Equity markets were rather dull today, on exceptionally low volume - which is saying a lot, since volume left the building years ago.
Dull, boring, inconsequential, however, is how financial markets are supposed to be, or, that is at least how they used to be before the advent of personal computers, CNBC and individually-managed accounts. Today's go-go markets are driven by extra doses of liquidity, courtesy of the Fed (as much as readers hate reading that over and over and over again, the author hates having to mention it even more), HFTs, flash crashes, breaking news (why doesn't somebody fix it?), surprises, tweets, scandals, ponzi schemes, dotcoms, options, derivatives, swaps, repos and hot money flowing from carry trades into equities and back out again.
One can only wonder how many times the same money is re-invested, re-invented, re-created, re-hypothecated, recycled, rinsed and repeated. It seems sometimes that one need only a brokerage account and a pair of fast hands to tip-type your way into the wondrous world of high finance. If only such were true, we'd all be traders and multi-millionaires just like the guys on the infomercials telling you that NOW is the time to FLIP THAT HOUSE!
Alas, investing is boring and unexciting, and well it should be, though Americans, driven by media, need the big splash, the dazzle of bright lights and the promise of easy money to be enticed. Sadly for the marketeers and their media whores, more Americans play the ponies, gamble at casinos or play the lottery than invest in stocks, bonds or commodities. We've been programmed to be risk-takers and the stock market - try as it might - just seems to many to be a rigged game for rich guys in suits and ties and fancy women in shiny, tight-fitting business suits.
Thus, we have these dull markets, in which the major brokerages make war with each other via the computer algos, following each other into what eventually becomes a black hole, a void, a nonsensical, immaterial, valueless dump. That's what our stock markets have devolved into, especially after the crash of 2008-09. The major indices may have come all the way back in the four-to-five years since then, but all that money has been sucked out of the market by the brokerages and hedge funds via bonuses. It's common knowledge that the average investor usually gets screwed unless he/she is either very careful or very smart. There's just no way to win a rigged game. As the old adage goes, "if you're playing a game of poker and you don't know who the mark is, chances are it's probably you."
The general American public is simply not that stupid. After being burned by the high-tech Wall Street crooks in 2000, 2001 and again in 2008, they have not returned. Some maybe, but they're a small minority, mostly younger folks who don't know better or older people with money to burn, potentially. Paper losses still sting, and, if there's another severe downturn in the markets any time soon - an event long, long overdue, according to fundamentals - they'll be gone for good as well.
With all the scams, crimes and untold misdeeds that have become all-too-common on Wall Street - without, incidentally, any criminal prosecutions - is there any wonder that average people with money are still shy about investing in stocks? In a perverse way, thats why this market must and will likely continue to defy gravity and levitate to higher and higher levels: because another crash would destroy what little bit of confidence is left in the ultimate confidence game.
So, now that the banks are all sufficiently recapitalized (supposedly) and everything in America is just hunky-dorey, Wall Street may be looking itself in the mirror and wondering if they've taken too many scalps over the past few years. Maybe they'll keep the liquidity-driven, non-fundamental, irrational exuberance going for a while longer, but slowly, much more slowly.
Or is it time to turn it over again? Wash, rinse, repeat...
Dow 15,091.68, -26.81 (0.18%)
NASDAQ 3,438.79, +2.21 (0.06%)
S&P 500 1,633.77, +0.07 (0.00%)
NYSE Composite 9,437.17, -5.59 (0.06%)
NASDAQ Volume 1,605,809,375
NYSE Volume 3,124,652,250
Combined NYSE & NASDAQ Advance - Decline: 2673-3792
Combined NYSE & NASDAQ New highs - New lows: 475-30
WTI crude oil: 95.17, -0.87
Gold: 1,434.30, -2.30
Silver: 23.70, +0.038
Showing posts with label derivatives. Show all posts
Showing posts with label derivatives. Show all posts
Monday, May 13, 2013
Tuesday, June 29, 2010
Markets Plunge on Data, Fear; False Bottom in Place
There are so many negative issues plaguing equity investments at this juncture one can only hope to keep abreast of daily developments. Investors and traders should simply assume that all prior data was poor and that future data will continue in the same poor fashion for the foreseeable future - and maybe beyond.
As the global deflationary death (and debt) spiral persists, there's little any single entity can do to prevent major dislocations and value deterioration. The stock market is only a proxy for the general US economy, though it serves as a very solid guide to global conditions. What seems to be a major stumbling block for the overall health or decay of a global economic system is that it is made up of many smaller, moving parts - equity markets, bond markets, governments, nations, derivatives, commodities, etc. - and without coordination (virtually impossible) from these moving parts, stemming the deflationary tide is next to impossible.
