Many Signs Beginning to Appear That Signal the End of the Bull Run

These times, trying for some, are inscrutable for others.

While a small fraction of the population can see the changes in culture, society and technology clear as day, the majority only gets a grasp of the situation when the changes have taken hold and new trends already developed.

We are currently in a period of great change. Two years from today, one will not recognize America. Other countries will undergo massive upheavals. It is already underway.

Look around. The kinds of people - average, middle class folks - you used to see on a regular basis are gone, replaced by walking zombies on food stamps. Get used to it. The welfare-police state is upon us. Alternately, the people who have seen this coming are preparing to prosper. It will get worse before it improves, but, when the current power structure and domination of mega-corporations ultimately fails, small businesses, which have been under the thumb from competition from larger rivals and government regulations gone wild, will emerge, grow and prosper. It's just a matter of time.

As for today's roller-coaster on Wall Street, the movements were up, down, up, with the Dow closing at the mid-point of its 62-point high of the day and the -142-point lows, but still in the red. The S&P and NASDAQ finished with gains, though small.

Reporting prior to the opening bell, Johnson & Johnson (JNJ) reported better-than-expected earnings, but finished the day lower on poor guidance. A similar scenario played out for insurance giant, Travelers (TRV), and cell carrier, Verizon (VZ).

Following the trading close, IBM reported an earnings beat (6.13 ex-items vs. 5.99 est.), but a huge miss on revenues. Analysts were looking for $28.25 billion and got only $27.70 billion.

Sadly, for Big Blue, they are trading at roughly an 11 P/E multiple. The company is a dinosaur and headed for extinction, though that reality is still a way off.

Another slow-footed beast, Texas Instruments (TXN) reported 0.46 per share on revenue of $3.03 billion. Both of these tech behemoths were trading lower in after-hours, with IBM down nearly three percent. Dead money. It's what's not for dinner.

Among the more obvious signs that change is permanent and the bull market in stocks is coming ever closer to a crashing climax:

• Sears, JC Penny and Target.
• Analyst on CNBC says stocks will fall 10%, then fumbles targets of 16,000 on the Dow and 1800 on the S&P. Basic math: FAIL.
• Chris Christie
• Hillary
• Mohamed El-Erian steps down as Pimco CEO
• Another former Pimco exec, Neel Kashkari announces he is running for governor of California.
• Complaints that the Dow is down because some stocks are priced too high. (At least there's a solution for that.)

More are certain to follow.

DOW 16,414.44, -44.12 (-0.27%)
NASDAQ 4,225.76, +28.18 (+0.67%)
S&P 1,843.80, +5.10 (+0.28%)
10-Yr Note 99.30, +0.18 (+0.18%) Yield: 2.83%
NASDAQ Volume 1.91 Bil
NYSE Volume 3.75 Bil
Combined NYSE & NASDAQ Advance - Decline: 3649-2079
Combined NYSE & NASDAQ New highs - New lows: 466-36
WTI crude oil: 94.99, +0.62
Gold: 1,241.80, -10.10
Silver: 19.87, -0.434
Corn: 425.00, +1.00

Stocks Rise, Then Fall, End Flat; Dow Up 16X in 31 Years Though Not the Same

Stocks flew at the open, making the highs of the session, then backtracked, recovered and finally flat-lined until 3:00 pm ET, when selling commenced, taking the indices back to break-even for the day.

It was mostly a senseless trade, kicking off a holiday-shortened week which will feature lower volume than usual (if that's possible) and giddiness surrounding the holiday shopping season, which almost always produces an up session on the short Friday after Thanksgiving.

A few friends were commenting on the wisdom of a buy and hold strategy for the long haul as the Dow Jones Industrials crossed the 16,000 threshold this past Friday. One idea was that holding an index fund of Dow stocks from late 1982 to the present would have resulted in a 16X return on your money, or $10,000 invested in the Dow in 1982 - the last time the Dow crossed the 1000 mark and did not fall below it - would be worth $160,000 today.

It's an interesting concept, but, in case somebody wanted to just buy all the individual stocks in the Dow 30 blue chips, it would have probably been a more profitable, albeit time-consuming endeavor. Of the 30 stocks in the Dow today, only 10 of them were part of the index back in late 1982.

Those ten are AT&T, American Express, IBM, duPont, 3M, Proctor & Gamble, GE, United Technologies, Merck and Exxon (merged with Mobil to form ExxonMobil).

In those 31 years, the composition of the Dow changed 13 times, including eight times since 2003. Not to say that the stocks in the Dow are all magnificent winners, but how one gets a 16X return is by taking out under-performers and replacing them with stocks which have a better chance of appreciation, kind of a shell game, though one could have done well just holding any fund indexed to the famous average.

By way of comparison, the S&P 500 rose from about 140 to the current level just above 1800 in the same time period, a gain of just over 13X. Of course, the S&P has even more movement in and out of the index, and weightings are changed periodically. Overall, it gets re-jiggered more often than the Dow.

