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%)

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%)

Stocks Tumble As Investors Flee Overvalued Stocks

Today was yet another example of the kind of days which are typical in a bear market, and make no mistake, this is the early phase of what could become a raging bear which will strip stocks of 40-60% of their valuations. Stocks were higher in the early trading and slumped in the afternoon, with the Dow Industrials closing at its lowest level in three weeks.

With today's losses, the Dow has plunged into negative territory for the month, following back-to-back declines for February and March. Even earning reports are not enough to keep stocks elevated, especially after Alphabet (parent of Google, GOOG) posted what appeared to be strong numbers only to reveal increasing expenses, crushing profit margins.

Dow component 3M (MMM) led the decline after posting earnings per share of $2.50, which missed analyst estimates of $2.52, and were 16% higher than the $2.16 posted in the year-ago period. The stock was blasted, losing 14.77 points (-6.84%) to end the day at 201.11.

Caterpillar was close behind in the loss column, down -9.80 points (-6.36%).

Alphabet dropped a stunning -47.47 (-4.45%) to close out the session at 1,019.98.

Only six of 30 Dow stocks managed gains on the day. The NASDAQ and other major indices were also badly damaged.

The prevailing trend this earnings season has been that whatever a company posts, it's probably not good enough for anybody seeking to get out of a position, as risk aversion has suddenly become popular once again, especially with yields on the ten-year-note approaching three percent and precious metals (gold, silver) at bargain basement prices.

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

At the Close, Tuesday, April 24, 2018:
Dow Jones Industrial Average: 24,024.13, -424.56 (-1.74%)
NASDAQ: 7,007.35, -121.25 (-1.70%)
S&P 500: 2,634.56, -35.73 (-1.34%)
NYSE Composite: 12,513.91, -96.87 (-0.77%)

Dow Soars To New All-Time High, Paced By Caterpillar, 3M

Led by two of its highest-priced components, the Dow Jones Industrial Average blasted to another new high on Tuesday.

Caterpillar (CAT) and 3M (MMM) announced strong third quarter results with the maker of heavy industrial and earth-moving equipment was up nearly five percent, while 3M rose almost six percent on the day.

With those two posting extraordinary gains and the remainder of the Dow 30 rather muted, the blue chip index vastly outpaced the other main indices, putting 24,000 within sight just days after breaking through the 23,000 mark.

The Dow closed above 23,000 for the first time on October 18 and is up nearly 500 points in just one week.

Investors continue to chase returns, and, in the case of Dow components, dividend yield. Both 3M and Caterpillar offer dividend yields rivaling the 10-year treasury bill and are considered by analysts to be among the safest of equities to hold in a portfolio.

The other indices all ended the session with gains, but at much lower percentages than the Dow.

At the Close, Tuesday, October 24, 2017:
Dow: 23,448.20, +174.24 (+0.75%)
NASDAQ: 6,597.09, +10.26 (+0.16%)
S&P 500: 2,567.98, +3.00 (+0.12%)
NYSE Composite: 12,405.13, +20.70 (+0.17%)

Sluggish Beginning To Week Has Stocks Cautious, Business Stalled

With little information upon which to base trading other than the recent dovish sentiments expressed by central banks, stocks in the US moved in a tight trading range to start the week.

The lack of volatility was something of a surprise, given that investors and speculators have been given the green light by Yellen and Co., though perhaps upon closer inspection, getting ahead of breakeven for the year has some of the more seasoned veteran traders taking a pause.

By just about any metric, stocks on the S&P and NASDAQ are highly overvalued, with most P/E estimates averaging in the low 20s on both exchanges. Dow Industrials are just a little less highly-valued, though some, such as Caterpillar (CAT) are showing severe signs of globalization stress.

CATs problems remain on the revenue side of the ledger, as the company hasn't met targets since the financial calamity of 2008. Global growth being as slow as it has been - and especially such in mining, infrastructure, and major construction, CATs bailiwick - the company is simply unable to deliver results like those during the housing and credit bubble.

That's largely the case for major industrial companies, which have weathered the storm via stock buybacks, close attention to labor levels, and an outright strike on capital improvements. While this short-term strategy may be worthwhile from quarter to quarter, in the long run, these companies have to get back to growing and maintaining their core business interests. Uncertainty - despite the easy credit conditions which are prevalent - concerning global monetary policy is keeping the lid on capital investment.

Worse yet, and this is not seen in any of the macro-metrics, is the paucity of new business development, either in the way of spin-offs or entrepreneurial endeavors. Small business, saddled by an onerous regulatory regime, high taxation and pressure on state legislatures to increase minimum wages, is stifling business formation.

These conditions cannot maintain for too long, lest the markets revolt, consumers retrench, and recession becomes reality.

