It's been a rough month for transportation stocks and Monday's tumble sent the Dow Jones Transportation Average back into correction territory, a condition unnoticed by financial pundits who are supposed to be on top of such events.
Maybe it's because the transports - and the rest of the stock universe - has had a happy 2019 thus far, but the previous high referenced by the ^DJT dates back to September 14.
The S&P and NASDAQ set new all-time highs earlier this month, but the Industrials, like the Trannys, harken back to 2018. October 3 to be precise.
While the other indices took sizable hits on Monday, they are each down around five to six percent, but the transports have been taking it on the chin of late, their pronounced decline due, no doubt, to ongoing trade tensions with China. Since trade and transportation are so heavily intertwined, it doesn't take a mastermind to figure why the transports have been treated so harshly.
With the trade scenario likely to continue devolving, expect no relief in the transport sector. The next key points for the average is around 9900 (the October lows) and 8637 (late December). Should the transports continue their descent from here, expect the other indices to follow suit, which means the peals of panic will be loud and sustained.
This entire exercise in trade trolling will eventually work itself out and the Chinese are likely to end up on the losing side. As President Trump never fails to highlight, they've been winning for decades, and it's time to turn the tables, at least a little bit. It's not like the Chinese empire will return to the 18th century, though, because they've got trade tentacles everywhere. The US is seeking better terms, and they're almost certain to get them because China will be pragmatic. They will not risk losing power control over trade with just one country, even though that country is their biggest customer.
China will politely bow, the president will rightly claim a victory, stocks will be lower, but they will spring back, like they always do. President Trump's trade policies are disruptive, but, they will benefit US business interests in the long term. They're nothing to be panicked about and certainly aren't going to threaten the US economy in any grand fashion.
In the meantime, however, the transports and industrials are probably going to take a significant hit. Figure another 15-20% on the trannys and 10-15% downside for the indys.
Dow Jones Industrial Average: 25,324.99, -617.38 (-2.38%)
NASDAQ: 7,647.02, -269.92 (-3.41%)
S&P 500: 2,811.87, -69.53 (-2.41%)
NYSE Composite: 12,526.71, -261.43 -2.04%
Dow Jones Transportation Average: 10,305.85, -296.34 (-2.80%)
Showing posts with label Dow Jones Transportation Index. Show all posts
Showing posts with label Dow Jones Transportation Index. Show all posts
Tuesday, May 14, 2019
Thursday, April 25, 2019
Dow Theory: Primary Bear Market with Reactionary Bull in Effect
Dow Theory has been around for more than 100 years and even in today's lightning-fast markets, Fed interventions, multiple tasing platforms and indices, it still serves investors well in determining primary and secondary trends over medium and longer-term horizons.
Even as the NASDAQ and S&P 500 made new highs on Tuesday, April 23 - and scampered back from them on Wednesday, the 24th - the Dow Jones Industrial Average remains technically in a bear market which began in October of 2018 and was confirmed by the Dow Jones Transports later in the month when the Trannys slipped below 10,000, bounced back from there but were clobbered all of December (as were the Industrials), putting in a low right around Christmas.
Since then, stocks have been on a tear, but the Transports and Industrials have stubbornly resisted making new all-time highs dating back to September of 2018 for the Trannys and the first week of October for the Industrials.
As the momentum of the new year and the "Trump economy," with an able assist from the Federal Reserve - which stopped its insistence on hiking the federal funds rate 25 basis points every quarter and also suspended its balance sheet roll-off - both indices are within hailing distance of all-time highs once again. They are tantalizingly close to extending what many consider to be the longest bull market in US history, despite Dow Theory standing in the way, saying, "no, the primary trend has changed."
The issue for investors and chart-watchers is whether the Bear that emerged late last year will persist in the face of solid economic data and healthy performances by individual stocks or fall victim to excessive speculation and high valuations. The Shiller CAPE ratio remains elevated, above levels seen in 1929 and 2008, though below the spasmodic bubble highs of 2000.
Neither proposition - new all-time highs or another retreat - offers particular pleasure. New highs would confirm that the bubble economics put in place following the 08-09 financial crisis are still in play, and there's ample evidence to support that view. A systemic breakdown - first a correction (10%), followed by a massive sell-off similar to what was witnessed in December of last year - would please nobody other than the most ardent short-sellers (and maybe the Democrat party, Trump haters and the mainstream media).
Of course, the Industrial and Transportation indices are exceedingly narrow, though they are far from being outdated. The 30 stocks on the Industrial Average and the 20 on the Transportation Index still manage to provide a compelling snapshot of the US big business economy. Understanding their primary and secondary trends goes a long way towards gauging the overall health of the US economy.
This is a time to pay them extra attention, as the next major move should provide timely insight to the years ahead. Friday's first estimate of first quarter GDP may spur a move in one direction or another as estimates have ranged as low as +0.9 to +2.8.
Anything over +2.2 is likely to be viewed positively in the current risk-happy environment. a reading under +1.6 would fan the flames of the bear campfire. The estimate is due out on Friday, April 26, at 8:30 am ET.
Even as the NASDAQ and S&P 500 made new highs on Tuesday, April 23 - and scampered back from them on Wednesday, the 24th - the Dow Jones Industrial Average remains technically in a bear market which began in October of 2018 and was confirmed by the Dow Jones Transports later in the month when the Trannys slipped below 10,000, bounced back from there but were clobbered all of December (as were the Industrials), putting in a low right around Christmas.
Since then, stocks have been on a tear, but the Transports and Industrials have stubbornly resisted making new all-time highs dating back to September of 2018 for the Trannys and the first week of October for the Industrials.
As the momentum of the new year and the "Trump economy," with an able assist from the Federal Reserve - which stopped its insistence on hiking the federal funds rate 25 basis points every quarter and also suspended its balance sheet roll-off - both indices are within hailing distance of all-time highs once again. They are tantalizingly close to extending what many consider to be the longest bull market in US history, despite Dow Theory standing in the way, saying, "no, the primary trend has changed."
The issue for investors and chart-watchers is whether the Bear that emerged late last year will persist in the face of solid economic data and healthy performances by individual stocks or fall victim to excessive speculation and high valuations. The Shiller CAPE ratio remains elevated, above levels seen in 1929 and 2008, though below the spasmodic bubble highs of 2000.
Neither proposition - new all-time highs or another retreat - offers particular pleasure. New highs would confirm that the bubble economics put in place following the 08-09 financial crisis are still in play, and there's ample evidence to support that view. A systemic breakdown - first a correction (10%), followed by a massive sell-off similar to what was witnessed in December of last year - would please nobody other than the most ardent short-sellers (and maybe the Democrat party, Trump haters and the mainstream media).
Of course, the Industrial and Transportation indices are exceedingly narrow, though they are far from being outdated. The 30 stocks on the Industrial Average and the 20 on the Transportation Index still manage to provide a compelling snapshot of the US big business economy. Understanding their primary and secondary trends goes a long way towards gauging the overall health of the US economy.
This is a time to pay them extra attention, as the next major move should provide timely insight to the years ahead. Friday's first estimate of first quarter GDP may spur a move in one direction or another as estimates have ranged as low as +0.9 to +2.8.
Anything over +2.2 is likely to be viewed positively in the current risk-happy environment. a reading under +1.6 would fan the flames of the bear campfire. The estimate is due out on Friday, April 26, at 8:30 am ET.
Saturday, November 24, 2018
WEEKEND WRAP: Black Friday or Blue Friday? Oil Down 34%, S&P, NASDAQ, NYSE In Correction
The beatings will continue until morale improves.
While the exact origin of the above phrase is clouded, it certainly applies to the current stock trading regimen that has sent world markets spinning downward and US stocks to levels comparable to nearly a year ago.
The sad situation for stocks continued even into the holiday season, when the traditionally upbeat and optimistic Black Friday half-day session turned into a savage selloff that lasted right through to the 1:00 pm ET close.
Following a brief respite on Wednesday that saw the Dow end down less than one point, and the Thanksgiving Day holiday, investors took their cues from overseas markets, which were sold off on Thursday, extending the dour moods in Europe and the Pacific Rim. Friday's trading in foreign markets was mixed, though the outlier was Brazil, where the Bovespa lost 1,247.21 points (-1.43%), confirming the theme of a global, rolling, slow-motion crash in equity values.
According to respected sources (ZeroHedge and ETF Daily News), the Dow suffered its worst Black Friday loss since 2010 and the S&P saw its worst performance for the day after Thanksgiving since the mid-1930s.
While the Dow has not yet caught down to its deepest depths of 2018, it is approaching the 2018 bottom from March 23 (23,533.20), promoting the idea that the worst of this round o selling is not quite over.
Friday's session concluded another in a series of poor performances for stocks, nearly equalling the declines seen in the week of October 8-12, sending all of the major indices below their respective 50, 200, and 40-week moving averages.
While shoppers in the US were out buying electronics, toys, appliances, clothes, and assorted trinkets, Wall Street traders were selling off assets, not an encouraging start to the holiday season. All of the major averages ended the week below where they started 2018. Without a significant Santa Claus rally, 2018 looks to be one of the worst for traders since 2008, when the S&P 500 lost 38.49%. Since then, only twice - in 2011 and 2015 - has the S&P closed lower than the close from the previous year. Currently, the S&P is down less than two percent on the year.
Friday's losses sent there S&P 500 into correction territory, ending down 10.17% from the September 20 all-time high (2930.75). The NASDAQ sank further into correction, and is approaching an outright bear market. The NASDAQ is down 14,44% from its August 29 high (8109.69).
On October 3rd, the Dow Industrials closed at an all-time high of 26,828.39. On Friday, it closed down 9.48% from that level.
The NYSE Composite, which peaked on January 25 at 13,637.02, is down 11.74%, and the Dow Jones Transportation Index is down 10.39 since closing at 11,570.84 on September 14.
Finally, the big loser for the week - which will eventually be a boon to consumers - was oil, which was once again crushed, as WTI crude lost more than seven percent, to $50.42/barrel. On October 3rd, coincidentally the game day the Dow peaked, WTI crude sold for $76.41 per barrel. That's a decline of 34.02% in just over seven weeks. Now, that's a crash.
Dow Jones Industrial Average November Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 11/1/18 | 25,380.74 | +264.98 | +264.98 |
| 11/2/18 | 25,270.83 | -109.91 | +155.07 |
| 11/5/18 | 25,461.70 | +190.87 | +345.94 |
| 11/6/18 | 25,635.01 | +173.31 | +519.25 |
| 11/7/18 | 26,180.30 | +545.29 | +1064.54 |
| 11/8/18 | 26,191.22 | +10.92 | +1075.46 |
| 11/9/18 | 25,989.30 | -201.92 | +873.54 |
| 11/12/18 | 25,387.18 | -602.12 | +271.42 |
| 11/13/18 | 25,286.49 | -100.69 | +170.27 |
| 11/14/18 | 25,080.50 | -205.99 | -35.72 |
| 11/15/18 | 25,289.27 | +208.77 | +173.05 |
| 11/16/18 | 25,413.22 | +123.95 | +297.00 |
| 11/19/18 | 25,017.44 | -395.78 | -98.78 |
| 11/20/18 | 24,465.64 | -551.80 | -650.58 |
| 11/21/18 | 24,464.69 | -0.95 | -651.53 |
| 11/23/18 | 24,285.95 | -178.74 | -830.27 |
At the Close, Friday, November 23, 2018:
Dow Jones Industrial Average: 24,285.95, -178.74 (-0.73%)
NASDAQ: 6,938.98, -33.27 (-0.48%)
S&P 500: 2,632.56, -17.37 (-0.66%)
NYSE Composite: 12,036.24, -87.10 (-0.72%)
For the Week:
Dow: -1,127.27 (-4.44%)
NASDAQ: -308.89 (-4.26%)
S&P 500: -103.71 (-3.79%)
NYSE Composite: -364.04 (-2.94%)
Tuesday, November 20, 2018
Crash Much? All 2018 Gains Wiped Out In Global Stock Rout
Where to begin?
Today's stock market rout was worldwide, starting in Japan, as the NIKKEI fell 238 points, the Hong Kong's Hang Sent slid 531 points and China's SSE Composite Index closed at 2,645.85, down 57.66 points, or -2.13%.
Europe was next up on the hit list, as the Germany's DAX was off 178.13 points (-1.58%), closing in on a 20% decline for the year. Other European stock indices were down between one and one-and-a-half percent.
As markets opened in the Western Hemisphere, the selling accelerated, sending the Dow down more than 400 points at the open and other North and South American indices falling sharply. By the end of the day, it was absolute carnage, a veritable sea of red. Every equity index on Yahoo's Major World Indices page was lower, save Malaysia's KLCI, which managed a 4-point, 0.25% gain.
Seriously, though, today's crash began in the fall of 2008, when stocks were wiped out in the face of the Lehman Brothers collapse and the sub-prime housing crisis, and also had roots from April 9, 2009, when stocks finally bottomed out as the FASB loosened accounting rules, issuing an official update to rule 157, allowing companies to deviate from standard mark-to-market principles in valuing assets.
The Fed and its central bank cohorts had their dirty little fingers in the dikes as well, conjuring up trillions of dollars in liquidity, effectively bailing out financial institutions that were, essentially, bankrupt. That's what brought us here today, ten years and trillions of dollars later. The everything bubble has finally popped.
This is a rolling crash, not a hard one, like on Black Tuesday in 1929. There have been - in just the past eight trading days - losses on the Dow of 201, 602, 100, 206, 395 points and today's 552. There were gains of 201 and 124 points on Thursday and Friday of last week, but the cumulative effect comes to a loss of 1731 points since November 8, roughly a seven percent dribble.
