Stocks Finish Flat to Lower; Alcoa, Sears Roil Markets After-Hours

2014 is not starting out the way 2013 ended. Stocks spent most of the day in the red, with only the S&P finishing with a fractional gain of 0.64 points.

Focus was on initial unemployment claims prior to the opening bell, as those seeking unemployment benefits fell 15,000 last week to a seasonally adjusted 330,000, but the numbers failed to ignite any fire under stocks. Investors are still largely on the sidelines, awaiting Friday's non-farm payroll report for December from the BLS.

Stocks languished throughout the sluggish session, though after the close a number of important earnings reports generated a good deal of fear.

Alcoa (AA), traditionally the first company to report, said per share earnings for the fourth quarter were below estimates of .06 per share, coming in at .04 after extraordinary items, including $384 million to settle allegations that one of its units bribed members of Bahrain’s royal family and officials at a state-owned company to win business in 2004. The company, outside of arcane and often absurd bookkeeping rules, experienced a massive loss.

The net loss was $2.34 billion, or $2.19 a share, compared with net income of $242 million, or 21 cents, a year earlier, New York-based Alcoa said today in a statement. Profit excluding a settlement in a bribery case and other one-time items was 4 cents a share, trailing the 6-cent average of 16 estimates compiled by Bloomberg. Sales declined to $5.59 billion from $5.9 billion.

Shares of the world's largest aluminum manufacturer were down nearly four percent in after-hours trading.

Sears Holdings (SHLD), operators of Sears and K-Mart stores, was equally disappointing, maybe moreso, when it reported same-store sales declines of 7.4% during the quarter ended January 6. Amid the depressing holiday season miss, the company projected losses of between $2.35 and $3.39 for the quarter ending Feb. 1.

Shares of Sears Holdings were down more then 14% after-hours.

If those economic stories weren't enough to turn one's stomach, New Jersey governor and leading 2016 Republican presidential candidate, Chris Chistie, proved today that he is not only an overbearing, obnoxious, obese bully, but a terrible liar and scapegoater, capable of throwing even his highest-ranking administrators under any fast-approaching bus, as well.

DOW 16,444.76, -17.98 (-0.11%)
NASDAQ 4,156.19, -9.42 (-0.23%)
S&P 1,838.13, +0.64 (+0.03%)
10-Yr Note 97.87, +0.57 (+0.59%) Yield: 2.96%
NASDAQ Volume 2.10 Bil
NYSE Volume 3.56 Bil
Combined NYSE & NASDAQ Advance - Decline: 2878-2807
Combined NYSE & NASDAQ New highs - New lows: 415-42
WTI crude oil: 92.00. -0.33
Gold: 1,229.40, +3.90
Silver: 19.68, +0.144
Corn: 412.00, -5.00

President Backs Cautiously Away from Syria; Markets Exultant

Tuesday night's address to the nation was - for lack of a better term - illusory.

While President Obummer tried his best to appear calm and in control, he was anything but. Russia's Vladimir Putin had outmaneuvered him on the Syria strike issue by proposing that Syria put its chemical weapons under supervision of international parties.

Meanwhile, the House of Representatives was backing far, far away from the unpopular choice to attack Syria, "in a measured way," as Secretary of State John Kerry might put it. A no vote on whether to give the president the authority to attack Syria was all but certain in the House and might have faltered in the Senate as well.

Thus, laughably, the president advised congress to delay its vote on authorization for use of military force for two weeks. Issue settled. Syria will not be assaulted by US arms, the president saves some face and congress gets off the hook as well. There probably will never be a vote on authorization. The Syria chemical attacks, which the administration so vociferously denounced as brutal, heinous, inhume and so outside the realm of civilized conduct that the Syrian government needed to be punished for them, will be back page news by the end of tomorrow so that congress and the president can move onto what they were trying to cover up with a war strike: the budget and debt ceiling twin fiascos.

Those will come soon enough and command daily, screechy headlines from the breathless media whores, but before them, the Federal Reserve's FOMC meets next Tuesday and Wednesday, after which it will purportedly announce the great tapering, or, as it's being called on Wall Street, taper-lite, suggesting that the Fed will reduce its monthly bond purchases from $85 billion a month to somewhere in the neighborhood of $70 billion. Ho-hum. One supposes that the world can survive without an additional $10 billion of monthly liquidity. Somehow, we'll all find a way to survive.

With all these grand developments, Wall Street pros took the opportunity to ramp up stocks in advance of the next options expiry, in hopes that can can make another quick buck before the Fed pulls away the punch bowl.

The Dow was up another 135 points on the day, the third straight session in which the blue chip average was higher by more than 100 points, giving it a gain for the week, thus far, of 404 points. The NASDAQ and S&P were weighed down by Apple (AAPL), whose latest "earth-shaking" announcement was not any new products but merely enhancements and new pricing for existing ones. The stock was punished severely, down 26.93 points on the day.

