Thursday, March 29, 2018

Stocks Little Changed As Dow Transports Flirt With Bear Market Confirmation

As outlined in yesterday's special note, the bull market has come perilously close to rolling over into a vicious bear market, or, in Dow Theory terminology, the primary trend is about to change.

Key to this chartist theory is the 20-component Dow Jones Transportation Index, which has been falling in price right along with the other major indices, but needs one more little push to the downside to confirm the change in primary change, that being the point at which the transportation index closes below its previous closing low of 10,136.61.

Twice, early in Wednesday's session, the transports slipped below the magic mark, and approached it again in the final hour, falling to 10,136,26, before the short-covering crowd came in to rescue the bulls and prolong the agony of waiting for what will someday be known as the "turning point."

While there are all manner of economic and geopolitical risks extant, it's impossible to know exactly what will trigger the final cascade into bear-market-land, though investors need not necessarily be concerned unless one's time horizon is relatively short. That's because, according to experts, who are uniformly almost always wrong, bear markets last, on average, about 16 months, and the time taken to recover all of the losses back to the "turning point," is roughly three years.

Regardless of one's position or opinion on finance and economy, one thing is certain: February and March have been different from the 106 previous months of this long-in-the-tooth bull market. They have been outright losers, changing the prevailing sentiment from buy the dip to sell the rip.

Collectively, the 30 stocks comprising the Dow Jones Industrial Average are nearly 2800 points from their all-time-high from January 26, and that's a wall of worry that may be too high to climb.

Trading for March concludes on Thursday, as Good Friday is a recognized holiday.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29
3/20/18 24,727.27 +116.36 -301.93
3/21/18 24,682.31 -44.96 -346.89
3/22/18 23,957.89 -724.42 -1071.31
3/23/18 23,533.20 -424.69 -1496.00
3/26/18 24,202.60 +669.40 -826.60
3/27/18 23,857.71 -344.89 -1171.49
3/28/18 23,848.42 -9.29 -1180.78

At the Close, Wednesday, March 28, 2018:
Dow Jones Industrial Average: 23,848.42, -9.29 (-0.04%)
NASDAQ: 6,949.23, -59.58 (-0.85%)
S&P 500 2,605.00: -7.62 (-0.29%)
NYSE Composite: 12,308.90, +6.36 (+0.05%)

Wednesday, March 28, 2018

Warning on Dow Theory Primary Trend: Watch the Dow Jones Transportation Index

This is a special note to followers of Dow Theory.

Presently, one must pay attention to the Dow Jones Transportation Index (^DJT). It has to close below 10,136.61, the Feb. 9 close, to confirm a change in the primary trend from Bull to Bear.

The Industrials already made the move this Friday past, but, according to Dow Theory (which is like 95% accurate - or better - when it comes to signaling primary directional changes), the Transports must confirm.

If it happens today (currently around 10,190) or tomorrow, bear in mind that markets are closed Friday (commemorating the day Jesus was crucified) and Sunday, the day Jesus rose from the dead, according to the Bible.

Far from bible-thumping, chronic venial sinners should bear in mind that Jesus may have risen from the dead, but the stock market probably won't.

Anyhow, when the transports confirm, then you'll have the answer to whether or not this is/was a turning point in the stock market.

Added, 10:48 am EDT: Transports have fallen below the target close for the second time today. The first fall was all the way down to 10,112.05, shortly after the opening bell. The most current drop has apparently bottomed (for now) at 10,121.22. Current conditions warrant monitoring the Transportation Index into the close.

Stocks Reverse Course, Midday, Post Huge Losses

Just for the record, there was no news, no catalyst, no event which caused stocks to end largely to the downside on Tuesday, after Monday's gains were attributed to the proposition of trade talks between China and the United States, an obvious straw man argument for equity appreciation.

Stocks were sailing right along until just after 1:00 pm EDT, but then proceeded to lose value for the remainder of the session. The NASDAQ, which was already in the red, posted a massive loss of 211 points, a decline of nearly three percent on the day.

Traders must have been caught wrong-footed, as Monday's massive spike seemed to indicate that all was well. Apparently, that was not the case, sending the Dow back down near the lows registered on Friday.

With markets closed on Friday, there remain just two trading days to the month, which almost certainly mark two straight months of losses, a rarity over the past nine years of bullishness. Notably, Monday's rise was on very slim volume compared to the number of sell orders seen on Friday and other recent down days.

Only the NASDAQ holds gains for the year and the first quarter. Fund statements are going to show minus signs for many investors, an unusual sight which may spur even more selling.

Interest rates on treasuries fell across the curve, with emphasis on the long end. The 10-year-note closed out with a 2.78% yield.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29
3/20/18 24,727.27 +116.36 -301.93
3/21/18 24,682.31 -44.96 -346.89
3/22/18 23,957.89 -724.42 -1071.31
3/23/18 23,533.20 -424.69 -1496.00
3/26/18 24,202.60 +669.40 -826.60
3/27/18 23,857.71 -344.89 -1171.49

At the Close, Tuesday, March 27, 2018:
Dow Jones Industrial Average: 23,857.71, -344.89 (-1.43%)
NASDAQ: 7,008.81, -211.74 (-2.93%)
S&P 500: 2,612.62, -45.93 (-1.73%)
NYSE Composite: 12,302.54, -130.61 (-1.05%)

Tuesday, March 27, 2018

So, Now There's No Trade War?

Last week, all the financial media pundits could talk about was how President Trump was going to destroy the economy with his ill-advised tariffs, specifically targeting China, that great purveyor of cheap products that alternatively poison animals, emit toxic gasses, or break upon normal use (see Chinese nails, drill bits, concrete).

Well, over the weekend, the narrative somehow changed. Everything with China is "all good, nothing to see here, move along." And that's exactly what the slavish traders on Wall Street went about doing on Monday, sending the major indices soaring in one of the greatest one-day advances of all time.

The improvement on the NASDAQ was the ninth-largest ever. Interestingly, the eight advances bettering that number all occurred in the year 2000, except number one, which was a gain of 324.83 points in January of 2001. All of those gains were made in a bear market, after the NASDAQ dotcom bubble had burst.

On the Dow Jones Industrial Average, the 669.40 point gain was the largest since 2008, notably a period in which the economy was entering the Great Financial Crisis. Monday's advance was the third-best in market history.

