Stocks Reverse Course, Midday, Post Huge Losses

Just for the record, there was no news, no catalyst, no event which caused stocks to end largely to the downside on Tuesday, after Monday's gains were attributed to the proposition of trade talks between China and the United States, an obvious straw man argument for equity appreciation.

Stocks were sailing right along until just after 1:00 pm EDT, but then proceeded to lose value for the remainder of the session. The NASDAQ, which was already in the red, posted a massive loss of 211 points, a decline of nearly three percent on the day.

Traders must have been caught wrong-footed, as Monday's massive spike seemed to indicate that all was well. Apparently, that was not the case, sending the Dow back down near the lows registered on Friday.

With markets closed on Friday, there remain just two trading days to the month, which almost certainly mark two straight months of losses, a rarity over the past nine years of bullishness. Notably, Monday's rise was on very slim volume compared to the number of sell orders seen on Friday and other recent down days.

Only the NASDAQ holds gains for the year and the first quarter. Fund statements are going to show minus signs for many investors, an unusual sight which may spur even more selling.

Interest rates on treasuries fell across the curve, with emphasis on the long end. The 10-year-note closed out with a 2.78% yield.

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

At the Close, Tuesday, March 27, 2018:
Dow Jones Industrial Average: 23,857.71, -344.89 (-1.43%)
NASDAQ: 7,008.81, -211.74 (-2.93%)
S&P 500: 2,612.62, -45.93 (-1.73%)
NYSE Composite: 12,302.54, -130.61 (-1.05%)

So, Now There's No Trade War?

Last week, all the financial media pundits could talk about was how President Trump was going to destroy the economy with his ill-advised tariffs, specifically targeting China, that great purveyor of cheap products that alternatively poison animals, emit toxic gasses, or break upon normal use (see Chinese nails, drill bits, concrete).

Well, over the weekend, the narrative somehow changed. Everything with China is "all good, nothing to see here, move along." And that's exactly what the slavish traders on Wall Street went about doing on Monday, sending the major indices soaring in one of the greatest one-day advances of all time.

The improvement on the NASDAQ was the ninth-largest ever. Interestingly, the eight advances bettering that number all occurred in the year 2000, except number one, which was a gain of 324.83 points in January of 2001. All of those gains were made in a bear market, after the NASDAQ dotcom bubble had burst.

On the Dow Jones Industrial Average, the 669.40 point gain was the largest since 2008, notably a period in which the economy was entering the Great Financial Crisis. Monday's advance was the third-best in market history.

The timing of news in relation to the market is becoming somewhat suspect, almost as if somebody was gaming the system. A similar move was just over a month ago, on February 6th, when the Dow gained 567.02 points a day after it fell a record 1,175.21 points (a Monday) and two days before it fell by the second-most ever, 1,032.89 (Thursday).

Putting a little more perspective on the matter, the Dow remains down 826 points in the month of March and is still 2400 points lower than the all-time high close on January 26 (26,616.71) and in the red for the year, albeit only 500 points down.

Therefore, Monday's gains should not be viewed in a vacuum. No single day should. It pays to have perspective, especially since Dow Theory confirmed a major trend reversal - from bull to bear - as of Friday's close (23,533.20), which was lower than the February 8 finish at 23,860.46.

Chasing this bull will eventually lead directly into the path of a very hungry bear.

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

At the Close, Monday, March 26, 2018:
Dow Jones Industrial Average: 24,202.60, +669.40 (+2.84%)
NASDAQ: 7,220.54, +227.88 (+3.26%)
S&P 500: 2,658.55, +70.29 (+2.72%)
NYSE Composite: 12,433.15, +255.45 (+2.10%)

Stocks Slammed After Fed Rate Hike; Dow Reaches Correction Level, More Pain Looms

Being as they are truly ugly - and predictable (see yesterday's post and many more before that for reference) - it might be appropriate to post just the numbers.

However, beyond the usual blathering nonsense from the financial "talking heads" in TV-land, it would be imprudent to not point out that the Dow Jones Industrial Average has fallen just into correction, down 10.30% from the all-time-high closing price of January 26 of this year.

With today's losses, the Dow is now down more than 1000 points for the month of March, after a collapse of 1100 points in February. This puts the blue chip average on track to reach bear market status by sometime between May 15 and June 21. The magic number for a 20% drop off the high is 21,293.37.

Think it can't happen? Reference the dotcom collapse of 2000, the GFC of 2008-09, or the crash in October 1929 whittled to the Great Depression.

Naturally, markets do not respond in straight lines, so there is the possibility of some gains between now and the next big political event, the mid-term elections in November. If the major averages are not in bear country by that time, there's something fundamentally wrong with any and all systems of market prediction.

