All of the major US indices posted record losses as coronavirus (COVID-19) continues to rage through 115 countries, with 114,595 confirmed cases and a death toll now over 4,000 (4,028).
Adding to market grief, Saudi Arabia, in an effort to harm other oil producers sent crude futures plunging as it unilaterally slashed prices and raised production output. WTI crude fell below $30 a barrel, recovering slightly to above $34.00 a barrel prior to Tuesday's opening bell. Still, the price cut was mammoth, on the order of a 24.6% decline. WTI closed at $41.28 Friday, finishing at $31.13 on Monday.
The Dow, S&P, NASDAQ, and NYSE all recorded record point losses, blowing away earlier marks. The Dow's 2,013.76 loss nearly doubled the previous record from February 27 of this year (−1,190.95). On The NASDAQ, the 624.94-point loss topped the list, easily surpassing the February 9 drop of −414.30.
Losing 225,81, the S&P vaulted over its previous mark of −137.63, also on February 27 of this year, less than two weeks ago.
The treasury bond complex was not spared, with yields falling across the entire curve by enormous amounts. The 30-year bond finished at 0.99% yield, the first time ever it has been below one percent. The day's decline was an unprecedented 26 basis points. At the other end, one-month bills dropped 22 basis points, from 0.79 to 0.57%.
Offering the lowest yield is the six-month bill, at 0.27%. The 10-year note was absolutely shattered, down 20 basis points, from 0.74 to 0.54%. In terms of curve, the complex is exceedingly flat, with just 72 basis points between the top and bottom yields.
Gold and silver both were higher initially, but were beaten down over the course of the day.
In the United States, the number of new, confirmed cases are rising rapidly as tests from the CDC begin arriving in massive quantities to state and local hospitals and labs. There are now 755 cases of coronavirus in the US, and 26 deaths.
After China, the US ranks 8th overall. Italy has reported 9,172 cases with 463 deaths. Italy's death figures are the highest outside mainland China, as are the number of cases. The Italian government closed its borders completely on Monday after efforts to contain the virus to the northern provinces failed.
The other countries topping the list of most infected are, in order, South Korea, Iran, France, Spain, and Germany, after which comes the United States. All of the aforementioned countries are reporting more than 1,000 cases. Confirmed cases outside China has exceeded those inside China for nearly the past week and are doubling every three to four days.
In addition to the human tragedy, large events are being canceled worldwide. Ireland has canceled all St. Patrick's Day parades, and around the world sporting events, concerts and other large-crowd gatherings are being put on hold or canceled, including the huge South-by-Southwest (SXSW) conference in Austin, Texas. The NCAA basketball tournament, commonly known as March Madness, which begins in a week, NBA basketball, and Major League Baseball, which opens its regular season on March 26, are all mulling the idea of playing games with no fans in the stands.
Businesses are gearing down due to the crisis, with many major firms instructing employees to work from home. School cancelations are on the rise globally, and will be widespread in the US in coming days and weeks.
The after-effects of the virus on the business community and the economy are just beginning to be felt according to many in finance, including hedge fund manager Kyle Bass, who believes the crisi will peak in about a month.
Even though the World Health Organization (WHO) is reluctant to call the worldwide spread of the pathogen a pandemic, it is surely one. The WHO does not want to use the world pandemic as it would trigger the default of "pandemic bonds," designed to provide $500 million to the organization should a pandemic be declared.
With less than an hour before the opening bell in the US, stocks seem to have caught a bid. Japan's NIKKEI was lower for most of the day but finished marginally higher on Tuesday. Other Pacific Rim bourses finished with gains of one to one-and-a-half percent, while European indices are currently sporting gains of around 2.5%.
US stock futures point to a higher open, as traders prepare for another stressful session. The so-called "dead cat bounce" applies, as the markets don't seem to have actually bottomed out. When all is said and done, many countries are going to report GDP losses for the first and likely, second quarters, plunging the world into what may be a prolonged recession.