Back at the Dow Industrials, the index will be reshuffled after the close of trade on September 20. Being kicked out are Bank of America (BAC), Hewlett-Packard (HPQ) and Alcoa (AA), replaced by Nike (NKE), Goldman Sachs (GS) and Visa (V). Because of the way the index weights stocks, giving more weight to high-priced ones than low-priced ones, Goldman Sachs will become the third most-important stock on the Dow, with Visa becoming the second most-important.

In other words, with five financial firms now represented in the 30-stock index, get ready for Dow 20,000. There's no stopping it now, especially when the index can arbitrarily kick out losers and replace them with their favorite pump primers.

There is no honor, nor shame, amongst thieves.

Dow 15,326.60, +135.54 (0.89%)
Nasdaq 3,725.01, -4.01 (0.11%)
S&P 500 1,689.13, +5.14 (0.31%)
10-Yr Bond 2.92%, -0.04
NYSE Volume 3,341,576,250
Nasdaq Volume 1,679,120,750
Combined NYSE & NASDAQ Advance - Decline: 3573-2957
Combined NYSE & NASDAQ New highs - New lows: 344-80
WTI crude oil: 107.56, +0.17
Gold: 1,363.80, -0.20
Silver: 23.17, +0.156

Why Stocks Were Down Today and Other Ramblings... and Links

Getting right to the point, stocks slipped a little bit more today, oddly enough, right around another 50 points were knocked off the Dow. why is that odd, you ask?

Well, if you were going to dismantle something and didn't want anyone to take notice, you'd do it a little bit at a time, right? So, after a 50-point drop yesterday, another 55 points today receives little fanfare. Anything over 100 on the Dow, in either direction, gets the attention of Bob Pisani and the other market-watching noobs on CNBC and Bloomberg, and you don't want them going around shouting, "hey, look at this!" but 50 points, not so much.

The point is that stocks went down today (and yesterday) because that's the way the Goldman Sachs and Merrill Lynch's roll. If there were any good reason to bid stocks up, they certainly would have, but, that all got taken care of on January 2nd, to the tune of a 300-point rally. Now it's profit-taking harvest time for the quick-traders out there making all the loot, but, you know, they don't want anyone thinking it's time to head for the hills because there's a flood of bad stuff coming our way.

Uh-uh. Can't have that. The muppets must not be allowed to understand anything that is really happening. Only the global elitists are privy to the inside baseball stuff.

So, what's that bad stuff heading our way? How about a nasty, well-orchestrated fight over the debt ceiling that leads directly to a government shutdown? It has been mentioned only a few dozen times just this week, though every political empty hat says they want to avoid that at all costs. (Rubbish: we all know how loathe the pols in Washington are to actually do any work and how much they relish leisure time.)

So, yes, get ready for that, and that would precipitate some selling of stocks. Once the big guys get their profits, then the little people can take losses, all the while the talking head analysts saying things like, "this is just a little correction," or "stocks will rebound in the second half" (like Notre Dame did last night? Let's hope not).

It's been almost two weeks since the latest market moving event - the fiscal cliff miasma - so, a new crisis can't really be far off. Things should start getting heated up in a few more days or maybe around the end of January, once the new members of congress are all schooled up on their new roles and understand the rules of the game.

Yep, the debt ceiling showdown should prove to be some of the best political theatre of the year, and maybe the most disruptive. The Republicans keep threatening it, and they don't want to look like the boy who cried wolf, so, this time, they'll probably do it, and it will last maybe two or three weeks before a compromise is reached. Naturally, such a compromise will solve nothing except to get most of the furloughed federal employees back on the job, slow down the "recovery" a little and provice cover for Wall Street's anticipated lousy earnings.

So, that's why stocks were down today, but they'll be up sooner or later, and trade sideways a bit before the real deal comes down. Then, they'll drop like rocks from a tower, and it will be YOUR MONEY losing value, not THEIRS.

BTW: Alcoa (AA) kicked off earnings season after the bell, posting in-line earnings per share of six cents, which says plenty about the health of this global giant and the world economy in general. Their outlook is for aluminum demand to increase seven percent this year, due to, get this, increased demand from the aerospace industry (read: defense contractors). Whether or not that hike in demand ever materializes, well, we will just have to stay tuned. In the meantime, Alcoa is still a sub-$10 stock, which it's been for close to a year now. There's a reason for that.

---

Yesterday, I (that being me, Fearless Rick) opined on these pages that something was broken, though I could not quite put my finger on exactly what "it" was that had gone amiss, ending with the gloomy prospect that maybe everything was broken.

Of course, there are innumerable things broken in America and around the world, but there are many more that work, like the Internet, for instance. You're reading this, after all, on the internet. That works.

What's not working, and hasn't been for a long time is the media, but the internet is beginning to take care of that. Most people under the age of 30 get the majority of their news and opinion-making articles from the internet, not mainstream TV, newspapers or (heaven forbid!) the radio, so there's hope on that front.

