Sure, the economy is just fine.
That's what the pundits on Bloomberg and CNBC would have you believe.
So, if everything is so darn good, why is Macy's - which has over 700 stores in the US - closing 40 stores and laying off 4,500 employees?
And why did the NASDAQ and the Dow close the day in correction territory (down 10% from high) today, with the S&P not far off?
People who host shows and are guests on TV want you to believe it's all China's fault. Over on mainland China, their stock markets closed early for the second time this year. That's twice in four days that circuit breakers have been triggered. A 7% selloff causes the market to shut down. Those are their rules. Or, rather, those were their rules.
Early in the US session, Chinese authorities announced that they were suspending the circuit-breaker rule, so their stock markets may fall a lot deeper tomorrow than a mere 7% before everything in the People's Republic goes down the drain.
It's not China's fault. It's the fault of the Fed, the government (for looking the other way and accepting bribes from corporations and banks), and the greed of Wall Street. It's also the fault of smart people taking their money out of the rigged casino, aka Wall Street, before it all vanishes, like it did in 2000, or 2008.
Also, Yahoo! is laying off 1000 employees as part of their reorganization plan. One employee that isn't being let go, but should, is CEO Marissa Mayer, of whom Money Daily said years ago was nothing but a wannabe, a poser, with no measurable skills for running a company.
Yes, the economy is not good, Wall Street and the government is run by a gang of crooks, and, incidentally, those highly-paid CEOs, like Ms. Mayer, should be in bread lines with the rest of the people being let go, because they're incompetent.
America, a once-great country, is going down the tubes, and in a big hurry. The culprit is not some foreign entity, terrorism, guns or aliens. The reasons can be found all over the country. Greedy lawyers, greedier bankers, corrupt government officials, incompetent business leaders, and, interwoven into the fabric of this country, placid, placated, ill-educated, preoccupied, self-engrossed people who vote (or don't) in elections and think they've done their part are all part of the problem, and not part of the solution.
But, people could be the solution. If people stopped making poor decisions, stopped listening to people in authority positions, and started taking responsibility for their own lives, rather than hoping for handouts from an uncle sugar government, people could solve their problems on their own.
The concept of self-reliance has been largely lost in America, but, herms hoping it's going to make a comeback when people wise up to the antics of politicians who don't deliver on their promises and kick them to the curb, where they belong.
There are lots of problems in this country that people could solve on their own if they took charge of their own lives. That, truthfully, may be asking for too much. We've wasted too much time in this country and waited too long for the governing class to do the right thing. Now, it may be too late, and we'll all just have to fend for ourselves.
Actually, that may not be too bad a thing.
The day on wall Street was not pretty, with major indices taking a third huge loss in four days. The Dow Industrials are down nearly 1000 points so far this year, putting 2016 already 6% in the red for even the safest stocks. Averages were lower all day, with no signs of rallies, and, perhaps more telling than anything, there was no snap-back at 3:30 on short covering, which has been the norm of late.
As noted by the quotes below, WTI crude oil finished with a 33 handle, a number not seen in the oil pits in 12 years. Gold and silver have broken out of moribund ranges, though holding and advancing from these levels may be difficult, as central banks collude to keep currency that may compete with the almighty dollar, euro or yen at undesirable levels.
What's undeniable about the gold and silver rigging is that it is unsustainable long-term, though central banks and their henchmen in the COMEX have managed to keep sending the prices of precious metals lower for nearly five full years. With stocks potentially falling out of favor, bonds, cash and PMs may appear to be the best bets with which to ride out a currency storm, a scenario that could be occurring in real time as the dollar/yen carry trade continues to unwind.
There is chaos everywhere, and, for the final trading day of the new year's first week, two important developments will be how the Chinese markets fare and US non-farm payroll data for December, due for release at 8:30 am ET.
Closing prices for Thursday, January 7, 2016
S&P 500: 1,943.09, -47.17 (2.37%)
Dow: 16,514.10, -392.41 (2.32%)
NASDAQ, 4,689.43, -146.34 (3.03%)
Crude Oil 33.21 -2.24% Gold 1,109.20 +1.58% EUR/USD 1.0929 +1.41% 10-Yr Bond 2.1530 -1.10% Corn 352.00 -0.35% Copper 2.02 -3.16% Silver 14.32 +2.50% Natural Gas 2.37 +4.46% Russell 2000 1,064.57 -2.72% VIX 24.99 +21.37% BATS 1000 20,761.26 -2.29% GBP/USD 1.4618 -0.05% USD/JPY 117.5480 -0.80%
Showing posts with label correction. Show all posts
Showing posts with label correction. Show all posts
Thursday, January 7, 2016
Wednesday, January 6, 2016
The End? Stocks Slammed Again; Economic Prospects for 2016 Appear Grim
What should have happened in 2008-09 may be beginning to happen now, in 2016. Investors should take losses, companies should go broke, and government apologists should have a "come to Jesus" moment and admit that they've been lying about the recovery for years.
There is and there has been no recovery. GDP has been stuck between one-and-a-half and two-and-a-half percent since the financial crisis (and that's if you believe government accounting). 2015 will be fortunate to register at two percent growth.
Meanwhile, wages are stagnant and falling, 95 million able-bodied Americans are not officially counted as part of the workforce. The middle class has been hollowed out by Wall Street greed, government over-taxation, and unrealistic government salaries and pensions that suck the life out of local and state budgets.
The jobs that made America great have long gone, shipped overseas to China and elsewhere, and now we are exacerbating our pitiful condition by allowing in more immigrants - legal and illegal - taking away the few jobs left for natural-born citizens.
Baby boomers are retiring, replaced by their dumbed-down progeny. Our national debt of nearly $19 trillion - and growing - is a universal disgrace. Meanwhile the Federal Reserve, in cahoots with the shiftless Treasury Department, debases our currency by print a full 40% of government expenditures.
The federal government wants to grab our guns, the states want to charge us rent - in the form of property taxes - on the property we own, and neither of them can balance their books. The American public is at a breaking point, through with political correctness, suspicious of a government that spies upon us, regulates us, lies to us and sends our kids to die in useless wars which are never won. The controlled mainstream media propagandizes and cajoles anyone who doesn't align properly with the official corporate-government-military line.
Truly, in the short history of our Republic, we are on the cusp of complete breakdown in finance, education, morals, and decency.
And, while the blame can be placed on the people itself, because we voted for the spineless, unaccountable elected officials who have led us to this point, it should fall on the shoulders of those doing the governing, the legislating, the ones who are routinely bribed to pass legislation that favors corporations over people, banks over homeowners, and diminishment of our rights and liberties over common sense.
Our current government is the most corrupt to ever inhabit the halls of congress and the White House, our state houses and our government mansions. Is it any wonder that only half of the people who can vote, do vote?
Wall Street insiders hold all the cards, and they're gradually folding them. The Dow Industrials, S&P 500 and NASDAQ were all lower by massive amounts again today, for the second time in three this year. If this is a portent of what's ahead for the rest of the year, the ride may not be bumpy at all, merely a slide into the mediocrity created by greed, failed, moronic policies of the Federal Reserve, all with the implicit consent of the government, a government that is not worth the support of the people.