At the Close, Monday, March 9, 2020:
Dow Jones Industrial Average: 23,851.02, -2,013.76 (-7.79%)
NASDAQ: 7,950.68, -624.94 (-7.29%)
S&P 500: 2,746.56, -225.81 (-7.60%)
NYSE: 11,298.43, -1,053.60 (-8.53%)
Showing posts with label dead cat bounce. Show all posts
Showing posts with label dead cat bounce. Show all posts
Tuesday, March 10, 2020
Tuesday, June 26, 2018
Worst Dead Cat Bounce Ever As Stocks Struggle For Gains
Usually, after stocks have suffered a significant setback - as occurred Monday - on the following day traders look for what's known as a "dead cat bounce."
The term comes from the idea that even a dead cat dropped from a great height would at least bounce to some degree, the analogy to the downward trend of stocks from the previous day and the subsequent "bounce" on the morrow.
Today's dead cat bounce was more like a dead cat rollover, as stocks barely budged from the lower levels set in place on Monday. The Dow was up by as much as 130 points, but sellers took the reins again late in the session, knocking 100 points off the Dow while similar percentage moves were witnessed on the various other indices.
What this indicates is that there's no confidence in stocks presently, mainly because they are still, for the most part, wildly overvalued, and the conditions for another gigantic waterfall event are evident in the market.
Stability is what the market craves, and there is none to be found. Traders are pushing buttons almost at random, buying this or that, holding for seconds or maybe minutes, and unloading for instant, albeit tiny, profits. There are a multitude of evils circulating through markets presently. From the still-evolving trade war to the Fed's insistence on raising interest rtes in the face of stubbornly docile global economic backdrop to buyback-fueled phony earnings reports (due out over the next four to five weeks), all of the elements are in place for a full-on panic.
With assistance from central banks and their foolhardy schemes to keep stocks elevated, stocks are in a fragile, utterly resistible state of affairs. Everybody is holding some; nobody wants to admit defeat by selling, but little by little the perverse undesirability of stock certificates is beginning to emerge. Everybody wants a way out, and the only way out is to sell, and to sell quickly, but quietly, which is an impossible task.
This cat didn't bounce much at all and the only thing holding the stock market together is the willingness of traders of large positions to not cause a panic. Eventually, there will be no choice but to sell, everything, at once, because there simply aren't any buy-the-dip morons left in the casino.
It appears that luck has run out of the gambling hall and it's chasing a dead cat down Wall Street.
At the Close, Tuesday, June 26 2018:
Dow Jones Industrial Average: 24,283.11, +30.31 (+0.12%)
NASDAQ: 7,561.63, +29.62 (+0.39%)
S&P 500: 2,723.06, +5.99 (+0.22%)
NYSE Composite: 12,509.72, +28.12 (+0.23%)
The term comes from the idea that even a dead cat dropped from a great height would at least bounce to some degree, the analogy to the downward trend of stocks from the previous day and the subsequent "bounce" on the morrow.
Today's dead cat bounce was more like a dead cat rollover, as stocks barely budged from the lower levels set in place on Monday. The Dow was up by as much as 130 points, but sellers took the reins again late in the session, knocking 100 points off the Dow while similar percentage moves were witnessed on the various other indices.
What this indicates is that there's no confidence in stocks presently, mainly because they are still, for the most part, wildly overvalued, and the conditions for another gigantic waterfall event are evident in the market.
Stability is what the market craves, and there is none to be found. Traders are pushing buttons almost at random, buying this or that, holding for seconds or maybe minutes, and unloading for instant, albeit tiny, profits. There are a multitude of evils circulating through markets presently. From the still-evolving trade war to the Fed's insistence on raising interest rtes in the face of stubbornly docile global economic backdrop to buyback-fueled phony earnings reports (due out over the next four to five weeks), all of the elements are in place for a full-on panic.
With assistance from central banks and their foolhardy schemes to keep stocks elevated, stocks are in a fragile, utterly resistible state of affairs. Everybody is holding some; nobody wants to admit defeat by selling, but little by little the perverse undesirability of stock certificates is beginning to emerge. Everybody wants a way out, and the only way out is to sell, and to sell quickly, but quietly, which is an impossible task.
