When Senate majority leader Mitch McConnell announced on Tuesday that negotiations over a $2 trillion national bailout were "on the five-yard line," minority leader Chuck Schumer one-upped him, quipping that negotiations were on the two-yard line as he met and wrangled over details with Treasury Secretary Steven Mnuchin.
Presumptuously a bi-partisan effort, the back-and-forth between the administration and Senate leaders managed to lift spirts in lower Manhattan, sending stocks to record one-day gains as hope for financial relief appeared to be within reach.
The 2,113.01-point, 11.37 percent gain on the Dow Industrials was not only the greatest one-day point rise in market history, it was also the fourth-best percentage rise, following a 12.34 percent advance on October 30, 1929, when the market was just entering the Great Depression. At the time, the Industrial Average stood at 258.47, with its gain of 28.40 points.
Whether that comparison is fair or apocryphal remains to be seen, though it's a well-known fact that the greatest stock market gains occur during bear markets. Of the top seven one-day percentage gains, four were during the Great Depression, the other two occurring in the Great Financial Crisis, on October 13 and 28 of 2008. It would indeed be wise for market participants to pay heed to Tuesday's inclusion in this suspicious list.
The NASDAQ's 557.19-point rip was the second-most ever, following a 672.43-point advance on March 13, 2020, less than two-weeks ago. The 8.12 percent increase tied for seventh all-time with a similar percentage gain on April 18, 2001. At that time, the NASDAQ was well into the throes of the dot-com bust. The tech-laden index was then trading just above 2000, when a month prior it had reached all-time highs, breaking above 5000.
The story was the same for the S&P 500, which recorded the eighth-best percentage gain. The seven higher percentage gains were all made either during the Great Depression (five of them), while two happened in October, 2008. The S&P's 209.93-point rise stands second only to the 230.38-point advance on March 13 of this year.
While the Senate dithered over details, bulls were greatly relieved as they took it to the bears throughout the session. Led by Chevron (CVX) with a 22.74% increase, some of the top performers on the Dow Jones Industrial Average included American Express (AXP, +21.88%), beleaguered Boeing (BA, +20.89%), McDonald's (MCD, +18.13%), Goldman Sachs (GS, +13.80%), and 3M (MMM, +12.60%).
The outpouring of money and joy didn't stop at the corner of Wall Street and Broadway. The money flows extended into gold and silver, the two precious metals having recently been pounded below sensible levels. With one of its best one-day performances ever, gold advanced by some $84.80, finishing up at $1636.00 the ounce after a close at $1551.20 on Monday.
Silver rose from a close of 13.27 on Monday to end trading in New York at 14.36, a gain of 8.21 percent.
Oil was stable to higher, with WTI crude advancing from $23.36 per barrel to $24.01 on the day.
Generally, bonds sold off, led by treasuries with durations between one and 10 years. Yield on the 10-year note advanced eight basis points, from 0.76% to 0.84%. The largest gain of yield was found on the five-year note, which rose from 0.38% to 0.52%. The curve is still relatively flat, with yields in a narrow band of 138 basis points. The one, two, and three month bills all stand at 0.01%, with the 30-year bond checking in at 1.39%
While the Senate never did get to a cloture vote on Tuesday, the deal was eventually struck just before 1:00 am ET on Wednesday, when White House legislative affairs director Eric Ueland exited Senate Majority Leader Mitch McConnell’s office saying, according to CNN. “We have a deal.”
The full Senate is poised to vote on the package midday Wednesday. The House is expected to approve the bill by unanimous consent, sending it to the White House for President Trump's signature. The president is reportedly eager to sign the bill, sending money to individuals, families and businesses affected by events surrounding the coronavirus outbreak.
It is expected to advance direct payments of $1200 per citizen ($2400 for married couples) earning less than $75,000 a year. It is the largest stimulus bill ever made into law. With markets prepared to open shortly, futures are less-than-enthusiastic, as all of the major indices indicate a lower opening though Asian markets were up sharply overnight and European indices are mixed.
At the Close, Tuesday, March 24, 2020:
Dow Jones Industrial Average: 20,704.91, +2,113.01 (+11.37%)
NASDAQ: 7,417.86, +557.19 (+8.12%)
S&P 500: 2,447.33, +209.93 (+9.38%)
NYSE: 9,658.32, +880.94 (+10.04%)
Showing posts with label Chevron. Show all posts
Showing posts with label Chevron. Show all posts
Wednesday, March 25, 2020
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*%)
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*%)
Tuesday, November 13, 2018
Dow Down 100, NASDAQ Up 0.01; Crude Oil the Culprit
From the You Can't Make This Stuff Up Department:
The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.
One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.
Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.
Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.
Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.
While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.
A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.
For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.
Fun for everyone.
Dow Jones Industrial Average November Scorecard:
At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)
The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.
One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.
Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.
Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.
Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.
While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.
A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.
For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.
Fun for everyone.
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 |
At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)
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:
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%)
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, January 25, 2016
Gold, Silver Rise as Banks, Energy Stocks in Market Crosshairs
Being that the US equity markets are almost 100% likely to end the month with losses, the opening of the final week of January trading may have been significant if only for the direction of a select number of trading vehicles.
Obviously, energy stocks were once again in focus after last week's faux rally on actual inventory builds, though the pundits of oil slickery are blaming today's demise on the record weekend blizzard that decimated the Northeast.
As lame as it may sound, having the I-95 corridor out of commission for the better part of three to four days is certain to result in growth of the oil and distillate glut that has been plaguing the markets for the past 18 months. The logic is simple: if people aren't driving, nobody's buying gas, and that is exactly what the market doesn't want to hear, especially those of the camp who still believe in the peak oil myth and would like nothing better than to cripple the middle class with another round of crushing gas prices at the pump.
Sadly for them, no such thing is about to occur, and, after being goosed nearly 20% last week, WTI crude took a turn to the downside again, off almost 6% on the day, closing just a nod above $30 per barrel. With the canard of higher oil prices (last week was a serious short squeeze) out of the way, oil majors Exxon Mobil (XOM) and Chevron (CVX) - both Dow components - both declined by more than three percent.
Also taken down a few notches were banks, especially Bank of America (BAC), which closed below 13 at 12.96, a one-day four percent drop, now down a solid 30% from its recent 52-week high (18.48). Investors and specs are concerned not only with BAC's exposure to the oil patch and fracking concerns, which have been going belly-up since last Autumn, but with the overall health of the banking sector. Reminded that the nation's largest banks had to be bailed out during the sub-prime crisis just eight years ago, stock players don't need much to arouse their worst suspicions, that the balance sheets of the big money center banks are still not exactly transparent.
Citigroup (C) also was on the chopping block, losing 3.35%, extending its decline since May to a third of its value, from 60.95 to today's close at 39.55.
Meanwhile, gold and silver put on tidy gains, with gold edging up nearly $10, from $1098/oz. at Friday's close to a finish in US markets at $1107.90 today. Silver gained, from an even $14 to $14.23 on the day.
Overall, stocks were exposed again, with US indices staying in the red all day long, the selling accelerating during the afternoon and into the close. It was an inauspicious start to the week in a month that has been nothing short of embarrassing for Wall Street's perms-bulls.
