Friday, August 31, 2012

Bernanke's Jackson Speech Self-Fulfilling for Wall Street

Well, was it worth the wait?

Fed Chairman Ben Bernake delivered his speech at Jackson Hole, much to the delight, it seems, to the hordes of hungry bankers and investors wallowing around the money trough from which their riches are made.

The Chairman didn't say much, except what he always says: that the Fed would be ready to add stimulus when needed. The Wall Street parasites took this as a sure sign that more easy money, in the form of QE3, would be forthcoming, likely as of the September FOMC meeting in about two weeks.

In the meantime, stocks jumped, slumped and humped back to highs of just over 13,150 on the Dow, just in case anybody's interested heading into the long weekend.

As usual, stocks have to go higher on Friday, as they have in just about every instance since the end of May.

Anecdotally, Wall Street exhibits all the traits of wild herds, following wherever they are led, this time toward all risk assets, including stocks and commodities. It's been reported that food prices have already risen some 10-20% in poorer nations, which will eventually foment riots, panic and revolution, thoughthat doesn't matter a whit to the wizards of Wall Street or their political counterparts, Al that matters is a rising stock market, even though it may lead to the eventual destruction of the currency and the global economy to boot.

It's a sick game, with seemingly no end in sight.

Labor Day. What an odd name for a holiday. It should be called slaver day, because other than a few sporadic holidays and a week or two of annual vacation, americans and workers in the "civilized" world are nothing more than slaves to debt.

Try not to ponder that fate much over the next few days of what should be a relaxing, peaceful weekend.

Free houses for Everyone!

Dow 13,090.76, +90.05 (0.69%)
Nasdaq 3,066.96, +18.25 (0.60%)
S&P 500 1,406.57, +7.09 (0.51%)
NYSE Composite 8,014.93 +48.69(0.61%)
Combined NYSE & NASDAQ Advance - Decline: 3658-1811
Combined NYSE & NASDAQ New highs - New lows: 184-37
WTI crude oil: 96.47, +1.85
Gold: 1,687.60, +30.50
Silver: 31.37, +1.00

Thursday, August 30, 2012

Markets Edge Closer to Reality on Eve of Bernanke Speech

As has been ongoing for the whole week, markets took a decided turn negative today on strong sentiment and comments from a few Fed governors that Ben Bernanke's speech tomorrow at Jackson Hole will include no overt nor hidden message that the Fed is ready to commit to another round of QE, bond purchases or any kind of policy easing.

That's the current betting, and there's little more than that moving markets.

Here is a good summary of what Wall Street is expecting in advance of the speech, from the Wall Street Journal, along with excerpts from analysts from leading financial institutions.

Scheduled for 10:00 am EDT, the Fed Chairman's speech, "Monetary Policy Since the Crisis" has had the markets gripped for weeks.

At the very least, by 11:00-11:30 tomorrow, everyone will have an inkling of what the Fed plans to do, if anything, and possibly when.

Then, everything can return to normal - whatever that is - after the Labor Day holiday.

Dow 13,000.71, -106.77 (0.81%)
NASDAQ 3,048.71, -32.47 (1.05%)
S&P 500 1,399.48, -11.01 (0.78%)
NYSE Composite 7,966.24, -65.41 (0.81%)
NASDAQ Volume 1,218,830,750
NYSE Volume 2,534,874,500
Combined NYSE & NASDAQ Advance - Decline: 1481-3987
Combined NYSE & NASDAQ New highs - New lows: 118-54
WTI crude oil: 94.62, -0.87
Gold: 1,657.10, -5.90
Silver: 30.37, -0.47

Wednesday, August 29, 2012

Yuck. Stocks Stuck, Seek Direction from Fed. Good Luck.

News flash: Tail wags dog.

The markets continued their perverse game of chicken with the Chairman of the Federal Reserve over whether he'll offer any hints of a new round of QE, but sentiment seems to be shifting toward the argument that the chairman is not going to be very accommodative, either toward the stock market, interest rate policy or further bond purchases.

Whatever the assembled genii on Wall Street care to think, Mr. Bernanke is likely to be of the opinion that it's time for the congress to get up off their duffs and do something about the stagnating economy since the Fed - for all intents and purposes - has done what it can, albeit with limited success.

Any sane person (and we can safely assume that Bernanke hasn't gone completely off the deep end) would think that the US economy needs now to pick itself up, dust itself off and get on with business.

Were it all that simple, and, it should be, but the meddlers at the Federal Reserve and in the halls of congress have seen to it that the US - and by proxy the global - economy is largely a function of interest rates and government policy, not the vaunted free market that so many believe could work out of this malaise, if given a chance.

So, there's a chance that Bernanke will deliver what the mortal villains on Wall Street want so desperately, but the chance seems slim. Stocks would have likely risen in anticipation of golden words from the Chairman were there widespread belief that he was indeed planning on more easy money for his Wall Street buddies, because, as anyone who's ever played with stocks or options knows all too well, it's not a good idea to be late to the party.

By the time Mr. Bernanke finishes his speech at Jackson Hole, most of the major bets will already have been placed. Those who wait and see will likely suffer like the poor suckers who think investing is easy.

Stocks followed their familiar pattern again today: a stumble at the start, ramp up and sell off into the close, though the Dow managed - as all the majors did except the Comp. - to eke out a tiny gain of just over four points. Everything moved in slow motion, as volume has nearly dried up completely.


Bernanke is not going to rescue Wall Street for the sake of a few hundred points on the Dow. He's done it three times already (QE1, QE2, Operation Twist) and the players keep coming back for more. It's time for the Chairman to do what's right and take the punch bowl away.

The party should have been over a while ago. Only the chutzpah of the "masters of the universe" has managed to keep it going for so long.

Dow 13,107.48, +4.49 (0.03%)
NASDAQ 3,081.19, +4.05 (0.13%)
S&P 500 1,410.49, +1.19 (0.08%)
NYSE Composite 8,031.61, -2.24 (0.03%)
NASDAQ Volume 1,253,324,130
NYSE Volume 2,534,702,500
Combined NYSE & NASDAQ Advance - Decline: 3287-2178
Combined NYSE & NASDAQ New highs - New lows: 181-45
WTI crude oil: 95.60, -0.73
Gold: 1,658.50, -11.20
Silver: 30.70, -0.17

Tuesday, August 28, 2012

Drip... Drip... Drip... Dow Bleeds from Small Wound; NASDAQ at 11 1/2 Year High

It was the best of times, it was the worst of times...
-- Charles Dickens, A Tale of Two Cites

So it goeth... in the best Dickensian sense, the NASDAQ and Dow have diverged of late, forming an odd dichotomy, reprising the 2000-era old/new economies.

As the Dow suffered its sixth loss in the last seven sessions, the NASDAQ returned to the halcyon days of 2000, when, on its way through one of the worst crashes in market history it closed above 3100 for the last time, on November 15, 2000, on its eventual way to a bottom of 1419.23 on September 21, 2001.

So, for the NASDAQ, it is an 11-year, three month high, give or take a few days.

While the Dow is still within hailing distance of its own multi-year closing high (13279.32, May 1, 2012), it is down roughly two percent from there with losses mounting since the 68-point drop on the outside day last Tuesday.

The difference between the two indices is probably is risk assessment, or the mere fact that Apple (AAPL) is not a Dow stock. Had it been for, say, the last two years, the Dow Industrials might today be sporting a 15,000 handle, but, alas, the riggers of the Dow 30 apparently see Apple as unfit for inclusion, despite being the world's largest corporation by market cap.

The makers of the Dow components have a history of not being exactly of the genius character. For instance, Ford Motor Company has never been an elite member of the Dow club, despite a stellar record of accomplishments and great gains through the 20th century.