So, thinking that I must find out just what it is that's broken, research ensued, which consisted of a couple of adult beverages and some internet surfing.

Well, I was right. The entire global economic system is broken, and has been broken for a long time, but I already knew that. I just didn't know exactly how badly broken it was until I came across this exceptional piece of video (8 parts) by one Ann Barnhardt, and her aptly-titled dissertation, The Economy Is Going To Implode...And You Deserve to now Why.

Ms. Barnhardt breaks the complexities of the modern global economy down to a very understandable, though frighteningly-real level that just about everyone (including politicians and tin-horn local office-holders) can understand. One may or may not agree with her approach or her views, but nobody can argue with the math, which presents an unshakable case for economic calamity. This is must viewing for anyone who wishes to understand why everything seems to be heading downhill in America or to relieve - at least for a short time - that nagging feeling that something is broken. Here's part one of the video series.



Just in case you were busy watching the disgrace of Notre Dame at the hands of Alabama last night, and missed this, here's Alex Jones going ballistic over gun control on the Piers Morgan Show. And, in case you don't know who Alex Jones is, well, you're probably just another sheeple, or maybe a sleeple (that's people who appear awake but are actually sleeping). So, here's a link to infowars.com. Enjoy the video rant.



Dow 13,328.85, -55.44 (0.41%)
NASDAQ 3,091.81, -7.00 (0.23%)
S&P 500 1,457.15, -4.74 (0.32%)
NYSE Composite 8,604.38, -32.53 (0.38%)
NASDAQ Volume 1,743,272,375
NYSE Volume 3,757,457,750
Combined NYSE & NASDAQ Advance - Decline: 3003-3411
Combined NYSE & NASDAQ New highs - New lows: 302-13
WTI crude oil: 93.15, -0.04
Gold: 1,662.20, +15.90
Silver: 30.46, +0.383

Dow Tanks, Takes Other Averages with It as Global Slowdown Concerns Mount

There was no last hour rally for stocks on wednesday, no reprise of the late-day rallies that typified behavior through the summer and into the early days of fall.

Investors were taking profits and worried about the future after Alcoa (AA) kicked off 3rd quarter earnings season after the close Tuesday with a downbeat outlook, calling for reduced demand for aluminum in a worldwide slowdown.

The leading global producer of aluminum reported a third quarter net loss of $143 million, or -13 cents per share, compared with a profit of $172 million, or 15 cents per share, in the year-ago period. Excluding one-time items, adjusted profit was 3 cents per share, which beat consensus estimates which were calling for a roughly break-even quarter.

The company lowered its 2012 growth forecast for aluminum from seven percent to six, saying weak demand from China was the leading cause for the revision.

The Dow led the indices into the red, dragging the S&P and NASDAQ lower throughout a session which witnessed slow deterioration in share prices from the open into the close as an IMF report released on Tuesday, calling for lower 2013 growth worldwide, continued to weigh on markets.

Adding to the chorus calling for slowing growth, OPEC said that current production levels were ample heading into 2013 as demand continues to wane. That sent oil prices tumbling from early-day gains to a loss at the close of floor trading.

It was the third straight negative day on the Dow, the fourth for the S&P and NASDAQ and the first triple-digit loss on the Dow since July 23-24.

Stocks have been moving lower this week after reaching an interim high of 13,610.15 on the 5th of October, the day the non-farm payroll data was released. Since then, stocks have moved markedly lower, with the Dow down two percent in the first three days of this week, closing today just above the 50-day moving average.

The NASDAQ, the worst performer of the major indices this week, broke through its 50-day moving average on Tuesday and failed to recover today, spending only a few brief moments this morning on the plus side before deteriorating through the session.

Also hovering dangerously close to its 50-day MA, the S&P 500 has been down since making a double top on the 5th of October.

The two most robust indicators, the advance-decline line and the new highs - new lows metric continued to deteriorate, with the NASDAQ showing more new lows than highs for the second straight session, 32-53, and new highs holding a very slim edge - 42-33 - on the NYSE. Cumulatively, new lows outpaced new highs 86-74.

All this occurred without any assistance from Europe, where stocks were lower in nearly all Eurozone nations. Meetings scheduled for next week to hammer out bailout details for various countries and banking systems are seen to be troublesome and also weighing on sentiment, which has recently turned negative.

Dow 13,344.97, -128.56 (0.95%)
NASDAQ 3,051.78, -13.24 (0.43%)
S&P 500 1,432.56, -8.92 (0.62%)
NYSE Composite 8,220.62, -58.48 (0.71%)
NASDAQ Volume 1,763,862,625
NYSE Volume 2,927,658,250
Combined NYSE & NASDAQ Advance - Decline: 2271-3218
Combined NYSE & NASDAQ New highs - New lows: 74-86
WTI crude oil: 91.25, -1.14
Gold: 1,765.10, +0.10
Silver: 34.11, +0.124

Stocks Are Boring; Alcoa Shows Why; Europe Punts

On a midsummer's day upon which the biggest news was awaiting the second quarter earnings report from ALCOA, after he closing bell, stocks simply drifted below the break-even line in a tight range throughout the session.

