Amazon Misses, Gold, Silver Bid

Even more sloshing around as the week progresses. The Dow traded in a range of just 217 points, ramping back and forth across the unchanged line.

All other indices saw gains, although they were slight. The NASDAQ topped the list with nearly a one percent rise.

Within an hour of the opening bell Friday, Amazon (AMZN) reported eps of 4.23 per share versus an expected $4.59, a miss of 7.8%. This follows poor thrid quarter reports from Caterpillar (CAT), 3M (MMM), and Texas Instruments (TXN), on Thursday.

Gold and silver are being well bid, with silver gaining over 2.5% above $18 per ounce for the first time in over a month.

At the Close, Thursday, October 24, 2019:
Dow Jones Industrial Average: 26,805.53, -28.42 (-0.11%)
NASDAQ: 8,185.80, +66.00 (+0.81%)
S&P 500: 3,010.29,, +5.77 (+0.19%)
NYSE Composite: 13,118.91, +4.52 (+0.03%)

Seas of Red Ink; Global Collapse In Asset Pricing Underway; US Markets In Denial

Was Apple (AAPL), Amazon (AMZN), or Microsoft (MSFT) ever worth a trillion dollars?

All were, for a while, supposedly worth that high until the market considered the madness of such lofty valuations. Then, they were probably not.

A little quickie math is appropriate. For a company to be worth a trillion dollars, in rough terms, it would have to make a profit of $143 off every person on the planet (we're using 7 billion as an estimate) in a calendar year. Figuring a 15-year capitalization period, it's possible.

However, with the global median individual annual income at about $3000, it's unlikely. And for three companies to be worth that would mean every person on the planet, including babies and the elderly in nursing homes or hospices, would have to spend enough so that combined, Apple, Amazon, and Microsoft would net a profit of $429. So, for three companies to have that kind of valuation simultaneously is something right out of science fiction, because these people would have to spend about $2000 (figuring a rough profit margin of 20%) on products from just those three companies. Were this to happen, a third of the planet would die off because they spent most of their money on smartphones, software and trinkets from Amazon (with much lower profit margins, BYW), instead of food.

And what about all the other companies on the planet? From the corner store to multi-national corporations like General Motors, Nestle, Samsung, etc.? How much money do they extract from every person in the world with these three biggies crowding out everybody else? It simply doesn't add up.

That's why asset prices are collapsing. Companies, or rather, the stock prices representing shares of these companies are not worth what they're selling for, the big money knows it, and they're selling their shares to people less informed or desperate to make their investments pay off in the global rat race.

Let's face facts. US Stocks have more than tripled in value over the past 10 years. That doesn't make any sense. Were Americans suddenly three times as wealthy as they were 10 years ago? No. No. And Hell No.

Today, as stock prices tumbled around the world, US markets barely suffered a scraped knee and a paper cut. The NIKKEI was down 459 points, or, 2.12%. Japan's economy shrank by 2.5% in the third quarter.

Stock markets in Australia, New Zealand, Hong Kong, India, China, Indonesia, South Korea, Germany, France, England, Belgium, Italy, Greece, Spain, Brazil, Argentina, Mexico, and Canada were all down between one and two-and-a-half percent, again, after weeks of declines. Many of these indices are in correction. Germany, South Korea, China, Japan, and others are in bear markets, down more than 20%. That's just a sampling. But the US carries on, though the Dow is less than 325 points away from correction territory. All the other US indices are in correction, down more than 10%.

Dow Industrials were down more than 500 points in the morning, but finished, magically (same as last Thursday) well off the lows, in fact, with a small gain. Magic! Denial! HFT Algorithms! Programmed Trading! Central Bank Intervention! It's only temporary.

US stocks have performed better than the rest of the world, so far, but they are trending in the same direction - lower. Brokers and dealers on Wall Street are living in a La-la Land that would put Hollywood to shame. Many in the financial sphere are in deep denial. They don't believe the US economy can contract, that stocks can be re-priced lower, down 20, 30 or 40 percent or more. It has happened in the past, many times, and it will happen again. It is happening right now.

But, but, but, we can't have a stock market crash during the Christmas season, can we? Maybe stocks will not exactly crash this month, but the performance has been - on a day-to-day basis - underwhelming. Winter is coming (Dec. 20).

According to Dow Theory, the Dow Jones Transportation Index confirmed the primary trend change - from bullish to bearish - that the Dow Jones Industrial Average signaled on November 23. That's the second time this year Dow Theory confirmed a primary trend change. The last was through March (Industrials signaled) and April (Transports confirmed), but stocks bounced back quickly through the spring and summer. By autumn, the bloom was off the rose, however, and the false rally began to unwind, and it continues to unwind.

And, with that, today's musical selection, "Turn, Turn, Turn," released October 1, 1965, written by Pete Seeger, performed by the Byrds.



Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20

At the Close, Monday, December 10, 2018:
Dow Jones Industrial Average: 24,423.26, +34.31 (+0.14%)
NASDAQ: 7,020.52, +51.27 (+0.74%)
S&P 500: 2,637.72, +4.64 (+0.18%)
NYSE Composite: 11,889.29, -52.64 (-0.44%)

Another Blue Monday As Stocks Slammed Hard All Day; Techs Lead Losers

Whew!

This is becoming serious. Last week, when stock traders had a day off for observance of Veterans Day, the week opened with a 600-point loss. Today, the start of a new week, sees stocks tank to the tune of nearly 400 points.

It's not just the start of the week that's been bad of late, it's a recurring trend for the Dow and NASDAQ to slide by triple digits over the course of one session. The down days are beginning to add up, suggesting that something bigger is on the immediate horizon, and it's happening at a time which is usually a good one for stocks. November and December are among the better months for stock gains, though that doesn't look to be the case this season (Is it too early to say "Happy Holidays?").

Most of the selling on Monday came early. Shortly after noon in New York, the Dow had already shed more than 60 points. For the remainder of the session the blue chip index bounced around in a 100-point range, as some tepid buying emerged, though there was not wide enough commitment to keep stocks from near the lows of the day.

Faring even worse was the NASDAQ, which lost more than 100 points for the eighth time in the past seven weeks. In for particular harsh treatment are, and have been, tech stocks. It seems as though any company with a CEO under 40 or with any connection to computers or the internet has been targeted for extermination.

Here are some of the more notable Silicon Valley names on the Wall Street hit list:

• Facebook: hit a high of 217 in July, closed today at 131.55.
• Alphabet (Google): August 29: 1,249.30; Today: 1,020.00
• Netflix: August 30: 370.98; Today: 270.60
• Apple: September 4: 227.57; Today: 185.86
• Nvidia: September 4: 283.70; Today: 144.70
• Amazon: August 31: 2,012.71; Today: 1,512.29

These stocks were among the leaders during the long run-up from 2016 and prior. Now they are the loss-leaders. Amazon's peak is of interest because that was also the day the NASDAQ finished what looks like a pretty solid double top. It closed on August 29 at 8109.69 and on the 31st at 8109.54. It's been downhill since, the NASDAQ sporting a 13% decline since then.

