Sorry, but nobody can accurately analyze four consecutive days of 400+ point moves on the Dow.
It's just not normal, but this is what we get when there are no regulators, lax controls and machines doing 90% of the trading.
The only thing one can possibly take away from this is that markets, and most traders, have no idea what to expect from day-to-day and the entire equity complex is more than likely rigged to benefit high frequency traders and the TBTF banks.
Fundamental analysis more or less died in 2008, and now we are seeing the effects of a completely broken price discovery mechanism.
It's tough to get excited about a 400-point move higher when the day before was a 500-point move to the downside. Any attempt to justify this kind of activity should be met with blank stares and an excessive amount of skepticism because, over the past four days, nothing has fundamentally changed except the price people - or machines - are willing to pay for stocks, options, ETFs and mutual funds.
Seriously, it's not even worth attempting to analyze today's movements because tomorrow's are likely to be something completely different, rendering any judgments incorrect.
Dow 11,143.31, +423.37 (3.95%)
NASDAQ 2,492.68, +111.63 (4.69%)
S&P 500 1,172.64, +51.88 (4.63%)
NYSE Composite 7,257.57, +319.34 (4.60%)
Advancers beat decliners, 5816-965. On the NASDAQ, there were five (5) new highs and 131 new lows; the NYSE saw seven (7) stocks reach new highs, but 127 make new lows. It should be of some benefit to keep a close eye on the new highs-new lows indicator. Even on a massive upside day like today, very few stocks made new highs, though an inordinate number made new lows. That's a definitely bearish trend which has remained in place throughout the market turmoil.
Volume was on the high side again, though not nearly as robust as on the days when the markets turned lower. One gets the feeling that most of the trades are very short-term, and once the money's been made, the traders will exit and go looking for fresh meat. This isn't a stock market any more. It's close to being a casino, though that would give casinos a bad name.
NASDAQ Volume 3,091,521,750
NYSE Volume 7,798,956,500
Oil priced higher again, gaining $2.83, to close the NYMEX session at $85.72. Would it surprise anyone to see oil back above $90 shortly, with no change at all in prices for gasoline at the pump? It's all part of the elitists' plan to destroy the middle class.
Gold was slapped down after the CME announced it would raise margin requirements by 22%, losing $32.80, to $1,751.50. Silver nose-dived 66 cents, to $38.67.
A couple of things are for certain. The powers that be don't like gold and silver rising in price and the general direction of the market is down. We're still in correction territory, down more than 10% on the major indices, and these powerful rallies are fueled, in part, by short covering, the machine-driven trading and the allocations required by ETFs, one of the worst financial innovations of the last fifty years.
If ETFs are going to continue to be part of the market, they need to be excluded from making up part of the averages. In other words, spill them out into their own exchange, which would eliminate a lot of the volatility in markets today.
Of course, that will never happen.
Thank goodness tomorrow is Friday.
Showing posts with label New lows. Show all posts
Showing posts with label New lows. Show all posts
Thursday, August 11, 2011
Friday, July 29, 2011
Traders Still Positive on Debt Limit Deal; Markets Spooked
It could have been so much worse.
US stocks took another tumble Friday, on revisions to 1st and 2nd quarter GDP and fears that the debt ceiling debate in Washington was running out of time.
An hour prior to the opening bell, the government reported its second revision to second quarter GDP, which came in at a measly 1.3%, but the greater shock was the revision to first quarter GDP, which was revised lower, from 1.9% growth to a frighteningly-low 0.4%. That sent shock waves through the futures market and US indices fell sharply at the open, hitting the lows of the day within the first 15 minutes of trading.
Just before 10:00 am EDT, Chicago PMI was reported to have fallen to 58.8 in July, lower than forecast, from 61.1 the prior month. That wasn't bad enough news, however, to shake off the nascent rally on rumors and hope that congress would decide on a debt ceiling increase by the end of the day or over the weekend.
As the session wore on, stocks moved sharply on any unfounded rumors, but eventually gave way late in the day, as lawmakers in the House of Representatives agreed, 236-186, to begin debate on House majority leader John Boehner's debt ceiling proposal, which had been in limbo since Tuesday because the measure did not have the backing of the Tea Party wing of the Republican party and - even if it did pass the House - was seen as almost certain to fail in the Senate. An actual vote on the measure is expected to come around 6:00 pm EDT Friday.
At the end of the day and end of the week, with no resolution on the debt issue and economic data overshadowing even the best corporate second quarter reports, the Dow finished lower for the sixth straight day, the S&P down for the last five, and the NASDAQ in negative territory for the fourth day out of the last five. On Thursday, the NASDAQ registered a gain of just over one-and-a-half points.
For the week, the Dow lost 538 points, a 4% decline. The S&P slipped 53 points, the NASDAQ shed 102 points and the NYSE composite fell by 328 points.
As bad as it was, stocks actually recovered half of their earlier losses on Friday. Still, it was the worst weekly performance for US indices in a year.
Dow 12,143.24, -96.87 (0.79%)
NASDAQ 2,756.38, -9.87 (0.36%)
S&P 500 1,292.28, -8.39 (0.65%)
NYSE Composite 8,079.44, -44.59 (0.55%)
Declining issues again dominated advancers, 4113-2476, and the gap between the expanding number of new lows and shrinking new highs worsened. On the NASDAQ, there were just 26 new highs, as compared to 114 new lows. The NYSE showed even worse, with just 16 new highs and 177 new lows. The combined totals of 42 new highs against 291 new lows is sending the strongest sell signal imaginable. Even if the congress does find a way to pass a debt ceiling increase by Tuesday, August 2, the damage for wasting time has been done the Moody's and S&P will likely downgrade US debt in short order, as they both have warned would occur if serious measures were not taken at this impasse.
Add to that the non-recovery "recovery" which has been represented by high unemployment and falling home prices and the recipe for further declines in equities is writ large.
Volume on the day was strong, another sign of a weakening stock market poised on the brink of turning losses into a major correction and a resumption of the bear market.
NASDAQ Volume 2,274,169,000
NYSE Volume 5,045,403,000
Among other interesting notes were the 10-year, which rose in price, but slumped in yield, down to 2.80%. The 30-year bond also hit a fresh low yield of 4.13%.
Oil took some losses, down $1.74, to $95.70. Gold made another intra-day high of $1637.50, before settling back to close at $1,628.30, up $14.90 for the day. Silver was up 31 cents, to $40.11 per ounce.
With the markets suffering their worst weekly losses in a year - coincidentally at the same time top economists are partying at their annual convention in Jackson Hole, Wyoming, the same place that Fed Chairman announced the launch of QE2 last summer - the onus is on the congress to come with a plan that appeases not only both parties but the ratings agencies as well.
While it is doubtful they would let the August 2 date pass without a debt ceiling increase, the chances of them passing a bill before then that actually cuts spending appropriately are still quite long.
US stocks took another tumble Friday, on revisions to 1st and 2nd quarter GDP and fears that the debt ceiling debate in Washington was running out of time.
An hour prior to the opening bell, the government reported its second revision to second quarter GDP, which came in at a measly 1.3%, but the greater shock was the revision to first quarter GDP, which was revised lower, from 1.9% growth to a frighteningly-low 0.4%. That sent shock waves through the futures market and US indices fell sharply at the open, hitting the lows of the day within the first 15 minutes of trading.
Just before 10:00 am EDT, Chicago PMI was reported to have fallen to 58.8 in July, lower than forecast, from 61.1 the prior month. That wasn't bad enough news, however, to shake off the nascent rally on rumors and hope that congress would decide on a debt ceiling increase by the end of the day or over the weekend.
As the session wore on, stocks moved sharply on any unfounded rumors, but eventually gave way late in the day, as lawmakers in the House of Representatives agreed, 236-186, to begin debate on House majority leader John Boehner's debt ceiling proposal, which had been in limbo since Tuesday because the measure did not have the backing of the Tea Party wing of the Republican party and - even if it did pass the House - was seen as almost certain to fail in the Senate. An actual vote on the measure is expected to come around 6:00 pm EDT Friday.
At the end of the day and end of the week, with no resolution on the debt issue and economic data overshadowing even the best corporate second quarter reports, the Dow finished lower for the sixth straight day, the S&P down for the last five, and the NASDAQ in negative territory for the fourth day out of the last five. On Thursday, the NASDAQ registered a gain of just over one-and-a-half points.
For the week, the Dow lost 538 points, a 4% decline. The S&P slipped 53 points, the NASDAQ shed 102 points and the NYSE composite fell by 328 points.
As bad as it was, stocks actually recovered half of their earlier losses on Friday. Still, it was the worst weekly performance for US indices in a year.
Dow 12,143.24, -96.87 (0.79%)
NASDAQ 2,756.38, -9.87 (0.36%)
S&P 500 1,292.28, -8.39 (0.65%)
NYSE Composite 8,079.44, -44.59 (0.55%)
Declining issues again dominated advancers, 4113-2476, and the gap between the expanding number of new lows and shrinking new highs worsened. On the NASDAQ, there were just 26 new highs, as compared to 114 new lows. The NYSE showed even worse, with just 16 new highs and 177 new lows. The combined totals of 42 new highs against 291 new lows is sending the strongest sell signal imaginable. Even if the congress does find a way to pass a debt ceiling increase by Tuesday, August 2, the damage for wasting time has been done the Moody's and S&P will likely downgrade US debt in short order, as they both have warned would occur if serious measures were not taken at this impasse.
Add to that the non-recovery "recovery" which has been represented by high unemployment and falling home prices and the recipe for further declines in equities is writ large.
Volume on the day was strong, another sign of a weakening stock market poised on the brink of turning losses into a major correction and a resumption of the bear market.
NASDAQ Volume 2,274,169,000
NYSE Volume 5,045,403,000
Among other interesting notes were the 10-year, which rose in price, but slumped in yield, down to 2.80%. The 30-year bond also hit a fresh low yield of 4.13%.
Oil took some losses, down $1.74, to $95.70. Gold made another intra-day high of $1637.50, before settling back to close at $1,628.30, up $14.90 for the day. Silver was up 31 cents, to $40.11 per ounce.
With the markets suffering their worst weekly losses in a year - coincidentally at the same time top economists are partying at their annual convention in Jackson Hole, Wyoming, the same place that Fed Chairman announced the launch of QE2 last summer - the onus is on the congress to come with a plan that appeases not only both parties but the ratings agencies as well.
While it is doubtful they would let the August 2 date pass without a debt ceiling increase, the chances of them passing a bill before then that actually cuts spending appropriately are still quite long.
Tuesday, June 21, 2011
Markets Up on Greek Deal Hopes
Well, that headline is not a joke. Surely, nobody on Wall Street has ever heard the phrase, "beware Greeks bearing gifts," though by tomorrow, everyone will know whether the second bailout of Greece - with a third coming by the end of August, almost certainly - will be a bonus or a canard.
The issues facing the Greek government are the roll-over of some $10 billion in maturing debt, plus another $40 billion in August. Right now, the deal is on, if Greek prime minister, George Papandreou, receives a vote of confidence from the Greek parliament, in a vote scheduled at the stroke of midnight in Greece (5:00 pm EDT).
Papandreou looked to have enough votes to win the crucial vote of confidence in parliament which would pave the way to passage of the latest austerity measures next week, ensuring a $12 billion advance from the ECB and the IMF.
With time winding down on the vote, crowds were beginning to form in Syntagma Square, directly across from the Parliament building. A vote of no confidence would be seen as a victory for the Greek populace, and if Papandreou does get the needed votes, rioting and confrontation are a near-certainty, as much of the population would like to detach Greece from the EU, return to the drachma and move on. (We will post an update of the vote as soon as it is confirmed.)
Elsewhere, investors looked past more horrifying housing numbers, as existing home sales in May fell by 3.8% from April and are down 15.3% from the same time last year, according to the report released by the National Association of Realtors (NAR).
So, once again, Wall Street demonstrated just how far detached from Main Street it really is, a chasm that only seems to keep widening.
Dow 12,190.01, +109.63 (0.91%)
NASDAQ 2,687.26, +57.60 (2.19%)
S&P 500 1,295.52, +17.16 (1.34%)
NYSE Composite 8,156.27, +124.05 (1.54%)
Advancing issues defeated decliners, 5430-1205. On the NASDAQ, there were 55 new highs and 32 new lows. The NYSE registered 68 new highs and 25 new lows, effectively ending the 12-day stretch in which the lows held the advantage with the combined numbers at 123 new highs and 57 new lows. What a difference a Greek makes!
Volume on the day was marginally better than on Monday, which is saying very little.
NASDAQ Volume 1,825,893,375
NYSE Volume 3,913,965,750
WTI crude futures edged up 14 cents, to $93.40. Gold added $6.30, to $1546.80 and silver was up 37 cents to $36.43. The moves in precious metals reflected the uncertainty of global economic conditions.
Tomorrow the Federal Reverse Open Market Committee will issue another one of the periodic edicts, keeping interest rates at near ZERO, and, presumably, will include the words, "extended period" for how long they believe it will be before they actually raise rates one iota.
The Fed is stuck in no-man's land, with a stumbling, structurally-impaired domestic economy and the threat of inflation due to a falling dollar. Thus far, the Fed has taken the easy route of monetary stimulation, throwing trillions into a stagnant economy, and that's likely to be their choice for many months, if not years, to come.
In reality, Greece is a side-show.
The issues facing the Greek government are the roll-over of some $10 billion in maturing debt, plus another $40 billion in August. Right now, the deal is on, if Greek prime minister, George Papandreou, receives a vote of confidence from the Greek parliament, in a vote scheduled at the stroke of midnight in Greece (5:00 pm EDT).
Papandreou looked to have enough votes to win the crucial vote of confidence in parliament which would pave the way to passage of the latest austerity measures next week, ensuring a $12 billion advance from the ECB and the IMF.
With time winding down on the vote, crowds were beginning to form in Syntagma Square, directly across from the Parliament building. A vote of no confidence would be seen as a victory for the Greek populace, and if Papandreou does get the needed votes, rioting and confrontation are a near-certainty, as much of the population would like to detach Greece from the EU, return to the drachma and move on. (We will post an update of the vote as soon as it is confirmed.)
Elsewhere, investors looked past more horrifying housing numbers, as existing home sales in May fell by 3.8% from April and are down 15.3% from the same time last year, according to the report released by the National Association of Realtors (NAR).
So, once again, Wall Street demonstrated just how far detached from Main Street it really is, a chasm that only seems to keep widening.
Dow 12,190.01, +109.63 (0.91%)
NASDAQ 2,687.26, +57.60 (2.19%)
S&P 500 1,295.52, +17.16 (1.34%)
NYSE Composite 8,156.27, +124.05 (1.54%)
Advancing issues defeated decliners, 5430-1205. On the NASDAQ, there were 55 new highs and 32 new lows. The NYSE registered 68 new highs and 25 new lows, effectively ending the 12-day stretch in which the lows held the advantage with the combined numbers at 123 new highs and 57 new lows. What a difference a Greek makes!
Volume on the day was marginally better than on Monday, which is saying very little.
NASDAQ Volume 1,825,893,375
NYSE Volume 3,913,965,750
WTI crude futures edged up 14 cents, to $93.40. Gold added $6.30, to $1546.80 and silver was up 37 cents to $36.43. The moves in precious metals reflected the uncertainty of global economic conditions.
Tomorrow the Federal Reverse Open Market Committee will issue another one of the periodic edicts, keeping interest rates at near ZERO, and, presumably, will include the words, "extended period" for how long they believe it will be before they actually raise rates one iota.
The Fed is stuck in no-man's land, with a stumbling, structurally-impaired domestic economy and the threat of inflation due to a falling dollar. Thus far, the Fed has taken the easy route of monetary stimulation, throwing trillions into a stagnant economy, and that's likely to be their choice for many months, if not years, to come.
In reality, Greece is a side-show.
Friday, June 10, 2011
Stocks Down for Sixth Straight Week; Worst Since 2002
Whatever happened to the recovery? All of a sudden, nobody on Wall Street or in Washington is talking about "green shoots", improvement, growth or any of the associated nonsense that went along with the previous two years' worth of stimulus, easy Fed policy, bailouts and handouts.
But who's counting, anyway? Stocks fell for the sixth straight week, and, due to a sudden turnaround at 2:00 pm in the financial sector, the day's losses could have - and should have - been a whole lot worse. By now, the only people who don't know that we're in the throes of pure economic upheaval in its most base form - that of currency destruction - are the President (who took off early today, heading for a weekend at Camp David) and Larry Kudlow, who said last night on his CNBC show, The Kudlow Report, that he thought the "correction had run its course."
Naturally, both Larry and Mr. Obama are clueless, or hiding behind the facade of officialdom, because what's weighing most on stocks these days is the total distaste and/or disregard for all manner of equities by the general public. It should be apparent that most Americans either don't have the money to invest in stocks or have, and not liking the results, are completely out of the paper market and turning to cash, gold, silver, art, collectibles, or other commodities.
Nobody likes Wall Street's paper except Wall Street, and that's a fact well-known to anybody who's been following these things for more than the past couple of months. Wall Street paper is made up by Wall Street, distributed among themselves, and bought, sold, sliced and diced as many ways as humanly (or by computer) possible... until... there's nobody else to take the paper, and that's the condition we have today.
What other reason could there be for such a massive sell-off on such paltry, absolutely slush-fund-looking volume? The churn upwards has reversed course and the majors are now going to eat each other in a massive orgy of short-selling all the way to the bottom, wherever that might be.
In months ahead, look for blown up hedge funds, even more absurdly-underfunded pension funds and the near complete collapse of Wall Street's most-favored institutions. Some contend that the great unwind has already commenced, begun in earnest in 2007, completed in 2008 and the Spring of 2009. All that's occurred since has been a perverse show with no underlying value.
Whatever the case, stocks are no place to park money right now, and probably won't be for another few years, as the masters of the universe scramble to hold onto what little is left of the markets and the US economy.
A couple of side notes to benefit those who didn't see the carnage:
From Barron's Blog: "Financial stocks were falling in early trading, but shot up around 2 p.m. after CNBC reported that capital requirements for big banks will likely be less onerous than the market had been expecting."
That's just what we need, more leverage and easier capital requirements for the world's biggest banks. My, oh, my, what great leverage you have. Might as well make it 1000-1 and blow everything up.