It's how Wall Street produces outsize profits for investors; they change the game constantly or as conditions warrant. It begs the question of the wisdom of individual issues and fast money trading.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." --Henry Ford

DOW 16,072.54, +7.77 (+0.05%)
NASDAQ 3,994.57, +2.92 (+0.07%)
S&P 1,802.48, -2.28 (-0.13%)
10-Yr Note 100.10 +0.09 (+0.09%)
NASDAQ Volume 1.74 Bil
NYSE Volume 2.99 Bil
Combined NYSE & NASDAQ Advance - Decline: 2701-2954
Combined NYSE & NASDAQ New highs - New lows: 532-96
WTI crude oil: 94.09, -0.75
Gold: 1,241.20, -2.90
Silver: 19.88, +0.02
Corn: 431.25, +2.00

Wall Street Weirdness as Dow Makes New Record, NASDAQ Falls

Maybe it's the weather, but investor taste for speculation may be turning, just a day before the hoopla over the Twitter IPO is set to take place. The 142-character internet darling will open tomorrow at a very overpriced $27-30 per share. It could be that some big players in the tech investing (gambling) space just freed up money to get into the hottest IPO since... um, Facebook, though the memory of that magnificent failure is still fresh.

Still, winners just barely edged losers on the day, while the place to be in Dow stocks was in Chevron (CVX), IBM (IBM) and Microsoft (MSFT), an odd grouping there.

The MBA Mortgage Index slumped sadly prior to the open, with weekly applications off seven percent, even as 30-year rates fell to 4.32%.

Crude inventories showed only a modest uptick, which helped oil stage a rally off of five-month lows.

With bond yields settling lower, gold and silver up moderately, it was very tough to get a read on the overall market. Corn made fresh 52-week lows, which is bearish for beef, but bullish for carnivores in general, with beef prices stable and possibly set to decline. Overall, however, falling corn prices is about as good a deflation indicator as one can find, especially priced in silver.

Steady as she goes, though, especially on those safety plays in the Dow, which should consider to out-perform in a flight to dividend comfort.

Tweet that.

Dow 15,746.88, +128.66 (0.82%)
Nasdaq 3,931.95, -7.92 (0.20%)
S&P 500 1,770.49, +7.52 (0.43%)
10-Yr Bond 2.64%, -0.02
NYSE Volume 3,298,818,000
Nasdaq Volume 1,989,898,000
Combined NYSE & NASDAQ Advance - Decline: 2851-2753
Combined NYSE & NASDAQ New highs - New lows: 317-79
WTI crude oil: 94.80, +1.43
Gold: 1,317.80, +9.70
Silver: 21.77, +0.132
Corn: 421.25, -3.75

Avoiding the Obvious Global Slowdown, Stocks Ramp Higher to End Week

With the nation focused on the manhunt in the Boston bombings, Wall Street types took the opportunity to bid up prices on risk assets, which is really all they know how to do.

Despite the best efforts of the insiders trading against each other and hoping with all their hearts to lure retail suckers into the market, the major indices still ended the week with losses.

For the week, the Dow lost 318 points, and was held in check today by IBM, as Big Blue missed earning and revenue estimates and was down 8% in heavy trading.

The NASDAQ lost 88 points through the week; the S&P 500 dropped 33.

The G20 meeting in Washington was nothing more than the usual gap-fest, with nothing of importance coming out of the fete.

Boston continues to be locked down as infantile efforts by our nation's security forces try to catch a lone 19-year-old kid accused of committing - with his now-dead-brother - the Boston bomb attacks.

The wall-to-wall coverage of this non-event has allowed CNBC and Bloomberg talking heads to sidestep the issue of the rapid deterioration of the US economy.

Stay tuned for further non-developments.

Dow 14,547.51, +10.37 (0.07%)
NASDAQ 3,206.06, +39.70 (1.25%)
S&P 500 1,555.25, +13.64 (0.88%)
NYSE Composite 8,994.12, +72.94 (0.82%)
NASDAQ Volume 1,710,872,500
NYSE Volume 3,876,484,750
Combined NYSE & NASDAQ Advance - Decline: 4538-1852
Combined NYSE & NASDAQ New highs - New lows: 213-68
WTI crude oil: 88.01, +0.28
Gold: 1,395.60, +3.10
Silver: 22.96, -0.285

Dow Continues to Power Higher; Apple Cored After Hours

Editor's Note: Apologies for not posting yesterday. We had a major crash of our main computer on Sunday and have been working off a partially-impaired computer since, making life difficult and blogging an excursion into 1990s computing. A bew computer (due to arrive by Monday) should get everything back to normal within a few days.

Stocks keep climbing on hopes that the congress and the president can resolve their debt ceiling differences by passing a temporary extension (read: kicking can a bit down the road) and promising to get serious long before their May deadline (we will believe that when we see it).

The House passed the bill paving the way for an extension of the debt limit until May 19, when it will be reset to reflect additional borrowing through the interim period, voting overwhelmingly in favor across party lines, 285-144.

On Tuesday, existing haome sales came in below forecast, at 4.94M, on expectations of 5.10M (annualized). Not to worry, stocks put in another day of gains.

The Dow was the big winner today, thanks almost entirely to IBM, even though Big Blue has made the bulk of its profits over the past two years by buying back shares, thus reducing the number of shares available and making the EPS number more palatable.

Only 12 stocks on the Dow were up, compared to 17 closing in the red. Coca-Cola (KO) finished unchanged.

McDonald's reports that profits in the US were highly correlated to sales off its dollar menu, implying that either the American pallet enjoys the cheaper menu items or the American wallet is not very well-filled these days.

