Showing posts with label WTI. Show all posts
Showing posts with label WTI. Show all posts

Tuesday, November 13, 2018

Dow Down 100, NASDAQ Up 0.01; Crude Oil the Culprit

From the You Can't Make This Stuff Up Department:

The Dow was down 100 points (and 69 cents, but who's counting), while the NASDAQ finished a hectic day of trading with a gain of 0.01. All told, this was a losing session, as both the S&P 500 and NYSE Composite ended the day underwater.

One might have assumed that Tuesday's losses were an extension from Monday, with Apple leading stocks lower, but, even though the Cupertino computer colossus did finish lower by an even one percent, the biggest losers on the Dow were energy companies ExxonMobil and Chevron, which bracketed Boeing (BA), a 2.11% loser. XOM lost 2.29%. CVX was down 1.74%.

Volatility in stocks is making everybody crazy. The Dow was up 1075 points over the first six sessions in November, but has given back 905 in the past three sessions, leaving it up a mere 170 points for the month, one which traditionally is among the best for long players.

Thus, the answer to the question of what moved markets today is simple: the price of oil, as WTI crude lost ground for the 12th straight day. At $55.19, it's at the lowest level since November last year. Tuesday's decline was also the largest during the recent rout, down nearly eight percent.

Saudi Arabia reduced its estimate for global demand from two million barrels per day to 1.29 million, sending the price sharply lower. Oil peaked on October 3rd, above $76/barrel, and has been on a diagonal course lower since, now officially in a bear market.

While the Saudi's may be fretting over demand and promising production cuts in the near future, the real villain in the oil patch is supply. There's been a glut of oil forever, and the only movement in price was due to artificial crises, forced production cuts, and pure speculation. In June of 2017, WTI crude oil was going for $46/barrel, but was bumped up continuously over the next 16 months before the recent setback. From all indications, reduced demand and oversupply could push prices down below $50/barrel before Thanksgiving and further declines might be a welcome Christmas present for drivers and those who heat their homes with oil.

A lower price for oil, and, consequently, for gasoline and other derivatives, should act to boost the general economy, allowing consumers more disposable income to spend on necessities and/or holiday splurges, all of which should be positive for markets. However, the math isn't quite so simple, as Americans, beset with record credit card and other debt, might tighten their collective belts and pay down some of those nasty, recurring, monthly bills on credit cards with interest rates well beyond what used to be considered usury.

For the pair traders out there, that would mean shorting oil stocks and financials while buying consumer staples and cyclicals.

Fun for everyone.

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

At the Close, Tuesday, November 13, 2018:
Dow Jones Industrial Average: 25,286.49, -100.69 (-0.40%)
NASDAQ: 7,200.88, +0.01 (0.00%)
S&P 500: 2,722.18, -4.04 (-0.15%)
NYSE Composite: 12,328.23, -15.28 (-0.12%)

Friday, October 19, 2018

Stocks Can't Gain Traction; Tech, Industrials Lead Broad Decline

Continuing the stock rout that began in earnest two weeks ago became deeper and more pronounced on Thursday as broad declines sent speculators scurrying for cover.

The Dow Jones Industrial Average recorded its fifth triple-digit loss of the month and its eighth losing session in 14 trading days this month. The index is down nearly 1500 points from the all-time high reached at the close on October 3rd (26.828.39). If this isn't the beginning of a serious correction or bear market, it certainly looks like one.

Only five of the 30 Dow stocks managed gains, led by Verizon (VZ, 54.65, +0.69, +1.28%). Exxon Mobil and Chevron were also among the few winners, despite another day of declines in oil futures, which slumped below $69/barrel for the first time in a month. Mirroring the decline in stocks, WTI crude futures peaked on October 3rd at 76.20, but it's been all downhill since.

Caterpillar (CAT) was the Dow's biggest loser, dragged down nearly four percent on poor results from industry peers. CAT is off nearly 15% since October 3rd.

The other major indices suffered more serious losses, with the NASDAQ leading the way down, losing 157 points, more than a two percent drop. Once again, tech stocks dominated those losing ground, with Netflix, Google, Apple, and Tesla all declining by more than two percent.

There seems to be no escaping the cascade of falling stocks in October, traditionally one of the most volatile months for equities. No sector is particularly a safe haven, though utility stocks have largely been spared, thanks to low alpha and steady dividends.

The Dow needs only to finish Friday with a loss of 39 points or better to avoid a fourth straight weekly decline. A solid close to the week would also allow the S&P and NASDAQ to close out the week with gains, thanks to Tuesday's melt-up advance. However, stocks in Europe are losing ground in early Friday trading.

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
10/12/18 25,339.99 +287.16 -1118.32
10/15/18 25,250.55 -89.44 -1207.76
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 -1078.86

At the Close, Thursday, October 18, 2018:
Dow Jones Industrial Average: 25,379.45, -327.23 (-1.27%)
NASDAQ: 7,485.14, -157.56 (-2.06%)
S&P 500: 2,768.78, -40.43 (-1.44%)
NYSE Composite: 12,445.48, -167.57 (-1.33%)

Sunday, June 24, 2018

Weekend Wrap: Dow Ends Losing Streak at 8, Week Was Rough For Stocks

In what could easily bee seen as a week of transition - either from fantasy to reality or speculation to fundamental investing - all of the major averages lost value, led by the Dow Industrials, which suffered its worst weekly loss (-2.03%) since mid-March.

Since the day before the Fed raised rates on June 13, the Dow had been in a free-fall, losing 860 points over a span of eight trading sessions, before receiving on Friday to post a somewhat insignificant, symbolic gain. It was almost as though the Dow Industrials were collectively saying, "we're OK, we're still here, don't worry," while all along the smart money was leaving in droves for either safety in bonds, higher yields in the risky NASDAQ, or the venerable hideout in the Hamptons for the summer. In some cases, all three avenues of escape were likely employed.

Not that any of them did anybody any good, as the NASDAQ took its first weekly spill in the past five and bonds vacillated around the unchanged mark for the week. The 10-year-note closed out the week at 2.90%, well below any expectations from the runaway inflation and "solid" economy promoted by the Federal Reserve. If inflation and the economy were truly getting away, bonds would surely reflect the condition, but they are instead contracting, with the yield curve continuing to point toward inversion, and, if not a complete recession within the next 6 months to two years, at least a slowdown or moderation.

Neither result would be particularly beneficial to the interests of the Fed, which has to try to keep a straight face while propagandizing the condition of the economy. Spreads on the 2s-30s contracted one basis point on the week, to 48; the 2s-10s dropped two basis points to 34, while the 5s-30s expanded from 25 to 27 basis points.

After last Friday's smackdown, precious metals saw little change over the course of the week, though silver (16.45) fared better than gold (1271.10). Persistent calls for a breakout among the prominent "bug" pundits have produced nothing but a series of short-term run-ups followed by timely price busts.

Oil was the place to be on Friday, when OPEC failed to announce expected production increases. On Saturday, however, with markets closed, OPEC and a number of oil-producing countries such as Russia, Mexico and Kazakhstan, agreed to share an increase of a million barrels per day.

How the increases would be shared was not immediately disclosed, but, the Saturday announcement is sure to snap back against the 3.74 (+5.71%) gain on Friday that pushed the price of WTI crude oil to $69.28 per barrel.