Zero Hedge reports: Fed releases final POMO schedule of $60 billion.
Well, let's see how stocks fare without free money. Anybody not dreading July - the end of the Fed's slimy handouts to the banks - is living in a dream world, which would include 90% of the global population.
So, down we go. BTW: there have been other declines of six straight weeks, but the last one was in 2002. See you on the other side, if there is another side to this horrible story.
Dow 11,951.91, -172.45 (1.42%)
NASDAQ 2,643.73, -41.14 (1.53%)
S&P 500 1,270.98, -18.02 (1.40%)
NYSE Composite 8,016.39, -133.26 (1.64%)
As expected, declining issues buried advancing ones, 4462-1202. Our favorite indicator showed even more trouble ahead. New highs on the NASDAQ were subsumed by new lows, 24-163. On the NYSE, there were only 20 new highs and 95 new lows, which makes the combined total the worst since the lows overtook the highs, six sessions ago, 44-258. If history is any guide - and it's usually a good one - this indicator will not turn over for at least six months, probably longer. Once either the new highs or new lows take an edge, it's generally for an extended period. For instance, new highs held sway over new lows on a daily basis for nearly two years before this most recent change.
Volume was again pathetic. Calling it light would be quite the understatement.
NASDAQ Volume 1,978,513,625
NYSE Volume 3,972,811,750
In today's great downdraft, commodities didn't fare any better, WTI crude futures on the NYMEX tumbled $2.64, to $99.29. Gold was taken down $12.20, to $1532.10, if only because of fund managers scrambling to meet margin calls. Silver took the worst of the action, falling $1.37, to $36.20 per ounce.
Putting the recent slide into perspective, since April 29, the Dow Jones Industrial Average has fallen by 858 points, still closing in on official correction territory, soon to become bear market territory. The Dow is less than 400 points from falling into negative territory for the year. The NASDAQ is already sporting a decline for all of 2011, closing today about nine points lower than where it ended 2010. It's lost 200 points since the market top, April 29.
As for the S&P, it's 93 points down over the past six weeks and is up a mere 13 points for the entire year. Time wasted, indeed. Does anyone now think that bailing out the too-big-to-fail banks was a good idea? Had the government done what was proper - that being nothing - and allowed the banks to go under and reorganize in other mysterious forms, the global economy would most likely be booming right now. Instead, we have a global catastrophe completely of their own making which is falling down upon their heads.
A pox on all their houses. Kick a banker to the curb today. They've been doing it to us since 1913.
But who's counting, anyway? Stocks fell for the sixth straight week, and, due to a sudden turnaround at 2:00 pm in the financial sector, the day's losses could have - and should have - been a whole lot worse. By now, the only people who don't know that we're in the throes of pure economic upheaval in its most base form - that of currency destruction - are the President (who took off early today, heading for a weekend at Camp David) and Larry Kudlow, who said last night on his CNBC show, The Kudlow Report, that he thought the "correction had run its course."
Naturally, both Larry and Mr. Obama are clueless, or hiding behind the facade of officialdom, because what's weighing most on stocks these days is the total distaste and/or disregard for all manner of equities by the general public. It should be apparent that most Americans either don't have the money to invest in stocks or have, and not liking the results, are completely out of the paper market and turning to cash, gold, silver, art, collectibles, or other commodities.
Nobody likes Wall Street's paper except Wall Street, and that's a fact well-known to anybody who's been following these things for more than the past couple of months. Wall Street paper is made up by Wall Street, distributed among themselves, and bought, sold, sliced and diced as many ways as humanly (or by computer) possible... until... there's nobody else to take the paper, and that's the condition we have today.
What other reason could there be for such a massive sell-off on such paltry, absolutely slush-fund-looking volume? The churn upwards has reversed course and the majors are now going to eat each other in a massive orgy of short-selling all the way to the bottom, wherever that might be.
In months ahead, look for blown up hedge funds, even more absurdly-underfunded pension funds and the near complete collapse of Wall Street's most-favored institutions. Some contend that the great unwind has already commenced, begun in earnest in 2007, completed in 2008 and the Spring of 2009. All that's occurred since has been a perverse show with no underlying value.
Whatever the case, stocks are no place to park money right now, and probably won't be for another few years, as the masters of the universe scramble to hold onto what little is left of the markets and the US economy.
A couple of side notes to benefit those who didn't see the carnage:
From Barron's Blog: "Financial stocks were falling in early trading, but shot up around 2 p.m. after CNBC reported that capital requirements for big banks will likely be less onerous than the market had been expecting."
That's just what we need, more leverage and easier capital requirements for the world's biggest banks. My, oh, my, what great leverage you have. Might as well make it 1000-1 and blow everything up.
Zero Hedge reports: Fed releases final POMO schedule of $60 billion.
Well, let's see how stocks fare without free money. Anybody not dreading July - the end of the Fed's slimy handouts to the banks - is living in a dream world, which would include 90% of the global population.
So, down we go. BTW: there have been other declines of six straight weeks, but the last one was in 2002. See you on the other side, if there is another side to this horrible story.
Dow 11,951.91, -172.45 (1.42%)
NASDAQ 2,643.73, -41.14 (1.53%)
S&P 500 1,270.98, -18.02 (1.40%)
NYSE Composite 8,016.39, -133.26 (1.64%)
As expected, declining issues buried advancing ones, 4462-1202. Our favorite indicator showed even more trouble ahead. New highs on the NASDAQ were subsumed by new lows, 24-163. On the NYSE, there were only 20 new highs and 95 new lows, which makes the combined total the worst since the lows overtook the highs, six sessions ago, 44-258. If history is any guide - and it's usually a good one - this indicator will not turn over for at least six months, probably longer. Once either the new highs or new lows take an edge, it's generally for an extended period. For instance, new highs held sway over new lows on a daily basis for nearly two years before this most recent change.
Volume was again pathetic. Calling it light would be quite the understatement.
NASDAQ Volume 1,978,513,625
NYSE Volume 3,972,811,750
In today's great downdraft, commodities didn't fare any better, WTI crude futures on the NYMEX tumbled $2.64, to $99.29. Gold was taken down $12.20, to $1532.10, if only because of fund managers scrambling to meet margin calls. Silver took the worst of the action, falling $1.37, to $36.20 per ounce.
Putting the recent slide into perspective, since April 29, the Dow Jones Industrial Average has fallen by 858 points, still closing in on official correction territory, soon to become bear market territory. The Dow is less than 400 points from falling into negative territory for the year. The NASDAQ is already sporting a decline for all of 2011, closing today about nine points lower than where it ended 2010. It's lost 200 points since the market top, April 29.
As for the S&P, it's 93 points down over the past six weeks and is up a mere 13 points for the entire year. Time wasted, indeed. Does anyone now think that bailing out the too-big-to-fail banks was a good idea? Had the government done what was proper - that being nothing - and allowed the banks to go under and reorganize in other mysterious forms, the global economy would most likely be booming right now. Instead, we have a global catastrophe completely of their own making which is falling down upon their heads.
A pox on all their houses. Kick a banker to the curb today. They've been doing it to us since 1913.
Monday, June 6, 2011
Stocks Pounded Again as No Catalyst Exists; BofA Gets a Taste of Own Medicine
After last week's carnage, traders lined up on Monday for what looks to be one of the duller trading weeks of the year, though the Greek bailout crisis in Euroland might change the scenario a bit.
There is scant economic news and the quarter doesn't end until June 30, so there are no corporate quarterly earnings reports on which to trade, which leaves markets in a situation nearly resembling "every man for himself."
Inasmuch as traders are a courageous lot, there was some horse-swapping in the session, though most of it was in the form of shedding assets because the US economy looks to be falling back upon itself and could be headed for another recession. QE2 ends abruptly just after options expiration on the 17th, so one could expect an even more severe downturn at that time.
Banks are once again in the cross-hairs. They led today's decline and are possibly among the worst risk assets to be holding at present, especially in the case of the big ones: JP Morgan, BofA, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo.
While many have taken to calling this a "soft patch" - which is just another term for "I have no idea because I only can make money when stocks go up" - more hardened economists see the current condition as analogous to the Fall of '08, as Greece (and maybe Spain, Portugal and Italy) takes the place of Lehman Brothers and another solvency crisis comes to bear.
However, it could be even deeper than that, with one of the major US banks finally throwing in the towel. In that case, it's likely to be Bank of America (BAC), which was highlighted in Fortune magazine on Friday.
In the article linked above, contributor Abigail Field - who has penned a number of solidly-researched pieces on the mortgage crisis - claims that the extent of sloppiness, incompleteness and outright fraud contained in mortgages originated and securitized by Countrywide (taken over by Bank of America in 2008) is likely much more severe and perverse than anyone had imagined and BofA wasn't letting on about it.
Bank of America is easily the one most crippled by the mortgage and foreclosure crisis and the extent of their losses may have been (probably is) grossly understated, both by the bank and by regulators. The sheer volume of bad loans, fraudulent documents and outright chaos in the mortgage servicing department of Bank of America would have taken down a smaller institution years ago, but BofA is the nation's largest bank and they've been aided continuously by the Federal Reserve, at taxpayer expense.
The severity of the crisis continues to dog the mega-bank at every turn and they may have to make the decision of off-board the entire Countrywide unit in order to salvage what remains of their institution. Of course, this is speculation, but the regulations still being written for the Dodd-Frank bill may be complete enough to call for an orderly winding down of the bank should it pose systemic risk, and surely it does.
To a lesser extent, Wells-Fargo (WFC) faces the same situation, as they managed to snatch up Wachovia - and all their no-doc, low-doc loans - during the turmoil of the financial crisis.
On the day, both stocks finished well into the red, with BAC falling to its lowest closing level since May 15, 2009, breaking below the close of 10.92 on November 30, 2010, losing 45 cents, to 10.83. Wells-Fargo (WFC) lost 0.60 to 26.26 and is close to making a double-bottom.
Today was a truly ugly day on Wall Street, as stocks simply lost value steadily, albeit slowly, throughout the session. The lows of the day were reached shortly after 3:00 pm and an abrupt rally fizzled in the final minutes. Nothing but reluctance to sell is keeping this market from an outright crash.
Dow 12,090.11, -61.15 (0.50%)
NASDAQ 2,702.56, -30.22 (1.11%)
S&P 500 1,286.17, -13.99 (1.08%)
NYSE Composite 8,115.87, -106.28 (1.29%)
Despite the modest declines, internals were shattered. Losers dominated winners, 5175-1436. The NASDAQ posted just 31 new highs, overwhelmed by 131 new lows. On the NYSE, there were just 27 new highs, but 65 new lows, putting the combined number at 58 new highs to 196 new lows. This is the third straight day of the lows beating the highs. On Thursday of last week, it was 115 to 76 and Friday saw 130-68, both in favor of new lows.
This is a very telling sign that we are about to enter a serious correction which should last months, at least through September. A ton of money has already fled stocks and more will follow. Volume was moderate, but only because there are fewer and fewer players every day.
NASDAQ Volume 1,826,802,125.00
NYSE Volume 4,034,310,000
Crude oil futures fell $1.21 to $99.01. Gold advanced $2.40, to $1544.80. Silver finished up 51 cents, at $36.80
Finally, in the video below, some justice was served in Florida, where Bank of America got their just deserts.
There is scant economic news and the quarter doesn't end until June 30, so there are no corporate quarterly earnings reports on which to trade, which leaves markets in a situation nearly resembling "every man for himself."
Inasmuch as traders are a courageous lot, there was some horse-swapping in the session, though most of it was in the form of shedding assets because the US economy looks to be falling back upon itself and could be headed for another recession. QE2 ends abruptly just after options expiration on the 17th, so one could expect an even more severe downturn at that time.
Banks are once again in the cross-hairs. They led today's decline and are possibly among the worst risk assets to be holding at present, especially in the case of the big ones: JP Morgan, BofA, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo.
While many have taken to calling this a "soft patch" - which is just another term for "I have no idea because I only can make money when stocks go up" - more hardened economists see the current condition as analogous to the Fall of '08, as Greece (and maybe Spain, Portugal and Italy) takes the place of Lehman Brothers and another solvency crisis comes to bear.
However, it could be even deeper than that, with one of the major US banks finally throwing in the towel. In that case, it's likely to be Bank of America (BAC), which was highlighted in Fortune magazine on Friday.
In the article linked above, contributor Abigail Field - who has penned a number of solidly-researched pieces on the mortgage crisis - claims that the extent of sloppiness, incompleteness and outright fraud contained in mortgages originated and securitized by Countrywide (taken over by Bank of America in 2008) is likely much more severe and perverse than anyone had imagined and BofA wasn't letting on about it.
Bank of America is easily the one most crippled by the mortgage and foreclosure crisis and the extent of their losses may have been (probably is) grossly understated, both by the bank and by regulators. The sheer volume of bad loans, fraudulent documents and outright chaos in the mortgage servicing department of Bank of America would have taken down a smaller institution years ago, but BofA is the nation's largest bank and they've been aided continuously by the Federal Reserve, at taxpayer expense.
The severity of the crisis continues to dog the mega-bank at every turn and they may have to make the decision of off-board the entire Countrywide unit in order to salvage what remains of their institution. Of course, this is speculation, but the regulations still being written for the Dodd-Frank bill may be complete enough to call for an orderly winding down of the bank should it pose systemic risk, and surely it does.
To a lesser extent, Wells-Fargo (WFC) faces the same situation, as they managed to snatch up Wachovia - and all their no-doc, low-doc loans - during the turmoil of the financial crisis.
On the day, both stocks finished well into the red, with BAC falling to its lowest closing level since May 15, 2009, breaking below the close of 10.92 on November 30, 2010, losing 45 cents, to 10.83. Wells-Fargo (WFC) lost 0.60 to 26.26 and is close to making a double-bottom.
Today was a truly ugly day on Wall Street, as stocks simply lost value steadily, albeit slowly, throughout the session. The lows of the day were reached shortly after 3:00 pm and an abrupt rally fizzled in the final minutes. Nothing but reluctance to sell is keeping this market from an outright crash.
Dow 12,090.11, -61.15 (0.50%)
NASDAQ 2,702.56, -30.22 (1.11%)
S&P 500 1,286.17, -13.99 (1.08%)
NYSE Composite 8,115.87, -106.28 (1.29%)
Despite the modest declines, internals were shattered. Losers dominated winners, 5175-1436. The NASDAQ posted just 31 new highs, overwhelmed by 131 new lows. On the NYSE, there were just 27 new highs, but 65 new lows, putting the combined number at 58 new highs to 196 new lows. This is the third straight day of the lows beating the highs. On Thursday of last week, it was 115 to 76 and Friday saw 130-68, both in favor of new lows.
This is a very telling sign that we are about to enter a serious correction which should last months, at least through September. A ton of money has already fled stocks and more will follow. Volume was moderate, but only because there are fewer and fewer players every day.
NASDAQ Volume 1,826,802,125.00
NYSE Volume 4,034,310,000
Crude oil futures fell $1.21 to $99.01. Gold advanced $2.40, to $1544.80. Silver finished up 51 cents, at $36.80
Finally, in the video below, some justice was served in Florida, where Bank of America got their just deserts.
Wednesday, June 1, 2011
A Major Dose of Reality and the Beginning of the End of Paper Money
Confirming yesterday's hypothesis that "something is wrong," stocks righted themselves to the steady flow of horrible economic news on wednesday and took their largest losses in months.
What really sent the markets into a deep funk was the release of the ADP private payroll survey, which showed job gains for the month of May to be only 38,000, when most estimates ranged from 175,000 to as high as 300,000. That sent futures tumbling in the hour just prior to the open and stocks did a complete reversal from Tuesday's glorious rally, which, truth be told, was based on nothing but hot air, or even cold air, but air, nonetheless.
Once traders had tasted the bitter flavor of selling winners and losers alike, the ISM manufacturing index came in at 10:00 am, well below expectations of 57.0, at 53.5, after notching a 60.4 handle in April. Despite still being positive (above 50), it was the worst reading since the fall of 2009.
Lumped on top of Tuesday's Chicago PMI and Case-Shiller housing report, the first week of June looks like it may be a tide-turning one. The euphoria of Tuesday's happy-face rally all but extinguished, investors, economists and government talkers must face the grim reality that the economy is sputtering, even after trillions in stimulus over the past two-and-a-half years.
The fallout from the long series of poor to horrible economic reports was that the benchmark 10-year note fell to its lowest level since last summer, checking in at 2.94%, after closing at 3.06 yesterday. Sub-3% yields on the 10-year is swell for borrowers, but it also belies a grim truth: that the economy is dead in the water, and there is nowhere to go but into the relative safety of fixed income, albeit at very unattractive yields.
Dow 12,290.14, -279.65 (2.22%)
NASDAQ 2,769.19, -66.11 (2.33%)
S&P 500 1,314.55, -30.65 (2.28%)
NYSE Composite 8,281.59, -195.69 (2.31%)
Declining issues overwhelmed advancers, 5420-1222. It was the biggest rout of 2011. Still hanging on for dear life, the new high-new low indicator showed the NASDAQ dead even at 74 new highs and the same number of new lows. On the NYSE, a bit more resilience, with 101 new highs and 38 new lows, though once again, the margin is shrinking and it's only a matter of time before the market flips right over and a full-blown correction can be announced.
Naturally, since nobody wants or likes to face the reality of the situation, the US and global economies are almost completely kaput. Nothing more than wasted effort printing worthless Dollars, Euros and Yuan will be the requisite response from the league of central bankers whose policies have been exposed as outright disasters. A great reckoning is upon us, and those who have not prepared will be blind-sided and left in tears with paper assets worth nothing.
Volume was on a par with Tuesday's, unsurprisingly, though one could have expected even heavier selling. Apparently, not everyone is convinced that the game is over. The Too Big To Fail banks are still holding out hope for more dollar devaluation for the Fed and more handouts via the strapped and wrecked taxpayer base.
Of the more curious aspects of today's global melt-down was that the dollar actually looked like the best of a bad lot, rising 0.364 to 74.90, though that condition is - as the Chairman might express - transitory. Eventually, all paper money will be debased to nothing as the world sinks into global depression.