The timing of news in relation to the market is becoming somewhat suspect, almost as if somebody was gaming the system. A similar move was just over a month ago, on February 6th, when the Dow gained 567.02 points a day after it fell a record 1,175.21 points (a Monday) and two days before it fell by the second-most ever, 1,032.89 (Thursday).

Putting a little more perspective on the matter, the Dow remains down 826 points in the month of March and is still 2400 points lower than the all-time high close on January 26 (26,616.71) and in the red for the year, albeit only 500 points down.

Therefore, Monday's gains should not be viewed in a vacuum. No single day should. It pays to have perspective, especially since Dow Theory confirmed a major trend reversal - from bull to bear - as of Friday's close (23,533.20), which was lower than the February 8 finish at 23,860.46.

Chasing this bull will eventually lead directly into the path of a very hungry bear.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29
3/20/18 24,727.27 +116.36 -301.93
3/21/18 24,682.31 -44.96 -346.89
3/22/18 23,957.89 -724.42 -1071.31
3/23/18 23,533.20 -424.69 -1496.00
3/26/18 24,202.60 +669.40 -826.60

At the Close, Monday, March 26, 2018:
Dow Jones Industrial Average: 24,202.60, +669.40 (+2.84%)
NASDAQ: 7,220.54, +227.88 (+3.26%)
S&P 500: 2,658.55, +70.29 (+2.72%)
NYSE Composite: 12,433.15, +255.45 (+2.10%)

Saturday, March 24, 2018

Stocks Crash Post-Fed Rate Hikes, But The Media Will Still Falsely Blame President Trump

Here are just a few of the headline items for the week that ended with two disastrous days after the FOMC policy rate decision to raise the federal funds rate to 1.50-1.75%, the sixth rate hike in the last 27 months and probably the one largest policy mistake in the history of the Federal Reserve System, an unconstitutional private banking system that has wreaked havoc on not only the economy of the United States of America, but of the entire planet.

Dow Jones Industrial Average fell 426 points, closing out the week at it's lowest level since November 22, 2017. The Dow is off nearly 1500 points for the month of March, a worse decline than that of February. In just the past week, the Dow has shed some 1410 points, a 5.67% drop.

The S&P 500 fell 5.9% on the week, the biggest drop in more than two years.

The NASDAQ 100 plunged 7.3% in the week, the most since August 2015. All of the major averages are negative for the year, except for the NASDAQ.

Scapegoating the tariffs put forward by President Trump has been the sport of the week on the likes of CNN, NBC, CBS, ABC. Surely, the Sunday talk shows will be hooting and hollering over what bad judgement the president has shown, when, in fact, it is the Federal Reserve's radical policies over the past ten years that have caused major distortions on Wall Street, a false sense of security in stocks as sound investments, impoverishment of many retirees who were denied any meaningful interest income on their savings due to the Fed's zero interest rate policy that prevailed from 2008 though 2015.

Meanwhile, the Fed, in a position to cause much further damage to the economy by raising rates while the nation is heavily indebted, has done just so, and has not backed off from its planned position to unwind its bloated balance sheet, and actually increase its sales of securities in the second half of 2008.

While the tariffs President Trump has put forward are certain to cause some disruption in some segments of the economy, they are not, on their own merit, the ultimate cause for a stock market collapse, such as is occurring presently.

There can be no other culprit than the Federal Reserve for the recent stock market volatility and massive outflows from stocks. Their policies have been the guiding force before, during and after the Great Financial Crisis of 2007-09, so there should be no doubting that their policies are still guiding investment decisions.

The entire global economic structure is currently under assault by coordinated central bank intervention, ongoing massive stock and bond buying and selling beyond their charters, and the continuing issuance of debt as fiat money on a global basis.

From the US federal government to individual citizens, the signs of financial stress are at breaking points. The federal government, already "officially" $21 trillion in debt, on Friday passed an omnibus spending bill of $1.3 trillion, causing further debt issuance and higher debt servicing costs thanks to the Fed's rate increases.

Corporations, which have binged on stock buybacks since 2009 and most recently increased their level of indebtedness and slothful management with the recent repatriation of an estimated $2 trillion based on the tax reform enacted by congress and singed into law by the president recently.

Individuals are more indebted than ever before, with credit card and student debt at all-time highs, variable rate mortgages increasingly difficult to service while incomes have barely budged for the past 20 years.

Additionally, the tax burden on some of the wealthiest Americans, with incomes over $100,000 per year, is upwards of 50%, enslaving these people to endless payments for governments (local, state, and federal) that have displayed absolutely no fiscal restraint.

Continued declines in the stock market are going to impact pension funds throughout the world, both pubic and private. Most public pension funds are massively underfunded, and heavily invested in stocks. A severe downturn - which has just begun - will bankrupt these entities, causing them to renew on promises made to workers.

A heavily-concentrated media will assure the public that the stock market collapse is entirely the fault of one man, President Donald J. Trump, while the true criminals of extortion and debt slavery are the central banks and their private, unconstitutional banking system, which has been favored and kept afloat by a supine congress.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29
3/20/18 24,727.27 +116.36 -301.93
3/21/18 24,682.31 -44.96 -346.89
3/22/18 23,957.89 -724.42 -1071.31
3/22/18 23,533.20 -424.69 -1496.00

At the Close, Friday, March 23, 2018:
Dow Jones Industrial Average: 23,533.20, -424.69 (-1.77%)
NASDAQ: 6,992.67, -174.01 (-2.43%)
S&P 500: 2,588.26, -55.43 (-2.10%)
NYSE Composite: 12,177.70, -199.69 (-1.61%)

For the Week:
Dow: -1413.31 (-5.67%)
NASDAQ: -489.32 (-6.54%)
S&P 500: -163.75 (-5.95%)
NYSE Composite: -606.68 (-4.75%)

Thursday, March 22, 2018

Stocks Slammed After Fed Rate Hike; Dow Reaches Correction Level, More Pain Looms

Being as they are truly ugly - and predictable (see yesterday's post and many more before that for reference) - it might be appropriate to post just the numbers.

However, beyond the usual blathering nonsense from the financial "talking heads" in TV-land, it would be imprudent to not point out that the Dow Jones Industrial Average has fallen just into correction, down 10.30% from the all-time-high closing price of January 26 of this year.