This cat didn't bounce much at all and the only thing holding the stock market together is the willingness of traders of large positions to not cause a panic. Eventually, there will be no choice but to sell, everything, at once, because there simply aren't any buy-the-dip morons left in the casino.
It appears that luck has run out of the gambling hall and it's chasing a dead cat down Wall Street.
| 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 |
| 6/25/18 | 24,252.80 | -328.09 | -163.04 |
| 6/26/18 | 24,283.11 | +30.31 | -132.73 |
At the Close, Tuesday, June 26 2018:
Dow Jones Industrial Average: 24,283.11, +30.31 (+0.12%)
NASDAQ: 7,561.63, +29.62 (+0.39%)
S&P 500: 2,723.06, +5.99 (+0.22%)
NYSE Composite: 12,509.72, +28.12 (+0.23%)
Thursday, April 26, 2018
Stocks' Bounce Not Very Convincing; Bears Taking Control Of Market Sentiment
The Industrials ended a five-session losing streak on Wednesday, but, as dead cat bounces go, it didn't even register on the Boo-Boo Kitty scale, leaving the Dow Jones Industrial Average in the red for the month of April and still within whistling distance of correction territory (23,954).
If it hasn't become obvious to just about everyone on Wall Street that stocks are in some serious trouble after nine years of relentless stock buybacks and jerking up by Fed policies of ZIRP and QE, it should be quite clear now. With earnings season winding down, there's going to be nothing with which to prop up stocks - other than the usual central bank manipulation and other wily shenanigans - from the first week off May until the next FOMC meeting in June.
Stocks and the Fed are playing a dangerous game of chicken. If the Federal Reserve insists upon its path of raising interest rates every three or four meetings, stocks are going to tank. From the Fed's point of view, it probably doesn't matter what they do in the interest rate scheme, since they consider the business cycle to be at an end. That kind of thinking gives them full reign to raise rates, crash the markets, send the economy into recession (late 2018 or early 2019), so that they have sufficient ammunition to battle the downturn they created. It's a sickening policy from the prior century that badly needs replacing in the 21st.
Dow Jones Industrial Average April Scorecard:
At the Close, Wednesday, April 25, 2018:
Dow Jones Industrial Average: 24,083.83, +59.70 (+0.25%)
NASDAQ: 7,003.74, -3.62 (-0.05%)
S&P 500: 2,639.40, +4.84 (+0.18%)
NYSE Composite: 12,517.86, +3.87 (+0.03%)
If it hasn't become obvious to just about everyone on Wall Street that stocks are in some serious trouble after nine years of relentless stock buybacks and jerking up by Fed policies of ZIRP and QE, it should be quite clear now. With earnings season winding down, there's going to be nothing with which to prop up stocks - other than the usual central bank manipulation and other wily shenanigans - from the first week off May until the next FOMC meeting in June.
Stocks and the Fed are playing a dangerous game of chicken. If the Federal Reserve insists upon its path of raising interest rates every three or four meetings, stocks are going to tank. From the Fed's point of view, it probably doesn't matter what they do in the interest rate scheme, since they consider the business cycle to be at an end. That kind of thinking gives them full reign to raise rates, crash the markets, send the economy into recession (late 2018 or early 2019), so that they have sufficient ammunition to battle the downturn they created. It's a sickening policy from the prior century that badly needs replacing in the 21st.