Today's Closing Prices:
S&P 500: 1,877.08, -29.82 (1.56%)
Dow: 15,885.22, -208.29 (1.29%)
NASDAQ: 4,518.49, -72.69 (1.58%)
Crude Oil 30.33 -5.78% Gold 1,105.60 +0.85% EUR/USD 1.0849 +0.47% 10-Yr Bond 2.0220 -1.27% Corn 369.25 -0.27% Copper 1.99 -0.47% Silver 14.23 +1.23% Natural Gas 2.16 +0.84% Russell 2000 997.37 -2.28% VIX 24.15 +8.10% BATS 1000 19,941.58 -1.78% GBP/USD 1.4246 -0.19% USD/JPY 118.3035 -0.36%
Obviously, energy stocks were once again in focus after last week's faux rally on actual inventory builds, though the pundits of oil slickery are blaming today's demise on the record weekend blizzard that decimated the Northeast.
As lame as it may sound, having the I-95 corridor out of commission for the better part of three to four days is certain to result in growth of the oil and distillate glut that has been plaguing the markets for the past 18 months. The logic is simple: if people aren't driving, nobody's buying gas, and that is exactly what the market doesn't want to hear, especially those of the camp who still believe in the peak oil myth and would like nothing better than to cripple the middle class with another round of crushing gas prices at the pump.
Sadly for them, no such thing is about to occur, and, after being goosed nearly 20% last week, WTI crude took a turn to the downside again, off almost 6% on the day, closing just a nod above $30 per barrel. With the canard of higher oil prices (last week was a serious short squeeze) out of the way, oil majors Exxon Mobil (XOM) and Chevron (CVX) - both Dow components - both declined by more than three percent.
Also taken down a few notches were banks, especially Bank of America (BAC), which closed below 13 at 12.96, a one-day four percent drop, now down a solid 30% from its recent 52-week high (18.48). Investors and specs are concerned not only with BAC's exposure to the oil patch and fracking concerns, which have been going belly-up since last Autumn, but with the overall health of the banking sector. Reminded that the nation's largest banks had to be bailed out during the sub-prime crisis just eight years ago, stock players don't need much to arouse their worst suspicions, that the balance sheets of the big money center banks are still not exactly transparent.
Citigroup (C) also was on the chopping block, losing 3.35%, extending its decline since May to a third of its value, from 60.95 to today's close at 39.55.
Meanwhile, gold and silver put on tidy gains, with gold edging up nearly $10, from $1098/oz. at Friday's close to a finish in US markets at $1107.90 today. Silver gained, from an even $14 to $14.23 on the day.
Overall, stocks were exposed again, with US indices staying in the red all day long, the selling accelerating during the afternoon and into the close. It was an inauspicious start to the week in a month that has been nothing short of embarrassing for Wall Street's perms-bulls.
Today's Closing Prices:
S&P 500: 1,877.08, -29.82 (1.56%)
Dow: 15,885.22, -208.29 (1.29%)
NASDAQ: 4,518.49, -72.69 (1.58%)
Crude Oil 30.33 -5.78% Gold 1,105.60 +0.85% EUR/USD 1.0849 +0.47% 10-Yr Bond 2.0220 -1.27% Corn 369.25 -0.27% Copper 1.99 -0.47% Silver 14.23 +1.23% Natural Gas 2.16 +0.84% Russell 2000 997.37 -2.28% VIX 24.15 +8.10% BATS 1000 19,941.58 -1.78% GBP/USD 1.4246 -0.19% USD/JPY 118.3035 -0.36%
Wednesday, November 6, 2013
Wall Street Weirdness as Dow Makes New Record, NASDAQ Falls
Maybe it's the weather, but investor taste for speculation may be turning, just a day before the hoopla over the Twitter IPO is set to take place. The 142-character internet darling will open tomorrow at a very overpriced $27-30 per share. It could be that some big players in the tech investing (gambling) space just freed up money to get into the hottest IPO since... um, Facebook, though the memory of that magnificent failure is still fresh.
Still, winners just barely edged losers on the day, while the place to be in Dow stocks was in Chevron (CVX), IBM (IBM) and Microsoft (MSFT), an odd grouping there.
The MBA Mortgage Index slumped sadly prior to the open, with weekly applications off seven percent, even as 30-year rates fell to 4.32%.
Crude inventories showed only a modest uptick, which helped oil stage a rally off of five-month lows.
With bond yields settling lower, gold and silver up moderately, it was very tough to get a read on the overall market. Corn made fresh 52-week lows, which is bearish for beef, but bullish for carnivores in general, with beef prices stable and possibly set to decline. Overall, however, falling corn prices is about as good a deflation indicator as one can find, especially priced in silver.
Steady as she goes, though, especially on those safety plays in the Dow, which should consider to out-perform in a flight to dividend comfort.
Tweet that.
Dow 15,746.88, +128.66 (0.82%)
Nasdaq 3,931.95, -7.92 (0.20%)
S&P 500 1,770.49, +7.52 (0.43%)
10-Yr Bond 2.64%, -0.02
NYSE Volume 3,298,818,000
Nasdaq Volume 1,989,898,000
Combined NYSE & NASDAQ Advance - Decline: 2851-2753
Combined NYSE & NASDAQ New highs - New lows: 317-79
WTI crude oil: 94.80, +1.43
Gold: 1,317.80, +9.70
Silver: 21.77, +0.132
Corn: 421.25, -3.75
Still, winners just barely edged losers on the day, while the place to be in Dow stocks was in Chevron (CVX), IBM (IBM) and Microsoft (MSFT), an odd grouping there.
The MBA Mortgage Index slumped sadly prior to the open, with weekly applications off seven percent, even as 30-year rates fell to 4.32%.
Crude inventories showed only a modest uptick, which helped oil stage a rally off of five-month lows.
With bond yields settling lower, gold and silver up moderately, it was very tough to get a read on the overall market. Corn made fresh 52-week lows, which is bearish for beef, but bullish for carnivores in general, with beef prices stable and possibly set to decline. Overall, however, falling corn prices is about as good a deflation indicator as one can find, especially priced in silver.
Steady as she goes, though, especially on those safety plays in the Dow, which should consider to out-perform in a flight to dividend comfort.
Tweet that.
Dow 15,746.88, +128.66 (0.82%)
Nasdaq 3,931.95, -7.92 (0.20%)
S&P 500 1,770.49, +7.52 (0.43%)
10-Yr Bond 2.64%, -0.02
NYSE Volume 3,298,818,000
Nasdaq Volume 1,989,898,000
Combined NYSE & NASDAQ Advance - Decline: 2851-2753
Combined NYSE & NASDAQ New highs - New lows: 317-79
WTI crude oil: 94.80, +1.43
Gold: 1,317.80, +9.70
Silver: 21.77, +0.132
Corn: 421.25, -3.75
Wednesday, August 28, 2013
Energy Stocks Push Dow Higher in Listless Session
In terms of the declines from the past two days, today's paltry gains were about 20% of the pullback, so technically, Wednesday's session was nothing much more than a knee-jerk, relief rally with little follow through.
Energy stocks, ExxonMobil (XOM) and Chevron (CVX) in particular, were responsible for roughly one half of the gains on the Dow Industrials, and there was concerted selling into the close, with stocks giving back about a third of the day's gains into the closing bell, a negative for trading conviction.
WTI crude oil closed above $110 a barrel for the first time since May, 2011, a direct result of the saber-rattling going on over Syria. Gold and silver took a breather, probably for some serious profit-taking, as the precious metals have been on a real tear over the past two weeks, bounding off their lows to make multi-month highs.