NASDAQ Volume 2,316,268,250
NYSE Volume 4,920,608,500
Of some small consolation to millions of consumers, oil fell abruptly, down $2.41, to $100.29. While still about $25 higher than it should be, the price of crude and the resultant price of gasoline should ease over the coming days and weeks to reflect the true status of the economy. Nothing kills growth as quickly or completely as high oil and gasoline prices, and, even though demand has been falling steadily since the average price of a gallon of unleaded gas hit just below $4.00, the price still remains a drag on the overall economy, at $3.77.
Gold was the greatest beneficiary of Wall Street's loathsome session, hitting a two-month high at $1551.20, before falling back to $1539.10, up $4.10 on the day. Naturally, the central banking cartel could not let silver go untouched, smashing the second precious metal down $1.65, to $36.82. Of course, in a deflationary depression, the metals offer no great relief, though they will tend to outperform all other asset classes and when the collapse of all fiat money occurs, they will shine as saviors.
June is shaping up to be a killer for the stock markets. Even though the ADP employment report has been widely criticized, there's little doubt that Friday's non-farm payroll report for May will be nothing short of disastrous, showing quite clearly that all the stimulus and wanton speculation of the past two years has done nothing to repair the deep wounds to the Main Street economy.
What little hope there is can be found amongst those who believe it is time for honesty and a change of policy, that people be favored over wealthy banks and their criminal CEOs and that government, if unable to serve the needs of the people, will be left behind. As during other times of hardship, the American public will turn to barter, black markets and other underground economies. Governments at all levels will be left holding onto unwieldy deficits as tax receipts fail to materialize.
The more one pays attention to what comes out of the mouths of bankers, government officials and elected legislators, the more one comes to realize that they have no interest but their own at heart and the American people will carry on without them, even if it means wholesale tax rebellion at every level. The system is burdened with unassailable costs and debts that cannot be paid. When and if congress decides to actually come to grips with these harsh realities, we will begin healing, though most with any sense of history feel that government has lost all control and the people are about to begin fending more or less for themselves.
Of course, the government will continue kiting checks to the "needy" and keeping the masses at bay with food stamps and other entitlement outlays, but the value will continue to erode and the already well-entrenched, wretched sub-class of welfare and government dole recipients will suffer even more.
It is truly a remarkable time in the world's history, and probably better to be young than old, for the young have the advantage of time - to repair, replenish and rebuild that which our absent leaders have destroyed.
What really sent the markets into a deep funk was the release of the ADP private payroll survey, which showed job gains for the month of May to be only 38,000, when most estimates ranged from 175,000 to as high as 300,000. That sent futures tumbling in the hour just prior to the open and stocks did a complete reversal from Tuesday's glorious rally, which, truth be told, was based on nothing but hot air, or even cold air, but air, nonetheless.
Once traders had tasted the bitter flavor of selling winners and losers alike, the ISM manufacturing index came in at 10:00 am, well below expectations of 57.0, at 53.5, after notching a 60.4 handle in April. Despite still being positive (above 50), it was the worst reading since the fall of 2009.
Lumped on top of Tuesday's Chicago PMI and Case-Shiller housing report, the first week of June looks like it may be a tide-turning one. The euphoria of Tuesday's happy-face rally all but extinguished, investors, economists and government talkers must face the grim reality that the economy is sputtering, even after trillions in stimulus over the past two-and-a-half years.
The fallout from the long series of poor to horrible economic reports was that the benchmark 10-year note fell to its lowest level since last summer, checking in at 2.94%, after closing at 3.06 yesterday. Sub-3% yields on the 10-year is swell for borrowers, but it also belies a grim truth: that the economy is dead in the water, and there is nowhere to go but into the relative safety of fixed income, albeit at very unattractive yields.
Dow 12,290.14, -279.65 (2.22%)
NASDAQ 2,769.19, -66.11 (2.33%)
S&P 500 1,314.55, -30.65 (2.28%)
NYSE Composite 8,281.59, -195.69 (2.31%)
Declining issues overwhelmed advancers, 5420-1222. It was the biggest rout of 2011. Still hanging on for dear life, the new high-new low indicator showed the NASDAQ dead even at 74 new highs and the same number of new lows. On the NYSE, a bit more resilience, with 101 new highs and 38 new lows, though once again, the margin is shrinking and it's only a matter of time before the market flips right over and a full-blown correction can be announced.
Naturally, since nobody wants or likes to face the reality of the situation, the US and global economies are almost completely kaput. Nothing more than wasted effort printing worthless Dollars, Euros and Yuan will be the requisite response from the league of central bankers whose policies have been exposed as outright disasters. A great reckoning is upon us, and those who have not prepared will be blind-sided and left in tears with paper assets worth nothing.
Volume was on a par with Tuesday's, unsurprisingly, though one could have expected even heavier selling. Apparently, not everyone is convinced that the game is over. The Too Big To Fail banks are still holding out hope for more dollar devaluation for the Fed and more handouts via the strapped and wrecked taxpayer base.
Of the more curious aspects of today's global melt-down was that the dollar actually looked like the best of a bad lot, rising 0.364 to 74.90, though that condition is - as the Chairman might express - transitory. Eventually, all paper money will be debased to nothing as the world sinks into global depression.
NASDAQ Volume 2,316,268,250
NYSE Volume 4,920,608,500
Of some small consolation to millions of consumers, oil fell abruptly, down $2.41, to $100.29. While still about $25 higher than it should be, the price of crude and the resultant price of gasoline should ease over the coming days and weeks to reflect the true status of the economy. Nothing kills growth as quickly or completely as high oil and gasoline prices, and, even though demand has been falling steadily since the average price of a gallon of unleaded gas hit just below $4.00, the price still remains a drag on the overall economy, at $3.77.
Gold was the greatest beneficiary of Wall Street's loathsome session, hitting a two-month high at $1551.20, before falling back to $1539.10, up $4.10 on the day. Naturally, the central banking cartel could not let silver go untouched, smashing the second precious metal down $1.65, to $36.82. Of course, in a deflationary depression, the metals offer no great relief, though they will tend to outperform all other asset classes and when the collapse of all fiat money occurs, they will shine as saviors.
June is shaping up to be a killer for the stock markets. Even though the ADP employment report has been widely criticized, there's little doubt that Friday's non-farm payroll report for May will be nothing short of disastrous, showing quite clearly that all the stimulus and wanton speculation of the past two years has done nothing to repair the deep wounds to the Main Street economy.
What little hope there is can be found amongst those who believe it is time for honesty and a change of policy, that people be favored over wealthy banks and their criminal CEOs and that government, if unable to serve the needs of the people, will be left behind. As during other times of hardship, the American public will turn to barter, black markets and other underground economies. Governments at all levels will be left holding onto unwieldy deficits as tax receipts fail to materialize.
The more one pays attention to what comes out of the mouths of bankers, government officials and elected legislators, the more one comes to realize that they have no interest but their own at heart and the American people will carry on without them, even if it means wholesale tax rebellion at every level. The system is burdened with unassailable costs and debts that cannot be paid. When and if congress decides to actually come to grips with these harsh realities, we will begin healing, though most with any sense of history feel that government has lost all control and the people are about to begin fending more or less for themselves.
Of course, the government will continue kiting checks to the "needy" and keeping the masses at bay with food stamps and other entitlement outlays, but the value will continue to erode and the already well-entrenched, wretched sub-class of welfare and government dole recipients will suffer even more.
It is truly a remarkable time in the world's history, and probably better to be young than old, for the young have the advantage of time - to repair, replenish and rebuild that which our absent leaders have destroyed.
Tuesday, April 12, 2011
Stocks Take Another Hit, But, Why?
Major US indices fell for a fourth consecutive session - with the exception of the Dow, which eked out a 1-point gain on Monday - and there are likely several reasons why this downtrend has continued and actually accelerated, with the biggest drop coming today.
After all, it is the beginning of earnings season, and first quarter results are expected to be pretty good. But is the market looking down the road, or could investors be wary of margin squeezes caused by runaway commodity prices, or consumer depression caused by over-the-top gas prices?
One thing's for sure: the winter was a long and cold one, and nobody got a break from high heating bills in a majority of the heating states of the Northeast and Midwest. That certainly couldn't have helped household budgets much and a Gallup poll released today suggests that Americans are as displeased with current and future conditions as they were this time in 2009 and through the middle of 2010.
The poll showed that only 33% of respondents in March think the economy is "getting better." That's a drop from 36% in February and 41% in January.
Another possibility is that the now-month-old tragedy in Japan is also worsening, as officials raised the level of the Fukushima Daiichi nuclear plant accident to 7, on a par with the disaster at Chernobyl, 25 years ago.
Perhaps the stock market wasn't really sold on the late-night budget deal reached on Friday night (We had expected this was only a continuing resolution and were right) and the potential that the deal could fall apart. Details are just beginning to trickle out that the cuts amount to much less than the $38.5 billion reported and that members of both parties, in bouth houses of congress, are displeased.
At Business Insider, Joe Weisenthal reports that the government might still shut down, this Friday. The AP has details from just where the phantom cuts are coming.
So, here we go again? The 2011 fiscal year ends September 30 (about 5 1/2 months from now), and the budget is still being trimmed, debated and flayed? This is no way to run a country, especially one as on the financial ropes as the USA. Get ready for more drama from the queens on Capitol Hill and at the White House.
The Hill has more detail on the cuts, which will go to a House floor vote on Thursday. The legislation is known as H.R. 1473, for those wishing to keep score at home.
Notwithstanding the aforementioned possibilities and potentialities, the Fed's ending of thier policy of handing over free money to Primary Dealers in June, via QE2, might be on the minds of many in the investment world. When that nearly $100 billion a month stops, so might Wall Street's 2-year-long party. In a related note, the Fed released it's schedule of banker handouts (POMO) for the remainder of April through May 12.
All of this news added up to some big drops in the equity markets, centered around just about 1% overall. Commodities were hit even harder (see below).
Dow 12,263.58, -117.53 (0.95%)
NASDAQ 2,744.79, -26.72 (0.96%)
S&P 500 1,314.16, -10.30 (0.78%)
NYSE Composite 8,360.46, -85.31 (1.01%)
Declining issues clobbered advancers again, 4883-1663, a nearly 3:1 ratio, the largest of the past four sessions. On the NASDAQ, new lows overtook new highs, 56-39, but it was the other way around on the stubborn NYSE, with new highs holding a slim edge over new lows, 41-20. A similar pattern was witnessed in March, with the new lows overtaking new highs on both indices for 4-6 days, but the supposed correction was cut short by a surprise rally that now seems to have run up against resistance and is failing fast. Volume was not spectacular, and would most accurately be described as moribund. Another few days of this, and another row over continuing funding to the federal government could put the kibosh on 2011 gains, short and long term.
NASDAQ Volume 1,798,176,500
NYSE Volume 4,735,433,500
Oil took another massive hit in price on Tuesday, with WTI crude futures falling $3.67, to $106.25, and even lower after NYMEX trading closed. That's a two-day drop of $6.52 per barrel and motorists can only hope the trend continues. There are a lot of speculators in the market, and estimates range from them making up anywhere from 10-40% of the oil price.
Of course, in a real world, with real world consequences coming from an actually-functioning Justice Department, that would otherwise be known as price-fixing. Since the Attorney General hasn't been seen in six or eight months, and is generally regarded as the worst ever, don't expect anything like even an investigation to commence any time soon. We hear the name of the AG is Eric Holder, but nobody's been able to confirm that.
Along with oil, a good number of food and grain commodities are coming off their highs. Corn, soybeans and wheat were down the most, with lean hogs and live cattle following the trend. Gold slipped $14.50, to $1,453.60. Silver fell 55 cents, to settle in at $40.07 per ounce.
It has been said that one day does not make a trend, and there's truth in that, but maybe four straight declines in major indices are significant enough for somebody to take notice. It's no secret that the US system is largely bankrupt and operating on fumes and smoke, so it might be just a matter of time for the markets to correct. Naturally, the meddling Fed has kept the rally going with oodles of cash, and just to be sure, they gave some to the wives of some already-rich bankers, as Matt Taibbi reports for Rolling Stone.
Fair warning: reading Taibbi's latest story might lead to vomiting or breaking of inanimate objects. Strap in securely, as this story reveals just how corrupt and unbalanced the entire bailout process has been and continues to be.
Paging Ron Paul, paging Ron Paul. The country is calling on you to run for president.
After all, it is the beginning of earnings season, and first quarter results are expected to be pretty good. But is the market looking down the road, or could investors be wary of margin squeezes caused by runaway commodity prices, or consumer depression caused by over-the-top gas prices?
One thing's for sure: the winter was a long and cold one, and nobody got a break from high heating bills in a majority of the heating states of the Northeast and Midwest. That certainly couldn't have helped household budgets much and a Gallup poll released today suggests that Americans are as displeased with current and future conditions as they were this time in 2009 and through the middle of 2010.
The poll showed that only 33% of respondents in March think the economy is "getting better." That's a drop from 36% in February and 41% in January.
Another possibility is that the now-month-old tragedy in Japan is also worsening, as officials raised the level of the Fukushima Daiichi nuclear plant accident to 7, on a par with the disaster at Chernobyl, 25 years ago.
Perhaps the stock market wasn't really sold on the late-night budget deal reached on Friday night (We had expected this was only a continuing resolution and were right) and the potential that the deal could fall apart. Details are just beginning to trickle out that the cuts amount to much less than the $38.5 billion reported and that members of both parties, in bouth houses of congress, are displeased.
At Business Insider, Joe Weisenthal reports that the government might still shut down, this Friday. The AP has details from just where the phantom cuts are coming.
So, here we go again? The 2011 fiscal year ends September 30 (about 5 1/2 months from now), and the budget is still being trimmed, debated and flayed? This is no way to run a country, especially one as on the financial ropes as the USA. Get ready for more drama from the queens on Capitol Hill and at the White House.
The Hill has more detail on the cuts, which will go to a House floor vote on Thursday. The legislation is known as H.R. 1473, for those wishing to keep score at home.
Notwithstanding the aforementioned possibilities and potentialities, the Fed's ending of thier policy of handing over free money to Primary Dealers in June, via QE2, might be on the minds of many in the investment world. When that nearly $100 billion a month stops, so might Wall Street's 2-year-long party. In a related note, the Fed released it's schedule of banker handouts (POMO) for the remainder of April through May 12.
All of this news added up to some big drops in the equity markets, centered around just about 1% overall. Commodities were hit even harder (see below).
Dow 12,263.58, -117.53 (0.95%)
NASDAQ 2,744.79, -26.72 (0.96%)
S&P 500 1,314.16, -10.30 (0.78%)
NYSE Composite 8,360.46, -85.31 (1.01%)
Declining issues clobbered advancers again, 4883-1663, a nearly 3:1 ratio, the largest of the past four sessions. On the NASDAQ, new lows overtook new highs, 56-39, but it was the other way around on the stubborn NYSE, with new highs holding a slim edge over new lows, 41-20. A similar pattern was witnessed in March, with the new lows overtaking new highs on both indices for 4-6 days, but the supposed correction was cut short by a surprise rally that now seems to have run up against resistance and is failing fast. Volume was not spectacular, and would most accurately be described as moribund. Another few days of this, and another row over continuing funding to the federal government could put the kibosh on 2011 gains, short and long term.
NASDAQ Volume 1,798,176,500
NYSE Volume 4,735,433,500
Oil took another massive hit in price on Tuesday, with WTI crude futures falling $3.67, to $106.25, and even lower after NYMEX trading closed. That's a two-day drop of $6.52 per barrel and motorists can only hope the trend continues. There are a lot of speculators in the market, and estimates range from them making up anywhere from 10-40% of the oil price.
Of course, in a real world, with real world consequences coming from an actually-functioning Justice Department, that would otherwise be known as price-fixing. Since the Attorney General hasn't been seen in six or eight months, and is generally regarded as the worst ever, don't expect anything like even an investigation to commence any time soon. We hear the name of the AG is Eric Holder, but nobody's been able to confirm that.
Along with oil, a good number of food and grain commodities are coming off their highs. Corn, soybeans and wheat were down the most, with lean hogs and live cattle following the trend. Gold slipped $14.50, to $1,453.60. Silver fell 55 cents, to settle in at $40.07 per ounce.
It has been said that one day does not make a trend, and there's truth in that, but maybe four straight declines in major indices are significant enough for somebody to take notice. It's no secret that the US system is largely bankrupt and operating on fumes and smoke, so it might be just a matter of time for the markets to correct. Naturally, the meddling Fed has kept the rally going with oodles of cash, and just to be sure, they gave some to the wives of some already-rich bankers, as Matt Taibbi reports for Rolling Stone.
Fair warning: reading Taibbi's latest story might lead to vomiting or breaking of inanimate objects. Strap in securely, as this story reveals just how corrupt and unbalanced the entire bailout process has been and continues to be.
Paging Ron Paul, paging Ron Paul. The country is calling on you to run for president.
Thursday, July 1, 2010
ISM Data, Home Sales Rattle Markets: Deflation Clearly Evident
The relentless slide in the markets continued on Thursday as the series of data releases evidencing poor economic performance across the entire global swath of markets added even more dour numbers.
Prior to the opening bell, the government-affiliated PMI for China fell to 52.1 in June from 53.9 in May and 55.7 in April, and the HSBC China Manufacturing PMI fell to 50.4 in June from 52.7 in May. HSBC reports their figure the lowest in a year, even though readings over 50 do indicate expansion.
First time unemployment claims came in at 472,000, a rise above the prior week's revised reading of 459,000 new claimants.
Once markets were open for trading, matters turned even worse when the US ISM Index dropped to 52.6 in June from 59.7 in May and pending home sales registered a 30% decline month-over-month.
Revealing in the ISM data was the 20.5% decline in prices. Overall, production slipped 5.2% and new orders were off 7.2%.
Much of the decline in housing starts was credited to the end of the government's tax credit on home purchases in April, but the 30% decline was more than twice what was expected, sending the index to an all-time low of 77.6 from a reading of 110.9 in April. The index is also is 15.9% below the May 2009 figure.
Stocks plunged when that disastrous duo came off the news wires, with the Dow quickly plummeting to its intra-day low of 9,621.89, with other indices following the path lower.
Markets tore through all levels of support, but regained composure midday and closed with relatively minor losses.
But serious technical damage had been done this day, as in days past. Concern over the shaky health of the US economy continued to dog investors at every turn and tomorrow's release of non-farms payroll from June hasn't offered much hope, though many are wondering whether or not the market is seriously oversold and the impact of the employment data already factored into prices.