Dow Jones Industrial Average April Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 4/2/18 | 23,644.19 | -458.92 | -458.92 |
| 4/3/18 | 24,033.36 | +389.17 | -69.75 |
| 4/4/18 | 24,264.30 | +230.94 | +161.19 |
| 4/5/18 | 24,505.22 | +240.92 | +402.11 |
| 4/6/18 | 23,932.76 | -572.46 | -170.35 |
| 4/9/18 | 23,979.10 | +46.34 | -134.01 |
| 4/10/18 | 24,407.86 | +428.76 | +294.66 |
| 4/11/18 | 24,189.45 | -218.55 | +76.11 |
| 4/12/18 | 24,483.05 | +293.60 | +369.71 |
| 4/13/18 | 24,360.14 | -122.91 | +247.80 |
| 4/16/18 | 24,573.04 | +212.90 | +460.70 |
| 4/17/18 | 24,786.63 | +213.59 | +674.29 |
| 4/18/18 | 24,748.07 | -38.56 | +635.73 |
| 4/19/18 | 24,664.89 | -83.18 | +552.55 |
| 4/20/18 | 24,462.94 | -201.95 | +350.60 |
| 4/23/18 | 24,448.69 | -14.25 | +336.35 |
| 4/24/18 | 24,024.13 | -424.56 | -88.21 |
| 4/25/18 | 24,083.83 | +59.70 | -28.51 |
At the Close, Wednesday, April 25, 2018:
Dow Jones Industrial Average: 24,083.83, +59.70 (+0.25%)
NASDAQ: 7,003.74, -3.62 (-0.05%)
S&P 500: 2,639.40, +4.84 (+0.18%)
NYSE Composite: 12,517.86, +3.87 (+0.03%)
Tuesday, April 10, 2018
Trends Take Time; Why Tuesday's Sharp Gains Should Be Discounted
Less than 24 hours after making the bold proclamation that the bull market was over, Wall Street traders seem to disagree, sending the Dow Industrials up nearly 400 points at the open, with the Transportation Index cruising 130 points to the upside when the bell rang to start trading.
Days like this are precisely why investing is a longer-term proposition. Markets can turn on a dime, on a word from some prominent investor (see: Warren Buffett), a Fed President, a presidential tweet or even something more innocuous, like the trade balance (a new record, ignored), or jobs data (a bad miss on Friday, not ignored).
It's imperative to maintain perspective and not question what your own eyes told you a day ago, a week ago a month ago. In fact, for the Dow Theory components to finally trigger a sell signal took nearly three months from start to finish, all that time merely suggesting something ominous, before finally saying, "yes, here it is."
Tuesday's massive bounce contained no earth-shattering qualities in and of itself. The way the markets have been performing of late, one could hypothesize an equally violent downturn on Wednesday, Thursday, or Friday, though it appears the bulls are discounting the Dow Theory as a false flag for now. One wonders what the perma-bulls will be eating come June - steak tartar or boiled crow?
Instead of taking a short-term approach and admitting one was/is wrong, it's likely a better plan to look back at the charts and see exactly where the Dow Jones Industrial Average has to go before making a judgement on the efficaciousness of Dow Theory. I's a simple number: 26,616.71, the high from January 26, and the Transportation Index would have to close above 11,373.38, the all-time high from January 12.
Those numbers are far away, so the test will come over the coming weeks of earnings releases, when Wall Street and the financial news-speakers on CNBC, Bloomberg, and Fox Financial Network will be falling over each other to proclaim the greatness of the latest "beat." Bear in mind that all of these funny numbers coming out over the next three weeks, especially the EPS (earnings per share) figures, have all been manipulated by stock buybacks, diluting the number of shares outstanding, and in many cases, by lowered expectations by analysts. The true comparisons can be found from year-ago EPS (i.e., growth) and gross revenue numbers.
So, despite the snorting of the bull for a day, reserving judgement on a dead-cat, one-day wonder of a rally may be not only prudent, but prescient.
Dow Jones Industrial Average April Scorecard:
At the Close, Tuesday, April 10, 2018:
Dow Jones Industrial Average: 24,407.86, +428.76 (+1.79%)
NASDAQ: 7,094.30, +143.96 (+2.07%)
S&P 500: 2,656.85, +43.69 (+1.67%)
NYSE Composite: 12,575.63, +195.08 (+1.58%)
Days like this are precisely why investing is a longer-term proposition. Markets can turn on a dime, on a word from some prominent investor (see: Warren Buffett), a Fed President, a presidential tweet or even something more innocuous, like the trade balance (a new record, ignored), or jobs data (a bad miss on Friday, not ignored).
It's imperative to maintain perspective and not question what your own eyes told you a day ago, a week ago a month ago. In fact, for the Dow Theory components to finally trigger a sell signal took nearly three months from start to finish, all that time merely suggesting something ominous, before finally saying, "yes, here it is."