Volume was typically dismal, as is usually the case in August, especially the last week of the month, as were are witnessing.
News flow and economic data have been largely negative. Today's -1.3% downturn in pending home sales for July was another sign that the housing market continues to cool and may turn into a chill as the peak selling season is passing quickly.
Talk was centered on when the US would strike Syria, rather than "if," and how that might affect the Fed's decision over tapering bond purchases in September or delay it until tensions subside. Such banter is the stuff of markets, but largely foolish speculation and ignorant of the underlying trends in the economy, which are weak, at best, and slumping, at worst.
Overall, it was a nothing session, with most traders either on hold until a Syria assault becomes reality or on holiday until after Labor Day.
Gains were minimal and may prove to be fleeting.
Dow 14,824.51, +48.38 (0.33%)
NASDAQ 3,593.35, +14.83 (0.41%)
S&P 500 1,634.96, +4.48 (0.27%)
NYSE Composite 9,311.30, +23.19 (0.25%)
NASDAQ Volume 1,318,517,250
NYSE Volume 2,873,515,250
Combined NYSE & NASDAQ Advance - Decline: 3655-2890
Combined NYSE & NASDAQ New highs - New lows: 59-88
WTI crude oil: 110.10, +1.09
Gold: 1,418.80, -1.40
Silver: 24.39, -0.26
Energy stocks, ExxonMobil (XOM) and Chevron (CVX) in particular, were responsible for roughly one half of the gains on the Dow Industrials, and there was concerted selling into the close, with stocks giving back about a third of the day's gains into the closing bell, a negative for trading conviction.
WTI crude oil closed above $110 a barrel for the first time since May, 2011, a direct result of the saber-rattling going on over Syria. Gold and silver took a breather, probably for some serious profit-taking, as the precious metals have been on a real tear over the past two weeks, bounding off their lows to make multi-month highs.
Volume was typically dismal, as is usually the case in August, especially the last week of the month, as were are witnessing.
News flow and economic data have been largely negative. Today's -1.3% downturn in pending home sales for July was another sign that the housing market continues to cool and may turn into a chill as the peak selling season is passing quickly.
Talk was centered on when the US would strike Syria, rather than "if," and how that might affect the Fed's decision over tapering bond purchases in September or delay it until tensions subside. Such banter is the stuff of markets, but largely foolish speculation and ignorant of the underlying trends in the economy, which are weak, at best, and slumping, at worst.
Overall, it was a nothing session, with most traders either on hold until a Syria assault becomes reality or on holiday until after Labor Day.
Gains were minimal and may prove to be fleeting.
Dow 14,824.51, +48.38 (0.33%)
NASDAQ 3,593.35, +14.83 (0.41%)
S&P 500 1,634.96, +4.48 (0.27%)
NYSE Composite 9,311.30, +23.19 (0.25%)
NASDAQ Volume 1,318,517,250
NYSE Volume 2,873,515,250
Combined NYSE & NASDAQ Advance - Decline: 3655-2890
Combined NYSE & NASDAQ New highs - New lows: 59-88
WTI crude oil: 110.10, +1.09
Gold: 1,418.80, -1.40
Silver: 24.39, -0.26
Wednesday, March 6, 2013
Dow Reaches New High... Again; Hugo Chavez Death a Boon for Oil Companies
Another day, another new high for the Dow Jones Industrials.
Ho, hum, bumble-dee-dum.
It's going to be this way for a while. Don't expect a major correction any time soon, no matter what happens in the real world, because we haven't had one since the fall of 2011, when the government was about to go over the artificial debt ceiling.
Did somebody say artificial? How crass. But, it should be noted that most of what occurs on computer screens and TVs these days is nothing but bunk, a self-sustaining Wall Street fantasy designed to keep the economy from deflating.
And, you know, a little deflation - in things like gas prices, food prices and maybe, god forbid, event ticket prices - might not be such a bad thing.
But that is what the fed fears most... runaway deflation, where prices actually match up with the costs of living. For those of you under the age of 50, there was a time in this country - not so long ago - that a man could support a family with his own wages and still have money left over to save.
Those days are long gone, unless you're making over $85K a year, are an expert budgeter and have an understanding wife. (Please, hold your laughter.)
That would apply to maybe 10% of the population. The rest are waiting in line at Wal-Mart at midnight waiting for the food stamp deposit to clear the bank so as to proceed to checkout. The disparities between rich and poor in America have not compressed, but, look on the bright side, they're worse in Europe and France is forcing most of their million-and-billionaires to move because of confiscatory tax rates.
So, Hugo Chavez, president of Venezuela, is dead, so ExxonMobil, Royal Dutch Shell, BP and Chevron now have a free pass to plunder the resources of another South American nation. It's all good. Plundering in the Middle east or Africa is such a tiring trip, so far from the homeland.
This morning's ADP employment report showed a gain of 198,000 jobs in February, spurred mostly by - hold on now - small businesses. And you though the days of any job over 30 hours were over thanks to Obamacare. Well, wait until next year. We're in a recovery, dontcha know.
Today's market action was about as muted as a golf clap for a double bogey. The S&P struggled to close positive; the NASDAQ couldn't muster into the green.
When the music stops, make sure your chair has four legs.
Dow 14,296.24, +42.47 (0.30%)
NASDAQ 3,222.37, -1.76 (0.05%)
S&P 500 1,541.46, +1.67 (0.11%)
NYSE Composite 8,996.97, +18.88 (0.21%)
NASDAQ Volume 1,716,934,500
NYSE Volume 3,951,567,000
Combined NYSE & NASDAQ Advance - Decline: 3548-2878
Combined NYSE & NASDAQ New highs - New lows: 520-54
WTI crude oil: 90.43, -0.39
Gold: 1,574.90, 0.00
Silver: 28.80, +0.199
Ho, hum, bumble-dee-dum.
It's going to be this way for a while. Don't expect a major correction any time soon, no matter what happens in the real world, because we haven't had one since the fall of 2011, when the government was about to go over the artificial debt ceiling.
Did somebody say artificial? How crass. But, it should be noted that most of what occurs on computer screens and TVs these days is nothing but bunk, a self-sustaining Wall Street fantasy designed to keep the economy from deflating.
And, you know, a little deflation - in things like gas prices, food prices and maybe, god forbid, event ticket prices - might not be such a bad thing.
But that is what the fed fears most... runaway deflation, where prices actually match up with the costs of living. For those of you under the age of 50, there was a time in this country - not so long ago - that a man could support a family with his own wages and still have money left over to save.
Those days are long gone, unless you're making over $85K a year, are an expert budgeter and have an understanding wife. (Please, hold your laughter.)
That would apply to maybe 10% of the population. The rest are waiting in line at Wal-Mart at midnight waiting for the food stamp deposit to clear the bank so as to proceed to checkout. The disparities between rich and poor in America have not compressed, but, look on the bright side, they're worse in Europe and France is forcing most of their million-and-billionaires to move because of confiscatory tax rates.
So, Hugo Chavez, president of Venezuela, is dead, so ExxonMobil, Royal Dutch Shell, BP and Chevron now have a free pass to plunder the resources of another South American nation. It's all good. Plundering in the Middle east or Africa is such a tiring trip, so far from the homeland.