Tuesday's losses sent the S&P 500 hurtling toward correction territory. From the close of 2,930.75 on September 20 to today's finish at 2,641.89 is a 9.86% loss. For those in the rounding up-or-down crowd, that's 10 percent, or, close enough for horseshoes or hand grenades.
For those keeping score, the Dow is down 8.81% from it's closing high on October 3 (26,828.39). The NASDAQ, which has been in and out and back into correction since October 24, is still up on the year... a whopping five points and change. The index is down 14.82% since August 29. Albeit marginally, the Dow Industrials, S&P, NYSE Composite and the Dow Transports are all lower for the year.
The NYSE Composite which peaked at 13,637.02 on January 26 and never regained that height, is down 11.61%, reaching down to correction levels today, though, like the NASDAQ, it had breached the 10% down level on October 24 and since recovered.
Lastly, the Dow Jones Industrial Average finished today with a loss of 321.52 (-3.05%), at 10,212.94. That's an 11.74% drop from the all-time high close of 11,570.84, September 14.
In the commodity space, oil was crushed again today, as WTI crude futures ended at 53.22, down $3.98 per barrel (-6.94%). According to oilprice.com, that's the lowest price since mid-October of 2017.
Where do stocks go from here? That question almost answers itself.
Dow Jones Industrial Average November Scorecard:
At the Close, Tuesday, November 20, 2018:
Dow Jones Industrial Average: 24,465.64, -551.80 (-2.21%)
NASDAQ: 6,908.82, -119.65 (-1.70%)
S&P 500: 2,641.89, -48.84 (-1.82%)
NYSE Composite: 12,054.17, -226.74 (-1.85%)
Today's stock market rout was worldwide, starting in Japan, as the NIKKEI fell 238 points, the Hong Kong's Hang Sent slid 531 points and China's SSE Composite Index closed at 2,645.85, down 57.66 points, or -2.13%.
Europe was next up on the hit list, as the Germany's DAX was off 178.13 points (-1.58%), closing in on a 20% decline for the year. Other European stock indices were down between one and one-and-a-half percent.
As markets opened in the Western Hemisphere, the selling accelerated, sending the Dow down more than 400 points at the open and other North and South American indices falling sharply. By the end of the day, it was absolute carnage, a veritable sea of red. Every equity index on Yahoo's Major World Indices page was lower, save Malaysia's KLCI, which managed a 4-point, 0.25% gain.
Seriously, though, today's crash began in the fall of 2008, when stocks were wiped out in the face of the Lehman Brothers collapse and the sub-prime housing crisis, and also had roots from April 9, 2009, when stocks finally bottomed out as the FASB loosened accounting rules, issuing an official update to rule 157, allowing companies to deviate from standard mark-to-market principles in valuing assets.
The Fed and its central bank cohorts had their dirty little fingers in the dikes as well, conjuring up trillions of dollars in liquidity, effectively bailing out financial institutions that were, essentially, bankrupt. That's what brought us here today, ten years and trillions of dollars later. The everything bubble has finally popped.
This is a rolling crash, not a hard one, like on Black Tuesday in 1929. There have been - in just the past eight trading days - losses on the Dow of 201, 602, 100, 206, 395 points and today's 552. There were gains of 201 and 124 points on Thursday and Friday of last week, but the cumulative effect comes to a loss of 1731 points since November 8, roughly a seven percent dribble.
Tuesday's losses sent the S&P 500 hurtling toward correction territory. From the close of 2,930.75 on September 20 to today's finish at 2,641.89 is a 9.86% loss. For those in the rounding up-or-down crowd, that's 10 percent, or, close enough for horseshoes or hand grenades.
For those keeping score, the Dow is down 8.81% from it's closing high on October 3 (26,828.39). The NASDAQ, which has been in and out and back into correction since October 24, is still up on the year... a whopping five points and change. The index is down 14.82% since August 29. Albeit marginally, the Dow Industrials, S&P, NYSE Composite and the Dow Transports are all lower for the year.
The NYSE Composite which peaked at 13,637.02 on January 26 and never regained that height, is down 11.61%, reaching down to correction levels today, though, like the NASDAQ, it had breached the 10% down level on October 24 and since recovered.
Lastly, the Dow Jones Industrial Average finished today with a loss of 321.52 (-3.05%), at 10,212.94. That's an 11.74% drop from the all-time high close of 11,570.84, September 14.
In the commodity space, oil was crushed again today, as WTI crude futures ended at 53.22, down $3.98 per barrel (-6.94%). According to oilprice.com, that's the lowest price since mid-October of 2017.
Where do stocks go from here? That question almost answers itself.
Dow Jones Industrial Average November Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 11/1/18 | 25,380.74 | +264.98 | +264.98 |
| 11/2/18 | 25,270.83 | -109.91 | +155.07 |
| 11/5/18 | 25,461.70 | +190.87 | +345.94 |
| 11/6/18 | 25,635.01 | +173.31 | +519.25 |
| 11/7/18 | 26,180.30 | +545.29 | +1064.54 |
| 11/8/18 | 26,191.22 | +10.92 | +1075.46 |
| 11/9/18 | 25,989.30 | -201.92 | +873.54 |
| 11/12/18 | 25,387.18 | -602.12 | +271.42 |
| 11/13/18 | 25,286.49 | -100.69 | +170.27 |
| 11/14/18 | 25,080.50 | -205.99 | -35.72 |
| 11/15/18 | 25,289.27 | +208.77 | +173.05 |
| 11/16/18 | 25,413.22 | +123.95 | +297.00 |
| 11/19/18 | 25,017.44 | -395.78 | -98.78 |
| 11/20/18 | 24,465.64 | -551.80 | -650.58 |
At the Close, Tuesday, November 20, 2018:
Dow Jones Industrial Average: 24,465.64, -551.80 (-2.21%)
NASDAQ: 6,908.82, -119.65 (-1.70%)
S&P 500: 2,641.89, -48.84 (-1.82%)
NYSE Composite: 12,054.17, -226.74 (-1.85%)
Thursday, November 1, 2018
October Ends With Gains, But Still Marks Worst Month Of 2018 For Stocks
There was no spooking investors on the last day of October. Instead, stock buyers were treated to steady gains, especially on the beaten-down NASDAQ.
The gains from Tuesday and Wednesday took all the indices away fro the dreaded 10% correction space, though the NASDAQ is still hovering dangerously close, a mere 25 points atop the minus ten percent level (7281.20).
What didn't move much was the Dow Jones Transportation Index, up a mere 15 points and still down 12% from recent highs.
Even with the winnings of the last two sessions, October still turned out to be the worst month of the year for the Dow, which ended down some 1341.55 from the September 28 closing price. That topped the losses from February (-1120.19) and March (-926.09). The October declines left the Dow up just one percent on the year.
With the traditionally bad month of October fading into memory, the market welcomes November and December, two of the better months for stocks. Immediately ahead is the non-farm payroll data for October due out prior to the opening bell on Friday and looking to beat expectations after ADP reported on Wednesday a gain of 227,000 jobs for the month.
Stocks remain under pressure, however, as the recent volatility spread from techs and financials to the rest of the market. There are still questions on valuation and forward guidance that are keeping investors on their toes.
Dow Jones Industrial Average October Scorecard:
At the Close, Wednesday, October 31, 2018:
Dow Jones Industrial Average: 25,115.76, +241.12 (+0.97%)
NASDAQ: 7,305.90, +144.25 (+2.01%)
S&P 500: 2,711.74, +29.11 (+1.09%)
NYSE Composite: 12,208.06, +78.12 (+0.64%)
The gains from Tuesday and Wednesday took all the indices away fro the dreaded 10% correction space, though the NASDAQ is still hovering dangerously close, a mere 25 points atop the minus ten percent level (7281.20).
What didn't move much was the Dow Jones Transportation Index, up a mere 15 points and still down 12% from recent highs.
Even with the winnings of the last two sessions, October still turned out to be the worst month of the year for the Dow, which ended down some 1341.55 from the September 28 closing price. That topped the losses from February (-1120.19) and March (-926.09). The October declines left the Dow up just one percent on the year.
With the traditionally bad month of October fading into memory, the market welcomes November and December, two of the better months for stocks. Immediately ahead is the non-farm payroll data for October due out prior to the opening bell on Friday and looking to beat expectations after ADP reported on Wednesday a gain of 227,000 jobs for the month.
Stocks remain under pressure, however, as the recent volatility spread from techs and financials to the rest of the market. There are still questions on valuation and forward guidance that are keeping investors on their toes.
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 | -1,405.48 |
| 10/12/18 | 25,339.99 | +287.16 | -1,118.32 |
| 10/15/18 | 25,250.55 | -89.44 | -1,207.76 |
| 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 | -1,078.86 |
| 10/19/18 | 25,444.34 | +64.89 | -1,013.97 |
| 10/22/18 | 25,317.41 | -126.93 | -1,140.90 |
| 10/23/18 | 25,191.43 | -125.98 | -1,265.88 |
| 10/24/18 | 24,583.42 | -608.01 | -1,873.89 |
| 10/25/18 | 24,984.55 | +401.13 | -1,472.76 |
| 10/26/18 | 24,688.31 | -296.24 | -1,769.00 |
| 10/29/18 | 24,442.92 | -245.39 | -2,014.39 |
| 10/30/18 | 24,874.64 | +431.72 | -1582.67 |
| 10/31/18 | 25,115.76 | +241.12 | -1341.55 |
At the Close, Wednesday, October 31, 2018:
Dow Jones Industrial Average: 25,115.76, +241.12 (+0.97%)
NASDAQ: 7,305.90, +144.25 (+2.01%)
S&P 500: 2,711.74, +29.11 (+1.09%)
NYSE Composite: 12,208.06, +78.12 (+0.64%)
Wednesday, October 24, 2018
Ka-Boom, Stocks Crash, Key Support Levels Shattered; NASDAQ Enters Correction
Stocks turned in an ugly performance on Wednesday, unfortunately, it wasn't even as bad as the declines of just two weeks ago, on October 10. Apparently, traders don't like buying stocks on Wednesdays. Either that, or they like selling them on Wednesdays.
In any case the Dow Jones Industrial Average is down nearly 2,250 points in the last three weeks, the NASDAQ posted it's third-worst single day point drop in history and the S&P 500 has closed lower 13 of the last 15 sessions and the last six straight.
For the NASDAQ, the 329-point loss today eclipsed the 315 points shed on October 10. Four of the six, and five of the ten biggest single day point losses on the NASDAQ have occurred this year.
All of this is happening in the face of solid economic data, record low unemployment and moderate inflation. It's also happening in the middle of third quarter earnings reporting season, a time that many analysts had predicted would be challenging, which, at this point, seems an understatement.
The carnage today on Wall Street was unconfined and accelerated into the close, as opposed to yesterday's miracle rally off fresh lows. Well, today's bottoms were deeper and more pronounced than the levels breached on Tuesday, and they are signaling that this is only the beginning of a deeper dive, as the major indices are reaching or already have exceeded a correction of 10 percent.
At today's closing bell, the S&P 500 is down 9.2% from its October 3 all-time high. The NASDAQ is now down 12.4% from the August 29 all-time high of 8109.69. The Dow, which peaked on October 3rd at 26,828.39 is down 8.4%. The NYSE Composite is down 9.6%.
The Dow Jones Transportation Index, which was already off more than 10 percent, lost another 330 points today and is down 14.4% from its all-time high of 11,570.84 from September 14.
All of the majors have breached their 200-day moving averages, indicating that these losses are not technical, but more of a fundamental nature. Earnings reports thus far have been moderate, though there have been some notable misses, and more than a handful of companies have warned that the next few quarters may not meet expectations. That is exactly the kind of talk that scares bulls into hiding and encourages the bears, who have now taken control of market dynamics.
This is how record-long bull markets end, at the culmination of monstrous credit creation, with loud thuds and days and days of interminable, deep losses.
Dow Jones Industrial Average October Scorecard:
At the Close, Wednesday, October 24, 2018:
Dow Jones Industrial Average: 24,583.42, -608.01 (-2.41%)
NASDAQ: 7,108.40, -329.14 (-4.43%)
S&P 500: 2,656.10, -84.59 (-3.09%)
NYSE Composite: 11,971.91, -315.53 (-2.57%)
In any case the Dow Jones Industrial Average is down nearly 2,250 points in the last three weeks, the NASDAQ posted it's third-worst single day point drop in history and the S&P 500 has closed lower 13 of the last 15 sessions and the last six straight.
For the NASDAQ, the 329-point loss today eclipsed the 315 points shed on October 10. Four of the six, and five of the ten biggest single day point losses on the NASDAQ have occurred this year.
All of this is happening in the face of solid economic data, record low unemployment and moderate inflation. It's also happening in the middle of third quarter earnings reporting season, a time that many analysts had predicted would be challenging, which, at this point, seems an understatement.
The carnage today on Wall Street was unconfined and accelerated into the close, as opposed to yesterday's miracle rally off fresh lows. Well, today's bottoms were deeper and more pronounced than the levels breached on Tuesday, and they are signaling that this is only the beginning of a deeper dive, as the major indices are reaching or already have exceeded a correction of 10 percent.
At today's closing bell, the S&P 500 is down 9.2% from its October 3 all-time high. The NASDAQ is now down 12.4% from the August 29 all-time high of 8109.69. The Dow, which peaked on October 3rd at 26,828.39 is down 8.4%. The NYSE Composite is down 9.6%.