The slow collapse of stocks that has been on display the first week of this year has already been gaining steam since prior to last summer. Stocks peaked in late May and are 6-8% lower (depending on which index you choose) from their inflated high points. The Dow is down nearly 500 points in just three days this year and more than 850 points since the Fed decided, in their insipid, desperate desire, to raise interest rates mid-December.
Manufacturing, as measured by the ISM, has shown contraction for two consecutive months. US Services PMI dropped to 54.3 - the lowest since January 2015. ISM Services fell to 55.3, the lowest level since March 2014.
US factory orders for November fell 4.2% year-over-year, the 13th consecutive monthly drop. We are on the verge of a recession, in the middle of a depression. The emperor has no clothes and this time, with federal funds rates straining to hold between 0.25 and 0.50%, there is no place to hide.
If this isn't the end, it's getting pretty close. According to the most widely-accepted charting methods, stocks will enter a correction phase within a month, if not sooner. Corporate profits are falling, as companies cannot concoct any more accounting tricks to show even meager profits. Quarterly results are due out over the next three to four weeks and prospects for corporate earnings are poor. For retailers, energy stocks and consumer goods producers, the results - stemming from missing expectations for the holiday season and an oversupply of crude oil and distillates - might be devastating.
Stores are being shuttered in malls across the country and with them, marginal jobs which will not come back. The only bright spots are that inflation is nil, gasoline is cheap, and the winter, thus far, has been mild, at least in the heavily-populated Northeast.
Somehow, America will survive. However, the America of 2016 is a far cry from what the country was just 30 years ago, and a dim representation of what our Founding Fathers conceived.
S&P 500: 1,990.26, -26.45 (1.31%)
Dow: 16,906.51, -252.15 (1.47%)
NASDAQ: 4,835.76, -55.67 (1.14%)
There is and there has been no recovery. GDP has been stuck between one-and-a-half and two-and-a-half percent since the financial crisis (and that's if you believe government accounting). 2015 will be fortunate to register at two percent growth.
Meanwhile, wages are stagnant and falling, 95 million able-bodied Americans are not officially counted as part of the workforce. The middle class has been hollowed out by Wall Street greed, government over-taxation, and unrealistic government salaries and pensions that suck the life out of local and state budgets.
The jobs that made America great have long gone, shipped overseas to China and elsewhere, and now we are exacerbating our pitiful condition by allowing in more immigrants - legal and illegal - taking away the few jobs left for natural-born citizens.
Baby boomers are retiring, replaced by their dumbed-down progeny. Our national debt of nearly $19 trillion - and growing - is a universal disgrace. Meanwhile the Federal Reserve, in cahoots with the shiftless Treasury Department, debases our currency by print a full 40% of government expenditures.
The federal government wants to grab our guns, the states want to charge us rent - in the form of property taxes - on the property we own, and neither of them can balance their books. The American public is at a breaking point, through with political correctness, suspicious of a government that spies upon us, regulates us, lies to us and sends our kids to die in useless wars which are never won. The controlled mainstream media propagandizes and cajoles anyone who doesn't align properly with the official corporate-government-military line.
Truly, in the short history of our Republic, we are on the cusp of complete breakdown in finance, education, morals, and decency.
And, while the blame can be placed on the people itself, because we voted for the spineless, unaccountable elected officials who have led us to this point, it should fall on the shoulders of those doing the governing, the legislating, the ones who are routinely bribed to pass legislation that favors corporations over people, banks over homeowners, and diminishment of our rights and liberties over common sense.
Our current government is the most corrupt to ever inhabit the halls of congress and the White House, our state houses and our government mansions. Is it any wonder that only half of the people who can vote, do vote?
Wall Street insiders hold all the cards, and they're gradually folding them. The Dow Industrials, S&P 500 and NASDAQ were all lower by massive amounts again today, for the second time in three this year. If this is a portent of what's ahead for the rest of the year, the ride may not be bumpy at all, merely a slide into the mediocrity created by greed, failed, moronic policies of the Federal Reserve, all with the implicit consent of the government, a government that is not worth the support of the people.
The slow collapse of stocks that has been on display the first week of this year has already been gaining steam since prior to last summer. Stocks peaked in late May and are 6-8% lower (depending on which index you choose) from their inflated high points. The Dow is down nearly 500 points in just three days this year and more than 850 points since the Fed decided, in their insipid, desperate desire, to raise interest rates mid-December.
Manufacturing, as measured by the ISM, has shown contraction for two consecutive months. US Services PMI dropped to 54.3 - the lowest since January 2015. ISM Services fell to 55.3, the lowest level since March 2014.
US factory orders for November fell 4.2% year-over-year, the 13th consecutive monthly drop. We are on the verge of a recession, in the middle of a depression. The emperor has no clothes and this time, with federal funds rates straining to hold between 0.25 and 0.50%, there is no place to hide.
If this isn't the end, it's getting pretty close. According to the most widely-accepted charting methods, stocks will enter a correction phase within a month, if not sooner. Corporate profits are falling, as companies cannot concoct any more accounting tricks to show even meager profits. Quarterly results are due out over the next three to four weeks and prospects for corporate earnings are poor. For retailers, energy stocks and consumer goods producers, the results - stemming from missing expectations for the holiday season and an oversupply of crude oil and distillates - might be devastating.
Stores are being shuttered in malls across the country and with them, marginal jobs which will not come back. The only bright spots are that inflation is nil, gasoline is cheap, and the winter, thus far, has been mild, at least in the heavily-populated Northeast.
Somehow, America will survive. However, the America of 2016 is a far cry from what the country was just 30 years ago, and a dim representation of what our Founding Fathers conceived.
S&P 500: 1,990.26, -26.45 (1.31%)
Dow: 16,906.51, -252.15 (1.47%)
NASDAQ: 4,835.76, -55.67 (1.14%)
Wednesday, May 22, 2013
Market Reverses Following Fed Minutes Release
The markets opened with ebullience after NY Fed President Bill Dudley's comments suggested that the Federal Reserve was not considering any major policy changes, with the Dow reaching the highs of the day - the Dow gaining 155 points - between 10:00 and 11:00 am EDT.
All of a sudden, when Fed Chairman, speaking before the congressional Joint Economic Committee, didn't absolutely rule out that the Fed could begin tapering bond purchases before Labor Day, stocks took an abrupt U-turn, but stabilized in positive territory.
Upon the release of minutes from the Fed's April policy meeting, however, things began to get ugly. The minutes revealed that some members of the FOMC thought they should be tapering - or easing - right away or as early as their June meeting, considering the effects of the program and how the economy seemed to have been improving.
That had a chilling effect on the trading floor, as volume picked up, and stock prices headed south in one of the most volatile sessions in some time - a full 276-point round-trip on the Dow industrials. The other major indices followed suit and actually recorded worse losses, on a percentage basis.
Today's key reversal was a triple-engulfing variety, eclipsing the highs and lows of the three previous sessions, and that, to chartists everywhere, screams of directional bias, in this case, to the downside.