More than likely, that is not the case, but rather the market was guided by insiders on the short side of many trades, covering today and re-instituting positions in anticipation of a tepid report before the beginning of Friday's trade. while that may seem cynical to some, it's how the market has been running for some time. It's a big boy's game and small investors do not stand a chance.
Unless, by some miracle of accounting, the government shows 50,000 or more private sector jobs created over the month just past, the markets are on course for one of their worst weeks in quite some time.
Dow 9,732.53, -41.49 (0.42%)
NASDAQ 2,101.36, -7.88 (0.37%)
S&P 500 1,027.37, -3.34 (0.32%)
NYSE Composite 6,462.03, -7.62 (0.12%)
Giving more credence to the bearish camp, decliners outstripped advancers by an unhealthy margin, 4052-2496, and new lows ramped past new highs, 439-101, the third straight day in which the lows have buried the highs and the largest margin of the three. Volume was also very heavy, the best showing of the week.
NASDAQ Volume 2,678,066,750
NYSE Volume 7,533,900,500
Today's sudden decline caused liquidation and winding down of many trades, particularly in the highly-hedged commodity arena. Oil saw its worst price decline in at least three months, losing $2.68, to $72.95. Gold was completely devastated, dropping $39.00, to $1,206.30 and even further - below $1200 - after the NY close. Silver also disappointed, dropping 91 cents (4.88%), to $17.76. Prices for the precious metals fell to levels not seen in over a month.
Continued weakness in global markets continue to stir fears of widening deflationary trends, particularly worrisome to those who carry heavy debt burdens, such as almost all government entities, hedge funds, banks and other financial institutions.
Global deflation, begun in earnest in August 2007, continues to gain momentum and shake existing financial infrastruture.
Prior to the opening bell, the government-affiliated PMI for China fell to 52.1 in June from 53.9 in May and 55.7 in April, and the HSBC China Manufacturing PMI fell to 50.4 in June from 52.7 in May. HSBC reports their figure the lowest in a year, even though readings over 50 do indicate expansion.
First time unemployment claims came in at 472,000, a rise above the prior week's revised reading of 459,000 new claimants.
Once markets were open for trading, matters turned even worse when the US ISM Index dropped to 52.6 in June from 59.7 in May and pending home sales registered a 30% decline month-over-month.
Revealing in the ISM data was the 20.5% decline in prices. Overall, production slipped 5.2% and new orders were off 7.2%.
Much of the decline in housing starts was credited to the end of the government's tax credit on home purchases in April, but the 30% decline was more than twice what was expected, sending the index to an all-time low of 77.6 from a reading of 110.9 in April. The index is also is 15.9% below the May 2009 figure.
Stocks plunged when that disastrous duo came off the news wires, with the Dow quickly plummeting to its intra-day low of 9,621.89, with other indices following the path lower.
Markets tore through all levels of support, but regained composure midday and closed with relatively minor losses.
But serious technical damage had been done this day, as in days past. Concern over the shaky health of the US economy continued to dog investors at every turn and tomorrow's release of non-farms payroll from June hasn't offered much hope, though many are wondering whether or not the market is seriously oversold and the impact of the employment data already factored into prices.
More than likely, that is not the case, but rather the market was guided by insiders on the short side of many trades, covering today and re-instituting positions in anticipation of a tepid report before the beginning of Friday's trade. while that may seem cynical to some, it's how the market has been running for some time. It's a big boy's game and small investors do not stand a chance.
Unless, by some miracle of accounting, the government shows 50,000 or more private sector jobs created over the month just past, the markets are on course for one of their worst weeks in quite some time.
Dow 9,732.53, -41.49 (0.42%)
NASDAQ 2,101.36, -7.88 (0.37%)
S&P 500 1,027.37, -3.34 (0.32%)
NYSE Composite 6,462.03, -7.62 (0.12%)
Giving more credence to the bearish camp, decliners outstripped advancers by an unhealthy margin, 4052-2496, and new lows ramped past new highs, 439-101, the third straight day in which the lows have buried the highs and the largest margin of the three. Volume was also very heavy, the best showing of the week.
NASDAQ Volume 2,678,066,750
NYSE Volume 7,533,900,500
Today's sudden decline caused liquidation and winding down of many trades, particularly in the highly-hedged commodity arena. Oil saw its worst price decline in at least three months, losing $2.68, to $72.95. Gold was completely devastated, dropping $39.00, to $1,206.30 and even further - below $1200 - after the NY close. Silver also disappointed, dropping 91 cents (4.88%), to $17.76. Prices for the precious metals fell to levels not seen in over a month.
Continued weakness in global markets continue to stir fears of widening deflationary trends, particularly worrisome to those who carry heavy debt burdens, such as almost all government entities, hedge funds, banks and other financial institutions.
Global deflation, begun in earnest in August 2007, continues to gain momentum and shake existing financial infrastruture.
Wednesday, June 30, 2010
A Rush to the Exits at Quarter's End
On the final day of trading for the second quarter - the midpoint of the year - traders and investors took a look back on what has gone before and peered into an uncertain future.
By the end of the day, their assessment was clear: this is no time to be heavily invested in equities. Thus, in the final hour of trading, all of the major US indices took a severe turn to the downside finishing the day - and the quarter - with what turned from a trickle into a complete rout.
Stocks had held their own through most of the session, trading slightly above the unchanged mark for the most part, but, when it came down to concrete buying or selling decisions, everybody hit the sell button nearly simultaneously. A delay of a few moments could cost thousands, or even millions, of dollars, so once the trend was in place after 3:15 pm, the volume increased and near panic ensued. Only a serious effort in the final fifteen minutes - most likely by the PPT and some delighted short-sellers covering positions for the day - kept the markets from melting down completely.
Even as rescuers came to aid at the close, the Dow finished with a new closing low for the year, finally coming to rest on a number it hasn't seen since November 3, 2009, nearly 8 months ago.
The consensus opinion for the first half of 2010: Not so good. Prospects for the second half: Disturbingly downbeat. It's as though both the soprano and tenor each caught a cold nearing intermission of an opera.
Dow 9,774.02, -96.28 (0.98%)
NASDAQ 2,109.24, -25.94 (1.21%)
S&P 500 1,030.71, -10.53 (1.01%)
NYSE Composite 6,469.66, -50.43 (0.77%)
By day's end decliners buried advancers under the avalanche of late selling, 4127-2385. New lows smashed new highs by a margin nearly equal to yesterday's, 295-103. Volume, which had been on the light side most of the day, was so concentrated in the final hour that it ended up being just about normal, evan a bit on the heavy side.
NASDAQ Volume 2,212,934,750
NYSE Volume 5,968,454,500
For the second straight session, oil was down while gold was up, this time joined by silver prices, which increased eight cents, to $18.67. Gold managed a gain of $3.50, to close at $1,245.50, while oil slipped back another 61 cents, to $75.63, the lowest level in two weeks.
Weighing on the market - in addition to the world of woes already known - was the ADP Private Employment report for June, which showed a gain of just 13,000 jobs in the month, a number so tiny and so vile as to engender groans of pain from the trading floors.
The report comes two days prior to the highly-anticipated "official" government non-farm payroll report, which had already been expected to be less-than-cheery, but now, with the ADP report in hand, is likely to come in as a complete stinker, just what the markets and the American public don't need.
As for the first half of the year, stocks saw and end to the bear market rally that began in March of '09 and the beginnings of a second leg down, the bottom of which is anybody's guess. Some are calling for markets to sink even further than they did through Fall of 2008 and Winter of 2009, while the more optimistic believe this is only a correction.
The numbers bear neither side any witness, as they are stuck between correction (10%) and primary trend (20%). That stocks would be lower here and for the year as a whole would fall in line with the January barometer, which accurately presages direction about 80% of the time.
Since the end of 2009, the Dow is down 652 points. From it's high of 11,205 (April 26), the drop is a spectacular 1431 points, or -12.75%. The NASDAQ is down 160 points for the year and, from its high of 2530 (April 23) , the decline is 421 points (-16.64%). Everybody's favorite index, the S&P 500, is down a seemingly tame 85 points since the start of the year, but has given up 187 points from the April 23 high of 1217 (-15.37%).
The broadest measure of all, the NYSE Composite, is on the record for being down 414 points on the year, with a drop of 1260 from its high of 7729 on April 14, or a near-bear-market downturn of 16.30%.
With the two broadest gauges - the NASDAQ and NYSE Comp. - taking the biggest percentage hits over a span of a little more than two months, it's no stretch to say that the decline has been both broad and swift. The past two weeks have been particularly brutal. Since June 17, the indices have registered just one gain and eight losing sessions.
The worst of it is that the week isn't yet over, and the economic which carries the most weight, the June non-farm payroll report, won't make an appearance until Friday, though the expectation of a poor showing may already be factored into many trades.
By the end of the day, their assessment was clear: this is no time to be heavily invested in equities. Thus, in the final hour of trading, all of the major US indices took a severe turn to the downside finishing the day - and the quarter - with what turned from a trickle into a complete rout.
Stocks had held their own through most of the session, trading slightly above the unchanged mark for the most part, but, when it came down to concrete buying or selling decisions, everybody hit the sell button nearly simultaneously. A delay of a few moments could cost thousands, or even millions, of dollars, so once the trend was in place after 3:15 pm, the volume increased and near panic ensued. Only a serious effort in the final fifteen minutes - most likely by the PPT and some delighted short-sellers covering positions for the day - kept the markets from melting down completely.
Even as rescuers came to aid at the close, the Dow finished with a new closing low for the year, finally coming to rest on a number it hasn't seen since November 3, 2009, nearly 8 months ago.
The consensus opinion for the first half of 2010: Not so good. Prospects for the second half: Disturbingly downbeat. It's as though both the soprano and tenor each caught a cold nearing intermission of an opera.
Dow 9,774.02, -96.28 (0.98%)
NASDAQ 2,109.24, -25.94 (1.21%)
S&P 500 1,030.71, -10.53 (1.01%)
NYSE Composite 6,469.66, -50.43 (0.77%)
By day's end decliners buried advancers under the avalanche of late selling, 4127-2385. New lows smashed new highs by a margin nearly equal to yesterday's, 295-103. Volume, which had been on the light side most of the day, was so concentrated in the final hour that it ended up being just about normal, evan a bit on the heavy side.
NASDAQ Volume 2,212,934,750
NYSE Volume 5,968,454,500
For the second straight session, oil was down while gold was up, this time joined by silver prices, which increased eight cents, to $18.67. Gold managed a gain of $3.50, to close at $1,245.50, while oil slipped back another 61 cents, to $75.63, the lowest level in two weeks.
Weighing on the market - in addition to the world of woes already known - was the ADP Private Employment report for June, which showed a gain of just 13,000 jobs in the month, a number so tiny and so vile as to engender groans of pain from the trading floors.
The report comes two days prior to the highly-anticipated "official" government non-farm payroll report, which had already been expected to be less-than-cheery, but now, with the ADP report in hand, is likely to come in as a complete stinker, just what the markets and the American public don't need.
As for the first half of the year, stocks saw and end to the bear market rally that began in March of '09 and the beginnings of a second leg down, the bottom of which is anybody's guess. Some are calling for markets to sink even further than they did through Fall of 2008 and Winter of 2009, while the more optimistic believe this is only a correction.
The numbers bear neither side any witness, as they are stuck between correction (10%) and primary trend (20%). That stocks would be lower here and for the year as a whole would fall in line with the January barometer, which accurately presages direction about 80% of the time.
Since the end of 2009, the Dow is down 652 points. From it's high of 11,205 (April 26), the drop is a spectacular 1431 points, or -12.75%. The NASDAQ is down 160 points for the year and, from its high of 2530 (April 23) , the decline is 421 points (-16.64%). Everybody's favorite index, the S&P 500, is down a seemingly tame 85 points since the start of the year, but has given up 187 points from the April 23 high of 1217 (-15.37%).
The broadest measure of all, the NYSE Composite, is on the record for being down 414 points on the year, with a drop of 1260 from its high of 7729 on April 14, or a near-bear-market downturn of 16.30%.
With the two broadest gauges - the NASDAQ and NYSE Comp. - taking the biggest percentage hits over a span of a little more than two months, it's no stretch to say that the decline has been both broad and swift. The past two weeks have been particularly brutal. Since June 17, the indices have registered just one gain and eight losing sessions.
The worst of it is that the week isn't yet over, and the economic which carries the most weight, the June non-farm payroll report, won't make an appearance until Friday, though the expectation of a poor showing may already be factored into many trades.
Wednesday, June 2, 2010
Stocks Surging in Advance of Jobs, Retail Data
Apparently, market participants are of a mind that upcoming jobs reports, in the form of the May ADP private sector report, Thursday's usual unemployment claims and Friday's BLS non farm payroll report, will outweigh most of the other issues that have been dragging stocks lower recently.
Of course, it could all be a one-day burp in advance of Thursday's retail figures - expected to disappoint - for suckers, or be really nothing at all.
Stocks have been trading in a range, and the only key figure to keep a close eye upon is Dow 11,205.03. That's the most recent closing high, hit back on April 26. If the Dow cannot climb up to and surpass that mark, expect trading to become either range-bound or negative for an extended period. With earnings reports still 5-6 weeks in the future, there needs to be some kind of catalyst, and the gut feeling around here is that the negativity spewing out from the floor of the Gulf of Mexico - in addition to ongoing, overhanging debt fears globally - will be sufficient enough to keep investor optimism constrained.
Today's quick-hit rally, mostly occurring after 2:00 pm, has little meaning in the overall context, especially considering the oversold condition of the market. Another 300-400 points higher on the Dow would not be out of the question over the next two to three weeks, just as a continuation of the downdraft would surprise nobody.
Generally speaking, it's never a good idea to base very much on one day's trading. The remaining days of the week should provide more clarity.
Dow 10,249.54, +225.52 (2.25%)
NASDAQ 2,281.07, +58.74 (2.64%)
S&P 500 1,098.38, +27.67 (2.58%)
NYSE Composite 6,839.54, +178.44 (2.68%)
Advancers climbed all over decliners, 5353-1220, a 9:2 margin, though our tried and true indicator showed that new highs could not overwhelm new lows, which carried the day, 127-105. Though that margin is narrow, the trend of more new lows than new highs indicates that the market is meeting overhead resistance, and that the market is at least fully priced. Volume, low for the session for the fourth day in a row, indicates the lack of conviction, even in spite of today's outsized headline numbers.
NYSE Volume 5,837,430,000
NASDAQ Volume 2,171,016,000
Oil grabbed a negligible bid of 28 cents, gaining to $72.86. Gold sold off by $4.20, finishing in New York at $1,220.60. Silver was lower as well, losing 24 cents, to $18.30.
While today's gains were overall outstanding, they may be nothing more than an overreaction to a paucity of news, much of which has been bad of late. Bulls being what they are, the momentum could last until something comes along to derail it or send prices even higher, mostly a countertrend move inside overall bear market conditions.
There's also some divergence within the various indices. While the Dow and S&P still trade below their 200-day moving averages, the NASDAQ is poised above its 200 day MA. These conditions usually end up favoring the bearish camp in the long run, but the market being as unpredictable an animal as ever walked out of the jungle, anything is possible.
Of course, it could all be a one-day burp in advance of Thursday's retail figures - expected to disappoint - for suckers, or be really nothing at all.
Stocks have been trading in a range, and the only key figure to keep a close eye upon is Dow 11,205.03. That's the most recent closing high, hit back on April 26. If the Dow cannot climb up to and surpass that mark, expect trading to become either range-bound or negative for an extended period. With earnings reports still 5-6 weeks in the future, there needs to be some kind of catalyst, and the gut feeling around here is that the negativity spewing out from the floor of the Gulf of Mexico - in addition to ongoing, overhanging debt fears globally - will be sufficient enough to keep investor optimism constrained.
Today's quick-hit rally, mostly occurring after 2:00 pm, has little meaning in the overall context, especially considering the oversold condition of the market. Another 300-400 points higher on the Dow would not be out of the question over the next two to three weeks, just as a continuation of the downdraft would surprise nobody.
Generally speaking, it's never a good idea to base very much on one day's trading. The remaining days of the week should provide more clarity.
Dow 10,249.54, +225.52 (2.25%)
NASDAQ 2,281.07, +58.74 (2.64%)
S&P 500 1,098.38, +27.67 (2.58%)
NYSE Composite 6,839.54, +178.44 (2.68%)
Advancers climbed all over decliners, 5353-1220, a 9:2 margin, though our tried and true indicator showed that new highs could not overwhelm new lows, which carried the day, 127-105. Though that margin is narrow, the trend of more new lows than new highs indicates that the market is meeting overhead resistance, and that the market is at least fully priced. Volume, low for the session for the fourth day in a row, indicates the lack of conviction, even in spite of today's outsized headline numbers.
NYSE Volume 5,837,430,000
NASDAQ Volume 2,171,016,000
Oil grabbed a negligible bid of 28 cents, gaining to $72.86. Gold sold off by $4.20, finishing in New York at $1,220.60. Silver was lower as well, losing 24 cents, to $18.30.
While today's gains were overall outstanding, they may be nothing more than an overreaction to a paucity of news, much of which has been bad of late. Bulls being what they are, the momentum could last until something comes along to derail it or send prices even higher, mostly a countertrend move inside overall bear market conditions.
There's also some divergence within the various indices. While the Dow and S&P still trade below their 200-day moving averages, the NASDAQ is poised above its 200 day MA. These conditions usually end up favoring the bearish camp in the long run, but the market being as unpredictable an animal as ever walked out of the jungle, anything is possible.
Tuesday, May 25, 2010
Money At Risk: Dow Plunges 290, Recovers, Gives Investors False Hope
Just like the "flash crash" of May 6, there will be no explanation given for the reversal of fortunes today in stocks. When all of the other major global markets - Japan, China, Hong Kong, Korea, France, Great Britain, Germany, Brazil - were down anywhere from two to four per cent, and US markets initially crash, but then recover to walk away barely bruised, what does that tell you?
That we're special, somehow? That the US is in so much better shape than the rest of the world that if their economies all imploded, ours would receive hardly a scratch? Anyone who buys into such cockeyed logic should have "MORON" stamped upon their forehead.
No, what that tells anybody with any knowledge of how deeply corrupted our stock exchanges have become, is that they are a massively rigged game, and the winners are mostly insiders at banks and brokerages pushing the market in whichever ways delights their fancies and fattens their bottom lines.
