Showing posts with label Apple. Show all posts
Showing posts with label Apple. Show all posts

Sunday, January 26, 2020

WEEKEND WRAP: Coronavirus Affecting Markets; Turbulent Week Ahead; Oil Already Whacked

Last week, as the the wealthy and infamous gathered for the annual World Economic Forum (WEF) in Davos, Switzerland, markets were focusing on more compelling domestic and international issues, primarily, the impeachment trial of President Donald J. Trump and the outbreak of the deadly coronavirus which has spread outward from its source in mainland China, now reaching around the world, particularly in the Northern Hemisphere, where nearly all the developed nations are anchored.

While the impeachment hearings were less impactful, being that the first few days of the trial consisted of one session for rule-making and three days of Democrat managers from the House of Representatives reiterating their tired claims from months of investigations stemming from a single phone call, the spread of a killer virus caught everybody's attention.

The number of deaths officially reported by the Chinese government grew from 16 on Wednesday to 23 to 41 to 56 by Sunday. As the week progressed, the number of reported cases grew considerably - by Sunday, nearly 2,000 in China alone - along with the number of countries discovering outbreaks. By Sunday morning, instances of reported cases had been registered in France, South Korea, Japan, Nepal, Thailand, Singapore, Vietnam, Taiwan, Australia, and the United States.

Similar to the SARS (severe acute respiratory syndrome) outbreak, which killed more than 750 people in 2002-2003, the threat is that this particular virus is spreading at a much faster rate as transmissibility is increasing.

By Monday morning, the toll will likely exceed 90, but there's widespread speculation that China has been and continues to understate not only the number of cases reported, but also the death toll.

This is the kind of thing some students of the dark science of economics might consider a "black swan," an unusual event or occurrence with a low probability that nobody sees coming. Already, the coronavirus outbreak has affected markets, but none more profoundly than oil. With travel bans in effect already in some Chinese cities and many presumably taking precautions to avoid crowds and people who may be infected, the world's second-largest user of oil and distillates is bound to experience a sharp demand decline that will affect prices globally.

WTI crude fell, over the course of the week, from $58.58 per barrel to $54.19, a decline of 7.5%. Brent dropped from an opening at $65.65 on Monday to $59.85 by week's end, losing nearly nine percent.

Stocks were also hit, as increasingly dire stories continued to mount over the course of the week, limiting upside on all exchanges, and squelching rallies on Tuesday, and especially in the US on Friday, when the Chinese government announced the rising death toll and cancellation of many Lunar New Year festivities, the biggest holiday in the country.

China, already on the brink of an extended financial downturn, saw severe damage to equity markets.

If the coronavirus continues to spread to other countries and becomes a pandemic, declines on the major indices (the Dow was down for the fourth straight day as of Friday) could turn what appeared as a minor fluctuation into an avalanche. Limiting movement, be it out of fear or by government dictates, would seriously hamper economic activity anyway, and, if the contagion becomes global in nature, which it appears to be doing, the effect may be long-lasting.

So, that's how normal operating markets turn into dungeons of doom. There is no silver lining, other than, you guessed it, silver and gold, both of which turned in the opposite direction from stocks, both tumbling on Tuesday but gaining the remainder of the week. Gold finished at $1571.60 per ounce; silver closed out the week at $18.10 per ounce. There is likely to be a further, faster advance in precious metals should the virus continue to spread.

With an FOMC meeting up next week (January 28-29) bonds saw high demand, moving interest rates on treasuries to their lowest levels since October, 2019. The 10-year-note closed out the week at 1.70% yield, with the 30-year bond closing at 2.14%.

Also upcoming in the week ahead, a slew of earnings reports, many of them notable as most will be for the fourth quarter of 2019 and the full year.

On Monday, homebuilder D.R. Horton (DHI) and telecom Sprint (S) get the earnings parade started. A loaded Tuesday has Lockheed Martin (LMT), 3M (MMM), Phizer (PFE), United Technologies (UTX), Nucor (NUE), and PulteGroup (PHM). Apple (APPL) and eBay (EBAY) report after the close.

On Wednesday, Dow components Boeing (BA), AT&T (T), and McDonald's (MCD) present, along with Mastercard (MA), General Electric (GE), and Dow Chemical (DOW). Tesla (TSLA), Microsoft (MSFT), Facebook (F), and PayPal (PYPL) report after the close. Thursday's offerings include some titans. Coca-Cola (K), UPS (UPS), and Verizon (VZ) report prior to the opening bell. Amazon (AMZN) and Visa (V) are up after the close.

Prior to Friday's market open, ExxonMobil (XOM), Chevron (CVX), and Caterpillar (CAT) close out the earnings deluge.

It's going to be a busy week with plenty of engaging, diverging stories. In case that's not enough, the impeachment trial could conceivably wrap up by Friday, possibly sooner, the Super Bowl is Sunday, February 2nd, and the first presidential primary, the Iowa caucus, convenes on Monday, February 3rd.

If the coronavirus continues to spread, it's not likely to slow down, so this coming week could be an opportunity to take profits and/or shed losers before markets get any ideas about tanking. Depending on how severe the virus becomes, how quickly and how far it spreads, appropriate defensive actions may be entertained.

With stocks close to all-time highs, there's hardly a case to be made for buying at this point, which, in itself may provide good enough reason for some spirited selling.