The Dow Jones Transportation Index, which was already off more than 10 percent, lost another 330 points today and is down 14.4% from its all-time high of 11,570.84 from September 14.
All of the majors have breached their 200-day moving averages, indicating that these losses are not technical, but more of a fundamental nature. Earnings reports thus far have been moderate, though there have been some notable misses, and more than a handful of companies have warned that the next few quarters may not meet expectations. That is exactly the kind of talk that scares bulls into hiding and encourages the bears, who have now taken control of market dynamics.
This is how record-long bull markets end, at the culmination of monstrous credit creation, with loud thuds and days and days of interminable, deep losses.
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 | -1,405.48 |
| 10/12/18 | 25,339.99 | +287.16 | -1,118.32 |
| 10/15/18 | 25,250.55 | -89.44 | -1,207.76 |
| 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 | -1,078.86 |
| 10/19/18 | 25,444.34 | +64.89 | -1,013.97 |
| 10/22/18 | 25,317.41 | -126.93 | -1,140.90 |
| 10/23/18 | 25,191.43 | -125.98 | -1,265.88 |
| 10/24/18 | 24,583.42 | -608.01 | -1,873.89 |
At the Close, Wednesday, October 24, 2018:
Dow Jones Industrial Average: 24,583.42, -608.01 (-2.41%)
NASDAQ: 7,108.40, -329.14 (-4.43%)
S&P 500: 2,656.10, -84.59 (-3.09%)
NYSE Composite: 11,971.91, -315.53 (-2.57%)
Tuesday, October 23, 2018
Stocks Creamed At Opening, Rally For Minor Losses
As mentioned in the most recent post, stocks tested a variety of support levels on Tuesday and actually crashed right through them early in the session.
But, about 10:30 am ET, a rally began, first in fits and starts, but by noon, it was well underway, lifting stocks well off their lows and continuing until... until... well, no, the major indices didn't turn positive, not even for a fleeting instant. By 3:00 pm all of the "greater fools" had been had, the dip buyers had bought all the dips they could and stocks drifted slightly lower into the close.
What started with the Dow down nearly 550 points, the NASDAQ off by more than 200, the S&P losing more than 60 points and the NYSE Composite down 264, ended with merely pedestrian losses and investors wiping the sweat from their furrowed brows. Once again, as has happened so many times during the Fed-led bull market of the 2010s, stocks averted catastrophe and sailed through the day thanks to so-called bargain hunters, that rare breed of speculators who believe buying a stock that's three to five percent off its highs is some kind of grand deal.
This is more than likely the coordinated work of central banks, who are not ever audited, who can created limitless amounts of funny money with the push of a button, and who have done so regularly in order to keep alive the dreams of prosperity and financial security for millions, by inventing - and then investing - trillions.
Behind the scene presented to the unsuspecting, unprofessional investing class - those people with retirements and life savings locked into 401k and other accounts - there was real damage. One index that did not recover very well at all was the Dow Jones Transportation Index, which slipped 199 points, to 10,237.02, a loss of 1.90%, sending it well below the key level of 10,397.23, its most recent low, from October 11, while also descending into correction territory for a second time this month, below 10,413.
With the transports falling like a bowling ball off a cliff, the importance of transportation to the rest of the economy has to be put into question. If nothing's moving, or, at least moving with less alacrity and determination, how strong is the whole economy? With their relevance to the Industrials via Dow Theory and in real life practice, the transports are the answer in search of a question, the question being how long can the slip-slide-recover charade continue before the bottom falls completely out?
The other fly in the financial ointment is, and has been, oil. WTI crude lost ground again today, sliding more than four percent into the low-$66 range, well off the $76/barrel high recently achieved. Not to offer a punnish perception, but oil greases the skids of industry and transportation. Lower pricing for the world's most vital commodity can mean one of three things: 1) lack of demand, 2) oversupply, 3) global recession. Of course, a combination of all three might be the correct analysis, though the implications of such a paroxysm might trigger a more virile reaction amongst the monied class.
Considering the ramifications of the major indices falling straight through support levels and then rebounding to more respectable levels, plus the demise of oil and the transports, one can easily conclude that the October volatility that has been apparent since the start of the month is nowhere near abatement. Even the mediocre losses today add to somebody's misery, though the pain felt is being doled out in small units, much like Chinese water torture, rather than having investors suffer the quick blade of the guillotine in a sudden crash (that may be saved for closer to the mid-term elections).
Stating the very, very obvious, this is far from over.
Dow Jones Industrial Average October Scorecard:
At the Close, Tuesday, October 23, 2018:
Dow Jones Industrial Average: 25,191.43, -125.98 (-0.50%)
NASDAQ: 7,437.54, -31.09 (-0.42%)
S&P 500: 2,740.69, -15.19 (-0.55%)
NYSE Composite: 12,287.44, -87.33 (-0.71%)
But, about 10:30 am ET, a rally began, first in fits and starts, but by noon, it was well underway, lifting stocks well off their lows and continuing until... until... well, no, the major indices didn't turn positive, not even for a fleeting instant. By 3:00 pm all of the "greater fools" had been had, the dip buyers had bought all the dips they could and stocks drifted slightly lower into the close.
What started with the Dow down nearly 550 points, the NASDAQ off by more than 200, the S&P losing more than 60 points and the NYSE Composite down 264, ended with merely pedestrian losses and investors wiping the sweat from their furrowed brows. Once again, as has happened so many times during the Fed-led bull market of the 2010s, stocks averted catastrophe and sailed through the day thanks to so-called bargain hunters, that rare breed of speculators who believe buying a stock that's three to five percent off its highs is some kind of grand deal.
This is more than likely the coordinated work of central banks, who are not ever audited, who can created limitless amounts of funny money with the push of a button, and who have done so regularly in order to keep alive the dreams of prosperity and financial security for millions, by inventing - and then investing - trillions.
Behind the scene presented to the unsuspecting, unprofessional investing class - those people with retirements and life savings locked into 401k and other accounts - there was real damage. One index that did not recover very well at all was the Dow Jones Transportation Index, which slipped 199 points, to 10,237.02, a loss of 1.90%, sending it well below the key level of 10,397.23, its most recent low, from October 11, while also descending into correction territory for a second time this month, below 10,413.
With the transports falling like a bowling ball off a cliff, the importance of transportation to the rest of the economy has to be put into question. If nothing's moving, or, at least moving with less alacrity and determination, how strong is the whole economy? With their relevance to the Industrials via Dow Theory and in real life practice, the transports are the answer in search of a question, the question being how long can the slip-slide-recover charade continue before the bottom falls completely out?
The other fly in the financial ointment is, and has been, oil. WTI crude lost ground again today, sliding more than four percent into the low-$66 range, well off the $76/barrel high recently achieved. Not to offer a punnish perception, but oil greases the skids of industry and transportation. Lower pricing for the world's most vital commodity can mean one of three things: 1) lack of demand, 2) oversupply, 3) global recession. Of course, a combination of all three might be the correct analysis, though the implications of such a paroxysm might trigger a more virile reaction amongst the monied class.
Considering the ramifications of the major indices falling straight through support levels and then rebounding to more respectable levels, plus the demise of oil and the transports, one can easily conclude that the October volatility that has been apparent since the start of the month is nowhere near abatement. Even the mediocre losses today add to somebody's misery, though the pain felt is being doled out in small units, much like Chinese water torture, rather than having investors suffer the quick blade of the guillotine in a sudden crash (that may be saved for closer to the mid-term elections).
Stating the very, very obvious, this is far from over.
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 | -1,405.48 |
| 10/12/18 | 25,339.99 | +287.16 | -1,118.32 |
| 10/15/18 | 25,250.55 | -89.44 | -1,207.76 |
| 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 | -1,078.86 |
| 10/19/18 | 25,444.34 | +64.89 | -1,013.97 |
| 10/22/18 | 25,317.41 | -126.93 | -1,140.90 |
| 10/23/18 | 25,191.43 | -125.98 | -1,265.88 |
At the Close, Tuesday, October 23, 2018:
Dow Jones Industrial Average: 25,191.43, -125.98 (-0.50%)
NASDAQ: 7,437.54, -31.09 (-0.42%)
S&P 500: 2,740.69, -15.19 (-0.55%)
NYSE Composite: 12,287.44, -87.33 (-0.71%)
WARNING: Stocks Tumble Again, Key Levels About To Be Tested; Corporate Bag-Holders
As noted in the most recent WEEKEND WRAP, major US indices have been stretched lower to plumb their 200-day moving averages, with the NYSE Composite already having broken well below its 200-day.
While Monday's declines were not extraordinary, they were - with the obvious defection of the NASDAQ - uniform. Lock-step movement of the majors is usually cause for alarm, either to the upside or down, and, in this case, the S&P, Dow and Composite have been displaying the kind of cascading losses indicative that the move is not contained within a few select sectors, but rather, is broadly-based.
US stocks are not the only issues facing lower pricing. Stock indices around the world have been under severe pressure for most of October, extending back into August and September for most of Europe. Emerging markets, suffering losses most of the year - in the case of China, the decline began in 2015 - show no signs of recovering, their slide relentless and often violent.
Overnight, Hong Kong's Hang Send and Japan's NIKKEI indices were battered, the Hang Sent down, 3.06%, the NIKKEI off 2.67%. China's SSE Composite, already a basket case down more than 50% since 2015, fell another 2.26%.
Early on Tuesday, all European stock markets were lower. As has been the case for the past eight weeks, Germany's DAX was leading the way down.
When markets open in the US on Tuesday, the expectation if for further declines, as futures predict a very rough opening. S&P futures were off by as much as 37 points, NASDAQ futures were down more than 125 points, and Dow futures had fallen by more than 400 points by 8:00 am ET.
The immediate key levels for the major indices are obvious ones, as markets close in on the October 11 interim bottoms. The Dow is looking at its close of 25,051.55 on that date. Any intra-day move below that level would likely trigger even more selling pressure, as once again, Dow Theory rears its head, predicating a primary trend change from bullish to bearish.
Confirmation would come from the Transportation Index, which closed on October 11 at 10,397.23 and Monday at 10,435.76. Monday's loss of just three points on the transports was a shallow shadow of what's been an ugly performance since mid-September. Any close below 10,413 would put the index in correction territory, which was not reported on the October 11 flush.
As the S&P approaches its October 11 low of 2728.37, it is still three to four percentage points above correction (-10%), but the index has been hammered down of late with lower closing prices in 11 of the last 13 trading sessions.
The aforementioned NYSE Composite needs a close of 12,273 to qualify for correction mode. Its high dates all the way back to January 26, when it closed at an all-time high of 13,637.02. The composite is down more than nine percent from the highs and is down 3.6% year-to-date.
NASDAQ watchers will be eyeing the level of 7329.06, the October 11 closing low, after the index reached an all-time high of 8109.54 on August 31. A close of 7298 would be a 10% decline from that level.
Since October is traditionally the most volatile month, companies and investors will be seeking scapegoats and already some corporate types have singled out the threat or imposition of tariffs by President Trump as the primary cause for poor third quarter results.
Some analysts have touted the recent selloff as technical in nature, without important underlying rationale. Taking the case further afield, a recent note by JP Morgan analysts infers that the selling is not only technical in nature, but driven by the lack of corporate stock buybacks, typically halted or blacked out during earnings seasons.
The MarketWatch article which references the analysis is fascinating and full of charts and figures comparing the October breakdown to February's quickly-accelerating descent.
What the analysts fail to point out in their notes is that stocks rose dramatically during second quarter earnings season, from the end of June to near the end of July, putting the lie to their thesis. Stock buybacks have been the main driver of stocks since the aftermath of the 2008-09 crash, and are poised this year to reach a record above $900 billion.
At least, when stocks rebound near the end of the month (as the analysis suggests), we can finally proclaim to know just who those infamous buy the dip punters have been. If indications of a bear market continue to emerge, America's finest corporations, led by the best and brightest managers, will be the ultimate bag-holders, repurchasing their own stock at grossly elevated prices.
Only in America...
Dow Jones Industrial Average October Scorecard:
At the Close, Monday, October 22, 2018:
Dow Jones Industrial Average: 25,317.41, -126.93 (-0.50%)
NASDAQ: 7,468.63, +19.60 (+0.26%)
S&P 500: 2,755.88: -11.90 (-0.43%)
NYSE Composite: 12,374.76, -82.51 (-0.66%)
While Monday's declines were not extraordinary, they were - with the obvious defection of the NASDAQ - uniform. Lock-step movement of the majors is usually cause for alarm, either to the upside or down, and, in this case, the S&P, Dow and Composite have been displaying the kind of cascading losses indicative that the move is not contained within a few select sectors, but rather, is broadly-based.
US stocks are not the only issues facing lower pricing. Stock indices around the world have been under severe pressure for most of October, extending back into August and September for most of Europe. Emerging markets, suffering losses most of the year - in the case of China, the decline began in 2015 - show no signs of recovering, their slide relentless and often violent.
Overnight, Hong Kong's Hang Send and Japan's NIKKEI indices were battered, the Hang Sent down, 3.06%, the NIKKEI off 2.67%. China's SSE Composite, already a basket case down more than 50% since 2015, fell another 2.26%.
Early on Tuesday, all European stock markets were lower. As has been the case for the past eight weeks, Germany's DAX was leading the way down.
When markets open in the US on Tuesday, the expectation if for further declines, as futures predict a very rough opening. S&P futures were off by as much as 37 points, NASDAQ futures were down more than 125 points, and Dow futures had fallen by more than 400 points by 8:00 am ET.