Stocks fell to levels below both the 1000-point flash crash and below all preceding 2010 lows. That happened right out of the gate, within 15 minutes of the open. Stock futures had been forewarning a brutal open, with Dow futures down as much as 250 points prior to the bell-ringing. These kinds of gap opens serve only to benefit inside traders, to the detriment of individual investors and fund managers who cannot move massive amounts of stock without really rattling markets.
The average Jane or Joe who doesn't keep an eye peeled on CNBC all day long may only notice the Dow was down 20 points and be happy with that, never knowing that it was lower by 290 just 15 minutes into the session. The S&P 500 actually finished with a fractional gain, after being down by as many as 32 points.
Possibly the most egregious display of manipulation was in the NASDAQ, which was down by as many as 73 points but recovered to finish down only two points.
Did the issues which hammered all other markets simply go away by the time US markets were trading? No. Those issues were belligerent behavior by North Korea toward their neighbors to the South, a slowdown of economic activity and a potential real estate bubble in China and the continuing fiscal woes of the entire continent of Europe, though more specifically, the potential default of the governments of Greece and Spain.
What most casual observers and investors may not realize is that the markets will return to those lows. Whether they do that tomorrow, Thursday, Friday, next week or next month is immaterial. The major indices all fell below their 200-day moving averages last week and continue to mostly reside there. One day's action will not change the fact that new lows were set in place and such lows will almost always be retested. The Dow and S&P were in the throes of a triple bottom breakdown, falling below the lows of February and early May. That kind of violation of support just doesn't go away, stocks have to be handled to erase losses and fresh bottoms.
Call it whatever you like, but today set up a new bottom and one of the more severe head fakes ever seen. Downside risk is still predominant and there's a high likelihood that the final push - after 3:00 - was caused mostly by short covering. US markets should not be considered a safe haven for any investor, simply because they are so obviously rigged. They may move strongly in one direction or the other - or both, like today - without reason.
Dow 10,043.75, -22.82 (0.23%)
NASDAQ 2,210.95, -2.60 (0.12%)
S&P 500 1,074.03, +0.38 (0.04%)
NYSE Composite 6,665.83, -0.91 (0.01%)
Market internals offer much better perspective. Declining issues were dominant over advancers, 4334-2242. New lows maintained their advantage over new highs and actually expanded their edge, 369-88. Volume was heavy, owing to the fact that a lot of stock had to be moved around to erase those early losses.
NYSE Volume 8,458,538,000.00
NASDAQ Volume 2,893,359,500.00
Another indication of what really happened today in markets comes from the commodity pits, where July Crude was down $1.68, to $68.75, a fresh closing contract low. Gold finished up $4.00, to $1,197.80, though silver closed down 22 cents, at $17.76.
The deflation trade is still on, meaning one should be either in cash or equivalents, short, living in another country, or all of the above. Money at risk stays at risk, especially in markets so obviously flawed.
Please pay particular attention to anyone who tells you that 1140 on the S&P is a "bottom." You are advised to run - as quickly as possible - as far away as possible from anyone holding that point of view.
That we're special, somehow? That the US is in so much better shape than the rest of the world that if their economies all imploded, ours would receive hardly a scratch? Anyone who buys into such cockeyed logic should have "MORON" stamped upon their forehead.
No, what that tells anybody with any knowledge of how deeply corrupted our stock exchanges have become, is that they are a massively rigged game, and the winners are mostly insiders at banks and brokerages pushing the market in whichever ways delights their fancies and fattens their bottom lines.
Stocks fell to levels below both the 1000-point flash crash and below all preceding 2010 lows. That happened right out of the gate, within 15 minutes of the open. Stock futures had been forewarning a brutal open, with Dow futures down as much as 250 points prior to the bell-ringing. These kinds of gap opens serve only to benefit inside traders, to the detriment of individual investors and fund managers who cannot move massive amounts of stock without really rattling markets.
The average Jane or Joe who doesn't keep an eye peeled on CNBC all day long may only notice the Dow was down 20 points and be happy with that, never knowing that it was lower by 290 just 15 minutes into the session. The S&P 500 actually finished with a fractional gain, after being down by as many as 32 points.
Possibly the most egregious display of manipulation was in the NASDAQ, which was down by as many as 73 points but recovered to finish down only two points.
Did the issues which hammered all other markets simply go away by the time US markets were trading? No. Those issues were belligerent behavior by North Korea toward their neighbors to the South, a slowdown of economic activity and a potential real estate bubble in China and the continuing fiscal woes of the entire continent of Europe, though more specifically, the potential default of the governments of Greece and Spain.
What most casual observers and investors may not realize is that the markets will return to those lows. Whether they do that tomorrow, Thursday, Friday, next week or next month is immaterial. The major indices all fell below their 200-day moving averages last week and continue to mostly reside there. One day's action will not change the fact that new lows were set in place and such lows will almost always be retested. The Dow and S&P were in the throes of a triple bottom breakdown, falling below the lows of February and early May. That kind of violation of support just doesn't go away, stocks have to be handled to erase losses and fresh bottoms.
Call it whatever you like, but today set up a new bottom and one of the more severe head fakes ever seen. Downside risk is still predominant and there's a high likelihood that the final push - after 3:00 - was caused mostly by short covering. US markets should not be considered a safe haven for any investor, simply because they are so obviously rigged. They may move strongly in one direction or the other - or both, like today - without reason.
Dow 10,043.75, -22.82 (0.23%)
NASDAQ 2,210.95, -2.60 (0.12%)
S&P 500 1,074.03, +0.38 (0.04%)
NYSE Composite 6,665.83, -0.91 (0.01%)
Market internals offer much better perspective. Declining issues were dominant over advancers, 4334-2242. New lows maintained their advantage over new highs and actually expanded their edge, 369-88. Volume was heavy, owing to the fact that a lot of stock had to be moved around to erase those early losses.
NYSE Volume 8,458,538,000.00
NASDAQ Volume 2,893,359,500.00
Another indication of what really happened today in markets comes from the commodity pits, where July Crude was down $1.68, to $68.75, a fresh closing contract low. Gold finished up $4.00, to $1,197.80, though silver closed down 22 cents, at $17.76.
The deflation trade is still on, meaning one should be either in cash or equivalents, short, living in another country, or all of the above. Money at risk stays at risk, especially in markets so obviously flawed.
Please pay particular attention to anyone who tells you that 1140 on the S&P is a "bottom." You are advised to run - as quickly as possible - as far away as possible from anyone holding that point of view.
Friday, May 21, 2010
Pausing to Catch a Breath; Markets Bounce to End Dismal Week
Like the punch line to the old joke, "What are 500 lawyers lying dead at the bottom of the ocean?", gaining 125 points the day after the Dow Jones Industrials had just lost nearly 400, is... well, a good start.
However, the internals don't quite match the enthusiasm some may hold for the headline numbers, and, when the indices tumbled out of bed this morning into a ditch, they set new intra-day lows. Further, the whole thrust of today's gallop higher seemed a little out of place and probably had more to do with options expiration and covering short positions than anyone wants to admit.
It was a nice end to a really bad week for equity investors. All of the major averages ended up well below where they began the year, hugging their respective 200-day moving averages, or, in the case of the S&P 500, nestled comfortably below it. Obviously, whatever market worries caused the collapse of the past four weeks, those conditions are still present, and possibly getting worse.
For instance, Europe's $1 Trillion bailout is being called TARP a la EU, likened to the US version unveiled at their height of our own crisis back in the Fall of 2008, and many are saying it isn't enough. The US economy, hailed as the best of a bad bunch, isn't doing very well with real estate markets stuck in a funk and unemployment remaining stubbornly high; China is purposely slowing their own growth (they may not have to; slack global demand may do them in), fearing inflation; oil continues to spew from the floor of the Gulf of Mexico, fouling the Southern coastline and threatening to destroy one of the great ecosystems of the fragile planet; state governments are just beginning to come to grips with austerity measures to combat their own fiscal deficits.
Is there anything good? Well, the price of gas is coming down gradually, but other than that, no, there's nothing good about a financial system teetering on the brink of implosion, the governments of nations nearing collapse, ecological disasters, politicians more focused on being re-elected than actually fixing things and the most corrupt insider game of high finance being played out on Wall Street.
Maybe the entire system needs to be flushed. Maybe an upheaval of the old guard might just lead to better days ahead. Maybe it's time for the rich and greedy to come to understand that impoverishing the entire planet isn't going to necessarily result in their own enrichment.
Today's little bump higher is, as usual, suspect, in that the rally came off an early, deep decline. Within minutes of the opening bell, the Dow was down 145 points, the other indices in a similar fix. The turnabout had all the earmarks of our old friends at the PPT, rushing to the rescue of financial markets which had apparently taken all they could handle. No matter the cause or underhandedness surrounding the Friday push to higher ground, stocks tumbled back into negative territory in the final hour. Technically, the indices made all of the day's gains in the last twenty minutes of trading, so, no, we're not buying it, nor should anybody.
Dow 10,193.39, +125.38 (1.25%)
NASDAQ 2,229.04, +25.03 (1.14%)
S&P 500 1,087.69, +16.10 (1.50%)
NYSE Composite 6,775.45, +122.45 (1.84%)
While advancing issues beat up decliners pretty handily, 4622-1938, new lows overwhelmed new highs for the third consecutive trading session, 295-87, and once that indicator flips in one direction or another, it's usually in it for a long haul, which can last anywhere from 4 to 20 months. Volume was abnormally high, owing to the idea that many shares were being parceled out of options and many short positions covered. Beisdes, it may have taken the insiders boosting stocks a bit more heft than they originally planned. Selling pressure didn't subside. It was just temporarily replaced by coordinated buying.
NYSE Volume 9,276,994,000.00
NASDAQ Volume 3,366,007,500.00
The first day of trading in the July futures contract for crude oil resulted in some price spillage, down 76 cents to the adjusted level of $70.04. Gold continued to retreat, losing $13.10, to $1,175.70, as did silver, down a relatively benign 6 cents, to $17.63.
The final week of May and all of June will be interesting to observe (meaning: do not trade this market) as investors will continue to focus on the issues in Europe, financial regulation and some potential pre-warnings from companies whose fates have turned from rosy to thorny. But, call me a tree-hugger or whatever you like, I have a feeling that the oil spill in the Gulf will dominate the news in a very ugly manner.
However, the internals don't quite match the enthusiasm some may hold for the headline numbers, and, when the indices tumbled out of bed this morning into a ditch, they set new intra-day lows. Further, the whole thrust of today's gallop higher seemed a little out of place and probably had more to do with options expiration and covering short positions than anyone wants to admit.
It was a nice end to a really bad week for equity investors. All of the major averages ended up well below where they began the year, hugging their respective 200-day moving averages, or, in the case of the S&P 500, nestled comfortably below it. Obviously, whatever market worries caused the collapse of the past four weeks, those conditions are still present, and possibly getting worse.
For instance, Europe's $1 Trillion bailout is being called TARP a la EU, likened to the US version unveiled at their height of our own crisis back in the Fall of 2008, and many are saying it isn't enough. The US economy, hailed as the best of a bad bunch, isn't doing very well with real estate markets stuck in a funk and unemployment remaining stubbornly high; China is purposely slowing their own growth (they may not have to; slack global demand may do them in), fearing inflation; oil continues to spew from the floor of the Gulf of Mexico, fouling the Southern coastline and threatening to destroy one of the great ecosystems of the fragile planet; state governments are just beginning to come to grips with austerity measures to combat their own fiscal deficits.
Is there anything good? Well, the price of gas is coming down gradually, but other than that, no, there's nothing good about a financial system teetering on the brink of implosion, the governments of nations nearing collapse, ecological disasters, politicians more focused on being re-elected than actually fixing things and the most corrupt insider game of high finance being played out on Wall Street.
Maybe the entire system needs to be flushed. Maybe an upheaval of the old guard might just lead to better days ahead. Maybe it's time for the rich and greedy to come to understand that impoverishing the entire planet isn't going to necessarily result in their own enrichment.
Today's little bump higher is, as usual, suspect, in that the rally came off an early, deep decline. Within minutes of the opening bell, the Dow was down 145 points, the other indices in a similar fix. The turnabout had all the earmarks of our old friends at the PPT, rushing to the rescue of financial markets which had apparently taken all they could handle. No matter the cause or underhandedness surrounding the Friday push to higher ground, stocks tumbled back into negative territory in the final hour. Technically, the indices made all of the day's gains in the last twenty minutes of trading, so, no, we're not buying it, nor should anybody.
Dow 10,193.39, +125.38 (1.25%)
NASDAQ 2,229.04, +25.03 (1.14%)
S&P 500 1,087.69, +16.10 (1.50%)
NYSE Composite 6,775.45, +122.45 (1.84%)
While advancing issues beat up decliners pretty handily, 4622-1938, new lows overwhelmed new highs for the third consecutive trading session, 295-87, and once that indicator flips in one direction or another, it's usually in it for a long haul, which can last anywhere from 4 to 20 months. Volume was abnormally high, owing to the idea that many shares were being parceled out of options and many short positions covered. Beisdes, it may have taken the insiders boosting stocks a bit more heft than they originally planned. Selling pressure didn't subside. It was just temporarily replaced by coordinated buying.
NYSE Volume 9,276,994,000.00
NASDAQ Volume 3,366,007,500.00
The first day of trading in the July futures contract for crude oil resulted in some price spillage, down 76 cents to the adjusted level of $70.04. Gold continued to retreat, losing $13.10, to $1,175.70, as did silver, down a relatively benign 6 cents, to $17.63.
The final week of May and all of June will be interesting to observe (meaning: do not trade this market) as investors will continue to focus on the issues in Europe, financial regulation and some potential pre-warnings from companies whose fates have turned from rosy to thorny. But, call me a tree-hugger or whatever you like, I have a feeling that the oil spill in the Gulf will dominate the news in a very ugly manner.
Wednesday, May 19, 2010
Today, the Collapse Began; Cash Reigns Supreme
While the headline numbers for today's trading on the major indices weren't all that startling, but the largely unnoticed event - an indicator which I watch like a hawk and report on daily - occurred today, as the new high - new low metrics completely reversed, with new lows taking the edge over new highs.
Of all the indicators which investment analysts cite in their mountains of research and charts, this simple indicator has proven to be the absolute best and most accurate for determining both bull and bear market direction, long term, and isn't long term what investing is supposed to be about, anyway?
The first time I made note of this simple indicator was when it turned negative in August, 2007, an innocuous time for many, but the actual beginning of the still-ongoing financial crisis. New lows took the edge from the new highs in that month and did not give up the advantage - on a day-by-day basis - until April of 2009, a span of some 20 months, a spectacular indicator, to be sure!
There were a handful of days in which there were more posted new highs than new lows, but through those 20 months, new lows led new highs nearly every trading day. When they turned over last year, with new highs surpassing new lows on a daily basis, I was slow to comprehend its meaning and power, but finally caught on in June as the markets embarked upon a truly breathtaking nine-month rally.
Today marked the second time new lows have surpassed new highs in the past two weeks. The first instance was on the day of the "flash crash" on May 6, nearly two weeks ago. Today, the move was decisive, with 167 new lows compared to only 90 new highs. It would bear to watch this indicator closely for the next ten trading sessions, to see if it continues to trend in this manner, but my gut feeling is that it has flipped and the market is heading for a renewed bout of bearishness, marked by sharp selling and equally sharp rallies off fresh bottoms.
Investors would be well advised to get out of equities as soon as possible, if not already in cash, equivalents or tools of trades as I have been suggesting for some time.
Dow 10,444.37, -66.58 (0.63%)
NASDAQ 2,298.37, -18.89 (0.82%)
S&P 500 1,115.05, -5.75 (0.51%)
NYSE Composite 6,927.21, -32.00 (0.46%)
Losing issues outstripped advancers by a colossal margin, 5030-1549, or better than 3:1, another indication of more pain to come for Bulls. Volume was also strong, indicating that the selling has not yet reached fever pitch.
NYSE Volume 7,827,840,000.00
NASDAQ Volume 2,588,426,750.00
Crude slipped to a seven-month low today before regaining its footing, adding 46 cents, to $69.87 per barrel at the close, though that gain was likely a knee-jerk reaction to the relentless selling the entire month of May which has brought the price down more than 15%.
If there was any indication of deflation, it was not only in the April CPI numbers released prior to the market's opening, which showed a decline of 0.1% (same as yesterday's PPI), but in the price of gold, which sold off considerably. The yellow metal plummeted $21.70, to $1,192.60. Silver suffered an even larger percentage loss, diving 76 cents, to $18.09.
As are all other commodities, they are trading vehicles, and while they may fare better than other asset classes, they are still not immune from the ravishes of deflation, which has been and continues to bombard global markets with price dislocations and a general lack of pricing power.
The race to the bottom is on again. Cash is king once more!
Of all the indicators which investment analysts cite in their mountains of research and charts, this simple indicator has proven to be the absolute best and most accurate for determining both bull and bear market direction, long term, and isn't long term what investing is supposed to be about, anyway?
The first time I made note of this simple indicator was when it turned negative in August, 2007, an innocuous time for many, but the actual beginning of the still-ongoing financial crisis. New lows took the edge from the new highs in that month and did not give up the advantage - on a day-by-day basis - until April of 2009, a span of some 20 months, a spectacular indicator, to be sure!
There were a handful of days in which there were more posted new highs than new lows, but through those 20 months, new lows led new highs nearly every trading day. When they turned over last year, with new highs surpassing new lows on a daily basis, I was slow to comprehend its meaning and power, but finally caught on in June as the markets embarked upon a truly breathtaking nine-month rally.
Today marked the second time new lows have surpassed new highs in the past two weeks. The first instance was on the day of the "flash crash" on May 6, nearly two weeks ago. Today, the move was decisive, with 167 new lows compared to only 90 new highs. It would bear to watch this indicator closely for the next ten trading sessions, to see if it continues to trend in this manner, but my gut feeling is that it has flipped and the market is heading for a renewed bout of bearishness, marked by sharp selling and equally sharp rallies off fresh bottoms.
Investors would be well advised to get out of equities as soon as possible, if not already in cash, equivalents or tools of trades as I have been suggesting for some time.