With summer officially arriving on Thursday (June 21), the pessimistic view of stocks could begin to prevail, as the adage of "sell in May" might more aptly be applied as "swoon in June."

The Dow slipped back to a point where it is more than 2000 points below the January high (26,616.71, January 26), and prospects going forward - as a drop-off in earnings is expected over the next three quarters - are not yet dire, though they may be characterized as "challenging."

A powerful (and very long) article on fiat money, gold, silver, and cryptocurrencies by former member of the US House of Representatives and candidate for president, Ron Paul, is on the Mises Institute website, here.

Dow Jones Industrial Average June Scorecard:

Date Close Gain/Loss Cum. G/L
6/1/18 24,635.21 +219.37 +219.37
6/4/18 24,813.69 +178.48 +397.85
6/5/18 24,799.98 -13.71 +384.14
6/6/18 25,146.39 +346.41 +730.55
6/7/18 25,241.41 +95.02 +825.57
6/8/18 25,316.53 +75.12 +900.69
6/11/18 25,322.31 +5.78 +906.47
6/12/18 25,320.73 -1.58 +904.89
6/13/18 25,201.20 -119.53 +785.36
6/14/18 25,175.31 -25.89 +759.47
6/15/18 25,090.48 -84.83 +674.64
6/18/18 24,987.47 -103.01 +571.63
6/19/18 24,700.21 -287.26 +284.37
6/20/18 24,657.80 -42.41 +241.96
6/21/18 24,461.70 -196.10 +45.86
6/22/18 24,580.89 +119.19 +165.05

At the Close, Friday, June 22, 2018:
Dow Jones Industrial Average: 24,580.89, +119.19 (+0.49%)
NASDAQ: 7,692.82, -20.14 (-0.26%)
S&P 500: 2,754.88, +5.12 (+0.19%)
NYSE Composite: 12,639.57, +79.34 (+0.63%)

For the Week:
Dow: -509.59 (-2.03%)
NASDAQ: -53.56 (-0.69%)
S&P 500: -24.78 (-0.89%)
NYSE Composite: -95.07 (-0.75%)

Thursday, February 25, 2016

Tickle Me Elmo Version Of Durable Goods Sends Stocks Soaring

Reactions to this morning's January Durable Goods report ran from the mildly surprised to grossly exuberant, with the most apropos metaphor being the one in which the stock market is Christmas, the traders are children (not far from the truth) and the report was a Tickle Me Elmo doll.

The doll was immediately unwrapped, hugged and unconditionally loved by all the kids, who seemed to wish that Christmas would never end, sending the major indices solidly higher and yields on bonds noticeably lower.

It was as though the year was hard, winter came early and any present would have sufficed to ease some of the woes, though this particular gift was simply perfection, wiping away the past six weeks of anguish and anger, tears, fears and jeers. Even oil gained 2 1/2%, finishing just over $33/bbl.

For the record, the rise in durable goods was 4.9%, the best move in 10 months.

According to a one-time reading of the stock market (today), there are no longer any issues regarding ultra-low interest rates, the slowdown in China (the SSE slipped by 6.41% overnight), chaos in Europe, or the ongoing wars in Syria and Ukraine.

We know this is untrue, but today's action would have one believe that a bull market was in full gear, GDP was booming at 5% and peace had broken out around the globe. Such are the vicissitudes in a market driven solely by headlines and not by fundamentals, because, in reality, the problems have not been resolved - not the ones from last week, last month, last year, or even from 2008. The issues remain, as do the fast-buck artists populating the trading stations and computer terminals of the markets.

Tomorrow should prove more prescient, with the second estimate of 2015 4th quarter GDP hitting the wires at 8:30 am, a good hour prior to ringing the opening bell.

But today was an undoubted victory for the bulls. Let them celebrate tonight and face the music as time presses forward. The Gold Bugs and Silver Eagles continue to be constrained, shackled, handcuffed, quarantined.

Best quote of the day: "Nobody will see it coming." They usually don't.

Tickle These, Elmo:
S&P 500: 1,951.70, +21.90 (1.13%)
Dow: 16,697.29, +212.30 (1.29%)
NASDAQ: 4,582.21, +39.60 (0.87%)

Crude Oil 33.06 +2.83% Gold 1,235.30 -0.31% EUR/USD 1.1028 +0.09% 10-Yr Bond 1.6970 -2.58% Corn 360.25 -1.17% Copper 2.08 -0.86% Silver 15.15 -0.93% Natural Gas 1.79 -2.56% Russell 2000 1,031.58 +0.93% VIX 19.11 -7.77% BATS 1000 20,677.17 0.00% GBP/USD 1.3964 +0.22% USD/JPY 112.8855

Tuesday, February 9, 2016

Stocks Finish Flat, But Internals Signal Something Is Seriously Wrong

US Stocks closed today marginally on the downside, though appearances can be deceiving, as there was outright catastrophe in Japan which spilled over into worried European markets.

With Chinese markets (including the SSE and Hang Seng) the Nikkei took a magnificent beating on Tuesday, losing 918 points, a 5.40% loss on the day, sending the main index of Japan further into bear market territory. Perhaps even more significant, the JCB 10-year note yield fell to a negative number, under ZERO, for the first time in history. This marks Japan and Switzerland as the only countries in the world with negative yields out to ten years, though other countries are rapidly approaching that benchmark, in particular, Germany.

European bourses all finished their session with losses of one percent or more, and, at the open in the US, the situation appeared dire, with Dow futures down more than 150 points. Stocks quickly gained traction, turned positive near midday, flirted with the unchanged line throughout the session until finally giving it up late in the day.

But, the story is not the minor loss the major indices took, but the skew of all manner of metrics toward the negative. Bond yields continued to collapse, with the ten-year down to 1.71%. The spread between the ten and two-year note compressed down to 1.04, something of a danger zone, as the two-year actually rose two bits, to yield 0.67%.

Bank stocks were unhappy spots, with Bank of America (BAC) closing at 12.20, a new 52-week and multi-year low.

Advancers were also far behind declining stocks by a margin of more than 2-to-1. Also of note, the number of new lows (NASDAQ and NYSE combined) dwarfed new highs, 812-70, with only six of those new highs on the Naz. The central planners at the central banks can pin their hats on the day as they successfully halted the manic rallies in silver and gold, for a day, anyway.

Additionally, oil was sent back well below the $30 mark, finishing in New York at $28.38 a barrel.

The VIX is also signaling more turbulence, hanging steadily in the mid-20s range.

The rout in stocks, however, like the gains for the metals, is far from over. Consensus view on Wall Street is still concerned, but not yet panicked. Stocks are still about 5-7% away from official bear market territory, though a few bad days could send the indices reeling in the wrong direction.

In a story by Bernard Condon (AP) about how much money companies have lost doing stock buybacks, we find that the stock buybacks which goosed the market and individual stocks higher over the past six to seven years has been nothing short of a colossal flop and threatens to become an even heavier weight stopped to the stock market.

What stock buybacks did accomplish was to allow executives to boost their companies' earnings without devoting capital to expansion, while at the same time justifying their extraordinary salaries and cashing out their outrageous stock options and/or bonuses.

Investors should be outraged, and righteously so, because these companies should have been either expanding their capital base or market share or distributing dividends to their shareholders. What these stock buyback kings have done is nothing short of a fiduciary failure, which in other industries would be cause for criminal indictments.