This morning's ADP employment report showed a gain of 198,000 jobs in February, spurred mostly by - hold on now - small businesses. And you though the days of any job over 30 hours were over thanks to Obamacare. Well, wait until next year. We're in a recovery, dontcha know.
Today's market action was about as muted as a golf clap for a double bogey. The S&P struggled to close positive; the NASDAQ couldn't muster into the green.
When the music stops, make sure your chair has four legs.
Dow 14,296.24, +42.47 (0.30%)
NASDAQ 3,222.37, -1.76 (0.05%)
S&P 500 1,541.46, +1.67 (0.11%)
NYSE Composite 8,996.97, +18.88 (0.21%)
NASDAQ Volume 1,716,934,500
NYSE Volume 3,951,567,000
Combined NYSE & NASDAQ Advance - Decline: 3548-2878
Combined NYSE & NASDAQ New highs - New lows: 520-54
WTI crude oil: 90.43, -0.39
Gold: 1,574.90, 0.00
Silver: 28.80, +0.199
Tuesday, March 5, 2013
INEVITABLE: Dow Sets New All-Time Closing High
Without a doubt, this headline news story is about the least anticipated - because it was such a sure thing - of this or any recent year.
With unemployment at 7.9%, 47 million Americans on food stamps and after millions of foreclosures, bank bailouts, company bailouts (GM, Chrysler, AIG, others), a downgrade of the US from AAA to AA+, Wall Street has its new record high.
Big whoop.
That's the good news.
Keeping a level head and household, as prices rise and wages stagnate, that's the tough part. Not everyone in America has participated in this miraculous four year rally off the March, 2009 lows. The main beneficiaries have been the big Wall Street brokerages, which, thanks to the magnanimity of the Federal Reserve - whose balance sheet has more than triple in that time period - were able to at least partially repair their broken balance sheets and claim victory over the evil financial crash.
At this level the Dow Jones Industrials are up a stunning 117% off the lows, as good a period for stocks as ever has been, though one might argue that it was bought on the backs of homeowners, many of whom are still trapped in their domiciles, with prices well below what they owe or what they paid back in the heady days of the early to mid-2000s.
It would be a different story were the US economy growing at a pace of better than two percent - where it's been stuck for these past four to five years, but, realistically, there aren't many Americans who can camly state that they've doubled their net investment value over the past four years. Most of the gains were made on Wall Street or close to it, by the traders, players and hedge funds who expressed their blind faith that the system would not - could not - fail, and dove headlong into stocks.
Bully for them, and may they enjoy their profits. There's absolutely nothing wrong with making money. But, the evidence that the majority of Americans are not participating is clear. Average daily volumes are less than half what they were in 2007, the last time the Dow posted a record close.
There's also the fear that keeps people out of markets. It's no coincidence that after making new highs, stocks have lately had the nasty habit of recoiling and falling back, as was the case in both 2000 and 2007.
So, this may be short-lived if recent history is a guide, or, are we on the path to a new and glorious epoc of American exceptionalism?
One would be hard-pressed to find anyone of that undiluted opinion... except maybe on CNBC or Bloomberg TV, where "guests" are paid handsomely to talk their book.
Buy, buy, buy at the new all-time high?
You're kidding, right?
And, not to rain on anybody's parade, here are the changes to the makeup of the Dow Industrials since 2007.
On February 19, 2008, Chevron (CV) and Bank of America (BAC) replaced Altria Group (MO) and Honeywell (HON).
On September 22, 2008, Kraft Foods (KRFT) replaced American International Group (AIG).
On June 8, 2009, General Motors (GM) and Citigroup (C) were replaced by The Travelers Companies (TRV) and Cisco Systems (CSCO).
On September 24, 2012, UnitedHealth Group (UNH) replaced Kraft Foods (KRFT).
It seems, especially in that September 22, 2008 swap, that some bad was replaced with good. GM was restructured and salvaged by the US government. Citigroup went through a 1:10 reverse split in 2010. Where would the Dow be today, without these changes? Travelers alone is up over 100% since joining the Dow.
And, lest we forget that little thing called inflation, which, experts tell us, has been running at about 2.5% for the past five years, today's record for the Dow is a nominal one, not a real one, and, just to throw some more fuel on the fire, measured in gold instead of dollars, it's not even close. In fact, measured against gold, the Dow has barely budged off the bottom.
It's all a matter of which metrics you want to use.
No matter what, though, let's see how high it goes from here. With the Fed backing it at the rate of $85 billion a month, it should rip right through 15,000 before even breaking a sweat.
Dow 14,253.77, +125.95 (0.89%)
NASDAQ 3,224.13, +42.10 (1.32%)
S&P 500 1,539.79, +14.59 (0.96%)
NYSE Composite 8,978.12, +77.07 (0.87%)
NASDAQ Volume 1,849,814,250
NYSE Volume 3,686,912,250
Combined NYSE & NASDAQ Advance - Decline: 4532-1728
Combined NYSE & NASDAQ New highs - New lows: 688-50
WTI crude oil: 90.82, +0.70
Gold: 1,574.90, +2.50
Silver: 28.60, +0.108
With unemployment at 7.9%, 47 million Americans on food stamps and after millions of foreclosures, bank bailouts, company bailouts (GM, Chrysler, AIG, others), a downgrade of the US from AAA to AA+, Wall Street has its new record high.
Big whoop.
That's the good news.
Keeping a level head and household, as prices rise and wages stagnate, that's the tough part. Not everyone in America has participated in this miraculous four year rally off the March, 2009 lows. The main beneficiaries have been the big Wall Street brokerages, which, thanks to the magnanimity of the Federal Reserve - whose balance sheet has more than triple in that time period - were able to at least partially repair their broken balance sheets and claim victory over the evil financial crash.
At this level the Dow Jones Industrials are up a stunning 117% off the lows, as good a period for stocks as ever has been, though one might argue that it was bought on the backs of homeowners, many of whom are still trapped in their domiciles, with prices well below what they owe or what they paid back in the heady days of the early to mid-2000s.
It would be a different story were the US economy growing at a pace of better than two percent - where it's been stuck for these past four to five years, but, realistically, there aren't many Americans who can camly state that they've doubled their net investment value over the past four years. Most of the gains were made on Wall Street or close to it, by the traders, players and hedge funds who expressed their blind faith that the system would not - could not - fail, and dove headlong into stocks.
Bully for them, and may they enjoy their profits. There's absolutely nothing wrong with making money. But, the evidence that the majority of Americans are not participating is clear. Average daily volumes are less than half what they were in 2007, the last time the Dow posted a record close.
There's also the fear that keeps people out of markets. It's no coincidence that after making new highs, stocks have lately had the nasty habit of recoiling and falling back, as was the case in both 2000 and 2007.
So, this may be short-lived if recent history is a guide, or, are we on the path to a new and glorious epoc of American exceptionalism?
One would be hard-pressed to find anyone of that undiluted opinion... except maybe on CNBC or Bloomberg TV, where "guests" are paid handsomely to talk their book.
Buy, buy, buy at the new all-time high?
You're kidding, right?
And, not to rain on anybody's parade, here are the changes to the makeup of the Dow Industrials since 2007.
On February 19, 2008, Chevron (CV) and Bank of America (BAC) replaced Altria Group (MO) and Honeywell (HON).
On September 22, 2008, Kraft Foods (KRFT) replaced American International Group (AIG).