Dow 10,444.37, -66.58 (0.63%)
NASDAQ 2,298.37, -18.89 (0.82%)
S&P 500 1,115.05, -5.75 (0.51%)
NYSE Composite 6,927.21, -32.00 (0.46%)
Losing issues outstripped advancers by a colossal margin, 5030-1549, or better than 3:1, another indication of more pain to come for Bulls. Volume was also strong, indicating that the selling has not yet reached fever pitch.
NYSE Volume 7,827,840,000.00
NASDAQ Volume 2,588,426,750.00
Crude slipped to a seven-month low today before regaining its footing, adding 46 cents, to $69.87 per barrel at the close, though that gain was likely a knee-jerk reaction to the relentless selling the entire month of May which has brought the price down more than 15%.
If there was any indication of deflation, it was not only in the April CPI numbers released prior to the market's opening, which showed a decline of 0.1% (same as yesterday's PPI), but in the price of gold, which sold off considerably. The yellow metal plummeted $21.70, to $1,192.60. Silver suffered an even larger percentage loss, diving 76 cents, to $18.09.
As are all other commodities, they are trading vehicles, and while they may fare better than other asset classes, they are still not immune from the ravishes of deflation, which has been and continues to bombard global markets with price dislocations and a general lack of pricing power.
The race to the bottom is on again. Cash is king once more!
Thursday, May 13, 2010
All About Today's Reversal, And Why It Matters
The downturn in equity markets today should not have come as a surprise to anybody who understands charts and amrket dynamics.
A nice chart of the Dow covering the past six months reveals the condition. The market is sitting right on its 50-day moving average with no clear direction, though lower seems to be the most likely move as days progress.
Recall the events of the past 5 trading days: After the "flash crash" (thanks to the geniuses at CNBC for giving it a nickname) of last Thursday, the Dow sank on Friday, had a sharp opening gap up and maintained that stature on Monday, dipped a bit on Tuesday, rallied above the 50-day moving average on Wednesday, and today closed below that important measuring stick.
Now, there's an easier way to look at these events, especially if you're a cynical observer such as I. After scooping up shares at the bottom on Thursday and Friday, the power players behind the scenes made fast cash on Monday, sold a little more on Tuesday, sucked in more late-comers on Wednesday and now are selling in earnest. The moves are being made in conjunction with various and many stock option plays, the May variety which expire on Friday, the 21st, being the most active.
Depending on how badly these power players - the same group likely behind the flash crash and other recent organized selling - want to hit the little guys on the other end of trades - and how soon - this little episode could take on some very interesting dimensions. They might be over-weighted on the long end, or they could be itching for another downdraft. The latter would make more sense from a chartist's perspective. Once a market breaks through a key level - like the 50-day MA - the corresponding next moves are usually more of the same, and this move was one of significantly violent quality, so the downside appears to be the more obvious choice.
Of course, these insiders are a savvy bunch and they've likely already discounted the idea that the market should behave in patterned ways, so they just might keep stocks chugging along, mirroring the 50-day until options expire. The cynical view is that they bought close to the bottom and are slowly selling at fat profits presently, though, and that patten should continue.
At the end of today's trading, there was a rush for the exits. Stocks closed at their lows of the session, which is one of the more profound daily indicators one can find. It indicates a real reluctance to maintain positions and even less commitment to any new purchases.
Dow 10,782.95, -113.96 (1.05%)
NASDAQ 2,394.36, -30.66 (1.26%)
S&P 500 1,157.43, -14.24 (1.22%)
NYSE Composite 7,234.37, -81.99 (1.12%)
On the day, decliners took the advantage over advancing issues, 4193-2349. There were 192 new highs to a paltry 53 new lows. This is an interesting development. The market is holding judgement in abeyance, perhaps awaiting some catalyst, or just marking time until the next move lower. Volume was down for the third consecutive day, another indication that the markets are poised to head even lower, likely back to test the Friday intra-day low of 10,221.50.
NYSE Volume 5,477,719,500.00
NASDAQ Volume 2,321,865,500.00
Commodity prices continued to cool. Crude oil maintained its relentless slide, losing another $1.25 per barrel, to $74.40. Even gold bugs were either spooked or taking profits, sending the price down by $13.90 per ounce, to $1,228.80. Silver also ran down 16 cents, to $19.48.
Much of today's selling was blamed on some interesting and disturbing comments from mainstream retailer Kohl's, which issued 2nd quarter fiscal 2010 guidance that fell short of expectations and noted that the average amount per transaction was down in the most recent quarter. Macy's also cited the same metric, days ago. With retailers cautious about consumer spending, they are acting as the canaries in the coal mine, warning that the current recovery - if one exists at all - may not be sustained. If they're right, stocks will find no bottom in the near term and the remainder of the year may be a wipeout for many corporations.
It's interesting to note that the January indicator predicted that 2010 would be a down year for stocks and maintains a solid record of correctly predicting the future economy, somewhere in the range of 85% accurate. Since the major indices are right about where they began the year, that long-ago (4 months) indicator overhangs the market like the sword of Damocles.
While Wall Street pondered its own fate, oil continues to surge from beneath the ocean into the Gulf of Mexico. With the disaster now entering its 4th week without resolution, the slick continues to grow and the oil continues to flow. That oil will go somewhere, eventually, but the drama is playing out in what appears to be a slow-motion nightmare on Bourbon Street.
At the end of it all, expect to see the end of the rig company, Transocean, drowned in a sea of lawsuits. The CEO of BP, Tony Hayward, almost certainly will be sacked, if the company even survives. As for Halliburton, the love-child of former US VP, that company seems to be born under a lucky star. The damage to the Gulf waters, the shorelands and the wetlands may be unbearable and unresolved for years to come.
A nice chart of the Dow covering the past six months reveals the condition. The market is sitting right on its 50-day moving average with no clear direction, though lower seems to be the most likely move as days progress.
Recall the events of the past 5 trading days: After the "flash crash" (thanks to the geniuses at CNBC for giving it a nickname) of last Thursday, the Dow sank on Friday, had a sharp opening gap up and maintained that stature on Monday, dipped a bit on Tuesday, rallied above the 50-day moving average on Wednesday, and today closed below that important measuring stick.
Now, there's an easier way to look at these events, especially if you're a cynical observer such as I. After scooping up shares at the bottom on Thursday and Friday, the power players behind the scenes made fast cash on Monday, sold a little more on Tuesday, sucked in more late-comers on Wednesday and now are selling in earnest. The moves are being made in conjunction with various and many stock option plays, the May variety which expire on Friday, the 21st, being the most active.
Depending on how badly these power players - the same group likely behind the flash crash and other recent organized selling - want to hit the little guys on the other end of trades - and how soon - this little episode could take on some very interesting dimensions. They might be over-weighted on the long end, or they could be itching for another downdraft. The latter would make more sense from a chartist's perspective. Once a market breaks through a key level - like the 50-day MA - the corresponding next moves are usually more of the same, and this move was one of significantly violent quality, so the downside appears to be the more obvious choice.
Of course, these insiders are a savvy bunch and they've likely already discounted the idea that the market should behave in patterned ways, so they just might keep stocks chugging along, mirroring the 50-day until options expire. The cynical view is that they bought close to the bottom and are slowly selling at fat profits presently, though, and that patten should continue.
At the end of today's trading, there was a rush for the exits. Stocks closed at their lows of the session, which is one of the more profound daily indicators one can find. It indicates a real reluctance to maintain positions and even less commitment to any new purchases.
Dow 10,782.95, -113.96 (1.05%)
NASDAQ 2,394.36, -30.66 (1.26%)
S&P 500 1,157.43, -14.24 (1.22%)
NYSE Composite 7,234.37, -81.99 (1.12%)
On the day, decliners took the advantage over advancing issues, 4193-2349. There were 192 new highs to a paltry 53 new lows. This is an interesting development. The market is holding judgement in abeyance, perhaps awaiting some catalyst, or just marking time until the next move lower. Volume was down for the third consecutive day, another indication that the markets are poised to head even lower, likely back to test the Friday intra-day low of 10,221.50.
NYSE Volume 5,477,719,500.00
NASDAQ Volume 2,321,865,500.00
Commodity prices continued to cool. Crude oil maintained its relentless slide, losing another $1.25 per barrel, to $74.40. Even gold bugs were either spooked or taking profits, sending the price down by $13.90 per ounce, to $1,228.80. Silver also ran down 16 cents, to $19.48.
Much of today's selling was blamed on some interesting and disturbing comments from mainstream retailer Kohl's, which issued 2nd quarter fiscal 2010 guidance that fell short of expectations and noted that the average amount per transaction was down in the most recent quarter. Macy's also cited the same metric, days ago. With retailers cautious about consumer spending, they are acting as the canaries in the coal mine, warning that the current recovery - if one exists at all - may not be sustained. If they're right, stocks will find no bottom in the near term and the remainder of the year may be a wipeout for many corporations.
It's interesting to note that the January indicator predicted that 2010 would be a down year for stocks and maintains a solid record of correctly predicting the future economy, somewhere in the range of 85% accurate. Since the major indices are right about where they began the year, that long-ago (4 months) indicator overhangs the market like the sword of Damocles.
While Wall Street pondered its own fate, oil continues to surge from beneath the ocean into the Gulf of Mexico. With the disaster now entering its 4th week without resolution, the slick continues to grow and the oil continues to flow. That oil will go somewhere, eventually, but the drama is playing out in what appears to be a slow-motion nightmare on Bourbon Street.
At the end of it all, expect to see the end of the rig company, Transocean, drowned in a sea of lawsuits. The CEO of BP, Tony Hayward, almost certainly will be sacked, if the company even survives. As for Halliburton, the love-child of former US VP, that company seems to be born under a lucky star. The damage to the Gulf waters, the shorelands and the wetlands may be unbearable and unresolved for years to come.
Monday, June 15, 2009
Stocks, Commodities Belted; New Highs-Lows Indicator Calls Shot
After a week of listless trading which ended Friday with an upside-down condition between the headline number and the market internals, the measurement of new highs vs. new lows indicated that a reversal was at hand. On Friday, June 12, the Dow reached its highest level since January 6 of this year, and true to form, marked an interim market top from which a fall was not only predictable, but almost too obvious.
The Dow index was trapped between the last vestiges of a long bear market rally and the nearly-impossible condition of making new highs, converting to a new bull market. Since the transportation index failed to confirm the highs on the Industrial, there seemed to be no other direction but down, and on Monday, investors took the bearish signal and ran with it.
The major indices fall in line with the Dow decline, the worst hit being the Composite, with the broadest base of stocks. As usual, market participants tried to force a last-hour rally, as has been their behavior on nearly every down day, but their efforts failed to recover much of the ground lost during the session. At the low point of the day, the Dow was down 223 points, rallied from 3 pm to 3:45 pm to -175 points, but lost traction in the final 15 minutes of trade with all of the major indices ending near their lows for the day.
As concerns our most valued (and simple) indicator, the new highs-new lows measure went positive for five straight sessions, reversing a 21-month-old pattern, before rolling over into the negative (more new lows than highs) on Friday, in stark contradiction to the upside move on the Dow. Interestingly, the advance-decline line on Friday also went negative, nearly telegraphing Monday's direction.
Dow 8,612.13, -187.13 (2.13%)
NASDAQ 1,816.38, -42.42 (2.28%)
S&P 500 923.72, -22.49 (2.38%)
NYSE Composite 5,967.26, -181.35 (2.95%)
On the day, declining issues led advancers by an enormous margin, 5283-1174, (9-2); while new lows remained in control over new highs, 65-34. Volume was once more in the negligible range, close to levels seen last week, so, not influential. It may be that we are witnessing the summer level of activity on the market. Many participants may have already retreated to the sidelines, and will seek re-entry points at some later date. There are still large amounts of profits to be taken as the markets have not yet gone into "gran mal seizure" mode, though that may occur at any time.
Refreshingly, the new lows-new highs indicator rang true and maintained the negative bias from Friday, restoring faith in the one simple indicator that has been absolutely dead on throughout the market decline of the past 22 months.
NYSE Volume 1,150,418,000
NASDAQ Volume 2,178,292,000
While stocks were sliding, commodities were doing the same, with losses across the spectrum. Notable contrarians were Natural Gas and Pork Belly futures, both up sharply. Crude oil for July delivery fell $1.42, to $70.62. Further pullback, to the $55-62 level is expected, unless there's evidence of increased demand. One can safely assume that the recent rise in oil prices was the result of naked speculation of a seasonal variety, and thus, unlikely to produce long-lasting gains.
Gold was sent southward once more, dipping $13.20, to $927.50. Silver also took a large hit, losing 85 cents (a massive one-day loss), to $14.03. It's likely that the metals may remain somewhat range-bound, much of the trade dependent upon this week's PPI (tomorrow) and CPI (Wednesday) figures. If gains in both are sizable, that would indicate inflation, taking up all commodity prices, but there seems to be unfolding evidence that markets have cooled considerably and will remain moribund for the foreseeable future, making speculation difficult, it not foolish.
The world's economies are not as badly damaged as they appeared to be back in the fall of 2008, though the stresses to the overall global system has been significant. Market players are discovering that the recent rally in stocks may have been quite overdone and without justification, forcing many investors into a more defensive posture. Additionally, with the recent Treasury data indicating that foreign involvement has dried up considerably, there's increased pressure on bonds, forcing yields higher, and, thus, moving money away from riskier stocks and commodities.
Given the current conditions, there appears to be few places to make money, so a flight to the relative safely of bonds may be the preferred route for many.
The Dow index was trapped between the last vestiges of a long bear market rally and the nearly-impossible condition of making new highs, converting to a new bull market. Since the transportation index failed to confirm the highs on the Industrial, there seemed to be no other direction but down, and on Monday, investors took the bearish signal and ran with it.
The major indices fall in line with the Dow decline, the worst hit being the Composite, with the broadest base of stocks. As usual, market participants tried to force a last-hour rally, as has been their behavior on nearly every down day, but their efforts failed to recover much of the ground lost during the session. At the low point of the day, the Dow was down 223 points, rallied from 3 pm to 3:45 pm to -175 points, but lost traction in the final 15 minutes of trade with all of the major indices ending near their lows for the day.
As concerns our most valued (and simple) indicator, the new highs-new lows measure went positive for five straight sessions, reversing a 21-month-old pattern, before rolling over into the negative (more new lows than highs) on Friday, in stark contradiction to the upside move on the Dow. Interestingly, the advance-decline line on Friday also went negative, nearly telegraphing Monday's direction.
Dow 8,612.13, -187.13 (2.13%)
NASDAQ 1,816.38, -42.42 (2.28%)
S&P 500 923.72, -22.49 (2.38%)
NYSE Composite 5,967.26, -181.35 (2.95%)
On the day, declining issues led advancers by an enormous margin, 5283-1174, (9-2); while new lows remained in control over new highs, 65-34. Volume was once more in the negligible range, close to levels seen last week, so, not influential. It may be that we are witnessing the summer level of activity on the market. Many participants may have already retreated to the sidelines, and will seek re-entry points at some later date. There are still large amounts of profits to be taken as the markets have not yet gone into "gran mal seizure" mode, though that may occur at any time.
Refreshingly, the new lows-new highs indicator rang true and maintained the negative bias from Friday, restoring faith in the one simple indicator that has been absolutely dead on throughout the market decline of the past 22 months.
NYSE Volume 1,150,418,000
NASDAQ Volume 2,178,292,000
While stocks were sliding, commodities were doing the same, with losses across the spectrum. Notable contrarians were Natural Gas and Pork Belly futures, both up sharply. Crude oil for July delivery fell $1.42, to $70.62. Further pullback, to the $55-62 level is expected, unless there's evidence of increased demand. One can safely assume that the recent rise in oil prices was the result of naked speculation of a seasonal variety, and thus, unlikely to produce long-lasting gains.
Gold was sent southward once more, dipping $13.20, to $927.50. Silver also took a large hit, losing 85 cents (a massive one-day loss), to $14.03. It's likely that the metals may remain somewhat range-bound, much of the trade dependent upon this week's PPI (tomorrow) and CPI (Wednesday) figures. If gains in both are sizable, that would indicate inflation, taking up all commodity prices, but there seems to be unfolding evidence that markets have cooled considerably and will remain moribund for the foreseeable future, making speculation difficult, it not foolish.
The world's economies are not as badly damaged as they appeared to be back in the fall of 2008, though the stresses to the overall global system has been significant. Market players are discovering that the recent rally in stocks may have been quite overdone and without justification, forcing many investors into a more defensive posture. Additionally, with the recent Treasury data indicating that foreign involvement has dried up considerably, there's increased pressure on bonds, forcing yields higher, and, thus, moving money away from riskier stocks and commodities.
Given the current conditions, there appears to be few places to make money, so a flight to the relative safely of bonds may be the preferred route for many.
Thursday, June 11, 2009
More Stocks Making New Highs
For the fifth consecutive day, new highs have exceeded new lows, today, by 91-69.
To some, that may sound like fairly mundane news, but to readers of this blog, it's an important turning point. Daily new lows have outnumbered new highs every day for some 21 months (with the exception of about 6 days) until last week.
So, has the spell been broken? Is the economy on the verge of recovery? Are we headed for a new bull market?
The answers, in order, are: YES, NO, and PROBABLY NOT.
Until the economy begins showing real signs of strength, such as, home prices increasing instead of declining, month-over-month; new jobs being created; corporate profits showing real improvement, not just "beat the (watered-down) street numbers"; and maybe getting the national debt under control, the US economy is in for a rough ride. While the solitary new lows-new highs indicator may be turning green, it's more likely because the new highs set in 2008, much like earnings forecasts, are of the low-bar variety. The new highs in '09 are likely well below the previous highs in '07 or '06. and, since the market was hammered so badly both in the fall of '08 and the first quarter of '09, there aren't many more new lows to be had. Some of the real losers have been delisted (see GM, etc.), while others are resting comfortably in the single digits.
As for a new bull market, well, such is the stuff of dreams and fairies. It would be more in the realm of Harry Potter to conger up a new bull market than for the economic conditions to present such a scenario. Stocks are currently overvalued, as will be seen some time later this summer or into the fall. Some selling would indeed be healthy right about now, though there is a general push-back from Wall Street, the federal government and mainstream media against any show of weakness. It's very odd, but much akin to the Japanese (or is it Chinese?) concept of "losing face," wherein one puts on the best show possible in order to appear wholesome, vibrant and strong.