Apparently, not everyone is convinced that the only thing that matters is what happens in Washington. The NYSE Composite closed lower on the session.

So far in 2013, Dow Jones Industrials have finished higher on 11 of 16 trading days, including the last four straight. The average is up a whopping 675 points, roughly a five percent gain, which, in more normal times, might be good for a full year.

Caution is advised, though with the Fed pumping liquidity with every last ounce of reserve (no pun intended), the chances are that any pullback will be temporary and short-lived.

After hours, shares of Apple (AAPL) were slashed, as the company reported flat earnings per share on increased revenue (18%) year-over-year. The stock was down nearly five percent, falling below the 500 level once again.

Dow 13,779.17, +66.96(0.49%)
NASDAQ 3,153.67, +10.49(0.33%)
S&P 500 1,494.78, -2.22(0.15%)
NYSE Composite 8,828.35, -4.40 (0.05%)
NASDAQ Volume 1,687,925,130
NYSE Volume 3,764,679,750
Combined NYSE & NASDAQ Advance - Decline: 2909-3504
Combined NYSE & NASDAQ New highs - New lows: 510-10
WTI crude oil: 95.23, -1.45
Gold: 1,686.70, -6.50
Silver: 32.44, +0.262

Reality Catching Up to Wall Street on Earnings Misses, Fears

Around June, this author told a particularly self-absorbed, furtive individual that there would be a market "event" shortly before the presidential election, designed to offer the impression that the economy, under president Obama, was failing in multitudinous ways, designed to usher in Mitt Romney as the next occupant of the White House.

Until today, that prediction seemed somewhat unreasonable, as stocks have risen sharply during the summer months, but, as third quarter earnings - in addition to various warnings from the likes of the IMF and World Bank - are proving, the US and global economies are far from what anyone would consider healthy.

Today's sharp sell-off was the product of many misses and warnings by huge multi-national companies that either missed earnings and/or revenue estimates or issued warnings for the months ahead.

Among those companies that fell short of Wall Street's lowered estimates after Thursday's close and prior to Friday's open were McDonald's (MCD), Microsoft (MSFT), Google (GOOG), high-flying Chipolte Mexican Grill (CMG), and General Electric (GE). The misses came behind similar poor showings from Intel (hit a 52-week low today) and IBM, earlier in the week and proved quite a few sell-side analysts correct in predicting that this quarter would be very rough from an earnings perspective.

Truth be told, even those companies beating earnings estimates are not beating by much, with some exceptions, and are generally hitting targets that are lower than the previous years numbers, which, as the market is a continuous-discounting mechanism, means stocks are going in reverse, with earnings falling, not growing.

That alone should explain today's deep, across-the-board, declines, but also brings into question the entire philosophy behind central bank easing and money printing on a global scale. Sure enough, easy money has propped up banks and companies and a multitude of stocks and indices, but the end result of funny fiat money always reverts to a point at which currencies become worthless and derivative instruments, such as stocks, and, further out, bonds, lose value and we could be nearing the conclusion of the failed stimulative experiment that's fixed nothing since the crash of 2008.

Speaking of crashes, today's drop pales by comparison to what occurred 25 years ago to the day, the well-known stock market crash of 1987, when the Dow Jones Industrial Average fell by 23%. It was a seminal market event that will probably (hopefully) never be repeated, as there are supposedly more safeguards and triggers - to say nothing of the PPT - to prevent such a disastrous one-day event.

That is not to say that markets, stocks and indices cannot fall hard over periods of time, though it is far too soon to call today's action the beginning of such a a downward spiral. However, with tech stocks and industrials feeling the heat from investors in an earnings season that has been short on enthusiasm and long on fear, the coming weeks, especially with the November elections as a backdrop, could produce some calamities such as have already been seen in individual stocks, many of which were grossly overvalued and highly speculative, Chipolte and Apple come immediately to mind.

Checking the charts, it's useful to point out that the Dow and S&P broke through their 50-day moving averages and closed just about right on them, a position last seen a week ago, before Monday and Tuesday's "savior" rallies pushed equities back to something of a triple top, which has now broken down in a dramatic reversal. Today's declines on the two indices were the worst since mid-June. Shortly thereafter, both indices progressed above their 50-day MA, but have now returned to the roost, setting up a very unsettling weekend and a potential breakdown on Monday or further on during the week.

As for the NASDAQ, today's worst percentage loser, that index has been screaming red for a month, having busted through its 50-day MA eight sessions ago. Any further deterioration in the beloved NAZ could trigger a serious correction, as it is already down 7% in the past month.

Looking ahead to next week, earnings reports are due out on some big names, such as Cattepillar (CAT), Las Vegas Sands (LVS), Yahoo (YHOO) and Texas Instruments (TXN) on Monday; 3M (MMM), Coach (COH), Facebook (FB) and United Parcel Service (UPS) on Tuesday; and, on Wednesday, Boeing (BA), Eli Lilly (LLY), General Dynamics (GD), Lockheed Martin (LMT) and O'Reilly Automotive (ORLY).

Those mentioned above are but a smattering of companies reporting, in what will be the busiest week of earnings season. CNBC and Bloomberg will be looking for rays of hope, while investors may have a more wary eye toward more companies missing on earnings and revenue.

One economic data point worth noting was existing home sales for September, falling 1.7% to an annual run rate of 4.75 million, well below most estimates.

