Showing posts with label S&P 500. Show all posts
Showing posts with label S&P 500. Show all posts

Friday, February 28, 2020

All Major US Indices Post Record Losses On Coronavirus (COVID-19) Shocks

This is how it always ends. A pileup on the interstate. Panic at the disco.

And this is only the beginning of the end of a bull market that's survived long past its sell-by date, the final six months being kept upright by oodles of fake bucks from the Fed via the repo market.

Prior to that it was stock buybacks and more Fed printing. It's over. Get used to it.

A couple of friends yesterday were in the first stage of he Kubler-Ross five levels of grief, denial, saying that the stock market would come back. This, despite evidence right in front of their faces of massive losses and still they won't move their money to a safer place.

Smart money will be making more all the way down. Most money will simply disappear.

All of the major indices suffered yesterday their worst point losses in stock market history. That's right, the worst ever.

The Dow Jones Industrials managed to dispose of 1,190.96 points, edging out the 1,175.21 trashing on February 5, 2018. The NASDAQ put down a marker that is likely to stand for a long time (if it's not broken sometime during the next few months), dropping 414 points, bettering the former record of -355.49 from April 4, 2000, by some 59 points. That's a lot.

The S&P 500 also crushed its previous record, ripping off 137.63 points, topping the old mark of -113.19 from February 5, 2018.

It's been a bad week for stocks as the coronavirus (COVID-19) continues to spread across the globe.

Oddly enough, but with some historical precedence, precious metals have been bashed down over the past few days as well, just as they were at the height of the global meltdown of 2008. Everything lost value then. Same now.

Crude oil took another bump lower, with WTI crude as low as $45.25 pr barrel. Yield on the ten-year note fell to yet another record low, checking in at 1.30% at the end of the day. The 30-year was at 1.79%.

With the final trading day of the week on deck, there isn't much more to say than glad it's over, but the tide has turned, with all the major indices already - in the span of just five days - in correction territory, donw by more than 10%. Unless something changes quickly, there's a bear market staring investors in the face.

Cant say that it hasn't been apparent. This is no surprise. All the market needed was a good scapegoat and it found one in coronavirus and its aftereffects.

At the Close, Thursday, February 27, 2020:
Dow Jones Industrial Average: 25,766.64, -1,190.96 (-4.42%)
NASDAQ: 8,566.48, -414.29 (-4.61%)
S&P 500: 2,978.76, -137.63 (-4.42%)
NYSE: 12,547.25, -499.35 (-3.83%)

Wednesday, February 26, 2020

Bloodbath Continues As Stocks Respond To Coronavirus Fears; Bond Yields Achieve Fresh Lows; A Black Swan Moment?

So, is this "the big one?"

Is this the beginning of the inevitable late-stage bull market crash?

It very well could be, with the coronavirus taking up residence in market perceptions as the black swan, the mythical entity so eloquently devised and demonstrably argued in Nassim Nicholas Taleb's book by the same name in 2007.
Talib's tome is on the mark.

To those unfamiliar with the concept, black swans are rare, some say even non-existent, and Talib posits that rare, unpredictable events do happen, and their appearance can manifest itself in positive or negative ways.

Thus, the coronavirus (COVID-19) qualifies as a black swan event, as it appeared almost from nowhere, without warning, without announcement, and without restraint. It could be said that the virus itself is not the black swan, but what turned it into a major event for markets and economies was the fumbled handling of it and attempts to contain it in its early days of spread in China.

Had the virus been less contagious, less virulent, better contained, it might have had little to no effect on markets, but, as has been seen over the past two months, it managed to spread across almost all of mainland China, escaped its borders and eventually has been contracted in now forty countries, as far-flung as Sri Lanka, Bahrain, Finland, and the United States.

It is out there, it is virulent, it is deadly in some cases. Invisible, untouchable, it is an ideal psy-op by which the mainstream and financial media can whip up fear into a tornado of emotion, to whirl about Wall Street and global financial centers and create a panic.

The truth - and there have been more than enough variants of that to render objective opinion nearly moot - is that the virus is apparently not as deadly as other natural disasters might be. It is not even keeping pace with deaths by accident or from the more common flu, but the media coverage and government response to it has been nothing short of ghastly and draconian. Mass quarantines are not something most people alive today have ever experienced, but the world is getting a first-hand view - albeit somewhat clouded by China's command - of entire cities and provinces on lockdown, now followed by similar experience in South Korea and Italy and elsewhere, and possibly, we have been warned, coming to a neighborhood near you.

So, while fear is stoked in the general populace over the chance of catching the disease, possibly dying from it and possibly having to live isolated for weeks, the financial world sees disruption to the normal conduct of business, anathema of the first order.

Starting with the supply lines for parts to finished products out of China and ending with entire huge swaths of populations unable to transact in an orderly manner, the spread of the virus has the potential of putting the entire planet on hold, unable to work, pay bills, advance production, build, grow. COVID-19 is the potion, media and government the ice and the straw that sirs the drink (hat tip to Mr. October, Reggie Jackson for the apropos analogy), and it is all connected.

Whether or not the spread of the virus, its immediate health effects and reaction to it will be enough to send economies into reverse is still unknown, though it's looking more and more likely that whatever carnage it is producing is not about to stop soon and will continue until either it mutates itself out of existence or is contained to a level at which people can work, travel, and interact freely without fear.

So far, it has not been contained to any satisfactory level and appears to be spreading further into the general population in many countries.

With what we know, and the reaction thus far - by China first and the rest of the world after that - COVID-19 may not decimate the world's population, but the fear of it, the media coverage of it, and various government responses to it have the potential to crash markets around the world.

Note the variance between the rise in price (up) and the bottom panel.
That is the correlation with the S&P 500, which the Dow
underperformed all through 2019 and into 2020.
The financial environment has quickly shifted from greed over to fear and fear is not backing down. Investors are seeking safety rather than profit. Companies are reviewing disaster plans and procedures rather than seeking expansion and growth. These conditions will likely prevail for months, long enough to send stocks spiraling into a death trap, bonds soaring, and eventually gold and silver to unforeseen levels (though precious metals took a thumping on Tuesday thanks to the unseen hands of interlopers in the paper markets).

On Tuesday, the Dow took another huge step down, as did the NASDAQ, S&P, and other indices around the world, especially in Europe, which after China, looms the most precarious. Europe was already been on edge, close to recession, prior to the emergence of the coronavirus threat and they may be reeling uncontrollable into an abyss should the population experience widespread or even minor contraction.

In the United States, the slowdown has begun, with automakers concerned about parts en route from China and whether such essential production parts will arrive in an orderly manner. It's probable that they will not. Other industries have a similar connection to China and elsewhere, and anecdotal evidence suggests that slowdowns and possible layoffs lie straight ahead.

Bond yields have cratered like a failed bundt cake. Yield on the 10-year note crashed through its all-time low, stopping finally at 1.33%, two basis points below the prior low from July 5th and 8th of 2016 (1.37%). The 30-year bond dipped to 1.80%. The three and five-year notes mark the bottom of the treasury curve at 1.16, dangerous levels for capital markets.

In conclusion, unless events somehow take a radical turn for the better, conditions exist in spades for massive market turmoil to the downside. Beyond the idea that most liquid equity markets and individual securities have been extremely overbought and propped up by Fed injections and corporate buybacks, the effect from coronavirus and reaction to it should continue to offer nothing good in terms of upside impetus for the foreseeable future, though the first quarter and well into the second.

Global recession or worse is a viable consideration.

At the Close, Tuesday, February 25, 2020:
Dow Jones Industrial Average: 27,081.36, -879.44 (-3.15%)
NASDAQ: 8,965.61, -255.67 (-2.77%)
S&P 500: 3,128.21, -97.68 (-3.03%)
NYSE: 13,143.73, -390.37 (-2.88%)

If all this is too much for you to bear, then sit back, relax, and enjoy music from a better time, the Beatles' Revolver album.