At the Close, Friday, January 24, 2020:
Dow Jones Industrial Average: 28,989.73, -170.36 (-0.58%)
NASDAQ: 9,314.91, -87.57 (-0.93%)
S&P 500: 3,295.47, -30.07 (-0.90%)
NYSE: 13,978.47, -123.57 (-0.88%)

For the Week:
Dow: -358.37 (-1.12%)
NASDAQ: -74.03 (-0.79%)
S&P 500: -343.15 (-1.03%)
NYSE: -123.57 (-0.8*%)

Thursday, November 21, 2019

Disturbance in the Force? Stocks Suffer Losses

Dow Components Apple (AAPL) and Home Depot (HD) sent the Dow Industrials lower, dragging the tech sector, NASDAQ and S&P 500 down with it.

With third quarter results not as good as expectations, there's pressure on US stocks, especially now that China has balked again at phase one of the proposed on-again, off-again trade deal between the globe's two largest economies.

Also weighing on equites are repeated stories of recession fears from Europe, especially in the major economies: Germany, France, and Italy. Brexit is still not resolved and there's renewed optimism among remainers that the result of the 2016 referendum might still be overturned. As Europe is one of the major US trading powers, what happens over the pond affects many companies in the US.

Bond yields dipped again, especially at the long end of the treasury curve, with the 10-year note falling to a yield of 1.74%. With the Fed now officially on hold, bond vigilantes may have their day in the sun, pushing yields down to near record levels if the holiday season doesn't produce a bounty of stock buys.

Markets are at an unusual crossroads with many swirling stories that have the potential to send equities flying in either direction. What looks like a sideways trading regimen may hold sway the remainder of the year, though more and more economists and predictors are saying that a recession in the United States is not a foregone conclusion for 2020.

Third quarter results from a plethora of companies are now in the books and though most beat expectations, such were lowered and cannot be counted on to produce a buying frenzy. A repeat of last year's monumental losses in December could reoccur, though the Fed and nefarious forces behind the scenes have the power to deflect losses and turn indices around on various dimes.

Control is in the hands of the algorithms and central bankers. Don't expect much downside as long as hope for a trade deal remains present.

At the Close, Wednesday, November 20, 2019:
Dow Jones Industrial Average: 27,821.09, -112.93 (-0.40%)
NASDAQ: 8,526.73, -43.93 (-0.51%)
S&P 500: 3,108.46, -11.72 (-0.38%)
NYSE Composite: 13,419.30, -47.05 (-0.35%)

Thursday, January 3, 2019

Stocks Slammed, Bonds Rally As Global Slowdown Fears Rise

Apple computer, maker of the iconic iPhone, was the cause of much of today's equity angst, as the tech giant warned that fourth quarter sales were likely to come in under revenue estimates.

Apple CEO Tim Cook issued a letter late Wednesday to investors advising that a slowdown in China sales would cause fourth quarter revenue to decline 4.8% year over year to $84 billion, well below analyst estimates. It's not that Apple is losing money - far from that - it's just not making as much as expected. Shares of Apple (AAPL) were down nearly 10% on the news, the largest one-day loss in six years.

Combined with a report from the Institute for Supply Management (ISM) that had December's PMI fall by the most since the financial crisis of 2008, stocks were on the defensive all day long. The report concluded that December PMI fell from 59.3 to 54.1, a descent of 5.4%. While anything over 50 is considered expansion, the falloff is considered to be a harbinger of worse data to come, as many participants in the survey blamed trade tensions with China as a leading cause for the slowdown.

Thus, the 1000+ point gain from December 26 was cut down by two-thirds on Thursday, just a week later, sending the Dow and other major indices closer to bear market territory once again.

January has gotten off to a horrible start, as though December's rout hadn't ended, which, of course, would be correct. Losses on stocks are only just beginning. By March of this year, expect stocks to be another 10-15% lower than where they stand today, and, even then, with signs of a global slowdown flashing red, a bottom won't likely be put in until the market has flushed out all of the weak hands and sent fund managers scurrying in even greater numbers to cash and bonds.

Presently, the treasuries are telling an interesting story about the economy. While the Federal Reserve insisted on raising rates four times in 2019, the bond market has expressed extreme displeasure, sending the yield on the 10-year note to 2.56%, down ten basis points just today, marking the lowest yield since January of last year. Additionally, short-maturity bills spiked (thanks to Fed hikes at the low end) with the one-year yielding 2.50%, as compared to 2.39% for the 2-year and 2.37% for the five-year note. Inversion in accelerating at the short end of the curve.

While this is traditionally not the pairs that signal recession, that distinction belonging to the 2s-10s spread, it is highly unusual. Bond traders are saying they don't want to issue longer-term, for fear that the economy will weaken as time progresses. The 30-year also was slammed lower, yielding 2.92%, down five basis points from yesterday.

2019 is looking to be an even worse year for equity investors, and a rout in the stock market could cause panic to spread to many diverse levels of economic activity. A recession within the next three to twelve months is looking more a certainty with each passing day.

Dow Jones Industrial Average January Scorecard:

Date Close Gain/Loss Cum. G/L
1/2/19 23,346.24 +18.78 +18.78
1/3/19 22,686.22 -660.02 -641.24

At the Close, Thursday, January 3, 2019:
Dow Jones Industrial Average: 22,686.22, -660.02 (-2.83%)
NASDAQ: 6,463.50, -202.43 (-3.04%)
S&P 500: 2,447.89, -62.14 (-2.48%)
NYSE Composite: 11,190.44, -193.09 (-1.70%)

Monday, December 10, 2018

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%)

Thursday, November 22, 2018

Thanksgiving Is Not For Giving Money To Brokers; Dow Slides Into Weakened Holiday Close

All the stocks you bought last year are worth less this year.

