No sooner than one believes one thing, conditions change to make the opposite true. That's why stocks go up and down. Yes, really.
After yesterday's rally on news that Tim Geithner was confirmed as Treasury Secretary and was boosting plans for a "bad bank" bailout for the endangered species that are large commercial banks, and the Obama administration was toasting with congressional cohorts their $800+ billion stimulus plan, news changed.
Starbucks plans to close more stores and lay off 7000 more employees. Ditto Boeing, ditto Kodak, and others. New home sales for 2008 sank to their lowest level in 26 years. There were record numbers of first-time unemployment claims filed last week. Durable goods orders fell another 2.6% in just one month. Pundits far and wide were assailing the stimulus plan as too little, too late. In the relatively short span between Wednesday's closing bell and Thursday's open (a scant 17 1/2 hours) the mood had changed.
But, if you're a chartist with keen observational skills, you already knew that stocks could not sustain any meaningful rally. As I mentioned just two days ago, in my post, Why Stocks Won't Move:
The US equity markets are so solidly stalled, constipated and intractable for one simple reason. They have yet to retest the November 20 lows. Until that task is accomplished, there will be no meaningful rally in stocks, as there is no chart confirmation and thus, no commitment.
This is not to say that the Dow cannot escape the clutches of 7500 and change, though the current battle line clearly has been set at the most reasonable level of 8149. Stocks could easily advance another couple hundred points without anyone questioning whether or not they're overbought.
Well, on Wednesday, the Dow did gain 200 points. And on Thursday, it fell by 226, closing at 8149.01. Hmmm... seems somebody's a penny off. Close enough, though, because nobody's perfect. Since 4:00 pm this afternoon, however, I have been answering the phone with the salutation, "Hello, resident genius."
Dow 8,149.01, -226.44 (2.70%)
NASDAQ 1,507.84, -50.50 (3.24%)
S&P 500 845.14, -28.95 (3.31%)
NYSE Composite 5,300.77, -200.69 (3.65%)
The condition of the economy is decidedly poor. The politicos in Washington can try to spin in any way they like, but many Americans - squeezed by ridiculous utility bills, overtaxed to near-death, and now many of them out of work and soon to be out on the street - are not schmoozing with cocktails after work. Many are just lucky enough to be able to afford dinner and maybe a malt liquor or pale ale.
Once again, the big-wigs in DC are sending the same wrong message as the CEOs and top executives on Wall Street. The Wall Street crowd has been chided by the government, so it's the public's right to express anger at elected officials.
Shame on you, Mr. Obama, Ms. Pelosi, Mr. Reid, Mr. McConnell, Mr. Boehner. Having cocktails while people are hungry, homeless, jobless and yearning smacks of elitism. I voted for Mr. Obama. I'm sure he was a better choice than McCain, but I'll say this just once: "Bush wrecked the economy, now it's Obama's turn to make it worse." I hope I'm wrong.
On the day, declining issues overwhelmed advancers, 5200-1333. 176 stocks made new 52-week lows. Only 16 made new highs. Volume was uninspired.
NYSE Volume 1,435,231,000
NASDAQ Volume 1,939,281,000
Oil fell another 72 cents, to $41.44. Gold picked up the slack, gaining $16.50, to $906.50. Silver also was higher, up 18 cents, to $12.15. Lean hogs and live cattle were little changed, but they are much lower than at this time last year. Food and energy have fallen precipitously in the deflationary cycle, perhaps providing some little modicum of comfort in this era of widespread distress.
Tomorrow, the government releases preliminary data on 4th quarter GDP and it's expected to show a contraction of roughly 5%. While that news will be neither surprising nor conclusive, it will confirm that the economy is in the throes of a deep, dark, dismal retreat.
Sure, Senator, the Resident Genius would like a screaming orgasm and some of that pulled pork you're passing around, thank you.
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