With today's losses, the Dow is now down more than 1000 points for the month of March, after a collapse of 1100 points in February. This puts the blue chip average on track to reach bear market status by sometime between May 15 and June 21. The magic number for a 20% drop off the high is 21,293.37.

Think it can't happen? Reference the dotcom collapse of 2000, the GFC of 2008-09, or the crash in October 1929 whittled to the Great Depression.

Naturally, markets do not respond in straight lines, so there is the possibility of some gains between now and the next big political event, the mid-term elections in November. If the major averages are not in bear country by that time, there's something fundamentally wrong with any and all systems of market prediction.

The Dow has receded beyond the previous interim low, 24,538.04, and is very close to the absolute near-term bottom of February 8, of 23,860,46 (less than 100 points away).

Three of the four major averages are in the red for 2018, the lone survivor being the NASDAQ, sporting a gain of less than 300 points. With that in mind, further losses should be felt hardest in the NASDAQ, as it is front-loaded with tech and financial stocks. Being the most volatile of the indices, the NASDAQ could come under severe pressure as early as Friday (tomorrow), though a dead-cat bounce to end the week is also an understandable scenario.

with the Fed's rate hike being the proximate cause of the most recent selling, it's now behind the market, but so long as the Fed talks up rate increases and balance sheet unwinding it will bleed from stocks. The entirely false narrative of "recovery" and "growth" will become more vilified and ridiculed as weak economic data continues to roll forward. Estimates of first quarter GDP have fallen precipitously in recent days, as it is generally the worst period for GDP due largely to weather, and, this Winter has lingered longer than most (it's already Spring). There's snow on the ground and cold temperatures throughout the Northeast and into the Midwest.

The advance estimate of first quarter GDP will be announced the last week of April, on the 27th. It would be expected that any gains between here and then will be wiped away rather quickly when the figure comes in at something South of two percent.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29
3/20/18 24,727.27 +116.36 -301.93
3/21/18 24,682.31 -44.96 -346.89
3/22/18 23,957.89 -724.42 -1071.31

At the Close, Thursday, March 22, 2018:
Dow Jones Industrial Average: 23,957.89, -724.42 (-2.93%)
NASDAQ: 7,166.68, -178.61 (-2.43%)
S&P 500: 2,643.69, -68.24 (-2.52%)
NYSE Composite: 12,377.39, -306.37 (-2.42%)

Fed Has Ventured Into Dangerous Territory With Most Recent Rate Hike

Whether Wednesday's 25 basis point hike in the federal funds rate will eventually become a seminal moment in economic history, only time will tell. On the surface, there are a good number of indications that the Fed, by increasing the overnight lending rate to 1.50-1.75%, may have finally blundered into a crucial policy error.

The hike being the sixth such rate increase of 0.25% in the past 27 months, the Federal Reserve has ventured into an area which has the potential to do more harm than good, as evidenced by the sudden turnabout in stocks after the rate decision was announced, and, more to the point, during Fed Chairman Jerome Powell's first press conference.

Stocks initially rose on the release, but gave back all of the gains, finally ending with complete capitulation as the trading day drew to a close, turning what was a brief 250-point gain into a lasting 45-point loss at the close.

What has equity investors puzzled and anguished is the Fed's insistence on their continued insistence on higher interest rates, despite economic data that shows quite clearly that inflation is nascent and growth largely a chimera, a construct of rose-colored projections of the general economy added to massive increases in government spending, which is, in the end, fully lacking in productive qualities.

Governors of the Federal Reserve, ensconced, as they are, within their cocoons of smug condescension, are either uninformed to the realities of life in the real world or purposely interpreting their trumped-up economic data as reflective of a booming economy.

The other possibility is that the Fed officials know that the economy - both domestic and global - is headed for recession, and they are preparing for the worst, employing the only tool they believe effective, the varying of interest rates with the intent to either slow lending and economic activity by raising them, or increase the same by lowering them.

Sadly, the Fed has the cart well out in front of the horse. Their rate increases will slow the economy, precisely at a time in which they should be doing nothing. Eventually, the Fed will have to reverse the direction of their myopic monetary monopoly, as the economy - which has been limping along at two percent growth or less for the past ten years - and lower rates, ushering in another era of mad money machinations, sending valuations of stocks out into the cosmos, while the public watches the explosion of wealth inequality soar to unimagined heights.

Besides the folly of raising rates in a weak economic environment, the Fed continues to preach that they are decreasing their massive balance sheet, rolling off their horde of somewhat dubious mortgage-backed securities and treasury bills, notes and bonds.

Having taken a path toward a rather rapid depletion of liquidity, Mr. Powell and his cohorts will soon find that themselves vilified and, with any hope, bankrupt.

Their continuing charade of being the "best and brightest" know-it-alls in the financial universe must come to an end soon, lest the entire global economic structure be collapsed into one giant heap of unplayable debt, impoverishing the world's billions of citizens while laying bare their own conceit, deceit, and utter depravity.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29
3/20/18 24,727.27 +116.36 -301.93
3/21/18 24,682.31 -44.96 -346.89

At the Close, Wednesday, March 21, 2018:
Dow Jones Industrial Average: 24,682.31, -44.96 (-0.18%)
NASDAQ: 7,345.29, -19.02 (-0.26%)
S&P 500: 2,711.93, -5.01 (-0.18%)
NYSE Composite: 12,683.76, +20.12 (+0.16%)

Wednesday, March 21, 2018

Down, Down, Down, Up, Up, Down, Up

As the headline indicates, stocks are in an extreme state of fluctuation. The ups-and-downs in the headline indicate the direction of the Dow Jones Industrial Average for the past seven sessions.

The total point movement for those seven days is 1217.97 with the emphasis on the downside of over 600 points. The average change was 174.00, with only one day (March 16) posting a change of less than 115 points (+72.85). It is plain to see that volatility is quite high. Wednesday's rate policy decision from the FOMC should provide some idea of direction, though it is unlikely to calm markets at all.