Of course, since this all occurred within the cozy regulatory environment that is Wall Street, nothing even close to that will happen. The executives who personally profited from corporate paper profits will walk away with their cash after hollowing out scores of once-healthy companies. It may turn out to be good overall, if a few of the giant multi-nationals like Wal-Mart, Yum Brands and ExxonMobil get cut down to more reasonable sizes and markets open up for more nimble - and honest - competitors.

Tuesday's Cracker-jack pot:
S&P 500: 1,852.21, -1.23 (0.07%)
Dow: 16,014.38, -12.67 (0.08%)
NASDAQ: 4,268.76, -14.99 (0.35%)

Crude Oil 28.38 -4.41% Gold 1,189.20 -0.73% EUR/USD 1.1294 +0.86% 10-Yr Bond 1.7290 -0.35% Corn 360.50 -0.48% Copper 2.04 -2.61% Silver 15.23 -1.30% Natural Gas 2.10 -2.01% Russell 2000 964.17 -0.53% VIX 26.71 +2.73% BATS 1000 20,030.11 -0.07% GBP/USD 1.4468 +0.29% USD/JPY 115.0020 -0.51%

Monday, December 28, 2015

Santa Takes a Little Off the Top

Stocks fell today, first hard, then made a daylong comeback to close near the unchanged mark.

It was rather a random day in the world of high finance. Ten-year and 30-year treasuries each closed off a pip, 2.21 and 2.93, respectively, while the 2-year note budged upward from 0.97 to 0.98, tightening and flattening the spread. It wasn't a monumental move, but noticeable to anyone paying attention. The market didn't really appreciate the boost in the fed funds rate and the displeasure is being voiced by various, subtle means, like the desperation in high yields, and the shut-off of the banking spigot that funded stock buybacks for most of the last five years.

It's probably better, right now, to keep a close eye on the bond market. It may turn out to be the place for volatility and profit in 2016, especially if the Federal Reserve follows through on their plans for three or four more rate hikes by this time next year. That is an unlikely event, though "normalization" is what the Fed continues to say they are aiming for, though a truly normal economy won't likely materialize for three or four more years, if they're lucky.

To have a 10-year treasury yielding 4-5% would be quite an accomplishment by 2019 or 2020, considering all the damage already done by over a decade of fed fund rates at one percent or lower.

Equity markets were decidedly dull, as there are few trades to be made of any importance this late in the game, though the markets are still well below all-time highs reached in May, especially the broad gauge of the S&P, which cannot seem to get out of its own way.

Today was mostly gibberish, as will likely be the case the remainder of the week, and the year. It's hard to draw any conclusions from the last week's trading in a calendar year. The first week of January will be much more insightful.

WTI crude was slapped back down from last week's euphoric and ridiculous closing level, finishing the day at 36.72/barrel. Anyone calling a bottom around here just hasn't considered the slack in the economy and the production glut facing producers. It's a huge problem, but nobody wants to cut production, even at these lower prices, constituting a possible new normal.

S&P 500, 2,056.50, -4.49 (0.22%)
Dow, 17,528.27, -23.90 (0.14%)
NASDAQ, 5,040.99, -7.51 (0.15%)

Monday, December 14, 2015

Is a Global Recession Just Ahead, or, A Global Depression?

Gas prices at the pump haven't been this low since 2009, though the prices back then maintained for a very brief time, as oil plummeted during the financial crisis (remember that?), but quickly rebounded as the Fed and other central banks added extreme amounts of liquidity to markets globally and before long, crude oil was back in the $90-100/barrel range.

Last year, the price of a barrel of crude - both Brent and WTI - began a precipitous decline, cutting in half the traded price. As 2014 turned to 2015 and many culprits were blamed (Saudi Arabia, US frackers, Russia(?), the price continued to hover in the $45-65 range. By late summer, all bets were off as the price of a barrel of crude fell into the low-$40 range, and then this month declined into the 30s.

While gas at $2/gallon and lower is a boon for drivers, especially in the US, where commuters and businesses were burdened with gas above $3.00 and sometimes over $4/gallon for years, it's not such a great deal for oil producers, especially the aforementioned frackers, whose marginal profitable price per barrel was estimated at somewhere between $45 and $75 per barrel.

Plenty of rigs have gone idle, but debt has to be serviced, and most of these drillers are on the hook for millions, borrowed from banks when the getting was good, now having to pay back the costs of exploration, drilling and extraction while operating at a loss.

The oil patch is just one element of the global liquidity crunch which may be about to enter a new, more dangerous phase, when, in two days time, the FOMC of the Federal Reserve is supposed to raise the federal funds rate for the first time in more than seven years.

The Fed plans to set the rate at 0.25% for money banks can borrow from the Fed, and, while that may not sound like a big deal to most, it certainly is to banks and corporations, which have been borrowing and spending at record paces since mid-2009.

With the FOMC rate policy decision now less than 48 hours away, there's a growing nervousness on Wall Street over this unprecedented move by the Fed. It's unprecedented because there's a vast amount of evidence that the bubble the Fed has blown is about to be not only pricked, but popped and blown wide open. Simply put, the party is about to end, and the drunks on the dance floor will be looking for a ride home, but nobody will be available for a safe trip, because not just the investment and corporate community, but the Fed itself, is staggering and woozy.

It may be a big, bad boogey man, like the 2000 scare, or the Mayan calendar, or those pesky asteroids which dare to come within 100,000 miles of dear planet earth. Or, it could be the real thing.

Nothing lasts forever, and, from the looks of the bond, commodity, and emerging markets, the long "recovery" and stock market rally seems to have run out of steam. Global trade is down, global GDP keeps being revised lower, US manufacturing is fading, China is becoming a basket case. It all points to reduced growth, or, in proper recession terms, negative growth.

If you're in the market, there's still a day and a half to get out, and probably more, if you can handle small losses. If you're not in the market, but still have to drive, eat, and breath, good news. In recessions and, especially, depressions, everything (except debt) is cheaper.

Hedge, buy, or sell accordingly.


Tuesday, November 5, 2013

Stocks Split in Sloppy Session; Bond Yields Rising, Oil Sliding

Stocks slid at the opening bell, with the Dow down by as many as 117 points in the first half hour of trading, but quickly reversed direction at 10:00 am EST and continued a slow but steady gain the rest of the day.

Apparently, what turned stocks around was the October ISM Services reading, which came in at a solid 55.4, a full pint better than last month's data and a huge beat to the expected 54.0.

While questions concerning the veracity of these kinds of reports after the unusually-strong Chicago PMI data a week ago continue to swirl around, the beat on services - which is now the main production engine of the US, since we've hollowed out our manufacturing core and mostly export inflation - was enough for the Wall Street crowd to lift stocks off their lows.

That they were able to keep buying interest maintained for the remainder of the session was likely due to the usual POMO injection by the Fed, allowing for rampant speculation and unusually-high leverage.

While stocks were seeing the light of day - though the NASDAQ never quite made it into positive territory, bonds were getting slammed, up six bips in yield by the end of the day, as the gains following the end of the government shutdown are gradually being eroded. The closing level of 2.66% on the 10-year note was the highest in two-and-a-half weeks.

The big story happens to be in oil, which continues its retreat from $110/barrel highs just two months ago. Another $5.00 drop in the price of WTI will put oil into a bear market, a condition nobody has considered. While low oil prices relate positively to gas at the pump and is a boost for the economy, releasing more purchasing power, the underlying causes may be more nefarious and significant.