Tuesday, February 25, 2020

Coronavirus (COVID-19) Takes a Bite Out of Europe and Wall Street

COVID-19 continues to rage, and on Monday, it took a bite out of global markets, especially in Europe and the Americas, with stock indices falling in a range around 3.5% on the day.

For the Dow Jones Industrial Average, it was the biggest decline in two years and the third biggest point drop in the history of the index, closing just short of the #2 all-time drop, −1,032.89 on February 8, 2018 a decline of 4.15%. Monday's rip was a 3.65% decline.

The S&P's 111.89-point loss was the second-worst ever on that index, nearly topping a 113.19 loss, also from February 8, 2018. The NASDAQ's 355.31-point decline was the second biggest on record. The worst day for the NASDAQ was on April 14, 2000, when the index plummeted nine percent, posting a loss of 355.49, kicking off what would be known as the dotcom bust.

There's a general theme around these kinds of outsized losses. Usually, there's follow-up, but it doesn't always come the very next day. It's usually another day later. That's likely because investors have become so accustomed to "buying the dip" that any major loss is seen as a buying opportunity, and this may well be, but it's probably going to be better to sit and watch on Tuesday and be ready to jump in (or out) on Wednesday or Thursday.

Another wave will come, and it's not going to be pretty. as pointed out in our Weekend Wrap, investors aren't concerned with the spread of the coronavirus per se, they're worried about the effect it is going to have on businesses, particularly, in this case, those with supply chains emanating out of mainland China, and there are plenty of them in addition to the airlines and cruise ship companies which have already been hard hit by the tail of the virus.

The after-effects from COVID-19 aren't going to emerge for months. Less than two months into the pandemic, the virus has yet to unleash its most virulent strain upon a host of countries outside China, but the list of countries seeing the number of new infections growing is getting larger. Italy, South Korea, Iran, Hong Kong, and Japan are the current hotspots, with cases doubling every day or two.

It will take some months for this to slow down and eventually be contained, but it's going to be very disruptive to the normal flow of business for some time. This is definitely not a time to be bullish, though the second half of the year may be.

With stocks battered around the world, bonds rallied, with yield on the 10-year note dropping eight basis points, from 1.46% to 1.38%. The 30-year bond hit another all-time low yield at 1.84%.

The yield curve remains inverted at the short to middle, with 1, 2, 3, and 6-month bills all posting yields higher than the 10-year, though the 2s-10s remained constant at a 12 basis point difference, the 2-year ending the day at 1.26. The curve is nearly flat, with 1.60% at one end (1-month) and 1.84% at the other, on the 30-year. A soft underbelly in the middle, with a 1.21% yield on the 3s and 5s, makes the entire trip one of just 63 basis points, or just more than one half of a percent. That's FLAT!

Oil hit the skids, with WTI dropping to 51.43 per barrel, though that's still higher than what is likely coming in months ahead, especially if widespread quarantines become fashionable in developed countries, particularly speaking of Europe and the USA.

Gold and silver were well bid, but smashed down at the end of the day. It's not yet the time for the almighty dollar to suffer. The yen and euro must submit first, along with China's yuan. When these fiat currencies are exposed, when negative interest rates are more an essential element than an experimental one, then the metals will soar. The world isn't there yet and nobody will be adequately prepared when that eventuality occurs, which could be six months from now or six years. It's looking like it may be closer to the latter, as the global machinery of finance isn't as fragile as it may appear on the surface.

Keeping a sharp eye out for emerging hotspots and especially on the US mainland, stocks ripe for shorting may be in the entertainment, hospitality, and dining segments.

At the Close, Monday, February 24, 2020:
Dow Jones Industrial Average: 27,960.80, -1,031.61 (-3.56%)
NASDAQ: 9,221.28, -355.31, (-3.71%)
S&P 500: 3,225.89, -111.86 (-3.35%)
NYSE: 13,534.12, -441.66 (-3.16%)

Friday, December 27, 2019

Shades of the Late 90s: S&P Poised to Be Best Year Since 1997

With just three more sessions left in the year, the S&P 500 is on the cusp of becoming the best year for stock investors in 22 years, since 1997, recollecting back to the halcyon days of the tech and dotcom boom (and subsequent bust).

With the close on Thursday of 3,229.91, the S&P is up 29.24%. Friday's futures are pointing to a positive open, and the index needs to gain just less than 12 points to surpass 2013's gain of 29.60% to become not just the best year of the decade, but of the nascent 21st century. 22 years ago, in 1997, the index gained 31.01%, and that was on the back of gains of 34% and 20% in 1995 and 1996, respectively.

Closing out 2018 on December 31 at 2,506.85, the S&P has piled on more than 700 points, but not all of that was in record territory. Recall that the final three months of 2018 were downright frightening to investors, as the index tumbled from a September 20 closing high of 2,930.75 to a low of 2,351.10 on December 24, prior to Treasury Secretary Steven Mnuchin's (in)famous phone call, purportedly, to the Plunge Protection Team (PPT), aka the President's Working Group on Financial Markets.

The rest is for the history books or maybe Christmas fantasies. The tremendous slide in stocks was halted with the market closed on December 25. The index had declined from 2,743.79 on November 28 by nearly 400 points and that was after the nearly 300 point losses from late September through October with a brief rally prior to Thanksgiving.

On the 26th of December, stocks boomed, with the S&P gaining an astonishing 116 points, standing at 2,467.70 on the close of trading. Wall Street's worst fears had been vanquished. Stability returned and little by little stocks came back into favor, with slow but steady gains through the early months of 2019, finally setting a new all-time high on April 23rd, when the index closed at 2,933.68. The mini bear market lasted all of seven months.

Through the middle of the year, gains were sporadic due to tensions over the trade war between China and the United States, though any negative news was quickly dispatched with hope for a breakthrough in days following. This kind of knee-jerk up and down action continued through summer and into the fall, with the index first bounding through the 3,000 mark on July 12.

The celebration was short-lived, however, as the index dipped back below 2,850 in mid-August, but began to gather momentum which carried it through the end of the third quarter. From October 1 forward to today, the S&P has tacked on nearly another 300 points, cresting over 3,000 again for the final time on October 23. The gains in November and December alone are approaching 200 points, about seven percent.

Should the S&P close out the year with reasonable gains - and there's little reason to believe that it won't - it could be the beginning of something big, if one is a believer in the predictive nature of charts and the cyclical behavior of stocks, politics and people.

Going back to 1995, when the S&P pumped higher by 34.11% - the best gain since 1958 - the following four years were all solid ones for investors. A 20.26% gain in 1996 was followed by gains of 31.01 in 1997, 26.67 in '98, and 19.53 in 1999. Those were also the years of Bill Clinton's second term as president of the United States, and, similarly to today's political circus, he was impeached, his affair with Monica Lewinsky occurring in 1994, his eventual impeachment by the House of Representatives and subsequent acquittal by the Senate in 1998.

While the parallels between the final years of the 1990s to today's market and political environment may be described as strikingly similar there is no assuredness that the same bounty will befall investors during what is likely to be President Trump's second term in office. Since the recent impeachment fiasco has fallen flat and is currently stalled out, perhaps the Democrats in the House will go for a second try after the elections in November of next year (or maybe even before).

Democrats' undying allegiance to the faith of "orange man bad" is assured. However, it appears that the president, for all his warts and flaws and tweets, has been doing a bang-up job on the economy, and it's his successes that have triggered the Dems' ire for the most part. If the Senate remains in Republican hands, it's a safe bet that Trump will reign for four more years, and that possibly, his economic policies (remember, he's made and lost billions of dollars in private life over the years) will usher in four more years of outstanding returns on the stock market.

One caveat to bear in mind. After 1999, some may remember what happened. The tech boom went bust. The S&P lost 10.14% in 2000, 13.14% in 2001, and 23.37% in 2002. Of course, the NASDAQ fared much worse, losing 78% over the same three years.

As we approach a new decade, think positive thoughts.