Until then, the long weekend waiting game, and, on Monday night, the final presidential debate, followed on Wednesday another FOMC rate policy decision, which will probably be nothing more than a formality.

Naturally, there will be the usual can-kicking and posturing from Europe, which still cannot come up with plans for either Greece or Spain, which may or may not be part of the plan to hold off the bad news until after our elections. One can hardly wait.

That is all... for now.

Dow 13,343.51, -205.43 (1.52%)
NASDAQ 3,005.62, -67.25 (2.19%)
S&P 500 1,433.19, -24.15 (1.66%)
NYSE Composite 8,324.14, -118.68 (1.41%)
NASDAQ Volume 2,194,602,500.00
NYSE Volume 3,851,036,250
Combined NYSE & NASDAQ Advance - Decline: 1168-4339
Combined NYSE & NASDAQ New highs - New lows: 166-117
WTI crude oil: 90.05, -2.05
Gold: 1,724.00, -20.70
Silver: 32.10, -0.771

Pandit Resigns from CITI; IBM Revenue Miss; Greece Talks Stall; Farm Notes

It was a busy day on Wall Street, with stocks closing at or very near their highs of the day, the two-day rally this week nearly recouping the losses from the prior week on the Dow and S&P, though the NASDAQ, hardest hit last week, has recovered only about 1/2 of its losses.

Stocks got an early boost when Coca-Cola (KO) matched earnings estimates of 50 cents per share and Johnson & Johnson (JNJ) reported third quarter earnings, excluding special items, of $1.25 per share. Analysts, on average, expected $1.21 per share. Both companies are components of the Dow Jones Industrial Average.

Goldman Sachs (GS), the nation's fifth largest bank by assets (though even though hastily granted a commercial bank charter in the midst of the 2008 financial crisis, has yet to open a single retail branch), also beat lowered estimates, citing debt investments and underwriting fees as the main profit drivers.

Industrial production grew by 0.4%, capacity utilization increased slightly from 78.2% to 78.3% in September and the CPI ratcheted up 0.6% in September, due mostly to higher food and fuel costs, which explains why the "official" core rate of an 0.1% increase excludes those necessities. On an annual basis, the September CPI translates into 7.2% inflation, which is probably less than it actually is in the new, Fed-funded world of bizarro-finance.

The big news was the abrupt departure of Citigroup CEO Vikram Pandit and COO John P. Havens, just a day after the company reported third quarter earnings. According to published reports, Citi's board of directors had been plotting Pandit's retirement for months, though Pandit himself said it was soley his decision.

Pandit's departure sent shock waves through executive offices at Fortune 500 companies and elsewhere, as apparently, there are still some BODs that are not rubber-stamping mechanisms.

Stocks got off to a fast start with most of the gains made in the morning, with small additions in the afternoon.

After the bell, IBM reported earnings in line with expectations, but missed on revenue of $24.7 billion, down from $25.8 billion in Q2, setting up for a testy open on Wednesday. Shares of Big Blue were down five points in after hours trading.

The Euro gained sharply against the dollar, boosting US shares even more as the dollar cheapened, but, in news generally sealed off from the US, Greece's talks with the troika fell apart over further austerity measures with negotiators walking out of meetings.

That late-breaking news, combined with the results from IBM and the scoring of tonight's presidential debate will set the tone for the open on Wednesday.

Farm Notes: Did you know that the agribusiness model that the large corporate farms employ (row planting and harvesting) wastes land, water and valuable resources, besides putting harmful chemicals - through the use of pesticides and fertilizers - to produce crops that are significantly less-protein rich than vegetables grown in the average backyard garden?

Also, using intensive gardening methods such as those used for centuries in France and elsewhere, the same amount of vegetables that an agribusiness farm can produce on one acre can be produced on 1/10th or less of an acre with less fertilizer, water and no pesticides.

Gardening, in America and elsewhere, isn't just about a pasttime or a hobby. It's about reclaiming the economy and moral high ground from corporations and the wasteful practices promoted by the Department of Agriculture.

Dow 13,551.78, +127.55 (0.95%)
NASDAQ 3,101.17, +36.99 (1.21%)
S&P 500 1,454.92, +14.79 (1.03%)
NYSE Composite 8,386.47, +92.97 (1.12%)
NASDAQ Volume 1,735,765,375.00
NYSE Volume 3,539,692,250
Combined NYSE & NASDAQ Advance - Decline: 3861-1630
Combined NYSE & NASDAQ New highs - New lows: 278-40
WTI crude oil: 92.09, +0.24
Gold: 1,746.30, +8.70
Silver: 32.96, +0.216

Nice Day for Dow Industrials, Thanks to IBM; Housing Fix Not In

Stocks continued their happy saunter through the cold of January, with the Dow Jones Industrials posting another nearly-100-point gain, thanks in large part to IBM (up 7.98 to 188.50 (+4.42%) on solid 4th quarter earnings reported after the bell Thursday), which accounted for half of the Dow's gain all by itself.

The other indices lagged far behind the Blue Chips, courtesy of Google's (GOOG) worst earnings miss in six years, reporting a profit of $2.7 billion on revenue of $10.6 billion, well below Wall Street non-GAAP estimates of $9.50 per share versus an estimate of $10.46. Whoops! Shares of the internet behemoth were down 53.58 points, a loss of better-than eight percent.