Whatever the case, the differences in how the averages are structured and weighted makes for interesting interplay as the stodgy Dow companies, what with their dividend-paying stocks and generally long track records, grind slowly in one direction or the other, the NASDAQ offers more high-fliers, jocular IPOs (like Facebook, Groupon and Zynga, to name just a few) and many small niche players, thus being the desired place for the sport of day-trading and point-splitting by the HFTs, hedgies and other mindless market cyborgs.

Once again, as has been the case through almost the entire month of August, there was little in the way of data or news to shake traders out of or into positions. The Case-Shiller 10-and-20-city index of home values showed another smallish year-over-year gain, though the August consumer confidence reading of 60.6 - down sharply from last month's 65.4 - did arouse some traders momentarily from their checker-playing, book-reading or whatever worthless activity keeps them in attendance these days.

After a few moments of excitement, however, they'd had enough and went back to the business of not trading, allowing the computers to do their dirty handiwork behind the scenes and away from the incessant snoring.

It was, again, quite the snooze-fest, and one has to wonder if traders will be back on their toes after the Labor Day recess or whether this kind of low-volume, low volatility regime is all part of a new normal that precludes individual investors.

There is a bit of tension over Friday's speech by Ben Bernanke at the Jackson Hole economic symposium (how anyone, and especially an army of seasoned traders, can get excited about one speech is yet another matter) and the news that ECB president Mario Draghi - citing a "heavy work load" - bowed out from attending.

We're happy that Mr Draghi is working hard at whatever he's doing, purportedly hammering out a deal with the German Bundesbank to save Europe from imminent collapse, though one might also assume attending important economic events such as Jackson Hole has come to be known, should be on his agenda.

At least Mr. Draghi has a job, something roughly 20% of Greeks, Italians and Spaniards do not. It is everyone's hope that he and other Eurocrat leaders concoct a suitable rescue plan for Europe and the rest of civilization before the world ends on December 21, according to wild-eyed gloom-and-doom types eyeing the Mayan calendar, because, if they don't, it will be too late.

Perhaps its for the best that the markets and traders take August off, like their politician friends in Washington almost always do. Wall Streeters can join congress with an approval rating of under 10%. Nearly everyone else - about 9.98% of the population - could care less.

Dow 13,102.99, -21.68 (0.17%)
NASDAQ 3,077.14, +3.95 (0.13%)
S&P 500 1,409.30, -1.14 (0.08%)
NYSE Composite 8,032.72, -3.53 (0.04%)
NASDAQ Volume 1,335,361,880
NYSE Volume 2,499,501,000
Combined NYSE & NASDAQ Advance - Decline: 3147-2303
Combined NYSE & NASDAQ New highs - New lows: 152-51
WTI crude oil: 96.33, +0.86
Gold: 1,669.70, -5.90
Silver: 30.88, -0.17

Monday, August 27, 2012

Despite Big Move By Apple, Stocks Have No Monday Lift

As has been the case for many weeks (as noted in Friday's posting), stocks could simply not find any meaningful reasons to move to higher ground, even in the wake of a big move by Apple after a federal jury awarded Apple $1 billion in its patent infringement case over rival Samsung.

Apple stock hit an all-time high of 680.87 in early trading, but drifted lower throughout the session.

Veteran tape-watchers (we're fairly certain there are a few left out there) must have dozed off from another in a seemingly-endless stream of low-volume, noiseless, motion-defying trading. All but the first and last hours saw any significant action. The trading range on the Dow amounted to less than 80 points from top to bottom, with stocks selling off in the final hour and closing near the lows of the session.

Of the major averages, only the NASDAQ finished in positive territory, though it was green by only three points. The Dow was the biggest percentage loser, off 0.25% on the day.

Otherwise, there was little to no interest in equities on first day of the final unofficial week of summer, prior to the three-day Labor Day holiday.

Traders may be asleep at the switch and/or holding positions until after the holiday and Ben Bernanke's speech to the assembled central bankers and key economists at Jackson Hole on Friday.

Many on Wall Street are expecting Bernanke to signal another round of quantitative easing (QE), as he did in his 2010 speech, though skeptics of that theory abound, citing politics (the elections are nearly just two months away) and the muddled and murky economic picture as reasons the chairman of the world's largest central bank will not offer specificity in his remarks.

Additionally, ECB president Mario Draghi will present at the symposium, though his record for signaling specific policy actions are spotty at best. Draghi, as well as most European politicians, seems always to be long on rhetoric and short on delivery of specifics.

Outside of some M&A activity and Apple's move higher, the week began with a dolorous thud and will likely end that way unless Bernanke can be convinced that the time for the Fed to act - once again - is now. The high degree of uncertainty and doubt in the markets and general economy will likely keep a lid on what have to be viewed as excessively overpriced stocks and accompanying indices.

Dow 13,124.67, -33.30 (0.25%)
NASDAQ 3,073.19, +3.40 (0.11%)
S&P 500 1,410.44, -0.69 (0.05%)
NYSE Composite 8,033.93, -13.94 (0.17%)
NASDAQ Volume 1,363,789,875
NYSE Volume 2,439,756,500
Combined NYSE & NASDAQ Advance - Decline: 2676-2833
Combined NYSE & NASDAQ New highs - New lows: 162-45
WTI crude oil: 95.47, -0.68
Gold: 1,675.60, +2.70
Silver: 31.05, +0.43

Friday, August 24, 2012

Stocks End Week with Gains (as usual); Do Weekly Options Drive the Markets?

Stocks finished the week with outsize gains on a virtually dead news day, which makes one turn to head-scratching and contemplation over not only the general direction of the market, but why stocks perform better on Fridays as opposed to, say, Mondays, which, of late have been among the worst days on a week-by-week basis.

It might have something to do with the advent of weekly options contracts - a relatively new market development - in which "bets" are placed on the direction of everything from stocks, to EFTs, to entire indices.

Since Wall Street is such a crooked, rigged casino type of operation, the club of insiders which invent such derivatives cooked up weekly options - which expire every Friday - as yet another way to skin the hapless rubes who aren't content with the usual durations of one, two, three, four months or longer.

Weekly options are nothing but pure, unadulterated gambling on direction, just about the same as betting red or black at a roulette wheel, but, a peek at direction on Mondays (when positions are initiated) and Fridays (when they are closed) over the past ten weeks reveals an unsettling pattern.

Using the Dow Jones Industrials as our test case, beginning with the 18th of June (a Monday) and continuing the series through today, the tally is remarkably consistent:

Mondays: 1 Up; 9 Down
Fridays: 8 Up; 2 Down

Amazing! Isn't it? If one can count on Mondays and Fridays being the only significant market moving days, trading - especially in options contracts - becomes almost a predetermined routine, something that could be gamed by a relatively simple algorithm.

Oops! Did we let the cat out of the bag? Since algos, via HFTs perform between 75 and 90% of all trading in the markets, could it be that the Goldman Sachs and Merrill Lynch's of the world are doing exactly that from the comfort of their prop desks? One can only imagine the traders, feet propped up neatly on their desks every Monday morning, programming in massive sell orders on various stocks while simultaneously sending the algos out to buy calls on the very same equities.

If that's the case, these traders are probably spending most of the midweek out on the golf course or the yacht or partying with their rich buddies in the Hamptons or other secret enclaves of the privileged class. Why work, when you have concocted such a simple trading regimen that only needs your attention twice a week? Even better, these prop jockeys are probably initiating positions and closing out trades with commands from their cell phones while sipping mai tais by the pool or at the beach.

Life just can't get any better, can it?