Whether or not traditional chart theory will hold water in this artificial liquidity environment is anybody's guess, because stocks have shown recently an uncanny ability to disregard any kind of bad news, though this kind of news - that the Fed might be pulling back the punch bowl from the drunken, leveraged party that is Wall Street - is of a different nature altogether.
As far as bull and bear markets are concerned, we're still a far cry from calling a turn, though tomorrow, the bull's reign will be entering its 51st month and stocks have just exhibited the kind of explosive move to the upside that is indicative of final tops. The coming days, weeks and months will be critical if only to ascertain whether this move is a one-day event, the beginning of a short-term correction or the start of a bear market.
Key factors to consider in today's movement were volume - one of the highest of the year - the advance-decline line and how meaningfully traders will take the mixed messages from various Fed officials.
Another insight is how fruitless the markets have become, when the only pertinent news concerns whether or not the Fed will keep accommodating the broken banks and brokerages with historical low interest rates, which incidentally, shot higher today, the 10-year breaking through the 2.0% yield mark.
Even more important is whether the Fed is actually planning to take its foot off the gas soon or is blowing more hot air, i.e., jawboning the market.
Considering the relative performance of the US economy (sluggish at best) and the consequences of tightening policy even a little bit from this unprecedentedly-accommodative posture it might be best to take a wait-and-see attitude toward the markets in general. Rather than an abrupt, decisive move to the downside (though it could very well happen), some sideways movements in the markets would seem to make more sense, at least until there is clarity on Fed policy, along with a host of other potential market-moving issues.
Dow 15,307.17, -80.41 (0.52%)
NASDAQ 3,463.30, -38.82 (1.11%)
S&P 500 1,655.35, -13.81 (0.83%)
NYSE Composite 9,501.99, -96.28 (1.00%)
NASDAQ Volume 2,058,095,625
NYSE Volume 4,350,662,000
Combined NYSE & NASDAQ Advance - Decline: 1555-4990
Combined NYSE & NASDAQ New highs - New lows: 753-35
WTI crude oil: 94.28, -1.90
Gold: 1,367.40, -10.20
Silver: 22.47, +0.017
All of a sudden, when Fed Chairman, speaking before the congressional Joint Economic Committee, didn't absolutely rule out that the Fed could begin tapering bond purchases before Labor Day, stocks took an abrupt U-turn, but stabilized in positive territory.
Upon the release of minutes from the Fed's April policy meeting, however, things began to get ugly. The minutes revealed that some members of the FOMC thought they should be tapering - or easing - right away or as early as their June meeting, considering the effects of the program and how the economy seemed to have been improving.
That had a chilling effect on the trading floor, as volume picked up, and stock prices headed south in one of the most volatile sessions in some time - a full 276-point round-trip on the Dow industrials. The other major indices followed suit and actually recorded worse losses, on a percentage basis.
Today's key reversal was a triple-engulfing variety, eclipsing the highs and lows of the three previous sessions, and that, to chartists everywhere, screams of directional bias, in this case, to the downside.
Whether or not traditional chart theory will hold water in this artificial liquidity environment is anybody's guess, because stocks have shown recently an uncanny ability to disregard any kind of bad news, though this kind of news - that the Fed might be pulling back the punch bowl from the drunken, leveraged party that is Wall Street - is of a different nature altogether.
As far as bull and bear markets are concerned, we're still a far cry from calling a turn, though tomorrow, the bull's reign will be entering its 51st month and stocks have just exhibited the kind of explosive move to the upside that is indicative of final tops. The coming days, weeks and months will be critical if only to ascertain whether this move is a one-day event, the beginning of a short-term correction or the start of a bear market.
Key factors to consider in today's movement were volume - one of the highest of the year - the advance-decline line and how meaningfully traders will take the mixed messages from various Fed officials.
Another insight is how fruitless the markets have become, when the only pertinent news concerns whether or not the Fed will keep accommodating the broken banks and brokerages with historical low interest rates, which incidentally, shot higher today, the 10-year breaking through the 2.0% yield mark.
Even more important is whether the Fed is actually planning to take its foot off the gas soon or is blowing more hot air, i.e., jawboning the market.
Considering the relative performance of the US economy (sluggish at best) and the consequences of tightening policy even a little bit from this unprecedentedly-accommodative posture it might be best to take a wait-and-see attitude toward the markets in general. Rather than an abrupt, decisive move to the downside (though it could very well happen), some sideways movements in the markets would seem to make more sense, at least until there is clarity on Fed policy, along with a host of other potential market-moving issues.
Dow 15,307.17, -80.41 (0.52%)
NASDAQ 3,463.30, -38.82 (1.11%)
S&P 500 1,655.35, -13.81 (0.83%)
NYSE Composite 9,501.99, -96.28 (1.00%)
NASDAQ Volume 2,058,095,625
NYSE Volume 4,350,662,000
Combined NYSE & NASDAQ Advance - Decline: 1555-4990
Combined NYSE & NASDAQ New highs - New lows: 753-35
WTI crude oil: 94.28, -1.90
Gold: 1,367.40, -10.20
Silver: 22.47, +0.017
Wednesday, November 14, 2012
Stocks Take Another Beating; Dow Off 185, NASDAQ in Correction
All the issues and problems facing the US and global economies are coming home to roost in a perfect storm of excessive debt, fiscal intransigence, monetary experimentation, overpriced equities, general distrust of leadership, lack of growth, geopolitical tension and poor earnings prospects for corporations.
The selloff today was a continuation of what's been occurring since before the election, but has accelerated dramatically since. Wall Street is quite unhappy with prospects that President Obama will not budge from his position to eliminate the Bush tax cuts on the wealthiest two percent of Americans, as emphatically spelled out in an early afternoon press conference.
The president was cool, calm and collected, fielding questions on a variety of topics, but, even though he mentioned compromise frequently, he did not waver in his commitment to tax the wealthy at more than their current rates, including gains on investments, particularly - Wall Street fears - regular income and dividends.
Taking their cue from the president's message, stocks, which opened briefly higher, but quickly fell deep into the red, made new lows nearing the end of his remarks and continued lower into the close, the Dow suffering a 185-point loss and the NASDAQ reaching levels 10% below their recent highs, crashing into correction territory.
With all of the major indices, including even the Russell 2000 of mostly small cap stocks, continuing their descent below their respective 200-day moving averages, bottoms were sought out, though none could be found.
The massive run-up which began in March of 2009 is being unwound, with most of the blame being laid upon the politicians in Washington, DC, though there are more than a few more scapegoats, notably the greed and feed crowd that started the entire mess - the irresponsible banking community and their masters of control, the Federal Reserve.
With the dual policies of ZIRP and massive monetization, the Fed enabled much of Wall Street's excess and continues to do so even today. The neo-Keynesian policies of Ben Bernanke and his predecessor, Alan Greenspan, has spawned a debt bubble deflation crisis that they cannot - as much as they try - spend their way out of.
Most individual investors have been fleeing the market or have already taken their seats on the sidelines, so the damage being done to stocks is going to impact the middle and upper classes the most, with 401k, investment and pension plans taking the brunt of the declines.