Nobody knows exactly where this is all going, but, from recent market action, it looks to be headed to a not very nice place.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78

At the Close, Monday, November 19, 2018:
Dow Jones Industrial Average: 25,017.44, -395.78 (-1.56%)
NASDAQ: 7,028.48, -219.40 (-3.03%)
S&P 500: 2,690.73, -45.54 (-1.66%)
NYSE Composite: 12,280.91, -119.37 (-0.96%)

Stocks Stumble Again, Dow Loses All November Gains; Germany's DAX Tumbling

After a while, one gets the impression that the bottom is going to fall out at some point, the only matter being one of when, and, maybe, by how much.

Stocks trended lower for a fourth straight day, with the Dow plunging by more than 350 points midway through the session, giving up all of its gains for November (some 1075 points). The NASDAQ led in percentage terms, down nine-tenths of a percent, with the S&P giving up early gains as well.

As usual, it could have been worse. The Dow slumped below 25,000 for the first time in two weeks, and while big, round numbers are flashy, the 25,000 level has no particular importance other than acting as a psychological figure.

Consumer prices rose by the most in nine months, as the October CPI came in with a "hot" 0.3% increase, fueling more concern that the Fed will continue raising interest rates at its December meeting, as planned. By now, the December federal funds increase should have been priced in, so, accusing inflation as the culprit de jour is probably a bit off the mark. What's really causing the continuation of the selling is more than likely a move by smart money out of stocks and into bonds or cash equivalents. With a 10-year treasury note offering well beyond three percent interest with no risk, some of the money leaving the market is surely headed that way, though corporate bonds are similarly attractive, albeit with a little more risk premia.

The major indices are still less than 10 percent off their all-time highs, making valuation a true issue. Post midterm elections, it appears that the federal government will be largely dysfunctional for the next two years, blunting any of President Trump's economic initiatives, and Maxine Waters proclamation that banking regulations will be tightened isn't winning any popularity contests on Wall Street. Waters is the chair-in-waiting of the House Financial Services Committee, which oversees banks and other financial institutions.

There's considerable concern over the smooth continuation of government, more even than there has been since the Gore-Bush election selection fiasco of 2000. Taken by any measure, Trump's policies in the first two years of his administration have been business-friendly, and the newly-elected Democrat majority in the House not only threatens to stop any progress that's been made, but actually reverse it by plunging Washington into chaos with investigations and special committees designed to strip the president of his power and possibly lead to impeachment.

Such an unstable environment gives pause to business expansion decisions while also worrying large investors. Thus, stocks are acting as a proxy for politics, which is not their best function, and the results could be devastating if the Democrats don't back down from their overly strident positions.

Given such a climate, is there any wonder stocks cannot gain traction, even with unemployment at historic lows?

Another concern is the state of foreign markets, which remain moribund at best, the DAX, Germany's main stock index has been falling in conjunction with US stocks, and it recently broke a key "neckline" in an obvious head-and-shoulders pattern according to analysts at FXEmpire.com. The German market could enter bear market territory in a matter of weeks, if not days, an important element in gauging world stock performance and a general indicator of economic health in the Eurozone.

These are just a few of the elements pushing hard against investors.

While the Dow is still 1000 points from an official correction, the NASDAQ re-entered the correction zone on Monday and the tech sector - which had been the driver of rallies - threatens to pull the entire stock complex down with it.

Amazon may be celebrating a coup in gaining sweet deals for its new HQ2 in Virginia and New York, but the rest of the tech world is not such a happy place.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72

At the Close, Wednesday, November 14, 2018
Dow Jones Industrial Average: 25,080.50, -205.99 (-0.81%)
NASDAQ: 7,136.39, -64.48 (-0.90%)
S&P 500: 2,701.58, -20.60 (-0.76%)
NYSE Composite: 12,280.73, -47.57 (-0.39%)

Stocks Flatlined In Bifurcated Trading; Can Reform MAGA?

Maybe investing should be a little more like Wednesday's activity: boring. Slow. Uninteresting, aside from the continuance of the Dow-NASDAQ dichotomy.

Back in the mid-90s, with the advent of the internet and the CNBCs of the world, stock trading became more akin to fantasy sports than serious investing. Day-trading became the norm, volatility increased and the natural outcome was to favor professionals who had the tools, skills, and patience to ply the market with the requisite aptitude and attitude.

Today's algo-driven compression chamber that is called a "market" is a far cry from the staid and simple concepts of just a generation ago. Prior to the internet explosion of online brokerages and sophisticated strategies, buy and hold was the norm. Investment advisors - at least the honest ones not tied to commissions or performance - put people's money into solid companies with deep backgrounds, decades of dividend payments and reasonable price-earning ratios.

Investors today throw money at companies such as Tesla (TSLA), which hasn't made a dime in earnings. That nomenclature was also the trademark of the dotcom boom and bust. Pets.com, Beyond.com and other pie-in-the-sky, profitless, promising companies fell to the waysides in 2000 after being hyped non-stop on message boards and from boiler room operations such as those prominently featured in movies like "The Wolf of Wall Street."

Not to say that there aren't new-age companies that deserve the backing of the investing public, but it's a crowded space, and valuations on companies like Google (Alphabet, GOOG), Amazon (AMZN) and others are out in the stratosphere somewhere, reflecting future growth of mammoth proportions which may or may not come to fruition.

That's probably why the aforementioned Dow-NASDAQ see-saw exists. Investors in Dow stocks (30 blue chips) are quite a bit more circumspect and conservative than the punters and speculators on stocks covered by the NASDAQ. They're also more likely to hold - or even add to positions - during downturns rather than sell outright and go looking for the next momentum-chasing darling of the day.

In the past, rules and regulations on banking and investment houses kept speculation at reasonable levels. All of that changed with the internet, 24-hour financial news, and, most importantly, changes to the Glass-Steagall act under President Bill Clinton in 1999. Clinton signed into law the Gramm-Leach-Bliley Act, which repealed SOME of the provisions of the Glass-Steagall Act, most notably, those measures which kept the banking business separate from the investment business.

Certainly, the new requirements struck a blow for free markets as the original Glass-Steagall act of 1933 was a response to wide-open conditions which contributed to the Great Depression. But, Clinton's new liberalness may have been a step too far. Since the enactment of Gramm-Leach-Bliley, the US economy has suffered the dotcom crash, the Great Financial Crisis of 2008-09, and various distortions of Federal Reserve policies like ZIRP (Zero Interest Rate Policy) and QE (Quantitative Easing).

Now that the Fed seeks to unwind its bloated balance sheet and normalize interest rates, perhaps it's time to call out the real culprit of financial repression: widespread advantageous policies for the banking sector which crowd out and frustrate individual efforts. While a democratization of the investing world has occurred to some degree with crowd-sourcing, the regulations surrounding the nascent rise of small offerings continue to throttle companies and potential investors with needless rules and strictures.