The immediate key levels for the major indices are obvious ones, as markets close in on the October 11 interim bottoms. The Dow is looking at its close of 25,051.55 on that date. Any intra-day move below that level would likely trigger even more selling pressure, as once again, Dow Theory rears its head, predicating a primary trend change from bullish to bearish.
Confirmation would come from the Transportation Index, which closed on October 11 at 10,397.23 and Monday at 10,435.76. Monday's loss of just three points on the transports was a shallow shadow of what's been an ugly performance since mid-September. Any close below 10,413 would put the index in correction territory, which was not reported on the October 11 flush.
As the S&P approaches its October 11 low of 2728.37, it is still three to four percentage points above correction (-10%), but the index has been hammered down of late with lower closing prices in 11 of the last 13 trading sessions.
The aforementioned NYSE Composite needs a close of 12,273 to qualify for correction mode. Its high dates all the way back to January 26, when it closed at an all-time high of 13,637.02. The composite is down more than nine percent from the highs and is down 3.6% year-to-date.
NASDAQ watchers will be eyeing the level of 7329.06, the October 11 closing low, after the index reached an all-time high of 8109.54 on August 31. A close of 7298 would be a 10% decline from that level.
Since October is traditionally the most volatile month, companies and investors will be seeking scapegoats and already some corporate types have singled out the threat or imposition of tariffs by President Trump as the primary cause for poor third quarter results.
Some analysts have touted the recent selloff as technical in nature, without important underlying rationale. Taking the case further afield, a recent note by JP Morgan analysts infers that the selling is not only technical in nature, but driven by the lack of corporate stock buybacks, typically halted or blacked out during earnings seasons.
The MarketWatch article which references the analysis is fascinating and full of charts and figures comparing the October breakdown to February's quickly-accelerating descent.
What the analysts fail to point out in their notes is that stocks rose dramatically during second quarter earnings season, from the end of June to near the end of July, putting the lie to their thesis. Stock buybacks have been the main driver of stocks since the aftermath of the 2008-09 crash, and are poised this year to reach a record above $900 billion.
At least, when stocks rebound near the end of the month (as the analysis suggests), we can finally proclaim to know just who those infamous buy the dip punters have been. If indications of a bear market continue to emerge, America's finest corporations, led by the best and brightest managers, will be the ultimate bag-holders, repurchasing their own stock at grossly elevated prices.
Only in America...
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 | -1,405.48 |
| 10/12/18 | 25,339.99 | +287.16 | -1,118.32 |
| 10/15/18 | 25,250.55 | -89.44 | -1,207.76 |
| 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 | -1,078.86 |
| 10/19/18 | 25,444.34 | +64.89 | -1,013.97 |
| 10/22/18 | 25,317.41 | -126.93 | -1,140.90 |
At the Close, Monday, October 22, 2018:
Dow Jones Industrial Average: 25,317.41, -126.93 (-0.50%)
NASDAQ: 7,468.63, +19.60 (+0.26%)
S&P 500: 2,755.88: -11.90 (-0.43%)
NYSE Composite: 12,374.76, -82.51 (-0.66%)
Friday, September 21, 2018
Dow Theory Thwarted; Bulls Back In Charge As Industrials Register New All-Time High
In what has to be regarded as a false signal from the Dow Theory tracking primary trends, the Dow Jones Industrial Average posted a new all-time closing high on Thursday, finishing the session at 26,656.98, eclipsing the previous record close of 26,616.71 reached on January 26, 2108.
In the interim, the Dow suffered through a shallow correction in February and March, gradually regaining its momentum in the second quarter, gaining 158.97 points for all of April, May, and June. During that period, however, other indices were exhibiting strength, especially the NASDAQ, which soared to record highs in June, followed by more all-time highs in July and August.
The S&P 500 took longer to recover, finally reaching a new apex on August 24, though the index showed considerable resilience and strength from April though the summer. It too finished at a record, gaining 22.80 points, it's best single-day gain in nearly two months.
The bear market, primary trend reversal signal sent via Dow Theory was initially triggered when the industrial average made a new short-term low on March 23, at 23,533.20, and confirmed on April 9, when the Transportation Index also closed at a new recent low of 10,119.35.
Skeptics noted that the transports, immediately after reaching that critical low, immediately rebounded with a 650-point rally over the next seven sessions. The aftermath from the signal forward didn't appear to be anything even remotely resembling a bear market, and if it was, the signal was too late and not useful for trading purposes. In fact, had one paid heed to the primary trend signal, one would have missed out on some sizable gains from April though the present.
The transportation index made a fresh record close at 11,436.35, on August 21 and has since finished higher than that on a tuber of occasions. The new high close on the Dow Jones Transportation Index was the first signal that the primary market trend was about to reverse again. It was just a matter of time and playing catch-up for the Dow to achieve a new record.
Whatever the market rationale - be it the Trump effect, animal spirits, or simply the general attractiveness of US markets caused by the recent strong dollar - stocks continue to be the best investments available to the general public and the larger institutional investing community.
Where the market goes from here is, as always, an open question, though it appears that the longest bull market in history will continue apace. Nothing, not even regular, quarterly interest rate increases by the Federal Reserve, has been able to slow down the US equity express.
On the heels of solid performances in July and August, the Dow is poised to post the best quarterly results of the year when the third quarter concludes in just one week, September 28. The Dow added 1143.78 points in July, 557.29 in August, and has racked up a gain of 692.16 in September.
Dow Jones Industrial Average September Scorecard:
At the Close, Thursday, September 20, 2018:
Dow Jones Industrial Average: 26,656.98, +251.22 (+0.95%)
NASDAQ: 8,028.23, +78.19 (+0.98%)
S&P 500: 2,930.75, +22.80 (+0.78%)
NYSE Composite: 13,225.11, +103.14 (+0.79%)
In the interim, the Dow suffered through a shallow correction in February and March, gradually regaining its momentum in the second quarter, gaining 158.97 points for all of April, May, and June. During that period, however, other indices were exhibiting strength, especially the NASDAQ, which soared to record highs in June, followed by more all-time highs in July and August.
The S&P 500 took longer to recover, finally reaching a new apex on August 24, though the index showed considerable resilience and strength from April though the summer. It too finished at a record, gaining 22.80 points, it's best single-day gain in nearly two months.
The bear market, primary trend reversal signal sent via Dow Theory was initially triggered when the industrial average made a new short-term low on March 23, at 23,533.20, and confirmed on April 9, when the Transportation Index also closed at a new recent low of 10,119.35.
Skeptics noted that the transports, immediately after reaching that critical low, immediately rebounded with a 650-point rally over the next seven sessions. The aftermath from the signal forward didn't appear to be anything even remotely resembling a bear market, and if it was, the signal was too late and not useful for trading purposes. In fact, had one paid heed to the primary trend signal, one would have missed out on some sizable gains from April though the present.
The transportation index made a fresh record close at 11,436.35, on August 21 and has since finished higher than that on a tuber of occasions. The new high close on the Dow Jones Transportation Index was the first signal that the primary market trend was about to reverse again. It was just a matter of time and playing catch-up for the Dow to achieve a new record.
Whatever the market rationale - be it the Trump effect, animal spirits, or simply the general attractiveness of US markets caused by the recent strong dollar - stocks continue to be the best investments available to the general public and the larger institutional investing community.
Where the market goes from here is, as always, an open question, though it appears that the longest bull market in history will continue apace. Nothing, not even regular, quarterly interest rate increases by the Federal Reserve, has been able to slow down the US equity express.
On the heels of solid performances in July and August, the Dow is poised to post the best quarterly results of the year when the third quarter concludes in just one week, September 28. The Dow added 1143.78 points in July, 557.29 in August, and has racked up a gain of 692.16 in September.
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 |
At the Close, Thursday, September 20, 2018:
Dow Jones Industrial Average: 26,656.98, +251.22 (+0.95%)
NASDAQ: 8,028.23, +78.19 (+0.98%)
S&P 500: 2,930.75, +22.80 (+0.78%)
NYSE Composite: 13,225.11, +103.14 (+0.79%)
Wednesday, September 19, 2018
Traders Shrug, Stocks Rip Higher
Bear market in Emerging Markets? No problem.
Upcoming Fed rate hike? Why worry?
Trade war with China? Nah.
The general attitude on Tuesday - following a somewhat dismal start to the week - seemed to be the old "buy the dip" mantra that boosted stocks high for most of the last ten years in the extended bull market.
As long as nothing major appears to disrupt the global money flow, traders in New York seem to be content buying stocks at just about any price, any multiple, any day, any time.
Tuesday's trading was a textbook example of momentum trading on the absence of news, good, bad, or otherwise. Stocks got off to a solid start and added to their gains throughout the session, with the markets in lockstep for a change.
The Dow was led higher by a wide swatch of companies, from Boeing (BA) to Nike (NKE), to Pfizer (PFE), Intel (INTC), and Home Depot (HD), all of which gained more than one percent on the day. 25 of 30 Dow components were winners, with just five losing ground.
Blue chips closed at their best level since the end of January, eclipsing the losses incurred in February and March, which are now fading into the deep recesses of trading memory. The Dow Jones Industrial Average is less than 400 points from making a new all-time high. Such a move would negate the Dow Theory bear market signal issued in April, as the Dow Transportation Index has already broken above its previous high.
Dow Jones Industrial Average September Scorecard:
At the Close, Tuesday, September 18, 2018:
Dow Jones Industrial Average: 26,246.96, +184.84 (+0.71%)
NASDAQ: 7,956.11, +60.32 (+0.76%)
S&P 500: 2,904.31, +15.51 (+0.54%)
NYSE Composite: 13,091.98, +60.07 (+0.46%)
Upcoming Fed rate hike? Why worry?
Trade war with China? Nah.
The general attitude on Tuesday - following a somewhat dismal start to the week - seemed to be the old "buy the dip" mantra that boosted stocks high for most of the last ten years in the extended bull market.
As long as nothing major appears to disrupt the global money flow, traders in New York seem to be content buying stocks at just about any price, any multiple, any day, any time.
Tuesday's trading was a textbook example of momentum trading on the absence of news, good, bad, or otherwise. Stocks got off to a solid start and added to their gains throughout the session, with the markets in lockstep for a change.
The Dow was led higher by a wide swatch of companies, from Boeing (BA) to Nike (NKE), to Pfizer (PFE), Intel (INTC), and Home Depot (HD), all of which gained more than one percent on the day. 25 of 30 Dow components were winners, with just five losing ground.
Blue chips closed at their best level since the end of January, eclipsing the losses incurred in February and March, which are now fading into the deep recesses of trading memory. The Dow Jones Industrial Average is less than 400 points from making a new all-time high. Such a move would negate the Dow Theory bear market signal issued in April, as the Dow Transportation Index has already broken above its previous high.
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 |
At the Close, Tuesday, September 18, 2018:
Dow Jones Industrial Average: 26,246.96, +184.84 (+0.71%)
NASDAQ: 7,956.11, +60.32 (+0.76%)
S&P 500: 2,904.31, +15.51 (+0.54%)
NYSE Composite: 13,091.98, +60.07 (+0.46%)
Monday, September 10, 2018
Dow Losses Widen, Deepen; Top Four Components Slashed
Stocks flopped around like fish out of water Monday, as investors found nothing on which to hang a positive spin or trade. The Dow gave up early 100+ point gains to finish lower for the second straight session and the fifth time in the last seven.
The NASDAQ put up a better fight, but still could not find adequate footing to stage any meaningful rally. Stocks are unrealistically valued as the business cycle - despite commentary and central bank intervention suggesting that it has been abolished - heads into the latter stages and nears overcapacity.
It is, after all, September, and there's plenty on the minds of individuals and investors, not the least of which being odious debt levels in corporate, government and individual accounts. With interest rates on the rise and winter approaching, concern may be more toward preservation of capital than appreciation of such. Risk is rising for obvious reasons and the global economy is groaning from severe stresses placed upon it by a rising dollar, which has become the go-to currency and the US the trading capitol of the world.
More than a few economists and analysts had predicted a second half slowdown, so, after gains in July and August, September may be the market's Waterloo, forcing the hands of even the most ardent bulls. This week also marks the ten-year anniversary of the fall of Lehman Brothers, as well as another reminder of the 9-11 tragedy of 2001, tomorrow.
Somber as the mood may be, American hearts and minds are forever looking ahead, so a slow week or even a down month is unlikely to unhinge the usual giddiness of the bulls. It's been nearly 10 years since the market retreated in a serious manner, but current conditions don't augur well for a sudden collapse. Rather, a bumpy road lower may be the preferred path as the signs of decay over the past week are beginning to make more of an impact.
The Dow can't seem to handle prosperity over 26,000. It has closed above that level a handful of times (three, to be exact) in the last week of August, but beat a hasty retreat once it was revealed to be overbought.
Monday's losers were an odd assortment of UnitedHealth Group (UNH) 259.73, -8.55 (-3.19%); Boeing 341.86, -7.42 (-2.12%); Traveler's 127.60, -2.49 (-1.91%); and, Apple (AAPL) 218.33, -2.97 (-1.34%). These are diverse businesses, the only possible connection being finance, though that's dubious, at best. Adding in Goldman Sachs (GS) 231.91, -2.00 (-0.86%), the other common thread is that Boeing is the most expensive stock on the index, UNH second, GS third, and Apple, fourth. The Travelers (TRV) is a distant 13th-most expensive, the selling in those shares possibly tied to potential losses from Hurricane Florence, which is taking dead aim at the coastal communities of the Carolinas and due to make landfall later this week (likely Thursday morning).