In particular, Dow stocks, seen by many as representing the core of American industrialism, have lost more than 1100 points since their highs in early October, erasing most of the gains made throughout the year.
While Washington politicians dither over negotiations to avoid massive tax increases and huge budget cuts (which some say are needed), investors are worried that whatever solution they arrive at will be too little, too late and more of a can-kicking exercise than real reform.
With the holidays fast approaching, Americans are not in a mood for more business as usual from either Wall Street or Washington, and the anger is growing, even on Main Street, where small businesses continue to suffer or skirt taxation completely.
The next few days and weeks could easily turn into a crisis more severe than that of 2008, since none of the improprieties produced by that financial peer into the abyss have yet to be resolved, and now there are fewer measures the Fed or the Treasury can employ to keep the economy afloat.
If anyone thought that the crisis in America was over - to say nothing of the even worse conditions in Europe - they should pay close attention to what happens over the next sixty to ninety days, because they will surely be replete with wild market swings, irony and recriminations from all sides against each other.
Surviving into and beyond 2013 will be a major test of not only the American spirit but of Americans' willingness to accept leadership. President Obama's election to a second term was probably the correct choice, but he alone cannot fix the mess others created.
After today, the bankers and the wizard genii of Wall Street should be running for cover they should have sought out years ago.
Today was a truly dark day, though, from the looks of things, there are many more to come.
Grow some crops if you can, stay close to home and loved ones, and remember our motto: FREE HOUSES FOR EVERYONE!
Dow 12,570.95, -185.23 (1.45%)
NASDAQ 2,846.81, -37.08 (1.29%)
S&P 500 1,355.49, -19.04 (1.39%)
NYSE Composite 7,903.42, -119.81 (1.49%)
NASDAQ Volume 2,103,531,000
NYSE Volume 4,062,878,250
Combined NYSE & NASDAQ Advance - Decline: 822-4741
Combined NYSE & NASDAQ New highs - New lows: 39-333 (WoW!)
WTI crude oil: 86.32, +0.94
Gold: 1,730.10, +5.30
Silver: 32.88, +0.393
The selloff today was a continuation of what's been occurring since before the election, but has accelerated dramatically since. Wall Street is quite unhappy with prospects that President Obama will not budge from his position to eliminate the Bush tax cuts on the wealthiest two percent of Americans, as emphatically spelled out in an early afternoon press conference.
The president was cool, calm and collected, fielding questions on a variety of topics, but, even though he mentioned compromise frequently, he did not waver in his commitment to tax the wealthy at more than their current rates, including gains on investments, particularly - Wall Street fears - regular income and dividends.
Taking their cue from the president's message, stocks, which opened briefly higher, but quickly fell deep into the red, made new lows nearing the end of his remarks and continued lower into the close, the Dow suffering a 185-point loss and the NASDAQ reaching levels 10% below their recent highs, crashing into correction territory.
With all of the major indices, including even the Russell 2000 of mostly small cap stocks, continuing their descent below their respective 200-day moving averages, bottoms were sought out, though none could be found.
The massive run-up which began in March of 2009 is being unwound, with most of the blame being laid upon the politicians in Washington, DC, though there are more than a few more scapegoats, notably the greed and feed crowd that started the entire mess - the irresponsible banking community and their masters of control, the Federal Reserve.
With the dual policies of ZIRP and massive monetization, the Fed enabled much of Wall Street's excess and continues to do so even today. The neo-Keynesian policies of Ben Bernanke and his predecessor, Alan Greenspan, has spawned a debt bubble deflation crisis that they cannot - as much as they try - spend their way out of.
Most individual investors have been fleeing the market or have already taken their seats on the sidelines, so the damage being done to stocks is going to impact the middle and upper classes the most, with 401k, investment and pension plans taking the brunt of the declines.
In particular, Dow stocks, seen by many as representing the core of American industrialism, have lost more than 1100 points since their highs in early October, erasing most of the gains made throughout the year.
While Washington politicians dither over negotiations to avoid massive tax increases and huge budget cuts (which some say are needed), investors are worried that whatever solution they arrive at will be too little, too late and more of a can-kicking exercise than real reform.
With the holidays fast approaching, Americans are not in a mood for more business as usual from either Wall Street or Washington, and the anger is growing, even on Main Street, where small businesses continue to suffer or skirt taxation completely.
The next few days and weeks could easily turn into a crisis more severe than that of 2008, since none of the improprieties produced by that financial peer into the abyss have yet to be resolved, and now there are fewer measures the Fed or the Treasury can employ to keep the economy afloat.
If anyone thought that the crisis in America was over - to say nothing of the even worse conditions in Europe - they should pay close attention to what happens over the next sixty to ninety days, because they will surely be replete with wild market swings, irony and recriminations from all sides against each other.
Surviving into and beyond 2013 will be a major test of not only the American spirit but of Americans' willingness to accept leadership. President Obama's election to a second term was probably the correct choice, but he alone cannot fix the mess others created.
After today, the bankers and the wizard genii of Wall Street should be running for cover they should have sought out years ago.
Today was a truly dark day, though, from the looks of things, there are many more to come.
Grow some crops if you can, stay close to home and loved ones, and remember our motto: FREE HOUSES FOR EVERYONE!
Dow 12,570.95, -185.23 (1.45%)
NASDAQ 2,846.81, -37.08 (1.29%)
S&P 500 1,355.49, -19.04 (1.39%)
NYSE Composite 7,903.42, -119.81 (1.49%)
NASDAQ Volume 2,103,531,000
NYSE Volume 4,062,878,250
Combined NYSE & NASDAQ Advance - Decline: 822-4741
Combined NYSE & NASDAQ New highs - New lows: 39-333 (WoW!)
WTI crude oil: 86.32, +0.94
Gold: 1,730.10, +5.30
Silver: 32.88, +0.393
Wednesday, June 6, 2012
Short-covering, Algo Push, Promises of Free Money Boost Stocks
Stocks were boosted globally on a combination of an HFT algo push, technical bounce, short covering and something of an unveiled promise by the ECB's Mario Draghi, Germany's Queen Angela Merkel and US print primer-in-chief, president 0-blah-blah to create more money out of thin air until all the bad stuff goes away.
Good luck with that.
The sheeple will continue to follow their leaders, nothing will really be fixed, but the sugar high will be nice... until it's not.
If anyone is entertaining the impulse to buy into this rally, be reminded that the bankrupt US banks led the way back above the 200-day moving averages on the S&P, Dow and NYSE. There are more distortions and false tops in the current market than usual, and that's saying quite a lot.
Gold got a bit of a boost, but the day's real winner was silver, closing in fast on $30/ounce.
Nothing has really changed, except the big money on Wall Street placed some short term bets on what appear to be (they're not) cheap stocks. Moves such as today's usually result in tears and pain within a small time frame. However, if every central bank in the world is going to print until they run out of ink, there could be a bit of a lift. Events may change that.
Caution is strongly advised as the correction may or may not be over. Probably the worst time to buy stocks is during a snap-back rally, especially one like this, on no news, data or earnings.