Tuesday's massive bounce contained no earth-shattering qualities in and of itself. The way the markets have been performing of late, one could hypothesize an equally violent downturn on Wednesday, Thursday, or Friday, though it appears the bulls are discounting the Dow Theory as a false flag for now. One wonders what the perma-bulls will be eating come June - steak tartar or boiled crow?
Instead of taking a short-term approach and admitting one was/is wrong, it's likely a better plan to look back at the charts and see exactly where the Dow Jones Industrial Average has to go before making a judgement on the efficaciousness of Dow Theory. I's a simple number: 26,616.71, the high from January 26, and the Transportation Index would have to close above 11,373.38, the all-time high from January 12.
Those numbers are far away, so the test will come over the coming weeks of earnings releases, when Wall Street and the financial news-speakers on CNBC, Bloomberg, and Fox Financial Network will be falling over each other to proclaim the greatness of the latest "beat." Bear in mind that all of these funny numbers coming out over the next three weeks, especially the EPS (earnings per share) figures, have all been manipulated by stock buybacks, diluting the number of shares outstanding, and in many cases, by lowered expectations by analysts. The true comparisons can be found from year-ago EPS (i.e., growth) and gross revenue numbers.
So, despite the snorting of the bull for a day, reserving judgement on a dead-cat, one-day wonder of a rally may be not only prudent, but prescient.
Dow Jones Industrial Average April Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 4/2/18 | 23,644.19 | -458.92 | -458.92 |
| 4/3/18 | 24,033.36 | +389.17 | -69.75 |
| 4/4/18 | 24,264.30 | +230.94 | +161.19 |
| 4/5/18 | 24,505.22 | +240.92 | +402.11 |
| 4/6/18 | 23,932.76 | -572.46 | -170.35 |
| 4/9/18 | 23,979.10 | +46.34 | -134.01 |
| 4/10/18 | 24,407.86 | +428.76 | +294.66 |
At the Close, Tuesday, April 10, 2018:
Dow Jones Industrial Average: 24,407.86, +428.76 (+1.79%)
NASDAQ: 7,094.30, +143.96 (+2.07%)
S&P 500: 2,656.85, +43.69 (+1.67%)
NYSE Composite: 12,575.63, +195.08 (+1.58%)
Thursday, May 18, 2017
The Market as The Matrix; Most People Took The Blue Pill
In case you’re not sure just what a “dead cat bounce” is, imagine taking a dead cat up to the top of a three-story building and dropping it to the ground.
It will bounce, but not much. This is precisely what occurred in US stocks on Thursday, the market getting a reprieve after Wednesday’s bloodbath.
One can try mightily to dissect the various moving parts of the market and arrive at pure conjecture as to what is happening any given day, but these days, reality has become stranger than fiction by massive degrees, even in such hallowed enclaves as financial markets, supposedly not prone to manipulation, fakery, or thievery, but that’s exactly what is on the table.
To say that the Fed, in conjunction with other central banks and their commercial bank proxies, own the market is likely a basic truth. To think that once owned, these players would not mold the narrative and the movement to exactly their liking, is the essence of naivety.
Since 2000, the markets have been owned, even more so since the Great Financial Crisis (GFC) of 2008-09. Based on fiat money and dictates from money printers, the stock markets are the complete tool of enslavement. Governments, pensions, retirement funds, school districts, and all other manner of group investment are tied to “the market,” controlled by the Fed to never stop climbing, lest the debt-slavery of the American public become known.
If markets collapse, so to the deep state system of inflation and skimming, so don’t count on anything changing soon, President Trump or no President Trump, which is exactly why the deep state and the current residents of congress so oppose Mr/ Trump’s every move. He’s a threat to their control of the system.
It’s right out of the film, “The Matrix.” Most people took the blue pill.
Here's a short clip of Laurence Fishburne (Morpheus) explaining the Matrix to Keanu Reeves (Neo).