The decision - probably a hike in the federal funds rate of 0.25% - is scheduled for Wednesday, 2:00 pm EDT with new Fed chairman Jerome Powell's first press conference at 2:30 pm EDT.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29
3/20/18 24,727.27 +116.36 -301.93

At the Close, Tuesday, March 20, 2018:
Dow Jones Industrial Average: 24,727.27, +116.36 (+0.47%)
NASDAQ: 7,364.30, +20.06 (+0.27%)
S&P 500: 2,716.94, +4.02 (+0.15%)
NYSE Composite: 12,663.64, +12.18 (+0.10%)

Tuesday, March 20, 2018

Stocks Dumped Again As FOMC Meeting Portends Higher Interest Rates

The most obvious cause for Monday's sharp selloff has to be the widely-anticipated 25 basis point hike in the federal funds rate which should become official when the FOMC concludes its March meeting on Wednesday.

Getting out in front of the Fed's move was paramount, as stocks slid in early going, gaining a little back in the afternoon. The Dow plunged nearly 500 points intra-day, bottoming out at 24,453.14 just prior to 3:00 pm EDT.

Anybody playing the market net short has to be pleased with recent results while bulls may be looking to gore any bear marketer caught on the loose.

What bears (no pun intended) watching is what happens on the actual announcement (Wednesday, 1:00 pm EDT) and thereafter. If the slide continues, the Dow will soon enter correction territory again with the next stop a full blown bear market, which would signal the end of a nine-plus-year bull run.

For now, it's safe to say that the Dow won't be seeing much in the way of positive progress unless the Fed surprises and leaves rates unchanged, a very doubtful expectation.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69
3/19/18 24,610.91 -335.60 -418.29

At the Close, Monday, March 19, 2018:
Dow Jones Industrial Average: 24,610.91, -335.60 (-1.35%)
NASDAQ: 7,344.24, -137.74 (-1.84%)
S&P 500: 2,712.92, -39.09 (-1.42%)
NYSE Composite: 12,651.46, -132.93 (-1.04%)

Sunday, March 18, 2018

Stocks Remain Under Pressure As Rate Hike Looms

With the March FOMC meeting now less than a week away (March 20-21), stocks experienced some turbulence in the lead-up to the expected 25 basis point hike in the federal funds rate.

That is likely the most important feature of the markets at this juncture, with stocks getting squeezed as bonds have apparently accepted the rate hike as a fait accompli and have stabilized, with the 10-year-note settling in the range of a 2.85% yield.

Taking the worst of it was the Dow Jones Industrial Average, which suffered another setback for the week and remains lower for the month. If the down finishes March in the red, it would be the first occurrence of two straight losing months since December 2015 and January 2016.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03 -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54
3/16/18 24,946.51 +72.85 -82.69

At the Close, Friday, March 16, 2018:
Dow Jones Industrial Average: 24,946.51, +72.85 (+0.29%)
NASDAQ: 7,481.99, +0.25 (0.00%)
S&P 500: 2,752.01, +4.68 (+0.17%)
NYSE Composite: 12,784.39, +40.78 (+0.32%)

For the Week:
Dow: -389.23 (-1.54%)
NASDAQ: -78.82 (-1.04%)
S&P 500: -34.56 (-1.24%)
NYSE Composite: -134.43 (-1.04%)

Thursday, March 15, 2018

Stocks Bounce, Dead Cat Variety, Then Fade

Nothing much to see here, though the Dow has managed to stay in a relatively tight range, below the interim high and above the interim low, still negative for the month.

Further patience, with a slight bias to the short side, is advised

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03 -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08
3/15/18 24,873.66 +115.54 -155.54

At the Close, Thursday, March 15, 2018:
Dow Jones Industrial Average: 24,873.66, +115.54 (+0.47%)
NASDAQ: 7,481.74, -15.07 (-0.20%)
S&P 500: 2,747.33, -2.15 (-0.08%)
NYSE Composite: 12,743.61, -19.06 (-0.15%)

Added:

Report from upstate NY (30 miles east of Rochester) Crash is coming, very soon. Restaurants are closing everywhere. Most of the small towns, like Sodus, Macedon, Clyde, Newark have plenty of retail space for lease, much of it on the block for over two years.

Retail is awful. Only the biggest, best-established stores are surviving, and that's all they're doing. People are over-taxed, stressed out, debt-laden zombies. Average of $22k per student in most districts. Upstate NY (from Albany west to Buffalo) has been in a depression for the past 20 years, but, seriously, it's getting worse. People are down to buying just necessities and trying to pay off credit card and school debt. Forget about mortgages. It's like the sub-prime crisis is still ongoing. Monroe County (Rochester) lists two to three foreclosures a day.

The narrative that we're in "recovery" or "expansion" is complete horse manure. As soon as you make some money, there's the revenue guy or the locals erecting more stupid regulations to make life more difficult.

A true cleansing is needed. Start by closing all the schools. Screw the overpaid, fat, stupid teachers and their huge pension load. They suck. They don't teach; they only take. Same for most government employees. Then sack half the municipal and state employees. Then 50% of the federal employees. When half of the nation is on welfare, cut that off, shoot the worthless eaters and start over.

I'm in my mid-60s and I have to admit, I've never seen the economy in worse condition. Ever since 2008, it's been every man for himself. Pretty darn sad. We used to have a good country, but it's been going downhill for several generations. Half of the youth are worthless and will be dangerous.

Bankruptcy filings will erupt in the second half this year unless there's dramatic change from within. Trump can't do it all, but he's fighting a deflation monster nobody wants to admit exists.

Here, with a foot of snow on the ground five days before Spring, things are looking pretty damn bleak.

Dow Sheds For Third Strat Day; Last Week's Gains In Jeopardy

Trade wars. Inflation. Rate hikes. Housing prices. Wealth inequality.

Take your pick. These are but a few of the issues vexing investors as the Dow Jones Industrials recorded triple digit losses for the third straight session, wiping out the gains from the previous Friday and threatening to eviscerate all of the upside from a momentous prior week.

Anybody keeping score (and if you have a pension plan, college fund, or any other kind of tangential reach into the world of equities, you should be) has to be at least a little bit alarmed at the inability of stocks to regain their momentum. After a wildly positive January, February was fraught with panic and pain. Now March is beginning to shape up into a further continuation of the slippery slope upon which stocks are currently sliding downward.

Over the previous week, the Dow had ramped up nearly 800 points, but, as of the current mid-week, the blue chips are down nearly 600 points. Another day like Wednesday would not only eclipse the gains of last week, but it would also signal to chart-watchers a breach of the prior interim low, 24,538.06, achieved March 2nd.