On a positive and somewhat perplexing note, the Dow Jones Transportation Index closed at a new record high, picking up 206 points to finish at 11,554.08. This is not ordinary trading, with the Dow down, the NASDAQ up, along with a record on the transports. Either traders are playing momentum-chasing games or something unseen is occurring out of sight from regular investors. The odd trading patterns that have persisted since the sudden February fallout are bizarre and without explanation. Adding in the commodity shakedown, markets are sending mixed signals which only those with fingers firmly on triggers can apparently comprehend.
On world indices, the Far East continued lower, Europe didn't decline, but gains were marginal, and South American markets returned to their downward trend with gusto.
With a slow start to the week, it's difficult to image a good result as the grind toward the September 25-26 FOMC commences.
Dow Jones Industrial Average September Scorecard:
At The Close, Monday, September 10, 2018:
Dow Jones Industrial Average: 25,857.07, -59.47 (-0.23%)
NASDAQ: 7,924.16, +21.62 (+0.27%)
S&P 500: 2,877.13, +5.45 (+0.19%)
NYSE Composite: 12,929.01, +17.89 (+0.14%)
The NASDAQ put up a better fight, but still could not find adequate footing to stage any meaningful rally. Stocks are unrealistically valued as the business cycle - despite commentary and central bank intervention suggesting that it has been abolished - heads into the latter stages and nears overcapacity.
It is, after all, September, and there's plenty on the minds of individuals and investors, not the least of which being odious debt levels in corporate, government and individual accounts. With interest rates on the rise and winter approaching, concern may be more toward preservation of capital than appreciation of such. Risk is rising for obvious reasons and the global economy is groaning from severe stresses placed upon it by a rising dollar, which has become the go-to currency and the US the trading capitol of the world.
More than a few economists and analysts had predicted a second half slowdown, so, after gains in July and August, September may be the market's Waterloo, forcing the hands of even the most ardent bulls. This week also marks the ten-year anniversary of the fall of Lehman Brothers, as well as another reminder of the 9-11 tragedy of 2001, tomorrow.
Somber as the mood may be, American hearts and minds are forever looking ahead, so a slow week or even a down month is unlikely to unhinge the usual giddiness of the bulls. It's been nearly 10 years since the market retreated in a serious manner, but current conditions don't augur well for a sudden collapse. Rather, a bumpy road lower may be the preferred path as the signs of decay over the past week are beginning to make more of an impact.
The Dow can't seem to handle prosperity over 26,000. It has closed above that level a handful of times (three, to be exact) in the last week of August, but beat a hasty retreat once it was revealed to be overbought.
Monday's losers were an odd assortment of UnitedHealth Group (UNH) 259.73, -8.55 (-3.19%); Boeing 341.86, -7.42 (-2.12%); Traveler's 127.60, -2.49 (-1.91%); and, Apple (AAPL) 218.33, -2.97 (-1.34%). These are diverse businesses, the only possible connection being finance, though that's dubious, at best. Adding in Goldman Sachs (GS) 231.91, -2.00 (-0.86%), the other common thread is that Boeing is the most expensive stock on the index, UNH second, GS third, and Apple, fourth. The Travelers (TRV) is a distant 13th-most expensive, the selling in those shares possibly tied to potential losses from Hurricane Florence, which is taking dead aim at the coastal communities of the Carolinas and due to make landfall later this week (likely Thursday morning).
On a positive and somewhat perplexing note, the Dow Jones Transportation Index closed at a new record high, picking up 206 points to finish at 11,554.08. This is not ordinary trading, with the Dow down, the NASDAQ up, along with a record on the transports. Either traders are playing momentum-chasing games or something unseen is occurring out of sight from regular investors. The odd trading patterns that have persisted since the sudden February fallout are bizarre and without explanation. Adding in the commodity shakedown, markets are sending mixed signals which only those with fingers firmly on triggers can apparently comprehend.
On world indices, the Far East continued lower, Europe didn't decline, but gains were marginal, and South American markets returned to their downward trend with gusto.
With a slow start to the week, it's difficult to image a good result as the grind toward the September 25-26 FOMC commences.
Dow Jones Industrial Average September Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 9/4/18 | 25,952.48 | -12.34 | -12.34 |
| 9/5/18 | 25,974.99 | +22.51 | +10.17 |
| 9/6/18 | 25,995.87 | +20.88 | +31.05 |
| 9/7/18 | 25,916.54 | -79.33 | -48.28 |
| 9/10/18 | 25,857.07 | -59.47 | -107.75 |
At The Close, Monday, September 10, 2018:
Dow Jones Industrial Average: 25,857.07, -59.47 (-0.23%)
NASDAQ: 7,924.16, +21.62 (+0.27%)
S&P 500: 2,877.13, +5.45 (+0.19%)
NYSE Composite: 12,929.01, +17.89 (+0.14%)
Friday, August 24, 2018
Stocks Take A Break, All Major Indices In Red
The S&P just set a record as the longest bull market in US history, the Dow has been on a tear and the Dow Transportation Index just set a new all-time high two days ago, so, it's perfectly natural for stocks to take a breather here.
It is, after all, the 23rd of August, the proverbial dog days of summer. Plenty of people needed to take a break, look things over, calm down, have another mai tai by the pool and relax. Markets have been running at breakneck speed thanks to the Trump hate, tariffs, emerging market slide, Turkey's currency crisis, Italy's break away government, et. al.
Thursday's trading differed from previous session in that all four of the major indices finished lower. Lately, the pattern has been for split markets, with the Dow and NASDAQ moving in opposite directions. Though the losses were not significant, the fact that the direction was similar may signal something more ominous.
Of course, the way markets have been consistently, over time, moving to higher ground, going short here would seem to be a rather risky proposition.
Dow Jones Industrial Average August Scorecard:
At the Close, Thursday, August 23, 2018:
Dow Jones Industrial Average: 25,656.98, -76.62 (-0.30%)
NASDAQ: 7,878.46, -10.64 (-0.13%)
S&P 500: 2,856.98, -4.84 (-0.17%)
NYSE Composite: 12,933.46, -57.05 (-0.44%)
It is, after all, the 23rd of August, the proverbial dog days of summer. Plenty of people needed to take a break, look things over, calm down, have another mai tai by the pool and relax. Markets have been running at breakneck speed thanks to the Trump hate, tariffs, emerging market slide, Turkey's currency crisis, Italy's break away government, et. al.
Thursday's trading differed from previous session in that all four of the major indices finished lower. Lately, the pattern has been for split markets, with the Dow and NASDAQ moving in opposite directions. Though the losses were not significant, the fact that the direction was similar may signal something more ominous.
Of course, the way markets have been consistently, over time, moving to higher ground, going short here would seem to be a rather risky proposition.
Dow Jones Industrial Average August Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 8/1/18 | 25,333.82 | -81.37 | -81.37 |
| 8/2/18 | 25,326.16 | -7.66 | -89.03 |
| 8/3/18 | 25,462.58 | +136.42 | +55.05 |
| 8/6/18 | 25,502.18 | +39.60 | +94.65 |
| 8/7/18 | 25,628.91 | +126.73 | +221.38 |
| 8/8/18 | 25,583.75 | -45.16 | +176.22 |
| 8/9/18 | 25,509.23 | -74.52 | +101.70 |
| 8/10/18 | 25,313.14 | -196.09 | -94.39 |
| 8/13/18 | 25,187.70 | -125.44 | -219.83 |
| 8/14/18 | 25,299.92 | +112.22 | -107.61 |
| 8/15/18 | 25,162.41 | -137.51 | -245.12 |
| 8/16/18 | 25,558.73 | +396.32 | +151.20 |
| 8/17/18 | 25,669.32 | +110.59 | +261.79 |
| 8/20/18 | 25,758.69 | +89.37 | +351.16 |
| 8/21/18 | 25,822.29 | +63.60 | +414.76 |
| 8/22/18 | 25,733.60 | -88.69 | +326.07 |
| 8/22/18 | 25,656.98 | -76.62 | +249.45 |
At the Close, Thursday, August 23, 2018:
Dow Jones Industrial Average: 25,656.98, -76.62 (-0.30%)
NASDAQ: 7,878.46, -10.64 (-0.13%)
S&P 500: 2,856.98, -4.84 (-0.17%)
NYSE Composite: 12,933.46, -57.05 (-0.44%)
Wednesday, August 22, 2018
Of The Long Bull Run And The Short Bear
Today, the S&P 500 set a new mark as the longest bull run in stock market history, surpassing the bull market record that ran from October 1990 to March 2000.
On Wednesday, the bull market that began on April 8, 2009, reached 3,453 days. The nearly 9 1/2 year run without a decline of 20% has seen the S&P rise from its low of 815.55 on April 7, 2009, to yesterday's closing high of 2,862.96, a gain of 2047.41, an average annual return of 26.4%. It's been quite a decade for Wall Street after the financial crisis had put the world on edge.
Unlike anything seen before, excepting possibly the expansion during the 1990s dotcom boom, investors have been showered with profits from virtually all sectors. There is no denying that the bull market of the 20-teens will go down in economic history as one of the more bizarre experiences ever, fueled by unlimited free-spending by central banks in global coordination, slashing interest rates at times, in some countries, to negative yields.
Adding to the hyper activity in the markets were stock buybacks by nearly every major corporation, financed by ultra-low interest rates. Buybacks reduced the number of shares outstanding, thus boosting earnings-per-share calculations beyond normal ranges.
While many still argue that this bull market was mostly smoke and mirrors, enhanced by the Federal Reserve and of benefit to only the richest one percent of the population, anybody who invested during this period made money. That's an undeniable fact that serves to silence even the grizzliest of bears.
Shortest Bear Market?
Adherents to Dow Theory (Money Daily being of that disposition) saw the end of the bull market earlier this year, when the Dow dropped precipitously from its January 26 all-time high close of 26,616.71 to 23,533.20 on March 23. The primary trend change (bull to bear) was confirmed when the Transportation Index closed on 10,119.36 on April 9. Since then, the Dow has come back, though it has not surpassed its previous high, which would signal another primary trend change from bear to bull. However, yesterday, August 21, the Transports set a new record closing high, finishing the session at 11,436.36 and well beyond its previous record close of 11,373.38, reached on January 12, 2018.
While the Transports have been leading (without much notice) the charge to new highs, it will take another spurt higher of nearly 900 by the Dow Industrials to surpass its own all-time high. If that scenario develops, the Dow will confirm the trend change that the Transportation Index has suggested. According to Dow Theory, the two have to react in tandem, confirming the primary trend direction.
The Dow demands close scrutiny in the weeks and possibly months ahead, because, despite the larger universe of pundits and analysts celebrating the longest bull run ever, until the Dow Jones Industrial Average closes above 26,616.71, theoretically, this is still a bear market and the recent activity since late March of this year has been nothing but speculation and noise.
For all the hoopla over the bull market record, today's action was noticeably subdued. Of the four major indices, only the NASDAQ returned a winner, as investors waded back into the tech-soaked speculative morass.
Dow Jones Industrial Average August Scorecard:
At the Close, Wednesday, August 22, 2018:
Dow Jones Industrial Average: 25,733.60, -88.69 (-0.34%)
NASDAQ: 7,889.10, +29.92 (+0.38%)
S&P 500: 2,861.82, -1.14 (-0.04%)
NYSE Composite: 12,992.05, -4.71 (-0.04%)
On Wednesday, the bull market that began on April 8, 2009, reached 3,453 days. The nearly 9 1/2 year run without a decline of 20% has seen the S&P rise from its low of 815.55 on April 7, 2009, to yesterday's closing high of 2,862.96, a gain of 2047.41, an average annual return of 26.4%. It's been quite a decade for Wall Street after the financial crisis had put the world on edge.
Unlike anything seen before, excepting possibly the expansion during the 1990s dotcom boom, investors have been showered with profits from virtually all sectors. There is no denying that the bull market of the 20-teens will go down in economic history as one of the more bizarre experiences ever, fueled by unlimited free-spending by central banks in global coordination, slashing interest rates at times, in some countries, to negative yields.
Adding to the hyper activity in the markets were stock buybacks by nearly every major corporation, financed by ultra-low interest rates. Buybacks reduced the number of shares outstanding, thus boosting earnings-per-share calculations beyond normal ranges.
While many still argue that this bull market was mostly smoke and mirrors, enhanced by the Federal Reserve and of benefit to only the richest one percent of the population, anybody who invested during this period made money. That's an undeniable fact that serves to silence even the grizzliest of bears.
Shortest Bear Market?
Adherents to Dow Theory (Money Daily being of that disposition) saw the end of the bull market earlier this year, when the Dow dropped precipitously from its January 26 all-time high close of 26,616.71 to 23,533.20 on March 23. The primary trend change (bull to bear) was confirmed when the Transportation Index closed on 10,119.36 on April 9. Since then, the Dow has come back, though it has not surpassed its previous high, which would signal another primary trend change from bear to bull. However, yesterday, August 21, the Transports set a new record closing high, finishing the session at 11,436.36 and well beyond its previous record close of 11,373.38, reached on January 12, 2018.
While the Transports have been leading (without much notice) the charge to new highs, it will take another spurt higher of nearly 900 by the Dow Industrials to surpass its own all-time high. If that scenario develops, the Dow will confirm the trend change that the Transportation Index has suggested. According to Dow Theory, the two have to react in tandem, confirming the primary trend direction.