There is, at last, a supply-demand condition that is positive for the US, as more and more oil is being produced in North America, at the same time that demand is dwindling, or rather, has been dwindling for the past three to four years. Americans have tightened their collective belts and are much more careful about their driving habits these days, as lowered incomes have left less for transportation expenses. High unemployment also pays a part, as fewer people are driving to work five or six days a week.

So, while a period of lower gas prices is cause for celebration, the party may not be of the epic variety, with fewer participants and an overhang of disappointing economic circumstances.

Key numbers to watch tomorrow will be the MBA Mortgage Index (7:00 am), September Leading Indicators (10:00 am) and crude inventories (10:30 am).

Dow 15,618.22, -20.90 (0.13%)
Nasdaq 3,939.86, +3.27 (0.08%)
S&P 500 1,762.97, -4.96 (0.28%)
10-Yr Bond 2.66%, +0.06
NYSE Volume 3,485,473,500
Nasdaq Volume 1,899,388,750
Combined NYSE & NASDAQ Advance - Decline: 2064-3571
Combined NYSE & NASDAQ New highs - New lows: 248-74
WTI crude oil: 93.37, -1.25
Gold: 1,308.10, -6.60
Silver: 21.64, 0.064
Corn: 425.00, -1.25

Friday, July 12, 2013

Boffo Week for Stocks; Gas Prices on the Rise

For investors, a week nearly devoid of any actionable news resulted in one of the best weekly gains in stocks of the year.

On the week, stocks roared higher, much of the gains based on Fed Chairman Ben Bernanke's dovish comments on unemployment and the economy following the close of trading on Wednesday. Fed governor James Bullard - the most dovish of the flock of doves comprising the Fed governors - chimed in late Friday to add more fuel to the hot money rally.

The weekly gains:
Dow: +328.46 (2.17%)
S&P 500: +48.30 (2.96%)
NASDAQ: +120.70 (3.47%)

That's it in a nutshell. Just remember that nothing matters except the words coming out of Fed members' mouths.

On the downside, oil prices have spiked higher, consequently raising the price of fuel at the pump. According to AAA, gas prices nationally rose an average of 7 1/2 cents this week to $3.550 for unleaded regular, but the price pass-along to stations has only just begun. Drivers should brace for gas at $3.80 to over $4.00, depending on location, long before Labor Day.

Dow 15,464.30, +3.38(0.02%)
NASDAQ 3,600.08, +21.78(0.61%)
S&P 500 1,680.19, +5.17(0.31%)
NYSE Composite 9,493.20, -0.06 (0.00%)
NASDAQ Volume 1,487,364,375
NYSE Volume 3,132,032,500
Combined NYSE & NASDAQ Advance - Decline: 3295-3092
Combined NYSE & NASDAQ New highs - New lows: 543-27
WTI crude oil: 105.95, +1.04
Gold: 1,277.60, -2.30
Silver: 19.79, -0.164

Wednesday, June 12, 2013

Stocks Erase Early Gains; Dow Down Three Straight for First Time in 2013

Equities took another shot to the ribs on Tuesday as bears took control of the trading.

After an initial gain of 119 points on the Dow, sentiment turned radically negative for really no apparent reason, as selling into strength became the preferred strategy after months of buying dips.

The Dow posted its first three-day losing streak of 2013, with the other major averages following suit. Today's closing numbers put the S&P and the Dow dangerously close to their 50-day moving averages: 1610 for the S&P; 14970 on the Dow, and, any troubling signs from Thursday's initial unemployment claims could shoot the averages right through support and into a proverbial no-man's land.

Trading volume was rather tepid, but losers outnumbered gainers again, by a roughly 3:1 margin. The major indices now have entered an area that is decisively below the midpoint between recent highs and lows, trending lower, as has been the mantra for most of the month of June.

The dark lining inside the silver cloud came in the form of WTI crude oil prices, which hit a three-week high.

Bias remains bearish short-term, as new lows outpaced new highs for the second straight session and are deteriorating.

Where this goes from here is anyone's guess, though most are placing their wagers toward continued weakness in stocks as interest rates bumped up slightly again today, the 10-year closing at 2.23%, but that's what makes gambling investing so interesting.

Dow 14,995.23, -126.79 (0.84%)
NASDAQ 3,400.43, -36.52 (1.06%)
S&P 500 1,612.52, -13.61 (0.84%)
NYSE Composite 9,189.42, -66.06 (0.71%)
NASDAQ Volume 1,501,521,500
NYSE Volume 3,677,878,750
Combined NYSE & NASDAQ Advance - Decline: 1675-4828
Combined NYSE & NASDAQ New highs - New lows: 129-428
WTI crude oil: 95.88, +0.50
Gold: 1,392.00, +15.00
Silver: 21.80, +0.15

Wednesday, May 1, 2013

'Sell in May' the Mantra for Almost All Asset Classes

The first day of may held true to the tried and true market adage, "sell in May and stay away," as all asset classes declined, though commodity prices were hardest hit and forex barely budged.

Stocks took it on the chin from traders who continue to see horror in economic data, today's fright fest courtesy of the ADP Employment Index, construction spending and the ISM Index.

ADP said the economy missed its target of 150,000 new jobs by a wide amount, coming in at 119,000 for April and revised March lower as well. Construction spending shrank by 1.7% on expectations of a 0.4% increase, and the ISM reading, though nearly in line with expectations, registered a relatively weak 50.7, just barely above the 50 mark which signals growth above the number or decline below it.

It was likely the ADP figure that sent stocks careening at the open, but it wasn't until after the FOMC announcement at 2:00 pm EDT that stocks really began to slump deeply, finishing near the lows of the day after the Fed said they would keeps rates as they were, to the surprise of absolutely nobody. Daily volume was moderate.

The Vix spiked above 14.50, a signal that risk was being sold off, though still mired in a low range. Gold, silver and oil all surpassed the losses in stocks, with crude take=ing the biggest dive. WTI and Brent continue to converge; the expectation is that they will align at some point so that there is a global price for oil. Currently, futures are less than $10 apart, with Brent the higher of the two, falling below $100 per barrel as Europe's recession/depression begins to reach epic proportions.

As for gold and silver, the paper prices posted don't really seem to matter any more, as the price for physical metal has departed company from the spot price in nearly every venue in every country on the planet. People are aware of currency debasement and are seeking ways to preserve what little wealth remains in this era of extreme punishment for savers.

Treasuries have fallen below the recent plateau levels and continue to point up weakness in the economy and the need for some to flee to safe havens. As inflation remains subdued - using a Fedspeak term - bond holders are not losing much over time, though durations shorter than five years are yielding almost nothing. The benchmark ten-year was last seen around 1.63% yield.

The first day of the new month brought out the bears, though it remains to be seen whether this is the beginning of a trend or just a one-trick pony. The government's non-farm payroll data, due out Friday prior to the opening, should be the highlight of the week. Anticipation is for 155,000 new jobs created in April, but, after ADP's disappointing numbers this morning, prospects appear dim.