The worst part about this story is not how the rich enjoy their lives without working, but the idea that there's likely a kernel of truth to it.

Almost as good as farming, where the common wisdom is that farmers plant in the spring, harvest and sell in the fall and vacation all winter, these prop traders are just taking loafing to an all new level of expertise and functionality.

Life is so easy! BTW: Silver closed at a 3 1/2 month high today. Thank you, Blythe Masters and JP Morgan.

In keeping with our ongoing, sporadic tradition of musical thematic revivalism, perhaps the Rolling Stones' You Can't Always Get What You Want, from their 1969 album Let It Bleed is appropriate.

Have a great weekend and remember to be selling on Monday.

This is the original cut from Keith, Mick and the boys. It doesn't get any better.

Dow 13,157.97, +100.51 (0.77%)
NASDAQ 3,069.79, +16.39 (0.54%)
S&P 500 1,411.13, +9.05 (0.65%)
NYSE Composite 8,047.48, +36.04 (0.45%)
NASDAQ Volume 1,326,204,750
NYSE Volume 2,581,308,750
Combined NYSE & NASDAQ Advance - Decline: 3459-1968
Combined NYSE & NASDAQ New highs - New lows: 113-48
WTI crude oil: 96.15, -0.12
Gold: 1,672.90, +0.10
Silver: 30.62, +0.17

Thursday, August 23, 2012

Stocks Fall Across the Board as Fed Stimulus Hopes Fade

This is a seriously perverse stock market.

One of the primary reasons stocks took a beating today was that many in the investment community are awakening to the idea that the Federal Reserve isn't going to do another round of QE before the elections because, get this, the economy isn't "bad enough."

That's right, because the economy is just limping along and not falling off a cliff into recession, the Fed is reluctant to enact any bold policy actions, thus putting the proverbial lid on stocks. Besides, with the all-important presidential election upcoming in a little more than two months, the Fed doesn't want to do anything to improve the economy, being that they are so, so, apolitical.

At least that's the story they're trying to sell.

The truth is that the last two rounds of QE were massive money-dumping busts which enriched only the well-connected and already wealthy. Those dwelling in the middle and lower classes of society are still awaiting the over-hyped "trickle down," another canard dreamt up by political and economic hacks who believe to have bamboozled the entire global population in service to their wealthy masters.

It's twisted logic at its very finest, the kind of thinking that only sleazy politicians and interest parasitic bankers could command.

Next, they'll be telling us that raw chicken is fine to eat or that eight percent unemployment is "natural."

In effect, the politicos and central bankers are out of bullets. All they can do now is pile up more debt on what's already outstanding until the whole edifice of corruption and funny money collapses upon itself.

Of course, the rich will be hurt the least, if at all. The middle class will take it standing up, lying down or whichever way the government-controlled media spoon-feeds it to the unsuspecting masses.

Not to worry. When stocks continue their slide into and through Labor Day and Americans wake up one morning and find that they are actually European, or worse, when it comes to national monetary and fiscal policy, we'll all make do with less, because the last twenty years, we'll be told, were a mirage of our own making for spending too much, wanting too much and not paying attention.

At least there's a tiny nugget of truth there. Americans haven't been paying attention for so long, the government is now responsible for nearly half of GDP when one adds in transfer payments (welfare, social security, state and federal pensions, etc.) and the once proud American economy is a shadow of its former self, controlled largely by a handful of corporations which pay little to no tax.

That's OK. The economy isn't "bad enough," right?

Meanwhile, the advance-decline continues bleeding negative and new highs, new lows compress further, advancing toward equilibrium.

Gold and silver were off like rockets. This is rotation from risk assets to hard assets, and it's gathering momentum.

Dow 13,057.46, -115.30 (0.88%)
Nasdaq 3,053.40, -20.27 (0.66%)
S&P 500 1,402.08, -11.41 (0.81%)
NYSE Composite 8,011.44, -62.79 (0.78%)
NYSE Volume 3,019,112,000
Nasdaq Volume 1,392,715,500
Combined NYSE & NASDAQ Advance - Decline: 1743-3759
Combined NYSE & NASDAQ New highs - New lows: 82-47
WTI crude oil: 96.27, -0.99
Gold: 1,672.80, +32.30
Silver: 30.46, +0.90

Bonds, Stocks Trend Lower As Correction May Be Forming, Gathering Momentum

This is a midday report, as the author will likely not be available for posting at the regularly-scheduled time, shortly after the markets close. A complete report will be posted at some point, probably in the early evening.

Stocks started the day lower, as expected, after initial jobless claims came in at 372,000 in the current week, beyond expectations and up 4,000 from the prior week.

Other than that bit of news, existing home sales grew at an annual rate of 4.47M in July, after a reading of 4.37M in June.

At the time of this posing, stocks are down broadly, but beginning to pare losses. Regardless, if the Dow closes lower today, it will be the fourth consecutive losing session, an expected development, after Tuesday's "double-engulfing, outside" day.

Gold and silver are sharply higher, with silver up more than $1.00 at the time of this posting.

Dow 13,100.13, -72.63 (0.55%)
Nasdaq 3,065.85, -7.82 (0.25%)
S&P 500 1,407.54, -5.95 (0.42%)
10-Yr Bond 1.67%, -0.05

Wednesday, August 22, 2012

Stocks Split in Another Lackluster Session

There were heaps of indecision and disbelief after yesterday's rise and fall led to a stumbling session for US stocks on Wednesday, with the major indices split after a midday rally pushed the S&P and NASDAQ modestly into positive territory, but left the Dow and Composite with marginal losses.

With literally no data points on which to trade, investors were mostly in a defensive posture until FOMC minutes were released at 2:00 pm EDT. The idea that the Fed might still be considering some easing before the November elections lit a fire under some traders, though the size of the move was unconvincing.

It's unlikely that the Fed would move decisively soon unless there are overt signs of weakness in the economy to a greater degree than has already been proven. Fed Chairman Ben Bernanke and the rest of the world's elite traders, economists and analysts will gather at Jackson Hole, Wyoming, next week for an annual economic symposium, though skepticism over whether the Chairman will make any earth-shattering announcements abounds.

That is primarily what has the the bulls running for cover, because the economy has been sullen and without forward momentum, even while stocks have recorded strong gains through the summer. The entire June-August rally may have been built on false hopes and pipe dreams of another round of quantitative easing.

Without a monetary boost, stocks could suffer anything from a mild to severe correction within the next two weeks, and the charts are beginning to show signs that Tuesday's double top was something to actually be concerned about.

With little in the way of economic data this week (New and existing home sales, initial unemployment claims and durable orders), traders have little upon which to trade, so the late summer doldrums should continue, at least into the early portion of next week and possibly through Labor Day.

After that, the experts will be back on the street with new strategies or old ones, based entirely on best guesses as to the outcome of the elections and how long European leaders can keep their juggling act going without dropping all of the balls.

It's a strange state for the markets, full of uncertainty and doubt, though very close to 52-week highs. It's ripe for something - either a breakout to the upside or a 5-15% slide. And, while everyone has opinions, nobody is really putting out convincing arguments on either side.

The market bears close scrutiny at this juncture, as the next move may be decisive and worth playing, but only if one has guts and conviction to stick with trades over the next couple of months, because, as has been shown all year long, this market likes to gyrate like a lithe belly dancer without giving off any signs of where it's headed next.

Our money is on the downside, but we've been in that posture for a long time and have been in cash or equivalents for the better part of the past four years. If the precious metals continue to gather momentum, that could convince us to take a flier on some puts or shorts in selected stocks or indices. If new highs - new lows continue to compress tomorrow and the A-D line opens negative, we could be all in on Diamond (DIA) and/or Spider (SPY) October puts.