On June 8, 2009, General Motors (GM) and Citigroup (C) were replaced by The Travelers Companies (TRV) and Cisco Systems (CSCO).
On September 24, 2012, UnitedHealth Group (UNH) replaced Kraft Foods (KRFT).
It seems, especially in that September 22, 2008 swap, that some bad was replaced with good. GM was restructured and salvaged by the US government. Citigroup went through a 1:10 reverse split in 2010. Where would the Dow be today, without these changes? Travelers alone is up over 100% since joining the Dow.
And, lest we forget that little thing called inflation, which, experts tell us, has been running at about 2.5% for the past five years, today's record for the Dow is a nominal one, not a real one, and, just to throw some more fuel on the fire, measured in gold instead of dollars, it's not even close. In fact, measured against gold, the Dow has barely budged off the bottom.
It's all a matter of which metrics you want to use.
No matter what, though, let's see how high it goes from here. With the Fed backing it at the rate of $85 billion a month, it should rip right through 15,000 before even breaking a sweat.
Dow 14,253.77, +125.95 (0.89%)
NASDAQ 3,224.13, +42.10 (1.32%)
S&P 500 1,539.79, +14.59 (0.96%)
NYSE Composite 8,978.12, +77.07 (0.87%)
NASDAQ Volume 1,849,814,250
NYSE Volume 3,686,912,250
Combined NYSE & NASDAQ Advance - Decline: 4532-1728
Combined NYSE & NASDAQ New highs - New lows: 688-50
WTI crude oil: 90.82, +0.70
Gold: 1,574.90, +2.50
Silver: 28.60, +0.108
Friday, November 2, 2012
Wall Street Taketh Away: Jobs, Sandy Aftermath Not Pretty
Remember the big ramp-up in stocks yesterday, based upon the new, revised-metholdology ADP October jobs data?
Gone.
That is despite a big beat in the non-farm payroll data released prior to Friday's open. The BLS said that the US created 171,000 net new jobs in the month of October, and, initially, the stock jocks loved it, pushing futures higher and sending the Dow Jones Industrials up 57 points at the open.
Trouble was, however, that the positive jobs data had already been priced in, off of the ADP beat. So, sorry, Charlie, no profit for you if you're a dollar short and a day late, as is the case. By 10:00 am, the Dow was flat. It and the other indices crawled lower through out the day, with the losses accelerating in the final two hours of the session.
There were other factors to stocks - and commodities - giving back everything on the final day of trading for the week. Corporate reporting for the third quarter has been seminally sour. Today's miss was by Chevron (CVX), a Dow component, which saw third-quarter net income fall to $5.25 billion, or $2.69 per share, from $7.83 billion, or $3.92 per share, a year earlier.
Chevron earned $2.55 per share, compared with the analysts' average estimate of $2.83. Oops! Poor babies, their efforts to skin every last dollar from the pockets of US consumers weren't quite as good as last year. The price of oil is down and headed even lower today.
Somebody send a memo to the CEOs of the energy companies and other Fortune 500 CEOs: there's a global slowdown going on, mostly because you guys have overpriced everything from baby formula to burials, and people simply can't foot the bill any more.
Other than sliding corporate earnings (note: Most major corporations are still massively profitable, just not as profitable as last year, or, in some cases, last quarter, but some, like Sharp and Panasonic are close to bankruptcy, with more to follow), there's a litany of issues facing the global economy, like the fiscal cliff and mountains of debt and unfunded liabilities worldwide (no small matter), the continuing crisis in Europe (still unresolved and getting worse), the uncertainty of the presidential election in the US (hint: Obama's going to win easily, which is another reason Wall Street is unhappy), and this little inconvenient storm called Hurricane Sandy, which still has most of the New Jersey shoreline, Long Island, Staten Island and lower Manhattan still without power and people suffering in cold weather, without fuel, food, and gas lines extending for miles in Jersey and New York, not because there's no gas, but no electricity to power the pumps and stations, many of which remain closed.
Yep, things are not good overall, and, from the looks of things, they're not getting any better. The damages from Sandy will easily exceed those of Katrina. It doesnt take a genius to figure out that a massive storm which wreaked havoc on the most densely-populated area of the country is going to cost more than the laughable estimates of $20 billion that have been bandied about by so-called experts. Try $60 billion or more, maybe in excess of $100 billion, and that number is going to pt a serious dent in fourth quarter GDP.
The current wisdom being foisted upon the supposedly-knowledgeable investing community - that all the destruction from Hurricane Sandy will eventually be a net positive for the economy a la Frederic Bastiat's "broken window" parable - is complete media hogwash put forward by economist goon-whores like Moody's Mark Zandi, Mesirow's Diane Swonk and Deutsche Bank's Joe LaVorgna (yes, the Germans always like to have Italians do their dirty work), and are completely off base.
While NYC Mayor Bloomberg has been catching considerable flak - most of it well-deserved - for pushing ahead with the New York City Marathon this weekend, the long tail of Hurricane Sandy is likely to help push the US economy into recession in the fourth quarter of 2012 and beyond. Unlike Katrina, which concentrated its wrath upon New Orleans and the Southern shores, Sandy hit the highest income folks in the country, and that's not something that's going to be erased from the memory or the bottom line very easily. Just to make sure everybody's on the same page here, expect every fourth quarter profit miss to mention - at least in part - the effects of the hurricane on profits, whether real or imagined. Hurricanes and weather overall make for great scapegoats.
So, this week on Wall Street was more or less a wash. Two days closed, a flat day Wednesday, up Thursday and down Friday. The sharpie day-traders made a huge buck to be sure, but America and the global economy suffered terribly, NY marathon or not.
And, not to forget, Apple's iPad Mini was released for sale globally today. Lines were much shorter than for other Apple product launches, which goes to figure: you introduce a mini-tablet, you get mini-lines.
And, just to rub some salt into already open wounds, another storm is setting up to hit the Northeast next week.
Just what we all need.
Dow 13,093.16, -139.46 (1.05%)
NASDAQ 2,982.13, -37.93 (1.26%)
S&P 500 1,414.20, -13.39 (0.94%)
NYSE Composite 8,234.91, -76.45 (0.92%)
NASDAQ Volume 1,820,933,250
NYSE Volume 3,576,460,250
Combined NYSE & NASDAQ Advance - Decline: 1575-3880
Combined NYSE & NASDAQ New highs - New lows: 211-87
WTI crude oil: 84.86, -2.23
Gold: 1,675.20, -40.30
Silver: 30.86, -1.391
Gone.
That is despite a big beat in the non-farm payroll data released prior to Friday's open. The BLS said that the US created 171,000 net new jobs in the month of October, and, initially, the stock jocks loved it, pushing futures higher and sending the Dow Jones Industrials up 57 points at the open.
Trouble was, however, that the positive jobs data had already been priced in, off of the ADP beat. So, sorry, Charlie, no profit for you if you're a dollar short and a day late, as is the case. By 10:00 am, the Dow was flat. It and the other indices crawled lower through out the day, with the losses accelerating in the final two hours of the session.
There were other factors to stocks - and commodities - giving back everything on the final day of trading for the week. Corporate reporting for the third quarter has been seminally sour. Today's miss was by Chevron (CVX), a Dow component, which saw third-quarter net income fall to $5.25 billion, or $2.69 per share, from $7.83 billion, or $3.92 per share, a year earlier.