At the Close, Thursday, December 26, 2019:
Dow Jones Industrial Average: 28,621.39, +105.94 (+0.37%)
NASDAQ: 9,022.39, +69.51 (+0.78%)
S&P 500: 3,239.91, +16.53 (+0.51%)
NYSE Composite: 13,940.42, +45.28 (+0.33%)

Wednesday, December 25, 2019

It's What You Buy and When You Buy (and sell) It

Stock pickers, fund managers, hedge specialists, and financial pundits will be singing the praises of the stock market for 2019, as it will go down in history as one of the better years in terms of percentage gains on the national indices.

Currently, as everybody takes a say off for Christmas, the S&P 500 is up 28.58% on the year, closing in on its best performance sine 2013 (29.60%). This is according to an interactive chart from, which shows the annual return on the S&P from 1927 to the present.

While annual returns provide a positive longterm perspective, what happens in real life is more nuanced. Not everybody buys in on January 1 and sells on December 31. Not only would that be foolish from a tax standpoint, i's hardly practical. Securities are bought and sold at varying times of the year. The trick is to time purchases and sales for maximum effect.

What the referenced chart of annual returns doesn't show, is, taking the time period from September, 2018 to the present day, the return is smaller. Those with functioning memories will recall that stocks tumbled in October and December of last year, but staged a mighty comeback in 2019. On September 17, 2018, the S&P closed at 2.929.67. On Tuesday, it stood at 3,223.38. For those who bought at that September 17 high, that comes out as a gain of 10.02% to today. Not bad, but hardly the gaudy percentage for the shorter duration.

This is not to suggest anything: that stocks are overpriced, or that a pullback is imminent, or anything, other than to illustrate that buying at the proper time results in higher returns. It also points up the fact that while the S&P, Dow and NASDAQ are all making new all-time highs presently, they were also doing so last year (and for many years before that). There's no doubt that stocks have been the all-star investments not only of the past decade, but for many decades before, and they probably will continue to be so into the future.

For holders of stocks or owners of pension funds, college funds, index funds, 401k funds, or mutual funds, this portends to be a Merry Christmas, especially if one followed the most simple constructive advice of investing: buy low, sell high.

As it should be, and to all a good night.

At the Close, Tuesday, December 24, 2019:
Dow Jones Industrial Average: 28,515.45, -36.08 (-0.13%)
NASDAQ: 8,952.88, +7.24 (+0.08%)
S&P 500: 3,223.38, -0.63 (-0.02%)
NYSE Composite: 13,895.14, -4.85 (-0.03%)

Sunday, November 10, 2019

WEEKEND WRAP: Stocks Set Records; Bonds, Precious Metals Battered

The three major averages - Dow, NASDAQ, S&P 500 - all reached record territory this week, and, despite some give-back on Wednesday, closed out the week with all-time high closing prices. The lone laggard was the NYSE Composite, which hasn't yet managed to get back to January 2018 levels, but it is close, within 250 points.

Catalysts for the massive run-up through October and into November were supposed breakthroughs in the ongoing US-China trade deadlock and the Fed's 25 basis point cut in the federal funds rate last Wednesday (October 30). Positive news, or even the hint of such, was enough to ignite stocks in the US while Europe tetters on the verge of recession.

Gains made during the past five or six weeks look to be locked in for year-end, but there's barely a sniff of selling among the investment crowd. New records could be set in the indices through Thanksgiving, Black Friday and beyond, especially if indications of renewed vigor in manufacturing develops. It's been dragging lately, but the sector is wide and varied. Some states are doing well as opposed to ones like New York, which has lost 10,000 manufacturing jobs this year, and some sub-sectors are outperforming. Metal tooling is seeing a revival thanks to tariffs on steel, while semiconductors are slumping.

While stocks continued on their merry way to equity nirvana, fixed investment took a beating, especially in the case of the benchmark 10-year note, which appears headed back above two percent, closing out this week with a yield of 1.94%, the highest since July 31 (2.02%). The long end of the curve is certainly steepening, and in a hurry. The 30-year bond checked out on Friday with a yield of 2.43, just a basis point below the closing on August 1 (2.44%).

The short end of the treasury yield curve is still flat, with the difference between 1-month bills and the 5-year note a mere 18 basis points (1.56-1.74%). The curve has maintained an un-inverted posture for nearly three months now, since the 2s-10s crossed for three days in August of this year. That brief period of inversion did engender some recession fears at the time, but they have been allayed by the curve settling into a more orderly regimen.

Recession still being a possibility, always, chances of it occurring anytime soon were quelled when third quarter GDP came in hotter than expected, at 1.9%. Not a good number, the fact that it was above most estimates (1.6%) was enough to hold off the bears. If the measurement holds for the next two estimates of third quarter GDP, the absolute earliest recession bells could ring would be after the first quarter of 2020, if both the fourth quarter of 2019 and first of 2020 were negative, and those are some pretty big ifs.

Thus, it's unlikely that the US will encounter a recession - or at least have one reported - until after the second quarter of 2020, but the economy is looking like it will continue to grow, albeit modestly, until at least the elections in November, good news for President Trump and Republicans in general, and not-so-good for Democrats who wail about everything, even when nothing is amiss in any major way.

Also hammered were precious metals, with silver falling below the Maginot line of $17/ounce late in the week to close out at $16.77. Gold fell from right around $1500/ounce to end the week at its lowest level since the start of October, at $1458.80.

If interest rates continue to climb, it could exacerbate the bearish tone already developing in the metals. To holders, it may not be such a big deal, but more of an opportunity to buy more on the supposed cheap. Precious metals have been out of favor since their massive run-up from 1999 to 2011, and there seems to be no end in sight for the overall bear regime that has taken hold.

One has to consider the rationale for gold or silver as one of protection, so, from a buyer's standpoint there's absolutely nothing wrong with holding or storing some of the shiny stuff. It still maintains value, though it has been fluctuating greatly over the past 20 years, but what hasn't. Gold and silver still provide peace of mind and a store of value that is better, over the longest of terms, than any other investment, save possibly real estate, the difference being that no taxes have to be paid on the shiny metals.

Outlooking for the next seven weeks through Christmas is decidedly positive for stocks, which is all anybody really seems to care about these days. Pension funds are all in, as many have to be, in hopes that there will not be massive underfunding for the retiring baby boomers.

In the most simplistic of ways, stocks may be overvalued, but the rising yields on bonds may tempt some of the less-daring speculators to dive into a safety play. Worse things have happened, but, for now, there seems to be a nice balancing act between the Fed, the government, business, and heavily-indebted consumers, the latter group buoying and buying into the great money scheme of the longest bull market in history.

Some day, it will all come to a screeching halt. By most measures, it's not stopping any time soon.

At the Close, Friday, November 8, 2019:
Dow Jones Industrial Average: 27,681.24, +6.44 (+0.02%)
NASDAQ: 8,475.31, +40.80 (+0.48%)
S&P 500: 3,093.08, +7.90 (+0.26%)
NYSE Composite: 13,407.80, +12.26 (+0.09%)

For the Week:
Dow: +333.88 (+1.22%)
NASDAQ: +88.92 (+1.06%)
S&P 500: +26.17 (+0.85%)
NYSE Composite: +107.54 (+0.81%)

Thursday, October 31, 2019

Fed's FOMC Delivers Rate Cut; Markets Respond Positively

Following the Fed's FOMC announcement of another 25 basis point cut to he federal funds rate - the thrid in the last four months - stocks took off for new heights, with the S&P posting another new all-time high, just two days after breaking through to a record close.

The Dow Jones Industrial Average ended the session 212 points off its all-time high, the NASDAQ just 36 points shy of a record, and the NYSE Composite closed less than 400 points from its January 2018 record.

With three-quarters of a point shaved off the key target interest rate for Fed watchers, the overnight lending rate stands in a range of 1.5% to 1.75% and the Fed's language suggests that it will not cut rates automatically at its next meeting (December) or any future meeting.

What the somewhat hawkish stance means for markets is that the flow of money is going to be stanched at some point, and that point may have already occurred, though adroit rate watchers expect further pressures on the economy that would force the Fed's hand in the first and second quarter of next year.