Two other tech titans - Microsoft (MSFT) and Intel (INTC) - reported excellent quarters, helping to keep the montl-long rally going. The Dow, S&P and NYSE Composite were up each of the four trading days this week; the NASDAQ fell just short, losing 1.63, despite a valiant, last-half-hour rally.

Despite the outstanding gains from the last half of December through today, there are signs of trouble, and the fact that today marked options expiry, may lead to declines next week as more companies report. With just about 20% of the S&P 500 having reported, only 55% have beaten expectations, a ten year low. The average for the past ten years has been that 62% of companies beat street estimates. Considering that the big banks have all reported already - and all of them matched or beat - this does not bode well for the bulk of reporting companies which are set to report over the next two weeks.

Meanwhile, the Dow is back at levels last seen in mid-July, today's close just missing (four points) making a six-month high. It will be interesting to see if the Dow can crack through next week and continue onward toward exceeding the 2011 high of 12810.54 made on April 29. Yes, it's getting a bit frothy. The word for next week is likely to be "overbought," as in "we're market pumping day-traders who don't give a hoot about fundamentals, just making a profit."

So far, the advance-decline and new highs-new lows indicators are showing no sign of an impending correction, but, with the Dow up nearly 1000 points in just the past four weeks, a short correction would be something a healthy market would fully appreciate.

One other item that may be a canary in the coal mine is the nice rise in gold over the past few weeks, including a healthy advance today, and, finally, silver caught a bid over the past few sessions, finally breaking and holding over the artificial resistance at $30/ounce.

On CNBC today, the network featured a series of reports on housing, calling it, somewhat inappropriately, "The Big Fix." Hottest among the topics was the government plan to sell off Fannie Mae and Freddie Mac's inventory of foreclosed homes (REO) to investor groups which will turn these single-family homes scattered across the country into rental units.

As is usual with government's half-baked plans, there are a rash of questions and arguments against, primarily centered around the whole fairness issue of kicking families out and then reselling - at what should be huge discounts - to well-heeled investors more concerned with turning profits than restoring blighted neighborhoods. The plan is still in the formative stages, but there are indications that the government will allow the investors to rent to whomsoever they please, which would include welfare and other social program recipients, meaning that homeowners ought to be on guard for the ghetto-ization and balkanization of their McMansion neighborhoods, such as is the case in other socialized nations, notably France, where the ghettos are in the suburbs, far from the uber-rich in the well-maintained cites.

One other problem is that the banks - if they actually do the right thing and write down these loans - will be facing far larger write-downs on bulk sales than anticipated. Since the US economy has been predicated for the past six years on keeping the banks free from losses, the government plan looks like a classic election-year crash and burn before it even gets going.

Dow 12,720.48, +96.50 (0.76%)
NASDAQ 2,786.70, -1.63 (0.06%)
S&P 500 1,315.38, +0.88 (0.07%)
NYSE Compos 7,829.34, +9.97 (0.13%)
NASDAQ Volume 1,979,837,250
NYSE Volume 3,911,913,250
Combined NYSE & NASDAQ Advance - Decline: 3289-2274
Combined NYSE & NASDAQ New highs - New lows: 182-26
WTI crude oil: 98.46, -1.93
Gold: 1,664.00, +9.50
Silver: 31.68, +1.17

Clueless? You're Not Alone on Turnaround Tuesday

From the most grizzled veterans to the baby-faced nubians, nobody was able to put any kind of story or spin on the dramatic turnaround stocks made Tuesday.

After IBM and Texas Instruments both reported revenue misses for the second quarter Monday after the close, Goldman Sachs continued the trend with an earnings report that had traders scrambling for the exits before the market had even opened. When stocks did begin trading, they fell off a cliff, with the Dow down by more than 145 points within the first 15 minutes.

Stabilizing in the red, all indices were trading lower, but gained strength throughout the morning and accelerated into the afternoon session. As 2:00 pm approached, stocks had staged a stunning reversal on nothing but momentum. By the close, all of the major indices sported solid gains, keeping hopes alive that this earnings season would offer some value and momentum for the second half of the year.

Even though IBM ended lower for the day (-3.24, 126.55, -2.50%), it had pared losses substantially, after it had opened with a loss of more than 5%. Goldman Sachs, on the other hand, possibly the true catalyst behind the entire market rally, ended the day higher (+3.23, 148.91, +2.22%) after initially trading down by more than 3 1/2 points from its previous close.

Dow 10,229.96, +75.53 (0.74%)
NASDAQ 2,222.49, +24.26 (1.10%)
S&P 500 1,083.48, +12.23 (1.14%)
NYSE Composite 6,820.04, +80.40 (1.19%)

Headline numbers were supported by strong internals, with advancing issues beating back decliners, 4846-1552. New highs remained atop new lows, 214-136, though once again the disturbing trend in the NASDAQ - more new lows than highs, 67-26 - appeared for the second straight day. Volume was light, but much better than Monday's dismal showing.

NASDAQ Volume 1,944,221,875
NYSE Volume 5,323,317,000

Crude oil closed out the August futures contract up 90 cents, at $77.44, the highest price in a month. Gold rallied for a gain of $9.80, to $1,191.50. Silver added 15 cents, to $17.68.