In a true free market, there would be 1/10th the number of regulations in place today, and most of them would be foisted upon the high-profile trading houses of Wall Street, not the start-up companies that must wade through SEC regulations and countless pages of blue sky laws.

For America to be great again, maybe boring isn't the way to go, but unfair rules which favor the well-heeled over start-ups might need to be examined and revised.

In the meantime, despite the promise of crowd-sourcing and online trading, small investors will continue to be subject to unfair trading practices which puts the interests of Wall Street far ahead those of Main Street.

At the close, Wednesday, September 12, 2018:
Dow Jones Industrial Average: 25,998.92, +27.86 (+0.11%)
NASDAQ: 7,954.23, -18.25 (-0.23%)
S&P 500: 2,888.92, +1.03 (+0.04%)
NYSE Composite: 12,990.10, +37.80 (+0.29%)

FAANGs Whacked Again As Investors Pull Back From Tech Space

Netflix was murdered in trading on Wednesday as investors reacted to a report by Morgan Stanley analyst Katy Huberty that Apple plans to launch a competing video service though the company has to date made no announcement.

It was enough to take seriously, and money flowed out of Netflix (NFLX) to the tune of a 22.42-point decline, off a whopping 6.17% at the close. Apple's stock barely budged, but in fact was down 1.49 (-0.65%).

A day after topping $1 trillion in market cap, Amazon (AMZN) shed 44 points to close at 1994.82, a solid two-percent decline.

Alphabet (GOOG), parent of Google was lower by 10.82 (-0.88%), and Tesla lost nearly three percent, closing at 280.74, reaching its lowest closing point since May 25.

Facebook lost nearly four points to finish the day at 167.18, a four-month low.

All of this trading occurred while tech executives were brought before congress to testify in a wide-ranging probe of the unregulated social media space. Facebook’s Sheryl Sandberg and Twitter’s Jack Dorsey faced congressional scrutiny before a select committee of senators and House representatives. It's political theater at its very best, with lawmakers preening and getting in good soundbites in the lead to the midterm elections in two months.

Wishing for nothing less than to regulate free speech on the internet, congress is unlikely to have much impact upon the operation of the social media behemoths. As private enterprises, these mammoth companies are free to do as they please, from banning users who upset their dilettante views to promoting largely socialist idealism.

While the hearings make for some useful political jabbing, the congress shows by its naive use of forums such as these that they are as much a part of the problem as the companies themselves. Since most politicians use social media platforms to promote their particular agendas, dragging big company executives to Capitol Hill is more red herring than serious hearings.

While congress browbeats, investors are keenly aware that some of these companies are seriously overvalued. Tesla, for instance, is down 100 points in less than a month's time, exceeding a 25% decline. Facebook is off 50 points since July 25 and is likewise trading under bear market conditions, down nearly 24% over the last six weeks.

With the current round of tech profit-taking having a serious effect on investor confidence in the space, the staid stocks of the Dow gained slightly on the day, barely moving the needle. Elsewhere, stocks were roiled worldwide, as emerging market conditions continue to deteriorate.

The September swoon is gathering momentum and a more severe decline may be dead ahead for US stocks despite a booming economy and low unemployment. The main problems are rising interest rates and fundamental overvaluation issues.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17

At the Close, Wednesday, September 5, 2018:
Dow Jones Industrial Average: 25,974.99, +22.51 (+0.09%)
NASDAQ: 7,995.17, -96.07 (-1.19%)
S&P 500: 2,888.60, -8.12 (-0.28%)
NYSE Composite: 12,968.55, -1.31 (-0.01%)

Weekend Wrap: Booming Economy, Gradual Inflation Boosts US Stocks

While the NASDAQ and S&P set multiple intra-day and closing records, the Dow continued its slow progress toward the January 26, all-time closing high of 26,616.71.

Once more, the NASDAQ led all indices in percentage terms, chalking up a two percent gain for the final week in August. The Dow finished up August with a second consecutive monthly gain (+557.29), though it was less than half of July's rise (+1143.78).

Despite two straight losing sessions, the Dow stands just 650 points away from the record.

The strategy being forwarded by the Trump administration has great appeal on Wall Street, as the summer saw many positive gains across all sectors despite efforts by the media to ignore or downplay the president's accomplishments Pointing up potential drawbacks from proposed and enacted tariffs on imports and negotiated trade deals with Mexico and Canada, the left-leaning TV and big-city newspaper media continue a vain attempt to discredit the election of Trump in 2016 via ongoing harassment by the fake Mueller investigation and countless talking heads from former administrations taking every opportunity to trash-talk the current occupant of the White House.

Thus, while the media and proponents of the left side of the political aisle promulgate a false narrative, Donald Trump and his team are actually moving forward on bold economic plans, rescuing America from over a decade of stagnation and building for a better future.

Official and unofficial sources confirm that the two-pronged assault via media and political character assassination are being called into question by US citizens. Seeing bigger paychecks, job openings everywhere and a dramatic decline in Washington war-mongering, the general public simply is not buying with the media, Democrats, and political shills are selling.

With the three-day Labor Day weekend marking an unofficial close to summer, many professional traders will be getting back to serious work approaching the next FOMC meeting (September 25-26). It's accepted that the policy meeting will produce another 25 basis point increase in the target federal funds rate, boosting it to 2.00-2.25%. The effective rate as of July was 1.91%. There is s normal lag between the target and effective rate of a few days or weeks on the lower end. Currently, the effective rate has been rising between the 1.75% and 2.00% target rate set in June.

Two big items on the Fed radar are inflation and the dollar. Having targeted two percent inflation as desirable, official data shows a slow but steady rise, approaching or even exceeding the goal. The strong dollar, however, is acting as a counterweight not only to inflation but to tariffs, the rising dollar able to purchase more foreign goods for the same amount of money.

The strong dollar, rising interest rates, and positive data on the US economy (4.2% GDP growth in the second quarter) offer the additional benefit of making the US the best place to invest, either in equities (growth) or fixed income (stability).

With one month remaining in the third quarter, the US economy engine seems to be operating on all cylinders. Any slowdown, even as predicted by a potential inverted yield curve, is still expected to be at least six months to over a year away. With that kind of time horizon, there's little concern on Wall Street over even the most expensive stocks, such as the FAANGs (Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOG) (Alphabet)), which continue to guide the NASDAQ to new highs.

Such strong speculative conditions should persist past the FOMC meeting into the fourth quarter. More than a few analysts had predicted a weaker second half of 2018, though those forecasts are likely to be tossed upon the scrapheap of financial history.

Donald Trump's "Make America Great Again" jingo is sounding like sweet music to the ears of investors, a condition unlikely to change any time soon.