Both gold and silver have broken out of their recent ranges and could put in a long, strong run through the end of the year, so the buying opportunity window may be closing quickly on the metals, a favorable trade the past twelve years, despite persistent meddling and price fixing by major and central banks.

Dow 13,172.76, -30.82 (0.23%)
NASDAQ 3,073.67, +6.41 (0.21%)
S&P 500 1,413.49, +0.32 (0.02%)
NYSE Composite 8,079.02, -3.66 (0.05%)
NASDAQ Volume 1,426,827,000
NYSE Volume 2,809,365,750
Combined NYSE & NASDAQ Advance - Decline: 2122-3396
Combined NYSE & NASDAQ New highs - New lows: 93-53 (compression)
WTI crude oil: 97.26, +0.42
Gold: 1,656.80, +16.30
Silver: 29.84, +0.28

Tuesday, August 21, 2012

Market Chart Alert: Dow Double Engulfing Day Signals Start of Turnaround

For as long as just about anyone who charts stocks and indices can remember, the pattern which appeared in today's session should be a primary signal that stocks are ready for an abrupt turn - and this one is decidedly to the downside.

Notwithstanding ongoing market manipulation to the contrary, which has pushed stocks to extreme levels over the past few months when just the opposite appeared more likely on poor data, low volume and other bearish signals, the double engulfing pattern - in which the high and low of today exceeded the highs and lows of the previous two sessions - is a bright red flashing light to chartists everywhere.

The Dow Jones Industrials took a rather abrupt turn late morning. After a slow start, the index reached the high point of the day (13,330.76) just before 11:00 am EDT, hovered in that area, then began a serious decline a short time later, finally dipping into the red around noon.

For the rest of the session, the Dow, carrying the other major indices along with it, continued a slow descent until bottoming out around 3:15 pm EDT at 13,186.60, eventually finishing just 16 points off the low, yet another bearish signal.

The trading range of 144 points exceeded the highs and lows from Friday and Monday's trading, on both sides and was the widest range since August 3rd, when the index ranged 148 points, but finished higher by 111 points.

The headwinds that have been pushing against stocks for a while (could be two months, two quarters or two years, depending on perspective) may finally be taking its toll on the trading community, though there's also sufficient data to determine that stocks have reached the upper limit for the short turn, coming a whisker within the 52-week high of 13,338.66, achieved on May 1st.

While the chart is eliciting a strong double-top formation, the gain from Dow 12035.09 to today's high - a rally of 1,295 points, or, roughly 10%, from June 4, was built on a series of sharp one-or-two-day upside moves with intermittent, short selloffs in between until the baby-step gains typical of the past two weeks.

In simpler terms, the market may just have run out of gas, the problems in Europe and the coming crucial elections and fiscal cliff all creating significant uncertainty in the minds of investors and traders.

A pull-back from these current nose-bleed levels would not be without precedent; indeed, the month of May shook out to the same amount as the gains in June, July and August combined.

What happens next is anyone's guess, and the transportation average is offering a bit of a clue, having finished the day just 0.23 short of the high made on Friday, a one-month high, but well short of the 52-week high set on May 2nd, 5334.52.

The issues plaguing the market and the general economy still are persistent and a shock to the system may be forthcoming, especially since neither the Europeans nor the Federal Reserve seem committed to further monetary easing, something market participants have been lobbying for over the past four to six months.

With November's elections coming fast, the Fed is very reluctant to make any abrupt announcements, while in Europe, the cries from Germany to stop the Ponzi-like bailouts of the southern sovereigns grows louder with each proceeding day.

Despite market breadth being only moderately negative and new highs - new lows reading nearly off the charts positive, we'll await confirmation from these and/or other metrics before making an all-red bear call.

Adding to the market consternation on the day were the continued run-up in safe haven assets, gold and silver, both reliable indicators of general fear in the marketplace.

As for the ongoing rally in crude oil, that is more a function of the time of year, when market insiders annually push prices to their highest levels preceding the Labor Day holiday, just two weeks hence.

Dow 13,203.58, -68.06 (0.51%)
NASDAQ 3,067.26, -8.95 (0.29%)
S&P 500 1,413.17, -4.96 (0.35%)
NYSE Composite 8,082.68, -11.65 (0.14%)
NASDAQ Volume 1,574,080,875
NYSE Volume 3,249,264,250
Combined NYSE & NASDAQ Advance - Decline: 2408-3071
Combined NYSE & NASDAQ New highs - New lows: 264-32
WTI crude oil: 96.68, +0.71
Gold: 1,642.90, +19.90
Silver: 29.43, +0.83

Friday, August 17, 2012

Between Meaning and Nothingness

As it turns out, the mystery of Thursday's sudden ramp up in volume and price action wasn't such a mystery at all. A quick look at the calendar confirms that today was the third Friday of the month, the day of stock options expiration.

Mystery solved.

Rather than bore readers with an explanation of how stocks played Friday in the usual "dead summer" manner, we leave with a few ripened Beatles tunes.

Enjoy the weekend!

For anybody in particular:

Dow 13,275.20, +25.09 (0.19%)
NASDAQ 3,076.59, +14.20 (0.46%)
S&P 500 1,418.16, +2.65 (0.19%)
NYSE Composite 8,102.07, +12.07 (0.15%)
NASDAQ Volume 1,644,206,500
NYSE Volume 2,910,906,000
Combined NYSE & NASDAQ Advance - Decline: 3463-2003
Combined NYSE & NASDAQ New highs - New lows: 283-38
WTI crude oil: 96.01, +0.41
Gold: 1,619.40, +0.20
Silver: 28.00, -0.21

Thursday, August 16, 2012

Speculators Step Up to End Dull Trade with a Bang

Think zero interest rate policy and money for virtually free doesn't have its upside?

Ask fund and managed account managers what they think of this trading environment and they'll likely respond in unanimity that it's never been better. After eight straight days of lackluster, low-volume trading, the wheeler-dealers went to work in concerted fashion, driving all risk assets higher on Thursday.

When the biggest banks and their trading arms can borrow money at 25 basis points or less overnight, what happens is trading like today, shutting off the noise about a sputtering, topped out market with a quick, one-day ramp up on strong volume for a nice turn of profit for the week.

The particular catalyst could be anything, from Angela Merkel's comments today about floating more bailout money to save the Euro, to benign initial claims figures (op a mere 2,000 from the prior week, to 366,000), to July housing starts dropping to 746,000 annualized from 754,000 or the Philadephia Fed's manufacturing index gaining to -7.1 in August from July's horrific -12.1. Well, forget those last two as they don't quite fit the hopium narrative.

Indeed, if conditions on Wall Street get any better, the feds may just cancel the November election and proclaim President Obama the winner by default. After all, the campaign money flows from Wall Street and other major investors, multi-millionaires and billionaires to the candidates or their PACs, and Wall Street has been having a rousing good time the past three-and-a-half years. Why end the party now?

At some point, analysts are going to poke around the numbers a bit and find that stocks are extremely overvalued, priced for perfection, at levels unsustainable for the long run unless corporations severely fudge their books to show better-than-expected results (oh, that's never been done before, not in America).

It doesn't matter what analysts or the best chartists in the business conclude, however. Stocks will continue to go up as long as markets continue to be manipulated by the central planners scattered around the globe in investment houses, central banks and government ivory towers.

What's that? You don't believe the US markets are not manipulated? Maybe you need a little convincing from experts in the field.

Take J.S. Kim, for example, who posits that potential gold and silver investors are continually fed disinformation about a market manipulated by contrived futures and trading patterns in a false, paper market

Perhaps one could take advice from Chris Martenson's commentary, headlined "What to Do When Every Market Is Manipulated?"