After the bell, Yahoo! and Apple reported, with Yahoo missing on revenue though beating consensus bottom line EPS by a penny at 15 cents per share. Apple beat on almost all metrics, including gross revenue and earnings per share, setting up a potentially powerful open for tech shares on Wednesday.

Mixed Messages

Stocks began the day and finished it in mixed fashion, as the Dow was the only major index to close above the break-even line. Especially hard-hit was the NASDAQ, which suffered from a very downbeat report from Baidu.com (BIDU), China's version of Google, when the company reported third quarter earnings, but guided investors of a revenue shortfall upcoming due to a change in advertising placements. The stock opened down 77 points, but recovered to close only 49 points in the red. Still, the stock took an 11% hit by the end of the trading session.

The Dow was helped along by three components: ExxonMobil (XOM), Chevron (CVX) and IBM (IBM), which accounted for almost all of the smallish upside. The two oil majors were helped by a positive 3rd quarter from British Petroleum (BP), while IBM announced a $5 billion increase to its stock buy-back program.

Dow 9,882.17, +14.21 (0.14%)
NASDAQ 2,116.09, -25.76 (1.20%)
S&P 500 1,063.41, -3.54 (0.33%)
NYSE Composite 6,932.04, -28.05 (0.40%)

The session was overall a weak one, as declining issues beat gainers by a wide margin, 4263-2205. What is of particular interest is the small margin of new highs over new lows (123-71), the worst performance for new highs since that particular metric rolled over back in May. The easy comparisons to last year's stock prices, especially off the monstrous 7-month+ rally, would normally presume a large number of new highs, which was evidenced during the summer and early fall, but the recent pullback has changed the outlook considerably.

Volume on the day was in line with the overall trend of the past two to three weeks.

NYSE Volume 6,203,113,500
NASDAQ Volume 2,405,401,500

Commodities, like stocks, were tied somewhat to the stronger dollar, as gold fell $7.40, to $1,035.40, silver dropped 56 cents, to $16.54, but oil bucked the general trend, gaining 87 cents, to $79.55, though the $80 mark continues to appear to be a led on price. Demand is simply not high enough to support a price over $80, much less in the $70s. Additionally, supply is robust, with nary a shortage anywhere in the world. Price of energy commodities will continue to be pressured by warmer-then-normal weather in the Northern Hemisphere, which is predicted through December.

Investors, through their trading stratagems, are offering a very good insight into how earnings results are being played. With most of the big names already having reported, unless companies are beating both earnings and revenue projections, they are being bid up prior to the release of their reports and quickly sold off. This has all the earmarks that would accompany a market top, and the indices are generally 3% below the heights reached last week.

A 5-8% dip from here would be no surprise, especially with some severe headwinds approaching in terms of 3rd quarter GDP (Thursday), though first September Durable Goods orders before the bell tomorrow, which yesterday I incorrectly said would be reported today (hanks to Yahoo Finance).

Late Day Action Boosts Stocks; Google Soars; IBM Sours

As is often the case during earnings season, much of the real action happened after the closing bell. That was when tech bellwethers Google (GOOG) and IBM (IBM) announced third quarter earnings results. But first, a recap of the day's trading, which was, by most accounts, choppy and surprising at the end.

Stocks spent most of the day in a narrow range just below the break even line. Around 2:30 pm, the major indices managed to pop into the green and stayed there into the close, marking new 2009 highs for the major indices. These moves were in spite of the chorus of boos surrounding Goldman Sach's 3rd quarter earnings announcement before the bell, which was better than expectations, but not good enough to keep the stock from sliding throughout the session. Most of the interest was focused not on Goldman's stellar 3rd quarter, but on the bonuses being paid to executives.

The company practically owns the deal-making space, now that Bear Stearns and Lehman Bros. have departed, and they made boatloads of money - $3.19 billion, beating the estimates handily - but because of a Meredith Whitney downgrade on Tuesday (based on valuation - Goldman shares have nearly quadrupled since last November) and general dislike for the firm many believe runs the government, the banking business and most of the known universe. Like them or hate them, making 300% on your money in a year isn't hard to take. Sure, they pay their executives handsomely, but they bring in huge money for their shareholders, so the only people griping are those not smart enough to have gotten on the bandwagon.

The stock lost a whole 3 points and change on the day. I'm sure owners of the stock are really crying in their champagne.

Also before the bell was the usual horrid unemployment claims number. Another 514,000 Americans filed for unemployment benefits this week. These numbers cannot be taken seriously. First, unemployment benefits are so easy to come by these days that the people claiming them probably shouldn't even be counted as seriously unemployed. All you have to do is a poor job and somebody will certainly furlough you. Additionally, according to the figures, which have been over 500,000 for more than a year, there have been at least 25 million people collecting benefits in the past 12 months. That's an enormous figure, even in bad times. What matters more is how long these people stay out of work, not how many are stepping up to the collection plate.

The number of people still collecting benefits fell below 6 million, and that number has been trending lower for months, a positive sign for the economy.

Citigroup also reported before the bell and the results were mixed. The company which received the most assistance from the feds, and is partially owned by you ,me, and our neighbors across America, hasn't done a very good job of managing our money, which came as no surprise and had little influence on the general market.