Some of the biggest gains happen within bear markets, so, be advised that we are still in a cyclical bull market ensconced by a secular bear. Profit-taking should commence within the next three trading days. After that, anybody's guess is best, dependent largely upon what Chairman Ben says to the joint committee of congress tomorrow, though our hunch is that he's already let the cat out of the bag to his henchmen on the street.
Dow 12,414.79, +286.84 (2.37%)
NASDAQ 2,844.72, +66.61 (2.40%)
S&P 500 1,315.13, +29.63 (2.30%)
NYSE Composite 7,502.04, +163.41 (2.23%)
NASDAQ Volume 1,671,509,125
NYSE Volume 4,113,058,500
Combined NYSE & NASDAQ Advance - Decline: 4818-849
Combined NYSE & NASDAQ New highs - New lows: 93-33
WTI crude oil: 85.02, +0.73
Gold: 1,634.20, +17.30
Silver: 29.49, +1.08
Good luck with that.
The sheeple will continue to follow their leaders, nothing will really be fixed, but the sugar high will be nice... until it's not.
If anyone is entertaining the impulse to buy into this rally, be reminded that the bankrupt US banks led the way back above the 200-day moving averages on the S&P, Dow and NYSE. There are more distortions and false tops in the current market than usual, and that's saying quite a lot.
Gold got a bit of a boost, but the day's real winner was silver, closing in fast on $30/ounce.
Nothing has really changed, except the big money on Wall Street placed some short term bets on what appear to be (they're not) cheap stocks. Moves such as today's usually result in tears and pain within a small time frame. However, if every central bank in the world is going to print until they run out of ink, there could be a bit of a lift. Events may change that.
Caution is strongly advised as the correction may or may not be over. Probably the worst time to buy stocks is during a snap-back rally, especially one like this, on no news, data or earnings.
Some of the biggest gains happen within bear markets, so, be advised that we are still in a cyclical bull market ensconced by a secular bear. Profit-taking should commence within the next three trading days. After that, anybody's guess is best, dependent largely upon what Chairman Ben says to the joint committee of congress tomorrow, though our hunch is that he's already let the cat out of the bag to his henchmen on the street.
Dow 12,414.79, +286.84 (2.37%)
NASDAQ 2,844.72, +66.61 (2.40%)
S&P 500 1,315.13, +29.63 (2.30%)
NYSE Composite 7,502.04, +163.41 (2.23%)
NASDAQ Volume 1,671,509,125
NYSE Volume 4,113,058,500
Combined NYSE & NASDAQ Advance - Decline: 4818-849
Combined NYSE & NASDAQ New highs - New lows: 93-33
WTI crude oil: 85.02, +0.73
Gold: 1,634.20, +17.30
Silver: 29.49, +1.08
Friday, February 6, 2009
SPECIAL: Markets Off Course, Major Correction Coming
This is a special report on the unusual action in US equity markets this morning. Our usual recap will be posted around 5:00 today.
Last night, well after markets closed, News Corp. (NWSA) - the media conglomerate controlled by Rupert Murdoch - reported a loss of $6.4 billion in its most recent quarter.
This morning, paper and pulp producer Weyerhaeuser (WY) posted a 4th quarter loss of more than $1.21 billion, or $5.73 a share, from a loss of $63 million, or 30 cents a share, a year ago.
An hour prior to the opening bell, the Bureau of Labor Statistics reported job losses of 598,000 in January and a jump in the "official" unemployment rate to 7.6%.
So, naturally, at the open, the major US equity indices went straight UP. What's that you say? Doesn't make any sense?
Well, you're right. As I mentioned briefly yesterday, and the day before, and many times prior to that, US MARKETS ARE RIGGED.
As I write, I am watching stocks race towards the sky, with the Dow up 180 points, the NASDAQ higher by 33 and the S&P ahead by 17.
Speaking of the S&P, Standard & Poor's Index Services reports that it expects dividends for components of its S&P 500 Index to drop 13.3% this year. More bad news, right?
Stocks are higher, based on absolutely nothing but hype, not even hope! Zounds!
As a bonus, here's Peter Schiff on why the stimulus package is going to make things worse:
And...
- Secretary of State Thomas Jefferson
Anyhow, look for stocks to stop rallying on this semi-short squeeze and tank below 7500 in the near future. I'll be back later to report on how the rest of the day went.
Last night, well after markets closed, News Corp. (NWSA) - the media conglomerate controlled by Rupert Murdoch - reported a loss of $6.4 billion in its most recent quarter.
This morning, paper and pulp producer Weyerhaeuser (WY) posted a 4th quarter loss of more than $1.21 billion, or $5.73 a share, from a loss of $63 million, or 30 cents a share, a year ago.
An hour prior to the opening bell, the Bureau of Labor Statistics reported job losses of 598,000 in January and a jump in the "official" unemployment rate to 7.6%.
So, naturally, at the open, the major US equity indices went straight UP. What's that you say? Doesn't make any sense?
Well, you're right. As I mentioned briefly yesterday, and the day before, and many times prior to that, US MARKETS ARE RIGGED.
As I write, I am watching stocks race towards the sky, with the Dow up 180 points, the NASDAQ higher by 33 and the S&P ahead by 17.
Speaking of the S&P, Standard & Poor's Index Services reports that it expects dividends for components of its S&P 500 Index to drop 13.3% this year. More bad news, right?
Stocks are higher, based on absolutely nothing but hype, not even hope! Zounds!
As a bonus, here's Peter Schiff on why the stimulus package is going to make things worse:
And...
"If the American people ever allow the banks to control the issuance of their currency.. the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered."
- Secretary of State Thomas Jefferson
Anyhow, look for stocks to stop rallying on this semi-short squeeze and tank below 7500 in the near future. I'll be back later to report on how the rest of the day went.
Monday, March 19, 2007
Another Big Monday for the Dow
After ending last week with modest losses, the Dow and other major US equity indices raged higher on Monday, with blue chips in the lead. The tenor of the trade was eerily similar to last Monday's in which the Dow headed higher before noon, leveled off and sold off slightly into the close.
The only difference was that there was no late afternoon selling. The Dow remained close to its highs for the day from 11:30 onward.
Dow 12,226.17 +115.76; NASDAQ 2,394.41 +21.75; S&P 500 1,402.06 +15.11; NYSE Composite 9,091.00 +107.99
Volume showed a less-than-enthusiastic buying crowd, though advancing issues swamped declining ones by a 5-2 margin. Last week's trend in the new highs-new lows metric has now completely reversed for the third time in four weeks, with new highs posting a 209-96 advantage on the day.
With the Fed set to issue a statement on interest rate policy on Wednesday, today's buyers seemed confident that last week's alarming PPI numbers were muted by the tame CPI reading and that inflation is still not a problem. That said, there's almost nobody on Wall Street who thinks the Fed will either raise or lower rates this week.
The market may have to search for a catalyst as the only other meaningful data out this week (beyond the scores of the NCCA tournament games) are in the housing sector, a market segment that's already seen more than its fair share of battering over the past month.