The Dow has receded beyond the previous interim low, 24,538.04, and is very close to the absolute near-term bottom of February 8, of 23,860,46 (less than 100 points away).

Three of the four major averages are in the red for 2018, the lone survivor being the NASDAQ, sporting a gain of less than 300 points. With that in mind, further losses should be felt hardest in the NASDAQ, as it is front-loaded with tech and financial stocks. Being the most volatile of the indices, the NASDAQ could come under severe pressure as early as Friday (tomorrow), though a dead-cat bounce to end the week is also an understandable scenario.

with the Fed's rate hike being the proximate cause of the most recent selling, it's now behind the market, but so long as the Fed talks up rate increases and balance sheet unwinding it will bleed from stocks. The entirely false narrative of "recovery" and "growth" will become more vilified and ridiculed as weak economic data continues to roll forward. Estimates of first quarter GDP have fallen precipitously in recent days, as it is generally the worst period for GDP due largely to weather, and, this Winter has lingered longer than most (it's already Spring). There's snow on the ground and cold temperatures throughout the Northeast and into the Midwest.

The advance estimate of first quarter GDP will be announced the last week of April, on the 27th. It would be expected that any gains between here and then will be wiped away rather quickly when the figure comes in at something South of two percent.

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

At the Close, Thursday, March 22, 2018:
Dow Jones Industrial Average: 23,957.89, -724.42 (-2.93%)
NASDAQ: 7,166.68, -178.61 (-2.43%)
S&P 500: 2,643.69, -68.24 (-2.52%)
NYSE Composite: 12,377.39, -306.37 (-2.42%)

Home Sales and Stocks Are Diverging?

Stocks staged an incredible rally on Monday set against a backdrop of the second straight monthly decline in both new and existing home sales.

Existing home sales for January were reported last Wednesday; new home sales came out on Monday morning and were far from encouraging, showing a January decline of 7.8% after December's 9.3% drop.

With a shrug, stock investors ignored yet another sign that the general economy is not operating at optimal efficiency. Apparently, the mindset is such that owning stocks is a better investment than owning a place to live. Maybe when Americans are all renters, they will be encouraged to buy even more stocks, to balance things out, so to speak.

Wall Street may have a mind of its own, though it appears that mind is being led by some very false rhetoric about the strength of the US - and global - economy.

Monday's big gains puts the Dow in position to erase all of the losses from earlier in the month. The NASDAQ is already back above where it began the month.

Dow Jones Industrial Average February Scorecard:

Date	Close	Gain/Loss	Cum. G/L
2/1/18	26,186.71	+37.32	+37.32
2/2/18	25,520.96	-665.75	-628.43
2/5/18	24,345.75	-1,175.21	-1,803.64
2/6/18	24,912.77	+567.02	-1,236.62
2/7/18	24,893.35	-19.42	-1,256.04
2/8/18	23,860.46	-1,032.89	-2288.93
2/9/18	24,190.90	+330.44	-1958.49
2/12/18	24,601.27	+410.37	-1548.12
2/13/18	24,640.45	+39.18	-1508.94
2/14/18	24,893.49	+253.04	-1255.90
2/15/18	25,200.37	+306.88	-949.02
2/16/18	25,219.38	+19.01	-930.01
2/20/18	24,964.75	-254.63	-1184.64
2/21/18	24,797.78	-166.97	-1351.61
2/22/18	24,962.48	+164.70	-1186.91
2/23/18	25,309.99	+347.51	-839.40
2/26/18	25,709.27	+399.28	-440.12

At the Close, Monday, January 26, 2018:
Dow Jones Industrial Average: 25,709.27, +399.28 (+1.58%)
NASDAQ: 7,421.46, +84.07 (+1.15%)
S&P 500: 2,779.60, +32.30 (+1.18%)
NYSE Composite: 12,999.62, +115.51 (+0.90%)

Rally Fails As Bear Market Chart Patterns Emerge

One of the clearest chart indicators of bear markets is the "higher open, lower close" condition, which has been showing up in the daily charts on a regular basis of late.

Thursday was another in a steady stream of such charts, with the Dow higher by nearly 360 points by midday, only to lose more than half of the gains by the closing bell.

Another pattern - more often indicating broken or tired markets - is split decisions, wherein the major averages diverge as discretion becomes more prevalent. The NASDAQ, which extended its losing streak to four days on Thursday, ended the session in the red while the other indices were up.

These recurring patterns are worth noting at this juncture, though not entirely indicative of overall market direction. In general, however, the decline which began at the beginning of February has not been surmounted and continues to hold stocks below recent highs, a condition which will resolve itself at some point in the near term.