Today's impish gains:
S&P 500: 2,051.60, +2.02 (0.10%)
Dow: 17,623.87, +21.57 (0.12%)
NASDAQ: 4,808.87, +13.23 (0.28%)

Crude Oil 41.68 +1.31% Gold 1,244.30 -0.80% EUR/USD 1.1245 -0.20% 10-Yr Bond 1.92 +2.78% Corn 369.00 +0.54% Copper 2.29 +0.31% Silver 15.86 +0.31% Natural Gas 1.82 -4.72% Russell 2000 1,098.58 -0.28% VIX 13.79 -1.64% BATS 1000 20,677.17 0.00% GBP/USD 1.4373 -0.62% USD/JPY 111.8770 +0.34%

Welcome to the Age of Financial Repression; Markets Fall, Metals Gain

This was truly a strange day in US equity markets. On the heels of Wednesday's Fed announcement that the federal funds rate would stay at 0-0.25% until the latter part of 2014 (read: as long as we need ZIRP to keep the economy from collapse) and blow-out earnings from Caterpillar (CAT), stocks opened sharply higher, but then nose-dived right at 10:00 am, after the Commerce Dept. reported that new home sales in December fell by 2.2%, to an annualized rate of 307,000. Additionally, the median price of a new house purchased last month declined 12.8% from a year ago. 2010 now stands complete as the worst year for new home sales since records began being kept in 1963.

On top of the earlier-reported initial unemployment claims spiking back up to 377,000 from an upwardly-revised 356,000 last week, not even the hope of endless largesse from the Federal Reserve could keep stocks in positive territory. All major indices ended in the red. By contrast, gold and silver posted solid gains.

A term one won't be hearing much on mainstream media is "financial repression," and if it sounds harsh, it's because it is, and it is the reality of much of today's economic world.

Here's a definition of Financial Repression from Investopedia:

A term that describes measures by which governments channel funds to themselves as a form of debt reduction. This concept was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon. Financial repression can include such measures as directed lending to the government, caps on interest rates, regulation of capital movement between countries and a tighter association between government and banks. The term was initially used in response to the emerging market financial systems during the 1960s, '70s and '80s.

Bingo. Another term for the collusion of business and government is fascism.

Welcome to the new world order. For a glimpse of who and what are destroying the value of capital and thus, your money, just take some time to view the goings-on at the World Economic Forum in Davos, Switzerland. Surely, George Soros, Mark Zuckerman, Jamie Dimon and a gaggle of billionaires have the worming men and women of the world's best interests at heart.

Dow 12,734.63, -22.33 (0.18%)
NASDAQ 2,805.28, -13.03 (0.46%)
S&P 500 1,318.43, -7.62 (0.57%)
NYSE Composite 7,883.90, -30.91 (0.39%)
NASDAQ Volume 2,061,939,750
NYSE Volume 4,521,722,000
Combined NYSE & NASDAQ Advance - Decline: 2651-2944
Combined NYSE & NASDAQ New highs - New lows: 332-21 (very extreme)
WTI crude oil: 99.70, +0.30
Gold: 1,726.70, +26.60
Silver: 33.74, +0.62

Stocks Explode to Upside on Earnings

Well, apparently whatever it was that Ben Bernanke said on Wednesday to the Senate Committee, spooking the markets into an immediate and swift pullback, was not all that important because prior to the opening bell three Dow components - 3M (MMM), AT&T (T) and Caterpillar (CAT) - released second quarter earnings above expectations and sent stocks off to a roaring start.

The enthusiasm for equities was not in the least tempered by higher initial unemployment claims, which came in at 464,000, well ahead of last week's 427,000. So long as companies were turning sizable profits, nothing was holding back investors from buying.

Even existing home sales being down 5.1% for June or the Index of Leading Indicators dipping 0.2% had no effect on the rush to buy into the good news from corporate earnings.

Dow 10,322.30, +201.77 (1.99%)
NASDAQ 2,245.89, +58.56 (2.68%)
S&P 500 1,093.67, +24.08 (2.25%)
NYSE Composite 6,901.91, +170.75 (2.54%)

Advancing issues reversed Wednesday's drubbing, leading decliners, 5498-1017, and new highs soared ahead of new lows, 278-82. On a day which held such unbridled enthusiasm, there were more new highs (46) on the NASDAQ than new highs (39), reversing a three-day counter-trend. Volume was roughly at the same level as the previous session, though for bulls, it was a positive sign.

NASDAQ Volume 2,264,130,750
NYSE Volume 5,504,649,500

Oil futures were really the big winner on the day, with the September contract rising $2.74, to $79.30, the basis for which was unknown. Gold and silver were ahead only slightly, with gold gaining $3.90, to $1,195.50, and silver up 32 cents, to $18.12.

Every sector showed positive results as earnings season finally produced some results on which traders could trust with their money.

Despite the high quality of earnings, the major indices have yet to break through their 200-day moving averages, which are providing fairly stiff resistance, though corporate earnings continue to defy economic indicators.

At some point, possibly as early as tomorrow, stocks should break out from their recent range, tossing aside the cockeyed government reports and focusing on profits and valuations, like today.

Anecdotally, valuations may be as rich as they may get. For instance, 3M, which reported earnings of $1.54 for the most recent quarter, is trading at a multiple of 16.5 times trailing earnings, fairly rich.