Dow 14,700.95, -138.85 (0.94%)
NASDAQ 3,299.13, -29.66 (0.89%)
S&P 500 1,582.70, -14.87 (0.93%)
NYSE Composite 9,174.76, -102.12 (1.10%)
NASDAQ Volume 1,769,443,125
NYSE Volume 3,697,257,75o
Combined NYSE & NASDAQ Advance - Decline: 1665-4789
Combined NYSE & NASDAQ New highs - New lows: 377-53
WTI crude oil: 91.03, -2.43
Gold: 1,446.20, -25.90
Silver: 23.34, -0.842

Wednesday, October 3, 2012

Like Emotions, Stocks Run the Full Gamut

There's good karma and bad karma, and there seems to be no shortage of either on Wall Street lately.

The best advice concerning the essence of bad karma is to quickly depart, a dictum taken to heart by investors with losing positions, of which there are currently some, though not an overwhelming number.

While the averages have done little of late to inspire either the bulls or the bears, individual stocks have been doing cartwheels and flips, like Kraft did today in a singular reprise of the flash crash (though to the upside), or like Hewlett-Packard to the downside.

Through it all, it's an emotional game played over emotionless bits of data and what used to be paper certificates. While it may be profitable to some, only those willing and able to suffer long periods of fallow may eventually come away with significant gains. Stocks, even though many Americans unwittingly own them through 401k or other investment vehicles, are a risky lot, not for the feint of heart.

Today's action was choppy, mostly positive, but moreso in the morning than in the afternoon, when the Dow slipped briefly into negative territory and the S&P, NASDAQ and NYSE Composite hit the lows of the day. As usual, low volume was prevalent, economic data uninspiring and stocks rebounded in the final hour.

It's like waiting for a hammer or second shoe to drop, the endless ticking, the tickling teases, the unending speculation running through the mind. What if? What, then?

The best news to millions of motorists was today's precipitous drop in the price of oil, which was surely bad news for certain speculators.

As in sports, or love, or simple competition, there are winners and there are losers. Unlike Nature, which makes choices based on long-standing natural dictums, the rules of stocks are man-made, and subject to frequent reconsideration, recalculation and remorse.

Nature gives to all, takes from one and gives to another. It's a zero-sum game through the pantheon of ages. Stocks are different. One must buy into risk and losses and gains go to those in the right positions.

Most of us, in our heart of hearts, would probably choose nature over stocks, but we're either too dumb, numb or indoctrinated to make such a wise, but simple choice.

Perhaps in another time, a different place, the crush of humanity would make the wise choice. For now, we have what we have, and it is not very pleasing.

Finally, for those having trouble finding full range of human emotions in these hectic, helter-skelter times, or just suffering an overload of the negative ones, this classic from Nat King Cole:

Dow 13,494.61, +12.25 (0.09%)
NASDAQ 3,135.23, +15.19 (0.49%)
S&P 500 1,450.99, +5.24 (0.36%)
NYSE Composite 8,297.50, +2.39 (0.03%)
NASDAQ Volume 1,683,303,875
NYSE Volume 3,486,346,750
Combined NYSE & NASDAQ Advance - Decline: 2643-2824
Combined NYSE & NASDAQ New highs - New lows: 246-46
WTI crude oil: 88.14, -3.75
Gold: 1,779.80, +4.20
Silver: 34.69, +0.021

Thursday, March 1, 2012

Metals, Stocks Rebound; Oil Continues Relentless Rise

After a one-day hiatus from the usual upward trend, stocks, and especially gold and silver rebounded in the midst of the liquidity-fueled rally, though the move in the metals - especially silver - was stronger than the one in equities.

Keeping the lid on stocks somewhat throughout the session were lingering fears of an oil price shock, as WTI crude rose again, mostly on nothing but idle speculation over the situation in Iran, which is largely unfounded and without credibility as the closure of the Strait of Hormuz by the Iranians would be tantamount to economic suicide since they also use the strait to ship their oil produce.

Nonetheless, oil was up almost $2.00 on floor trading and wholesale gas prices rose by another nine cents, a cost which will almost all be passed along to the (un)happy motorists.

The national average for unleaded regular stood at $3.78/gallon according to AAA, with the highest price on the mainland being found in California ($4.33) and the lowest in Wyoming, at $3.17. The states of Oregon, Washington, New York and Illinois are closing in on the $4.00 mark, despite national consumption having dropped to historic low levels over the past six months.

Also putting a damper on investor enthusiasm was today's big miss on the ISM Index, which came in at 52.4 for February, after a reading of 54.1 in January and expectations for 54.7, though that was tempered with another solid reading on initial unemployment claims, which again came in at 351K. Last week's 351K was revised upward to 353K.

Even though gold didn't even come close to recovering the losses from Wednesday, it is still above its trend line and the price of silver moved back above what everyone believes to be key support/resistance at $35.50.

With little on the calendar for Friday, traders will be looking for any kind of catalyst. Perhaps our friends across the pond in Europe will provide some theatrics. They've been eerily quiet for almost two full days... seems like an eternity.

Dow 12,980.30, +28.23 (0.22%)
NASDAQ 2,988.97, +22.08 (0.74%)
S&P 500 1,374.09, +8.41 (0.62%)
NYSE Composite 8,175.20, +61.95 (0.76%)
NASDAQ Volume 1,887,835,875
NYSE Volume 3,910,319,750
Combined NYSE & NASDAQ Advance - Decline: 3532-2096
Combined NYSE & NASDAQ New highs - New lows: 244-30
WTI crude oil: 108.84, +1.77
Gold: 1,722.20, +10.90
Silver: 35.66, +1.02

Tuesday, February 21, 2012

Dow Runs at 13,000, Relents, as Oil Tops $106/Barrel; Gold, Silver Rocket Higher

On the heels of a three-day weekend and a late-night session of EU finance ministers which apparently (maybe, sort of, kinda) came to a conclusion on funding for the failed state of Greece, the Dow Jones Industrials were poised to exceed 13,000, a number not seen since May of 2008.

While the Eurocrats dithered, wrangled and finally agreed to a very messy agreement to stave off the imminent default of the Republic of Greece, most Americans were sleeping, though the conditions of the Greek people continued to worsen, seemingly by the hour.

Nonetheless, stocks opened with the usual ebullience afforded the opening of a new week of stock profit pursuits and quickly came within a whisker of the magic 13,000 level, before falling quickly backward at 10:00 am, as the Euro plunged.

Undiscouraged, the monkey algos, which amount for more than 70% of all trades, turned around as the Euro resumed gaining value against the US dollar and the Dow eventually broke through the haloed mark, though just briefly, on three different occasions during the session.

Meanwhile, the price of a barrel of WTI crude oil surpassed $105/barrel and just after 2:30, rang up $106. At that, the market had had enough and the day's rally was quickly over, the Dow - and all of the major averages - falling into the red before recovering slightly into the close for a split finish.

While there is still some guarded optimism over the Greek "deal" struck by the EU ministers, there are more than just a few doubters that the country will ever recover from the depression caused by decades of overspending, cheating on taxes (it's a Greek - and exceedingly a global - way of life) and an overhang of debt that would make even mighty Atlas himself shy from the task of holding aloft the birthplace of democracy.

Stock profiteers aside, there's ample reason to believe that Greece's ongoing tragedy will help pull down the rest of the Eurozone, and with it the global economy, fiat money and eventually, governments. The major economies of the world are playing with fire, printing without remorse nor sufficient moral appreciation of what the aftermath of global inflation will bring.