For a more general understanding, one could comb through the 29,800,000 results for the search term "market manipulation," and see what kind of gems are unearthed.

The control, rigging or manipulation of markets in the United States has been going on in a large manner ever since Ronald Reagan created, by executive order, the President's Working Group on Financial Markets (otherwise known as the PPT, or Plunge Protection Team) after the massive market crash in the wake of "Black Monday," when the Dow Jones Industrials plummeted 508 points Oct. 19, 1987 and was called into action again when Long Term Capital Management (LTCM) nearly brought down the house of cards in 1998.

After 9/11/2001, the PPT, as it became known, has been on keen alert to any signs of a meltdown in markets, but not even the heft and might of the underhanded, underground operatives of the government could deflect the market forces pushing against them in the fall of 2008.

Since then, the manipulation in equity markets has become almost overt, with the Fed guiding the way by the light of quantitative easing (QE) and ZIRP.

While here at Money Daily we deride the pimping and pumping of markets by insider forces, there comes a time when one must admit that investing in risk assets such as stocks and commodities over the past three years has never been easier. All one needs to do is hold a basket of stocks or index contracts long enough and they're sure to rise. It's become a permanent feature of US markets that they cannot fall for long and there is no end in sight to the manipulation.

It's just that easy for the rich to get richer and the rest of us to remain in a stupefied trance-like state of amazement and contentment.

Dow 13,250.11, +85.33 (0.65%)
NASDAQ 3,062.39, +31.46 (1.04%)
S&P 500 1,415.51, +9.98 (0.71%)
NYSE Composite 8,089.82, +60.81 (0.76%)
NASDAQ Volume 1,901,789,500
NYSE Volume 2,898,041,250
Combined NYSE & NASDAQ Advance - Decline: 3862-1572
Combined NYSE & NASDAQ New highs - New lows: 230-30
WTI crude oil: 95.60, +1.27
Gold: 1,619.20, +12.60
Silver: 28.21, +0.40

Wednesday, August 15, 2012

Wall Street's Summer Doldrums Extend Into 8th Day

For nearly two weeks running, trading ranges on the major indices have been slim and volume exceptionally light, as Wall Street sees no reason to rush either in or out of positions late in the summer.

This kind of trading regime is of no particular value to anybody, even to insiders who depend on at least some shred of volatility to move stocks in one direction or the other.

There's no catalyst for stocks at the present time, a condition which could persist until the elections in November or whenever the Europeans decide to actually do something about their ongoing crisis.

On the other hand, this just could be the "new normal" for US markets, since the triumvirate of high frequency trading (HFT), insider trading and the utter lack of individual investors to trust in the markets, has rendered just about all investment decisions a moot point.

Zero interest rate policy (ZIRP) by the Fed and general fraud on the part of the nation's biggest banks - in collusion with the federal government - have many otherwise investor types on the sidelines in cash or other hard assets like gold, silver or real estate.

About the only thing showing any movement are commodities, and they're moving in a very dangerous direction, with corn prices escalating and oil jumping back up into nose-bleed territory. In a macro sense, high food and energy prices will derail any kind of recovery, even the one we haven't had for the past three years.

Stocks, however, continue to levitate at unreasonable levels, another reason why there isn't much in the way of buying activity, but the conundrum is why there hasn't been more selling, either for profit-taking (and there's been plenty of profit of late) or out of a sense that the bottom is going to fall out of the global economy any day now.

In either case, one would expect some kind of movement, and most likely not to the upside. Corporate profits in the second quarter were barely as good as lowered estimates, small business continues to struggle along, housing is not fixed and unemployment remains stubbornly high.

Perhaps the lesson to be taken from this summer respite is that one can only kick a can so far down a given road until either the road ends or somebody picks up the can for a nickel deposit return.

Something will change to get Wall Street out of its rut, but timing such an event could prove costly and dangerous.

Dow 13,164.78, -7.36 (0.06%)
NASDAQ 3,030.93, +13.95 (0.46%)
S&P 500 1,405.53, +1.60 (0.11%)
NYSE Composite 8,030.08, +10.55 (0.13%)
NASDAQ Volume 1,498,334.250
NYSE Volume 2,527,355.50
Combined NYSE & NASDAQ Advance - Decline: 3628-1915
Combined NYSE & NASDAQ New highs - New lows: 152-57
WTI crude oil: 94.33, +0.90
Gold: 1,606.60, +4.20
Silver: 27.81, +0.05

Tuesday, August 14, 2012

Wall Street Remains a Dead Zone; Habits of the Rich

It was another day of lackluster trading on US exchanges, with stocks spending most of the session in positive territory before sliding in the afternoon back to near opening levels.

This is the seventh straight session in which stocks have more or less meandered across and along the unchanged mark on ridiculously low volume, with no catalyst for change on the horizon.

Even economic data was dull or given the short shrift, as retail sales for July posted their best showing since February, a gain of 0.8%, though that was counterbalanced by a revision of June's figures from -0.5 to -0.7.

PPI showed some nascent signs of inflation, gaining 0.3% for July, with the core coming in at a somewhat surprising 0.4%, sparking fears that inflation has emerged from the core of food and energy, though the numbers lack any definitive pattern.

That was about it, as the masters of the universe were more likely pondering the upcoming presidential election or the bottom of a cocktail glass out at the Hamptons.

Since Wall Street seems preoccupied or disinterested in the capital markets for the time being, let's take a look at the habits of the rich, courtesy of author Tom Corley's recent work, Rich Habits, from whence came the following quiz:
1 Do you read at least one career-related educational book a month?
2 Do you engage in aerobic exercise of 20-40 minutes a day for at least 4 days a
3 Do you eat 300 calories of less in junk food per day?
4 Do you set monthly, annual and long-term goals?
5 Do you spend 20-30 minutes each work day reading career-related magazines,
trade publications, newsletters etc.?
6 Do you limit T.V. and Social Media to one hour per day?
7 Do you regularly save 10% or more of your gross income?
8 Do you call everyone you know to wish them a happy birthday? This includes
family, friends and business contacts.
9 Do you create daily "To Do" lists and complete at least 70% or more of your
daily tasks?
10 Do you call or send thank you cards to everyone who has done something that
helped you in your career or life?

The author posits that if you perform six or more of the above on a regular basis, you have the kernel of success flowing through your veins.

Of course, the quiz is somewhat simplistic, though it maintains that an ordered life, with goals and aspirations, plus dollops of common sense, may eventually lead to a life of leisure and contentment.

Other virtues that may lead one to find happiness and success include perseverance, decisiveness, objectivity, passion, organization and a positive direction. Starting off a professional career with a fat salary and some quality guidance certainly helps, though those final accoutrements are not always afforded to the vast majority.

Dow 13,172.14, +2.71 (0.02%)
NASDAQ 3,016.98, -5.54 (0.18%)
S&P 500 1,403.93, -0.18 (0.01%)
NYSE Composite 8,019.53, +0.90 (0.01%)
NASDAQ Volume 1,569,593,500
NYSE Volume 2,918,056,000
Combined NYSE & NASDAQ Advance - Decline: 2453-3094
Combined NYSE & NASDAQ New highs - New lows: 178-53
WTI crude oil: 93.43, +0.70
Gold: 1,602.40, -10.20
Silver: 27.76, UNCH

Monday, August 13, 2012

Dead Market Syndrome Continues; Consent by the Governed Should be Withdrawn

It's almost impossible to write any compelling commentary on the market as long as the PPT continues to meddle and volumes remain so horrifyingly low.