With earnings season at hand, one would normally expect more excitement, but, alas, all is not well with what used to be known as the perfect discounting mechanism, i.e., the Wall Street stock exchanges.

Like it or not, continued central bank intervention on the grandest of scales ever witnessed has done nothing to revitalize global industry. The world has been in a funk for at least the past four years - since the epochal events of fall, 2008 - banks are all insolvent zombies and a global slowdown is coming at a time when monetary authorities are at their weakest, with zero to near-zero base interest rates the norm, bloated central bank balance sheets, full of faulty debt instruments nobody else wants to own, and sovereign debt exploding everywhere.

The world is full of debt and overcapacity, yet those in charge, scared to death as they may be, relent whenever an adult solution - like actually writing down bad debts - is needed and instead pass the hat to neighboring countries, the next central banker or the IMF, which, incidentally, is funded by the same over-indebted nations that borrow from it.

In the corporate sector, the slowdown can be seen everywhere, but especially tantalizing was Alcoa's (AA) second quarter, in which the company posted a loss.

Of all the goofy headlines designed to make people think everything is OK, the only one to get it right was the AP, which blared, Alcoa Inc. posts 2Q net loss in slowing economy.

Aluminum manufacturer Alcoa Inc. says it lost $2 million in the second-quarter as revenue dropped due to weaker prices and pockets of declining demand in the slowing global economy.

Alcoa on Monday posted break-even earnings per share for the April-through-June quarter. That compares with net income of $322 million, or 28 cents a share, a year ago.

Revenue fell 9 percent to $5.96 billion.

The world's largest producer of aluminum has been squeezed into a condition in which it can no longer shed employees to save money, command a profitable price for its products due largely to over-supply, and thus, limps into the second half of the year off a loss with prospects for growth jaded, at best.

If Alcoa is any kind of bellwether, and, as a standing member of the Dow 30, it should be, the prospects for a robust earnings season have just been significantly reduced, maybe obliterated.

Companies can only do so much in stagnant or imploding economies, which is what the global condition is today, and just breaking even (or, taking a small loss) is probably considerably better than some of the companies to follow will do.

It's a very tough environment - one in which large firms have limited pricing power and smaller firms can't find financing. That's oversimplifying matters to a large degree, but there will be fire sales, clear misses and break evens on lowered expectations this quarter and going forward, unless and until central banks take their foot off the accelerator of the money-printing press.

Early signs of total collapse came from Europe today, where the ESM (European Stability Mechanism) - a permanent funding source of 500 billion Euros - was to be established, but was delayed amid growing discontent among participants, and the nagging need for the fund to not only bail out nations, but also the banks of those nations, without any preconditions.

The delay, just 10 days after a euphoric european summit ended with apparent agreement, sent Spanish bonds soaring over seven percent and confusion reigning supreme in the Eurozone.

This clip from CNBC, featuring two of the most vocal critics of centralized economic planning, central bank intervention and bailouts, Rick Santelli and Nigel Farage tells the story of the growing discontent perfectly well.

Dow 12,736.29, -36.18 (0.28%) NASDAQ 2,931.77, -5.56 (0.19%) S&P 500 1,352.46, -2.22 (0.16%) NYSE Composite 7,736.22, -20.40 (0.26%) NASDAQ Volume 1,358,825,380 NYSE Volume 2,810,960,750 Combined NYSE & NASDAQ Advance - Decline: 2427-3155 Combined NYSE & NASDAQ New highs - New lows: 293-51 WTI crude oil: 85.99, +1.54 Gold: 1,589.10, +10.20 Silver: 27.44, +0.52

Markets Offering Few Directional Clues Amidst Continuing Crises

Spain today, tomorrow jobs, next day China. Wholesale inventories are growing.

That's how the markets seem to be lurching from one crisis to the next, though overall performance in equity markets has - until the past five days - been outstanding.

Today's deep declines in Europe and the US notwithstanding, global economies have withstood more than three years of relentless pressure and are still standing.

This kind of vacillation leaves most analysts red-eyed and weary at the ends of most weeks and casual market observers in a state of dumbfounded blurriness.

Recapping the losses in US equity markets today need not lead one to conclude that the economy is falling over a cliff; indeed, stocks have been on a 30% tear since October, and the recent five-day decline has only clipped off a small percentage. And, it's just the start of earnings season for the first quarter, one which is predicted to be less-than-outstanding, withe the estimate for earnings growth to be less than one percent.

The Dow is on its worst five-day losing streak since August of 2011; meanwhile the S&P and NASDAQ have suffered their biggest drops since late November. The S&P broke through support at 1370 and continued down from there, slicing through its 50-day moving average, while the NASDAQ busted below 3000, a beachhead just recently breached.