Big deal, right? You still have the same stocks and they'll come back. The stock market always goes higher.

That seems to be the common wisdom, or at least a salve for wounds incurred during the recent downturn, and such thinking is especially appropriate for the millions of small investors who have their money locked up in 401k plans, IRAs or other retirement or long-range investment vehicles. These folks aren't as nimble nor as knowledgeable as the pros on Wall Street or even their local corner store stock broker. They're stuck. They're what's known in the industry as bag-holders, and, as mentioned above, there are millions of them.

The way average consumers - as investors, per se - are treated by the large funds and brokerages who manage their money is tantamount to a skimming operation, not unlike the protection rackets made famous by mob bosses from the 20s, 30s and 40s.

You give the fund your money, and they make sure nothing bad happens to it, suggesting that they will invest it wisely, and, for that privilege, you pay them a fee. If things go wrong, and your money diminishes, your account balance declines, the fund is not held responsible. Too bad. Tough break. "We don't control the market," they'll tell you.

The willingness with which people turn over hard-earned money to managers to invest is a concept that has baffled and befuddled psychologists and entrepreneurs for time immemorial. The generations who were adults during the ravages of the Great Depression - though most of them have passed away - and anyone who lost money in the dotcom bust or the Great Financial Crisis (GFC) of 2007-09, have been rightfully skeptical of the suggestions and promises made by the hawkers of stocks and bonds, the skimmers of fees, the suit-and-tie, computer-aided experts who are allowed to handle everybody else's money.

Does the small investor ever ponder what the broker does with his money? Is he or she investing in the same stocks as the general public he or she is serving? That question is seldom asked, and even more infrequently, answered. And when stocks start to slide, what does the broker do? Is he or she holding steady, as the clients are told to do, or has he or she jumped ship, pulling all the profits out of the stocks he or she owns? These are interesting questions, which, unfortunately, are not required to be answered by individual brokers or their companies. The fiduciary aspects of the brokerage business leaves much to be desired in terms of consumer protection. In brief, consumers are NOT protected and never have been. When one hands over money to a broker, they also give the right for the broker to do whatever he or she wishes with those funds.

This is not an indictment of any broker or investment house. There are many good ones, more good than bad, by a long shot. However, they all share a few common traits: they routinely under-perform the general indices (the most-often quoted statistic being behind the S&P), and, they have zero accountability when they lose money for their clients.

So, this Thanksgiving, be thankful you have money that you can spread around for brokers to manage for you, because, apparently, you're not confident enough nor smart enough to manage it yourself. And then you pay taxes, if you have any gains.

Now, to those uppity markets...

Stocks were floating along a sugar high on the day before Thanksgiving until the rush of a dead-cat rally wore off around 2:00 pm ET., and in an especially large manner on the Dow in the final hour of trading (by this time, your broker was already over the river and through the woods, on his way to Grandmother's house).

The Dow dropped 200 points in those final two hours of trading, the bulk of it (185 points) in the final hour. The other indices lost ground, though not to the degree that the Dow Industrials slumped. A lot of the loss was in Apple, the stock that has been largely blamed for Tuesday's selling.

Finally, the Dow ended with a loss of less than one point. Ouch. Stocks will be on sale again on Black Friday, in a shortened session which ends at 1:00 pm ET.

Happy Thanksgiving!

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
11/20/18 24,465.64 -551.80 -650.58
11/21/18 24,464.69 -0.95 -651.53

At the Close, Wednesday, November 21, 2018:
Dow Jones Industrial Average: 24,464.69, -0.95 (0.00%)
NASDAQ: 6,972.25, +63.43 (+0.92%)
S&P 500: 2,649.93, +8.04 (+0.30%)
NYSE Composite: 12,123.34, +74.69 (+0.62%)

Monday, November 19, 2018

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%)

Friday, October 19, 2018

Stocks Can't Gain Traction; Tech, Industrials Lead Broad Decline

Continuing the stock rout that began in earnest two weeks ago became deeper and more pronounced on Thursday as broad declines sent speculators scurrying for cover.

The Dow Jones Industrial Average recorded its fifth triple-digit loss of the month and its eighth losing session in 14 trading days this month. The index is down nearly 1500 points from the all-time high reached at the close on October 3rd (26.828.39). If this isn't the beginning of a serious correction or bear market, it certainly looks like one.

Only five of the 30 Dow stocks managed gains, led by Verizon (VZ, 54.65, +0.69, +1.28%). Exxon Mobil and Chevron were also among the few winners, despite another day of declines in oil futures, which slumped below $69/barrel for the first time in a month. Mirroring the decline in stocks, WTI crude futures peaked on October 3rd at 76.20, but it's been all downhill since.

Caterpillar (CAT) was the Dow's biggest loser, dragged down nearly four percent on poor results from industry peers. CAT is off nearly 15% since October 3rd.

The other major indices suffered more serious losses, with the NASDAQ leading the way down, losing 157 points, more than a two percent drop. Once again, tech stocks dominated those losing ground, with Netflix, Google, Apple, and Tesla all declining by more than two percent.