Dow 10,062.94, +47.08 (0.47%)
NASDAQ 2,173.29, +1.06 (0.05%)
S&P 500 1,096.56, +4.54 (0.42%)
NYSE Composite 7,204.05. +21.67 (0.30%)

Declining issues finished slightly ahead of advancers, 3338-3081. There were 727 new highs to just 73 new lows. Volume was in the range it's been since Tuesday. There is still a ton of money on the sidelines, missing out on the rally. This stagnant money will be great for savvy traders, because when it finally does come in, it will send a strong selling signal at a supposed market top. Smart guys and gals will be able to maximize profits upon exiting. Look for an unusually high volume number to send the signal that it's time to unload.

NYSE Volume 6,184,697,500
NASDAQ Volume 2,199,385,750

Commodities were led by oil, which gained $2.40, to $77.58. The price of oil, and its derivative, gas, is approaching a level at which it can damage the economic recovery. more money being spent on fuel means less to spend on all the other things Americans enjoy. Though there's unanimity in the chorus of oil traders that the price will go higher, I'd still not engage in that trade as it can only go so far before crimping its own demand. Many would agree that it's already too high, but, since all hatred is currently focused on bankers, the oil moguls are getting a free ride. Buy some Chevron or ExxonMobil stock if you don't like the higher prices for gas. The gains will even out, and if prices do fall, your stock will only be worth a little less. It's a zero sum trade if you play it properly.

The precious metals were hit by profit taking. Gold sold off to $1,050.60, a key inflection point, down by $14.10. Silver dipped 49 cents, to $17.42.

As for Google, the company posted its largest profit and revenue ever. That about covers the state of the internet. Technology companies are extremely healthy, with squeaky clean balance sheets. Like Google, most of the larger ones have no, or very small amounts of, debt.

IBM also beat forecasts, but revenue slipped. Big Blue is still recovering from the last year in which many of its major clients suffered or went out of business. They're doing just fine, however, having hit new 52-week highs in just the past week.

Google also posted a string of new 52-week highs in recent days. The search giant is branching out into other areas, a sign that they feel supremely confident about the economy going forward.

You should too.

Split Friday, Positive Week for Stocks

Earnings results were just good enough - from Bank of America and Citigroup's weakness, to IBM and Google's strength - to push stocks modestly into positive territory for the day on two exchanges and marginally in the red on two others. The general ambivalence displayed by the day's trading is indicative of another topping out, or, at least a weekend resting point, as the Dow has rung up gains for 5 straight sessions, the NASDAQ, 6. It's a winning streak worthy of note and one that put an end to 4 consecutive losing weeks.

Over the past five sessions the Dow has tacked on an impressive 597 points, the NASDAQ perked up 130; the S&P gained 61 and the NYSE Composite added 411. For all the talk about there being no recovery in sight, the first wave of corporate earnings provided enough positive vibe to send the markets off on a nice upward run.

The question still remains as to whether the gains are sustainable, though given the early returns, the companies being traded seem to have adjusted to a new set of economic circumstances. While earnings are still down from what they were a year ago, so are stock prices. Investors are weighing the current results against an uncertain future, but remain positive, though skeptical. At least there seems to be little worry about a complete melt-down a la last fall.

Dow 8,743.94, +32.12 (0.37%)
NASDAQ 1,886.61, +1.58 (0.08%)
S&P 500 940.38, -0.36 (0.04%)
NYSE Composite 6,038.11, -4.94 (0.08%)

On the day, declining issues narrowly beat advancers, 3376-2936, but new highs bested new lows, 103-71. Volume remained down, though not down to levels of previous sessions, but close. The low level of trading velocity continues to be a topic overlooked by the mainstream financial press. Sluggish trading is a clear sign that investors ate still skittish and widely risk-averse. The vast majority of trades are of the short-term variety, more akin to gambling than traditional investing.

NYSE Volume 1,290,375,000
NASDAQ Volume 1,890,890,000

Commodity traders were also encouraged, sending crude futures higher again, up $1.48, to $63.50. Gold brought an additional $2.10 per ounce, at $937.50. Silver tacked on 17 cents, to close at $13.40.

The coming two weeks will be chock full of earnings hits and misses, though the general indications are that most companies have avoided all-out bust scenarios and may be looking to avoid returning to near-term bottoms from March. The US and world economies have stumbled badly, but they're still functioning, albeit at a decreased capacity.

More Reality Checks

US equity markets suffered through a second straight losing session on Tuesday, amid skyrocketing oil prices and mixed earnings reports.

Dow 13,912.94 -71.86; NASDAQ 2,763.91 -16.14; S&P 500 1,538.53 -10.18; NYSE Composite 10,125.40 -90.89

It was another dose of reality for the largely-overpriced markets. Fed Chairman Ben Bernanke and Secretary of the Treasury Hank Paulson both jawboned about the continuing housing and credit crises. Bernanke chided bankers from expecting a "bailout" from the Fed on Monday night, while Paulson encouraged the same bankers to figure out ways to save strapped homeowners from falling into foreclosure.

In effect, they both told the banking segment that they were on their own, as it should be. The actual condition is that Fed and Treasury have both been supplying assistance to the banks. These men aren't stupid. They know a banking failure could be catastrophic, however, reading into their words, one wonders what they really know, and whether they actually believe the situation to be much worse than it appears.