A drop below that level would be an almost certain sign that the index - and stocks in general - are in for another round of relentless selling pressure. What matters little is the suspected cause. What matters most is the evaporation of profits and gains and the spread of fear in the accumulation of wealth.

It would not be the first time that investors had been hoodwinked by snake oil salesmen promoting a path to easy street via investments in minuscule percentage ownership of gigantic corporations. In all likelihood, it would not be the last.

As has been stated in prior posts here at Money Daily, the market is moving not only on money flows and fundamentals, but on political considerations, whether they be real or imagined.

There is very real danger at this juncture and investors would be wise to hold cash and/or take profits.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03 -171.58 -22.17
3/14/18 24,758.12 -248.91 -271.08

At the Close, Wednesday, March 14, 2018:
Dow Jones Industrial Average: 24,758.12, -248.91 (-1.00%)
NASDAQ: 7,496.81, -14.20 (-0.19%)
S&P 500: 2,749.48, -15.83 (-0.57%)
NYSE Composite: 12,762.67, -69.08 (-0.54%)

Tuesday, March 13, 2018

Blue Chips Smashed Again; Dollar Dives; Gold, Silver Benefit

Whether or not the market - via the headline-parsing algorithms - was reacting to news that Rex Tillerson was fired from his position as Secretary of State or to hints that Larry Kudlow (yes, that "king dollar" Larry [cocaine habit] Kudlow) was in line to become the president's chief financial advisor has to be considered somewhat immaterial considering the calamitous close and the repeating pattern of strong openings and weak closes, telltale chart signals of bear markets.

Tuesday's rout left the Dow Jones Industrials down for the month... not by much, just 22 points, but there's been fundamental damage done to stocks not only today, but over the previous five weeks as well.

As Money Daily has recently taken pains to point out, the mood of the market has changed considerably since the go-go days of January. February marked the worst market performance in more than two years, and March is shaping up to be volatile and potentially devastating to equity holders.

Stocks have had ample time to recover the February losses but have failed to do so. That's an unmistakable fact underlying the weakening dynamic of the current condition.

On the day, the US dollar index dipped below the critical level of 90, closing at 89.71. The main beneficiaries of the dollar demise were the precious metals, as both gold and silver demonstrated strength. Though the gains were nothing dramatic, the PMs looked today like safe-haven bets, as did the 10-year-note, closing with a benign yield of 2.85%. Oil was banged lower, to 60.90 per barrel in WTI. The Dow has lost 328 points in the past two days, nipping off the excess of Friday's 440-point binge.

There are plenty of frayed nerves at the brokerage trading desks, especially with this coming Friday's options expiration, a triple-witching conclusion to the week.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54
3/12/18 25,178.61 -157.13 +149.41
3/13/18 25,007.03, -171.58 -22.17

At the Close, Tuesday, March 13, 2018:
Dow Jones Industrial Average: 25,007.03, -171.58 (-0.68%)
NASDAQ: 7,511.01, -77.31 (-1.02%)
S&P 500: 2,765.31, -17.71 (-0.64%)
NYSE Composite: 12,831.76, -66.63 (-0.52%)

Monday, March 12, 2018

Troubling Midday Reversal Sends Dow Down Again

The roller coaster continues. Beginning February 1, there have been 27 trading days. Of those, on the Dow, 15 have finished positive, 12 negative. It's fair to say that this has been essentially a directionless market for nearly a month-and-a-half, unless one takes the view that it's the beginning stage of a greater, cyclical bear market.

The Dow Jones Industrial Average closed at 26,186.71 on February 1. Today's disappointing close was 25,178.61, a little short of an 1100 point decline, but barely a blip on a logarithmic chart, a mere four percent.

What's more troubling than the small decline over the past five weeks is the time it has taken for the Dow to recover, and it hasn't fully regained all of the losses.

The low point - 23,860.46 - was February 8, so the Dow has recovered more than 1400 points since then, but, for a market that until recently had been racking up wins faster than a track star on steroids, the performance of late has been a real disappointment.

While the main driver to the downside may be nothing more than simple overvaluation, that alone is a real problem which can only be fixed two ways: 1) higher profits (EPS), or; 2) lower price per share.

It appears that the trend-setters in market-land have chosen door number two, because, while there may be adequate rationale to take a positive view of the economy, stocks have pretty much priced themselves out of any further upside. Real earnings, from increased sales, sound management, new product cycles, higher profit margins - those things which exist in real economies - are not to be found in many mature companies these days. Easy credit and stock buybacks have boosted share prices by diminishing the number of shares outstanding, thus making earnings appear better because they are divided by fewer shares.

Essentially, Wall Street has been playing three-card monte with investors, buying back stock, enriching shareholders and executives while doing little to nothing to improve the business. Capital investment has been sullen for the past decade, and, if stocks begin to tailspin, don't look for companies to begin investing in better infrastructure, more R&D, or ramp up employment. The people running these companies read from the same playbook, and they're more likely to become more entrenched, slash costs and lay people off, a recipe for disaster and a longer downturn.

The next few trading days should be quite instructive as a short-term chart pattern is possibly emerging. A close above 25,709.27 (February 26) would signal a reversal from the downtrend. Anything approaching the interim low of 24,538.06 (March 2) could be cause for alarm, indicative of fourth declines.

At the end of all this is the FOMC meeting on March 20-21, at the end of which the Fed will likely announce another increase of 25 basis points to the federal funds rate, a move which will put the overnight lending rate at 1.50-1.75% and would be the fourth increase in the past 13 months. The Fed first raised rates off the "zero-bound" in December 2015, but moved cautiously, not raising again until December of 2016. Since then there have been three ore 25 basis point hikes, in March, June, and December of last year.

This expected hike could be one too many, and too soon. With the economy still doodling along at 2.3% for 2017, the Fed may be too far out in front of their inflation and expansion projections.

There is much to digest between today and the FOMC meeting, but it appears the Fed has already made up its mind.