There seems to be no escaping the cascade of falling stocks in October, traditionally one of the most volatile months for equities. No sector is particularly a safe haven, though utility stocks have largely been spared, thanks to low alpha and steady dividends.

The Dow needs only to finish Friday with a loss of 39 points or better to avoid a fourth straight weekly decline. A solid close to the week would also allow the S&P and NASDAQ to close out the week with gains, thanks to Tuesday's melt-up advance. However, stocks in Europe are losing ground in early Friday trading.

Dow Jones Industrial Average October Scorecard:

Date Close Gain/Loss Cum. G/L
10/1/18 26,651.21 +192.90 +192.90
10/2/18 26,773.94 +122.73 +315.63
10/3/18 26,828.39 +54.45 +370.08
10/4/18 26,627.48 -200.91 +169.17
10/5/18 26,447.05 -180.43 -11.26
10/8/18 26,486.78 +39.73 +28.47
10/9/18 26,430.57 -56.21 -27.74
10/10/18 25,598.74 -831.83 -859.57
10/11/18 25,052.83 -545.91 -1405.48
10/12/18 25,339.99 +287.16 -1118.32
10/15/18 25,250.55 -89.44 -1207.76
10/16/18 25,798.42 +547.87 -659.89
10/17/18 25,706.68 -91.74 -751.63
10/18/18 25,379.45 -327.23 -1078.86

At the Close, Thursday, October 18, 2018:
Dow Jones Industrial Average: 25,379.45, -327.23 (-1.27%)
NASDAQ: 7,485.14, -157.56 (-2.06%)
S&P 500: 2,768.78, -40.43 (-1.44%)
NYSE Composite: 12,445.48, -167.57 (-1.33%)

Tuesday, September 25, 2018

Dow Losses Tied To Nothing Other Than Profit-Taking

There's almost no chance - as Yahoo! News blared in a headline late Monday afternoon - that Brett Kavenaugh's Supreme Court nomination had anything to do with the 181-point drop on the Dow.

The continuing false narrative foisted by the financial media is about as fake as fake news can get. Every day, there has to be a reason for stocks rising or falling, there just has to be. Otherwise, how would the 24-hour squawking about stocks, finance, and your money justify its existence.

Sure enough, there are days that movements in stocks is correlated to some economic event, data drop, or newsworthy story, but most of the time trading actions are the result of some analysis, some emotion, and largely, some advance planning. Big firms don't just jump in and out of positions on the news of the day, their positions, and the allocation of their capital, is guided by profit and loss, gauging risk and reward, greed and fear.

There are times in which herd mentality takes over and swings sectors or even entire markets one way or the other, but, by and large, such huge swings are already programmed by the big trading firms, which almost never leave their positions vulnerable to unforeseen events. They are protected by covered calls or puts or any of a variety of risk-reducing strategies. Nobody with any experience trading stocks is rushing to their terminals to buy or sell on whatever nonsense is being cooked up by the crooks running the federal government in Washington, DC, because what happens on Capitol Hill usually has little to nothing to do with real capital being flung far and wide from Wall Street.

Firm in the knowledge that big positions were not being liquidated by major traders, what did cause the dip on the Dow Monday?

Chalk it up to profit-taking on short-term positions. Of the 30 Dow stocks, only seven were winners on the day, leaving 23 in the loss column. Two of the winner - ExxonMobil and Chevron - were tied almost directly to oil prices, which were up not just on the day, but for the past few weeks, as WTI crude hit a four-year high above $72/barrel on Monday. Three were chip or computer-related, as Apple, Microsoft and Intel were up, and the other two, Disney and United Health, were based on some perceived valuation play.

The rest of the stocks were lower, and it's probably a good idea to discount it as nothing more than random noise. The Dow just reached all-time highs this past Thursday and was even higher on Friday, so traders had plenty of time over the weekend to figure their positions, their profits, and how to take them. Since the move was less than one percent there's reason to believe that many traders - who, via groupthink, share many of the same strategies, knowledge, and objectives - saw an opportunity to book profits and move on to the next big thing, whatever that might be.

And, when they discover the next profitable trade, it's a safe bet that you won't be privy to it, but that many of the bigger traders on the street will know. It will have nothing to do with the news, politics, the soybean crop report, or the color of Lady Gaga's hair. You can bet on that.

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
9/6/18 25,995.87 +20.88 +31.05
9/7/18 25,916.54 -79.33 -48.28
9/10/18 25,857.07 -59.47 -107.75
9/11/18 25,971.06 +113.99 +6.24
9/12/18 25,998.92 +27.86 +34.10
9/13/18 26,145.99 +147.07 +181.17
9/14/18 26,154.67 +8.68 +189.85
9/17/18 26,062.12 -92.55 +97.30
9/18/18 26,246.96 +184.84 +282.14
9/19/18 26,405.76 +158.80 +440.94
9/20/18 26,656.98 +251.22 +692.16
9/21/18 26,743.50 +86.52 +778.68
9/24/18 26,562.05 -181.45 +597.23

At the Close, Monday, September 24, 2018:
Dow Jones Industrial Average: 26,562.05, -181.45 (-0.68%)
NASDAQ: 7,993.25, +6.29 (+0.08%)
S&P 500: 2,919.37, -10.30 (-0.35%)
NYSE Composite: 13,162.05, -74.39 (-0.56%)

Monday, September 17, 2018

Apple Leads Dow, Stocks Lower On Valuation, Dividend Yield Concerns

It's not like Apple (AAPL) isn't a rock-solid stock. The Cupertino, California-based company which has given the world smartphones, smart watches and really zippy computers isn't the world's largest company by market cap for nothing.