Timing markets such as this one would be a heady task, and probably result in more pain than necessary. It is likely that investors are already taking positions and executing them prior to any definitive directional signal, making the case that bearishness may already hold a winning position over the long-standing bull market proponents.

Time will tell.

Dow Jones Industrial Average February Scorecard:

Date	Close	Gain/Loss	Cum. G/L
2/1/18	26,186.71	+37.32	+37.32
2/2/18	25,520.96	-665.75	-628.43
2/5/18	24,345.75	-1,175.21	-1,803.64
2/6/18	24,912.77	+567.02	-1,236.62
2/7/18	24,893.35	-19.42	-1,256.04
2/8/18	23,860.46	-1,032.89	-2288.93
2/9/18	24,190.90	+330.44	-1958.49
2/12/18	24,601.27	+410.37	-1548.12
2/13/18	24,640.45	+39.18	-1508.94
2/14/18	24,893.49	+253.04	-1255.90
2/15/18	25,200.37	+306.88	-949.02
2/16/18	25,219.38	+19.01	-930.01
2/20/18	24,964.75	-254.63	-1184.64
2/21/18	24,797.78	-166.97	-1351.61
2/22/18	24,962.48	+164.70	-1186.91

At the Close, Thursday, February 22, 2018:
Dow Jones Industrial Average: 24,962.48, +164.70 (+0.66%)
NASDAQ: 7,210.09, -8.14 (-0.11%)
S&P 500: 2,703.96, +2.63 (+0.10%)
NYSE Composite: 12,711.75, +16.22 (+0.13%)

Dow Hangs Onto Friday Gains Amid Late-Session Selloff

It was options expiration Friday and the volatility showed up late in the day, as the Dow shed more than 200 points off a morning rally, closing marginally ahead. The S&P gained a point and change, but the NASDAQ slipped into the red for the day.

The entire trading day came to matter little in the larger scheme, especially for the NASDAQ, which led all indices with a gain of more than five percent for the week.

With markets closed for President's Day on Monday, February 19, investors will take the time off to evaluate foreign markets and prepare for the seven remaining trading days of the month.

Stocks have clawed back more than half of the losses incurred earlier in the month, setting up for a continuation of the short-term rally well in advance of expected rate hikes at the next FOMC meeting on March 20-21.

This leaves stock indices with strong support at their respective 200-day moving averages, bottoms which look less likely to be revisited any time soon.

After some tumult earlier in February, it appears that nothing of import has changed - besides the value of the dollar and rates on treasury bonds - supportive of the proposition that central banks are still in charge and complete control.

Should investors be worried?

Always. But, presently, they are not.

Dow Jones Industrial Average February Scorecard:

Date	Close	Gain/Loss	Cum. G/L
2/1/18	26,186.71	+37.32	+37.32
2/2/18	25,520.96	-665.75	-628.43
2/5/18	24,345.75	-1,175.21	-1,803.64
2/6/18	24,912.77	+567.02	-1,236.62
2/7/18	24,893.35	-19.42	-1,256.04
2/8/18	23,860.46	-1,032.89	-2288.93
2/9/18	24,190.90	+330.44	-1958.49
2/12/18	24,601.27	+410.37	-1548.12
2/13/18	24,640.45	+39.18	-1508.94
2/14/18	24,893.49	+253.04	-1255.90
2/15/18	25,200.37	+306.88	-949.02
2/16/18	25,219.38	+19.01	-930.01

At the Close, Friday, February 16, 2018:
Dow Jones Industrial Average: 25,219.38, +19.01 (+0.08%)
NASDAQ: 7,239.47, -16.96 (-0.23%)
S&P 500: 2,732.22, +1.02 (+0.04%)
NYSE Composite: 12,874.36, +17.49 (+0.14%)

For the Week:
Dow Jones Industrial Average: +1028.48 (+4.25%)
NASDAQ: +364.97 (+5.31%)
S&P 500: +112.67 (+4.30%)
NYSE Composite: +468.54 (+3.78%)

How Long Before Stocks Regain Previous Highs?

The question before Wall Street's punters, planners and prognosticators is measuring the length of time it will take for the main indices to regain their prior all-time-high levels.

Just in case the recent downturn isn't of the long-term variety (a 50-50 proposition), the guesses and estimates range from a few weeks to a matter of months. However, if circumstance prevail to keep stocks lower - higher interest rates, bouncy economic data, unexpected geopolitical events - regaining the high ground could take years.

A couple of recent retreats and rises may prove instructive.