Chevron earned $2.55 per share, compared with the analysts' average estimate of $2.83. Oops! Poor babies, their efforts to skin every last dollar from the pockets of US consumers weren't quite as good as last year. The price of oil is down and headed even lower today.
Somebody send a memo to the CEOs of the energy companies and other Fortune 500 CEOs: there's a global slowdown going on, mostly because you guys have overpriced everything from baby formula to burials, and people simply can't foot the bill any more.
Other than sliding corporate earnings (note: Most major corporations are still massively profitable, just not as profitable as last year, or, in some cases, last quarter, but some, like Sharp and Panasonic are close to bankruptcy, with more to follow), there's a litany of issues facing the global economy, like the fiscal cliff and mountains of debt and unfunded liabilities worldwide (no small matter), the continuing crisis in Europe (still unresolved and getting worse), the uncertainty of the presidential election in the US (hint: Obama's going to win easily, which is another reason Wall Street is unhappy), and this little inconvenient storm called Hurricane Sandy, which still has most of the New Jersey shoreline, Long Island, Staten Island and lower Manhattan still without power and people suffering in cold weather, without fuel, food, and gas lines extending for miles in Jersey and New York, not because there's no gas, but no electricity to power the pumps and stations, many of which remain closed.
Yep, things are not good overall, and, from the looks of things, they're not getting any better. The damages from Sandy will easily exceed those of Katrina. It doesnt take a genius to figure out that a massive storm which wreaked havoc on the most densely-populated area of the country is going to cost more than the laughable estimates of $20 billion that have been bandied about by so-called experts. Try $60 billion or more, maybe in excess of $100 billion, and that number is going to pt a serious dent in fourth quarter GDP.
The current wisdom being foisted upon the supposedly-knowledgeable investing community - that all the destruction from Hurricane Sandy will eventually be a net positive for the economy a la Frederic Bastiat's "broken window" parable - is complete media hogwash put forward by economist goon-whores like Moody's Mark Zandi, Mesirow's Diane Swonk and Deutsche Bank's Joe LaVorgna (yes, the Germans always like to have Italians do their dirty work), and are completely off base.
While NYC Mayor Bloomberg has been catching considerable flak - most of it well-deserved - for pushing ahead with the New York City Marathon this weekend, the long tail of Hurricane Sandy is likely to help push the US economy into recession in the fourth quarter of 2012 and beyond. Unlike Katrina, which concentrated its wrath upon New Orleans and the Southern shores, Sandy hit the highest income folks in the country, and that's not something that's going to be erased from the memory or the bottom line very easily. Just to make sure everybody's on the same page here, expect every fourth quarter profit miss to mention - at least in part - the effects of the hurricane on profits, whether real or imagined. Hurricanes and weather overall make for great scapegoats.
So, this week on Wall Street was more or less a wash. Two days closed, a flat day Wednesday, up Thursday and down Friday. The sharpie day-traders made a huge buck to be sure, but America and the global economy suffered terribly, NY marathon or not.
And, not to forget, Apple's iPad Mini was released for sale globally today. Lines were much shorter than for other Apple product launches, which goes to figure: you introduce a mini-tablet, you get mini-lines.
And, just to rub some salt into already open wounds, another storm is setting up to hit the Northeast next week.
Just what we all need.
Dow 13,093.16, -139.46 (1.05%)
NASDAQ 2,982.13, -37.93 (1.26%)
S&P 500 1,414.20, -13.39 (0.94%)
NYSE Composite 8,234.91, -76.45 (0.92%)
NASDAQ Volume 1,820,933,250
NYSE Volume 3,576,460,250
Combined NYSE & NASDAQ Advance - Decline: 1575-3880
Combined NYSE & NASDAQ New highs - New lows: 211-87
WTI crude oil: 84.86, -2.23
Gold: 1,675.20, -40.30
Silver: 30.86, -1.391
Friday, December 11, 2009
Defying Dollar, Dow Closes Within 8 Cents of 52-Week High
For more than a little while, the trade has been to sell US dollars and buy US stocks. On Friday, the story was rather different, as buyers of Dow stocks, in particular, defied the dictum of the carry trade, buying stocks while the US Dollar was rising against other currencies. The questions on everybody's mind were, "Why?". Why now?", and "What about that Fed meeting next week?"
Answers for traders were not forthcoming, as they were bidding up Dow stocks to within 8 cents of its 52-week high at the close. That finish was meaningful, for a variety of reasons, not the least of which had to do with answers to the questions posed above.
Taking them one by one, here's a quick explanation:
Why? The reasons people buy stocks as they approach 52-week highs are as numerous as there are grains of sand on the beach, but in this case, it seemed to be with ulterior motive. Other possibilities include a massive short squeeze on Alcoa (AA), which was up a whopping 1.11, (8.22%). November retail sales came in better than expected (+1.3%) and the University of Michigan Consumer Sentiment reading was higher, at 73.4, following last month's 67.4. Naturally, that good news should have produced a stronger dollar. They did, but, remember the ulterior motive. Read on.
Why now? Stocks were bid up precisely to just below their closing 52-week high just in case technical analysts were peering in on the activities, and they surely were. Today was a planned day for such a rise because it had two significant elements going for it. First, it was Friday, meaning positions would be locked in until Monday, and, second, there is a Fed meeting next week in which it is widely expected that the FOMC will leave rates unchanged, but give more hints as to the exact date of the first, in what no doubt will be a series of, rate hikes. The other kicker is that some of that dubious Dubai debt is supposed to be repaid on Monday, and, if it isn't, chaos in financial markets could ensue.
What about that Fed meeting next week? As answered above, the FOMC will meet to discuss policy on Tuesday and Wednesday, the 15th and 16th, culminating in a policy decision and statement on Wednesday, right around 2:00 pm. That also coincides with options expiration on Friday, and if you think there aren't a boatload of players in that space, betting and hedging on the Fed decision, maybe you should go back to playing euchre with friends for nickels and dimes.
Obviously, there is a good deal of money riding on the events of next week, and the markers were laid down yesterday and today, but especially today, with the apparent end of the dollar carry trade. Don't buy into the argument that positions short the dollar and long stocks don't matter any more. That trade was very prevalent and has yet to be unwound. Today's rise on the Dow was a shot fired across the bows of many hedge funds who are trapped in losing positions. Fireworks should be expected right out of the gate on Monday.
Whoever was in control of today's trade on the Dow was using a great deal of leverage, meaning that today's move was very transient and temporary. Ask yourself if you'd be buying stocks at the end of the year, just as they're reaching new highs - highs, mind you, that have yet to be surpassed in any meaningful way since the end of October. Consider these data points for closes on the Dow, all 52-week highs:
November 17: 10,437.42
November 23: 10,450.95
November 25: 10,464.40
December 1: 10,471.58
Today's close was at 10,471,50 and there was no confirmation by the S&P or, even more importantly, the Dow Transportation Index. Ooops!
As a point of reference to illustrate just how difficult this area of resistance is proving to be, consider these recent closes on the S&P:
November 17: 1110.32
November 18: 1109.80
November 23: 1106.24
November 24: 1105.65
November 25: 1110.63
December 1: 1108.86
December 2: 1109.24
December 4: 1105.98
Today's close of 1106.41 is another meaningless near-top. Clearly, there's a distribution pattern taking place which is preventing stocks from breaking out to new highs.