The issue is more one of value over speculation. Apple is fully-capitalized, has doubled in price in less than two years, but the kicker might be the dividend of 2.92 is less than one-and-a-half percent (1.30%), while the 10-year treasury note is currently yielding three percent and probably is going to be higher in coming months.

Those numbers have to give serious investors pause to reflect on whether the tech giant - a mature company, not an instant start-up by any means - can continue to provide appreciation value in excess to their dividend. T-bills offer yield with nearly zero risk. All stocks carry risk to the downside, and Apple may have peaked a few weeks ago when it hit an all-time high of 228.35 at the September 4 closing bell.

Investing isn't a game of chasing winners, it's a matter of timing, though most advisors will deny the thought of market-timing. Proper discipline would have one buying Apple when it looks like it's cheap. With a P/E of just under 20, it's close to being expensive, so some players are obviously taking chips off the table while the gains are fresh and probably taxed at the long-term capital rate. It would make sense to do so. There are other stocks which may perform better in the near future and the allure of risk-free money at three percent is strong.

Whatever the reason, Apple has been leveling off, but the selling got serious on Monday, with volume above 36 million shares, about 10 million higher than average. The stock closed down 5.96 points (-2.66%), leading all Dow components as the Dow and NASDAQ suffered outsized losses, the NASDAQ especially, down nearly 1.5%.

Google (GOOG) also took a pretty big hit on Monday, losing 16.48 (1.41%), as did tech darling, Netflix (NFLX), which was broadly sold, -14.21 (3.90%), to 350.35.

The Dow Jones Industrial Average saw an even split with 15 gainers to 15 losers, but of the six stocks that trade for more than 200 per share, five of them declined, led by Apple. The others were Boeing (BA), UnitedHealth (UNH), Goldman Sachs (GS) and Home Depot (HD). The sole 200+ share price winner was 3M (MMM), which finished at 209.53, up 1.65 points (+0.79%).

Markets overall took a bit of a beating on Monday, though it wasn't enough for anybody to start yelling 'fire' on Wall Street. That may come when the Fed meets next week (September 24-25) and announces the third rate hike of 2018. That may prove to be more this market can bear.

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
9/6/18 25,995.87 +20.88 +31.05
9/7/18 25,916.54 -79.33 -48.28
9/10/18 25,857.07 -59.47 -107.75
9/11/18 25,971.06 +113.99 +6.24
9/12/18 25,998.92 +27.86 +34.10
9/13/18 26,145.99 +147.07 +181.17
9/14/18 26,154.67 +8.68 +189.85
9/17/18 26,062.12 -92.55 +97.30

At the Close, Monday, September 17, 2018:
Dow Jones Industrial Average: 26,062.12, -92.55 (-0.35%)
NASDAQ: 7,895.79, -114.25 (-1.43%)
S&P 500: 2,888.80, -16.18 (-0.56%)
NYSE Composite: 13,031.91, -18.61 (-0.14%)

Monday, September 10, 2018

Dow Losses Widen, Deepen; Top Four Components Slashed

Stocks flopped around like fish out of water Monday, as investors found nothing on which to hang a positive spin or trade. The Dow gave up early 100+ point gains to finish lower for the second straight session and the fifth time in the last seven.

The NASDAQ put up a better fight, but still could not find adequate footing to stage any meaningful rally. Stocks are unrealistically valued as the business cycle - despite commentary and central bank intervention suggesting that it has been abolished - heads into the latter stages and nears overcapacity.

It is, after all, September, and there's plenty on the minds of individuals and investors, not the least of which being odious debt levels in corporate, government and individual accounts. With interest rates on the rise and winter approaching, concern may be more toward preservation of capital than appreciation of such. Risk is rising for obvious reasons and the global economy is groaning from severe stresses placed upon it by a rising dollar, which has become the go-to currency and the US the trading capitol of the world.

More than a few economists and analysts had predicted a second half slowdown, so, after gains in July and August, September may be the market's Waterloo, forcing the hands of even the most ardent bulls. This week also marks the ten-year anniversary of the fall of Lehman Brothers, as well as another reminder of the 9-11 tragedy of 2001, tomorrow.

Somber as the mood may be, American hearts and minds are forever looking ahead, so a slow week or even a down month is unlikely to unhinge the usual giddiness of the bulls. It's been nearly 10 years since the market retreated in a serious manner, but current conditions don't augur well for a sudden collapse. Rather, a bumpy road lower may be the preferred path as the signs of decay over the past week are beginning to make more of an impact.

The Dow can't seem to handle prosperity over 26,000. It has closed above that level a handful of times (three, to be exact) in the last week of August, but beat a hasty retreat once it was revealed to be overbought.