So, investors will have to do what every good investor must in times like these: wait for signals. The problem is that there may not be many signs being flashed on the exchanges until quarterly earnings begin rolling out in three weeks. It will be interesting to see what traders occupy themselves with, barring any meaningful news or earth-shaking announcements.
In what's possibly been the best news of all for this shaky market, the price of a barrel of crude oil continued to fall on Monday, closing down another 52 cents to $56.59. Gold and silver, the precious metals usually-referred to as the best defense against inflation, posted negligible gains.
If we continue to follow the recent market pattern, today's gain will become rather meaningless by mid-week. Monday's mirthful mood could turn into more frustration by Friday as the correction continues into week 5.
The only difference was that there was no late afternoon selling. The Dow remained close to its highs for the day from 11:30 onward.
Dow 12,226.17 +115.76; NASDAQ 2,394.41 +21.75; S&P 500 1,402.06 +15.11; NYSE Composite 9,091.00 +107.99
Volume showed a less-than-enthusiastic buying crowd, though advancing issues swamped declining ones by a 5-2 margin. Last week's trend in the new highs-new lows metric has now completely reversed for the third time in four weeks, with new highs posting a 209-96 advantage on the day.
With the Fed set to issue a statement on interest rate policy on Wednesday, today's buyers seemed confident that last week's alarming PPI numbers were muted by the tame CPI reading and that inflation is still not a problem. That said, there's almost nobody on Wall Street who thinks the Fed will either raise or lower rates this week.
The market may have to search for a catalyst as the only other meaningful data out this week (beyond the scores of the NCCA tournament games) are in the housing sector, a market segment that's already seen more than its fair share of battering over the past month.
So, investors will have to do what every good investor must in times like these: wait for signals. The problem is that there may not be many signs being flashed on the exchanges until quarterly earnings begin rolling out in three weeks. It will be interesting to see what traders occupy themselves with, barring any meaningful news or earth-shaking announcements.
In what's possibly been the best news of all for this shaky market, the price of a barrel of crude oil continued to fall on Monday, closing down another 52 cents to $56.59. Gold and silver, the precious metals usually-referred to as the best defense against inflation, posted negligible gains.
If we continue to follow the recent market pattern, today's gain will become rather meaningless by mid-week. Monday's mirthful mood could turn into more frustration by Friday as the correction continues into week 5.
Friday, March 16, 2007
Stocks Sag Again at Week's End
US equities lost ground in Friday's session, culminating in the third down week in the last four. Today's losses were contained, with the Dow losing just less than 50 points while the NASDAQ and S&P were only down single digits. The Dow was down 166 points for the week. By contrast, the NASDAQ lost only 16. Blue chips are beginning to feel the pain of a weakening economy. Only 9 of the 30 Dow components showed gains on Friday, the highest being a mere 21 cents by both Wal-Mart and Hewlett-Packard.
Dow 12,110.41 -49.27; NASDAQ 2,372.66 -6.04; S&P 500 1,386.95 -5.33; NYSE Composite 8,982.73 -22.52
Market internals were mixed, as declining issues outpaced advancers by better than a 3-2 margin. New highs stayed ahead of new lows, barely, 145-112.
While sub-prime mortgage lending woes taking the better part of the headlines this week, the undercurrents of inflation, reduced investment flows and upcoming 1st quarter earnings and economic reports are keeping investor sentiment in an extremely cautious posture. With only 2 weeks left in the 1st quarter, if market performance is any gauge, we're in for a rough ride the remainder of the year.
While there are still analysts out there touting stocks and sounding cherry, they're voices are becoming fewer and the commentary increasingly couched in more restrained language. The long running of the bulls is over (officially ended on February 20), and the reality of the correction and the possibility of a protracted bear market is beginning to sink in.
The price of crude continued its week-long slide, losing another 44 cents on Friday to end the week at $57.11. Gold closed at 653.90, +6.80; silver finished the week at 13.22, +0.14. A slowing economy would not augur higher petroleum prices, proving that there indeed is a silver lining inside every dark cloud.
Dow 12,110.41 -49.27; NASDAQ 2,372.66 -6.04; S&P 500 1,386.95 -5.33; NYSE Composite 8,982.73 -22.52
Market internals were mixed, as declining issues outpaced advancers by better than a 3-2 margin. New highs stayed ahead of new lows, barely, 145-112.
While sub-prime mortgage lending woes taking the better part of the headlines this week, the undercurrents of inflation, reduced investment flows and upcoming 1st quarter earnings and economic reports are keeping investor sentiment in an extremely cautious posture. With only 2 weeks left in the 1st quarter, if market performance is any gauge, we're in for a rough ride the remainder of the year.
While there are still analysts out there touting stocks and sounding cherry, they're voices are becoming fewer and the commentary increasingly couched in more restrained language. The long running of the bulls is over (officially ended on February 20), and the reality of the correction and the possibility of a protracted bear market is beginning to sink in.
The price of crude continued its week-long slide, losing another 44 cents on Friday to end the week at $57.11. Gold closed at 653.90, +6.80; silver finished the week at 13.22, +0.14. A slowing economy would not augur higher petroleum prices, proving that there indeed is a silver lining inside every dark cloud.
Monday, March 5, 2007
Wider and Deeper
The US stock markets are in a protracted downturn that isn't likely to end soon, though the measure of the carnage on the NASDAQ has already nearly reached my expectations (7-9%).
People (like headline writers for major news services) usually search to find reasons behind the numbers, but in this current case, there need be no rationale. Stocks are falling because people are selling, plain and simple. A combination of certain perceptions, including, a) a slowing economy (real), b) overvaluation of stocks (again, real), and c) fear that the future may not be so bright (perceived, and only possibly real), have all contributed to the sell-off of the past week.
These perceptions are not about to change soon. Only revaluation (i.e., lower stock prices) is going to solve the problem and that means lower we must go. There's little confidence on Wall Street or Main St. right now and it's being reflected in the indices on an everyday basis.
Today was no exception as we saw the Dow hang in positive territory until capitulation in mid-afternoon. The NASDAQ and S&P 500 spent most of their day in the red.
Dow 12,050.41 -63.69; Nasdaq 2,340.68 -27.32; S&P 500 1,374.12 -13.05
The real carnage was on the NYSE Composite, which lost 120 points today (1.34%). Market metrics established that the correction is broadening and deepening. Overall NYSE and NASDAQ advance-decline lines ran roughly 5-1 in favor of the losers. NYSE volume was 10-1 in the red. But the most compelling data to confirm the ongoing train wreck were the 189 new lows which swamped the 98 new highs. That number had been relatively flat until Friday, at which time the new lows took over leadership.
The new lows will have to reach more than 300 combined before we can begin to take sight on a bottom, so there's much further to go.
Watching the tape today was a painful, gut-wrenching experience for most investors, except for the brilliant few who had already departed. There's still time to get out, however, before a simple loss becomes a life-changing event. As I've repeatedly noted, we are only in the early phase of this downturn and while I may be wrong about the actual bottom for the Dow, I've already been proven vulnerable on the depth of NASDAQ losses. The upcoming earnings season should prove to be a doozy and we're still 5-6 weeks away from that. Prudence would prescribe selling now, not later.