At the Close, Monday, March 12, 2018:
Dow Jones Industrial Average: 25,178.61, -157.13 (-0.62%)
NASDAQ: 7,588.32, +27.51 (+0.36%)
S&P 500: 2,783.02, -3.55 (-0.13%)
NYSE Composite: 12,898.40, -20.42 (-0.16%)

Sunday, March 11, 2018

Friday's Moonshot Sends Stocks to Positive for March, Year-to-Date

After losing nearly 500 points the first two trading days of March, the Dow Jones Industrial Average rebounded to positive for the month - and the year - with gains every day excepting Wednesday, when the Dow shed another 82 points. However, the big days occurred on Monday, with a gain of 336 points, and Friday, when the Dow and other major averages put the dismal days of February and March mostly behind them, as the industrials skyrocketed 440 points.

Amazingly, all of this optimism came in spite of endless growling over President Trump's steel and aluminum tariffs and synchronized shouting - from the halls of congress and the canyons of lower Manhattan - about an impending trade war.

Friday's burst higher was credited largely to the impressive February non-farm payroll report, which was a blockbuster, showing 313,000 new jobs created and a 4.1% unemployment rate in the shortest and coldest month of the year, numbers nobody could claim as anything other than positive, the mere hint of good news now capable of sending the stock market back to dizzying, overvalued heights.

Indeed, the NASDAQ closed at an all-time high, though the other indices still have a way to go to exceed the marks set on January 26, though another week like this one, with gains of more than 2.8% on each of the individual indices, would smash the old records on the S&P 500, and get the Dow and NYSE Composite within spitting distance.

How likely that is to happen is a matter of some conjecture, as the FOMC meets March 20 and 21, and is expected to raise the federal funds rate another 25 basis points. This is seen as a headwind to continued expansion, but, with seven days to trade up to the release of the new "policy," the day-trading demons of the financial world will have plenty of time to ramp up and then deflate, choosing either to sell the news or buy into the continuing expansion narrative, even as the bull market passed the nine-year mark on Friday.

There's been no absence of volatility or fluctuation to start off 2018, with massive gains in January, huge losses in February, and possibly an evening out in March. To those who believe the bull is weary, standing on only two legs, the word is "so what," with the punditry claiming - rightly so - that bear markets only last, on average, 12-14 months. What they do not want to discuss is the depth of those bear markets, nor the time taken to get back the losses incurred.

The past two bears, in 2000-2001 and 2007-2009, are good cases in point, using the Dow as the barometer, even though, in the case of the 2000 crash, it was the NASDAQ that collapsed more than anything, which could again be the case should history repeat.

On December 1, 1999, the Dow closed at 11,497.12, and bottomed at 7,591.93 on September 1, 2002, making the duration of the bear market a full 34 months, or nearly three years. It wasn't until September of 2006 that the index surpassed the old high (11,679.07), a period of nearly seven years from peak to peak, a period which seemed like eternity for some. Of course, the bull had been underway since the bottom in '02, and finally apexed in October of '07, blowing through 14,000 before beginning to pull back. (For the record, it took the NASDAQ 13 years to exceed it's pre-crash 2000 highs.)

The ensuing collapse fell just short of catastrophic calamity, as the housing market went bust, along with its many derivative trades, taking all of corporate America down for the count, with the Dow closing at 6,547.05 on March 9, 2009, a date which could arguably be called the end of the '07-09 bear market (16 months) and the beginning of the Fed-inspired bull run to the present, now 114 months old, the second-longest expansion in market history, with gains from the bottom to the recent peak quadrupling the investment, truly an inspiring, incredible, nearly inexplicable accomplishment.

The average of the last two bear markets supplies a possible scenario. If the bear market began in February (which we humans will only know at some later date), the bear would run through March of 2020, or 25 months, the average length of the last two bear markets. It's at least worth consideration, because two years of losses might actually be enough time to clear the decks of much of the excess debt and mal-investment (and there's been lots of it) of the past nine years. Anything longer would be mostly unbearable, not only to Wall Street, but to the average Jane and Joe Americans, who have suffered enough at the start of this century. Likewise, anything shorter would look like another band-aid for the corrupt banking and political system of cronyism and back-handedness toward the taxpaying public.

The mammoth gains over the past nine years are exactly why one should give pause and contemplation to the continuance of the bull market. In market terms, one would be buying at the highs if one would plunge in today, and why would anybody who saw $100,000 turn into $400,000, or a million into four million, even consider adding to positions?

Perhaps the view that President Trump will single-handedly usher in a era of increased prosperity and profit with his blustering "Make America Great Again" push can partially explain any euphoria surrounding the currency of the stock market and it's possible that he might be on the right track, even though he faces many hurdles and obstacles, not the least of which stem from his own party, people in his own administration, opponents on the Democrat side of the aisle and skeptics on Wall Street.

But, it's been proven time and again, Wall Street will play along with Washington if it serves their interest, which is, succinctly, more profits, and higher stock prices. This pits the speculators, gamblers, and traders of the world against the entrenched government "deep state," which cannot stomach Mr. Trump and is prepared to do anything within its power to besmirch and/or impeach him, including sending the stock market into a tailspin, making fundamental analysis of stocks, bonds, and just about any other investment vehicle, not only an exercise in economics, but in politics, as well.

Economic data has shown a mixed, slightly positive picture; politicians are hell=bent on discrediting the president, and, behind it all, an ocean of debt created by the Fed and their cohort central banks needs to be unwound, brought under control, and eventually retired, an exercise only the Fed has recently begun, with the ECB and Bank of Japan too to follow. The wild card is China, where the PBOC has created literal cities built on nothing but debt and speculation.

All that makes for one tricky trade.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99
3/9/18 25,335.74 +440.53 +306.54

At the Close, Friday, March 9, 2018:
Dow Jones Industrial Average: 25,335.74, +440.53 (+1.77%)
NASDAQ: 7,560.81, +132.86 (+1.79%)
S&P 500: 2,786.57, +47.60 (+1.74%)
NYSE Composite: 12,918.82, +173.81 (+1.36%)

For the Week:
Dow Jones Industrial Average: +797.68 (+3.25%)
NASDAQ: +302.94 (+4.17%)
S&P 500: +95.32 (+3.54%)
NYSE Composite: +360.83 (+2.87%)

Thursday, March 8, 2018

Stocks Steady As Trump Softens Steel, Aluminum Tariffs

As seen through the eyes of Wall Street computer algorithms, President Trump's 25% tariff on steel imports and 10% on aluminum aren't so bad after all.