By all accounts, it's just not going to happen. At least not any time soon. Take heed of the usefulness of the dollar carry or risk trade, and ignore the movements of today as just so much market noise. Buy low, sell high. What do you think the real tradrs are doing here?
And just in case you were wondering, the Dow finished higher for the week, with the NASDAQ and NYSE Composite lower. The S&P actually ended the week with a fractional gain, or, essentially flat.
Dow 10,471.50, +65.67 (0.63%)
NASDAQ 2,190.31, -0.55 (0.03%)
S&P 500 1,106.41, +4.06 (0.37%)
NYSE Composite 7,125.12, +20.62 (0.29%)
Advancers outnumbered decliners, 4043-2402, though you would have hardly guessed it looking just at the tape. Dow stocks were 21 up with 9 down. The two biggest movers to the upside were Alcoa (AA) and Bank of America (BAC), two dubious leaders, to be sure. New highs beat new lows, 348-60. Besides the days before and after Thanksgiving, NASDAQ volume was the lowest since September 4, a date that also preceded a holiday - Labor Day. NYSE volume was about average.
NYSE Volume 4,408,781,000
NASDAQ Volume 1,762,412,125
More evidence of some deviousness at play came from the commodities pits, where oil sold off for the 8th straight day, losing 89 cents, to $69.65. Meanwhile, major oil company Dow stocks, Chevron (CVX) and ExxonMobil (XOM) both traded higher throughout the session and finished with small gains, though gains nonetheless.
Gold, one of the main catalysts behind dollar strength, traded down again, off $6.60, to $1,119.60. Silver followed suit, losing 10 cents, to $17.09.
One should be well advised going into next week to not read very much into this week's action. Since stocks are at their highs, you've likely missed the move if you were not participating. If you were in, this could be a great time to take a little off the top or close positions should that be your preference. There's been plenty of play in March Index options against the Dow and S&P in particular. Large positions have been placed well out of the money, and while they may be there for protection, the possibility of a sharp correction, which has not yet occurred since the March lows, is growing. Eventually, there is going to be a 10-20% or larger downturn, though the timing of such an event is uncertain.
All good traders, like Boy Scouts, should be prepared.
Answers for traders were not forthcoming, as they were bidding up Dow stocks to within 8 cents of its 52-week high at the close. That finish was meaningful, for a variety of reasons, not the least of which had to do with answers to the questions posed above.
Taking them one by one, here's a quick explanation:
Why? The reasons people buy stocks as they approach 52-week highs are as numerous as there are grains of sand on the beach, but in this case, it seemed to be with ulterior motive. Other possibilities include a massive short squeeze on Alcoa (AA), which was up a whopping 1.11, (8.22%). November retail sales came in better than expected (+1.3%) and the University of Michigan Consumer Sentiment reading was higher, at 73.4, following last month's 67.4. Naturally, that good news should have produced a stronger dollar. They did, but, remember the ulterior motive. Read on.
Why now? Stocks were bid up precisely to just below their closing 52-week high just in case technical analysts were peering in on the activities, and they surely were. Today was a planned day for such a rise because it had two significant elements going for it. First, it was Friday, meaning positions would be locked in until Monday, and, second, there is a Fed meeting next week in which it is widely expected that the FOMC will leave rates unchanged, but give more hints as to the exact date of the first, in what no doubt will be a series of, rate hikes. The other kicker is that some of that dubious Dubai debt is supposed to be repaid on Monday, and, if it isn't, chaos in financial markets could ensue.
What about that Fed meeting next week? As answered above, the FOMC will meet to discuss policy on Tuesday and Wednesday, the 15th and 16th, culminating in a policy decision and statement on Wednesday, right around 2:00 pm. That also coincides with options expiration on Friday, and if you think there aren't a boatload of players in that space, betting and hedging on the Fed decision, maybe you should go back to playing euchre with friends for nickels and dimes.
Obviously, there is a good deal of money riding on the events of next week, and the markers were laid down yesterday and today, but especially today, with the apparent end of the dollar carry trade. Don't buy into the argument that positions short the dollar and long stocks don't matter any more. That trade was very prevalent and has yet to be unwound. Today's rise on the Dow was a shot fired across the bows of many hedge funds who are trapped in losing positions. Fireworks should be expected right out of the gate on Monday.
Whoever was in control of today's trade on the Dow was using a great deal of leverage, meaning that today's move was very transient and temporary. Ask yourself if you'd be buying stocks at the end of the year, just as they're reaching new highs - highs, mind you, that have yet to be surpassed in any meaningful way since the end of October. Consider these data points for closes on the Dow, all 52-week highs:
November 17: 10,437.42
November 23: 10,450.95
November 25: 10,464.40
December 1: 10,471.58
Today's close was at 10,471,50 and there was no confirmation by the S&P or, even more importantly, the Dow Transportation Index. Ooops!
As a point of reference to illustrate just how difficult this area of resistance is proving to be, consider these recent closes on the S&P:
November 17: 1110.32
November 18: 1109.80
November 23: 1106.24
November 24: 1105.65
November 25: 1110.63
December 1: 1108.86
December 2: 1109.24
December 4: 1105.98
Today's close of 1106.41 is another meaningless near-top. Clearly, there's a distribution pattern taking place which is preventing stocks from breaking out to new highs.
By all accounts, it's just not going to happen. At least not any time soon. Take heed of the usefulness of the dollar carry or risk trade, and ignore the movements of today as just so much market noise. Buy low, sell high. What do you think the real tradrs are doing here?
And just in case you were wondering, the Dow finished higher for the week, with the NASDAQ and NYSE Composite lower. The S&P actually ended the week with a fractional gain, or, essentially flat.
Dow 10,471.50, +65.67 (0.63%)
NASDAQ 2,190.31, -0.55 (0.03%)
S&P 500 1,106.41, +4.06 (0.37%)
NYSE Composite 7,125.12, +20.62 (0.29%)
Advancers outnumbered decliners, 4043-2402, though you would have hardly guessed it looking just at the tape. Dow stocks were 21 up with 9 down. The two biggest movers to the upside were Alcoa (AA) and Bank of America (BAC), two dubious leaders, to be sure. New highs beat new lows, 348-60. Besides the days before and after Thanksgiving, NASDAQ volume was the lowest since September 4, a date that also preceded a holiday - Labor Day. NYSE volume was about average.
NYSE Volume 4,408,781,000
NASDAQ Volume 1,762,412,125
More evidence of some deviousness at play came from the commodities pits, where oil sold off for the 8th straight day, losing 89 cents, to $69.65. Meanwhile, major oil company Dow stocks, Chevron (CVX) and ExxonMobil (XOM) both traded higher throughout the session and finished with small gains, though gains nonetheless.
Gold, one of the main catalysts behind dollar strength, traded down again, off $6.60, to $1,119.60. Silver followed suit, losing 10 cents, to $17.09.
One should be well advised going into next week to not read very much into this week's action. Since stocks are at their highs, you've likely missed the move if you were not participating. If you were in, this could be a great time to take a little off the top or close positions should that be your preference. There's been plenty of play in March Index options against the Dow and S&P in particular. Large positions have been placed well out of the money, and while they may be there for protection, the possibility of a sharp correction, which has not yet occurred since the March lows, is growing. Eventually, there is going to be a 10-20% or larger downturn, though the timing of such an event is uncertain.