After the NASDAQ shattered the 5000 mark in 2000 (5,048.62, March 10, 2000), it subsequently crashed and burned, shedding roughly 75% of its value by March 9, 2009 (1,268.64). It didn't get all the way back to the previous top until April 25, 2015, when it closed at 5,056.06.

Even more recent, when the Dow Jones Industrial Average topped out at 14,164.53 on October 9, 2007, less than 18 months later it had fallen by more than 50%, to 6,547.05, bottoming out on March 9, 2009. Fueled by central bank largesse in the form of ZIRP and QE, the Dow rocketed back to prior highs until March 5, 2013, closing at 14,253.77 that day, a period - from top to top - of a mere five-and-a-half years.

From this recent data, it appears the tops and bottoms are generally features of Spring and Fall, so the most recent January highs may not signal the market's last hurrah but portend another quick rise back beyond and then a fall.

Whatever the case may be, it does appear that the second-longest bull market in history is nearing an end, and may, in fact, be done. How long it takes to get back, after the eventual crash, is an open question, and one that should be correctly assessed in terms of years, and probably more than a decade.

For the record, the Dow regained some of what it lost over the past two weeks, but it still has a fair a distance to travel back toward the all-time highs, a touch more than 1500 points.

Next week? Why not?

Dow Jones Industrial Average February Scoreboard:

Date	Close	Gain/Loss	Cum. G/L
2/1/18	26,186.71	+37.32	+37.32
2/2/18	25,520.96	-665.75	-628.43
2/5/18	24,345.75	-1,175.21	-1,803.64
2/6/18	24,912.77	+567.02	-1,236.62
2/7/18	24,893.35	-19.42	-1,256.04
2/8/18	23,860.46	-1,032.89	-2288.93
2/9/18	24,190.90	+330.44	-1958.49
2/12/18	24,601.27	+410.37	-1548.12

At the Close, Monday, February 12, 2018:
Dow Jones Industrial Average: 24,601.27, +410.37 (+1.70%)
NASDAQ: 6,981.96, +107.47 (+1.56%)
S&P 500: 2,656.00, +36.45 (+1.39%)
NYSE Composite: 12,560.12, +154.30 (+1.24%)

If 2017 Was Good, 2018 Should Be Better

Anybody who owns stocks or has a portfolio in a retirement fund, 401k or other equity-style investments is well aware of just how good 2017 was.

All indications are that 2018 will be just as good, and probably better.

There's a number of reasons for this prognosis.

First, it's more than apparent that global stock markets are now completely under the purview of the global elite central banks, and that this central banks are actively buying stocks, boosting the underlying asset prices in the process.

Second, after that, nothing really matters, since central banks can create money out of the ether, at will, any time, for any purpose. Economics has been flipped upon its head. Price discovery has been delegated to a function of the central banks, i.e, they set the prices. No fundamental analysis is needed, nor will it be valid.

Since the goal of central banks is to keep their money ponzi schemes intact via their various currencies - pound, dollar, euro, yen, yuan - and the stock markets are primary vehicles, there exists almost zero chance of stocks losing value over even the short term. A longer-term decline would be unthinkable as it would destroy the fiat money that central banks employ in their quest to continue their global finance monopoly.

Knowing all of that, there's no reason anybody should invest in anything other than stocks, or, for added assurance, an index fund which tracks the Dow, S&P, NASDAQ, or all three, weighted, or otherwise.

Stocks will never go down again, at least not for any extended period of time.

Just Buy The Dips.

At the Close, Monday, January 8, 2018:
Dow: 25,283.00, -12.87 (-0.05%)
NASDAQ: 7,157.39, +20.83 (+0.29%)
S&P 500: 2,747.71, +4.56 (+0.17%)
NYSE Composite: 13,114.35, +11.12 (+0.08%)

Caution Thrown To (Bitter Cold) Wind, As Investors Ignore Tech and Weather Threats

Across the board gains were the order de jour on the second day of trading in the new year.

As on Tuesday, the NASDAQ outpaced the other major averages, continuing its meteoric rise beyond the 7,000 mark with tech stocks leading the way despite an admission from Intel (INTC) that their chips have a serious flaw, affecting nearly all chips made by the company over the past ten years.

The world's largest chipmaker was not immediately taken to the woodshed and whipped, though shares of the company were down more than three percent and are off another one-and-a-half percent in pre-market trading on Thursday.

Rival chipmaker, Advanced Micro Devices (AMD), was the main beneficiary of the Intel news, its stock advancing more than five percent on the day, though it appeared that AMD chips are also vulnerable, though not to the same extent nor by the same exploits as Intel chips.

While the immediate impact may be slim, the long-term repercussions of this revelation may be significant. The world's major chip manufacturers may be facing a black swan event once hackers devise attacks that could legitimately effect computers and servers worldwide, for years.