AT&T is trading at 11.5 times earnings, while Caterpillar sports an ultra-rich multiple of 25.75 times earnings.

Traditionally, stocks trade in a range of 12-15 times earnings. Considering the headwinds into which companies are running, the low end of that range may be more appropriate at the present. That kind of metric is keeping a lid on stocks currently.

Market Gains on Low Volume

A quick overview of Monday's trading follows. More on Tuesday after the bell.

Awaiting the 3rd quarter earnings report from Apple (AAPL), investors were encouraged by the number of S&P companies which reported earnings better than estimates (78%) last week and further weakness in the dollar as the session unfolded.

Dow 10,092.19, +96.28 (0.96%)
NASDAQ 2,176.32, +19.52 (0.88%)
S&P 500 1,097.91, +10.23 (0.94%)
NYSE Composite 7,222.21, +88.25 (1.13%)

Advancing issues led losers, 4415-1889. There were 819 stocks making new 52-week highs, to 100 new lows. Volume was exceedingly low, signaling a large degree of caution at the very start of the biggest week of earnings reports. If the low volume pattern continues through the next few days, it could be indicative of a short-term market top. However, most companies have not yet reported, so not much can be read into one day's trading volume.

NYSE Volume 3,816,968,500
NASDAQ Volume 1,725,801,875

Oil reached a new high for the year, trading up $1.08, to $79.61. Gold advanced $7.90, to $1,066.00. Silver tacked on 21 cents, to close at $17.63 per ounce.

Besides Apple reporting after the close, five Dow components will report prior to Tuesday's opening bell. Caterpillar (CAT), Pfizer (PFE), United Technologies (UTX), Coca-Cola (KO) and DuPont (DD) are the companies reporting.

Google, Caterpillar Sink Dow

After the close on Thursday, Google - for the second time in its brief 2-year existence as a public company - missed analyst expectations and sold off wildly in after-hours trading. On the open, Google (GOOG) was down 36 1/2 points, at 511.90, from the previous day's close. The stock regained some of the loss during the trading day, closing at 520.12, for a loss of 28.47.

With Google still fresh in the rear-view mirror, Caterpillar released second quarter results prior to the open, sinking the general market. The company earned $823 million, or $1.24 per share, in the three months ended June 30, down from $1.05 billion, or $1.52 per share during the same period last year. Analysts had expected a profit of $1.49 a share on revenue of $11.12 billion. The miss was staggering and shares traded lower by 3.78, closing at 83.20.

Dow 13,851.08 -149.33; NASDAQ 2,687.60 -32.44; S&P 500 1,534.10 -18.98; NYSE Composite 10,072.93 -121.08

Damage was widespread, as declining issues outpaced advancers by a 7-2 margin. New lows retook the edge over new highs for the second time in the last three sessions, 368-228.

Other issues reporting on the day were:

• Citigroup Inc. (C): Net income rose to $6.23 billion, or $1.24 per share, in the second quarter, from $5.27 billion, or $1.05 a share, in the same period a year earlier. Analysts had sought 1.13 per share, but, shares of the nation's largest bank still were down 40 cents on the day, closing at 50.73


• Schlumberger (SLB): Amid the dour tones of the day, the oil services company posted net income for April-June of $1.26 billion, or $1.02 per share, compared with $856.9 million, or 69 cents per share, in the year-earlier period. Revenue rose to $5.64 billion from $4.69 billion a year earlier. Analysts had expected earnings per share of 95 cents on revenue of $5.53 billion. Shares rose 3.23 to 96.68.


• Wachovia Corporation (WB): Net earnings increased 21.1% to $2.3 billion, or $1.22 per share, from $1.9 billion, or $1.17 per share in the year-earlier period. Those results were in line with analyst expectations of 1.22 per share. The stock, however, sold off sharply, finishing the session down 1.63, at 49.98

Microsoft (MSFT) was also in line with estimates, but was punished after a series of upside surprises. Shares of the software maker declined 0.35 to 31.16 on volume that was nearly double the average.

Oil dropped 35 cents to settle at $75.57. Gold rose another $6.60 to end at $684.70, while sister silver added 3 cents to $13.40. Friday was the culmination of the best week for the metals in at least 3 months.

Monday will witness more earnings reports with a number of heavyweights, including American Express (AXP), Halliburton (HAL), Merck (MRK), Schering-Plough (SGP) and Texas Instruments (TXN).

Results thus far have been less-than-inspiring, with a fair share of misses and few clear winners. The week will be important as the majority of US companies will have reported by Friday.

Economic indicators will also be in focus, with existing home sales at 10:00 a.m. on Wednesday, new home sales on Thursday and a preliminary reading on GDP for the 2nd quarter out prior to the market open on Friday. Analysts are expecting GDP to show a 3.2% gain. This, on the heels of first quarter's dismal 0.7% showing, may be a bit optimistic. Anything below 2.5% may signal further weakness and precipitous losses in stocks.