All good traders, like Boy Scouts, should be prepared.
Tuesday, October 27, 2009
Mixed Messages
Stocks began the day and finished it in mixed fashion, as the Dow was the only major index to close above the break-even line. Especially hard-hit was the NASDAQ, which suffered from a very downbeat report from Baidu.com (BIDU), China's version of Google, when the company reported third quarter earnings, but guided investors of a revenue shortfall upcoming due to a change in advertising placements. The stock opened down 77 points, but recovered to close only 49 points in the red. Still, the stock took an 11% hit by the end of the trading session.
The Dow was helped along by three components: ExxonMobil (XOM), Chevron (CVX) and IBM (IBM), which accounted for almost all of the smallish upside. The two oil majors were helped by a positive 3rd quarter from British Petroleum (BP), while IBM announced a $5 billion increase to its stock buy-back program.
Dow 9,882.17, +14.21 (0.14%)
NASDAQ 2,116.09, -25.76 (1.20%)
S&P 500 1,063.41, -3.54 (0.33%)
NYSE Composite 6,932.04, -28.05 (0.40%)
The session was overall a weak one, as declining issues beat gainers by a wide margin, 4263-2205. What is of particular interest is the small margin of new highs over new lows (123-71), the worst performance for new highs since that particular metric rolled over back in May. The easy comparisons to last year's stock prices, especially off the monstrous 7-month+ rally, would normally presume a large number of new highs, which was evidenced during the summer and early fall, but the recent pullback has changed the outlook considerably.
Volume on the day was in line with the overall trend of the past two to three weeks.
NYSE Volume 6,203,113,500
NASDAQ Volume 2,405,401,500
Commodities, like stocks, were tied somewhat to the stronger dollar, as gold fell $7.40, to $1,035.40, silver dropped 56 cents, to $16.54, but oil bucked the general trend, gaining 87 cents, to $79.55, though the $80 mark continues to appear to be a led on price. Demand is simply not high enough to support a price over $80, much less in the $70s. Additionally, supply is robust, with nary a shortage anywhere in the world. Price of energy commodities will continue to be pressured by warmer-then-normal weather in the Northern Hemisphere, which is predicted through December.
Investors, through their trading stratagems, are offering a very good insight into how earnings results are being played. With most of the big names already having reported, unless companies are beating both earnings and revenue projections, they are being bid up prior to the release of their reports and quickly sold off. This has all the earmarks that would accompany a market top, and the indices are generally 3% below the heights reached last week.
A 5-8% dip from here would be no surprise, especially with some severe headwinds approaching in terms of 3rd quarter GDP (Thursday), though first September Durable Goods orders before the bell tomorrow, which yesterday I incorrectly said would be reported today (hanks to Yahoo Finance).
The Dow was helped along by three components: ExxonMobil (XOM), Chevron (CVX) and IBM (IBM), which accounted for almost all of the smallish upside. The two oil majors were helped by a positive 3rd quarter from British Petroleum (BP), while IBM announced a $5 billion increase to its stock buy-back program.
Dow 9,882.17, +14.21 (0.14%)
NASDAQ 2,116.09, -25.76 (1.20%)
S&P 500 1,063.41, -3.54 (0.33%)
NYSE Composite 6,932.04, -28.05 (0.40%)
The session was overall a weak one, as declining issues beat gainers by a wide margin, 4263-2205. What is of particular interest is the small margin of new highs over new lows (123-71), the worst performance for new highs since that particular metric rolled over back in May. The easy comparisons to last year's stock prices, especially off the monstrous 7-month+ rally, would normally presume a large number of new highs, which was evidenced during the summer and early fall, but the recent pullback has changed the outlook considerably.
Volume on the day was in line with the overall trend of the past two to three weeks.
NYSE Volume 6,203,113,500
NASDAQ Volume 2,405,401,500
Commodities, like stocks, were tied somewhat to the stronger dollar, as gold fell $7.40, to $1,035.40, silver dropped 56 cents, to $16.54, but oil bucked the general trend, gaining 87 cents, to $79.55, though the $80 mark continues to appear to be a led on price. Demand is simply not high enough to support a price over $80, much less in the $70s. Additionally, supply is robust, with nary a shortage anywhere in the world. Price of energy commodities will continue to be pressured by warmer-then-normal weather in the Northern Hemisphere, which is predicted through December.
Investors, through their trading stratagems, are offering a very good insight into how earnings results are being played. With most of the big names already having reported, unless companies are beating both earnings and revenue projections, they are being bid up prior to the release of their reports and quickly sold off. This has all the earmarks that would accompany a market top, and the indices are generally 3% below the heights reached last week.
A 5-8% dip from here would be no surprise, especially with some severe headwinds approaching in terms of 3rd quarter GDP (Thursday), though first September Durable Goods orders before the bell tomorrow, which yesterday I incorrectly said would be reported today (hanks to Yahoo Finance).
Thursday, January 18, 2007
House Puts Kibosh on Big Oil
In the final legislative action of Nancy Pelosi's much-publicized first 100 hours of the 110th Congress, House members voted 264-163 in favor of a sweeping bill that cut tax breaks to oil companies and imposed sanctions that would recoup royalties that the government says it is owed.
In total, the bill could salvage as much as $15 billion from the pockets of the big US-based oil companies, particularly, Exxon-Mobil, Chevron and ConocoPhillips. The bill was debated in a highly partisan session, with Republicans claiming that the measure would cause gas prices to rise and Democrats heralding a new direction in energy policy.
Whether the Senate will follow suit is yet unknown, but the majority vote in the House was not enough to override a near-certain presidential veto.
Earlier in the day, Wall Street continued its assault on all things tech, sending the Nasdaq lower by 36 points, the largest point drop since November 27, 2006. The Nasdaq has lost nearly 60 points over the last three sessions, a trend that has been tied to disappointing projections from companies such as Intel, Cisco and Apple.
Next up on the earnings parade is Motorola, anticipated to announce quarterly earnings of 25 cents per share before markets open. Around the same time, Dow component General Electric will report. 64 cents is the anticipated per share figure.
The Dow was off a marginal 9.22, with the S&P losing 4.25. Light sweet crude for February delivery was pounded lower again, briefly dipping below $50/bbl. on the NYMerc before closing at $50.48.
In total, the bill could salvage as much as $15 billion from the pockets of the big US-based oil companies, particularly, Exxon-Mobil, Chevron and ConocoPhillips. The bill was debated in a highly partisan session, with Republicans claiming that the measure would cause gas prices to rise and Democrats heralding a new direction in energy policy.
Whether the Senate will follow suit is yet unknown, but the majority vote in the House was not enough to override a near-certain presidential veto.
Earlier in the day, Wall Street continued its assault on all things tech, sending the Nasdaq lower by 36 points, the largest point drop since November 27, 2006. The Nasdaq has lost nearly 60 points over the last three sessions, a trend that has been tied to disappointing projections from companies such as Intel, Cisco and Apple.
Next up on the earnings parade is Motorola, anticipated to announce quarterly earnings of 25 cents per share before markets open. Around the same time, Dow component General Electric will report. 64 cents is the anticipated per share figure.
The Dow was off a marginal 9.22, with the S&P losing 4.25. Light sweet crude for February delivery was pounded lower again, briefly dipping below $50/bbl. on the NYMerc before closing at $50.48.
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