Traders were not on the defensive, however, as the lure of early gains overwhelmed any concerns for troubles ahead, such as the massive snowstorm and bitter cold that is expected to affect most of the Northeast in days ahead. The storm - being called a Bomb Cyclone - is primarily focused off the Eastern coast of mainland North America, though New York, New Jersey, and Massachusetts were making preparations for a major winter weather event which has already bettered Southern cities such as Charleston, SC, and Savannah, GA.

The apparent complacency of equity speculators is somewhat confounding, given the potential for severe disruptions from weather and technology in coming days.

On the other end of the asset spectrum, precious metals responded to a slight rise in the dollar index, blunting a strong run for gold and silver over the past three weeks, though the selling seemed to be transitory, with the metals recovering early on Thursday morning as the dollar fell to fresh lows (91.933).

On Thursday morning, prior to the opening bell on Wall Street, ADP private payroll data for December showed a massive 250,000 job gain for the final month of 2017. While the AMD numbers are preliminary and subject to revision, they are sending a strong signal in advance of Friday's BLS non-farm payroll dataset for December.

With caution being thrown largely to the (bitterly cold) wind, Friday and/or Monday could be a day of "selling the news," or, as has been the case for the past nine years, the stock market rally will not be impeded by facts nor insinuations of negativity.

At the Close, Wednesday, January 3, 2018:
Dow: 24,922.68, +98.67 (+0.40%)
NASDAQ: 7,065.53, +58.63 (+0.84%)
S&P 500: 2,713.06, +17.25 (+0.64%)
NYSE Composite: 12,957.28, +54.55 (+0.42%)

Dow Posts Best Week Of Year; NASDAQ Falls

Confused?

In what was the best performance week of the year for the Dow (a nearly three percent gain), the NASDAQ lost more than one half percent.

The math is fairly simple. Outside of Apple (AAPL), which is a component of Dow 30 stock, the FAANGs (Facebook, Apple, Amazon, Netflix and Google) all got beaten down.

Facebook (FB) lost 1.78%.
Netflix (NFLX) was down 0.41%.
Amazon (AMZN) fell 1.44%, and Google (GOOG) dropped 1.10%. Additionally, another of the high-fliers, Tesla (TSLA) shed 0.75%.

Those stocks make up a mammoth portion of the total volume on the NASDAQ, thus nullifying any gains by all other stocks on the index.

Fear not, however, holders of high P/E paper, because since the Senate tax legislation was cleared Saturday morning by a narrow margin, all is well in the land of the free. Monday morning futures are pointing to a moon shot open.

For the Week Ending December 1, 2017:
Dow: +673.60 (+2.86%)
NASDAQ: -41.57 (-0.60%)
S&P 500: +39.80 (+1.53%)
NYSE Composite: +192.63 (+1.55%)

FOMC Leaves Rates Unchanged; Markets Respond Positively

The Federal Reserve's FOMC issued their policy statement at 2:00 pm ET, after a two-day meeting that was widely anticipated to keep the federal funds rate unchanged at 1.00-1.25%.

What the Fed did change in its statement was a few words which piqued the interest of the bullish crowd on Wall Street, saying that the US economy was displaying "solid" growth over the past few months, a change from their use of the word "moderate" or "moderately" to describe US economic growth.

That was enough for investors to snap up a few more mostly overpriced shares on the first day November, except on the NASDAQ, which was the one index to end the session at a loss.

The Fed is prepared to raise interest rates in December, boosting the federal funds rate to 1.25-1.50%, a level still well below what most economists consider normal and sustainable.

At the Close, Wednesday, November 1, 2017:
Dow: 23,435.01, +57.77 (+0.25%)
NASDAQ: 6,716.53, -11.14 (-0.17%)
S&P 500: 2,579.36, +4.10 (+0.16%)
NYSE Composite: 12,362.88, +21.87 (+0.18%)

Stocks continue Mostly Higher In Late October

Just a marker for the weekend notes interestingly that all of the huge NASDAQ gain was on Friday and the NYSE Composite actually posted a loss for the week.

This isn't really normal market behavior, but few are paying attention.

At the Close, Friday, October 27, 2017:
Dow: 23,434.19, +33.33 (+0.14%)
NASDAQ: 6,701.26, +144.48 (+2.20%)
S&P 500: 2,581.07, +20.67 (+0.81%)
NYSE Composite: 12,366.4346, +14.01 (+0.11%)

For the week:
Dow: +105.56, (+0.45%)
NASDAQ: +144.49 (+2.20%)
S&P 500: +5.86 (+0.23%)
NYSE Composite: -64.10 (-0.52%)

Stocks on Track for Awesome 3rd Quarter Returns

Spoiler Alert: Depending on how your money is allocated, your third quarter 2017 401k, pension or retirement fund statement is going to look pretty good when you get it the first or second week of October.