Fear? Greed? Take your pick. Stocks finished close to their lows of the day, setting up just about anything for Wednesday, though the overhand from Spain's 10-year bond hovering around 6% is troubling to all.

On the bright side, Alcoa (AA) opened earnings season with a surprise, posting a nine-cent per share first quarter profit on expectations of a four-cent loss. On the other hand, last year's first quarter profit was 27 cents per share.

The 10-year US treasury closed below 2% (1.98%) for the first time in a month and WTI crude oil ended the day at roughly the same level it was at on December 30 of last year.

Most corporate economists are calling for 2-3% growth for 2012, though their track record is of misses so wide that one would be a fool to invite them onto the bar darts team.

A couple of clues to keep on the radar over the next few days, because they will be telling: the advance-decline line has been anemic for the past two weeks and the past two days have been decidedly bearish; the VIX has spiked 30% in the past eight sessions; Dow transports never confirmed the recent rally and have been taking a beating recently; new highs - new lows has rolled over in three of the past four sessions; and, crude oil has tanked.

All of these indicators are important, but it's still too early to call a trend, especially as we head into the heart of earnings season over the next two weeks. It will pay to keep a very close eye on developments. The recent downturn could easily be nothing more than profit-taking or the forerunner of a severe downturn.

So, take your pick. Up, down, left, right, forward, backwards. If you have a job, keep it. If you have some money, save it. If you need to eat, buy some food (it's still relatively cheap), if you don't have to drive, don't, and, if you think life is still pretty good, enjoy it, because, in this environment, one never knows how long the good times will last.

Keep an eye on sunrise and sunset times and any variance from published expectations.

Dow 12,715.93, -213.66 (1.65%)
NASDAQ 2,991.22, -55.86 (1.83%)
S&P 500 1,358.59, -23.61 (1.71%)
NYSE Composite 7,842.00, -150.32 (1.88%)
NASDAQ Volume 1,916,928,125
NYSE Volume 4,651,426,500
Combined NYSE & NASDAQ Advance - Decline: 924-4713
Combined NYSE & NASDAQ New highs - New lows: 45-157
WTI crude oil: 101.02, -1.44
Gold: 1,660.70, +16.80
Silver: 31.68, +0.16

Dow Five Day Rally Ends; Alcoa Misses 3Q Earnings

From the first indication given by Alcoa (AA) after the bell on Tuesday, this earnings season may not be in investors' best interests.

The world's largest manufacturer of aluminum products reported earnings per share of 15 cents, on analyst expectations of 22 cents per share. Revenue was above estimates, at $6.42 billion on estimates of $6.22 billion, but higher costs and some sluggish sectors crimped income down to $172 million for the quarter.

Chairman and CEO Klaus Kleinfeld made a couple of interesting comments regarding the quarter's results on CNBC, shortly after the data release. Kleinfeld said that "fear is taking a toll," noting the overwhelming sentiment that investors were wary of the crisis in Europe and a potential global recession and noted that Alcoa was a "competent company in a very nervous world.

The stock was being hammered lower in after-hours trading, down

After Monday's huge upside rally, markets seemed hesitant on Tuesday, and stocks traded in choppy, range-bound fashion. The Dow moved less than 80 points from the lows to the highs on the day.

Another factor keeping trading to a minimum on light volume was the debate in Slovakia on the vote to approve an expanded Eurozone bailout fund. Shortly after markets closed in New York, Slovakian lawmakers on Tuesday rejected participating in an expanded euro rescue fund, significant because the measure needed unanimous approval from all 17 currency members.

With tiny Solvakia standing up against bank bailouts and more depreciation of the Euro against major currencies, the breakup of the Euro seems all but academic at this point. It's become clear over the past few months and years that only the Northern European countries are fiscally balanced and able to cope with market pressures, while those in the South - particularly Greece, Italy, Spain and Portugal - do not share the same financial disciple as displayed by say, the Germans.

Without expanded emergency capabilities, European banks will face a liquidity and solvency crisis similar to what happened in the US in the aftermath of the Lehman Bros. collapse and the contagion from it will almost certainly spread globally, though to what degree is as yet unknown.

The Slovakian Parliament decision and Alcoa's big miss on earnings should make for interesting trading on Wednesday in all markets, from Asia to Europe to the US.

Dow 11,416.30, -16.88 (0.15%)
NASDAQ 2,583.03, +16.98 (0.66%)
S&P 500 1,195.54, +0.65 (0.05%)
NYSE Composite 7,161.26, -12.19 (0.17%)
NASDAQ Volume 1,684,082,875
NYSE Volume 4,318,042,000
Combined NYSE & NASDAQ Advance - Decline: 3717-2705
Combined NYSE & NASDAQ New highs - New lows: 37-60
WTI crude oil: 85.81, +0.40
Gold: 1,661.00, -9.80
Silver: 32.00, +0.02

No Euphoria Over Budget Deal, Earnings

One might have expected some kind of reaction from the stock market after Friday night's final hour deal to keep the government running, or even from advance interest in the deluge of upcoming corporate earnings reports, but, despite an early session push higher, stocks drifted lower and lower throughout the session.