The Dow demands close scrutiny in the weeks and possibly months ahead, because, despite the larger universe of pundits and analysts celebrating the longest bull run ever, until the Dow Jones Industrial Average closes above 26,616.71, theoretically, this is still a bear market and the recent activity since late March of this year has been nothing but speculation and noise.
For all the hoopla over the bull market record, today's action was noticeably subdued. Of the four major indices, only the NASDAQ returned a winner, as investors waded back into the tech-soaked speculative morass.
Dow Jones Industrial Average August Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 8/1/18 | 25,333.82 | -81.37 | -81.37 |
| 8/2/18 | 25,326.16 | -7.66 | -89.03 |
| 8/3/18 | 25,462.58 | +136.42 | +55.05 |
| 8/6/18 | 25,502.18 | +39.60 | +94.65 |
| 8/7/18 | 25,628.91 | +126.73 | +221.38 |
| 8/8/18 | 25,583.75 | -45.16 | +176.22 |
| 8/9/18 | 25,509.23 | -74.52 | +101.70 |
| 8/10/18 | 25,313.14 | -196.09 | -94.39 |
| 8/13/18 | 25,187.70 | -125.44 | -219.83 |
| 8/14/18 | 25,299.92 | +112.22 | -107.61 |
| 8/15/18 | 25,162.41 | -137.51 | -245.12 |
| 8/16/18 | 25,558.73 | +396.32 | +151.20 |
| 8/17/18 | 25,669.32 | +110.59 | +261.79 |
| 8/20/18 | 25,758.69 | +89.37 | +351.16 |
| 8/21/18 | 25,822.29 | +63.60 | +414.76 |
| 8/22/18 | 25,733.60 | -88.69 | +326.07 |
At the Close, Wednesday, August 22, 2018:
Dow Jones Industrial Average: 25,733.60, -88.69 (-0.34%)
NASDAQ: 7,889.10, +29.92 (+0.38%)
S&P 500: 2,861.82, -1.14 (-0.04%)
NYSE Composite: 12,992.05, -4.71 (-0.04%)
Monday, April 30, 2018
Fearless Rick Called The Bear Market; Contributing To A Fund? You Are A Bag-Holder
There are very few people who ascribe to the discipline of Dow Theory.
I, Fearless Rick, am one of them. I am also the only person I know who has read Adam Smith's "The Wealth of Nations," and I am currently re-reading sections of that lengthy tome because it's important to understand.
I'm making these statements not to blow my own horn, but to point something out that readers of this blog and the millions of non-readers should acknowledge.
When I wrote this post on April 9, I had complete confidence in what I was delivering. There were no caveats, what-ifs, or other murky scenarios by which I could hedge my declaration that the bull market in stocks was over and that the next 18 months to three or four years would be losers for stock holders.
It's nearly a month later - and three months since the Dow Jones Industrial Average topped out at 26,616.71 (sorry, that number has been hard-wired into my brain) on January 26 - and nothing has changed. Stocks are still hovering between their 50 and 200-day moving averages. In fact, since the Dow Transports confirmed the bear market, the Dow Industrials are up - as of today's close - a whopping 184 points, a gain of less than one percent over the past 15 trading days.
Thus, I am here to say that it sure looks like I nailed it, called it, that I'm absolutely right. This is a bear market, and it will be a bear market until the Dow Industrials find some bottom and the Dow Transports confirm the primary trend change back to the bullish side.
And I will tell you when that happens and not a moment sooner.
I'm pointing this out because I've grown a little bit weary of toiling in obscurity while outright frauds like Dennis Gartman get to bloviate on CNBC in stultified language how "we" erred on the bullish side, or how he's "long gold in yen terms," or other such nonsense. He is getting paid to tout garbage. I get nothing, not even faint praise, when I'm absolutely right, 100%.
OK, so maybe I'm having a little hissy fit here, but I'm not going to lower my voice, nor am I going to stop speaking my mind, making my calls and writing this daily blog. My reward is out there somewhere, I just hope I get some of it before I get to heaven.
As for today's action in the markets, it was the same old saw that I've been commenting upon in previous blogs: up at the open, then a long, slow decline into the red, a typical and obvious chart pattern that the mainstream media will not ever acknowledge because they and their Wall Street banker masters want you to continue contributing to their ponzi schemes, at your own peril.
Fund holders will be the eventual bag-holders of this bear market. They'll lose anywhere from 30 to 60% of their portfolio if they don't reallocate their investments out of growth stocks and ETFs and into something more sustainable, whatever that may be. Bonds are probably a good spot as yields are rising. Commodities may not be bad, depending on the asset mix. Cash is more than likely to be king. You can send me some by clicking here.
We are entering a period in which it is more important to preserve capital than risk it and hope for gains. Hope is not an investment strategy. Watching your magic fund sink month after month is not pleasant, and being a bag-holder while the smart money runs for the exits is not what any rational person would do.
As anyone can clearly see, after taking losses in February and March, the Dow Jones Industrial Average finished with a gain of 50.81 points. That's not a gain, that is a rounding error, a pimple, a dot. It didn't even beat inflation. You lost money over time.
Get out, reallocate, or die.
Dow Jones Industrial Average April Scorecard:
At the Close, Monday, April 30, 2018:
Dow Jones Industrial Average: 24,163.15, -148.04 (-0.61%)
NASDAQ: 7,066.27, -53.53 (-0.75%)
S&P 500: 2,648.05, -21.86 (-0.82%)
NYSE Composite: 12,515.39, -78.64 (-0.62%)
I, Fearless Rick, am one of them. I am also the only person I know who has read Adam Smith's "The Wealth of Nations," and I am currently re-reading sections of that lengthy tome because it's important to understand.
I'm making these statements not to blow my own horn, but to point something out that readers of this blog and the millions of non-readers should acknowledge.
When I wrote this post on April 9, I had complete confidence in what I was delivering. There were no caveats, what-ifs, or other murky scenarios by which I could hedge my declaration that the bull market in stocks was over and that the next 18 months to three or four years would be losers for stock holders.
It's nearly a month later - and three months since the Dow Jones Industrial Average topped out at 26,616.71 (sorry, that number has been hard-wired into my brain) on January 26 - and nothing has changed. Stocks are still hovering between their 50 and 200-day moving averages. In fact, since the Dow Transports confirmed the bear market, the Dow Industrials are up - as of today's close - a whopping 184 points, a gain of less than one percent over the past 15 trading days.
Thus, I am here to say that it sure looks like I nailed it, called it, that I'm absolutely right. This is a bear market, and it will be a bear market until the Dow Industrials find some bottom and the Dow Transports confirm the primary trend change back to the bullish side.
And I will tell you when that happens and not a moment sooner.
I'm pointing this out because I've grown a little bit weary of toiling in obscurity while outright frauds like Dennis Gartman get to bloviate on CNBC in stultified language how "we" erred on the bullish side, or how he's "long gold in yen terms," or other such nonsense. He is getting paid to tout garbage. I get nothing, not even faint praise, when I'm absolutely right, 100%.
OK, so maybe I'm having a little hissy fit here, but I'm not going to lower my voice, nor am I going to stop speaking my mind, making my calls and writing this daily blog. My reward is out there somewhere, I just hope I get some of it before I get to heaven.
As for today's action in the markets, it was the same old saw that I've been commenting upon in previous blogs: up at the open, then a long, slow decline into the red, a typical and obvious chart pattern that the mainstream media will not ever acknowledge because they and their Wall Street banker masters want you to continue contributing to their ponzi schemes, at your own peril.
Fund holders will be the eventual bag-holders of this bear market. They'll lose anywhere from 30 to 60% of their portfolio if they don't reallocate their investments out of growth stocks and ETFs and into something more sustainable, whatever that may be. Bonds are probably a good spot as yields are rising. Commodities may not be bad, depending on the asset mix. Cash is more than likely to be king. You can send me some by clicking here.
We are entering a period in which it is more important to preserve capital than risk it and hope for gains. Hope is not an investment strategy. Watching your magic fund sink month after month is not pleasant, and being a bag-holder while the smart money runs for the exits is not what any rational person would do.
As anyone can clearly see, after taking losses in February and March, the Dow Jones Industrial Average finished with a gain of 50.81 points. That's not a gain, that is a rounding error, a pimple, a dot. It didn't even beat inflation. You lost money over time.
Get out, reallocate, or die.
Dow Jones Industrial Average April Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 4/2/18 | 23,644.19 | -458.92 | -458.92 |
| 4/3/18 | 24,033.36 | +389.17 | -69.75 |
| 4/4/18 | 24,264.30 | +230.94 | +161.19 |
| 4/5/18 | 24,505.22 | +240.92 | +402.11 |
| 4/6/18 | 23,932.76 | -572.46 | -170.35 |
| 4/9/18 | 23,979.10 | +46.34 | -134.01 |
| 4/10/18 | 24,407.86 | +428.76 | +294.66 |
| 4/11/18 | 24,189.45 | -218.55 | +76.11 |
| 4/12/18 | 24,483.05 | +293.60 | +369.71 |
| 4/13/18 | 24,360.14 | -122.91 | +247.80 |
| 4/16/18 | 24,573.04 | +212.90 | +460.70 |
| 4/17/18 | 24,786.63 | +213.59 | +674.29 |
| 4/18/18 | 24,748.07 | -38.56 | +635.73 |
| 4/19/18 | 24,664.89 | -83.18 | +552.55 |
| 4/20/18 | 24,462.94 | -201.95 | +350.60 |
| 4/23/18 | 24,448.69 | -14.25 | +336.35 |
| 4/24/18 | 24,024.13 | -424.56 | -88.21 |
| 4/25/18 | 24,083.83 | +59.70 | -28.51 |
| 4/26/18 | 24,322.34 | +238.51 | +210.00 |
| 4/27/18 | 24,311.19 | -11.15 | +198.85 |
| 4/30/18 | 24,163.15 | -148.04 | +50.81 |
At the Close, Monday, April 30, 2018:
Dow Jones Industrial Average: 24,163.15, -148.04 (-0.61%)
NASDAQ: 7,066.27, -53.53 (-0.75%)
S&P 500: 2,648.05, -21.86 (-0.82%)
NYSE Composite: 12,515.39, -78.64 (-0.62%)
Monday, April 9, 2018
It's OVER! Dow Transports Confirm Dow Theory Primary Trend Change Bull to Bear
Right off the bat, here's the theme for today's trading: Frankie Valli and the Four Seasons 1964 hit, "Dawn."
For the uninformed, today's epic pump-and-dump collapse on all the major indices was more than just "the usual." It was, simply put, a day to be marked in financial history, the day the most phony, contrived and manipulated bull market that ever existed, died an overdue death and gave birth to a bona fide bear market, something most of today's millennial day-trading demons have never experienced.
Why would the death of a bull market and the beginning of a bear market be something suitable for celebration?
Good question.
Here's an even better answer: because the bull market, which started March 9, 2009 - nine years and one month, to the day - was one built on fumes and Fed happy talk, endless fiat money printing, rounds and rounds of Quantitative Easing (QE), artificially low interest rates approaching zero (ZIRP) and corporate stock buybacks of unprecedented quantity. Almost nowhere was there a single sign of real growth; much of the gains in stocks were due to buyback manipulation as gross revenue stagnated for nearly a decade.
It was a decade of fakery, of spoofing and high frequency trading as GDP never reached three percent until nearing the end, and never actually did for a full year, including 2017, the last. Almost all of the supposed growth in the "recovery" was due to inflation, nothing else. A false sense of security was promoted by the governors and presidents of the Federal Reserve System and their regional banks and the public gobbled it up.
Meanwhile, in the real world, mark to market had been replaced by mark to fantasy, and price discovery was banished from the equity world.
According to Dow Theory - a nearly infallible projecting tool - as the Dow Transportation Index closed today below the February 9 low of 10,136.61, at 10,119.36, confirming the primary trend change, the bull market can be properly buried and a bear market born.
For anyone unfamiliar with Dow Theory, the primary trend change goes like this:
New Closing Low
Interim High, Below Previous High
New Low Below Previous Low.
This simple pattern must occur on both the Dow Jones Industrial Average and the Dow Jones Transportation Index (confirmation), and here's how it happened.
The Dow Jones Industrial Average made a new all-time high on January 26, 2018 (26,616.71).
On February 8, it closed at 23,860.46 (new low).
On February 26, it closed at 25,709.27 (interim high, lower than previous high).
On March 23, the Industrials closed at 23,533.20 (new low, lower than previous low).
For confirmation, the Dow Jones Transportation Index had made it's new high on January 12, 2018 (11,373.38).
On February 8, it closed at 10,136.61 (new low)
On February 26, it closed at 10,769.84 (interim high, lower than previous high)
On April 9, the Transportation Index closed at 10,119.36 (new low, lower than previous low = primary trend change, bull becomes bear).
Why is this good?
This is good because markets in a stable, trustworthy financial system must have a mechanism to clear mal-investment. Otherwise, stupid money must be purged from the system in order to create real value.
For instance, Facebook, Google, and many other stocks should not be trading as high as they currently are. They are overvalued, promoted by shysters and traded up by fools, one fool greater than the previous one. In other words, this is money chasing an unrealistic return. In order to get back to a realistic, fair, honest market, these stocks must lose value. Some companies will achieve their true value, which is zero. Others will lose 20, 30, maybe even more than 50%. The market will sort out the winners (there will be a few) from the losers (there will be many).