That's because the rally that started in March, 2009 is still alive and well here in September, 2017.

For instance, if you're a blue chip kind of person, the Dow Jones Industrial Average ended May just below 21,000. Two-and-a-half months later, it's broken through 22,000 and is poised for more gains through the end of the September. The Dow is tracking for roughly a five percent gain for the quarter. That's 20% annualized. Who knew this investing stuff was so easy?

In case you're a tech spec, the NASDAQ began the quarter at 6200 and just yesterday broke through to a new all-time high, above 6450. The gain is just over 4%, a little less than the Dow.

For those widely diversified, say, in an index fund tracking the S&P or NYSE, the 500 started June rocketing through 2420 and is currently just below 2500. Again, the profit is around 4%. The NYSE Composite has gone from 11,600 to over 12,000 in the quarter. That 400 point gain is less than four percent, but very safe and sound.

There are just 13 trading days remaining in the third quarter and no impediments for stocks to continue making new high after new high.

Happy returns!

At the Close, Tuesday, September 12, 2017:
Dow: 22,118.86, +61.49 (+0.28%)
NASDAQ: 6,454.28, +22.02 (+0.34%)
S&P 500: 2,496.48, +8.37 (+0.34%)
NYSE Composite: 12,057.12, +46.86 (+0.39%)

Stocks Post Gains As August Winds Down; Nomi Print On Central Bank Collusion

Investors put their money down as the major indices posted small gains heading into the end of the month. The NASDAQ was, in particular, on fire, posting the largest increase on the day, a more then one percent rise.

Non-farm payroll data for August will be released Friday morning in advance of the three-day Labor Day weekend, so that should color the final two days of the week, the last day of August and the first day of September.

As mentioned in prior posts, there's nothing stopping stocks from posting gains until congress comes back in September to begin debates on the debt ceiling, tax reform (that's funny, they always talk about tax reform and the tax code just keeps getting larger), and the federal budget (another fat boy).

To get an idea of just how far afield the world's central bankers have gone in trying to maintain a broken global financial system, Nomi Prins puts perfect spin on the topic, in her latest blog post, A Decade of G7 Central Bank Collusion... and Counting.

At the Close, 8/30/17:
Dow: 21,892.43, +27.06 (+0.12%)
NASDAQ: 6,368.31, +66.42 (+1.05%)
S&P 500: 2,457.59, +11.29 (+0.46%)
NYSE Composite: 11,805.07, +13.19 (+0.11%)

Dow Continues to Careen Higher as Other Indices Lag

Maybe the markets are broken by HFTs, computer algorithms, program trading, bid stuffing, and an assortment of hype, funny fiat money, low interest rates and the hunt for yield.

Maybe not, but, the week's look at the major indices indicates that only the Dow Jones Industrials posted solid gains (rising for the 9th straight session to another all-time high) while the other three major averages were essentially running in place, the NASDAQ actually posting a loss.

It's not unusual for one index to lead the market, but, since the 2008, stocks have made outsize gains and the darlings on the Dow have exceeded all expectations. Despite carrying some of the most obscenely-high P/E ratios in market history, traders continue to bang away at the McDonalds, Apples and Intels of the world, as though there is nothing other to buy.

These are the kinds of trading decisions which lead to apathy and eventual market convulsions. For now, however, there's nothing but the Dow Jones Industrial Average to prompt the cheerleading from everyone from the President of the United States on down.

Having a runaway stock market may be a sign of a strong economy, but, in this case, since it is so isolated, it should be viewed as a sign of imbalance.

At the Close, 8/4/17:
Dow: 22,092.81, +66.71 (0.30%)
NASDAQ 6,351.56, +11.22 (0.18%)
S&P 500 2,476.83, +4.67 (0.19%)
NYSE Composite: 11,984.89, +28.37 (0.24%)

For the Week:
Dow: +262.50 (1.20%)
NASDAQ: -23.11 (-0.36%)
S&P 500: +4.73 (0.19%)
NYSE Composite: +30.20 (0.25%)

For US Markets, It's Splits-ville Again

Another day, another session punctuated by divergent indices.

The NASDAQ goes up; the Dow goes down, or vice versa. The S&P 500 and NYSE Composite seem to go their own ways, more often than not, separate. All of this reeks of manipulation, selectivity, goal-seeking, and just about anything other than rational investing.