Obviously, the bankers know the fix they're in, but they're not telling either. The best they can come up with is a joint fund to repurchase their own lousy paper, which they are unable to unload at this time. I don't know the technical term for their off-the-books repurchasing of faulty investment paper, but it certainly smells a lot like Enron. It's entirely possible that a very big name or two in the financial business could find itself in deep, deep water as early as the first quarter of '08.

As the markets churned in negative territory all day long, declining issues outdistanced advancers by better than a 2-1 margin and the new highs-lows finally rolled over, with 221 new lows appearing against 168 new highs. That particular indicator has been trending lower over the past week and finally is giving a clear signal that more losing sessions are ahead for stocks.

In other words, in a series of shouting headlines I'd like to see, SELL! EVERYTHING! NOW!

Commodity prices continued to dog stocks. Oil was up to another record high, up $1.48 to $87.61. Experts are now calling for 20-30% higher heating bills throughout the winter. God bless Al Gore for giving us GLOBAL WARMING!

Oddly enough, gold lost 20 cents while silver declined by the same amount, closing at $13.36. BUY PRECIOUS METALS

Stocks are offering a mixed picture.

Before the open: Delta Air Lines (DAL) reported better than expected third quarter earnings of $0.56 per share, compared with the consensus estimate of $0.41.

Wells Fargo missed by $0.02, misses on earnings of $0.68 per share, $0.02 worse than the Reuters Estimates consensus of $0.70. Shares of the bank's stock were hammered down to 34.55, -1.40 by the close.

Johnson and Johnson earned 88 cents per share, compared with 94 cents per share during the same period a year ago. Analysts sought .90 cents per share. The stock fell 58 cents to 65.07.

After the market closed on Wednesday, IBM beat estimates by a penny. Apparently, this was not good enough for investors, as the stock was being punished - down nearly 2% - in after-hours trading.

Holders of Yahoo (YHOO) were treated to the first quarterly results with co-founder Jerry Wang as CEO and they were pleasantly surprised when the company announced earnings of 11 cents per share, beating the street estimate by 3 cents. The stock price was down 1.17 prior to the announcement. Shares traded nearly 10% higher in after-hours activity, up 2.59 to 29.28.

Intel (INTC) reported a 43% rise in profits after the close and investors sent it soaring after hours, up more than 5%.

BUY TECHS!

Actually, I've been recommending techs over financials and just about everything else for most of 2007. This market, as a whole, however, is headed lower.

CIT Group (CIT), Coca-Cola (KO) and United Technologies (UT) report before the market open on Wednesday, and their reports should influence early trading.

NYSE Volume 3,181,638,250
NASDAQ Volume 2,093,682,500

Late Surge Takes Struggling Dow Past 14,000; Google Misses

While the Dow spent all of the day in positive territory, it only broke through 14,000 briefly at various points during the session, and actually looked like it was not going to make it as of around 2:30 when the index hung about 40 points below the psychological barrier.

Dow 14,000.41 +82.19; NASDAQ 2,720.04 +20.55; S&P 500 1,553.08 +6.91; NYSE Composite 10,194.01 +45.73

A late-day surge sent the Dow over the top, setting another in a series of all-time closing highs. The NASDAQ and S&P followed suit as a spate of earnings eased investor fears, though there still were more than a fair share of misses on Wall Street. Technology stocks carried the day, with IBM leading the way.

Among companies reporting second quarter results, were:

• Bank of America (BAC): Net income rose to $5.76 billion, or $1.28 per share, from $5.48 billion, or $1.19 per share, a year ago, though the company set aside 1.81 billion to credit losses. Analysts were seeking $1.20. The stock traded marginally lower.


• Capital One Financial (COF): Net income totaled $750.4 million, or $1.89 per share, in the April-June period, up from $552.6 million, or $1.78 per share, in the year-ago quarter. Analysts were looking for $1.68 per share on revenue of $4.07 billion. The company reported revenue of $3.57 billion. Shares were off 87 cents prior to the after the bell announcement, but improved in after-hours trade.


• Google (GOOG): The Mountain View-based company earned $925.1 million, or $2.93 per share, during the three months ended in June. That compared with net income of $721.1 million, or $2.33 per share, at the same time last year. Analysts were looking for $3.59 per share. Shares were off more than 30 points (6%) in after-hours trading


• Honeywell (HON): Quarterly earnings rose to $611 million, or 78 cents per share, for the three months ended June 30 from $521 million, or 63 cents per share, in the year-ago period. Analysts expected 0.75 per share.

IBM, which announced earnings after Wednesday's close, rose another 4.78 to 115.86 after it reported a profit increase of 12% on unexpected gross income. The stock's stellar performance was responsible for much of Thursday's gain, though that may well be offset by Google's missing the mark. Google reported after the close on Thursday, so Friday may be a rocky session, with options expiration also occurring.

Advancing issues led decliners by a 19-12 margin. New highs moved back ahead of new lows, 464-220, a sharp reversal from yesterday.

Oil closed at its highest level of the year, $75.92, up another 87 cents on the day. Gold and silver traded higher with gold at $678.10, a $4.40 gain. Silver was up 9 cents to $13.38.

On tap for tomorrow (with analyst expectations):

• Caterpillar Inc. (CAT) 1.49


• Citigroup Inc. (C) 1.13


• Schlumberger (SLB) 0.95


• Wachovia Corporation (WB) 1.22