There are already signs that the economy is slipping, though the first estimate of third quarter GDP came in above expectations (1.6%) at 1.9% for the recently closed-out time frame, so it's not apparent that the US economy will be facing recession any time soon.

All of this makes for an interest final two months of the year for investors. Will we see a repeat of last year's December dive or are there enough animal spirits to keep the stock market churning higher?

Only time will tell.

At the Close, Wednesday, October 30, 2019:
Dow Jones Industrial Average: 27,186.69, +115.29 (+0.43%)
NASDAQ: 8,303.98, +27.13 (+0.33%)
S&P 500: 3,046.77, +9.88 (+0.33%)
NYSE Composite: 13,244.01, +34.41 (+0.26%)

Tuesday, October 29, 2019

S&P Sets Record All-Time High; Fake Trump Tweet; FOMC Meeting to Begin

With an FOMC meeting in the dock for Tuesday, investors took the opportunity to ramp stocks higher prior to the expected 25 basis point cut to the federal funds rate. Just prior to the opening bell, an apparently fake news story about a presidential tweet appeared on, saying President Trump tweeted, "today will be a good day in the stock market," and, "the China deal is moving forward ahead of schedule."

We checked the president's twitter feed and could not find any such tweet. We also checked Bloomberg, which featured an article on President Trump's tweets that related to the stock market. No such tweet was shown in the article.

This clearly looks like a somebody spoofed the grammatically-challenged Zero Hedge website. It was most likely one of their "reliable" email contacts trying to look good. It's a shame that "the Hedge" has slumped to such low levels of journalism - if that's what you want to call it - because it is normally a pretty good source for economic news not found elsewhere.

Recently, Zero Hedge has taken to posting political and other non-economic articles, to its detriment. Many of the commentators who frequented Zero Hedge in its heyday (2008-2009), prior to it being purchased by ABC Media (British Columbia, not the US media giant). According to the one-liner in the website's footer - Copyright ©2009-2019 Media, LTD - the company took it out of the original owner's hands in 2009, as the GFC was winding down.

For the S&P 500, Monday was a special occasion, setting a new all-time record high closing. Trump may not have pumped it with a tweet, but his "America First" policies have certainly contributed to the rise of all US indices.

If stocks were overvalued prior to Monday, they are even more overvalued now, and will likely be uber-overvalued after the FOMC announces another rate cut on Wednesday.

In the meantime, earnings season is in full swing. The big story was Google parent, Alphabet, third quarter earnings, reported after the close. Alphabet posted a per-share profit of $10.12 in the quarter, decidedly below the $13.06 a share from the same period last year. Analysts polled by Bloomberg were expecting a per-share profit of $12.35.

The sizable miss was due largely to losses in investments. Among investments that may have contributed to the loss, Alphabet was involved with Uber and Slack, two companies that recently IPO'd and have lost value.

Little of this will affect Tuesday's trade outside of Alphabet (GOOG). There's far too much enthusiasm for equities and anticipation of looser monetary policy from the Fed already backed into the mix.

At the Close, Monday, October 28, 2009:
Dow Jones Industrial Average: 27,090.72, +132.66 (+0.49%)
NASDAQ: 8,325.99, +82.87 (+1.01%)
S&P 500: 3,039.42, +16.87 (+0.56%)
NYSE Composite: 13,186.43, +40.19 (+0.31%)

Sunday, October 27, 2019

WEEKEND WRAP: Green Lights for Stocks; Flight From High Tax States Varies US Landscape

For equity investors, the week was all about Friday.

After flailing about the prior four sessions, US indices got a sizable boost on the final day of the week, sending traders home satisfied with a positive result for the week.

With the Dow, NASDAQ, and Composite mere percentage points short of all-time highs, the S&P 500 is within three points of its record closing high, recorded earlier this year, on July 26 (3,025.86).

So, with all the uncertainty surrounding geo-political events - impeachment, Brexit, trade war - stocks continue to perform magic as solid investments in a ZIRP and NIRP environment.

With the Fed committed to "not QE" through the second quarter of 2020 (at least), stocks have in front of them a glowing green light signaling fresh all-time highs. The FOMC is expected to cut another 25 basis points at its meeting this week, the second to last of the year.

In commodity trading, WTI crude oil was bid, closing out the week at 56.63 a barrel after slumping down to $52.45 over the prior two weeks. Gold and silver, both sluggish over the past month, finally were bid on Thursday and Friday. Gold was as high as $1518 on Friday, settling in at $1504, while silver crested above $18 per ounce and closed right on that number Friday.

Ten-year treasury notes continued to be shunned, finishing out the week with a yield of 1.80%, with some correlation to ongoing cuts in the federal funds rate. Bond traders are expressing a preference for short-term maturities, with 1, 2, and 3-month bills nearly at the same yield as the 10-year. While the yield curve has returned from inverted to a rather dull slope, there's certainly no consensus on direction. With the 10-year yield at its best level since August, it is still well below the average 2.72% which prevailed in the first quarter.

Earnings reports have been unreassuring, with as many misses as those topping estimates. Overall, mega-corps are still making money, just not so much to boost their prices significantly. In this environment, banging out 5-8% year-over-year gains has to be considered pretty solid, being that the current economic cycle is well past the mid-point and may be nearing an end.

Recession talk has subsided for now, though different regions throughout the vast US landscape offer varied results. In general, flight from high-tax states - New York, New Jersey, Massachusetts, Maryland, Connecticut, Illinois, and California, in particular - to Southern enclaves continues apace. Retirees are taking their money and running for the state line, seeking reduced property, income, and estate taxes in more conservative states.

States that have not raised their minimum wages significantly are experiencing an influx of new residents, and with that, housing, roads, and commercial spaces are being constructed at a hot pace. Meanwhile, the Northeast continues to suffer from an overabundance of taxation, regulation, and handouts to the indigent at the same time its infrastructure is crumbling and best residents are leaving.

New York is a prime example of the dangers of liberal policies causing middle and upper class flight. While undocumented (illegal) migrants (aliens) are offered free food, housing, and education, long-suffering native New Yorkers are feeling put out, footing the bill for government largesse while good jobs are scarce and property taxes are near the highest in the nation. Home values are depressed, despite low interest rates and job creation is limited by the excessive minimum wage and other requirements of employment paid for by companies.

New York leads the nation in lost manufacturing jobs in 2019, estimated to have shed 10,000 positions through the first nine months of the year. The Empire State has also suffered significant losses in the hospitality and construction industries, due to the higher minimum wage and lack of growth in commercial and residential building.

These so-called "high tax states" are going to face a cash crunch, as higher paid workers are replaced with low-skill, low pay employees. The revenue will not be enough to sustain the high costs of state agencies and pensions. A major bust has been building for years in many states who will have to face the reality that the days of big promises are over and government staff reduction and budget cuts are on the table.

The United States is a big country, and, similar to the nations of Europe, some states may be booming while others are failing.

Caveat Emptor.

At the Close, Friday, October 25, 2019:
Dow Jones Industrial Average: 26,958.06; +152.53 (+0.57%)
NASDAQ: 8,243.12, +57.32 (+0.70%)
S&P 500: 3,022.55, +12.26 (+0.41%)
NYSE Composite: 13,146.24, +27.33 (+0.21%)

For the Week:
Dow: +187.86 (+0.70%)
NASDAQ: +153.58 (+1.90%)
S&P 500: +36.35 (+1.22%)
NYSE Composite: +139.60 (+1.07%)

Saturday, November 24, 2018

WEEKEND WRAP: Black Friday or Blue Friday? Oil Down 34%, S&P, NASDAQ, NYSE In Correction

The beatings will continue until morale improves.

While the exact origin of the above phrase is clouded, it certainly applies to the current stock trading regimen that has sent world markets spinning downward and US stocks to levels comparable to nearly a year ago.

The sad situation for stocks continued even into the holiday season, when the traditionally upbeat and optimistic Black Friday half-day session turned into a savage selloff that lasted right through to the 1:00 pm ET close.