Dow Jones Industrial Average August Scorecard:

Date	Close	Gain/Loss	Cum. G/L
8/1/18	25,333.82	-81.37	-81.37
8/2/18	25,326.16	-7.66	-89.03
8/3/18	25,462.58	+136.42	+55.05
8/6/18	25,502.18	+39.60	+94.65
8/7/18	25,628.91	+126.73	+221.38
8/8/18	25,583.75	-45.16	+176.22
8/9/18	25,509.23	-74.52	+101.70
8/10/18	25,313.14	-196.09	-94.39
8/13/18	25,187.70	-125.44	-219.83
8/14/18	25,299.92	+112.22	-107.61
8/15/18	25,162.41	-137.51	-245.12
8/16/18	25,558.73	+396.32	+151.20
8/17/18	25,669.32	+110.59	+261.79
8/20/18	25,758.69	+89.37	+351.16
8/21/18	25,822.29	+63.60	+414.76
8/22/18	25,733.60	-88.69	+326.07
8/23/18	25,656.98	-76.62	+249.45
8/24/18	25,790.35	+133.37	+382.82
8/27/18	26,049.64	+259.29	+642.11
8/28/18	26,064.02	+14.38	+656.49
8/29/18	26,124.57	+60.55	+717.04
8/30/18	25,986.92	-137.65	+579.39
8/31/18	25,964.82	-22.10	+557.29

At the Close, Friday, August 31, 2018:
Dow Jones Industrial Average: 25,964.82, -22.10 (-0.09%)
NASDAQ: 8,109.537, +21.174 (+0.26%)
S&P 500: 2,901.52, +0.39 (+0.01%)
NYSE Composite: 13,016.89, -23.04 (-0.18%)


For the Week:
Dow: +174.47 (+0.68%)
NASDAQ: +163.56 (2.06%)
S&P 500: +26.83 (+0.93%)
NYSE Composite: +17.45 (+0.13%)

Dow, NASDAQ Hammered As Investors Continue Flight, FAANGs Pounded; What a Mess!

How's this for a healthy economy?

Facebook (FB): 196.35, -5.39 (-2.67%)
Amazon (AMZN): 1,663.15, -52.52 (-3.06%)
Apple (AAPL): 182.17, -2.75 (-1.49%)
Netflix (NFLX): 384.48, -26.61 (-6.47%)
Google (Alphabet, GOOG): 1,124.81, -30.67 (-2.65%)

...and, for good measure,

Tesla (TSLA): 333.01, -0.62 (-0.19%)

Tesla gets special consideration because its demise will be swift, painful and awe-inspiring for a variety of reasons. First, the company is run by a person (Elon Musk) who is almost certainly bi-polar, meaning he's brilliant, but eventually a nut-case, like a Pee Wee Herman on steroids. Second, the company has mountains of debt which will not likely be serviced in an orderly manner. Third, the cars keep bursting into flames. Fourth, and possibly most important, the competition in the eVehicle category is fierce and will swallow up the upstart. Everybody from Porsche, to BMW, to Jaguar has invested heavily in battery powered vehicles and these companies have more expertise and money than little Tesla.

Telsa is one of those companies that is wildly overvalued and ripe for a fall. It was spared today because nobody has any nterest in selling it just yet. They're all along for the ride (pardon the pun). When the bugs start getting squashed on the windshield, so to speak, it will be epic. Tesla's EPS is a humorous (if you're not an investor) -13.97 per share. Yep, they're losing money on every car they sell, and they don't make it up on volume. This one's a definite long-term short.

As for the rest of the market, one can only assume that seasoned veterans of the investing business see what's ahead. Trade wars don't help, but they're certainly not the only cause. Stock buybacks will prove to be disastrous once the price drops become permanent (soon, within months or weeks). The FAANGs in particular have been responsible for up to 75% of the recent gains on the NASDAQ, and they're based on nothing more than herd behavior. The stocks were hot, everybody got in. When everybody tries to get out, days like today are the result. Expect more of them over the next 3-5 months.

Lest one needs reminding, the Dow confirmed bear market conditions on April 9, and that HAS NOT CHANGED. Nor will it. Stocks will continue to be out of favor for the foreseeable future. Selected, mostly-defensive stocks will fare better than the recent high-flyers, but most money managers who can are turning aggressively to cash because they see no way out of an end-of-cycle bust scenario.

The market decline, top to bottom, could take another 12 to 18 months, having begun in February of this year and we haven't even hit recession yet, which is likely to occur in the fourth quarter of this year or the Q1 2019, though a third quarter negative read is not yet off the table, though unlikely.

The initial panic phase caused by the February correction on the Dow was only the beginning. The Dow is closing in on a second correction at 23,954. It will have to fall below 21,292 to be officially called a bear market (-20%), but by then, it's probably too late for many, who will be forced to take the ride down to wherever it finally rests. Anybody paying attention has already been on alert and hopefully divesting with profits.

While the next market bear bottom will be substantially lower than where it is today, it is unlikely to be the end of the world, though to many, it will seem like it. The current phase is slower and more grinding, such as witnessed over the past two weeks. The Dow has only seen one close to the upside in the last 10 sessions, and this was the largest decline since May 29 (-391.64), though there have been more than enough triple-digit declines and gains in the interim and surely more to come.

Today's drop on the Dow wiped out all of June's gains and is within 140 points of flushing the gains from April (+50) and May (+252), which would make the second quarter a loser, just like the first, although, with nothing to backstop markets here, still be not equal than the losses experienced in the first quarter. There's only four more trading days left in the quarter and the scramble is underway to shed losers and find safe havens.

Good luck with that.

Next stop for the Dow, on the downside, is somewhere between 22,700 and 23,300. It should get a bounce of maybe 400-600 points from there, but the trend is surely to the downside for the near and long term.

The treasury yield curve flattened just a touch on the day, with two particularly interesting flavors. The 5s-10s spread is now a measly 12 basis points (2.75%, 2.87%). That's not much of a premium on the benchmark 10-year note over the five. Why wait an additional five years to get your money back at basically the same rate? The 10s-30s spread is only 16 bips (3.02%). That's flat. As a pancake. If the 5s-10s invert, all hell breaks loose, and it's not out of the question that it could happen, soon, possibly within weeks.

Anybody holding gold or silver should be selling if not altogether out by now. The PMs have been a poor choice since 2012, but the silver lining is that they will be even cheaper in coming months. The metals, through the magic of rampant manipulation by central banks, are mirroring stocks presently, and, as they did during the GFC of 2008-09, will be ripped lower on redemptions and hustles for cash, but will likely be the first to recover.

It's advisable to sell out of PMs now and buy them back at a lower price come later this year. Gold may hit $950, and silver $13.50 before any bounce.

Invest wisely. Drink Kambucha. Drive a Porsche.