Stocks ended the day in the green, but it was a bumpy ride getting there, with most of the gains coming in the final half-hour of trading, during and after Trump's announcement.

In realistic analysis, Thursday's trading amounted to less than nothing, focused so heavily upon the tariff issue, as if that were all that mattered. Tomorrow's non-farm payroll report for January, released at 8:30 am, prior to the opening bell, will likely impact markets more decidedly.

Stocks, with the Dow Jones Average in particular, have made essentially no progress since February 14, when it closed at 24,893.49. There's still a mountain to climb to get back to all-time highs from January 26 (26,616.71). The Dow remains in the red for March.

Elsewhere, oil closed just a hair above $60/barrel, at $60.33, a multi-week low, gold was down to $1322.50 per ounce, while silver held steady at $16.50 the ounce. Bonds continued to hold firm, with the 10-year-note finishing with a yield of 2.87%.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84
3/8/18 24,895.21 +93.85 -133.99

At the Close, Thursday, March 8, 2018:
Dow Jones Industrial Average: 24,895.21, +93.85 (+0.38%)
NASDAQ: 7,427.95, +31.30 (+0.42%)
S&P 500: 2,738.97, +12.17 (+0.45%)
NYSE Composite: 12,745.01, +38.00 (+0.30%)

Is The Global Economy About To Roll Over?

Recent pullbacks in stocks, and, more importantly, their inability to recover, is a sure sign that trouble lies directly ahead for the global elite chieftains of central banks which have dominated economics since the Great Financial Crisis of 2008.

The central banks are not the only culprits when it comes to how poorly economies of countries are engaged, elected and unelected officials in government need at least a share of the blame. Both parties promote endless debt in a finite world, a construct which cannot endue without obvious pitfalls and the troublesome realities of mathematics.

Central banks issue currency as debt. Politicians tax and spend money they don't have. Between the two, the only profiteers are those large enough to engage and/or endanger the system, i.e., very, very rich people and large banking interests, otherwise known as commercial banks, investment banks, insurance companies and ultra-large, multi-national, monopolistic corporations like McDonald's, Wal-Mart, Google, Facebook, the six big oil companies.

Nothing against big companies and very, very rich people, except that they've benefitted from a very, very unlevel playing field of economics which takes - by way of interest, taxes, and various fees - from the common and remits to the oligarchical controllers of said economies.

This world is ending because of inertia and entropy. Individuals and small business cannot keep up with rising taxes, inflating prices the result of increasing interest rates. Credit has skyrocketed near all-time highs in America, and the wallets of those individuals tasked with repayment are thin - as thin as they've been since 1999, the last time incomes kept pace with inflation or the meanderings and maneuverings of the central banks and governments.

The stock market is not a cause of wealth or decline. It is a symptom, and it is breaking down.

It's only a matter of time before the symptom of excessive valuation falls prey to the reality of diminishing returns.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08
3/7/18 24,801.36 -82.76 -227.84

At The Close, Wednesday, March 7, 2018:
Dow Jones Industrial Average: 24,801.36, -82.76 (-0.33%)
NASDAQ: 7,396.65, +24.64 (+0.33%)
S&P 500: 2,726.80, -1.32 (-0.05%)
NYSE Composite: 12,707.01, -13.76 (-0.11%)

Wednesday, March 7, 2018

Cohn's Departure Shakes Wall Street; What is WABOL?

Stocks spent the better part of the session pondering the unchanged line, bouncing from gains to losses back to gains by the end of the day, but those gains were marginal, as the bigger news broke after the close.

Supposedly in response to President Trump's proposed tariffs on imported steel and aluminum, Chief Economic Advisor to the president, Gary Cohn, resigned his position just before the nightly news broadcast at 6:00 pm ET.

Cohn, former president and COO at investment bank, Goldman Sachs, is highly regarded on Wall Street, thus, his departure from the administration puts the nation's major corporations (and especially those in the financial services sector) at odds with the president. Add to that defections from his own party in the form of comments from House Speaker Paul Ryan and the dutious declarations of defiance from Democrats in House and Senate, and the president is again on his own, skating on some very thin ice.

With stocks reacting in varied fashion - the Nikkei and Hang Seng were both down overnight, while European exchanges were mixed at midday - Trump's foray into the international trade arena has sparked no small degree of interest and disparagement.

While Trump has only announced his intention to impose steel and aluminum tariffs of 25% and 10%, the reactions have been vociferous and without restraint. It remains to be seen whether the president actually goes ahead with his plan (he likely will) and how actual trade will be affected, with reciprocal tariffs and retaliatory measures sure to come from trading partners around the world.

*********
What is WABOL?

Fearless Rick, publisher and chief writer for the Money Daily blog and parent Downtown Magazine has coined a new internet acronym, referenced as WABOL, for "What A Bunch Of Losers."

As such, the acronym WABOL can be employed in any situation involving two or more people that may be the subject of negative commentary, for example:

The New England Patriots
Any gathering of politicians
Public employees

You get the idea. Fearless Rick coined the term. Yes, he did, and this is proof.

WABOL

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44
3/6/18 24,884.12 +9.36 -145.08

At the Close, Tuesday, March 6, 2018:
Dow Jones Industrial Average: 24,884.12, +9.36 (+0.04%)
NASDAQ: 7,372.01, +41.30 (+0.56%)
S&P 500: 2,728.12, +7.18 (+0.26%)
NYSE Composite: 12,720.77, +40.04 (+0.32%)

Tuesday, March 6, 2018

Stocks Bounce Back, Set To Continue Gains

After posting losses the first two trading days of March, stocks opened the new week with fresh gains, nearly erasing the red ink for the month. The Dow is still down more than 150 points for the month and much more than that from all-time highs (January 26 is looking smaller and smaller in the rear-view mirror), but stocks are poised to push higher on Tuesday on good news from the Korean Peninsula.

Talks between the North and South are apparently proceeding well, with the North - according to published reports - willing to denuclearize if the US and its allies can ensure its safety. The thought of nuking North Korea, being more of a paranoid construct in the mind of leader, Kim Jong-un, than any substantive reality, should not be a major obstacle should talks continue apace.

If the North and South states do eventually settle their differences, it would amount to nothing less than a complete coup for President Trump and his negotiating team, which has talked alternatively tough and sensible to the North Koreans. Resolution of the 65-year-old standoff would seem to be positive for all parties, depending on the terms of any definitive pact.