The Dow jumped out of the gate to an early high, up 62 points, but gave all expect one paltry point back as the day progressed.

While the theory may be that the government was supposed to remain open and in business, so no, the stock market would not react, the reality is that since the major indices bumped headlong into resistance on Wednesday, there's been nothing but retreat and even a robust earnings season (which is unlikely) may not be able to shake the markets from their sideways-down direction.

On the day, the Dow Jones Industrials, the smallest index by numbers (30 stocks), though the largest by measure, was the only one to post a gain in any of the past three sessions, and even that was somewhat of an aberration caused by heavy buying of Alcoa at the close.

As it was, Alcoa (AA), the world's largest aluminum manufacturer, and traditionally the first company in the Dow to report, was off 15 cents at the close (17.77) and was trading marginally higher (+0.06) in after-hours trading. The company reported earnings of 28 cents per share, a penny above estimates, but revenue short of expectations by almost two per cent.

Dow 12,381.11, +1.06 (0.01%)
NASDAQ 2,771.51, -8.91 (0.32%)
S&P 500 1,324.46, -3.71 (0.28%)
NYSE Composite 8,445.77, -38.17 (0.45%)

Even though stocks finished with small movement, declining issues danced all over advancers, 4471-2165, a ratio of more than 2:1. New highs on the NASDAQ totaled a mere 59, with 32hitting new lows. On the NYSE, new highs led the way, 108-16, over new lows. Volume, on the first day of the week, was encouraging, as it was not horrible, though still just barely with a pulse.

NASDAQ Volume 2,039,947,625
NYSE Volume 3,841,427,750

Thanks to some large positions being taken off, notably by Goldman Sachs, the oil rally came to an abrupt halt on Monday. WTI crude futures fell $2.85, to $109.92 and were down even more after the NYMEX close. Gold dropped $6.00, to $1,468.10, while silver managed to remain flat, at $40.61.

With the budget deal due to be singed and passed sometime this week, investors will be focusing squarely on quarterly reports over the next few weeks, and prospects are said to be good, with the vast majority of companies meeting or beating Wall Street expectations.

Stocks Stall on Aloca Waiting Game

Ahead of earnings from Alcoa, officially kicking off 2nd quarter reporting season, stocks were flatter than paint on a wall. Additionally, volume was at levels not seen in many months, completely lacking in conviction from buyers or sellers.

Still, three major averages managed to post their fifth consecutive day of gains, while the NYSE Composite surrendered a fractional loss.

Dow 10,216.27, +18.24 (0.18%)
NASDAQ 2,198.36, +1.19 (0.06%)
S&P 500 1,078.75, +0.79 (0.01%)
NYSE Composite 6,794.48. -14.23 (-0.22%)

Declining issues finished well ahead of advancing ones, 4185-2170, though new highs registered well in excess of new lows, 158-65. It's likely, as earnings reports begin to appear with regularity, that stocks will get a reprieve from the previous two months of fairly-uninterrupted selling. While corporations may report excellent second quarter results, the underlying economies - in the US and Europe, especially - remain under pressure from excessive government spending and overall flagging economic statistics.

NASDAQ Volume 1,329,977,875
NYSE Volume 2,923,618,750

In the commodities space, gold gained $6.70, to $1,205.20; silver added 18 cents, to $18.08, but crude oil slipped $1.14, to $74.95, as oil continues to show reluctance to move past the $75 per barrel mark.

Alcoa (AA) announced a .02 beat of street estimates, which is just barely good enough to satisfy skeptics.

Factory Orders Up; Pending Hone Sales Down

The headline explains quite a bit. The manufacturing sector continues to churn, though at unimpressive levels, and the housing market continues to slump. Factory orders were up 1.1% in November, after posting a gain of 0.8% in October. Pending hone sales were down 16% in November, as compared to October. While that may be seen as the result of the expiring of the new buyer tax credit, that excuse has begun to wear thin. Foreclosures are still at or near record highs, and, with unemployment hovering around 10%, aren't expected to drop off any time soon.

The housing market in the United states is still a shambles and any efforts to revive it, other than plain, ordinary waiting it out, are likely to fail. There are more than enough residential properties on the market for the scarce number of available buyers. Simple supply and demand math are all one needs to know about real estate from now until 2012. If you're thinking of buying, offer less, or buy something reasonable, to live in, not as an investment.

Stocks zig-zagged all day with the Dow remaining underwater for the entire session. The range was very narrow as investors showed a bit of caution after yesterday's blow-off, start-of-the-year rally. Stocks don't appear to be cheap anymore, and some of them don't look like solid investments, either. Cash remains king and when put to its proper use, can produce solid assets. In the current low-inflation (some dare call it deflation) environment, actual money is a rather useful, fluid thing, and Americans are finding out that there are bargains both to be had and sold. It's a good time to be frugal, or so it seems, and that would imply that it's not a good time to be in stocks, which are, by their nature, speculative.