At The Close, 5/18/17:
Dow: 20,663.02, +56.09 (0.27%)
NASDAQ: 6,055.13, +43.89 (0.73%)
S&P 500: 2,365.72, +8.69 (0.37%)
NYSE Composite: 11,434.06, +10.53 (0.09%)
It will bounce, but not much. This is precisely what occurred in US stocks on Thursday, the market getting a reprieve after Wednesday’s bloodbath.
One can try mightily to dissect the various moving parts of the market and arrive at pure conjecture as to what is happening any given day, but these days, reality has become stranger than fiction by massive degrees, even in such hallowed enclaves as financial markets, supposedly not prone to manipulation, fakery, or thievery, but that’s exactly what is on the table.
To say that the Fed, in conjunction with other central banks and their commercial bank proxies, own the market is likely a basic truth. To think that once owned, these players would not mold the narrative and the movement to exactly their liking, is the essence of naivety.
Since 2000, the markets have been owned, even more so since the Great Financial Crisis (GFC) of 2008-09. Based on fiat money and dictates from money printers, the stock markets are the complete tool of enslavement. Governments, pensions, retirement funds, school districts, and all other manner of group investment are tied to “the market,” controlled by the Fed to never stop climbing, lest the debt-slavery of the American public become known.
If markets collapse, so to the deep state system of inflation and skimming, so don’t count on anything changing soon, President Trump or no President Trump, which is exactly why the deep state and the current residents of congress so oppose Mr/ Trump’s every move. He’s a threat to their control of the system.
It’s right out of the film, “The Matrix.” Most people took the blue pill.
Here's a short clip of Laurence Fishburne (Morpheus) explaining the Matrix to Keanu Reeves (Neo).
At The Close, 5/18/17:
Dow: 20,663.02, +56.09 (0.27%)
NASDAQ: 6,055.13, +43.89 (0.73%)
S&P 500: 2,365.72, +8.69 (0.37%)
NYSE Composite: 11,434.06, +10.53 (0.09%)
Monday, July 30, 2007
Dead Cat Bounce
Investors shook off last week's monumental declines and searched for bargains amid the wreckage on Monday. All the major indices showed decent gains on relatively strong buying. There was certainly some resolve to Monday's rally, but whether or not it will last is another question altogether.
Dow 13,358.31 +92.84; NASDAQ 2,583.28 +21.04; S&P 500 1,473.91 +14.96; NYSE Composite 9,623.18 +114.95
Make no doubt about it, there's a big, big problem inside the sub-prime mortgage mess and it's leaking over into corporate borrowing and mainstream mortgage lending. The simplistic reassurances of people like Ben Bernanke and Hank Paulson are masking a problem that goes to the heart of the world banking systems.
Money and credit has expanded worldwide at an astonishing rate and there's payback on the way. For a clue, watch merger and acquisition (M&A) activity over the next few weeks and months. It's already slowed down after a rash of big deals earlier in the year. Private capital has gone soft and conservative, and these people know what they're doing - it's their money, after all. CNN Money has a particularly propitious story on stalled funding for some big buyouts.
Over the next month and a half, expect more fallout, because drops like we witnessed last week do not occur in a vacuum. There's more to the story and it's a good bet that the invisible hand of the Plunge protection Team (PPT) was again at work today. Shortly after the markets opened, they took an unhealthy dip, but quickly bounced back to the positive. All of the indices hugged the flatline until just after noon, when all of them took off into positive territory for the remainder of the session, trademark market manipulation by the usual suspects.
As is the fashion of the market manipulators of the secretive Working Group on Financial Markets, they prefer small losses over long periods of time rather than big, spectacular, headline-grabbing declines.
Their unseen actions in the markets cause a sheep-like follow-along response, as evidenced today. Advancing issues gained the upper hand over decliners by a 3-2 ratio, though the new lows were still holding sway in a rather ponderous manner, with 746 bottom-outers to just 93 new highs. That's still out of balance and augurs ill for stocks going forward.
One-day rallies are not a cure-all, and the same conditions that contributed to last week's sell-off still exist. Without the PPT, the markets may very well have finished lower again today. The stated goals of the so-called PPT are:
Keep an open mind and an open eye on how the markets - and, to a lesser degree, individual stocks - move in relation to events and non-events.