There is a serious problem developing if the world's most active market - the US stock exchanges - continue the daily pattern of losses in the morning followed by sharp reversal and firming up throughout the remainder of the session.

Combined trading volumes for the NYSE and NASDAQ today reached the nadir for the year and could possibly represent the lowest trading volume since the 2008 crash.

This is worse than a liquidity issue; it is a confidence issue. Individual investors have fled the marketplace, seeking safer havens in raw land, gold, silver and other hard assets.

Small, passive investors, such as those stuck in pension plans, IRAs or 401k plans, have no options other than to cash out and take the penalty, but the PPT has made that approach seem ludicrous by pumping up equities on a regular basis.

Were stocks free to trade without government intervention, the p/e multiples would be in the range of eight to ten, sending indices plummeting, reflecting the true weakness in the markets, but that's not going to happen until sometime close to the election, which is now a mere 13 weeks away.

The candidates are posturing and the rhetoric will get louder and more divisive as the conventions approach, though it's all for show, meaning nothing, as compaign promises are routinely broken. Whichever candidates are chosen (or appropriated by the black boxes that purportedly count every vote), little will change for the good of the people. It's amusing that the media and presidential candidates want the general public to believe this is the most important election of their lives, just as it was in 2000, 2004 and 2008.

All right, this election is important. It's important to understand that the elections are absolutely meaningless because the civil rights of American citizens have been slowly but surely stripped away, the constitution shredded, and the two-party system guarantees mediocre politicians and worse outcomes. Not voting, i.e., withdrawing consent, is the only way Americans are ever going to regain the freedoms lost over the past 12 years, but, as is usual in America, the people have been asleep for so long, they merely follow along, in a zombie trance, trusting in a system built on lies, fraud and special interests.

A day of reckoning is soon to come. Best be prepared.

Dow 13,169.43, -38.52 (0.29%)
NASDAQ 3,022.52, +1.66 (0.05%)
S&P 500 1,404.11, -1.76 (0.13%)
NYSE Composite 8,012.29, -32.47 (0.40%)
NASDAQ Volume 1,321,221,625
NYSE Volume 2,340,765,750
Combined NYSE & NASDAQ Advance - Decline: 2214-3277
Combined NYSE & NASDAQ New highs - New lows: 116-55
WTI crude oil: 92.73, -0.14
Gold: 1,612.60, -10.20
Silver: 27.77, -0.30

Friday, August 10, 2012

Our Dysfunctional Economy Won't Be Repaired Until Bankers Go to Jail

The popular phrase, "it's better to light a candle than curse the darkness," was once spoken in public by Peter Benenson, the English lawyer and founder of Amnesty International, at a Human Rights Day ceremony on 10th December 1961. There are disputes over the origin of this nugget of wisdom, some attributing it as an "ancient Chinese proverb."

Whatever the case, Mr. Benenson, and the American Christopher Society, which adopted the phrase as its motto, certainly had meritorious intentions in keeping to the spirit of the words.

When it comes to our current economic climate and the out-of-control, corrupt worldwide banking and political liaison, the cabal of bankers and politicians are the darkness, and, as much as one tries to be at all times civil, they need to be cursed.

Market manipulations aside, this week could well have been the utter, disgusting end of years of rigging, price, fixing, fraud and associated crimes, none of which having been prosecuted.

It's been mentioned in this space before that the end of manipulation is eventual failure or stagnation and this week was a prime example. Sure, it's summer and the height of vacation season, but the entire range of trade over the past five days on the Dow Jones Industrials was 115 points. On the NASDAQ, 45 points, while the S&P 500 vacillated between a low of 1391 and a high of 1406, which, incidentally, was close to where it closed on Friday. The S&P finished higher every day this week, though the biggest gain was a whopping seven points.

By the way, all of todays gains were made in the final 40 minutes of trading and the day's volume was embarrassing. Free and fair markets - that's what we used to have in the United States. What we have now is a dangerous, insider-controlled contrivance.

Were there a way to "light a candle" amidst the fraud that has enveloped our financial, political and media systems, it would probably be blown out in an instant. We the people are seemingly bred to watch, listen, obey and not ask questions. The banking elite, however, can do no wrong, as evidenced by a number of stories which emerged from the flotsam of the week that wasn't.

On Tuesday, the CFTC shut down a four-year-long investigation into silver market manipulation, focusing on JP Morgan and HSBC, saying there was insufficient evidence to bring any charges.

Thursday, the US Department of Justice decided not to pursue criminal charges against Goldman Sachs or any of its employees on mortgage securities fraud, concluding "that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time.” The investigation, which took over a year, was prompted by Goldman Sach's CEO Lloyd Blankfein testifying to a congressional panel that the firm actually took the opposite sides of trades that they sold to their clients. But, that's not sufficient for the bought-and-paid-for invisible man, Eric Holder, to bring a case forward. (Here's an idea: to help balance the budget, why not just shut down the DoJ? They apparently aren't interested in prosecuting anybody connected with the financial industry for anything. Big savings there.)

Thursday night, CBS ran, as the second story on their nightly national "news" broadcast, that the housing market was finally recovering (this probably was the sixth or seventh time over the past two years the shills at CBS had run such a story). Why then does Gary Shilling suggest that existing home prices could fall another 20%?

Flood of Foreclosures Could Cause Home Prices to Drop 20%: Gary Shilling

So, make up your own mind. Is the banking system, government oversight and the media working for you and your fellow citizens? Or are there two levels of justice in the USA (and probably everywhere else): one for rich bankers and one for the rest of us? Can we really trust our leaders to do the right things for the people? Or are we caught up in a fascist corporotocracy that feeds upon individuals for the benefit of the rich and powerful?

Go ahead and curse the darkness, because it needs to be cursed. Then light a candle. Take care of your family and friends and do something for yourself, like buying some raw land, growing some of your own vegetables, or investing in physical gold or silver.

To close out the week, or, if you're in need of additional reinforced rancor over the weekend, check out the latest Keiser Report, with Max Keiser and Stacy Herbert, below:

Dow 13,207.95, +42.76 (0.32%)
NASDAQ 3,020.86, +2.22 (0.07%)
S&P 500 1,405.86, +3.06 (0.22%)
NYSE Composite 8,042.59, +17.58 (0.22%)
NASDAQ Volume 1,568,909,750
NYSE Volume 2,586,105,500
Combined NYSE & NASDAQ Advance - Decline: 2753-2759
Combined NYSE & NASDAQ New highs - New lows: 153-43
WTI crude oil: 92.87, -0.49
Gold: 1,622.80, +2.60
Silver: 28.06, -0.04

Thursday, August 9, 2012

The Result of Manipulated Markets

Call it what you like: rigged, played, insider trading, manipulated, contrived; when markets are not allowed to be free from intervention by governments or massive money managers, you get what amounts to basically nothing, stagnation, atrophy.

Read it and wonder. No explanation is sufficient nor necessary.

Dow 13,165.19, -10.45 (0.08%)
NASDAQ 3,018.64, +7.39 (0.25%)
S&P 500 1,402.80, +0.58 (0.04%)
NYSE Composite 8,025.00, +6.77 (0.08%)
NASDAQ Volume 1,677,765,625
NYSE Volume 3,089,631. 750
Combined NYSE & NASDAQ Advance - Decline: 3077-2454
Combined NYSE & NASDAQ New highs - New lows: 204-41
WTI crude oil: 93.36, +0.01
Gold: 1,620.20, +4.20
Silver: 28.10, -0.02

Wednesday, August 8, 2012

Why Bother? Stocks Are Volatile and May Be Overpriced

With nearly two trillion dollars having been shifted out of stock funds into bond funds and elsewhere over the past four years, wealth managers and their clients might look at today's results and question whether stocks are worth even bothering with at all.