Dow 10,572.02, -11.94 (0.11%)
Nasdaq 2,308.71. +0.29 (0.01%)
S&P 500 1,136.52. +3.53 (0.31%)
NYSE Composite 7,354.87, +28.13 (0.38%)

Interestingly enough, today's market moves were broad-based and on solid volume. Advancers outnumbered decliners, 3575-2976, wit the bulk of the gains on the NYSE. New highs appear to be peaking, at 754 today, as compared to 76 new lows.

NYSE Volume 5,687,644,500
Nasdaq Volume 2,395,510,250

Commodities were almost universally higher, with the notable exception of natural gas (somebody must have taken my post from yesterday to heart), down 25 cents. Oil priced at a 15-month high for the second straight day, reaching $81.77 on a gain of 26 cents. Gold continued to rebound, though up just 20 cents, to $1,118.50. Silver was the big winner on the day, gaining 34 cents to reach $17.80.

Stock remain in a very measured upward range, and while many commentators are expecting the rally to run out of steam (self included), it hasn't happened yet. The next likely move should occur during the hullabaloo over earnings, which will commence earnestly next week. Those not wishing to wait for Alcoa (AA) to officially kick off earnings season on Monday might get a clue from Monsanto (MON), which reports tomorrow.

Deals, Upgrades Boost Stocks; NASDAQ Breaks Out

Led by news that Sanofi-Aventis (SNY) will buy retail health products firm Chattem (CHTT) for $1.9 billion and upgrades of key Dow components Intel (INTC) and Alcoa (AA) helped stocks kick off the short Christmas week with a bang.

Stocks soared right off the opening bell and held onto most of their gains through a somewhat listless session, though there was plenty of M&A news to keep participants interested. Besides Alcoa surging nearly 8% at the close, merger mania seems to have overtaken the health care sector, as pharma firms flush with cash seek to expand into the consumer market.

With the US senate voting to suspend debate on the health care bill, the major drug companies seem confident they have wrung the very best deal they could out of their congressional puppets. Many firms in the sector have been up sharply in recent days, including Dow components Merck (MRK) and Pfizer (PFE), considering the reform measure to be nothing more than bluster and Democratic party PR, void of substantive change. Thus, big pharma and health care providers will continue their rapacious plundering of the American people well into the next presidential cycle without a hitch.

Since US politics has been and continues to be largely held hostage by Wall Street, the pharmaceutical companies got whatever they wanted from a compliant Congress, meaning no real reform and no tax changes. It all adds up to business as usual for American medicine - the public pays, and if it can't, taxpayers foot the bill.

Dow 10,414.14, +85.25 (0.83%)
Nasdaq 2,237.66, +25.97 (1.17%)
S&P 500 1,114.05, +11.58 (1.05%)
NYSE Composite 7,147.15, +60.96 (0.86%)

Simple indicators affirmed the upside bias, suggesting further price appreciation for equities as advancing issues trumped decliners, 4503-2061, and new highs beat new lows, 499-94. Even though the dollar was higher against foreign currencies, stocks managed healthy gains, with all ten sectors advancing. Volume was slightly lower than normal, due to the closeness of the holidays, but not so poor as to suggest that traders were completely disinterested.

As the Dow and S&P were churning over ground already harvested, the NASDAQ broke out to new highs, as financial services and technology led the index higher. Amazon (AMZN), Google (GOOG) and Apple (AAPL) all posted strong gains.

NYSE Volume 4,531,713,500
Nasdaq Volume 1,837,347,875

The commodity complex was buffeted by the rising greenback. Oil slipped 89 cents, to $72.47. Gold fell dramatically, below the psychological $1100 level, down $15.50, to $1,096.00, in a continuation of the pull-back from all-time highs. Silver responded in like fashion, losing 28 cents, to $17.04.

With just three more days remaining in the shortened week (plus, Thursday will be a half-session), Tuesday's trade is likely to be more tempered as the third and final GDP estimate for the 3rd quarter is released at 8:30 am and existing home sales data for November will be announced at 10:00 am. At the same time on Wednesday, the National Association of Realtors (NAR) will release new home sales figures for November.

Defying Dollar, Dow Closes Within 8 Cents of 52-Week High

For more than a little while, the trade has been to sell US dollars and buy US stocks. On Friday, the story was rather different, as buyers of Dow stocks, in particular, defied the dictum of the carry trade, buying stocks while the US Dollar was rising against other currencies. The questions on everybody's mind were, "Why?". Why now?", and "What about that Fed meeting next week?"

Answers for traders were not forthcoming, as they were bidding up Dow stocks to within 8 cents of its 52-week high at the close. That finish was meaningful, for a variety of reasons, not the least of which had to do with answers to the questions posed above.