Since most companies have now already reported 2nd quarter earnings, the next six weeks will be a function more of emotion than fact and since the overall mood is still rather dubious about the future, sharp sell-offs may occur out of thin air. More likely are days of small double-digit-Dow losses, followed by some recovery, then the pattern repeating again. As it is, the Dow has traded lower 5 of the last 9 sessions and that measure bears close scrutiny. Should we actually be in a new bear market - which some analysts have suggested - the ratio of up days to down, in addition to the volume and point movements, will be a key divining tool.
Oil priced lower on the NY Mercantile Exchange, losing 19 cents to $76.83. Gold and silver both edged higher and continue to herald a breakout, though that's happened so many times in the past 18 months, nobody's giving it much credence.
Dow 13,358.31 +92.84; NASDAQ 2,583.28 +21.04; S&P 500 1,473.91 +14.96; NYSE Composite 9,623.18 +114.95
Make no doubt about it, there's a big, big problem inside the sub-prime mortgage mess and it's leaking over into corporate borrowing and mainstream mortgage lending. The simplistic reassurances of people like Ben Bernanke and Hank Paulson are masking a problem that goes to the heart of the world banking systems.
Money and credit has expanded worldwide at an astonishing rate and there's payback on the way. For a clue, watch merger and acquisition (M&A) activity over the next few weeks and months. It's already slowed down after a rash of big deals earlier in the year. Private capital has gone soft and conservative, and these people know what they're doing - it's their money, after all. CNN Money has a particularly propitious story on stalled funding for some big buyouts.
Over the next month and a half, expect more fallout, because drops like we witnessed last week do not occur in a vacuum. There's more to the story and it's a good bet that the invisible hand of the Plunge protection Team (PPT) was again at work today. Shortly after the markets opened, they took an unhealthy dip, but quickly bounced back to the positive. All of the indices hugged the flatline until just after noon, when all of them took off into positive territory for the remainder of the session, trademark market manipulation by the usual suspects.
As is the fashion of the market manipulators of the secretive Working Group on Financial Markets, they prefer small losses over long periods of time rather than big, spectacular, headline-grabbing declines.
Their unseen actions in the markets cause a sheep-like follow-along response, as evidenced today. Advancing issues gained the upper hand over decliners by a 3-2 ratio, though the new lows were still holding sway in a rather ponderous manner, with 746 bottom-outers to just 93 new highs. That's still out of balance and augurs ill for stocks going forward.
One-day rallies are not a cure-all, and the same conditions that contributed to last week's sell-off still exist. Without the PPT, the markets may very well have finished lower again today. The stated goals of the so-called PPT are:
Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence
Keep an open mind and an open eye on how the markets - and, to a lesser degree, individual stocks - move in relation to events and non-events.
Since most companies have now already reported 2nd quarter earnings, the next six weeks will be a function more of emotion than fact and since the overall mood is still rather dubious about the future, sharp sell-offs may occur out of thin air. More likely are days of small double-digit-Dow losses, followed by some recovery, then the pattern repeating again. As it is, the Dow has traded lower 5 of the last 9 sessions and that measure bears close scrutiny. Should we actually be in a new bear market - which some analysts have suggested - the ratio of up days to down, in addition to the volume and point movements, will be a key divining tool.
Oil priced lower on the NY Mercantile Exchange, losing 19 cents to $76.83. Gold and silver both edged higher and continue to herald a breakout, though that's happened so many times in the past 18 months, nobody's giving it much credence.
Tuesday, March 6, 2007
Did That Dead Cat Bounce? Yes, Indeed!
Is this how downtrends end? With a one-day wonder resurgence that erases any doubt that the US economy, American resolve and corporate equities are safe investments, the markets have made a bold statement.
Too bad it's impossible to believe.
