Stocks Fail to Maintain QE Momentum; Dow Down Four Straight Sessions

After kicking up 148 points following the Fed's "no taper" announcement last Wednesday, it's been straight downhill for the venerable Dow Jones Industrials, even the addition of Goldman Sachs (GS), Visa (V) and Nike (NKE) to the mix unable to stem the outflow from the blue chip index.

The Dow has given back all of those gains and then some, falling for the fourth straight session on Tuesday with a 66.79-point loss after dropping 49 and change on Monday. The S&P followed the Dow to the downside, though not registering such a large percentage loss, while the NASDAQ continued to defy gravity - thanks largely to Apple (AAPL), up marginally on the day, though losing ground into the close.

What's troubling traders and the indices isn't by any means certain, though the about-face and duplicitous moves by the Fed certainly aren't helping. While chairman Ben Bernanke continually espouses openness and transparency, last week's decision to keep asset purchases at current levels was viewed by the street as opaque and insensitive to markets. A lot of people were short going into the FOMC meeting and came out losing their shirts, their covering of positions adding to the upward movement right after the announcement.

Also weighing heavily is the federal government's intransigence on doing anything constructive. Democrats and Republicans are at loggerheads over the budget (or, continuing resolution, as the case may be), Obamacare and the debt ceiling, issues which need to be urgently resolved lest the government become permanently the laughing stock of the world community.

With the Dow off by some 342 points over the last four days, one might suspect that smart money has already headed for safer ground, witness the rally in treasuries, especially the 10-year note, which has fallen precipitously from close to a 3% yield to stand at the end of today at a relatively tame and aesthetically-pleasing, 2.65%.

The government isn't about to work out its problems soon, with an October 1 deadline looming for a government shutdown, which looks more and more likely to occur. The politicians have used up whatever patience the American people have had, and now risk being completely distrusted by the populace as the gang of thugs and ignoramuses they are.

Wall Street may be beginning to awaken to the facts on the ground that the US economy is still in dire straits which are about to get progressively worse and the run on blue chip stocks is telling.

There are just four trading days left in the quarter and traders are, by nature, an impatient bunch, prone to distrust uncertainty. The rest of this week could be a real bloodbath because the politicians can't agree on anything at all.

Dow 15,334.59, -66.79 (0.43%)
Nasdaq 3,768.25, +2.97 (0.08%)
S&P 500 1,697.42, -4.42 (0.26%)
10-Yr Bond 2.65%, -0.06
NYSE Volume 3,480,190,750
Nasdaq Volume 1,731,125,375
Combined NYSE & NASDAQ Advance - Decline: 3563-2953
Combined NYSE & NASDAQ New highs - New lows: 309-44
WTI crude oil: 103.13, -0.46
Gold: 1,316.30, -10.70
Silver: 21.59, -0.271