In the end, stocks will be properly valued, but when that time is to come, nobody knows. The perma-bulls out there can take heart that bear markets generally last 14-18 months, some like the one during the Great Depression which began with the stock market collapse in 1929, last much longer. How deep this one will be depends on how quickly stocks revert to an undervalued position, because the market always overshoots on the upside and the downside. There will be a bottom, when it will be wise to buy stocks. The only winning position presently is to sell stocks at a profit, park the money in bonds or money markets and wait for the bottom, which, just like the primary change from bull to bear, will be repeated - in reverse - according to Dow Theory.
For those wishing for the good old days of January 26, a return to those levels may take four to seven years, possibly longer, and, judging by the general insanity plaguing the human race presently, one should prepare for the much longer period. There are mountains of bad investments and onerous debts to be flushed from the system, since they were not flushed out in 2008-09, only papered over by TARP, QE, and ZIRP.
If you must, cry in your beer over the death of the bull. The rest of us will be having a cold one with the new-born bear.
Dow Jones Industrial Average April Scorecard:
At the Close, Monday, April 9, 2018:
Dow Jones Industrial Average: 23,979.10, +46.34 (+0.19%)
NASDAQ: 6,950.34, +35.23 (+0.51%)
S&P 500: 2,613.16, +8.69 (+0.33%)
NYSE Composite: 12,380.55, +31.44 (+0.25%)
For the uninformed, today's epic pump-and-dump collapse on all the major indices was more than just "the usual." It was, simply put, a day to be marked in financial history, the day the most phony, contrived and manipulated bull market that ever existed, died an overdue death and gave birth to a bona fide bear market, something most of today's millennial day-trading demons have never experienced.
Why would the death of a bull market and the beginning of a bear market be something suitable for celebration?
Good question.
Here's an even better answer: because the bull market, which started March 9, 2009 - nine years and one month, to the day - was one built on fumes and Fed happy talk, endless fiat money printing, rounds and rounds of Quantitative Easing (QE), artificially low interest rates approaching zero (ZIRP) and corporate stock buybacks of unprecedented quantity. Almost nowhere was there a single sign of real growth; much of the gains in stocks were due to buyback manipulation as gross revenue stagnated for nearly a decade.
It was a decade of fakery, of spoofing and high frequency trading as GDP never reached three percent until nearing the end, and never actually did for a full year, including 2017, the last. Almost all of the supposed growth in the "recovery" was due to inflation, nothing else. A false sense of security was promoted by the governors and presidents of the Federal Reserve System and their regional banks and the public gobbled it up.
Meanwhile, in the real world, mark to market had been replaced by mark to fantasy, and price discovery was banished from the equity world.
According to Dow Theory - a nearly infallible projecting tool - as the Dow Transportation Index closed today below the February 9 low of 10,136.61, at 10,119.36, confirming the primary trend change, the bull market can be properly buried and a bear market born.
For anyone unfamiliar with Dow Theory, the primary trend change goes like this:
New Closing Low
Interim High, Below Previous High
New Low Below Previous Low.
This simple pattern must occur on both the Dow Jones Industrial Average and the Dow Jones Transportation Index (confirmation), and here's how it happened.
The Dow Jones Industrial Average made a new all-time high on January 26, 2018 (26,616.71).
On February 8, it closed at 23,860.46 (new low).
On February 26, it closed at 25,709.27 (interim high, lower than previous high).
On March 23, the Industrials closed at 23,533.20 (new low, lower than previous low).
For confirmation, the Dow Jones Transportation Index had made it's new high on January 12, 2018 (11,373.38).
On February 8, it closed at 10,136.61 (new low)
On February 26, it closed at 10,769.84 (interim high, lower than previous high)
On April 9, the Transportation Index closed at 10,119.36 (new low, lower than previous low = primary trend change, bull becomes bear).
Why is this good?
This is good because markets in a stable, trustworthy financial system must have a mechanism to clear mal-investment. Otherwise, stupid money must be purged from the system in order to create real value.
For instance, Facebook, Google, and many other stocks should not be trading as high as they currently are. They are overvalued, promoted by shysters and traded up by fools, one fool greater than the previous one. In other words, this is money chasing an unrealistic return. In order to get back to a realistic, fair, honest market, these stocks must lose value. Some companies will achieve their true value, which is zero. Others will lose 20, 30, maybe even more than 50%. The market will sort out the winners (there will be a few) from the losers (there will be many).
In the end, stocks will be properly valued, but when that time is to come, nobody knows. The perma-bulls out there can take heart that bear markets generally last 14-18 months, some like the one during the Great Depression which began with the stock market collapse in 1929, last much longer. How deep this one will be depends on how quickly stocks revert to an undervalued position, because the market always overshoots on the upside and the downside. There will be a bottom, when it will be wise to buy stocks. The only winning position presently is to sell stocks at a profit, park the money in bonds or money markets and wait for the bottom, which, just like the primary change from bull to bear, will be repeated - in reverse - according to Dow Theory.
For those wishing for the good old days of January 26, a return to those levels may take four to seven years, possibly longer, and, judging by the general insanity plaguing the human race presently, one should prepare for the much longer period. There are mountains of bad investments and onerous debts to be flushed from the system, since they were not flushed out in 2008-09, only papered over by TARP, QE, and ZIRP.
If you must, cry in your beer over the death of the bull. The rest of us will be having a cold one with the new-born bear.
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 |
At the Close, Monday, April 9, 2018:
Dow Jones Industrial Average: 23,979.10, +46.34 (+0.19%)
NASDAQ: 6,950.34, +35.23 (+0.51%)
S&P 500: 2,613.16, +8.69 (+0.33%)
NYSE Composite: 12,380.55, +31.44 (+0.25%)
Sunday, April 8, 2018
Weekend Wrap: First Week of 2nd Quarter Losing, Just Like February and March
This edition of the weekend wrap begins with a comment to an article on ZeroHedge
One need not read the article in question, only question the conclusion.
This article ignores the obvious.
The policy mistake was the March rate hike. It was either too soon, or completely mis-timed. One can assert, dependent upon where one is positioned, that any and all of the Fed's policies are mistakes, but that may be significantly overstating the case.
End-of-cycle dynamics? Give us all a break. The bull market began on March 9, 2009. It's now been nine years and one month, or 119 months, whichever you prefer. Nothing lasts forever, especially bull and/or bear markets.
The Dow Transportation Index (^DJT) is all one has to watch, since the Industrials have already broken below the Feb. 8 closing low.
According to Dow Theory - which, in matters of primary trends, has a track record approaching 100% - the transports need to confirm, and that number is 10,136.61 (yes, you should have that number memorized).
Where did the transportation Index close on Friday? 10,146.37. 10 points is all there is separating this market from turning bull to bear.
After Friday's mini-crash, stocks ended the week with a significant loss from where it started the week, the month, and the quarter, predictably, the NASDAQ being the worst performer.
Forget articles, commentary, and mainstream analysis. It's all noise. The Fed has made one policy error after another (keeping rates too low, too long, and, trying to raise rates in a weakened economy) and the bull market is ending. The close on the transports below 10,136.61 will tell you exactly when the market has turned, but it's not quite there yet. It could make the move on Monday, the 9th of April, but keen minds are looking at late may or June for the turn. Either way, the bull will be dead.
While there may be a bounce in the aftermath, it will not last and there is a good likelihood of a corollary recession 6-12 months beyond the turn.
That's all one needs to know.
Dow Jones Industrial Average April Scorecard:
At the Close, Friday, April 6, 2018:
Dow Jones Industrial Average: 23,932.76, -572.46 (-2.34%)
NASDAQ: 6,915.11, -161.44 (-2.28%)
S&P 500: 2,604.47, -58.37 (-2.19%)
NYSE Composite: 12,349.11, -222.83 (-1.77%)
For the Week:
Dow: -170.35 (-0.71%)
NASDAQ: -148.33 (-2.10%)
S&P 500: -36.40 (-1.38%)
NYSE Composite: -102.95 (-0.83%)
One need not read the article in question, only question the conclusion.
- markets have started pricing in a Fed policy mistake, or
- markets have started pricing in end-of-cycle dynamics.
This article ignores the obvious.
The policy mistake was the March rate hike. It was either too soon, or completely mis-timed. One can assert, dependent upon where one is positioned, that any and all of the Fed's policies are mistakes, but that may be significantly overstating the case.
End-of-cycle dynamics? Give us all a break. The bull market began on March 9, 2009. It's now been nine years and one month, or 119 months, whichever you prefer. Nothing lasts forever, especially bull and/or bear markets.
The Dow Transportation Index (^DJT) is all one has to watch, since the Industrials have already broken below the Feb. 8 closing low.
According to Dow Theory - which, in matters of primary trends, has a track record approaching 100% - the transports need to confirm, and that number is 10,136.61 (yes, you should have that number memorized).
Where did the transportation Index close on Friday? 10,146.37. 10 points is all there is separating this market from turning bull to bear.
After Friday's mini-crash, stocks ended the week with a significant loss from where it started the week, the month, and the quarter, predictably, the NASDAQ being the worst performer.
Forget articles, commentary, and mainstream analysis. It's all noise. The Fed has made one policy error after another (keeping rates too low, too long, and, trying to raise rates in a weakened economy) and the bull market is ending. The close on the transports below 10,136.61 will tell you exactly when the market has turned, but it's not quite there yet. It could make the move on Monday, the 9th of April, but keen minds are looking at late may or June for the turn. Either way, the bull will be dead.
While there may be a bounce in the aftermath, it will not last and there is a good likelihood of a corollary recession 6-12 months beyond the turn.
That's all one needs to know.
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 |
At the Close, Friday, April 6, 2018:
Dow Jones Industrial Average: 23,932.76, -572.46 (-2.34%)
NASDAQ: 6,915.11, -161.44 (-2.28%)
S&P 500: 2,604.47, -58.37 (-2.19%)
NYSE Composite: 12,349.11, -222.83 (-1.77%)
For the Week:
Dow: -170.35 (-0.71%)
NASDAQ: -148.33 (-2.10%)
S&P 500: -36.40 (-1.38%)
NYSE Composite: -102.95 (-0.83%)
Tuesday, April 3, 2018
Stocks Pounded Again; Transports Drop 206 Points
Following a brutal February and March, equity investors could hardly be pleased with the first day of trading in April and the start of the second quarter.
A weak opening was followed shortly by indecision and then a descent back into the abyss, with all the major averages into the red for the year. Of particular interest was the Dow Jones Transportation Index, which spent much of the afternoon testing new lows below the February 9 bottom of 10,136.61. Only a late-day push kept the transports from finishing under the level that would signal a primary trend change.
The Dow Industrial Average was likewise saved from further embarrassment as it gained into the close after being down more than 750 points earlier. The push higher nearing the end of the session should be largely attributed to nothing other than day-trading short-covering by quants and large hands taking massive profits at the expense of the bulls still looking for some upside.
With stocks under serious pressure for nearly two months, some relief is almost guaranteed, though the duration of any improvement is a question for market-timers, chartists and wide-eyed speculators. Recent activity appears to be more reminiscent of the end of a bull market and the beginning of something worse than what should accompany a surging economy. The narrative of US strength is failing on many fronts and likely will not last more than a few more months, or possibly, even a few days.
This is a market made for traders using other people's money, not their own.
Dow Jones Industrial Average April Scorecard:
At the Close, April 2, 2018:
Dow Jones Industrial Average: 23,644.19, -458.92 (-1.90%)
NASDAQ: 6,870.12, -193.33 (-2.74%)
S&P 500: 2,581.88, -58.99 (-2.23%)
NYSE Composite: 12,216.71, -235.35 (-1.89%)
A weak opening was followed shortly by indecision and then a descent back into the abyss, with all the major averages into the red for the year. Of particular interest was the Dow Jones Transportation Index, which spent much of the afternoon testing new lows below the February 9 bottom of 10,136.61. Only a late-day push kept the transports from finishing under the level that would signal a primary trend change.
The Dow Industrial Average was likewise saved from further embarrassment as it gained into the close after being down more than 750 points earlier. The push higher nearing the end of the session should be largely attributed to nothing other than day-trading short-covering by quants and large hands taking massive profits at the expense of the bulls still looking for some upside.
With stocks under serious pressure for nearly two months, some relief is almost guaranteed, though the duration of any improvement is a question for market-timers, chartists and wide-eyed speculators. Recent activity appears to be more reminiscent of the end of a bull market and the beginning of something worse than what should accompany a surging economy. The narrative of US strength is failing on many fronts and likely will not last more than a few more months, or possibly, even a few days.
This is a market made for traders using other people's money, not their own.
Dow Jones Industrial Average April Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 4/2/18 | 23,644.19 | -458.92 | -458.92 |
At the Close, April 2, 2018:
Dow Jones Industrial Average: 23,644.19, -458.92 (-1.90%)
NASDAQ: 6,870.12, -193.33 (-2.74%)
S&P 500: 2,581.88, -58.99 (-2.23%)
NYSE Composite: 12,216.71, -235.35 (-1.89%)
Thursday, March 29, 2018
Stocks Little Changed As Dow Transports Flirt With Bear Market Confirmation
As outlined in yesterday's special note, the bull market has come perilously close to rolling over into a vicious bear market, or, in Dow Theory terminology, the primary trend is about to change.
Key to this chartist theory is the 20-component Dow Jones Transportation Index, which has been falling in price right along with the other major indices, but needs one more little push to the downside to confirm the change in primary change, that being the point at which the transportation index closes below its previous closing low of 10,136.61.
Twice, early in Wednesday's session, the transports slipped below the magic mark, and approached it again in the final hour, falling to 10,136,26, before the short-covering crowd came in to rescue the bulls and prolong the agony of waiting for what will someday be known as the "turning point."
