Stocks Bounce, But Rally Is Short-Lived Following MLK Holiday

Oddly buoyed by bad data out of China (missed GDP estimates at 6.9%), stocks made a half-hearted attempt to stem some of the losses it took in the first two weeks of the year, rising by about one percent across the three major indices early, but the rally could not find its legs and sellers soon took over, sending the NASDAQ into negative territory for the ninth time in 11 sessions this year.

While there's still eight trading days remaining in the month, the January Barometer merits mention at this juncture if only because the month, as a whole, seems to be lost.

Readers will be reminded that the January Barometer - which posits that "as goes January, so goes the year" - has a roughly 90% correlation. The only question now for traders seems to be not whether the year of 2016 will be a bad one, but just how bad it will end.

Indications continue to suggest that the correction is far from over and the potential of an outright bear market is only being kept off the table due to some select large cap stocks. 65% of stocks on the S&P 500 are already in a bear market, i.e., off 20% or more, and the Russell 2000 is down more than 20% from previous highs.

Equities may have gotten a one-day reprieve from some non-committal buyers of the dip, but that strategy seems to have worn out its welcome. Seasoned traders are becoming more and more risk-averse, seeking the safety of large caps with steady dividends, strong balance sheets (there aren't many), and, as the 10-year-note is telling us quite plainly, fixed income investments.

Today's volatility included a 270-point round trip for the Dow, which was down more than 100 points midday. Wednesday may prove more challenging as markets approach the traditional options expiry on the third Friday of the month, at the end of the current week.

Today's Closing Quotes:
S&P 500: 1,881.33, +1.00 (0.05%)
Dow: 16,016.02, +27.94 (0.17%)
NASADAQ: 4,476.95, -11.47 (0.26%)

Crude Oil 28.59 -2.82% Gold 1,090.70 +0.01% EUR/USD 1.0908 +0.17% 10-Yr Bond 2.0350 +0.10% Corn 368.50 +1.45% Copper 1.97 +1.11% Silver 14.07 +1.29% Natural Gas 2.08 -0.76% Russell 2000 994.87 -1.28% VIX 26.05 -3.59% BATS 1000 20,041.25 -0.13% GBP/USD 1.4160 -0.66% USD/JPY 117.6320 +0.18%

First Half Boffo for Stocks, But Ends on a Stinker

As odd as the recent equity market has been, today's action ranked right up there in bizarro-land.

First, the Chicago PMI was leaked a few minutes early (which has been alleged to have happened at least twice in the past), sending stocks screaming lower. The 51.6 figure was well below estimates of 55.0, sending stocks to their lows of the day just after 10:00 am EDT, the Dow off by some 140 points. An hour later, however, all was forgotten and presumably forgiven, as the Dow briefly peaked above the flat line.

The remainder of the session had the NASDAQ modestly higher, the S&P hugging the unchanged mark and the Dow drifting about in the red.

That was until the very final minutes of the day, when the Russell 2000 rebalancing sent stocks screeching lower once again, all of the indices finishing near their lows, ending the first half of the trading year with a resounding thud.

Even though US stocks have out-performed just about every other asset class on the planet over the first six months of 2013, the last month has been quite the disappointment, June being the only down month of the year for the major averages, and the first down month for the Dow Industrials since November, 2012.

For the week, the Dow gained 110 points, down both Monday and Friday, while up sharply mid-week. The NASDAQ picked up 46 points for the week, while the S&P 500 added 13.85. Each of the indices closed out the month, the second quarter and the first half below their 50-day moving averages.

While gains in equities were easy to come by in the first half of the year, the second half holds many challenges, especially with many funds and big hitters already sitting on impressive gains. Most of the major brokerages have been diddling with second half projections, most of they of the rosy variety.

We shall see as the market opens with a holiday shortened week on July 1.

Gold reversed course from yesterday's manic selloff, while silver added more than 5% on the day, a possible market reversal for the precious metals.

Dow 14,909.60, -114.89 (0.76%)
NASDAQ 3,403.25, +1.38 (0.04%)
S&P 500 1,606.28, -6.92 (0.43%)
NYSE Composite 9,121.62, -21.94 (0.24%)
NASDAQ Volume 2,274,401,750
NYSE Volume 4,899,537,500
Combined NYSE & NASDAQ Advance - Decline: 3342-3116
Combined NYSE & NASDAQ New highs - New lows: 214-53
WTI crude oil: 96.56, -0.49
Gold: 1,231.30, +19.70
Silver: 19.57, +1.037

Another Day, Another Dow Record

Until further notice, just figure on stocks gaining about one percent per week on the major indices. There seems to be no impediment to rising equity asset prices and there is a great deal of support for prices at these levels.

Don't count on tomorrow's non-farm payroll data to make any difference at all; the experts are predicting a gain of about 160,000 jobs in February, pretty much in line with Wednesday's ADP report.

The Russell 2000 set an all-time high today, and the S&P 500 is just about 20 points from cracking the champagne on a new record top. That event could be any time within the next two to four weeks and it is one which investors are eyeing with some skepticism as it is a much broader average than the Dow Industrials.

Party on, but not like it's 1999, because 2000 was not a pretty year.

Best guess has Dow 15,000 in sight by the end of the year, possibly much sooner, unless there is some wild geo-political event or sudden reversal of fortune coming out of the blue, but betting on black swans has not been fruitful the past four years.

There's probably never been a safer environment for short-term traders. Stocks are on an unmistakable flight path to new highs.

Dow 14,329.49, +33.25 (0.23%)
NASDAQ 3,232.09, +9.72 (0.30%)
S&P 500 1,544.26, +2.80 (0.18%)
NYSE Composite 9,013.36, +16.39 (0.18%)
NASDAQ Volume 1,647,033,000
NYSE Volume 3,871,534,750
Combined NYSE & NASDAQ Advance - Decline: 3862-2586
Combined NYSE & NASDAQ New highs - New lows: 420-18
WTI crude oil: 91.56, +1.13
Gold: 1,575.10, +0.20
Silver: 28.81, +0.005