Besides volatility and inherently high risk that stocks present, there are also event risks, especially within the framework of recent politics, the European debt crisis and the so-called fiscal cliff which continues to approach without resolution from either the president or the current do-nothing congress.

What's amazing about the current state of US markets is how wonderfully they engage in self-levitation, despite crumbling profitability and dubious upgrades. Now 41 months into the cyclical bull market, the risk/reward scenario for anyone thinking about taking the plunge into stocks offers a mixed bag, at best, and questionable fundamentals at worst.

Take, for example, the two stocks of the day. McDonald's (MCD) had some horrendous numbers for the month of July, missing their targets, with a special nod to Europe, where sales and revenue were far below the mark. The stock was damaged by the news, though not badly, losing 1.48, to 87.53, on the day, though the multiple of 14 has some analysts worried about a global slowdown which would affect even such a stellar performer.

Priceline (PCLN), a momentum stock par excellence was a bit of a different story, losing 117.48 points (17.28%), to 562.32 today, after citing Europe as the main cause for revising its third quarter estimates lower.

Similar stories have rolled through the investment landscape with regularity over the past six months. The business climate has grown more challenging than ever with so much uncertainty about the future, both in the US and in Europe. It's difficult for companies to meet expectations for revenue and profit in such an unstable environment.

Many have already thrown in the towel on stocks and, at these levels, many more may see cashing out before the fall as a viable plan. The macro picture is still cloudy and murky, fraught with dangers, some of which are largely unseen. The bull market may be nearing the end of its course, making stocks less attractive for long-term investors.

Dow 13,175.64, +7.04 (0.05%)
Nasdaq 3,011.25, -4.61 (0.15%)
S&P 500 1,402.22, +0.87 (0.06%)
NYSE Composite 8,018.24, +0.53 (0.01%)
NYSE Volume 3,227,711,500
Nasdaq Volume 1,881,049,000
Combined NYSE & NASDAQ Advance - Decline: 2535-2886
Combined NYSE & NASDAQ New highs - New lows: 208-51
WTI crude oil: 93.35, -0.32
Gold: 1,616.00, +3.20
Silver: 28.08, -0.01

Tuesday, August 7, 2012

Stocks Tread Slightly Higher Amid Quiet News Flow

With news flow at a low point, given Europe and America's traditional vacation seasons, the Olympics in London and the generally-implied blackout of any stories that may paint the current economic picture as anything other than manageable or rosy, stocks were free to rise unfettered over the past two days, though Tuesday's gains were of a larger magnitude than Monday's.

Any stock market gains in the short term serve only the interests of the status quo and their loyalist followers and useful idiots in the furtherance of fiat folly. There are divided camps forming globally, set in their ideals and aspirations over the future of the money, investment and capital formation, which has lately been forming at two extremes: one being that of the very, very rich (and for them, capital formation means only money in their hands) and the other at the extreme fringe edges in black markets, very small business enterprises (micro), alternate currencies and sustainable local economies.

Those on the high end of the income ladder believe they hold all advantage. After all, theirs is the accepted means of conveyance: large, faceless, unaccountable corporations operating on massive scale with tax codes and regulations written to advance their cause and hinder all competition. They also have the blessing of governments, ease of entry into markets and access to nearly unlimited capital.

Playing by their own rules, corporations, as quasi-branches of elite banking and political machines, have every practical advantage over start-up entrepreneurs and small business, excepting some crucial, psychological ones, such as new ideas with appeal to the general public, community awareness and high levels of personalized customer service, often face-to-face and local.

As the debt de-leveraging process continues - over what now appears to be a very long course of possibly eight to twelve years, beginning with the mid-summer of 2008 - corporations on national and global scale will find customer tastes that are slowly changing and evolving, shifting to a preference for smaller and exceedingly local enterprises.

While the corporatists play their numbers games, squeezing out every last drop of revenue and profit from a dwindling supply of discretionary money, they are the few, and the hunted, while the risk-takers outside of the traditional business cycle swell in number and gain strength through diversity, ingenuity and spirit.

In a macro sense, on the surface all seems to be business as usual, though once the facades are peeled away, truths unearthed, hearts and minds changed, there is revealed a noisy war on multiple fronts being waged by rebellious forces of sound money and financial freedom.

It's a process, and it proceeds slowly, quietly in the background, but it is proceeding nonetheless.

Dow 13,168.22, +50.71 (0.39%)
NASDAQ 3,015.86, +25.95 (0.87%)
S&P 500 1,401.34, +7.11 (0.51%)
NYSE Composite 8,023.49, +59.39 (0.75%)
NASDAQ Volume 1,856,287,375.00
NYSE Volume 3,494,027,000
Combined NYSE & NASDAQ Advance - Decline: 3589-1960
Combined NYSE & NASDAQ New highs - New lows: 292-47
WTI crude oil: 93.67, +1.47
Gold: 1,612.80, -3.40
Silver: 28.09, +0.22

Friday, August 3, 2012

Markets Soar on NFP Data; End Week with Paltry Gains

Bernanke didn't deliver. Draghi promised much, but fell fell well short in the court of public opinion.

The BLS, however, with its July non-farm payroll report, hit a home run, reporting an increase of 163,000 net new jobs, well beyond average expectations of 85,000, which was good enough for the investariat to send stocks screaming higher as the week closed out with a winning session after four straight losers.

Friday's gains were enough to just about cover the losses for the week, even though volume was the lowest of the five days and the official unemployment rate ticked up to 8.3%. For the week, the Dow Jones Industrials added 20 points and some change, the S&P gained five, while the NASDAQ picked up nine points.

The NYSE Composite index added 27 points, making the week as a whole much ado about nothing in particular.

Noting that the BLS figures are highly suspect and likely politically-contrived, the prior month's figure of an 80,000 gain was revised to 64,000, casting a bit of a pall on the madness of numbers. Investors (using the term lightly) didn't care, sending stocks near three-month highs.

Naturally, most of the gains were made in the opening minutes of trading, closing out profits to all but the privileged few HFTs and insider, bankster types who always seem to be the most profitable in the market.

Once the initial burst of activity had concluded, the market drifted the rest of the session in a very tight range. For instance, the Dow, after 9:45 am EDT, didn't move in either direction by more than 30 points. This is exactly the kind of frightened trading one would assume in a headline-driven, mostly-artificial market.

The week's activity leaves open some very poignant questions. Since last week's two-day burst was derived from hope for relief from the Fed and ECB in the form of more easing of monetary policy or, in the ECB's case, a more robust lending facility with which to bail out failing banks and sovereigns, why then would a positive reading on employment send stocks higher after both the Fed and ECB disappointed?

Apparently, Wall Street gets it either way. Poor economic conditions produce lax monetary policy (and stock gains), but job growth seemingly blunts the argument for more easing, while showing that the economy is on the road to recovery. A win for Wall Street either way, though long-time market observers might view such duplicity with a dollop of disdain.

Chartists may wish to point out the Dow's double top pattern, though still at levels below the year's highs made in the first week of May. The other major indices display similar patterns, with the broadest measures, the NASDAQ and NYSE Composite, showing many trading gaps along the road higher.

It goes without saying that the current market environment is highly reactive and immediate, especially to the upside. Valuations, which, of course, everybody gives the short shrift these days, are fairly rich, especially with corporate profits mostly down from a year ago and many companies missing revenue targets in the second quarter.

Being the end of the week, and payday or some kind of day for the masters of the universe, the pattern has recently been to end with a loud bang, followed by celebrations at favored watering holes or house parties in the Hamptons.