Following a brief respite on Wednesday that saw the Dow end down less than one point, and the Thanksgiving Day holiday, investors took their cues from overseas markets, which were sold off on Thursday, extending the dour moods in Europe and the Pacific Rim. Friday's trading in foreign markets was mixed, though the outlier was Brazil, where the Bovespa lost 1,247.21 points (-1.43%), confirming the theme of a global, rolling, slow-motion crash in equity values.

According to respected sources (ZeroHedge and ETF Daily News), the Dow suffered its worst Black Friday loss since 2010 and the S&P saw its worst performance for the day after Thanksgiving since the mid-1930s.

While the Dow has not yet caught down to its deepest depths of 2018, it is approaching the 2018 bottom from March 23 (23,533.20), promoting the idea that the worst of this round o selling is not quite over.

Friday's session concluded another in a series of poor performances for stocks, nearly equalling the declines seen in the week of October 8-12, sending all of the major indices below their respective 50, 200, and 40-week moving averages.

While shoppers in the US were out buying electronics, toys, appliances, clothes, and assorted trinkets, Wall Street traders were selling off assets, not an encouraging start to the holiday season. All of the major averages ended the week below where they started 2018. Without a significant Santa Claus rally, 2018 looks to be one of the worst for traders since 2008, when the S&P 500 lost 38.49%. Since then, only twice - in 2011 and 2015 - has the S&P closed lower than the close from the previous year. Currently, the S&P is down less than two percent on the year.

Friday's losses sent there S&P 500 into correction territory, ending down 10.17% from the September 20 all-time high (2930.75). The NASDAQ sank further into correction, and is approaching an outright bear market. The NASDAQ is down 14,44% from its August 29 high (8109.69).

On October 3rd, the Dow Industrials closed at an all-time high of 26,828.39. On Friday, it closed down 9.48% from that level.

The NYSE Composite, which peaked on January 25 at 13,637.02, is down 11.74%, and the Dow Jones Transportation Index is down 10.39 since closing at 11,570.84 on September 14.

Finally, the big loser for the week - which will eventually be a boon to consumers - was oil, which was once again crushed, as WTI crude lost more than seven percent, to $50.42/barrel. On October 3rd, coincidentally the game day the Dow peaked, WTI crude sold for $76.41 per barrel. That's a decline of 34.02% in just over seven weeks. Now, that's a crash.

Dow Jones Industrial Average November Scorecard:

Date Close Gain/Loss Cum. G/L
11/1/18 25,380.74 +264.98 +264.98
11/2/18 25,270.83 -109.91 +155.07
11/5/18 25,461.70 +190.87 +345.94
11/6/18 25,635.01 +173.31 +519.25
11/7/18 26,180.30 +545.29 +1064.54
11/8/18 26,191.22 +10.92 +1075.46
11/9/18 25,989.30 -201.92 +873.54
11/12/18 25,387.18 -602.12 +271.42
11/13/18 25,286.49 -100.69 +170.27
11/14/18 25,080.50 -205.99 -35.72
11/15/18 25,289.27 +208.77 +173.05
11/16/18 25,413.22 +123.95 +297.00
11/19/18 25,017.44 -395.78 -98.78
11/20/18 24,465.64 -551.80 -650.58
11/21/18 24,464.69 -0.95 -651.53
11/23/18 24,285.95 -178.74 -830.27

At the Close, Friday, November 23, 2018:
Dow Jones Industrial Average: 24,285.95, -178.74 (-0.73%)
NASDAQ: 6,938.98, -33.27 (-0.48%)
S&P 500: 2,632.56, -17.37 (-0.66%)
NYSE Composite: 12,036.24, -87.10 (-0.72%)

For the Week:
Dow: -1,127.27 (-4.44%)
NASDAQ: -308.89 (-4.26%)
S&P 500: -103.71 (-3.79%)
NYSE Composite: -364.04 (-2.94%)

Tuesday, November 20, 2018

Crash Much? All 2018 Gains Wiped Out In Global Stock Rout

Where to begin?

Today's stock market rout was worldwide, starting in Japan, as the NIKKEI fell 238 points, the Hong Kong's Hang Sent slid 531 points and China's SSE Composite Index closed at 2,645.85, down 57.66 points, or -2.13%.

Europe was next up on the hit list, as the Germany's DAX was off 178.13 points (-1.58%), closing in on a 20% decline for the year. Other European stock indices were down between one and one-and-a-half percent.

As markets opened in the Western Hemisphere, the selling accelerated, sending the Dow down more than 400 points at the open and other North and South American indices falling sharply. By the end of the day, it was absolute carnage, a veritable sea of red. Every equity index on Yahoo's Major World Indices page was lower, save Malaysia's KLCI, which managed a 4-point, 0.25% gain.

Seriously, though, today's crash began in the fall of 2008, when stocks were wiped out in the face of the Lehman Brothers collapse and the sub-prime housing crisis, and also had roots from April 9, 2009, when stocks finally bottomed out as the FASB loosened accounting rules, issuing an official update to rule 157, allowing companies to deviate from standard mark-to-market principles in valuing assets.

The Fed and its central bank cohorts had their dirty little fingers in the dikes as well, conjuring up trillions of dollars in liquidity, effectively bailing out financial institutions that were, essentially, bankrupt. That's what brought us here today, ten years and trillions of dollars later. The everything bubble has finally popped.

This is a rolling crash, not a hard one, like on Black Tuesday in 1929. There have been - in just the past eight trading days - losses on the Dow of 201, 602, 100, 206, 395 points and today's 552. There were gains of 201 and 124 points on Thursday and Friday of last week, but the cumulative effect comes to a loss of 1731 points since November 8, roughly a seven percent dribble.

Tuesday's losses sent the S&P 500 hurtling toward correction territory. From the close of 2,930.75 on September 20 to today's finish at 2,641.89 is a 9.86% loss. For those in the rounding up-or-down crowd, that's 10 percent, or, close enough for horseshoes or hand grenades.

For those keeping score, the Dow is down 8.81% from it's closing high on October 3 (26,828.39). The NASDAQ, which has been in and out and back into correction since October 24, is still up on the year... a whopping five points and change. The index is down 14.82% since August 29. Albeit marginally, the Dow Industrials, S&P, NYSE Composite and the Dow Transports are all lower for the year.

The NYSE Composite which peaked at 13,637.02 on January 26 and never regained that height, is down 11.61%, reaching down to correction levels today, though, like the NASDAQ, it had breached the 10% down level on October 24 and since recovered.

Lastly, the Dow Jones Industrial Average finished today with a loss of 321.52 (-3.05%), at 10,212.94. That's an 11.74% drop from the all-time high close of 11,570.84, September 14.

In the commodity space, oil was crushed again today, as WTI crude futures ended at 53.22, down $3.98 per barrel (-6.94%). According to, that's the lowest price since mid-October of 2017.

Where do stocks go from here? That question almost answers itself.

Dow Jones Industrial Average November Scorecard:

Date Close Gain/Loss Cum. G/L
11/1/18 25,380.74 +264.98 +264.98
11/2/18 25,270.83 -109.91 +155.07
11/5/18 25,461.70 +190.87 +345.94
11/6/18 25,635.01 +173.31 +519.25
11/7/18 26,180.30 +545.29 +1064.54
11/8/18 26,191.22 +10.92 +1075.46
11/9/18 25,989.30 -201.92 +873.54
11/12/18 25,387.18 -602.12 +271.42
11/13/18 25,286.49 -100.69 +170.27
11/14/18 25,080.50 -205.99 -35.72
11/15/18 25,289.27 +208.77 +173.05
11/16/18 25,413.22 +123.95 +297.00
11/19/18 25,017.44 -395.78 -98.78
11/20/18 24,465.64 -551.80 -650.58

At the Close, Tuesday, November 20, 2018:
Dow Jones Industrial Average: 24,465.64, -551.80 (-2.21%)
NASDAQ: 6,908.82, -119.65 (-1.70%)
S&P 500: 2,641.89, -48.84 (-1.82%)
NYSE Composite: 12,054.17, -226.74 (-1.85%)

Monday, October 29, 2018

Massive Market Crash Sends Dow Into Correction Before Last-Minute Save

Monday's rapid rise at the opening bell turned to a massive selloff as the session progressed, prompted by a self-fulfilling note from Morgan Stanley chief strategist, Michael Wilson, that emerged around 1:00 pm ET, calling the current market turmoil more secular in nature rather than the "cyclical" call that most Wall Street analysts have been making.