Monday's losers were an odd assortment of UnitedHealth Group (UNH) 259.73, -8.55 (-3.19%); Boeing 341.86, -7.42 (-2.12%); Traveler's 127.60, -2.49 (-1.91%); and, Apple (AAPL) 218.33, -2.97 (-1.34%). These are diverse businesses, the only possible connection being finance, though that's dubious, at best. Adding in Goldman Sachs (GS) 231.91, -2.00 (-0.86%), the other common thread is that Boeing is the most expensive stock on the index, UNH second, GS third, and Apple, fourth. The Travelers (TRV) is a distant 13th-most expensive, the selling in those shares possibly tied to potential losses from Hurricane Florence, which is taking dead aim at the coastal communities of the Carolinas and due to make landfall later this week (likely Thursday morning).

On a positive and somewhat perplexing note, the Dow Jones Transportation Index closed at a new record high, picking up 206 points to finish at 11,554.08. This is not ordinary trading, with the Dow down, the NASDAQ up, along with a record on the transports. Either traders are playing momentum-chasing games or something unseen is occurring out of sight from regular investors. The odd trading patterns that have persisted since the sudden February fallout are bizarre and without explanation. Adding in the commodity shakedown, markets are sending mixed signals which only those with fingers firmly on triggers can apparently comprehend.

On world indices, the Far East continued lower, Europe didn't decline, but gains were marginal, and South American markets returned to their downward trend with gusto.

With a slow start to the week, it's difficult to image a good result as the grind toward the September 25-26 FOMC commences.

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
9/6/18 25,995.87 +20.88 +31.05
9/7/18 25,916.54 -79.33 -48.28
9/10/18 25,857.07 -59.47 -107.75

At The Close, Monday, September 10, 2018:
Dow Jones Industrial Average: 25,857.07, -59.47 (-0.23%)
NASDAQ: 7,924.16, +21.62 (+0.27%)
S&P 500: 2,877.13, +5.45 (+0.19%)
NYSE Composite: 12,929.01, +17.89 (+0.14%)

Monday, June 25, 2018

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%)

Wednesday, June 6, 2018

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%)

Sunday, June 3, 2018

Weekend Wrap: May Ends Dull, Jobs Data Sends Stocks Higher 1st of June

The see-sawing of the markets continued for another week ending in bifurcated manner, with the Dow and NYSE Composite suffering losses while the S&P and NASDAQ posted gains.

In particular, the Dow has seen 12 weeks with positive results, versus 10 weeks of losses, resulting in a relatively flat index, down a mere 84.01 points since the 2017 year-end close (December 29) of 24.719.22, the gains all made in January, when the Dow topped out at 26,616.71 on January 26. The losses were mostly confined to the correction in February and another poor showing in March. April and May both were positive for the Dow, though those small gains still leave the index nearly 2000 points below the all-time high.

Two stocks - Boeing (BA) and Apple (AAPL) have kept the Dow from sliding back into correction territory. Since April 30, Apple gained 15%, Boing added 23 points, or about seven percent, though both stocks have basically flatlined since mid-month.

On the holiday-shortened week, the Dow recorded losses on Tuesday and Thursday (May 31), and gains on Wednesday and Friday (June 1), the latter upswing largely attributable to the better-than-expected June non-farm payroll release, getting the new month off to a flying start.

As has been evident since the February and March selloffs, this has become a trader's market, with individual stocks and sectors favored over pure index plays. All of the major averages have gravitated around their respective 50 and 200-day moving averages, the divergences seldom taking any of them far above or below those critical lines of support and/or resistance.

With summer coming on fast, volume continues to wither away, with select stocks getting the bulk of the trading action. Bullish deniers of the Dow Theory change from April will be hard-pressed to make much of a case for buying stocks during the hot weather, as the Dow's all-time high fades farther and farther away.

Dow Jones Industrial Average June Scorecard:

Date Close Gain/Loss Cum. G/L
6/1/18 24,635.21 +219.37 +219.37

At the Close, Friday, June 1, 2018:
Dow Jones Industrial Average: 24,635.21, +219.37 (+0.90%)
NASDAQ: 7,554.33, +112.21 (+1.51%)
S&P 500: 2,734.62, +29.35 (+1.08%)
NYSE Composite: 12,620.83, +93.69 (+0.75%)

For the Week:
Dow: -117.48 (-0.48%)
NASDAQ: +120.48 (+1.62%)
S&P 500: +13.29 (+0.49%)
NYSE Composite: -14.12 (-0.11%)

Friday, May 11, 2018

Dow Gains 6th Straight Session; Oil Rises; Yield Curve Flattens

With a gain of nearly 200 points, the Dow Jones Industrial Average posted its sixth straight winning day, adding 875 points over that span.

Leading the charge higher were Apple (AAPL), which reached a new all-time high, at 190.04, and ExxonMobil (XOM), which gained 1.79 to close the session at 81.72. ExxonMobil's rise was attributed largely to the soaring price of oil. At 71.43 per barrel of WTI crude, oil is at its highest in four years, causing pain at the pump for commuters and drivers, but profits galore for energy companies.

While the immediate market euphoria may be tied somewhat to the rally in crude, it is likely to be short-lived if higher gasoline prices persist, as consumers will likely cut demand for other retail products, having to spend more to fill their tanks.

Another worrisome sign is the flattening treasury yield curve. The difference in yield spread between the five-year note and the 30-year bond fell to its lowest since 2007, a mere 29 basis points, with the five at 2.83 and the 30 at 3.12.

Flattening the curve, as at present, tightens banks' ability to lend at profit and is often a sign of a nearby recession. Should the curve invert - with fives' yield higher than 10's perhaps, it's an almost certain sign of recession, as all recessions over the past 50 years have been presaged by an inverted curve.