While there are all manner of economic and geopolitical risks extant, it's impossible to know exactly what will trigger the final cascade into bear-market-land, though investors need not necessarily be concerned unless one's time horizon is relatively short. That's because, according to experts, who are uniformly almost always wrong, bear markets last, on average, about 16 months, and the time taken to recover all of the losses back to the "turning point," is roughly three years.
Regardless of one's position or opinion on finance and economy, one thing is certain: February and March have been different from the 106 previous months of this long-in-the-tooth bull market. They have been outright losers, changing the prevailing sentiment from buy the dip to sell the rip.
Collectively, the 30 stocks comprising the Dow Jones Industrial Average are nearly 2800 points from their all-time-high from January 26, and that's a wall of worry that may be too high to climb.
Trading for March concludes on Thursday, as Good Friday is a recognized holiday.
Dow Jones Industrial Average March Scorecard:
At the Close, Wednesday, March 28, 2018:
Dow Jones Industrial Average: 23,848.42, -9.29 (-0.04%)
NASDAQ: 6,949.23, -59.58 (-0.85%)
S&P 500 2,605.00: -7.62 (-0.29%)
NYSE Composite: 12,308.90, +6.36 (+0.05%)
Key to this chartist theory is the 20-component Dow Jones Transportation Index, which has been falling in price right along with the other major indices, but needs one more little push to the downside to confirm the change in primary change, that being the point at which the transportation index closes below its previous closing low of 10,136.61.
Twice, early in Wednesday's session, the transports slipped below the magic mark, and approached it again in the final hour, falling to 10,136,26, before the short-covering crowd came in to rescue the bulls and prolong the agony of waiting for what will someday be known as the "turning point."
While there are all manner of economic and geopolitical risks extant, it's impossible to know exactly what will trigger the final cascade into bear-market-land, though investors need not necessarily be concerned unless one's time horizon is relatively short. That's because, according to experts, who are uniformly almost always wrong, bear markets last, on average, about 16 months, and the time taken to recover all of the losses back to the "turning point," is roughly three years.
Regardless of one's position or opinion on finance and economy, one thing is certain: February and March have been different from the 106 previous months of this long-in-the-tooth bull market. They have been outright losers, changing the prevailing sentiment from buy the dip to sell the rip.
Collectively, the 30 stocks comprising the Dow Jones Industrial Average are nearly 2800 points from their all-time-high from January 26, and that's a wall of worry that may be too high to climb.
Trading for March concludes on Thursday, as Good Friday is a recognized holiday.
Dow Jones Industrial Average March Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 3/1/18 | 24,608.98 | -420.22 | -420.22 |
| 3/2/18 | 24,538.06 | -70.92 | -491.14 |
| 3/5/18 | 24,874.76 | +336.70 | -154.44 |
| 3/6/18 | 24,884.12 | +9.36 | -145.08 |
| 3/7/18 | 24,801.36 | -82.76 | -227.84 |
| 3/8/18 | 24,895.21 | +93.85 | -133.99 |
| 3/9/18 | 25,335.74 | +440.53 | +306.54 |
| 3/12/18 | 25,178.61 | -157.13 | +149.41 |
| 3/13/18 | 25,007.03, | -171.58 | -22.17 |
| 3/14/18 | 24,758.12 | -248.91 | -271.08 |
| 3/15/18 | 24,873.66 | +115.54 | -155.54 |
| 3/16/18 | 24,946.51 | +72.85 | -82.69 |
| 3/19/18 | 24,610.91 | -335.60 | -418.29 |
| 3/20/18 | 24,727.27 | +116.36 | -301.93 |
| 3/21/18 | 24,682.31 | -44.96 | -346.89 |
| 3/22/18 | 23,957.89 | -724.42 | -1071.31 |
| 3/23/18 | 23,533.20 | -424.69 | -1496.00 |
| 3/26/18 | 24,202.60 | +669.40 | -826.60 |
| 3/27/18 | 23,857.71 | -344.89 | -1171.49 |
| 3/28/18 | 23,848.42 | -9.29 | -1180.78 |
At the Close, Wednesday, March 28, 2018:
Dow Jones Industrial Average: 23,848.42, -9.29 (-0.04%)
NASDAQ: 6,949.23, -59.58 (-0.85%)
S&P 500 2,605.00: -7.62 (-0.29%)
NYSE Composite: 12,308.90, +6.36 (+0.05%)
Wednesday, March 28, 2018
Warning on Dow Theory Primary Trend: Watch the Dow Jones Transportation Index
This is a special note to followers of Dow Theory.
Presently, one must pay attention to the Dow Jones Transportation Index (^DJT). It has to close below 10,136.61, the Feb. 9 close, to confirm a change in the primary trend from Bull to Bear.
The Industrials already made the move this Friday past, but, according to Dow Theory (which is like 95% accurate - or better - when it comes to signaling primary directional changes), the Transports must confirm.
If it happens today (currently around 10,190) or tomorrow, bear in mind that markets are closed Friday (commemorating the day Jesus was crucified) and Sunday, the day Jesus rose from the dead, according to the Bible.
Far from bible-thumping, chronic venial sinners should bear in mind that Jesus may have risen from the dead, but the stock market probably won't.
Anyhow, when the transports confirm, then you'll have the answer to whether or not this is/was a turning point in the stock market.
Added, 10:48 am EDT: Transports have fallen below the target close for the second time today. The first fall was all the way down to 10,112.05, shortly after the opening bell. The most current drop has apparently bottomed (for now) at 10,121.22. Current conditions warrant monitoring the Transportation Index into the close.
Presently, one must pay attention to the Dow Jones Transportation Index (^DJT). It has to close below 10,136.61, the Feb. 9 close, to confirm a change in the primary trend from Bull to Bear.
The Industrials already made the move this Friday past, but, according to Dow Theory (which is like 95% accurate - or better - when it comes to signaling primary directional changes), the Transports must confirm.
If it happens today (currently around 10,190) or tomorrow, bear in mind that markets are closed Friday (commemorating the day Jesus was crucified) and Sunday, the day Jesus rose from the dead, according to the Bible.
Far from bible-thumping, chronic venial sinners should bear in mind that Jesus may have risen from the dead, but the stock market probably won't.
Anyhow, when the transports confirm, then you'll have the answer to whether or not this is/was a turning point in the stock market.
Added, 10:48 am EDT: Transports have fallen below the target close for the second time today. The first fall was all the way down to 10,112.05, shortly after the opening bell. The most current drop has apparently bottomed (for now) at 10,121.22. Current conditions warrant monitoring the Transportation Index into the close.
Wednesday, August 3, 2016
Dow Ends 7-Day Losing Streak, But Who's Watching The Transports And NYSE Composite?
Markets can seem exuberant, sometimes, even over-exuberant, as has lately been the case, without reason.
The current environment is one of those times by which market movements cannot be rationally explained, or as the Maestro himself - former Fed Chairman, Alan Greenspan - so aptly put it, the markets seem to be suffering from irrational exuberance.
This needs to be pointed out in the current context of manipulation and high-stakes politics between the Nah! Brexit vote and the very real threat that Donald Trump might somehow wrangle himself into the Oval Office come November... to the absolute terror of the elite status quo, including everyone from Warren Buffet to Mark Cuban to Janet Yellen and just about every member of congress and Wall Street hedge fund slickster.
Money Daily has recently been pointing out that the any positive developments by Mr. Trump are and have been met with scurrying, rat-like selling of shares on the equity markets by those with very thin, lizard-like skins, probably your average congressional insider and self-important hedge fund managers.
On the other side of the coin, there's the relentless marauding of the Fed, the central bank which is prohibited from buying or selling of equities (unlike the Bank of Japan, which is now a top 10 holder of 90% of the stocks listed on the NIKKEI 225), but which has ample resources by which to funnel money into stocks via proxies such as Goldman Sachs, JP Morgan Chase, and Merrill Lynch, the investment arm of Bank of America, or even the Bank of Japan, which, having run out of luck in the Nikkei, is probably more than willing to buy US stocks.
It's a safe bet that the Fed and their cronies halted and reversed the post-Brexit decline, sending the Dow and S&P 500 to all-time highs via options trading and positions on the VIX, the volatility index, widely parlayed by those in the hedging business.
In fact, days before the Brexit vote, heads of the Swiss, Canadian, US and Japanese central banks were already in collusion to overcome any nasty "turbulence" in the markets, as openly reported by none other than Bloomberg.
So, it shouldn't come as any stretch of the imagination that the same types who distort presidential polls and have the mainstream media wrapped around their little fingers should also keep stocks artificially high as long as it appears that Hillary Clinton will be elected president come November 8.
Once stocks got to extreme levels, a bell went off in the heads of the big traders, telling them to take profits, resulting in a seven-day sell-off (otherwise known as consolidation), culminating in Tuesday's near-100-point decline on the Dow.
Wednesday, the Dow just barely hung on for a small gain, as did the other indices, however, the recent highs achieved by the Dow can be seen as absolute phonies, when referenced to the Dow Jones Transportation Average (DJTA), which sold-off and rebounded like other indexes post-Brexit, but did not attain new all-time highs (for the record, neither did the NASDAQ, nor the NYSE Composite, the broadest index of US stocks).
The Transports had a good run of it, topping out at 8048.09, but were 100 points shy of the all-time record, set back in April, 2015, at 8149.00.
The same is true on the NYSE Composite (NYA), which topped out recently at 10815.43, a far cry from May 2015, when the index stood proudly at 11254.87.
Taking away from this divergence in major markets is the idea that central banks and their friends can only influence so much. They often (make that, ALWAYS) leave bits and pieces of evidence of foul play scattered about. 100 or so points on the Transportation Average and over 400 points on the Composite shows just how sloppy and misguided their adventures into manipulation of not just stocks, but perceptions, have become.
Everybody watches the Dow and S&P. The transports and composite indices, not so much, or so they believe.
Dow Jones Industrial Average
18,355.00, +41.23 (0.23%)
NASDAQ
5,159.74, +22.00 (0.43%)
S&P 500
2,163.79, +6.76 (0.31%)
NYSE Composite
10,695.14, +34.01 (0.32%)
The current environment is one of those times by which market movements cannot be rationally explained, or as the Maestro himself - former Fed Chairman, Alan Greenspan - so aptly put it, the markets seem to be suffering from irrational exuberance.
This needs to be pointed out in the current context of manipulation and high-stakes politics between the Nah! Brexit vote and the very real threat that Donald Trump might somehow wrangle himself into the Oval Office come November... to the absolute terror of the elite status quo, including everyone from Warren Buffet to Mark Cuban to Janet Yellen and just about every member of congress and Wall Street hedge fund slickster.
Money Daily has recently been pointing out that the any positive developments by Mr. Trump are and have been met with scurrying, rat-like selling of shares on the equity markets by those with very thin, lizard-like skins, probably your average congressional insider and self-important hedge fund managers.
On the other side of the coin, there's the relentless marauding of the Fed, the central bank which is prohibited from buying or selling of equities (unlike the Bank of Japan, which is now a top 10 holder of 90% of the stocks listed on the NIKKEI 225), but which has ample resources by which to funnel money into stocks via proxies such as Goldman Sachs, JP Morgan Chase, and Merrill Lynch, the investment arm of Bank of America, or even the Bank of Japan, which, having run out of luck in the Nikkei, is probably more than willing to buy US stocks.
It's a safe bet that the Fed and their cronies halted and reversed the post-Brexit decline, sending the Dow and S&P 500 to all-time highs via options trading and positions on the VIX, the volatility index, widely parlayed by those in the hedging business.
In fact, days before the Brexit vote, heads of the Swiss, Canadian, US and Japanese central banks were already in collusion to overcome any nasty "turbulence" in the markets, as openly reported by none other than Bloomberg.
So, it shouldn't come as any stretch of the imagination that the same types who distort presidential polls and have the mainstream media wrapped around their little fingers should also keep stocks artificially high as long as it appears that Hillary Clinton will be elected president come November 8.
Once stocks got to extreme levels, a bell went off in the heads of the big traders, telling them to take profits, resulting in a seven-day sell-off (otherwise known as consolidation), culminating in Tuesday's near-100-point decline on the Dow.
Wednesday, the Dow just barely hung on for a small gain, as did the other indices, however, the recent highs achieved by the Dow can be seen as absolute phonies, when referenced to the Dow Jones Transportation Average (DJTA), which sold-off and rebounded like other indexes post-Brexit, but did not attain new all-time highs (for the record, neither did the NASDAQ, nor the NYSE Composite, the broadest index of US stocks).
The Transports had a good run of it, topping out at 8048.09, but were 100 points shy of the all-time record, set back in April, 2015, at 8149.00.
The same is true on the NYSE Composite (NYA), which topped out recently at 10815.43, a far cry from May 2015, when the index stood proudly at 11254.87.
Taking away from this divergence in major markets is the idea that central banks and their friends can only influence so much. They often (make that, ALWAYS) leave bits and pieces of evidence of foul play scattered about. 100 or so points on the Transportation Average and over 400 points on the Composite shows just how sloppy and misguided their adventures into manipulation of not just stocks, but perceptions, have become.
Everybody watches the Dow and S&P. The transports and composite indices, not so much, or so they believe.
Dow Jones Industrial Average
18,355.00, +41.23 (0.23%)
NASDAQ
5,159.74, +22.00 (0.43%)
S&P 500
2,163.79, +6.76 (0.31%)
NYSE Composite
10,695.14, +34.01 (0.32%)
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