The Dow and other major averages were sent off like fireworks at the open, but stalled in early trading, beginning their descent just after 10:00 am ET. The Dow topped off at 25,040.58 and continued lower, finally bottoming out at 24,122.23, an intra-day loss of more than 900 points, top to bottom. With just 15 minutes left in the trading session, short-covering took the Dow up more than 300 points, eviscerating more than half of the day's losses.

As for percentages, the Dow today actually was sent down just over 10% on both a closing and intra-day basis form the October 3rd all-time high. Intra-day, the Dow topped out at 26,951.81 before closing at 26,828.39. That puts the 10% correction mark at 24,256.63, intra-day, and 24,145.55 on a closing basis, both of which were exceeded today, though the closing number avoided a clear-cut entry into correction.

As for the benchmark S&P 500, today's close was 9.8% lower than the September 20 closing high of 2930.75. For those who like round numbers, that would qualify as being close enough, especially since the S&P bottomed out at 2,603.54, well below the number necessary to call it a correction. That index was down more than 55 points prior to the late-day rescue, finishing with a modest 17-point decline.

The NASDAQ and Dow Jones Transportation Index, both already well into correction territory, suffered even more losses on the day.

In agreement with Morgan Stanley's Wilson, there's growing evidence that what stocks are undergoing is anything but cyclical in nature, despite Friday's advance reading of third quarter GDP coming in at a rosy 3.5%. It's worth noting that the most recent quarter's growth was less than the second quarter's 4.2%, and that the first estimate is often revised lower in subsequent months, as data becomes more well-defined. Additionally, the third quarter figures were goosed higher primarily by consumer spending rather than business capital expenditures (CapEx), which were moribund.

For those of bullish sentiment, one has to consider just where markets are supposed to go when unemployment is at historic lows and the stock market is at historic highs, more than nine years into the longest bull market expansion in stock market history.

Proponents of Dow Theory (and the Elliott Wave) need only to look at a one or three-month chart to surmise that the Dow and the Transports have signaled a primary trend change - bullish to bearish. The Dow fell sharply from October 3rd to the 11th, rallied meekly through the 16th and puked it all up (or down, as the case may be) to current levels. The transports had already completed the four-step top-bottom-recovery-lower bottom prior to today's disaster, although it's all-time high was back on August 29.

The not-so-wild cards in the current scenario are the Fed's relentless assault on the federal funds rate, furiously raising a quarter point per quarter, inflation fueling via Trump's trade tariffs, and the stubbornness of wages to do anything but stagnate. It's a potpourri of potential pitfalls that are hard to ignore.

Like housing prices prior to the sub-prime crash, stock valuations do not always go up. This time is not different, and, judging by the frantic closing activity today, tomorrow could be a fully-loaded house of pain.

Unless the Dow rallies over the next two days, Octobers cumulative loss is looking to exceed the February and March losses combined.

And so it goes. Markets are cyclical and sometimes, secular. The latest days of trading feel like sometime has arrived.

Incidentally, today is the anniversary of Black Tuesday, October 29, 1929. Could that wicked buying in the final fifteen minutes have been an attempt to prevent history repeating?

Dow Jones Industrial Average October Scorecard:

Date Close Gain/Loss Cum. G/L
10/1/18 26,651.21 +192.90 +192.90
10/2/18 26,773.94 +122.73 +315.63
10/3/18 26,828.39 +54.45 +370.08
10/4/18 26,627.48 -200.91 +169.17
10/5/18 26,447.05 -180.43 -11.26
10/8/18 26,486.78 +39.73 +28.47
10/9/18 26,430.57 -56.21 -27.74
10/10/18 25,598.74 -831.83 -859.57
10/11/18 25,052.83 -545.91 -1,405.48
10/12/18 25,339.99 +287.16 -1,118.32
10/15/18 25,250.55 -89.44 -1,207.76
10/16/18 25,798.42 +547.87 -659.89
10/17/18 25,706.68 -91.74 -751.63
10/18/18 25,379.45 -327.23 -1,078.86
10/19/18 25,444.34 +64.89 -1,013.97
10/22/18 25,317.41 -126.93 -1,140.90
10/23/18 25,191.43 -125.98 -1,265.88
10/24/18 24,583.42 -608.01 -1,873.89
10/25/18 24,984.55 +401.13 -1,472.76
10/26/18 24,688.31 -296.24 -1,769.00
10/29/18 24,442.92 -245.39 -2,014.39

At the Close, Monday, October 29, 2018:
Dow Jones Industrial Average: 24,442.92, -245.39 (-0.99%)
NASDAQ: 7,050.29, -116.92 (-1.63%)
S&P 500: 2,641.25, -17.44 (-0.66%)
NYSE Composite: 11,942.15, -34.79 (-0.29%)

Thursday, October 11, 2018

Global Rout Continues; All 30 Dow Components Lower; China A 50% Loser Since 2015

Stocks took another beating on Thursday, though not quite as extensively on the tech side as was the case in Wednesday's rout. The Dow Industrials took another two percent hit, sending the 30 blue chips down another 546 points. The combined losses in the six sessions following the all-time high close of 26,828.39 on October 3rd at 1,775.56 or 6.69%, a figure that should not, in and of itself, inspire much fear, though the rapidity, persistency, and consistency of the losses are not exactly inspiring much in the way of investor confidence.

All 30 Dow stocks finished in the red. Spared from most of the carnage was Microsoft, which closed at 105.91, down a mere 0.25 points, or 0.24%. No other Dow issue reported a decline of less than one half percent. Leading the way down was Phizer, with a 3.82% loss. Other stocks finishing down three percent or more included JP Morgan Chase (3.00%), Traveler's (3.01%), Proctor and Gamble (3.16%), McDonald's (3.21%), Cisco Systems (3.31%), Chevron (3.40%) and Exxon Mobil (3.45%). The Dow's gain year-to-date is a now a mere 333 points, or less than two percent. There was nothing even approaching good news as third quarter reporting approaches.

The NASDAQ fared much better than the three percent decline it made on Wednesday, dropping less than 100 points, though that was hardly cause for optimism. Having reached a peak of 8102.04 on October 1, the index has shed some 673 points, putting it close to correction (-10%). NASDAQ shares are down a cumulative 8.3%.

On the S&P 500, the percentage decline was almost identical to that of the Dow, losing 57.31 points, down 2.06 percent. The losing streak of the S&P has now reached six straight days. It also closed at an all-time record of 2947.25 on October 1, but has since fallen 219 points, a 7.4% loss in just eight sessions.

Year-to-date, the S&P is up by only 55 points, a gain of just over two precent.

Stocks were also being sold off in droves on foreign exchanges. In Germany, the DAX continued its descent with a loss of 173.15, another 1.48% drop, sending it further into correction. Joining the DAX in the down 10 percent or more club was Britain's FTSE, losing 138.81 points (-1.94%). France's CAC 40 is teetering on the brink, down more than nine percent off recent highs.

On Pacific Rim exchanges, Japan's NIKKEI was down 3.89%, Hong Kong's Hang Seng lost 3.54%, but both were outdone by China, where the SSE Composite Index closed down 5.22%. China's stock market is the world's basket case, down a full 50% from its all-time high of 5,166.35 in June of 2015, the chart bearing a striking resemblance to the NASDAQ's dotcom bust of 2000. The SSE closed Thursday at 2,583.46.

What comes next for markets is anybody's guess. Analysts and economists range from complacency to panic and everything in between. The losses this week rival those from February of this year, when major US indices touched briefly into correction.

Bonds firmed on the day, with the 10-year note finishing with a yield of 3.13%. Oil was hit hard again, with WTI crude losing nearly three percent, closing just a shade under $71/barrel.