Today's skittish market turnaround may have been the first chapter in what could be "the great unraveling." Too little has been done - here in the US, in Europe, China and Japan - to address the underlying issues of the great recession, with the economists of the world having come up with no answer other than to simply pile more debt on top of the already enormous mountain of unpayable debts built up during the go-go 90s and moribund 2000s.

If there's any wonder why gold and silver took off today like they were launched out of cannons, the chart below may explain why the now-12-year bull run of the precious metals may just be getting started.

Dow 13,000 may be a pretty number and cause for celebration in some board rooms and on certain stock desks, but it has little to do with the overall health of the economy of any nation. Relentless printing of money, backed by "full faith and credit" has become the norm and we will all be the poorer for it in time and the price of oil is merely the tip of the spear that will pierce all the misconceptions and hopeful tones emanating from Wall Street, the City of London, Shanghai and Tokyo.

Dow 12,965.69, +15.82 (0.12%)
NASDAQ 2,948.57, -3.21 (0.11%)
S&P 500 1,362.21, +0.98 (0.07%)
NYSE Composite 8,115.42, +0.91 (0.01%)
NASDAQ Volume 1,815,109,000
NYSE Volume 3,766,193,750
Combined NYSE & NASDAQ Advance - Decline: 2490-3168
Combined NYSE & NASDAQ New highs - New lows: 260-16 (ridiculous)
WTI crude oil: 105.84, +2.60
Gold: 1,758.50, +32.60
Silver: 34.43, +1.21

Wednesday, November 16, 2011

Fitch Report on US Bank Exposure to Europe Crushes Stocks

Stocks were just trundling along on low volume Wednesday, until about 2:30 pm ET, when things took a turn for the worse. Nothing overly dramatic, but stocks began to slide from break-even into the red and accelerated at 3:30 - just 1/2 hour from the closing bell, when Fitch Ratings put out a report that focused attention on US bank exposure to Europe, saying that, though hedged, the top five US banks - Bank of America, JP Morgan Chase, Citi, Goldman Sach and Morgan Stanley (supposedly, those are the big five) - could suffer severely if the European debt crisis spirals out of control.

While there was nothing really new in the report, traders took it quite seriously, sending the Dow - already down about 75 points when the report surfaced - another 100 points lower into the close.

Gross exposures to large European countries was at the heart of the report, with US banks exposed to more than $400 billion of loans to France, the UK and banks in those countries. Despite steadfastly denying any outsized exposure to Europe, a half trillion dollars, as expressed by the Fitch report, isn't just chicken feed.

As to the sudden shift prior to the report going public, there was probably some degree of front-running by those with advance knowledge, generally the very same banks named in the report.

Earlier in the day, CPI was reported to be down 0.1% in October, industrial production improved by 0.7% and capacity utilization stood at 77.8%, up 0.5% from September.

By the end of the session, all sectors were lower, led by financials, especially Bank of America (BAC), which closed down 23 cents, to 5.90, its lowest close since October 7. Citigroup (C) was off 1.16, to 26.86, and Goldman Sachs (GS) fell 4.15, to 95.60.

Trade in crude oil was higher, though unusually focused on a plan to change the direction of crude oil flows on the Seaway pipeline, to enable it to transport oil from Cushing, Oklahoma to the U.S. Gulf Coast. The dense argument, which would, if oil were traded in a truly free and not-manipulated market, cause oil prices to fall, produced the opposite effect, with WTI crude rocketing above the $100 mark, as the gap between WTI and Brent crude continued to contract.

What seems to be in play is an overt effort to square the prices of the two grades worldwide. US oil has been creap for decades, but the price of crude in the US seems destined to rival that of Europe even though supplies in Canada, which has direct access to US markets, are high and could easily outstrip oil imports from the Middle East and elsewhere.

After President Obama shut down the proposed Keystone pipeline - which would have taken oil from the Alberta oil sands directly to Gulf Coast refineries - on regulatory and environmental grounds until at least after his supposed re-election, the only conclusion to be drawn is that it's not only the banks, the AMA and big pharma that have their tentacles around US politicians, but big oil as well, though that is hardly a revelation.

The news flow, from Europe and the US, continues to suggest that politicians and financial concerns know an economic downturn is just ahead, the only question being whether it's from natural economic forces or planned by the elitist elements in government, business and finance. Skeptics will call that "conspiracy theory" but since the politicians in the US (and probably in Europe) haven't done a thing to benefit the general population in two decades, why would they change their stripes now?

Dow 11,905.59 190.57 (1.58%)
NASDAQ 2,639.61 46.59 (1.73%)
S&P 500 1,236.91 20.90 (1.66%)
NYSE Compos 7,392.03 117.02 (1.56%)
NASDAQ Volume 1,940,961,000.00
NYSE Volume 4,034,991,750
Combined NYSE & NASDAQ Advance - Decline: 1427-4226
Combined NYSE & NASDAQ New highs - New lows: 74-105
WTI crude oil: 102.59, 3.22
Gold: 1,774.30, -7.90
Silver: 33.82, -0.63

Wednesday, July 27, 2011

D-Day Minus Six: Beware Falling Stocks; Dow, NASDAQ in Second-Worst Decline of 2011

It is now just six days from August 2nd, the day the government of the United States of America either passes a bill increasing the debt ceiling or begins defaulting on said debt, which is fast approaching $15 trillion.

Through accounting gimmicks and "borrowing" from the pension funds of federal employees, the government has thus far avoiding making either the commitment to borrow more or claim deadbeat status and suffer a beating at the hands of the ratings agencies in the form of credit downgrades and subsequent higher interest payments.

Make no bones about it, it is time for the American people to come to grips with the reality that the officials in Washington are not doing the jobs they are paid to do, nor have they represented the best interests of the American people for quite a long time (at least the past 11 years).

If the debt ceiling is not raised, calamity will surely ensue, which is why both sides - Republicans and Democrats, except for a few ardent Tea Partiers - have repeatedly expressed sentiment that the debt ceiling must be raised by August 2nd, no matter the outcome of budget negotiations. In truth, both sides are coming to the realization that their parties are far apart and that no budget issues or long-term spending should have become tied to the debt ceiling issue. They are separate matters which should be dealt with separately.

Nonetheless, the politicians continue their annoying Kabuki theatre while the American public seethes over their inability to compromise, act like reasonable adults and do what they were elected to do.

Wall Street has taken notice as well, logging losses in each of the first three days of this week, with no end to the selling yet in sight. To say that our "leaders" have taken a walk to the end of the plank would be putting it mildly. This issue should never have gotten to this point and those wishing to play fast and loose with the US economy should be given a hearly heave-ho and be dutifully shoved off the plank and into the drink.

What both parties have done - though especially the Republicans, who picked this fight - is shrink from their responsibilities, putting politics ahead of their oaths. It is a shameful chapter in American governance which should never be allowed to be repeated, though the general consensus is that more of the same will be forthcoming as the 2012 election season heats up.

The leaders of both parties should be henceforth removed from office for putting the stability and good faith and credit of America at extreme risk. After that, the herd of politicians being led by money from various lobbyists should be summarily removed from office. The entire congress could run better with many fewer members, preferably none of those presently constituting that formerly-august body.

The American public want change, need change and have been promised change, but all it has gotten is a sordid soap opera of bad politics and even worse outcomes. We have reached the brink and it is very nearly time to throw off the yoke of oppression by the governors and take matters in hand in a more efficient and direct manner. Nothing gets done in Washington any more; maybe it's time to shut it down.