Naturally, that's not what investing in equities is supposed to be about. It's supposed to consist of discounting future value, dividends and solid profitability, product lines and market share. Fundamentals of business and economy, dear Watson.
Dow 8,770.92, +31.90 (0.37%)
NASDAQ 1,862.37, +9.29 (0.50%)
S&P 500 944.89, +5.74 (0.61%)
NYSE Composite 6,163.13, +65.07 (1.07%)
As far as this week is concerned, the movement of the stock market has been kind of like a bad joke, or, watching paint dry. It's been a near-total waste of time. The big winner has been the NYSE Composite, up a whopping 80 points. The NASDAQ has put on 13 points; the S&P almost 5, and the Dow a miraculous 7 whole points!
Index traders are falling asleep at their desks, the excitement is so rare.
On the day, advancing issues outnumbered decliners, 4164-1405, though, while the disparity was large, the actual movement was tiny. You already know the score on the new highs vs. new lows, and volume was a little better than Wednesday's, which really doesn't say much. Investors worldwide are still awaiting some kind of pull-back, though it may be a long time in coming, if at all.
NYSE Volume 1,223,187,000
NASDAQ Volume 2,501,569,000
Oil hit a new high for the year, to nobody's surprise, rising $1.35, to $72.68. Gold was up as well, gaining $6.80, to $961.50, and silver added 27 cents, to $15.49. Commodity prices, outside of crude oil, have been trading up and down without much direction for the past three to four weeks, much like the stock market. The entire globe has been engulfed by an acute condition of indecisiveness, worse than any H1N1 Pandemic.
Tomorrow, we're hoping the market will be up, or down. Something to hang one's hat on would be welcome after a week of dullness.
To some, that may sound like fairly mundane news, but to readers of this blog, it's an important turning point. Daily new lows have outnumbered new highs every day for some 21 months (with the exception of about 6 days) until last week.
So, has the spell been broken? Is the economy on the verge of recovery? Are we headed for a new bull market?
The answers, in order, are: YES, NO, and PROBABLY NOT.
Until the economy begins showing real signs of strength, such as, home prices increasing instead of declining, month-over-month; new jobs being created; corporate profits showing real improvement, not just "beat the (watered-down) street numbers"; and maybe getting the national debt under control, the US economy is in for a rough ride. While the solitary new lows-new highs indicator may be turning green, it's more likely because the new highs set in 2008, much like earnings forecasts, are of the low-bar variety. The new highs in '09 are likely well below the previous highs in '07 or '06. and, since the market was hammered so badly both in the fall of '08 and the first quarter of '09, there aren't many more new lows to be had. Some of the real losers have been delisted (see GM, etc.), while others are resting comfortably in the single digits.
As for a new bull market, well, such is the stuff of dreams and fairies. It would be more in the realm of Harry Potter to conger up a new bull market than for the economic conditions to present such a scenario. Stocks are currently overvalued, as will be seen some time later this summer or into the fall. Some selling would indeed be healthy right about now, though there is a general push-back from Wall Street, the federal government and mainstream media against any show of weakness. It's very odd, but much akin to the Japanese (or is it Chinese?) concept of "losing face," wherein one puts on the best show possible in order to appear wholesome, vibrant and strong.
Naturally, that's not what investing in equities is supposed to be about. It's supposed to consist of discounting future value, dividends and solid profitability, product lines and market share. Fundamentals of business and economy, dear Watson.
Dow 8,770.92, +31.90 (0.37%)
NASDAQ 1,862.37, +9.29 (0.50%)
S&P 500 944.89, +5.74 (0.61%)
NYSE Composite 6,163.13, +65.07 (1.07%)
As far as this week is concerned, the movement of the stock market has been kind of like a bad joke, or, watching paint dry. It's been a near-total waste of time. The big winner has been the NYSE Composite, up a whopping 80 points. The NASDAQ has put on 13 points; the S&P almost 5, and the Dow a miraculous 7 whole points!
Index traders are falling asleep at their desks, the excitement is so rare.
On the day, advancing issues outnumbered decliners, 4164-1405, though, while the disparity was large, the actual movement was tiny. You already know the score on the new highs vs. new lows, and volume was a little better than Wednesday's, which really doesn't say much. Investors worldwide are still awaiting some kind of pull-back, though it may be a long time in coming, if at all.
NYSE Volume 1,223,187,000
NASDAQ Volume 2,501,569,000
Oil hit a new high for the year, to nobody's surprise, rising $1.35, to $72.68. Gold was up as well, gaining $6.80, to $961.50, and silver added 27 cents, to $15.49. Commodity prices, outside of crude oil, have been trading up and down without much direction for the past three to four weeks, much like the stock market. The entire globe has been engulfed by an acute condition of indecisiveness, worse than any H1N1 Pandemic.
Tomorrow, we're hoping the market will be up, or down. Something to hang one's hat on would be welcome after a week of dullness.
Wednesday, June 3, 2009
Critical Turn for US Markets
Today marked a potentially critical turn for US equity markets, from a strict interpretation of a key indicator, that being the new highs - new lows measure.
On Monday and Tuesday, new highs surpassed new lows on the daily tally for the first time in six months. New lows have held the edge every day since September of 2007, save for five or six occasions. On those occasions in which new highs surpassed new lows during this period, once new lows took back the lead, stocks fell for a time until the new lows were 25-100 times the number of new highs, at which point a bottom was reached in the market.
Today, there were 50 new lows to 48 new highs, a technical win for the lows, indicating that a market turn is at hand. This is the strongest selling indicator that has been seen in the past three months. While it's obvious that stocks are severely overbought and have been for weeks, this sole indicator is all that's needed to predict the immediate future for stocks. They are ready to roll over and die. The extend of the carnage cannot be known, but within the next 3-6 trading days, there will be dramatic movement to the downside.
Market action today was somewhat hidden, though the real damage was done on the NYSE Composite, the largest index, and the one least prone to manipulation. While losses on the three majors were limited, the Composite was down 2.41%, nearly twice that of the S&P, three times the decline of the Dow and triple the NASDAQ on a percentage basis.
Dow 8,675.24, -65.63 (0.75%)
NASDAQ 1,825.92, -10.88 (0.59%)
S&P 500 931.76, -12.98 (1.37%)
NYSE Composite 6,033.90, -148.97 (2.41)
Declining issues far outpaced advancing ones, 4346-2059. That is a significant number, much moreso than the feeble tape-painting attempt on the Dow, which had been down as much as 140 points at 3:30 pm. Of course, the manipulators in the market made sure to limit the damage with a 75-point rally in the final half hour. It should be disregarded, as should every index, as they are absurdly valued at present. Consider that the Dow is still more than 2000 points higher than it was less than three months ago. The game is nearly up. Savvy investors will be locking in profits very soon as waves of selling are set to hit the market. Volume was on the low side, but still meaningless. The warmer weather and shakiness of the markets have removed many participants.
NYSE Volume 1,323,971,000
NASDAQ Volume 2,320,685,000
Commodities may have telegraphed the next move in stocks. After weeks of rallying, nearly all commodities sold off on the day, indicating that speculators are scurrying for safer havens in bonds and money markets. The catalyst may have been the ADP Employment Change report, which showed a loss of 532,000 private sector jobs lost in May, and also revised April from a loss of 491,000 to a 545,000 job loss. With the official Labor Department Non-Farms Payroll report for May due out prior to the market open on Friday, there is every possibility that the report will show further deterioration in the US employment market, not "incremental improvement" as the media and government officials have been touting.
Oil dropped $2.43, to settle at $66.12. Gold dipped $18.80, falling to $965.60. Even silver, the strongest commodity over the past three weeks, fell 65 cents, to $15.31 per ounce. Almost every commodity, from energy-related to foodstuffs, fell hard on the day. The grip of deflation is unmistakable.
There's another tsunami dead ahead. Government efforts to revive the economy have been minimal at best, and potentially harmful, at worst. Investors are nervous and big money is heading for the hills. Despite the positive spin which the government and media have tried to put on the economic picture, the reality is that the US economy is not gong to recover any time soon.
Look for sideways-down movement over the coming weeks, peppered with a couple of major downside days, with the Dow registering 200-400 point losses. Once the selling begins, it will not be easily stopped. The banks and their TARP money are pulling out - they have to - before they are stuck with losing positions. Before that happens they will unload on retail investors.
Happy days? Not for bulls.
On Monday and Tuesday, new highs surpassed new lows on the daily tally for the first time in six months. New lows have held the edge every day since September of 2007, save for five or six occasions. On those occasions in which new highs surpassed new lows during this period, once new lows took back the lead, stocks fell for a time until the new lows were 25-100 times the number of new highs, at which point a bottom was reached in the market.
Today, there were 50 new lows to 48 new highs, a technical win for the lows, indicating that a market turn is at hand. This is the strongest selling indicator that has been seen in the past three months. While it's obvious that stocks are severely overbought and have been for weeks, this sole indicator is all that's needed to predict the immediate future for stocks. They are ready to roll over and die. The extend of the carnage cannot be known, but within the next 3-6 trading days, there will be dramatic movement to the downside.
Market action today was somewhat hidden, though the real damage was done on the NYSE Composite, the largest index, and the one least prone to manipulation. While losses on the three majors were limited, the Composite was down 2.41%, nearly twice that of the S&P, three times the decline of the Dow and triple the NASDAQ on a percentage basis.
Dow 8,675.24, -65.63 (0.75%)
NASDAQ 1,825.92, -10.88 (0.59%)
S&P 500 931.76, -12.98 (1.37%)
NYSE Composite 6,033.90, -148.97 (2.41)
Declining issues far outpaced advancing ones, 4346-2059. That is a significant number, much moreso than the feeble tape-painting attempt on the Dow, which had been down as much as 140 points at 3:30 pm. Of course, the manipulators in the market made sure to limit the damage with a 75-point rally in the final half hour. It should be disregarded, as should every index, as they are absurdly valued at present. Consider that the Dow is still more than 2000 points higher than it was less than three months ago. The game is nearly up. Savvy investors will be locking in profits very soon as waves of selling are set to hit the market. Volume was on the low side, but still meaningless. The warmer weather and shakiness of the markets have removed many participants.
NYSE Volume 1,323,971,000
NASDAQ Volume 2,320,685,000
Commodities may have telegraphed the next move in stocks. After weeks of rallying, nearly all commodities sold off on the day, indicating that speculators are scurrying for safer havens in bonds and money markets. The catalyst may have been the ADP Employment Change report, which showed a loss of 532,000 private sector jobs lost in May, and also revised April from a loss of 491,000 to a 545,000 job loss. With the official Labor Department Non-Farms Payroll report for May due out prior to the market open on Friday, there is every possibility that the report will show further deterioration in the US employment market, not "incremental improvement" as the media and government officials have been touting.
Oil dropped $2.43, to settle at $66.12. Gold dipped $18.80, falling to $965.60. Even silver, the strongest commodity over the past three weeks, fell 65 cents, to $15.31 per ounce. Almost every commodity, from energy-related to foodstuffs, fell hard on the day. The grip of deflation is unmistakable.
There's another tsunami dead ahead. Government efforts to revive the economy have been minimal at best, and potentially harmful, at worst. Investors are nervous and big money is heading for the hills. Despite the positive spin which the government and media have tried to put on the economic picture, the reality is that the US economy is not gong to recover any time soon.
Look for sideways-down movement over the coming weeks, peppered with a couple of major downside days, with the Dow registering 200-400 point losses. Once the selling begins, it will not be easily stopped. The banks and their TARP money are pulling out - they have to - before they are stuck with losing positions. Before that happens they will unload on retail investors.
Happy days? Not for bulls.
Friday, March 27, 2009
Reality, Resistance Force Profit-Taking at Week's End
After becoming absurdly overbought, US equity markets finally produced an intelligent about-face on Friday, though there remain a large number of holdouts who believe that the current condition is something other than an abnormally-large bear market rally.
The major indices gave back most of Thursday's ridiculous gains but still finished the week very much on the positive side. There was little in the way of economic reports or company earnings filings, so investors were mostly on their own, playing the momentum trade, and the momentum had clearly run its course to the upside, as the NASDAQ ended in positive territory for the year on Thursday, but came back to earth on Friday and the Dow broke dangerously close to upside resistance at 8000 before backing well away today.
The week was the third straight that stocks had finished with gains, and, in case you're keeping score, was the 4th time this year that stocks ended a week higher, against 8 which closed on a negative note. For some perspective, the Dow is down exactly 1000 points for the year, while the NASDAQ is off only 34 and the S&P down 88, more in line with the Dow.
Obviously, the NASDAQ contains far fewer financial stocks and is overweighted with tech stocks and smaller corporations, so we may be about to witness the stock market equivalent of Revenge of the Nerds as new-age technology companies outperform older, more established (and with heavier debt burdens and legacy costs) companies on the Dow and NYSE. Speaking of the NYSE Composite, it has performed the on line with the Dow, down 660 points for the year.
Dow 7,776.18, -148.38 (1.87%)
NASDAQ 1,545.20, -41.80 (2.63%)
S&P 500 815.94, -16.92 (2.03%)
NYSE Composite 5,096.64, -133.89 (2.56%)
Internals were decidedly negative, with advancing issues being outnumbered by declining ones, 4896-1612, a 3-1 ratio. New lows continued to pour in ahead of new highs, though at a moderate pace, 110-25. That metric, despite the huge recent rally, has yet to roll over. When it does, it is likely to be short-lived, as stocks should return to some more normal range (between 6900 and 7500 on the Dow). After that, it's anybody's guess where they will go, though a retest of the low (Dow 6550) is more than likely in the offing, though the exact timing of that move is as yet unclear. It could be merely weeks away or many months. Consult your own crystal ball if you desire a more accurate reading.
Volume was down slightly from levels seen during the run-up, indicating that there are still stubborn types holding recent gains. Those should be eviscerated over the coming 5 weeks, as the next round of corporate earnings takes center stage.
NYSE Volume 1,443,266,000
NASDAQ Volume 2,102,247,000
Over in the commodity pits, life was equally downbeat as oil slipped another $1.98, to $52.38, a bit of a relief for drivers as gas prices have recently edged back above the $2 mark. Gold fell $16.90, to $925.30. Silver was down 36 cents to $13.26. The precious metals continue to languish in a trading range, with gold hanging between $880 and $990 and silver trading iroughly between $12 and $13.75. Investors seem to be torn between buying the assets as inflation hedges and selling them on upticks in price during a deflationary trend. Both have been right at different times.
Just after the market closed (one can only wonder in amazement at the timing of these things) the FDIC took over Georgia's Omni National Bank, and it's nearly $1 billion in assets - pocket change in today's environment.
The coming week should be highly entertaining and instructional. On Tuesday, the S&P/Case Shiller Home Price Index numbers and Consumer Confidence for March are released prior to the market's open. Wednesday offers a bonanza of economic reports, including the ADP employment report for March, Construction Spending and Pending Home Sales for February, Crude Inventories and March Auto and Truck Sales. If the market can absorb that, Friday comes the government's official figures for March Non-farm Payrolls.
Traders will likely be hard-pressed to hold onto recent gains. Enjoy some great college hoops this weekend and get ready for a wild ride next week.
The major indices gave back most of Thursday's ridiculous gains but still finished the week very much on the positive side. There was little in the way of economic reports or company earnings filings, so investors were mostly on their own, playing the momentum trade, and the momentum had clearly run its course to the upside, as the NASDAQ ended in positive territory for the year on Thursday, but came back to earth on Friday and the Dow broke dangerously close to upside resistance at 8000 before backing well away today.
The week was the third straight that stocks had finished with gains, and, in case you're keeping score, was the 4th time this year that stocks ended a week higher, against 8 which closed on a negative note. For some perspective, the Dow is down exactly 1000 points for the year, while the NASDAQ is off only 34 and the S&P down 88, more in line with the Dow.
Obviously, the NASDAQ contains far fewer financial stocks and is overweighted with tech stocks and smaller corporations, so we may be about to witness the stock market equivalent of Revenge of the Nerds as new-age technology companies outperform older, more established (and with heavier debt burdens and legacy costs) companies on the Dow and NYSE. Speaking of the NYSE Composite, it has performed the on line with the Dow, down 660 points for the year.
Dow 7,776.18, -148.38 (1.87%)
NASDAQ 1,545.20, -41.80 (2.63%)
S&P 500 815.94, -16.92 (2.03%)
NYSE Composite 5,096.64, -133.89 (2.56%)
Internals were decidedly negative, with advancing issues being outnumbered by declining ones, 4896-1612, a 3-1 ratio. New lows continued to pour in ahead of new highs, though at a moderate pace, 110-25. That metric, despite the huge recent rally, has yet to roll over. When it does, it is likely to be short-lived, as stocks should return to some more normal range (between 6900 and 7500 on the Dow). After that, it's anybody's guess where they will go, though a retest of the low (Dow 6550) is more than likely in the offing, though the exact timing of that move is as yet unclear. It could be merely weeks away or many months. Consult your own crystal ball if you desire a more accurate reading.
Volume was down slightly from levels seen during the run-up, indicating that there are still stubborn types holding recent gains. Those should be eviscerated over the coming 5 weeks, as the next round of corporate earnings takes center stage.
NYSE Volume 1,443,266,000
NASDAQ Volume 2,102,247,000
Over in the commodity pits, life was equally downbeat as oil slipped another $1.98, to $52.38, a bit of a relief for drivers as gas prices have recently edged back above the $2 mark. Gold fell $16.90, to $925.30. Silver was down 36 cents to $13.26. The precious metals continue to languish in a trading range, with gold hanging between $880 and $990 and silver trading iroughly between $12 and $13.75. Investors seem to be torn between buying the assets as inflation hedges and selling them on upticks in price during a deflationary trend. Both have been right at different times.
Just after the market closed (one can only wonder in amazement at the timing of these things) the FDIC took over Georgia's Omni National Bank, and it's nearly $1 billion in assets - pocket change in today's environment.
The coming week should be highly entertaining and instructional. On Tuesday, the S&P/Case Shiller Home Price Index numbers and Consumer Confidence for March are released prior to the market's open. Wednesday offers a bonanza of economic reports, including the ADP employment report for March, Construction Spending and Pending Home Sales for February, Crude Inventories and March Auto and Truck Sales. If the market can absorb that, Friday comes the government's official figures for March Non-farm Payrolls.