The only bright spots were in precious metals. Gold had its best day in months, gaining $34 to $1,227.70 per troy ounce. Silver followed along dutifully, picking up 28 cents per troy ounce, at $14.61.

Dow Jones Industrial Average October Scorecard:

Date Close Gain/Loss Cum. G/L
10/1/18 26,651.21 +192.90 +192.90
10/2/18 26,773.94 +122.73 +315.63
10/3/18 26,828.39 +54.45 +370.08
10/4/18 26,627.48 -200.91 +169.17
10/5/18 26,447.05 -180.43 -11.26
10/8/18 26,486.78 +39.73 +28.47
10/9/18 26,430.57 -56.21 -27.74
10/10/18 25,598.74 -831.83 -859.57
10/11/18 25,052.83 -545.91 -1405.48

At the Close, Thursday, October 11, 2018:
Dow Jones Industrial Average: 25,052.83, -545.91 (-2.13%)
NASDAQ: 7,329.06, -92.99 (-1.25%)
S&P 500: 2,728.37, -57.31 (-2.06%)
NYSE Composite: 12,349.53, -272.61 (-2.16%)

Monday, August 27, 2018

Dow Gains 259, NASDAQ, S&P Set New Record Highs

Since June 27, the NASDAQ has made a strong advance of 572 points, a nifty 7.68% return in two months.

The S&P 500 has tacked on 196 points over the same span, a 7.26% gain.

The Dow has galloped ahead 1933 points in the past two months, 8.02%, topping both index rivals and closed above 26,000 on Monday for the first time since February 1. Overall, investors are piling into stocks, unconvinced that the Fed's now-quarterly interest rate hikes will slow down US production in major industries. Income creation has been a duopoly since the Trump tax cuts became effective after the start of the year and stocks shook off the shocks of February and March.

With the Dow posting gains in six of the last eight sessions, the industrials have added nearly 900 points since August 16. With a three-day holiday dead ahead, the positive vibe may extend through Friday.

There is no other way around it. This rally is real, and has legs. The next FOMC meeting and widely anticipated 25 basis point rate hike is still a month off, on September 25-26.

Along with the NASDAQ and S&P closing at record highs on Monday, the Dow is a mere 600 points from its previous high from January 26 of 26,616.71.

Summertime... and the profits are easy.

Dow Jones Industrial Average August Scorecard:

Date Close Gain/Loss Cum. G/L
8/1/18 25,333.82 -81.37 -81.37
8/2/18 25,326.16 -7.66 -89.03
8/3/18 25,462.58 +136.42 +55.05
8/6/18 25,502.18 +39.60 +94.65
8/7/18 25,628.91 +126.73 +221.38
8/8/18 25,583.75 -45.16 +176.22
8/9/18 25,509.23 -74.52 +101.70
8/10/18 25,313.14 -196.09 -94.39
8/13/18 25,187.70 -125.44 -219.83
8/14/18 25,299.92 +112.22 -107.61
8/15/18 25,162.41 -137.51 -245.12
8/16/18 25,558.73 +396.32 +151.20
8/17/18 25,669.32 +110.59 +261.79
8/20/18 25,758.69 +89.37 +351.16
8/21/18 25,822.29 +63.60 +414.76
8/22/18 25,733.60 -88.69 +326.07
8/23/18 25,656.98 -76.62 +249.45
8/24/18 25,790.35 +133.37 +382.82
8/27/18 26,049.64 +259.29 +642.11

At the Close, Monday, August 27, 2018:
Dow Jones Industrial Average: 26,049.64, +259.29 (+1.01%)
NASDAQ: 8,017.90, +71.92 (+0.91%)
S&P 500: 2,896.74, +22.05 (+0.77%)
NYSE Composite: 13,102.03, +102.59 (+0.79%)

Friday, August 24, 2018

Stocks Take A Break, All Major Indices In Red

The S&P just set a record as the longest bull market in US history, the Dow has been on a tear and the Dow Transportation Index just set a new all-time high two days ago, so, it's perfectly natural for stocks to take a breather here.

It is, after all, the 23rd of August, the proverbial dog days of summer. Plenty of people needed to take a break, look things over, calm down, have another mai tai by the pool and relax. Markets have been running at breakneck speed thanks to the Trump hate, tariffs, emerging market slide, Turkey's currency crisis, Italy's break away government, et. al.

Thursday's trading differed from previous session in that all four of the major indices finished lower. Lately, the pattern has been for split markets, with the Dow and NASDAQ moving in opposite directions. Though the losses were not significant, the fact that the direction was similar may signal something more ominous.

Of course, the way markets have been consistently, over time, moving to higher ground, going short here would seem to be a rather risky proposition.

Dow Jones Industrial Average August Scorecard:

Date Close Gain/Loss Cum. G/L
8/1/18 25,333.82 -81.37 -81.37
8/2/18 25,326.16 -7.66 -89.03
8/3/18 25,462.58 +136.42 +55.05
8/6/18 25,502.18 +39.60 +94.65
8/7/18 25,628.91 +126.73 +221.38
8/8/18 25,583.75 -45.16 +176.22
8/9/18 25,509.23 -74.52 +101.70
8/10/18 25,313.14 -196.09 -94.39
8/13/18 25,187.70 -125.44 -219.83
8/14/18 25,299.92 +112.22 -107.61
8/15/18 25,162.41 -137.51 -245.12
8/16/18 25,558.73 +396.32 +151.20
8/17/18 25,669.32 +110.59 +261.79
8/20/18 25,758.69 +89.37 +351.16
8/21/18 25,822.29 +63.60 +414.76
8/22/18 25,733.60 -88.69 +326.07
8/22/18 25,656.98 -76.62 +249.45

At the Close, Thursday, August 23, 2018:
Dow Jones Industrial Average: 25,656.98, -76.62 (-0.30%)
NASDAQ: 7,878.46, -10.64 (-0.13%)
S&P 500: 2,856.98, -4.84 (-0.17%)
NYSE Composite: 12,933.46, -57.05 (-0.44%)

Wednesday, August 22, 2018

Of The Long Bull Run And The Short Bear

Today, the S&P 500 set a new mark as the longest bull run in stock market history, surpassing the bull market record that ran from October 1990 to March 2000.

On Wednesday, the bull market that began on April 8, 2009, reached 3,453 days. The nearly 9 1/2 year run without a decline of 20% has seen the S&P rise from its low of 815.55 on April 7, 2009, to yesterday's closing high of 2,862.96, a gain of 2047.41, an average annual return of 26.4%. It's been quite a decade for Wall Street after the financial crisis had put the world on edge.

Unlike anything seen before, excepting possibly the expansion during the 1990s dotcom boom, investors have been showered with profits from virtually all sectors. There is no denying that the bull market of the 20-teens will go down in economic history as one of the more bizarre experiences ever, fueled by unlimited free-spending by central banks in global coordination, slashing interest rates at times, in some countries, to negative yields.

Adding to the hyper activity in the markets were stock buybacks by nearly every major corporation, financed by ultra-low interest rates. Buybacks reduced the number of shares outstanding, thus boosting earnings-per-share calculations beyond normal ranges.

While many still argue that this bull market was mostly smoke and mirrors, enhanced by the Federal Reserve and of benefit to only the richest one percent of the population, anybody who invested during this period made money. That's an undeniable fact that serves to silence even the grizzliest of bears.

Shortest Bear Market?

Adherents to Dow Theory (Money Daily being of that disposition) saw the end of the bull market earlier this year, when the Dow dropped precipitously from its January 26 all-time high close of 26,616.71 to 23,533.20 on March 23. The primary trend change (bull to bear) was confirmed when the Transportation Index closed on 10,119.36 on April 9. Since then, the Dow has come back, though it has not surpassed its previous high, which would signal another primary trend change from bear to bull. However, yesterday, August 21, the Transports set a new record closing high, finishing the session at 11,436.36 and well beyond its previous record close of 11,373.38, reached on January 12, 2018.