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

At the Close, Thursday, May 10, 2018:
Dow Jones Industrial Average: 24,739.53, +196.99 (+0.80%)
NASDAQ: 7,404.97, +65.07 (+0.89%)
S&P 500: 2,723.07, +25.28 (+0.94%)
NYSE Composite: 12,731.64, +99.15 (+0.78%)

Wednesday, May 2, 2018

Stocks Ripped Lower In Early Trade Before Miracle Rally; Signs Of Decline Ominous

After closing out April with the first positive result in three months - a paltry gain of 50.81 points - the Dow Jones Industrial Average began the month of May with a bad stumble, falling by as many as 350 points before rallying miraculously in the afternoon to end the session with a minor loss of just 64 points.

While the first day of May could have been - and probably should have been - a worse result than what the nightly news reports, signs for a continued decline in stocks overall are ominous.

The Dow remains far from all-time highs set in January, and, with earnings season winding down, traders will have a difficult time conjuring up reasons to have faith in equities over the near term.

With many stocks wickedly overvalued, the short-covering rally of Tuesday is likely to be short-lived, though the market still appears to be slightly oversold in the very short term.

April showed the market trading in a sideways direction, though the tilt to the downside is evident and wearing on Wall Street's general optimism. Any little thing could set off a panic, exacerbated by programmed trading and those silly algorithms and ETFs that bounce stocks around like rubber balls on concrete.

After the bell on Tuesday, Apple (AAPL) reported earnings for the most recent quarter that beat analyst estimates.

The company posted earnings of $2.73 per share on $61.1 billion of revenue. Analysts were looking for $2.64 per share on $60.9 billion of revenue, so, it wasn't exactly a blowout quarter, something that will surely be a cause for concern going forward. Apple is supposed to beat every quarter, and usually by leaps and bounds, but the company - which hasn't produced a new product in years - seems to be living more on reputation, and record stock buybacks, than innovation.

Dow Jones Industrial Average May Scorecard:

Date Close Gain/Loss Cum. G/L
5/1/18 24,099.05 -64.10 -64.10

At the Close, Tuesday, May 1, 2018:
Dow Jones Industrial Average: 24,099.05, -64.10 (-0.27%)
NASDAQ: 7,130.70, +64.44 (+0.91%)
S&P 500: 2,654.80, +6.75 (+0.25%)
NYSE Composite: 12,493.02, -22.34 (-0.18%)

Monday, November 20, 2017

Stocks Ignore Political Risks, China Regulations; Glint App Takes Gold Digital

Early morning in Europe and the Western Hemisphere were looking downright dreary to open the week's financial escapades, until buyers (central banks) emerged from the shadows (crypts), quickly erasing concerns over China's new rules to crimp the burgeoning shadow banking uprising and the failure of German Chancellor Angela Merkel to form a coalition government.

While futures were down sharply - especially on the European news - they were quickly corrected. China's markets quickly went from negative, staging a day-long rally, while European bourses were mostly positive and US stocks rallied sharply from the opening bell.

However, the euphoria flagged in the US as the session wore on, with stocks finishing off their highs of the day. Still, the results were much more cheerful than what might have happened if markets and investors were left alone, barring the blatant interventionism that seems to pervade trading in all markets.

The new paradigm is such that stocks cannot fail, but only go higher, valuations be damned, while gold and silver are routinely taken out to the woodshed for a weekly beating, such as occurred this morning, prior to the opening bell on Wall Street and throughout the day.

The setup isn't all so new at all. Since 2012, gold and silver have been mercilessly suppressed, to the point at which some staunch supporters are rethinking their love for shiny metals. This is exactly what central bankers wish, that wealth protectors give up and resign themselves to the fiat money regimen, but it is also precisely the time - if one is guided by sound investment stratagems - to begin loading up on what most would be shunning.

In that regard, London-based Glint launched a mobile app today that sets gold sailing into the digital age, offering Glintpay as a means by which to hold gold in a Swiss-based vault with the ability to spend one's holdings via a complementary MasterCard.

The app, which is available for download through the Apple App Store, works on iPhones and iPads using Apple's iOS operating system and is promising to provide quick and easy debit access to gold and a host of other currencies, with millions of locations worldwide accepting MasterCard.

How well the start-up will fare is an open question, but it does raise an interesting alternative to Bitcoin and other cryptocurrencies, which have witnessed monumental growth over the past six months and continue to raise eyebrows in the conventional banking universe.

The world is at a crossroads in terms of currencies. Trust in the debt-slavery central bank system continues to wane in various places as the rise of cryptos offers a glimpse of a possible future and precious metal devotees cling to long-held beliefs in money that is backed by physical assets.

Currency events are historically long-winded affairs, taking years or decades in which to sort themselves out. The ongoing forays between fiat, crypto, and physical seems to have gained some momentum today.

Investors with an eye on the global financial landscape would be wise to hold some of each, allocating more toward the digital and physical as events warrant as old systems are dying and may have been dealt an unrecoverable blow during the Great Financial Crisis of 2007-09.

At the Close, Monday, November 20, 2017:
Dow: 23,430.33, +72.09 (+0.31%)
NASDAQ: 6,790.71, +7.92 (+0.12%)
S&P 500: 2,582.14, +3.29 (+0.13%)
NYSE Composite: 12,320.77, +17.88 (+0.15%)

Tuesday, October 31, 2017

Scary Stocks for Halloween, But Apple's Business Model May Be More Frightening

Stocks fell uniformly n Monday, for no apparent reason other than the usual causes, fear, caution, valuation.