Traders will likely be hard-pressed to hold onto recent gains. Enjoy some great college hoops this weekend and get ready for a wild ride next week.
Friday, February 27, 2009
The Amazing Shrinking Economy
Prior to the market's open, the Commerce Dept. reported that GDP for the 4th quarter of 2008 declined by 6.2%, much more than the previous estimate of -3.8%, and more than the consensus estimate of -5.2%. Word was also spreading fast that the federal government was about to take a 36% stake in troubled Citigroup, more than quadrupling taxpayer's stake in the bank.
Right out of the gate, stocks tanked, with the Dow down nearly 150 points within the first 15 minutes. After trading in a tight range through most of the day, the markets finally succumbed to the intensely negative pressure in the final hour, sending the Dow, S&P and NYSE Comp. to new lows, surpassing those made earlier this week. As I said in yesterday's headline: GAME OVER!
Dow 7,062.93, -119.15 (1.66%)
NASDAQ 1,377.84, -13.63 (0.98%)
S&P 500 735.09, -17.74 (2.36%)
NYSE Composite 4,617.05, -95.97 (2.04%)
According to this report by Lauren Tara LaCapra, citing credit analysis by Egan Jones, a proprietary firm, Bank of America should be up next to follow Citigroup to the government hand-out window.
Hasn't it become evidently clear to Tim Geithner at Treasury that his plan for submitting the banks to a "stress test" won't even come close to relieving the stress to the credit and finance system?
First, the executives, Citi's Vikram Pandit and BofA's Ken Lewis, haven't come clean as to what's lurking on (and off - as in tier three) their books, awaiting implosion. Second, the government's benchmarks in the stress tests are simply too optimistic. For instance, the GDP worst case component calls for GDP to fall by 3.3% in 2009 and grow by 0.5% in 2010. We're looking today at a fourth quarter of 2008 in which GDP declined by 6.2%, according to the government's own report, issued today, so shouldn't the worst case be closer to a 5.0% decline in GDP for 2009 and a flat year in 2010?
As far as wost cases are concerned, a drop of 5.0% isn't even that bad. It is entirely possible that GDP could collapse by as much as 8 or 9% in the first two quarters of 2009 and get worse from there. The government simply doesn't want to face reality, believing, amazingly, after all we've been through, that the system is still resilient. It's not. The major banks are broken and the government is not only complicit through non-regulation, but now looking wholly incompetent, decrepit and corrupted to its core.
So, when the government finally gets the memo, they should have the FDIC close down Citi, zero out the shareholders, pay off bondholders at pennies on the dollar, recapitalize what's left and sell it off - in parts, if necessary - to private hands - shareholders, regional banks or private investors. Then, rinse, and repeat with Wells Fargo & Company (WFC) and JP Morgan Chase (JPM). anything short of a complete shutdown of the banking behemoths will only serve to prolong the agony in the credit, bond and stock markets, severely crimp lending and prolong the recession, turning it into a depression.
The Obama administration and Geithner's Treasury Dept. must take off the kid gloves, stop treating the banks as sacred cows and deal with the colossal problems facing the nation.
One of the reasons the economy is in such a staggering decline, is how lucrative not working has become. A woman caller to the Rush Limbaugh radio show today said she recieved $459 per week in unemployment insurance benefits and the government has just added an additional $25 per week, courtesy of the stimulus bill. That equates to $25,000 per year for not working. There clearly needs to be more incentive to find work, as being on the dole has now become better than the wages of 30-40% working Americans.
Elsewhere, General Electric (GE), slashed its annual dividend, from 32 cents to 10.
Market internals confirmed the headline numbers. Declining issues ran ahead of advancing ones, 4131-1390. New lows overwhelmed new highs, 815-7. Not a single NASDAQ issue made a new 52-week high on the day. The daily advantage for new lows over new highs has now run a full 16 months, since October, 2007. Volume was the highest of the week, in a week which was probably the highest it has been all year.
NYSE Volume 2,248,907,000
NASDAQ Volume 2,457,442,000
Commodities were quiet. Oil lost 46 cents, to $44.76. Gold lost a dime, to $942.50, while silver gained 13 cents to $13.11.
The major indices closed lower for the week, for the 7th time in 8 weeks in 2009.
In closing, I want to take this opportunity to lay claim to the coinage of a new socio-economic terminology, by announcing the advent of the Post-Government Era, a spawning global movement of rampant avoidance and non-compliance of the various laws, taxes and decrees of governments around the world. As the myriad levels of government lay deeper and deeper burdens upon the populace in the large majority of industrial nations, people will naturally revolt, and that revolutionary fervor finds its roots in non-compliance, civil disobedience and outright rejection of authority.
It's deserving of the current rostrum of national governments to receive treatment of this sort, as they have, individually and as a group, compounded the problems of the people, overtaxed them to extraordinary levels and continues to treat them as worthless fodder. The Post-Government Era has begun.
You heard it here first.
Right out of the gate, stocks tanked, with the Dow down nearly 150 points within the first 15 minutes. After trading in a tight range through most of the day, the markets finally succumbed to the intensely negative pressure in the final hour, sending the Dow, S&P and NYSE Comp. to new lows, surpassing those made earlier this week. As I said in yesterday's headline: GAME OVER!
Dow 7,062.93, -119.15 (1.66%)
NASDAQ 1,377.84, -13.63 (0.98%)
S&P 500 735.09, -17.74 (2.36%)
NYSE Composite 4,617.05, -95.97 (2.04%)
According to this report by Lauren Tara LaCapra, citing credit analysis by Egan Jones, a proprietary firm, Bank of America should be up next to follow Citigroup to the government hand-out window.
Hasn't it become evidently clear to Tim Geithner at Treasury that his plan for submitting the banks to a "stress test" won't even come close to relieving the stress to the credit and finance system?
First, the executives, Citi's Vikram Pandit and BofA's Ken Lewis, haven't come clean as to what's lurking on (and off - as in tier three) their books, awaiting implosion. Second, the government's benchmarks in the stress tests are simply too optimistic. For instance, the GDP worst case component calls for GDP to fall by 3.3% in 2009 and grow by 0.5% in 2010. We're looking today at a fourth quarter of 2008 in which GDP declined by 6.2%, according to the government's own report, issued today, so shouldn't the worst case be closer to a 5.0% decline in GDP for 2009 and a flat year in 2010?
As far as wost cases are concerned, a drop of 5.0% isn't even that bad. It is entirely possible that GDP could collapse by as much as 8 or 9% in the first two quarters of 2009 and get worse from there. The government simply doesn't want to face reality, believing, amazingly, after all we've been through, that the system is still resilient. It's not. The major banks are broken and the government is not only complicit through non-regulation, but now looking wholly incompetent, decrepit and corrupted to its core.
So, when the government finally gets the memo, they should have the FDIC close down Citi, zero out the shareholders, pay off bondholders at pennies on the dollar, recapitalize what's left and sell it off - in parts, if necessary - to private hands - shareholders, regional banks or private investors. Then, rinse, and repeat with Wells Fargo & Company (WFC) and JP Morgan Chase (JPM). anything short of a complete shutdown of the banking behemoths will only serve to prolong the agony in the credit, bond and stock markets, severely crimp lending and prolong the recession, turning it into a depression.
The Obama administration and Geithner's Treasury Dept. must take off the kid gloves, stop treating the banks as sacred cows and deal with the colossal problems facing the nation.
One of the reasons the economy is in such a staggering decline, is how lucrative not working has become. A woman caller to the Rush Limbaugh radio show today said she recieved $459 per week in unemployment insurance benefits and the government has just added an additional $25 per week, courtesy of the stimulus bill. That equates to $25,000 per year for not working. There clearly needs to be more incentive to find work, as being on the dole has now become better than the wages of 30-40% working Americans.
Elsewhere, General Electric (GE), slashed its annual dividend, from 32 cents to 10.
Market internals confirmed the headline numbers. Declining issues ran ahead of advancing ones, 4131-1390. New lows overwhelmed new highs, 815-7. Not a single NASDAQ issue made a new 52-week high on the day. The daily advantage for new lows over new highs has now run a full 16 months, since October, 2007. Volume was the highest of the week, in a week which was probably the highest it has been all year.
NYSE Volume 2,248,907,000
NASDAQ Volume 2,457,442,000
Commodities were quiet. Oil lost 46 cents, to $44.76. Gold lost a dime, to $942.50, while silver gained 13 cents to $13.11.
The major indices closed lower for the week, for the 7th time in 8 weeks in 2009.
In closing, I want to take this opportunity to lay claim to the coinage of a new socio-economic terminology, by announcing the advent of the Post-Government Era, a spawning global movement of rampant avoidance and non-compliance of the various laws, taxes and decrees of governments around the world. As the myriad levels of government lay deeper and deeper burdens upon the populace in the large majority of industrial nations, people will naturally revolt, and that revolutionary fervor finds its roots in non-compliance, civil disobedience and outright rejection of authority.
It's deserving of the current rostrum of national governments to receive treatment of this sort, as they have, individually and as a group, compounded the problems of the people, overtaxed them to extraordinary levels and continues to treat them as worthless fodder. The Post-Government Era has begun.
You heard it here first.
Friday, February 20, 2009
Stocks Hammered Again, But It Should Have Been Worse
After falling below key support on Tuesday, the Dow Jones Industrials, and US equities in general, were pounded down as fears of bank nationalization and unease over the future of the economy and even the welfare of the nation itself scared investors out of many positions.
While the technical damage on the Dow was serious, it should have been even worse, if not for subversive afternoon intervention by the usual corrupt cast of characters - the PPT, Goldman Sachs, Morgan Stanley, et. al. - which brought the Dow all the way back from a 215 point loss at 1:15 pm to a small gain at 10 minutes until 3:00.
At the heart of the matter was the fates of Bank of America and Citigroup, which suffered another day of crippling losses. At the low point of the day, Bank of America (BAC) was down 1.40, to 2.53, while Citigroup (C) fell 90 cents, to 1.51. On a basis unadjusted for splits, both were at all-time lows. Bank of America closed the day down a mere 14 cents, at 3.79, though Citigroup was not so fortunate, finishing 22% lower, down 56 cents at 1.95.
BofA CEO Ken Lewis was also subpoenaed by NY Attorney General Andrew Cuomo over the bonuses paid to Merrill Lynch executives in 2008. BofA took over Merrill under government supervision during the meltdown last fall.
It was only a hastily-prepared White House statement pledging a commitment to keeping banks in private hands that kept the markets from an all-out rout.
There's little doubt that the some kind of solution must be found for the ailing banking session, and soon. The public, however, has seen enough of bailouts and handouts, so the newly-installed Obama administration and Democratically-led congress must tread lightly.
Truth of the matter is that two of the nation's largest banks (and probably more) will have to be managed by the government, or somebody sober, for some time, in order to restore even a hint of credibility in the markets. There is also a distinct possibility that the government may not have sufficient power to prevent a complete collapse of an over-leveraged banking sector. In some ways, it is nothing more than the market hurrying the bankers' self-inflicted collapse.
Yesterday's rant by Rick Santelli at the Chicago Board of Trade (Feb. 19, 2009) on CNBC created no small sensation across the blogosphere. One of his more poignant remarks was his this gem:
Santelli was even called on the carpet by NBC's Brian Williams and Matt Lauer (NBC owns CNBC) on this morning's Today Show and put across the screen from his network nemesis, Steve Leisman, a puppy lapdog for the industrial-military-communications junta which rules the government and the nation. Santelli certainly has never backed down from a fight, and his performance on the Today Show was remarkably well-reasoned and honest with obvious middle-class populist overtones.
And now the censorship begins. While attempting to retrieve the code, I was initially met with a mention that the above-referenced video was no longer available on Youtube.com, a not-very-subtle attempt by the media elite to silence the truth and keep the public under wraps.. Don't be surprised if Santelli isn't quietly relieved of his duties soon or, more likely, continually marginalized. Nevertheless, as mentioned yesterday, the genie is well out of the bottle and the public outrage at just about anything and everything concerning government and big business will not be contained much longer.
Dow 7,365.67, -100.28 (1.34%)
NASDAQ 1,441.23, -1.59 (0.11%)
S&P 500 770.05, -8.89 (1.14%)
NYSE Compos 4,804.51, -76.65 (1.57%)
Internals were as expected, favoring declining issues over advancing ones, 4906-1775. New lows dominated new highs, expanding to new levels with 1119 new lows and a mere 25 new highs. The massive number of stocks hitting 52-week lows (1 in 6) have only been seen on days of extreme market turmoil, and today surely fit that bill. Volume was the highest in weeks, owing to options expirations, market intervention, usual trading and high levels of outright open executions on the sell side.
NYSE Volume 2,117,367,000
NASDAQ Volume 2,560,465,000
Commodities remained on their own track. Oil for March delivery closed down 54 cents, at $38.94 on the final day of that contract. Gold topped the $1000 mark, gaining $25.70, to $1,002.20. In concert, silver gained 56 cents, to $14.49. All food-related commodity futures were markedly lower.
The CPI figures released this morning demonstrated an increase of 0.4%, the first gain since July, 2008, though it is more than likely only an aberration in the continuing deflationary spiral.
Stocks should have finished much lower than they did today, which only means that they will fall further at some future date. Considering the level of angst in the market, in the public, and the ineptitude of government and corporate business to constrain the wealth destruction leads one to believe that the market is well into the third and most crucial phase of the bear market, total, utter, final capitulation.
All of the major indices finished the week with substantial losses. The Dow registered its lowest close since October 27, 1997.
For the week, the Dow was down a whopping 485 points, and closing in on a 50% decline from the October 2007 all-time high. The NASDAQ lost 93 points; the S&P surrendered 57; the NYSE Composite was down 402 points.
It's not a pretty picture and not likely to improve soon.
While the technical damage on the Dow was serious, it should have been even worse, if not for subversive afternoon intervention by the usual corrupt cast of characters - the PPT, Goldman Sachs, Morgan Stanley, et. al. - which brought the Dow all the way back from a 215 point loss at 1:15 pm to a small gain at 10 minutes until 3:00.
At the heart of the matter was the fates of Bank of America and Citigroup, which suffered another day of crippling losses. At the low point of the day, Bank of America (BAC) was down 1.40, to 2.53, while Citigroup (C) fell 90 cents, to 1.51. On a basis unadjusted for splits, both were at all-time lows. Bank of America closed the day down a mere 14 cents, at 3.79, though Citigroup was not so fortunate, finishing 22% lower, down 56 cents at 1.95.
BofA CEO Ken Lewis was also subpoenaed by NY Attorney General Andrew Cuomo over the bonuses paid to Merrill Lynch executives in 2008. BofA took over Merrill under government supervision during the meltdown last fall.
It was only a hastily-prepared White House statement pledging a commitment to keeping banks in private hands that kept the markets from an all-out rout.
There's little doubt that the some kind of solution must be found for the ailing banking session, and soon. The public, however, has seen enough of bailouts and handouts, so the newly-installed Obama administration and Democratically-led congress must tread lightly.
Truth of the matter is that two of the nation's largest banks (and probably more) will have to be managed by the government, or somebody sober, for some time, in order to restore even a hint of credibility in the markets. There is also a distinct possibility that the government may not have sufficient power to prevent a complete collapse of an over-leveraged banking sector. In some ways, it is nothing more than the market hurrying the bankers' self-inflicted collapse.
Yesterday's rant by Rick Santelli at the Chicago Board of Trade (Feb. 19, 2009) on CNBC created no small sensation across the blogosphere. One of his more poignant remarks was his this gem:
You know, they’re pretty much of the notion that you can’t buy your way into prosperity, and if the multiplier that all of these Washington economists are selling us is over… that we never have to worry about the economy again. The government should spend a trillion dollars an hour because we’ll get 1.5 trillion back.
Santelli was even called on the carpet by NBC's Brian Williams and Matt Lauer (NBC owns CNBC) on this morning's Today Show and put across the screen from his network nemesis, Steve Leisman, a puppy lapdog for the industrial-military-communications junta which rules the government and the nation. Santelli certainly has never backed down from a fight, and his performance on the Today Show was remarkably well-reasoned and honest with obvious middle-class populist overtones.
And now the censorship begins. While attempting to retrieve the code, I was initially met with a mention that the above-referenced video was no longer available on Youtube.com, a not-very-subtle attempt by the media elite to silence the truth and keep the public under wraps.. Don't be surprised if Santelli isn't quietly relieved of his duties soon or, more likely, continually marginalized. Nevertheless, as mentioned yesterday, the genie is well out of the bottle and the public outrage at just about anything and everything concerning government and big business will not be contained much longer.
Dow 7,365.67, -100.28 (1.34%)
NASDAQ 1,441.23, -1.59 (0.11%)
S&P 500 770.05, -8.89 (1.14%)
NYSE Compos 4,804.51, -76.65 (1.57%)
Internals were as expected, favoring declining issues over advancing ones, 4906-1775. New lows dominated new highs, expanding to new levels with 1119 new lows and a mere 25 new highs. The massive number of stocks hitting 52-week lows (1 in 6) have only been seen on days of extreme market turmoil, and today surely fit that bill. Volume was the highest in weeks, owing to options expirations, market intervention, usual trading and high levels of outright open executions on the sell side.
NYSE Volume 2,117,367,000
NASDAQ Volume 2,560,465,000
Commodities remained on their own track. Oil for March delivery closed down 54 cents, at $38.94 on the final day of that contract. Gold topped the $1000 mark, gaining $25.70, to $1,002.20. In concert, silver gained 56 cents, to $14.49. All food-related commodity futures were markedly lower.
The CPI figures released this morning demonstrated an increase of 0.4%, the first gain since July, 2008, though it is more than likely only an aberration in the continuing deflationary spiral.
Stocks should have finished much lower than they did today, which only means that they will fall further at some future date. Considering the level of angst in the market, in the public, and the ineptitude of government and corporate business to constrain the wealth destruction leads one to believe that the market is well into the third and most crucial phase of the bear market, total, utter, final capitulation.
All of the major indices finished the week with substantial losses. The Dow registered its lowest close since October 27, 1997.
For the week, the Dow was down a whopping 485 points, and closing in on a 50% decline from the October 2007 all-time high. The NASDAQ lost 93 points; the S&P surrendered 57; the NYSE Composite was down 402 points.
It's not a pretty picture and not likely to improve soon.
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