While the Transports have been leading (without much notice) the charge to new highs, it will take another spurt higher of nearly 900 by the Dow Industrials to surpass its own all-time high. If that scenario develops, the Dow will confirm the trend change that the Transportation Index has suggested. According to Dow Theory, the two have to react in tandem, confirming the primary trend direction.

The Dow demands close scrutiny in the weeks and possibly months ahead, because, despite the larger universe of pundits and analysts celebrating the longest bull run ever, until the Dow Jones Industrial Average closes above 26,616.71, theoretically, this is still a bear market and the recent activity since late March of this year has been nothing but speculation and noise.

For all the hoopla over the bull market record, today's action was noticeably subdued. Of the four major indices, only the NASDAQ returned a winner, as investors waded back into the tech-soaked speculative morass.

Dow Jones Industrial Average August Scorecard:

Date Close Gain/Loss Cum. G/L
8/1/18 25,333.82 -81.37 -81.37
8/2/18 25,326.16 -7.66 -89.03
8/3/18 25,462.58 +136.42 +55.05
8/6/18 25,502.18 +39.60 +94.65
8/7/18 25,628.91 +126.73 +221.38
8/8/18 25,583.75 -45.16 +176.22
8/9/18 25,509.23 -74.52 +101.70
8/10/18 25,313.14 -196.09 -94.39
8/13/18 25,187.70 -125.44 -219.83
8/14/18 25,299.92 +112.22 -107.61
8/15/18 25,162.41 -137.51 -245.12
8/16/18 25,558.73 +396.32 +151.20
8/17/18 25,669.32 +110.59 +261.79
8/20/18 25,758.69 +89.37 +351.16
8/21/18 25,822.29 +63.60 +414.76
8/22/18 25,733.60 -88.69 +326.07

At the Close, Wednesday, August 22, 2018:
Dow Jones Industrial Average: 25,733.60, -88.69 (-0.34%)
NASDAQ: 7,889.10, +29.92 (+0.38%)
S&P 500: 2,861.82, -1.14 (-0.04%)
NYSE Composite: 12,992.05, -4.71 (-0.04%)

Tuesday, August 21, 2018

Stocks Continue Rally, S&P 500 Reaches New All-Time High

There was cause for celebration on Wall Street and around America on Tuesday as the S&P 500 reached a new all-time record close, gaining 5.91 to finish the day at 2,862.96, four-and-a-half points beyond the previous high set just two weeks ago, on August 7th.

While the S&P and NASDAQ have surged to new records after the February correction, the Dow is still 800 points shy of its all-time mark, though, with the economy booming, there's little to no apprehension among investors. The widespread belief is that the Dow will push forward, despite the warnings from Dow Theorists who insist a bear market on the Dow Jones Industrial Average had commenced earlier in the year. Clearly, recent data disputes the veracity of any argument made by the venerable Dow Theory.

On Wednesday, stock pickers will be in a celebratory mood once again, marking the longest bull run in US market history, surpassing the dotcom run from 1990 to 2000. According to this LA Times story there is some disagreement, but there are few who argue that this bull run has been outstanding, starting on April 9, 2009, without as much as a 15% decline throughout the duration of the run.

Tomorrow it is, then. Another record.

Dow Jones Industrial Average August Scorecard:

Date Close Gain/Loss Cum. G/L
8/1/18 25,333.82 -81.37 -81.37
8/2/18 25,326.16 -7.66 -89.03
8/3/18 25,462.58 +136.42 +55.05
8/6/18 25,502.18 +39.60 +94.65
8/7/18 25,628.91 +126.73 +221.38
8/8/18 25,583.75 -45.16 +176.22
8/9/18 25,509.23 -74.52 +101.70
8/10/18 25,313.14 -196.09 -94.39
8/13/18 25,187.70 -125.44 -219.83
8/14/18 25,299.92 +112.22 -107.61
8/15/18 25,162.41 -137.51 -245.12
8/16/18 25,558.73 +396.32 +151.20
8/17/18 25,669.32 +110.59 +261.79
8/20/18 25,758.69 +89.37 +351.16
8/21/18 25,822.29 +63.60 +414.76

At the Close, Tuesday, August 21, 2018:
Dow Jones Industrial Average: 25,822.29, +63.60 (+0.25%)
NASDAQ: 7,859.17, +38.17 (+0.49%)
S&P 500: 2,862.96, +5.91 (+0.21%)
NYSE Composite: 12,996.76, +31.66 (+0.24%)

Dow Reaches Higher, S&P Closing In On Record As Bull Market Extends

Same song, different day.

The Dow led the major indices higher on Monday, while the NASDAQ languished near the unchanged mark most of the session, finishing with a small gain. Meanwhile, the S&P 500 improved to within a point of its all-time closing high. The previous record was 2,858.45 on August 7.

Despite the ongoing, beneath-the-surface currency crisis in Turkey and a full-blow economic collapse in Venezuela, the high rollers on Wall Street seem to have little sympathy as the Dow now stands at its high-water mark since February 25th.

According to most metrics, the US economy is cruising right along, with low unemployment and only slight hints of inflation. America's prosperity may be coming at the expense of the emerging nations of the world, though that's not a concern for those seeking gains in equity markets.

The Dow Industrials are less than 1000 points from the January 26 all-time high of 26,616.71 and the general markets are one day from becoming the longest bull market in US history.

Dow Jones Industrial Average August Scorecard:

Date Close Gain/Loss Cum. G/L
8/1/18 25,333.82 -81.37 -81.37
8/2/18 25,326.16 -7.66 -89.03
8/3/18 25,462.58 +136.42 +55.05
8/6/18 25,502.18 +39.60 +94.65
8/7/18 25,628.91 +126.73 +221.38
8/8/18 25,583.75 -45.16 +176.22
8/9/18 25,509.23 -74.52 +101.70
8/10/18 25,313.14 -196.09 -94.39
8/13/18 25,187.70 -125.44 -219.83
8/14/18 25,299.92 +112.22 -107.61
8/15/18 25,162.41 -137.51 -245.12
8/16/18 25,558.73 +396.32 +151.20
8/17/18 25,669.32 +110.59 +261.79
8/20/18 25,758.69 +89.37 +351.16

At the Close, Monday, August 20, 2018:
Dow Jones Industrial Average: 25,758.69, +89.37 (+0.35%)
NASDAQ: 7,821.01, +4.68 (+0.06%)
S&P 500: 2,857.05, +6.92 (+0.24%)
NYSE Composite: 12,965.10, +56.83 (+0.44%)

Monday, November 27, 2017

Black Friday Delivers; Wall Street Reaction Upcoming

Apparently, Black Friday 2017 was a mammoth hit, resulting in reported record consumer spending and a record day for firearms background checks.

According to Reuters:
U.S. retailers raked in a record $7.9 billion in online sales on Black Friday and Thanksgiving, up 17.9 percent from a year ago, according to Adobe Analytics, which measures transactions at the largest 100 U.S. web retailers, on Saturday.

Wall Street, which closed early on Friday, didn't have the news in hand, it being too early for reaction, but closed modestly higher in the shortened session.

Monday is shaping up as a volatile day, with plenty of crosswinds from the political front and economic data from China and Europe whipsawing futures prior to the opening bell in New York.

For the week as a whole, stocks put in a stellar performance. The NASDAQ and S&P 500 each closed at record highs on Friday.

At the Close, Friday, November 24, 2017:
Dow: 23,557.99, +31.81 (+0.14%)
NASDAQ: 6,889.16, +21.7988 (+0.3174%)
S&P 500: 2,602.42, +5.34 (+0.21%)
NYSE Composite: 12,421.93, +31.10 (+0.25%)

For the Week:
Dow: +199.75 (+0.86%)
NASDAQ: +106.37 (+1.57%)
S&P 500: +23.57 (+0.91%)
NYSE Composite: +119.04 (+0.97%)

Wednesday, September 13, 2017

Stocks on Track for Awesome 3rd Quarter Returns

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

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

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

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

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

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

Happy returns!

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