, but it may be very slow and gradual, killing one's patience and probably most profits. The best position remains cash and equivalents, gold, silver, rarities, arable land and tools of trades.

The continued low levels of trading indicate that individual investors have not returned to the market and some may stay away permanently. If a large enough segment of those fleeing stocks and bonds is made up of Baby Boomers at or nearing retirement, it could spell doomsday for Wall Street, though with approximately 10,000 Boomers retiring every day, the fresh influx of pension and Social Security monies could induce a good deal of foolish speculation, much of it by retirees not secure enough with their monthly take even though it's more than enough upon which to exist.

NASDAQ Volume 1,809,840,875.00
NYSE Volume 4,730,662,000

The front-end crude contract seems to have hit a wall at $92. Anyone with a functioning brain realizes that pushing gas prices over $4/gallon will kill any recovery or chance of the consumer-led economy doing anything but stalling around as fuel prices steal from all other spending. Still, the verdict on the oil barons is still out and their game will continue. $100 or higher for crude could happen, but it seems only sensible that driving and energy use would be curtailed severely by cash-strapped consumers. Oil finished at $91.55, up just 17 cents on the day.

Gold and silver were sporting nice gains until about 2:00 pm, when they turned radically lower, about the same time the Obama administration announced that 13 select drillers would be allowed to resume deep-water drilling in the Gulf of Mexico, halted in the wake of BP's Deepwater Horizon gusher last year. Gold was last seen down $7.50, at $1414.10. Silver lost 23 cents, to $30.68.

And, for the most absurd trade of the day, Bank of America (BAC) rose 85 cents, to 14.19 (a gain of 6.37%) on news that the bank had agreed to a $4.1 billion settlement with Fannie Mae and Freddie Mac to repurchase soured loans issued by Countrywide (purchased by BofA in 2008) the GSEs had backed.

And, now, on to Fearless Rick's Fabulous Preview of 2011...

Soothsayers of antiquity were revered and honored, but in the crowded world of today, there's no shortage of predictions, prognostications, and outright guesses on what the future will bring.

Most predictors are amateurs, not skilled in the art of actually hanging on a limb, due to fear of being wrong. Fearless Rick knows no such fear, having been wrong so often that it's become a fixture to some degree. What is presented here is not so much a final saying on what, where and when some events may occur, but rather a proximate attempt to use experience and empirical values to arrive at a kind of whole world experience.

The dominating theme of 2011 will be VALUE. The pricing of assets will be challenging due to a continuation of monetary policies which may or may not be alleviated by fiscal controls expected from newly-minted Tea Party Republicans in congress. By Spring, the US government will be approaching the debt ceiling and a battle over whether or not to raise it will begin in some form. The betting is that it will be raised again - out of necessity - but Republicans will issue stern warnings or attempt to tie the vote to more austerity measures. The rhetoric on Capitol Hill will be more raucous than ever, but eventually, the Tea Partiers will be put into line by the status quo centrists who prefer slow death rather than the pain of an operation to actually address the greatest concern of our day, the burgeoning federal debt.

It may be difficult to assume that the world will not end, nor will the existence of the Federal Reserve, in the present year though it will not be without significantly-large challenges. Despite indications from our runaway stock market, the US employment situation is not going to get materially better in 2011. In fact, even using the greatly-flawed BLS figures that get trotted out the beginning of each month, the Obama administration will have no option other than to take its lumps and admit that the economy is just not recovering at all. By June or earlier, the "official" unemployment figure will be over 10%, and shock waves will reverberate throughout the affected areas, mostly the South, Southwest and West, prompting more give-away programs from the administration and certain congressional factions.

Pressure for another stimulus bill will be large, spurred on by liberals who cannot get too much of a free lunch, but will ultimately be small, if passed at all. Stimuli has become a permanent factor in federal government, though, so some free money will certainly flow from the seat of power.

Residential Housing is going to be worse than ever, with prices falling in areas that weren't hard hit the first time around. With banks lending only to the super-clean credit risks there will be a continuing glut of houses on almost every local market. Coupled with interest rates that should moderate, overall activity will be at a snail's pace, similar to what was seen in 2010. Knowledge of local markets may result in windfalls for some, misery for others, especially those in homes with Alt-A or 5/30 or 5/20 mortgages that are resetting in 2011 - a motherload of them by Spring. The expectation is for residential housing prices to drop another 6-10% during the year, with larger decreases in the NorthEast and MidWest.