Upon examination, the stock market is nothing more than pieces of paper representing shares in company X or Y or Z, being traded for other pieces of paper known as yen, dollars, euros or pesos. It's the ultimate paper chase, based entirely on faith and foolery of grand design by the world's central bankers. It's a confidence game being played at the highest levels of finance, a dangerous precedent for the entire planet.

Unless the public detaches from the fraud, it will continue. The unique phenomenon at work in today's financial arenas is commonly known to psychiatrists as normalcy bias. It is the belief that everything seems to be working all right, so the urge to change is minimized, which is precisely the condition present in the debt-infested governments, businesses, and households everywhere.

The ultimate fear is that confidence is lost in the fiat system. After eight long years of propping up governments, businesses, and households with freshly-printed-or-minted cash, confidence is still durable, thanks to normalcy bias.

But, there are canaries in the coal mine, so to speak. These are burgeoning, non-repayable government debt, underfunded pensions (especially public union pensions), slack demand, disinflation, demographics, and the undeniable eventuality of recession, either in the US, Europe, or globally.

Fighting these trends with some degree of success has been the role of the central banks, but they are running out of viable options to keep global finance operating while also quelling local discontent, which is growing rapidly.

Money Daily does not pretend to know who is buying stocks and/or causing the variations in the major indices, but it is apparent that some entity other than brokerages are buying and it is well known that the Bank of Japan (BOJ), Swiss National Bank (SNB), and European Central Bank (ECB) have been and will continue to be outright buyers of equities.

When these entities become sellers, there will be no bottom to the markets.

Caveat Emptor.

At the Close, 7/24/17:
Dow: 21,513.17, -66.90 (-0.31%)
NASDAQ: 6,410.81, +23.05 (0.36%)
S&P 500: 2,469.91, -2.63 (-0.11%)
NYSE Composite: 11,904.71, -19.89 (-0.17%)

Mixed Markets are Sending Clear Message

As seems to be the norm lately, the major indices finished in mixed fashion Tuesday, with the NASDAQ and S&P finishing with gains, while the Dow and NYSE Composite took losses.

This repeating pattern may be confusing to some investors, but the trend seems pretty clear: there will be winners and losers on given days, often on the same days, and, while the general economy may have weak and strong sectors, the general trend is higher.

Nothing could be more obvious after chasing stocks since March of '09 has resulted in one of the greatest bull markets of any era. For the most part, it's been easy pickings for fund managers, hedgers (most of whom don't hedge at all), and even individuals investing in the market. An especially accommodative Federal Reserve has seen to that. Even today, with the federal funds rate at 1.00-1.25% - the highest in nine years - by historical standards it's still incredibly low.

Recent talk by Janet Yellen and other Fed members is leading the market to believe that this regime of low interest rates still has room to run. The FOMC has upped the federal funds rate twice already, but appears to be slowing its approach. Many believe they will only raise rates once more this year, likely in December.

Climbing the worry wall with the Fed, most of the Wall Street crowd seems convinced that the central bank has the stock market's back, despite political rhetoric and decades of denial. The Fed is supposed to control monetary policy, but, since the GFC, they certainly don't appear shy about meddling elsewhere, having sloshed bond and stock markets alike with wave after wave of fresh fiat.

Since the money is nothing more than paper with promises, it's what they can and will do. Until further notice, the Fed is in control of all money, yours, ours, theirs, and those of foreigners, dead people, and people not yet born.

It's probably a good thing that there's so much normalcy bias that hardly anyone cares that everything is completely fake.

Like the saying says, "fake it 'til you make it."

At The Close, 7/18/17:
Dow: 21,574.73, -54.99 (-0.25%)
NASDAQ: 6,344.31, +29.87 (0.47%)
S&P 500: 2,460.61, +1.47 (0.06%)
NYSE Composite: 11,877.42, -13.09 (-0.11%)

All Janet Yellen, All The Time Sends Stocks Soaring

“Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance.”

-- Janet Yellen, in prepared remarks to House Financial Services Committee, Wednesday, July 12, 2017

Since that statement, released prior to the opening bell on Wednesday, stocks have taken flight to new highs. For instance, the Dow Jones Industrial Average closed Tuesday at 21,409.07, and closed Friday at 21,637.74. A couple hundred points isn't bad, but check out the NASDAQ:
NASDAQ close 7/11/17: 6,193.30
NASDAQ close 7/14/17: 6,312.47

119 points in three days is OK work if you can get it, and Wall Street perfectly got it, interpreting Yellen's statement that the Fed's controlled federal funds interest rate would not be rising very quickly this year, if at all. Good news! Buy!