The Dow added 157 points, the NASDAQ was up 44.46, the S&P gained 21.29 and the NYSE Composite index grew by 168. These were solid gains all around, led by the NYSE Composite and the NASDAQ's 1.9% improvement, but one good day, after a series of bad ones, does not a bull market make. The trend is still to the downside. The Dow, for example, is still nearly 600 points below it's high of 12,795.93, achieved less then a month ago. It's broken through the 50 day moving average and today's gain - albeit impressive - leaves it more than 300 points below that mark.
Further, the big 416-point drop last Tuesday was preceded by four consecutive down sessions. Today's winner was only the 2nd positive close of the last 10 sessions. Bulls, hard-headed as they are, usually need to be hit over the head with a mallet before they stop charging ahead, so maybe more evidence is needed. Give them a couple more weeks.
The advance-decline and volume numbers for today were real shockers. This was no ordinary buying spree. Every sucker in the universe was taking the plunge, a sign that cooler heads (Bears, shorts and put options players) are about to take more of their money.
Gainers outnumbered losers by a 4-1 margin, but the volume figures were extraordinary. Dow volume checked in at only 5-6% on the combined averages. Up volume of 94% signals just one thing - this is nothing more than a dead cat bounce on a temporarily oversold condition. Everybody moving at once is never a good sign because the chances of everybody being right are slim to none.
This market will likely give today's gains back by the end of the week. If this mini-rally gets legs and moves another step forward, it may take until the end of next week to unwind, but unwind it will. The market is not in any condition to regroup and head for higher ground. This correction is still in its earliest stage. We can call today the beginning of stage two, in which those who did not lose enough to be wary in phase one will be eaten alive.
New highs reversed the recent trend, though not by much, winning the day by a slim margin of 123-108. That's encouraging for the Bulls, but nothing to write home about.
Oil, gold and silver were up marginally. Commodities are still stuck in somewhat overbought ranges and cannot move higher when the global economy is in a cooling period or slowing down, which it is. For bulls of all persuasions, however, today was needed relief. But, like all relief rallies, they are usually dramatic and short-lived. This was no exception.
Too bad it's impossible to believe.
The Dow added 157 points, the NASDAQ was up 44.46, the S&P gained 21.29 and the NYSE Composite index grew by 168. These were solid gains all around, led by the NYSE Composite and the NASDAQ's 1.9% improvement, but one good day, after a series of bad ones, does not a bull market make. The trend is still to the downside. The Dow, for example, is still nearly 600 points below it's high of 12,795.93, achieved less then a month ago. It's broken through the 50 day moving average and today's gain - albeit impressive - leaves it more than 300 points below that mark.
Further, the big 416-point drop last Tuesday was preceded by four consecutive down sessions. Today's winner was only the 2nd positive close of the last 10 sessions. Bulls, hard-headed as they are, usually need to be hit over the head with a mallet before they stop charging ahead, so maybe more evidence is needed. Give them a couple more weeks.
The advance-decline and volume numbers for today were real shockers. This was no ordinary buying spree. Every sucker in the universe was taking the plunge, a sign that cooler heads (Bears, shorts and put options players) are about to take more of their money.
Gainers outnumbered losers by a 4-1 margin, but the volume figures were extraordinary. Dow volume checked in at only 5-6% on the combined averages. Up volume of 94% signals just one thing - this is nothing more than a dead cat bounce on a temporarily oversold condition. Everybody moving at once is never a good sign because the chances of everybody being right are slim to none.
This market will likely give today's gains back by the end of the week. If this mini-rally gets legs and moves another step forward, it may take until the end of next week to unwind, but unwind it will. The market is not in any condition to regroup and head for higher ground. This correction is still in its earliest stage. We can call today the beginning of stage two, in which those who did not lose enough to be wary in phase one will be eaten alive.
New highs reversed the recent trend, though not by much, winning the day by a slim margin of 123-108. That's encouraging for the Bulls, but nothing to write home about.
Oil, gold and silver were up marginally. Commodities are still stuck in somewhat overbought ranges and cannot move higher when the global economy is in a cooling period or slowing down, which it is. For bulls of all persuasions, however, today was needed relief. But, like all relief rallies, they are usually dramatic and short-lived. This was no exception.
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