Perhaps the only good news on the day was that oil for April delivery closed down 1.57 to 60.07. Lower oil and gas prices would be welcome relief and surely more representative of the actual supply-demand scenario. Gold and silver were also lower again, signaling that there truly is no safe haven.
The Dow has lost nearly 600 points in just the last 5 sessions. If that isn't enough of a departure signal for you, maybe being hit by the actual train will do. It's very clear that another 1000 points will be sacrificed over the next 3-5 weeks. Caveat emptor.
People (like headline writers for major news services) usually search to find reasons behind the numbers, but in this current case, there need be no rationale. Stocks are falling because people are selling, plain and simple. A combination of certain perceptions, including, a) a slowing economy (real), b) overvaluation of stocks (again, real), and c) fear that the future may not be so bright (perceived, and only possibly real), have all contributed to the sell-off of the past week.
These perceptions are not about to change soon. Only revaluation (i.e., lower stock prices) is going to solve the problem and that means lower we must go. There's little confidence on Wall Street or Main St. right now and it's being reflected in the indices on an everyday basis.
Today was no exception as we saw the Dow hang in positive territory until capitulation in mid-afternoon. The NASDAQ and S&P 500 spent most of their day in the red.
Dow 12,050.41 -63.69; Nasdaq 2,340.68 -27.32; S&P 500 1,374.12 -13.05
The real carnage was on the NYSE Composite, which lost 120 points today (1.34%). Market metrics established that the correction is broadening and deepening. Overall NYSE and NASDAQ advance-decline lines ran roughly 5-1 in favor of the losers. NYSE volume was 10-1 in the red. But the most compelling data to confirm the ongoing train wreck were the 189 new lows which swamped the 98 new highs. That number had been relatively flat until Friday, at which time the new lows took over leadership.
The new lows will have to reach more than 300 combined before we can begin to take sight on a bottom, so there's much further to go.
Watching the tape today was a painful, gut-wrenching experience for most investors, except for the brilliant few who had already departed. There's still time to get out, however, before a simple loss becomes a life-changing event. As I've repeatedly noted, we are only in the early phase of this downturn and while I may be wrong about the actual bottom for the Dow, I've already been proven vulnerable on the depth of NASDAQ losses. The upcoming earnings season should prove to be a doozy and we're still 5-6 weeks away from that. Prudence would prescribe selling now, not later.
Perhaps the only good news on the day was that oil for April delivery closed down 1.57 to 60.07. Lower oil and gas prices would be welcome relief and surely more representative of the actual supply-demand scenario. Gold and silver were also lower again, signaling that there truly is no safe haven.
The Dow has lost nearly 600 points in just the last 5 sessions. If that isn't enough of a departure signal for you, maybe being hit by the actual train will do. It's very clear that another 1000 points will be sacrificed over the next 3-5 weeks. Caveat emptor.
Wednesday, February 28, 2007
Cooler Heads Prevail; Wall St. Bucks Up
A day after one of Wall Street's more impressive downflights, the suits got back on their trains this morning as usual and began buying some stocks.
It wasn't exactly an overwhelming affirmation of the miracle of capitalism, but Wall Street, being the fickle beast that it is, turned the tide and restored some confidence after a severe battering on enormous volume - the largest ever for the NYSE.
Like I said yesterday, nobody should have been in a big hurry to dump their 401k or empty the college fund because yesterday's event was highly staged and will barely be seen as a blip in the long run of events. The fact remains, however, that all of the gains of January and February were wiped out in one day, so we're starting all over again for the year, like some version of an economic do-over.
There were probably more than a few millions made on the short side in options and most of that was likely in the hands of the big brokerages and other uber-traders. Today's mini-rebound notwithstanding, the overall mood is a bit dour and anyone who's anyone knows that stocks were overbought and in need of some kind of reversal. One should also be aware that in this shock-and-awe environment, yesterday's Bear barrage was only the first salvo and more down days are on the horizon.
A 3-4% wallop on one day is certainly a good start for a protracted correction, which is well underway and should see a fair share of up and down days over the next couple of months. Naturally, the down days will be larger and more dynamic that the speculative uppers, and the bottom will eventually be found well below current levels.
For the record, the Dow gained 52.39 points, the NASDAQ plowed ahead 8.29 and the S&P picked up 7.78. Those numbers are dwarfed by yesterday's hammering, but it shows there are still Bulls ready for slaughter.
Make no mistake, the correction has now been well-greased and there are still overvalued stocks aplenty. A couple of my favorites, Yahoo and eBay, are trading at current p/e ratios of nearly 60 and 40, respectively. (I've a mind to buy about a zillion Yahoo April 30 puts but I don't want to disturb the market. I just want to report on it.)
One doesn't have to look far to find stocks to sell. Tuesday's sell-off was rather uniform and orderly - as orderly as a mini-crash can be - and while there were a number of severe casualties, there were no fatalities.
Today's muted reaction was more of a calming session, even though suckers could be found on every issue. Volume was once again abnormally high. There is more downside risk, much more. Keep an eye peeled on oil, silver and gold. Crude has broken above $60 for now, closing today at $61.75, the last day of trading for April futures. Expect a pull-back tomorrow on crude, while gold remains rangebound. Silver is on the verge of a breakout and bears watching if not an outright screaming buy. Considering the carnage from Tuesday, the precious metals certainly displayed some generous giveback today.
It wasn't exactly an overwhelming affirmation of the miracle of capitalism, but Wall Street, being the fickle beast that it is, turned the tide and restored some confidence after a severe battering on enormous volume - the largest ever for the NYSE.
Like I said yesterday, nobody should have been in a big hurry to dump their 401k or empty the college fund because yesterday's event was highly staged and will barely be seen as a blip in the long run of events. The fact remains, however, that all of the gains of January and February were wiped out in one day, so we're starting all over again for the year, like some version of an economic do-over.
There were probably more than a few millions made on the short side in options and most of that was likely in the hands of the big brokerages and other uber-traders. Today's mini-rebound notwithstanding, the overall mood is a bit dour and anyone who's anyone knows that stocks were overbought and in need of some kind of reversal. One should also be aware that in this shock-and-awe environment, yesterday's Bear barrage was only the first salvo and more down days are on the horizon.
A 3-4% wallop on one day is certainly a good start for a protracted correction, which is well underway and should see a fair share of up and down days over the next couple of months. Naturally, the down days will be larger and more dynamic that the speculative uppers, and the bottom will eventually be found well below current levels.
For the record, the Dow gained 52.39 points, the NASDAQ plowed ahead 8.29 and the S&P picked up 7.78. Those numbers are dwarfed by yesterday's hammering, but it shows there are still Bulls ready for slaughter.
Make no mistake, the correction has now been well-greased and there are still overvalued stocks aplenty. A couple of my favorites, Yahoo and eBay, are trading at current p/e ratios of nearly 60 and 40, respectively. (I've a mind to buy about a zillion Yahoo April 30 puts but I don't want to disturb the market. I just want to report on it.)