Dow Jones Industrial Average June Scorecard:

Date	Close	Gain/Loss	Cum. G/L
6/1/18	24,635.21	+219.37	+219.37
6/4/18	24,813.69	+178.48	+397.85
6/5/18	24,799.98	-13.71	+384.14
6/6/18	25,146.39	+346.41	+730.55
6/7/18	25,241.41	+95.02	+825.57
6/8/18	25,316.53	+75.12	+900.69
6/11/18	25,322.31	+5.78	+906.47
6/12/18	25,320.73	-1.58	+904.89
6/13/18	25,201.20	-119.53	+785.36
6/14/18	25,175.31	-25.89	+759.47
6/15/18	25,090.48	-84.83	+674.64
6/18/18	24,987.47	-103.01	+571.63
6/19/18	24,700.21	-287.26	+284.37
6/20/18	24,657.80	-42.41	+241.96
6/21/18	24,461.70	-196.10	+45.86
6/22/18	24,580.89	+119.19	+165.05
6/25/18	24,252.80	-328.09	-163.04

At the Close, Monday, June 25, 2018:
Dow Jones Industrial Average: 24,252.80, -328.09 (-1.33%)
NASDAQ: 7,532.01, -160.81 (-2.09%)
S&P 500: 2,717.07, -37.81 (-1.37%)
NYSE Composite: 12,481.60, -157.97 (-1.25%)

Stocks Split as Dow Flirts with 25,000 Mark

The Dow Industrials and the NYSE Composite ended the day lower on Tuesday, while the S&P 500 and NASDAQ posted gains.

All of the moves were muted, amounting to nothing more than market noise, except for the frothy NASDAQ, which posted an all-time closing high at 7637.86, barely - by 0.59 points - topping the previous high from mid-May.

The soaring NASDAQ should remind veteran traders of the red-hot dot-com market of 1999 and early 2000, which ending in tatters, cascading lower in March of 2000 in one of the greatest stock market routs of all time.

It took the NASDAQ a full 13 years to regain those 2000 highs, with an additional collapse in 2007-09. If anybody is thinking that the NASDAQ is once again running full throttle on hope and hype, they're probably in the cautious camp that has seen this kind of market madness before.

The leading stocks of the NASDAQ are the usual suspect, overvalued companies - the FAANGS - and traders will be riding their valuations for as long as the good times roll. The obvious question is how long before these titans of technology roll over.

Nothing lasts forever, including stock manias based on companies that have recently come under fire for misdeeds and faulty business practices and products. Tesla (TSLA), Facebook (FB), Starbucks (SBUX), and Alphabet, parent of Google (GOOG) have each had bouts of bad publicity, though the fallout hasn't readily struck their valuations.

Amazon (AMZN) and Apple (AAPL) are testing their upper ranges, adding some supposed value nearly every day. Apple is approaching a valuation of one trillion dollars, while Amazon is not far behind. Is any company worth a trillion dollars? That is a lot of money.

Meanwhile, the Dow continues to plow along just below 25,000, a figure it has achieved only one time since March 13. While 25,000 is still 1600 points below the all-time high on that index, it appears to be a psychological barrier that may prove difficult to surpass and maintain.

Date	Close	Gain/Loss	Cum. G/L
6/1/18	24,635.21	+219.37	+219.37
6/4/18	24,813.69	+178.48	+397.85
6/5/18	24,799.98	-13.71	+384.14

At the Close, Tuesday, June 5, 2018:
Dow Jones Industrial Average: 24,799.98, -13.71 (-0.06%)
NASDAQ: 7,637.86, +31.40 (+0.41%)
S&P 500: 2,748.80, +1.93 (+0.07%)
NYSE Composite: 12,658.70, -15.21 (-0.12%)

How To Deal With A Bully: Retailers Gang Up On Amazon

Wednesday, it was Macy's (M) reporting solid sales growth in the first quarter, fueling some interest in retail stocks overall.

Thursday morning, Wal-Mart is reporting 33% growth in online sales for the first quarter, proving that Americans will go where service and price are balanced, as the nation's largest retailer continues to roll out its innovative "ship-to-store" option and discounted shipping (free two-day delivery).

Amazon, the king of online retailing, may have succeeded in killing off and/or absorbing some smaller chain store retailers and accelerating the demise of dinosaurs like Sears, but they're certainly not going to mash down the biggest companies, such as Macy's, JC Penney, and Wal-Mart. While Seattle-based Amazon can build as many warehouses and fulfillment centers to facilitate faster, more efficient delivery, it is still hampered by its lack of bona fide retail locations, though its recent acquisition of Whole Foods will change that to varying degrees in different sectors and geographical locations.

Wal-Mart, which has a significant footprint in the retail food space, probably isn't worried about the emergence of Whole Foods poaching its customers, because Whole Foods is largely a near-luxury brand, selling organics and other higher-priced goods, while Wal-Mart customers are accustomed to low-priced, competitive products.

The recent resurgence of retail in the face of the Amazon effect should buoy some stocks and create an environment that will only become increasingly competitive, both online and in the real, brick-and-mortar world. As retailing evolves into 21st-century standards, don't expect first-mover Amazon to extend its gains, though its presence will certainly be dominant. Innovation by those playin catch-up with the newer technology should prove to level the playing field somewhat in coming years.

Macy's earnings beat managed to squeeze some upside out of stocks on Wednesday. Thursday's rise or fall will have much to do with Was-Mart's success story, though it may not provide enough of a catalyst to pull the entire market higher.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39
5/10/18	24,739.53	+196.99	+576.38
5/11/18	24,831.17	+91.64	+668.02
5/14/18	24,899.41	+68.24	+736.26
5/15/18	24,706.41	-193.00	+543.26
5/16/18	24,768.93	+62.52	+605.78

At the Close, Wednesday, May 16, 2018:
Dow Jones Industrial Average: 24,768.93, +62.52 (+0.25%)
NASDAQ: 7,398.30, +46.67 (+0.63%)
S&P 500: 2,722.46, +11.01 (+0.41%)
NYSE Composite: 12,743.80, +39.17 (+0.31%)

Facebook Helps Wall Street Rally; Amazon Posts Monster 1Q Surprise After Close

Facebook's (FB) blowout earnings were enough to propel markets forward for the day, but after the bell Amazon (AMZN) made serious noise when it absolutely crushed expectations, earning, in the first quarter, $3.27 per share on $51 billion in revenues for the quarter. Analysts had expected $1.27 per share on revenues of $49.96 billion. In the same quarter last year, earnings were $1.48 per share on $35.7 billion in revenue. Amazon was trading more than six percent higher in after-hours trading.

It's plain to see that Jeff Bezos of Amazon has taken internet technology and employed it to maximum capitalization. Traditional brick and mortar retailers have been failing and falling faster than the price of used shoes.

Amazon's monster quarter, combined with Friday's first estimate of first quarter GDP should be enough good news for a significant upside to close out the week. The timing could not have been better for the pushers of stock certificates, because February and March were down months for the Dow and other averages, and a third straight month of losses might have opened the selling floodgates wide.

With just two trading days remaining for the month, it's a safe bet that April will end in the black on the Dow, holding off, if only temporarily, the eventual sell-off everybody knows is coming. The Dow continues to wallow roughly 2000 points below the all-time high from January 26 (26,616.71). Expect the rally that started yesterday to continue into May, for a week or two. It should be good for 1000 Dow points at the minimum before it's exhausted. Look for pivot points upon which to place short bets, play puts or sell call options.