With the major indices counting to hover around all-time highs, there's no doubt reason to maintain some degree of caution. In fact, if one were so disposed to selling at a profit, now, as the year winds into its final two months, might not be a bad time to do so, considering the tax angles for 2018.

While stocks are scary on the day before Halloween, perhaps one may really get tingles from Aaple's business model concerning cell phones. Here's a one-off demonstration by an admittedly older fellow:

Apple has a problem with its business model in that they have to keep selling essentially the same product over and over and over again, every two years or so (their imaginary product cycle) to conumers who are probably fiarly content with the model they currently own.

In other words, in order to maintain their high level of profitability, Apple has to sell new iPhones to current iPhone users every two years.

I am (well, was, when Steve Jobs ran the company) an ardent fan of Apple. In fact, I'm using a MacBook Pro to connect to the internet and compose this missive. Its from 2011, six years old, and still performs incredibly well, so, why hasn't Apple forced me to upgrade?

Different market, I guess.

Anyhow, not to get too deep into the weeds, the problem I see is that their business model, as currently constructed, is unsustainable. Anybody who thinks they need to upgrade their phone every two years is off their rocker. America was built on products that worked well and lasted a long time. Maytag washers, GE refrigerators, Ford trucks, etc.

If every company adopted Apple's business model of a 2-year product cycle, the average consumer would have been tapped out long ago.

Why don't they just install a kill switch which renders their phones inoperable after 24 months? Admittedly, I am not a big cell phone advocate. I use a 10-year-old flip phone, and very seldom, at that.

The author makes some good points. Apple should be scared about changing consumer preferences and habits, considering their iPhone creation is now ten years into its product cycle and one can only suppose that the original iPhone from 2007 probably still functions, albeit slower and with fewer bells and whistles than the current models.

A day approaches in which cell phones will be maxed out on power and abilities. That's when Apple's business plans hit the wall.

At the Close, Friday, October 30, 2017:
Dow: 23,340.28: -85.45 (-0.40%)
NASDAQ: 6,688.32, -2.30 (-0.19%)
S&P 500: 2,570.72, -8.24 (-0.40%)
NYSE Composite: 12,319.47, -46.97 (-0.39%)

Thursday, June 29, 2017

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%)

Monday, May 15, 2017

Stocks Little Changed For Week With Tech Titans Continuing Leadership

Taken as a whole, the week on Wall Street was about as exciting as a Gheorghe Zamfir concert, without the music.

Stocks gyrated through very narrow ranges, extending a pattern that have prevailed - with only minor aberrations - since late March. In that span of time the major averages are roughly even on a daily and weekly basis, the major exception being the NASDAQ, which continues to climb without regard to fundamentals, driven largely on an odd combination of momentum, hope, faith, greed and a noticeable absence of fear, pricing out major tech companies, especially Alphabet (GOOG), parent of Google; Amazon (AMZN); Apple (AAPL); and Facebook (FB).

Those four companies have outperformed the broader market and carried the whole of Wall Street with it. In an investing environment largely devoid of critical analysis, these "no-brainers" of tech 2.0 or 3.0, or whatever moniker one wishes to place upon the rapid multiple expansion in this space, a few stocks make for giddy headlines.

The facts be damned; all of the investment money from funds and pension plans are routinely flowing into this small piece of the pie, crowding out smaller firms which operate without the largess of the Wall Street elite connected by the hip to the Federal Reserve.

It's a troubling scenario which bears watching closely as the bull market continues to run at its own pace. With the Fed and central bank cronies underwriting the entire market, there's a fakery here that is reminiscent of the tightly-held mainstream media.

Happy hunting!


At the Close, 5/12/17:
Dow: 20,896.61, -22.81 (-0.11%)
NASDAQ: 6,121.23, +5.27 (0.09%)
S&P 500: 2,390.90, -3.54 (-0.15%)
NYSE Composite: 11,547.05, -16.55 (-0.14%)

For the week:
Dow: -110.33 (-0.53%)
NASDAQ: +20.47 (0.34%)
S&P 500: -3.54 (-0.15%)
NYSE Composite: -68.54 (-0.59%)

Wednesday, May 10, 2017

Apple Tops $800 Billion Market Cap; NASDAQ Closes At All-Time High

Stocks were basically flat on Tuesday, but the NASDAQ finished at a new record high, paced, in large part by Apple (AAPL), which topped $800 billion in market cap on the day's gains.

Apple's most recent rise is likely due to two major investors, the Swiss National Bank (SNB) and Warren Buffett's Berkshire Hathaway, which has taken a major position in the world's richest company by market cap.

That's not surprising, given Buffett's record of success over the years, though it is hardly a genius pick. After all, if Buffet knows the Swiss National Bank is one of Apple's largest shareholders and continues to buy, why not join the party?

Buffet is well-connected and pretty bright, but owning Apple is pretty much a no-brainer in these days of central bank asset boosting.

At the Close, 5/9/17:
Dow: 20,975.78, -36.50 (-0.17%)
NASDAQ: 6,120.59, +17.93 (0.29%)
S&P 500: 2,396.92, -2.46 (-0.10%)
NYSE Composite: 11,567.52, -27.74 (-0.24%)