The wealthy barons of Wall Street, those who funded the campaigns and lined the pockets of these moronic, imbecilic politicians, should also be brought to task, something Attorney General Eric Holder seems reluctant to pursue. After all, Wall Street keeps him in nice suits and fancy offices. He should be impeached.

Today's losses on the major indices were the second-largest of 2011 (except for the S&P, for which it was the third-largest), surpassing the 68 points the NASDAQ lost on January 28, but less than the 77 point decline on February 22, though more than the 66 point loss on June 1.

The Dow dropped 166, 179 and 279 points, and the S&P fell 23, 28 and 30 points on the same dates, respectively.

Dow 12,302.55, -198.75 (1.59%)
NASDAQ 2,764.79, -75.17 (2.65%)
S&P 500 1,304.89, -27.05 (2.03%)
NYSE Composite 8,153.21, -178.46 (2.14%)

Declining issues slaughtered advancers, 5875-804. New highs on the NASDAQ numbered only 15, while new lows expanded to 89. On the NYSE, there were 28 new highs and 105 new lows. The combined totals of 43 new highs and 194 new lows puts this indicator clearly in the "sell signal" category. Volume was dynamic and huge. Make no doubt about it: this was a rout.

NASDAQ Volume 2,310,879,750
NYSE Volume 5,074,647,000

Commodities were rather tame throughout the equity carnage. WTI oil fell $2.19, to $97.40, from an artificial and fully inflated high point. Gold dipped $1.70, to $1,615.10, while silver fell a modest 13 cents, to $40.57. The losses in the precious metals are temporary, likely the result of margin calls. Eventually, if stocks continue to take on water, money will gush into gold and silver.

The delay in raising the debt ceiling was not the only issue making for a horrible day on Wall Street. Durable goods orders fell 2.1% in June, further evidence that the economy is slowing.

Tomorrow's initial unemployment claims reading from the BLS could be the proverbial straw that breaks this market's back. Should the number come in above 420,000, stocks could pick right up where they left off today, severely to the downside.

Thursday, June 23, 2011

The Old Dump and Pump

Stock traders - not investors - love action like today's on the US stock markets.

At the open the major indices plunged on news that the IEA and the United States would jointly release 60 million barrels of strategic reserves - 30 by the US, 30 by the IEA - to make up for supply shortages from the Lybian conflict. Furthering the desperate mood was the usual horrific chorus from Initial Unemployment Claims which came in much higher than anticipated (by idiots) at 429,000, plus, the prior week's claims were adjusted upward from 414K to 420K.

The revision should come without explanation. The BLS, who mangles the numbers, has revised claims upward just about every week for the past year-and-a-half, but those seeking an end to the jobs problems in America are surely going to have to wait longer.

Now, with all that bad news baked in, stocks were down precipitously, with the Dow off by more than 200 points for much of the session. But, lo and behold, just before 3:00 pm, word came from Europe that everything between Greece, the IMF and the ECB was just hunky-dorey. Greece would get their loans, the people would riot (a two-day general strike is already planned for next week), but all the bankers would be paid in full.

With that, the markets shaved a good 2/3rds off their losses, with the NASDAQ actually finishing in positive territory. Is this a stable economy, a stable market?

We will leave that question unanswered, hoping that bigger, brighter minds might offer some clues.

In any case, a lot of people got slaughtered, but you can bet your bottom dollar (if you still have one) that the bankster types at Goldman Sachs, JP MOrgan and Morgan Stanley had field days.

It's all good. Until it's not.

Dow 12,050.00, -59.67 (0.49%)
NASDAQ 2,686.75, +17.56 (0.66%)
S&P 500 1,283.50, -3.64 (0.28%)
NYSE Composite 8,054.08, -47.76 (0.59%)

Declining issues still led advancers, 3611-2936. On the NASDAQ, there were 42 new highs and 71 new lows. The NYSE had just 28 new highs and 49 new lows. Uh-oh, our key indicator has flipped bearish again, so maybe the Greece bailout isn't all that important to the US. Or maybe it is? The combined total of 70 new highs and 120 new lows puts things back into perspective, despite the obviously-rigged nature of the equity markets. Volume was actually a little spunky for a change. After all, it takes a lot of trading to move stocks around so much.

NASDAQ Volume 2,070,676,500
NYSE Volume 4,946,733,500

With the news of new supply coming on the market (at a rate of 2 million barrels a day), WTI crude futures fell $4.39, to $91.02, and traded under $90 briefly in the morning. One might think this was all about oil, but maybe it was really about gold, the enemy of central bankers worldwide, which made a new record close yesterday and appeared ready to vault towards $1600 per ounce. It didn't happen, as the morning downdraft took apart all long trades. Gold was decimated, losing $26.90, to $1521.10, wiping out a month's worth of gains. Silver was not spared, losing $1.07, to $35.27. It was a pretty ugly day for everyone, but particularly for commodities traders.

Hot fun in the Summertime. Rigged markets are so much fun!

Monday, June 13, 2011

Stocks Up? Not Really.

The desperation, both on Wall Street and in the hallowed halls of Congress and at the white House, is becoming palpable and, if the whole sordid state of affairs of our economy were not so profoundly sad, laughable.

Today, the wizards controlling the High Frequency Trading (HFT) computers, which account for about 75% (some say it's more than that) of all stock trades, managed to send the broad indices up in the morning, down a bit in the afternoon and close nearly unchanged. This is a very neat trick, devised to scalp money from day-traders, hedge funds, momentum players and anyone else foolish enough to venture into the caverns of Wall Street.

What it is not, is indicative of a stable condition in the markets. The current environment is about as unstable as it has been since the fall of 2008, when the entire global financial system nearly fell off the rails. There is the condition of the Greek debt, which sorely needs restructuring and plans have come, gone, come back, been revised, altered, accepted, rejected, sliced, diced, proposed, failed, and eventually found to be lacking. Greece will default; it is only a matter of time, as will Ireland, Spain, Portugal and maybe even Italy, Hungary and other small countries, like Balarus, which already has revalued its currency. Ouch.

It's interesting to note that Belarus took the extreme measure of revaluing its currency in light of a current account deficit that was 16% of GDP. In the US, congress is toying with raising the debt ceiling, and if it does so, will likely result in a current account deficit that's at least 10-12% of GDP. We're getting closer, and we can do it, for sure. USA - USA - USA!

Today's flat line finish was a sham. Take a look at the shattered internals.

Dow 11,952.97, +1.06 (0.01%)
NASDAQ 2,639.69, -4.04 (0.15%)
S&P 500 1,271.83, +0.85 (0.07%)
NYSE Composite 8,017.06, +0.67 (0.01%)

Losing stocks led winners by a wide margin, 3918-2699. NASDAQ new highs: 32; new lows: 139. NYSE new highs 21; new lows: 90. The combined total of 52 new highs and 229 new lows marks the seventh straight day in which new lows have exceeded new highs and indicates, more strongly than ever, that this downturn is going to be deeper and longer than anyone on Wall Street of in Washington is willing to disclose. A few numbers have been bandied about, like 1000 on the S&P and 10,000 on the Dow as possible bottoms, though die-hard deflationists are looking for much lower figures, rivaling or even exceeding the lows of March, 2009.

Volume was, as usual, depressed and depressing.