Dow Jones Industrial Average April Scorecard:

Date	Close	Gain/Loss	Cum. G/L
4/2/18	23,644.19	-458.92	-458.92
4/3/18	24,033.36	+389.17	-69.75
4/4/18	24,264.30	+230.94	+161.19
4/5/18	24,505.22	+240.92	+402.11
4/6/18	23,932.76	-572.46	-170.35
4/9/18	23,979.10	+46.34	-134.01
4/10/18	24,407.86	+428.76	+294.66
4/11/18	24,189.45	-218.55	+76.11
4/12/18	24,483.05	+293.60	+369.71
4/13/18	24,360.14	-122.91	+247.80
4/16/18	24,573.04	+212.90	+460.70
4/17/18	24,786.63	+213.59	+674.29
4/18/18	24,748.07	-38.56	+635.73
4/19/18	24,664.89	-83.18	+552.55
4/20/18	24,462.94	-201.95	+350.60
4/23/18	24,448.69	-14.25	+336.35
4/24/18	24,024.13	-424.56	-88.21
4/25/18	24,083.83	+59.70	-28.51
4/26/18	24,322.34	+238.51	+210.00

At the Close, Thursday, April 26, 2018:
Dow Jones Industrial Average: 24,322.34, +238.51 (+0.99%)
NASDAQ: 7,118.68, +114.94 (+1.64%)
S&P 500: 2,666.94, +27.54 (+1.04%)
NYSE Composite: 12,582.90, +65.04 (+0.52%)

Retail Sales Improve In March, Stocks Respond

Apparently, Amazon hasn't killed all of Main Street just yet.

After three straight monthly declines, US retail sales rose in March by 0.6%, beating consensus forecasts, with Americans spending more on big-ticket items.

Following a drop of 0.1% in February and a revised -0.2% in January, consumers stepped up to the plate in March, boosting hopes that the economic expansion would continue. Year-over-year, retail sales improved by 4.5%.

While those figures are encouraging, they're likely not much more than inflation, which, depending on where one resides and what one spends money upon, could be as high as 6-8% according to anecdotal reports. Other, more frugal consumers routinely report lower costs for food, though rent, gasoline, mortgage interest, health care, education, and taxes in general have been on the rise.

On the earnings front, Bank of America reported smashing numbers, with EPS up 51% to 62 cents a share versus the prior quarter. Adjusted revenue rose nearly four percent, to $23.1 billion, but the stock barely budged on the news, up just 13 cents (0.44%) to 29.93. While banking is back to being less risky after washing out all the bad debt from the sub-prime catastrophe, investors are still skeptical of the large banks, especially after revelations of many misdeeds at Wells-Fargo.

Banks like JP Morgan Chase, which has a better focus on wealth management, have fared better than standard retail operations such as BofA.

Dow Jones Industrial Average April Scorecard:

Date	Close	Gain/Loss	Cum. G/L
4/2/18	23,644.19	-458.92	-458.92
4/3/18	24,033.36	+389.17	-69.75
4/4/18	24,264.30	+230.94	+161.19
4/5/18	24,505.22	+240.92	+402.11
4/6/18	23,932.76	-572.46	-170.35
4/9/18	23,979.10	+46.34	-134.01
4/10/18	24,407.86	+428.76	+294.66
4/11/18	24,189.45	-218.55	+76.11
4/12/18	24,483.05	+293.60	+369.71
4/13/18	24,360.14	-122.91	+247.80
4/16/18	24,573.04	+212.90	+460.70

At the Close, Monday, April 16, 2018:
Dow Jones Industrial Average: 24,573.04, +212.90 (+0.87%)
NASDAQ: 7,156.28, +49.63 (+0.70%)
S&P 500: 2,677.84, +21.54 (+0.81%)
NYSE Composite: 12,628.21, +82.16 (+0.65%)

Revenge of the Gold (and Silver) Bugs As Dollar Crashes

Stocks may be hurtling towards infinity and beyond, but the long-suffering holders of gold and silver are about to be rewarded for their patience and prescience.

Overnight, the dollar index breached the 90 level to the downside extending the trend which saw the dollar lose the most value in 14 years in 2017.

As the dollar falls, gold and silver can do nothing but appreciate in dollar terms, and with Treasury Secretary Steven Mnuchin speaking out in favor of a weaker dollar, the trend seems set to accelerate.

Meanwhile, the US Postal Service continues to cater to the Amazons of the world by hiking postage rates (particularly to retail and the lowest tier of commercial rates, Commercial Base) and punish small business.

Likewise, cell carrier Verizon continues to throttle the speeds of users of its "unlimited" bandwidth service in spite of regulations and court rulings which forbid the practice.

The corrupt news media continues to taunt the public with stories that President Trump is about to be grilled by special prosecutor Robert Mueller in the "Russiagate" probe, while all along the true traitors are still employed by the FBI and Department of Justice.

It seems that the tree of liberty is ready to be to be quenched again.

At the Close, Tuesday, January 23, 2018:
Dow: 26,210.81, -3.79 (-0.01%)
NASDAQ: 7,460.29, +52.2568 (+0.7054%)
S&P 500: 2,839.13, +6.16 (+0.22%)
NYSE Composite: 13,474.11, +3.74 (+0.03%)

FAANGs, NASDAQ Under Assault as Investors Book Profits

Profit-taking in tech stocks continued on Monday as high-flying, high-p/e companies known affectionately as the FAANGs (Facebook, Apple, Amazon, Netflix, and Google) were subjected to relentless, high-volume selling.

For the record, here's how these tech darlings fared on Monday:
Facebook (FB) 171.47, -3.63 (-2.07%)
Apple (AAPL) 169.80, -1.25 (-0.73%)
Amazon (AMZN) 1,133.95, -28.40 (-2.44%)
Netflix (NFLX) 184.04, -2.78 (-1.49%)
Alphabet (Google, GOOG) 998.68, -11.49 (-1.14%)

General holders of these stocks are not yet alarmed over the losses which began a week ago, following the last-gasp ramping over Black Friday and Cyber Monday, because the companies have been among the best performers since January.

What is apparent is that investors are taking profits made in these stocks - none of which, other than Apple, offers dividends - and investing largely in Dow companies, all of which provide dividends to shareholders.

There's nothing unusual about what analysts typically call "sector rotation," except that the movement is quite pronounced. The S&P and Dow have outperformed the NASDAQ for six straight sessions.

With the markets less than two hours from the opening bell on Tuesday, futures are diverging wildly, with Dow futures up in the range of 130 points, while NASDAQ futures are falling by 90 points or greater.

At the Close, Monday, December 4, 2017:
Dow: 24,290.05, +58.46 (+0.24%)
NASDAQ: 6,775.37, -72.22 (-1.05%)
S&P 500: 2,639.44, -2.78 (-0.11%)
NYSE Composite: 12,634.89, +20.33 (+0.16%)

Dow Posts Best Week Of Year; NASDAQ Falls

Confused?