Taking them one by one, here's a quick explanation:

Why? The reasons people buy stocks as they approach 52-week highs are as numerous as there are grains of sand on the beach, but in this case, it seemed to be with ulterior motive. Other possibilities include a massive short squeeze on Alcoa (AA), which was up a whopping 1.11, (8.22%). November retail sales came in better than expected (+1.3%) and the University of Michigan Consumer Sentiment reading was higher, at 73.4, following last month's 67.4. Naturally, that good news should have produced a stronger dollar. They did, but, remember the ulterior motive. Read on.

Why now? Stocks were bid up precisely to just below their closing 52-week high just in case technical analysts were peering in on the activities, and they surely were. Today was a planned day for such a rise because it had two significant elements going for it. First, it was Friday, meaning positions would be locked in until Monday, and, second, there is a Fed meeting next week in which it is widely expected that the FOMC will leave rates unchanged, but give more hints as to the exact date of the first, in what no doubt will be a series of, rate hikes. The other kicker is that some of that dubious Dubai debt is supposed to be repaid on Monday, and, if it isn't, chaos in financial markets could ensue.

What about that Fed meeting next week? As answered above, the FOMC will meet to discuss policy on Tuesday and Wednesday, the 15th and 16th, culminating in a policy decision and statement on Wednesday, right around 2:00 pm. That also coincides with options expiration on Friday, and if you think there aren't a boatload of players in that space, betting and hedging on the Fed decision, maybe you should go back to playing euchre with friends for nickels and dimes.

Obviously, there is a good deal of money riding on the events of next week, and the markers were laid down yesterday and today, but especially today, with the apparent end of the dollar carry trade. Don't buy into the argument that positions short the dollar and long stocks don't matter any more. That trade was very prevalent and has yet to be unwound. Today's rise on the Dow was a shot fired across the bows of many hedge funds who are trapped in losing positions. Fireworks should be expected right out of the gate on Monday.

Whoever was in control of today's trade on the Dow was using a great deal of leverage, meaning that today's move was very transient and temporary. Ask yourself if you'd be buying stocks at the end of the year, just as they're reaching new highs - highs, mind you, that have yet to be surpassed in any meaningful way since the end of October. Consider these data points for closes on the Dow, all 52-week highs:

November 17: 10,437.42
November 23: 10,450.95
November 25: 10,464.40
December 1: 10,471.58

Today's close was at 10,471,50 and there was no confirmation by the S&P or, even more importantly, the Dow Transportation Index. Ooops!

As a point of reference to illustrate just how difficult this area of resistance is proving to be, consider these recent closes on the S&P:
November 17: 1110.32
November 18: 1109.80
November 23: 1106.24
November 24: 1105.65
November 25: 1110.63
December 1: 1108.86
December 2: 1109.24
December 4: 1105.98

Today's close of 1106.41 is another meaningless near-top. Clearly, there's a distribution pattern taking place which is preventing stocks from breaking out to new highs.

By all accounts, it's just not going to happen. At least not any time soon. Take heed of the usefulness of the dollar carry or risk trade, and ignore the movements of today as just so much market noise. Buy low, sell high. What do you think the real tradrs are doing here?

And just in case you were wondering, the Dow finished higher for the week, with the NASDAQ and NYSE Composite lower. The S&P actually ended the week with a fractional gain, or, essentially flat.

Dow 10,471.50, +65.67 (0.63%)
NASDAQ 2,190.31, -0.55 (0.03%)
S&P 500 1,106.41, +4.06 (0.37%)
NYSE Composite 7,125.12, +20.62 (0.29%)

Advancers outnumbered decliners, 4043-2402, though you would have hardly guessed it looking just at the tape. Dow stocks were 21 up with 9 down. The two biggest movers to the upside were Alcoa (AA) and Bank of America (BAC), two dubious leaders, to be sure. New highs beat new lows, 348-60. Besides the days before and after Thanksgiving, NASDAQ volume was the lowest since September 4, a date that also preceded a holiday - Labor Day. NYSE volume was about average.

NYSE Volume 4,408,781,000
NASDAQ Volume 1,762,412,125

More evidence of some deviousness at play came from the commodities pits, where oil sold off for the 8th straight day, losing 89 cents, to $69.65. Meanwhile, major oil company Dow stocks, Chevron (CVX) and ExxonMobil (XOM) both traded higher throughout the session and finished with small gains, though gains nonetheless.

Gold, one of the main catalysts behind dollar strength, traded down again, off $6.60, to $1,119.60. Silver followed suit, losing 10 cents, to $17.09.

One should be well advised going into next week to not read very much into this week's action. Since stocks are at their highs, you've likely missed the move if you were not participating. If you were in, this could be a great time to take a little off the top or close positions should that be your preference. There's been plenty of play in March Index options against the Dow and S&P in particular. Large positions have been placed well out of the money, and while they may be there for protection, the possibility of a sharp correction, which has not yet occurred since the March lows, is growing. Eventually, there is going to be a 10-20% or larger downturn, though the timing of such an event is uncertain.

All good traders, like Boy Scouts, should be prepared.