A re-emergence of North Korea into the union of so-called civilized nations might also pave the way for other countries, such as Ukraine and Iran, to proceed with normalization of policies, taking a step back from the brink of war or annihilation, nuclear or otherwise.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14
3/5/18 24,874.76 +336.70 -154.44

At the Close, Monday, March 5, 2018:
Dow Jones Industrial Average: 24,874.76, +336.70 (+1.37%)
NASDAQ: 7,330.70, +72.84 (+1.00%)
S&P 500: 2,720.94, +29.69 (+1.10%)
NYSE Composite: 12,680.73, +122.74 (+0.98%)

Sunday, March 4, 2018

The Week That Wasn't: February Flop Folds Into March Madness

This was a generally unsightly week for stocks. All of the major indices suffered losses, despite a late-Friday rally that boosted three of the four to positive, the notable exception, the stoic Dow Jones Industrial Average.

Taking a three percent hit for the week, the Dow suffered its third weekly setback in the last five, the most recent being the second-largest of the year, following the debacle from the first week in February. The other averages were down smaller percentages, the least of which was the NASDAQ, with just over one percent to the downside, staggered by the S&P (-2.04%) and the NYSE Composite (-2.53%).

Bonds were less volatile for the week as a whole, as the 10-year-note stabilized around 2.85%, finishing officially at 2.86%. Crude oil weakened, though not much, and gas prices eased a little as refiners switch over from winter to summer blends. With the US Dollar Index firming up early in the week, precious metals took it on the chin, but both gold and silver rebounded on Thursday and Friday as the short-lived dollar rally faded.

Most of the ballyhoo was over President Trump's announcement of tariffs on steel and aluminum imports, with a 25% fee on the former and a 10% duty on the latter. Critics mouthed off about rising prices on everything from automobiles to beer, though the effects are likely to be negligible. A 12-pack of beer is expected to cost about two cents more if duty-added aluminum is used, while a car contains roughly a ton of steel, which at $750 a ton, will amount to an additional $250 in the price of the already-bloated cost of a new vehicle.

Some countries are already crying foul, the loudest being Canada, from which the US imports the most steel, but many products from Canada, including lumber, are already highly regulated on the producer end, so even despite the NAFTA agreements, the US's neighbor to the North likely has little upon which to argue unfairness.

On the main, it was a poor week for stock holders, with mounting declines heading back toward the lows reached in the early days of February. The only index that can claim victory for the first two months of the year is the NASDAQ, holding tenuously onto a roughly three percent gain, with the S&P flat for the year, the Composite and Dow down the most, but none more than 2% for the annum.

Looking ahead, the FOMC is set to meet on March 16, with expectations of another 25 basis point hike to the federal funds rate. That is still disquieting to equity longs, and feeding into the ongoing rout in stocks. The week ahead will be indicative of the market's ability to digest another rate hike. So far, it's done well enough, but there is a point at which nearly risk-free yields will attract more money. Buoying up the stock market are massive buybacks, however, courtesy of the recent tax bill passed late last year. While companies that have been handing out bonuses have received most of the headlines, little to no reporting has been done on the same companies buying back even more of their own stock in an effort to assuage shareholders and keep their stock prices afloat at high tide.

How much money will be pumped back into stocks by the very owners and executives of said stocks is unknown, but eventually the tap will run dry and then interest rates will look more and more attractive. Without the buybacks of recent years, stocks would be more fairly valued, rather than being excessively overpriced as they have been for some time.

Sideways could be the most-favored direction for the next few weeks and months, with many experts calling for the eventual market blowout decline sometime in the third quarter (July-September), which would fit with the anti-Trump narrative leading into November's midterm elections.

Now the markets have not only become algo-driven and reactionary, but they are soon-to-be politically-charged as well.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22
3/2/18 24,538.06 -70.92 -491.14

At the Close, Friday, March 2, 2018:
Dow Jones Industrial Average: 24,538.06, -70.92 (-0.29%)
NASDAQ: 7,257.87, +77.31 (+1.08%)
S&P 500: 2,691.25, +13.58 (+0.51%)
NYSE Composite: 12,557.99, +39.26 (+0.31%)

For the Week:
Dow: -771.93 (-3.05%)
NASDAQ: -79.52 (-1.08%)
S&P 500: -56.05 (-2.04%)
NYSE Composite: -326.12 (-2.53%)

Friday, March 2, 2018

Stocks Continue Falling As March Commences With 420-Point Drop

After a brutal February, which took the Dow down by more than 1100 points, the first day of March suggested that more capital carnage may still be yet to come.

After a shaky positive start to the session, stocks quickly reversed course at midday after remarks by NY Fed head, William Dudley, and Fed Chair Jerome Powell signaled that the Fed would be pursuing three, and possibly, four, rate hikes in 2018. Accelerating the decline was the announcement by President Trump that he planned to impose 25% tariffs on imported steel and a 10% tag on imported aluminum.

Added to the losses of the last two sessions of February, Thursday's 420-point decline has ripped 1100 points off the Dow and futures are pointing to a lower open on Wall Street after stocks in Asia (NIKKEI, -542.83; Hang Seng, -460.80) were hit hard and European bourses have opened hard to the downside with Germany's DAX the biggest loser, down more than two percent at midday.

The Dow continues to cruise closer to correction territory, though it is still another 1000 points away, at 23,594, but, as seen in previous sessions, that amount of loss can occur in one or two sessions with relatively little resistance.

Current conditions suggest that economies globally are contracting, after a binge of easy credit field by central bank intervention and wanton money-printing for the past nine years. If the Fed and other central banks are convinced those policies must come to an end, an all-encompassing crash in the not-so-distant future is not out of the question.

Dow Jones Industrial Average March Scorecard:

Date Close Gain/Loss Cum. G/L
3/1/18 24,608.98 -420.22 -420.22

At the Close, Thursday, March 1, 2018:
Dow Jones Industrial Average: 24,608.98, -420.22 (-1.68%)
NASDAQ: 7,180.56, -92.45 (-1.27%)
S&P 500: 2,677.67: -36.16 (-1.33%)
NYSE Composite: 12,518.73, -133.82 (-1.06%)