In what was the best performance week of the year for the Dow (a nearly three percent gain), the NASDAQ lost more than one half percent.

The math is fairly simple. Outside of Apple (AAPL), which is a component of Dow 30 stock, the FAANGs (Facebook, Apple, Amazon, Netflix and Google) all got beaten down.

Facebook (FB) lost 1.78%.
Netflix (NFLX) was down 0.41%.
Amazon (AMZN) fell 1.44%, and Google (GOOG) dropped 1.10%. Additionally, another of the high-fliers, Tesla (TSLA) shed 0.75%.

Those stocks make up a mammoth portion of the total volume on the NASDAQ, thus nullifying any gains by all other stocks on the index.

Fear not, however, holders of high P/E paper, because since the Senate tax legislation was cleared Saturday morning by a narrow margin, all is well in the land of the free. Monday morning futures are pointing to a moon shot open.

For the Week Ending December 1, 2017:
Dow: +673.60 (+2.86%)
NASDAQ: -41.57 (-0.60%)
S&P 500: +39.80 (+1.53%)
NYSE Composite: +192.63 (+1.55%)

US Equites In Danger Zone After Very Volatile Week

The US economy isn't exactly on its back, but it also isn't growing by the phony 3+ percent the government reported in the past two quarters.

Speaking strictly from an economist's perspective, the US government GDP figures include grossly-inflated government spending and just about every spare dollar their statisticians can unearth from the mainland, Alaska and Hawaii.

GDP-watching is a Wall Street phenomena, serving the interests of the corporatists who need to return dividends or share growth to stockholders. Thus, it adds impetus to the argument that investing in US corporations is a good idea. That may or may not be true, depending largely upon which corporation is attracting the investing dollars.

Obviously, the FAANGs (Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (Alphabet, GOOG) have been the most attractive of the past six to eight years, while quite a few have faltered. Most of the stocks making gains since the GFC of 2007-09 have been the result of massive stock buybacks, a dubious distinction, as these high-fliers are the ones most prone to collapse in the case of a market rout.

They've diluted their shares and have deployed capital in one of the worst ways, buying back shares in order to boost EPS (earnings per share). Having fewer shares available while keeping profits at roughly the same level improves EPS, but it does not expand the business potential. Banks and financials are especially guilty in this regard. They're over-leveraged and will pay a price, but their executives and shareholders are happy little clams, for now.

When the share price falls, and dividends are slashed, the shareholders will be singing a different tune. The executives will be long gone because they've proven to care only about their own pockets and bonuses.

In any case, stocks ran through a very volatile week, punctuated by a massive dead-cat-bounce rally on Thursday which stanched some of the losses incurred since all-time highs the previous Tuesday.

There could be a waterfall effect developing, because confidence is waning. The holiday shopping season - which is demonstrably longer than last year's - should provide a boost, but the economy is lurching closer to two important events: the December Fed meeting and the expected rate hike, and another round of negotiations in congress over the debt ceiling limit, both mid-month.

Elsewhere, oil remains at elevated levels, above $55/barrel for WTI crude, gold and silver were bounced around but appear ready for a breakout (as they have too many times in the past four years, with nothing to show), bonds were flatter still.

At the Close, Friday, November 17, 2017:
Dow: 23,358.24, -100.12 (-0.43%)
NASDAQ 6,782.79, -10.50 (-0.15%)
S&P 500: 2,578.85, -6.79 (-0.26%)
NYSE Composite: 12,302.89, -0.39 (0.00%)

For the Week:
Dow: -63.97 (-0.27%)
NASDAQ: +31.85 (+0.47%)
S&P 500: -3.45 (-0.13%)
NYSE Composite: -19.71 (-0.16%)

Back to the Grind for Wall Street

All the blustering over nuclear war over, now replaced with frantic screaming about neo-Nazi and White Supremacy groups (what kind of media is this?) after demonstrations and bloodshed in Charlottesville over the weekend, Wall Street didn't seem to interested in anything in a typical mid-summer session.

Stocks kind of straddled the unchanged line, and the usual unusual of indices pointing in opposite directions was the result of a lackluster day of trading paper.

The only significant news was from retail, if it can be believed, as July retail sales showed a 0.6% improvement, mostly due to incentives on new car sales and leases.

It wasn't enough to send buyers into a panic of shopping for downtrodden mall rentiers, since everybody already knows that the half-life of most retailers is very short, due to the general slack demand in the economy and the Amazon effect of hovering up all latent shoppers to the internet.

So, since Americans killing other Americans is not apparently as sexy as Americans killing North Koreans, or vice-versa, not much on the rally front today.

At the Close, Tuesday, August 15, 2017:
Dow: 21,998.99, +5.28 (0.02%)
NASDAQ: 6,333.01, -7.22 (-0.11%)
S&P 500: 2,464.61, -1.23 (-0.05%)
NYSE Composite: 11,843.48, -12.58 (-0.11%)

Trouble In Wonderland; Amazon Drops On Disappointing 2Q Earnings

Nothing other than the usual dippity-doodle for these schizophrenic markets run almost entirely by computer algorithms as July draws to a close.

Apparently, all the new highs were just too much to handle, except in the case of the Dow, which is nearing orbital velocity, but all the other majors pulled back around midday.

The reasons for the collapse (the NASDAQ lost 130 points in roughly an hour and-a-half) were unclear, though the growing chorus of Wall Street analysts using words like bubble, overvalued, and crash may have something to do with it.

Also on the radar is tomorrow's first estimate (guess) of second quarter '17 GDP. The first quarter was nothing to scream about, at 1.6%, but there are plenty of prognosticators calling for upwards of 2.6% for the second quarter. Others remain skeptical, but the news will be released soon enough, prior to the opening bell on Friday.

After the close, Amazon released second quarter results, which were highly anticipated, but turned out to be a dud for investors.

Amazon (AMZN) reported Q2 net income of $197 million, or $0.40 per diluted share, down 77% from $857 million, or $1.78 in Q2 2016. This was on revenue of $37.955 billion, up 25% from the $30.4 billion a year ago, and above both the company's own expectations of $35.25-$37.75BN and consensus estimates of $37.18 billion. The company also reported operating margin of 1.7%, down from 2.8% last quarter and well below expectations.

Amazon was down two percent in after hours trading.

So why is everybody so skittish, or is it just the algos?

At the Close, 7/27/17:
Dow: 21,796.55, +85.54 (0.39%)
NASDAQ: 6,382.19, -40.56 (-0.63%)
S&P 500: 2,475.42, -2.41 (-0.10%)
NYSE Composite: 11,963.23, -1.68 (-0.01%)

Which Way is Up? Stocks Battered Again; VIX, Bond Yields Exploding

Volatility is back, to the chagrin of equity investors who have enjoyed the easiest ride to Easy Street possibly in the history of the US stock market.

The VIX, a broad measure of market volatility, spiked today as high as 15.16, a huge move, considering the close on Wednesday was 10.03. That's better than a 50% move to the top, though the slaughter was interrupted and canceled midday, when it appeared the world was ending. No doubt, the PPT another central bank cohorts rushed to the aid of everybody in quelling the panic, sending the VIX back to 11.44 at the end of the session.