It's the middle of summer and the rich have to play, after all.

Dow 13,096.17, +217.29 (1.69%)
NASDAQ 2,967.90, +58.13 (2.00%)
S&P 500 1,390.99, +25.99 (1.90%)
NYSE Composite 7,935.35, +169.75 (2.19%)
NASDAQ Volume 1,696,452,375
NYSE Volume 3,499,269,750
Combined NYSE & NASDAQ Advance - Decline: 4479-1107
Combined NYSE & NASDAQ New highs - New lows: 286-70
WTI crude oil: 91.40, +4.27
Gold: 1,609.30, +18.60
Silver: 27.80, +0.81

Thursday, August 2, 2012

ECB's Draghi Offers No Solution to European Debt Crisis; Markets Tank

After last week's explosive rallies - based entirely upon notions that Fed Chiaman, Ben Bernanke, and ECB president, Mario Draghi, were committed to fixing their ailing economies, this week's reality show fell flat on its face on both continents.

On Wednesday, when the Fed announced the usual no change in federal funds rates, it also added no stimulus for the US economy or even language that would lead investors to believe that another round of QE was son to follow.

Today's speech following the no-event in Brussels, in which the ECB kept interest rates pegged at 0.75%, Draghi's rhetoric could not have been less encouraging, especially after the strong words he uttered just days ago, saying that the ECB would employ all of its tools to keep the Euro strong and the Eurozone of 17 countries that use the common currency, intact.

The lack of follow-through by the two central bankers proved once more that monetary policy is stuck in a morass of debt and delusion, and also, that whatever measures they might employ now or in the future will have little effect upon the general economy.

Essentially, the policies currently in place - near-zero interest rates, massive bond-buying schemes and general criminality amongst the banking crowd - will continue without change or revision, and, thus, will do nothing to disengage the European and US economies from the slow-to-no-growth regimen they have been anchored in for the past three to four years.

With stock players taking their cues from the big-talkers, shares in European indices were smashed down hard, with declines across nearly all the major exchanges of 1.5 - 2.5 percent.

In the US, the losses were lighter, but beginning to accumulate, as fears arise over the size of the jobs number due out Friday morning.

The markets now have become conditioned to reacting immediately to rumors and headlines, a condition not conducive to profitable investing, the general pattern being dead markets when there is little of substance in the news, and wild swings whenever a central banker opens his or her mouth. Ironically, when central bankers do speak, what they say has little actual bearing on the economy, though they and the stock pickers and players like to think it does.

Capital markets have, for some time, been in an overpriced consolidation phase, with confidence waning even among professionals. The retail investor has all but abandoned stocks as a reliable instrument for sound investment, as the entire rigged affair has become too driven by insiders with specific knowledge and too risky for such small returns.

Both the Fed and ECB have managed to paint themselves into their own corners, with seemingly no escape route. All that matters is to keep markets in a manner that makes them look like they're functioning as normal.

While that plan is barely working, the rest of the planet plays dutifully along, waiting for some kind of dramatic event that will alter the investing landscape. Unfortunately for the waiters and current investors, such events usually tend to be of the negative variety.

The continued can-kicking by the authorities hasn't done the trick to this point, so it's folly to believe that even more stimulative efforts by central banks will offer any kind of relief. The trouble with this kick-the-can-down-the-road style of monetary policy is that the road eventually ends and with it, so too the power to create debt out of thin air and pass it along to the taxpayers.

That happens to be about the only glimmer of hope in this sordid chapter of Keynesian economics: that the system itself will eventually fail, prompting a return to sound money and economic principles that do not rely on debt.

Dow 12,878.88, -92.18 (0.71%)
NASDAQ 2,909.77. -10.44 (0.36%)
S&P 500 1,365.00, -10.14 (0.74%)
NYSE Composite 7,765.60, -75.75 (0.97%)
NASDAQ Volume 1,832,069,000
NYSE Volume 4,139,315.750
Combined NYSE & NASDAQ Advance - Decline: 2176-3350
Combined NYSE & NASDAQ New highs - New lows: 130-157
WTI crude oil: 87.13, -1.78
Gold: 1,590.70, -16.60
Silver: 27.00, -0.54

Wednesday, August 1, 2012

Dead, Rigged Market Can Only Respond As Ordered; Is Worthless, Valueless, Void

The Fed's FOMC announcement today was another snoozer, as expected, more or less, but, now that the nation's central bank has decided not to announce another round of QE, one has to wonder whether last week's euphoria was nothing more than orchestration for a quick profit drive. Probably was.

Otherwise, the market is absolutely a dead zone, with some action in specific stocks, though the overall trend is pretty morose. Anybody who has even a cursory knowledge of economics or finance realizes that the markets are highly rigged in favor of a nefarious group of insiders, whose main goal is to profit at the expense of others, even their own clients.

Further, everyone is aware of the headwinds facing the global economies and associated markets. Those are not and will not go away.

The few data points released today were not particularly encouraging, though the veracity of the releases and the methodologies employed in reaching conclusive evidence are also quite questionable.

ADP's monthly survey of private sector employment recorded a gain of 163,000 jobs in July, after posting a gain of 179,000 in June. The numbers provided by ADP are somewhat of a mystery, as they always differ widely from the "official" government non-farm payroll figures, due out Friday, and upon which everyone with skin in this market is awaiting.

The July ISM Index posted its second straight reading showing contraction, at 49.8 for the month, after June's 49.7. Contraction in manufacturing is for two consecutive months, even though it is slight, is not an encouraging sign for the future, as these kinds of negative readings often lead to nasty occurrences like recessions, layoffs and general malaise, sluggishness, business failures and assorted blight.

What may be even more surprising is that the market hasn't fallen more, now that the Fed is officially not going to do anything (which doesn't matter anyhow, because what they've done thus far hasn't really worked for anyone other than Wall Street types).

Tomorrow's ECB meeting - getting to be a nearly regular monthly voyage into the land of make believe - is almost certain to satisfy nobody, like some people we know, though, like those people, the leaders of the various nations might be sufficiently entertained by their fantasies to believe they're actually doing the world some good, when in fact they are only making life more miserable for more people and jeopardizing their own futures at the same time.

One gets the idea that these types just don't care about anything other than their own sorry existences, which, being the "leaders" that they are, complicates matters for the unchosen followers, the bulk of mankind.

Best possibly to ignore them completely, as their machinations now have little to do with reality. As the global Ponzi scheme draws inevitably closer to its fitting, fateful end, self-sufficiency and resourcefulness of individuals will become more and more a prized asset. The best time to start along of path of separation from the status quo and into a more sustainable existence of one's own would probably have been yesterday, though the globalists appear determined to stretch out their dying days as long as possible, giving a leg up to late starters.

For the rest, especially those defined by the elite as "worthless eaters," life continues to gradually erode into dependency upon the state, many of which are on life support and beyond the point where they can actually meet all of their obligations, an unenviable condition sure to result in great pain and suffering for many.

When even a rigged market is dead and lifeless, what hope for a future of sound economy can anyone honestly hold?

Dow 12,976.13, -32.55 (0.25%)
NASDAQ 2,920.21, -19.31 (0.66%)
S&P 500 1,375.32, -4.00 (0.29%)
NYSE Composite 7,848.60, -15.34 (0.20%)
NASDAQ Volume 1,691,360,500.00
NYSE Volume 4,014,368,000
Combined NYSE & NASDAQ Advance - Decline: 1791-3727
Combined NYSE & NASDAQ New highs - New lows: 257-114
WTI crude oil: 88.91, +0.85
Gold: 1,603.70, -6.80
Silver: 27.54, -0.38