NASDAQ Volume 1,854,694,875.00
NYSE Volume 4,102,367,000

In deflationist terms, there was good news. WTI crude oil fell by $1.99, to $97.30, the lowest price in month. Now, if drivers can just hang on a while longer, some of the price declines may begin showing up at the pump.

Precious metals were also lower, with gold coming down $16.80, to $1515.30, and silver once again breaking below $35/ounce, down $1.44, to $34.76.

The handwriting is on scrawled across the economic wall: No growth, no wages inflation, no commodity inflation, all assets are due for another round of devaluation. Hold, wait, then buy gold, silver, tools, arable land and other desirable assets.

Monday, May 9, 2011

Citi Reverse Split Causes Volume Dump; PPT Still Engaged

Covering the daily machinations of a stock market that is now nearly a vast wasteland of swap trades, churning and "gotcha" moves seldom offers much of anything substantive of which to report, but today's reverse split of Citigroup (C) may turn out to be a watershed moment for our contrived and trivial stock markets.

With Citi now a $44 stock instead of a $4.40 stock - and it being the nearly indisputable daily volume leader for many months - America's 3rd largest bank has cost the NYSE about 450,000 trades on a daily basis, today, tomorrow, forever. This dramatic upside-down-sizing caused today's NYSE volume to dip to its second-lowest level of the year.

It is more than dismal on Wall Street; it is so scary that the PPT was brought in today just before noon for a quick fixer-up, sending all the indices close to their highs of the day in a 20-minute ramp job that is certain to destroy what little remains of confidence in the veracity of US markets.

From about 11:50 am to 12:10 pm, the Dow gathered itself up for an 80 point gain, the NASDAQ gained about 27 points and the S&P added nine. The indices had been hugging the flat line until the PPT (yes, we're absolutely certain they're still working) showed up. Afterwards, stocks drifted along the new highs and closed near those newly-elevated levels.

Yet another fantastic display of why nobody trusts these markets and nobody should be trading here: the stocks are all traded between the biggest brokerages and selected hedge funds, and the whole game is rigged for their benefit. Someday, we can only hope, the whole miasma gets thrown a loop by the HFT computers and never recovers. Maybe then, the greed, corruption and utter uselessness of US stock markets can be exposed.

Dow 12,684.68, +45.94 (0.36%)
NASDAQ 2,843.25, +15.69 (0.55%)
S&P 500 1,346.29, +6.09 (0.45%)
NYSE Composite 8,478.19, +52.29 (0.62%)

For the record, advancing issues beat decliners, 4534-2055. NASDAQ new highs: 81; new lows: 39. On the NYSE, there were 120 new highs and 17 new lows. Combined volume for the NYSE and NASDAQ was at or below the lowest level of the year. While the trading volume on the NYSE was expected, the absurdly low number of trades on the NASDAQ is telling market timers that now is the time to get out of Dodge.

NASDAQ Volume 1,654,697,000.00
NYSE Volume 3,366,898,000

Commodities must be the new playground, because they had a banner day. Forget the massive drop in crude oil from last week. Today's ramp job of $5.37 on NYMEX WTI crude futures brought the price back to $102.55 at the close. One wonders whether it's actual volatility driving the wild price swings or just plain revenge by the traders who were nearly wiped out in last week's plummeting decline. In any case, the price of oil has absolutely nothing to do with fundamental. It's almost as though price discovery has become a function of speculation. There is no real price for a barrel of oil, only that which appears or appeases for the day. These markets are broken beyond repair. Time to dust off and oil up that old bike. You'll need the energy boost in order to stay ahead of the coming rolling panics in cities across America.

Gold buyers were back in earnest, raising the price $18.20, to $1513.60. Silver recovered as well, gaining $2.28, to $37.90.

If anybody can make sense of any of this, please call 1-800-CONFUSED and leave a long, descriptive message.

Friday, April 8, 2011

Ahead of Government Failure, Markets Shaky, Silver Sizzles

As the clock wends its way toward midnight and a shutdown of non-essential government functions, stock players were still hedging their bets, generally showing a preference for playing the waiting game until Monday when word will be official.

That's probably a pretty stupid position, given that Republicans and Democrats are ideologically miles apart and the best time to avert a crisis would have been weeks, if not months, ago. While there still remains a slight chance that the federal government will go into full-blown shutdown, as of this writing - shortly after 4:00 pm EDT - the odds are heavily in favor of the morons in Washington putting politics ahead of principles and allowing the government to shut down.

This they do at their own peril, though the geniuses who call themselves senators and representatives would be hard-pressed to believe that the American people will have lost all faith in their ability to lead and/or govern and/or legislate. By and large, with the notable exception of Tea Partiers and anarchists everywhere, are stridently against the government closing down, be it for a week, a month, or longer.

And, strangely enough, the things most people would like to see halted, will continue. Our troops will still be fighting worthless, nothing-to-gain wars in various countries, TSA agents will continue pat-downs on ordinary citizens, and the worst of it, elected officials will continue to be paid, while some 800,000 regular federal employees will have to fend for themselves without the benefit of a regular paycheck. In fact, even our fighting men and women, half a world away, will not receive their paychecks.

Naturally, the IRS will continue to process electronic returns, though refunds will more than likely be delayed. Social Security checks will still go out on time - for now. An extended absence of the federal government might turn out to be just what the country needs, though judging by the average intelligence of the hands-out American sheeple, there will be plenty of hand-wringing, despair and repercussions not as yet unveiled to either the politicians or the general populace.

As for the markets, they will continue in denial until it becomes evident that shuttering various branches of government and putting almost a million people out of work without pay (when do these federal employees become eligible for unemployment compensation?) indefinitely is going to cause the wheels of commerce to slow to a crawl.

We are under eight hours and counting down...

Dow 12,380.05, -29.44 (0.24%)
NASDAQ 2,780.41, -15.73 (0.56%)
S&P 500 1,328.17, -5.34 (0.40%)
NYSE Composite 8,483.94, -5.39 (0.06%)

Stocks held up pretty well considering the overhanging circumstances. The Dow was down more than 80 points at its afternoon lows, but the markets spent much of the session merely marking time. Declining issues overwhelmed advancers, 4205-2275, nearly a 2:1 ratio. The NASDAQ produced only 66 new highs and 29 new lows, while on the NYSE, there were 164 new highs and only 11 new lows. Obviously, there is less appetite for high beta NASDAQ stocks for the moment, though it should also be noted that volume was dismal once again.

NASDAQ Volume 1,632,480,125
NYSE Volume 3,950,118,750

The big winners on the day were commodities, the losers anybody who eats or drives. West Texas Intermediate crude oil futures hit another 32-month high, gaining $2.49, to close out the week at $112.79. By Sunday, gas prices in the US will average close to $3.80 per gallon, though this number could be a high, if federal employees are furloughed, not having to drive to work.

The real stars were the precious metals. At 4:30 pm EDT, gold was sitting at a new all-time high of $1474.50, up $16.10 on the day. Silver continued its very own moon shot, gaining $1.27, to $40.91, another 31-year high mark, with no stopping in sight. Gold and silver will continue to rise against all currencies until structural changes in central bank policy occur, which, with the Fed continuing to print money at a non-stop clip, appears to be roughly, never.

What the real impact of a federal government shutdown will be is still residing in the realm of the unknown, though one should expect the unexpected. As black swans go, this one could be darker and larger than most.

Money Daily will update as events warrant.