The Vix halting helped the major indices to some degree, though it could not stem the selling. The Dow melted down as low as 21,203, a full 250 points from the close on Wednesday. The NASDAQ was again hit full force, bottoming out at 6090, before receiving somewhat to close with a mere 90-point loss.

With the Federal Reserve's loose policy unchecked for eight years running, stock picking has been easier than throwing darts at a barn door. Despite the easy money, most hedge fund and money managers have failed to keep pace with simple indices, a shameful state of affairs for the people who are supposed to know what they're doing when it comes to investing. Now, as everything from the presidency to health care to the media and the future of the global economy is being questioned, the bifurcated reasoning of ultra-low interest rates and gambling recklessly in equities is beginning to lose some favor.

All of this came as the government reported, prior to the opening bell, first quarter GDP at a surprising 1.4% growth rate. This was the third estimate, after the first - back in April - came in at 0.7, and the second, in May, was better, at 1.2, were still below an acceptable range. Apparently, nobody is particularly interested in an economy that is growing at less than two percent, and maybe even less interested in the government's goal-seeking statistical chicanery.

It seems, from all appearances, that the Federal Reserve is being taken seriously about rising rates, if one agrees that bonds tell the real story. The rally in the 10-year note has been shunted, with yields spiking the past few days, opening at nearly 2.30%. The note closed at 2.267, a gain of better than two percent, a large move in treasuries.

Tech stocks were the usual suspects, as the FAANGs took the heat. Facebook, Apple, Amazon, Netflix, and Google all suffered losses on heavy volume.

So, is this the beginning of the end of the bull market?

Maybe. Maybe not. Nobody really would know, though there are those of the opinion that the market is vastly overextended and the core economy is under-performing and facing severe deflationary pressure.

What to watch now are the movie averages. The Dow is still gleefully above its 50-day moving average, but the NASDAQ closed precisely on its 50-day, as is the S&P. Further weakness could send sell signals and a plummet through the 50-day toward the 200-day.

Also to keep in mind is the rough guideline for correction territory, which is casually assumed to be a 10% decline.

The NASDAQ topped out at 6341.70, nearly three weeks ago. A quick look at a NASDAQ chart reveals the collapse on Friday, June 9, exactly three weeks ago as of tomorrow, as if somebody rang a bell, denoting the tippy-top of the market. A level of 5707 would have to be met for the NAZ to fall 10% and it is the most vulnerable index, having had the best run-up over the past three months.

Not that it would be a huge move, though significant in percentage terms, but it would erase gains all the way back to February 9, so just five months of lost appreciation.

Friday closes out not only the week, but the month and the quarter, so it should be instructive from a technical standpoint, if that actually matters any more.

Bull markets do not last forever, no matter how low interest rates are nor how easy money is to lend.

At the Close, 6/29/17:
Dow: 21,287.03, -167.58 (-0.78%)
NASDAQ Composite: 6,144.35, -90.06 (-1.44%)
S&P 500: 2,419.70, -20.99 (-0.86%)
NYSE Composite: 11,739.98, -72.82 (-0.62%)

Stocks May Be Near Peak; Fed Plans Going Up in Flames

It's been a troublesome two weeks for stock jockeys. Even as the Dow and S&P have rocketed to new highs, the shakeout on the NASDAQ last Friday may have been a harbinger of things to come and the die came up snake-eyes on Tuesday as all of the major indices took losses which accelerated into the closing bell.

On the surface, everything seems to be going according to plan. The Fed continues to lie to themselves - and everybody else - that the solvency trap of the GFC of 2007-09 has been permanently put in the rear view mirror and the future offers nothing less than roses and unicorns, otherwise termed "normalcy." Real people know better. While the official unemployment figures approach fantasy levels of sub-four percent, those in and out of the workforce haven't had sustained economic prosperity since prior to 2000. Wages have been absolutely stagnant for the better part of 20 years, not only in the United States, but in established economies around the world.

Since debt had reached unsustainable (read: unpayable) levels during the housing crisis period, all the central bank could do was double down with easy money to banks and connected investors and financiers via QE and ZIRP while the bulk of the population got dosed with 22% interest rates on credit cards, ballooning college tuition costs and, the ultimate teaser, cheap credit on new car loans and leases.

Well, the carousel is slowing to a stop as the world demographic ages not-so-gracefully into their 50s, 60s and 70s, an age at which one does less of everything, including driving, eating, buying, spending, racking up credit card debt and buying bigger houses. This simple fact is probably not lost on the central bankers, but, being mired into last-century Keynesian economic theories and practices, there's little they could do except what they did last week, a desperate attempt to buy more time via higher federal funds rates, a plan that allows a small comfort zone to ease into the next recession, which seems to be gathering momentum daily.

Stocks have never told the entire story of a nation's economy and they won't this time either. While the power elite jiggle their algos to capture the little gains that remain, real estate prices have peaked and are heading lower in many locales, gold, silver, and especially, oil are displaying tendencies one would normally associate with a deflationary economy, which, actually is what has been the experience for much of the past eight years.

Tech stocks have outperformed and rightfully so, but what tech has proven to do time and again is lower costs and prices via efficiencies of scale and market. This time is no different, the recent acquisition of Whole Foods by internet giant, Amazon, offers yet another chilling reminder that the past is pretense and the future will be won by the fastest and most agile companies, individuals and, yes, governments.

The Federal reserve and their crony central bankers across the globe have painted themselves - and everyone else - into a no-win situation, thinking that inflation equals salvation, when, in fact, it is nothing more than gloss. Making matters even more untenable is the idea that the Fed has been trying to induce inflation for the past eight years, without success. They've pumped trillions into the global economy with nil effect because the two things most important to free, functioning markets - price discovery and an honest discounting mechanism - have been missing due to their constant fiddling and control fraud.

Thus, the world approaches another financial Waterloo, more serious than the last, as global credit creation has stalled with growth being nothing more today than amalgamated numbers which are fictitious in the main. The overhang of government debt, pension shortfalls and corporate insouciance have created the perfect scenario for calamity.

If the Fed, ECB, BOJ and other central banks are in search of drama, this summer is likely to be a grand provider of entertainment for all. With stocks overvalued close to the point of absurdity, the assets to be hoarded - if one is in a position to exit the Wall Street casino - are real estate, currencies, gold, silver, tools and machinery.

Since June 9, the NASDAQ has closed negatively six of eight sessions. The Fed finalized their rate hike on the 14th after weeks, if not months, of telegraphing their move. The weakness in the NASDAQ is not a coincidence, but rather, a distinct message from the market.

At The Close, 6/19/17:
Dow: 21,467.14, -61.85 (-0.29%)
NASDAQ: 6,188.03, -50.98 (-0.82%)
S&P 500 2,437.03, -16.43 (-0.67%)
NYSE Composite: 11,738.95, -94.39 (-0.80%)