One doesn't have to look far to find stocks to sell. Tuesday's sell-off was rather uniform and orderly - as orderly as a mini-crash can be - and while there were a number of severe casualties, there were no fatalities.
Today's muted reaction was more of a calming session, even though suckers could be found on every issue. Volume was once again abnormally high. There is more downside risk, much more. Keep an eye peeled on oil, silver and gold. Crude has broken above $60 for now, closing today at $61.75, the last day of trading for April futures. Expect a pull-back tomorrow on crude, while gold remains rangebound. Silver is on the verge of a breakout and bears watching if not an outright screaming buy. Considering the carnage from Tuesday, the precious metals certainly displayed some generous giveback today.
Monday, February 26, 2007
The Correction Has Begun
On Monday, the Dow drooped for the 4th straight session. The correction has begun.
Since closing at 12,786.64 (an all-time high) on Feb. 20, the Dow has lost 154 points to its resting place today at the close of 12,632.26. Four straight losing days: a trend? Maybe, and at this point in time, likely.
There does not need to be any reason for a decline in the price of stocks as investors will make up any assortment of reasons to buy or sell, but when it comes to substantial increases or declines in the value of the blue chips of the Dow it's worth a second look.
On Monday, there were 16 Dow components in the losing column, one unchanged and 14 posting gains. The disparity was not large and neither was the point loss, a mere -15.22 for the session. Since the Dow is not a weighted average, a closer look at the components reveals that four of the five heaviest-traded issues were actually up.
Intel, the leader with 72 million shares traded, gained .09. Microsoft (63 mil.) was up .17. Citigroup (35 mil.) lost 1.09. Pfizer (32 mil.) gained .22 and General Electric (25 mil.) was up .24.
If the Dow was weighted, it would likely have shown a gain. But, it is not. The points are added and subtracted after being calculated by the Dow divisor, currently 0.14452124. So, that Citigroup loss of -1.09 ÷ 0.14452124 = -7.54. Citigroup's loss outweighed the gains of the other 4 stocks, even though those four stocks traded nearly 5 1/2 times the shares.
Adding a weighted average of the Dow might skew results to which investors have, over the years, grown accustomed, thus, it has not been changed in many years, though the divisor is routinely adjusted for splits.
So, we have the Dow in drop mode, while the other, weighted, indices march to their own beat. The finishes today were, however, similar. The NASDAQ lost 10.58 and the S&P was down 1.82. The reliably honest NYSE Composite showed a gain of just 1.24.
What we're witnessing and will be witness to over the next 5-7 weeks prior to the next round of earnings, is a bit of divergence between the indices. While the Dow and S&P should follow a similar path, I expect the NASDAQ, with its preponderance of tech and mid-cap issues, to outperform both of those.
Remember that in the dotcom implosion of 2000-2002, the NASDAQ took the most severe beating and has only recovered to less than half of its all-time high while the Dow has set new highs and the S&P is close to record territory. 1527.46 was the all-time high for the S&P. It's currently less than 80 points from that mark.
A 10% loss on the Dow would barely be noticeable. From its high of last week, a 10% decline would only put it at 11, 508. I believe a 15-20% loss on the Dow is now in the cards. It would signal to investors that the market is and has been overbought and that the colossal returns of the past 4 years cannot be sustained indefinitely.
I won't bore you with the details of my calculations, but note that Fibonaci numbers will be in play. Expect the Dow to bottom out around the 10,350 to 11,100 range. We're not in a position for a full-blown recession, but indications are that the economy is growing at a slow, sustainable rate. Dollars will be taken off the table in a combination of profit-taking and over-indulgent fears.
The entire episode should shake out by the end May, when the markets will likely go sideways for a while before setting sail for new highs in 2008. It's going to be a rough ride for a while, but nothing earth-shaking unless political machinations derail into some unlikely chaos.
The NASDAQ will fare much better, with an 8-10% decline being the absolute worst of this round.
Since closing at 12,786.64 (an all-time high) on Feb. 20, the Dow has lost 154 points to its resting place today at the close of 12,632.26. Four straight losing days: a trend? Maybe, and at this point in time, likely.
There does not need to be any reason for a decline in the price of stocks as investors will make up any assortment of reasons to buy or sell, but when it comes to substantial increases or declines in the value of the blue chips of the Dow it's worth a second look.
On Monday, there were 16 Dow components in the losing column, one unchanged and 14 posting gains. The disparity was not large and neither was the point loss, a mere -15.22 for the session. Since the Dow is not a weighted average, a closer look at the components reveals that four of the five heaviest-traded issues were actually up.
Intel, the leader with 72 million shares traded, gained .09. Microsoft (63 mil.) was up .17. Citigroup (35 mil.) lost 1.09. Pfizer (32 mil.) gained .22 and General Electric (25 mil.) was up .24.
If the Dow was weighted, it would likely have shown a gain. But, it is not. The points are added and subtracted after being calculated by the Dow divisor, currently 0.14452124. So, that Citigroup loss of -1.09 ÷ 0.14452124 = -7.54. Citigroup's loss outweighed the gains of the other 4 stocks, even though those four stocks traded nearly 5 1/2 times the shares.
Adding a weighted average of the Dow might skew results to which investors have, over the years, grown accustomed, thus, it has not been changed in many years, though the divisor is routinely adjusted for splits.
So, we have the Dow in drop mode, while the other, weighted, indices march to their own beat. The finishes today were, however, similar. The NASDAQ lost 10.58 and the S&P was down 1.82. The reliably honest NYSE Composite showed a gain of just 1.24.
What we're witnessing and will be witness to over the next 5-7 weeks prior to the next round of earnings, is a bit of divergence between the indices. While the Dow and S&P should follow a similar path, I expect the NASDAQ, with its preponderance of tech and mid-cap issues, to outperform both of those.
Remember that in the dotcom implosion of 2000-2002, the NASDAQ took the most severe beating and has only recovered to less than half of its all-time high while the Dow has set new highs and the S&P is close to record territory. 1527.46 was the all-time high for the S&P. It's currently less than 80 points from that mark.
A 10% loss on the Dow would barely be noticeable. From its high of last week, a 10% decline would only put it at 11, 508. I believe a 15-20% loss on the Dow is now in the cards. It would signal to investors that the market is and has been overbought and that the colossal returns of the past 4 years cannot be sustained indefinitely.
I won't bore you with the details of my calculations, but note that Fibonaci numbers will be in play. Expect the Dow to bottom out around the 10,350 to 11,100 range. We're not in a position for a full-blown recession, but indications are that the economy is growing at a slow, sustainable rate. Dollars will be taken off the table in a combination of profit-taking and over-indulgent fears.
The entire episode should shake out by the end May, when the markets will likely go sideways for a while before setting sail for new highs in 2008. It's going to be a rough ride for a while, but nothing earth-shaking unless political machinations derail into some unlikely chaos.
The NASDAQ will fare much better, with an 8-10% decline being the absolute worst of this round.
Subscribe to:
Posts (Atom)
Posts