The soft underbelly of that statement is that the US - and by extension, the global - economy is not growing, inflation is not roaring (June CPI was flat, as in 0.0%, and the Fed is desperate for inflation), wages are not rising and employment is still flagging. Additionally, the number of people out of the labor force is enormous, pension plans in states such as Illinois, Connecticut, California and elsewhere are imploding, putting additional pressure on the Fed, Wall Street and the PPT to keep asset prices rising. Otherwise, the entire financial system collapses.

Also, P/E ratios on the S&P 500 are hovering around 25%, which is about 40% higher than the norm. The market badly needs to correct, but, thanks to Yellen and her cohorts, central banks continue to purchase assets at exorbitant prices.

What could go wrong?

Have a great weekend.

At the Close, 7/14/17:
Dow: 21,637.74, +84.65 (0.39%)
NASDAQ: 6,312.47, +38.03 (0.61%)
S&P 500: 2,459.27, +11.44 (0.47%)
NYSE Composite: 11,897.31, +52.69 (0.44%)

For the week:
Dow: +223.40 (1.04%)
NASDAQ: +159.39 (1.59%)
S&P 500: +34.09 (1.41%)
NYSE Composite: +144.33 (1.23%)

More NASDAQ Losses Cause For Concern

There are those in the financial hinterlands who believe that the latest bout of indigestion in equities is simply another round of petty games played by central bank elitists who continue to exert extreme control, especially at times when it seems a correction may be at hand.

There are others who believe that the entire eight years of QE-and-ZIRP-inspired gains have been the exclusive province of the central banks and that they are preparing to pull the proverbial rug out from under markets via interest rate hikes and a general cessation of currency creation.

Both parties may be right, insofar as the central banks have been the epicenter of all financial activity, surreptitiously aiding the money center banks and primary dealers closest to the Fed's largesse.

Thus, the declines on the NASDAQ - not just today, but for the past three weeks - are sending signals to smaller market participants and there has been the beginning of a realignment of asset allocations, from tech to cash, from consumer staples and cyclicals to dividend-payers and utilities.

The issue at present, as was the case in 2008-09 and most other major market corrections or reversals from bull to bear, is that nowhere is there a safe place to hide, though the usual standouts are cash, precious metals and treasuries. On the latter, the 10-year note continued its ascent, finishing the day at 2.37, a multi-month high. That's a notable move, signifying that money may be indeed becoming tighter, even though that is a relative term, heading north from a real rate approaching zero.

At this juncture, it's still too early to raise the alarm bells, though the heavily-leveraged may be getting margin calls in short order. The NAZ is closing in on a five percent decline from the June 9 high of 6341.70, currently at a level of -3.98%. The even one percent loss on the NASDAQ today was followed in close order by the other major indices.

Caution is advised. Do NOT buy this dip as there are far too many worrying factors in the mix.

At the Close, 7/6/17:
Dow: 21,320.04, -158.13 (-0.74%)
NASDAQ: 6,089.46, -61.39 (-1.00%)
S&P 500: 2,409.75, -22.79 (-0.94%)
NYSE Composite: 11,702.42, -107.07 (-0.91%)

Stocks Split, NASDAQ Gains, Dow Flat

There is a definite surreal feel to stocks these early days of summer. While the NASDAQ has generally been the whipping boy through the latter stages of June and into July, the reverse was true on Wednesday as traders returned from a truncated long weekend.

The NASDAQ tacked on 40 points, but the other broad measure, the NYSE Composite, fell 26. The Dow was off by one point, while the S&P added three-and-a-half.

While this appears to be sector rotation and stock picking, the unruly movements may portend something more sinister in the near future. It could be nothing, but split decisions on the major indices usually indicate market turmoil, not the calm, placid environment with low VIX which has been a feature of the long bull run since March of 2009.

The VIX has been elevated of late and spiked recently, but hovering around the 11-12 region is nothing alarming. Should the VIX begin to rise day-over-day, worries may emerge and turn reluctant buyers into outright sellers.

Whatever the financial pundits insist about the strength of the economy, there are troubles, as indicated by the FOMC minutes from June which were released on Wednesday. The members were split over inflation and increases in the federal funds rate, a strong indication that the Fed - which has been relied upon excessively to control the economy - may not have the tools with which to battle a recessionary environment, which many believe is overdue.

In any case, this shortened week may not be enough to develop any kind of trend, other than extending the weird trading patterns which are becoming more and more confounding to fundamental analysts.

At the Close, 7/5/17:
Dow: 21,478.17, -1.10 (-0.01%)
NASDAQ: 6,150.86, +40.80 (0.67%)
S&P 500: 2,432.54, +3.53 (0.15%)
NYSE Composite: 11,809.49, -26.23 (-0.22%)