Tuesday's decline was not confined to, nor was it a result of, US interests. It was global, begun with a revision to China's April Leading Economic Indicators (LEI) by the Conference Board, from a gain of 1.7% to a much smaller - and much more significant - 0.3% gain. The pain felt in bourses around the globe was exacerbated by the same Conference Board's US Consumer Confidence reading for June, which tumbled to 52.9 from May's 62.7 mark.
Other than the China revision and one sentiment gauge, overall data and news flow has been nothing but sad. There hasn't been a positive economic data release since the June non-farms payroll data, itself a complete flop. Plaguing markets are a myriad of touchy, intertwined forces, including unemployment, residential housing, commercial real estate, slumping bond yields, government debt, household debt, shrinking money supply, tight credit conditions and currency fluctuations.
It's almost too much to expect from any market individually, so all markets are collectively sharing the pain. Oversimplifying the matter to the extreme, an oversupply of assets on a base of faulty investments funded with massive amounts of unsecured debt (in the Trillions of dollars) is collapsing at a rapid rate. That's why gold and silver have risen, or, at least lately held up much better than most assets - there's a finite, limited supply of them.
The selling began early and accelerated through the afternoon, with indices closing very near their lows of the day. The final, closing price of the S&P 500 was the lowest since October 30, 2009, an 8-month low, breaking through previous double-bottom support.
Dow 9,870.30, -268.22 (2.65%)
NASDAQ 2,135.18, -85.47 (3.85%)
S&P 500 1,041.24, -33.33 (3.10%)
NYSE Composite 6,520.09, -216.51 (3.21%)
Decliners decimated advancers, 5837-752 (nearly 8:1); new lows bounded past new highs, 324-93, finally confirming the roll-over of that indicator and sending the strongest sell signal possible. The daily high-low ratio has been mixed for the past four weeks and has now finally founded direction. Additionally, volume, which was non-existent on Monday, absolutely exploded to near-panic levels today.
NYSE Volume 7,193,685,000
NASDAQ Volume 2,783,303,750
Crude oil tumbled on demand concerns, losing $2.31, to $75.94. Gold saw a little bit of a bid, up $3.80, to $1,242.00, though silver fell 8 cents, to $18.59.
It was one of Wall Street's worst days of this or any year and the general consensus is that it's far from over. With three days remaining to the week and more sensitive data due out, there's no hope for the bullish case.
There is a small amount of support around Dow 9800, though it is very tentative, and likely to be broken without much fuss. The next leg down in the still-unfolding global de-leveraging process is likely to be the steepest from peak to trough and we are only at the beginning of it.
As the global deflationary death (and debt) spiral persists, there's little any single entity can do to prevent major dislocations and value deterioration. The stock market is only a proxy for the general US economy, though it serves as a very solid guide to global conditions. What seems to be a major stumbling block for the overall health or decay of a global economic system is that it is made up of many smaller, moving parts - equity markets, bond markets, governments, nations, derivatives, commodities, etc. - and without coordination (virtually impossible) from these moving parts, stemming the deflationary tide is next to impossible.
Tuesday's decline was not confined to, nor was it a result of, US interests. It was global, begun with a revision to China's April Leading Economic Indicators (LEI) by the Conference Board, from a gain of 1.7% to a much smaller - and much more significant - 0.3% gain. The pain felt in bourses around the globe was exacerbated by the same Conference Board's US Consumer Confidence reading for June, which tumbled to 52.9 from May's 62.7 mark.
Other than the China revision and one sentiment gauge, overall data and news flow has been nothing but sad. There hasn't been a positive economic data release since the June non-farms payroll data, itself a complete flop. Plaguing markets are a myriad of touchy, intertwined forces, including unemployment, residential housing, commercial real estate, slumping bond yields, government debt, household debt, shrinking money supply, tight credit conditions and currency fluctuations.
It's almost too much to expect from any market individually, so all markets are collectively sharing the pain. Oversimplifying the matter to the extreme, an oversupply of assets on a base of faulty investments funded with massive amounts of unsecured debt (in the Trillions of dollars) is collapsing at a rapid rate. That's why gold and silver have risen, or, at least lately held up much better than most assets - there's a finite, limited supply of them.
The selling began early and accelerated through the afternoon, with indices closing very near their lows of the day. The final, closing price of the S&P 500 was the lowest since October 30, 2009, an 8-month low, breaking through previous double-bottom support.
Dow 9,870.30, -268.22 (2.65%)
NASDAQ 2,135.18, -85.47 (3.85%)
S&P 500 1,041.24, -33.33 (3.10%)
NYSE Composite 6,520.09, -216.51 (3.21%)
Decliners decimated advancers, 5837-752 (nearly 8:1); new lows bounded past new highs, 324-93, finally confirming the roll-over of that indicator and sending the strongest sell signal possible. The daily high-low ratio has been mixed for the past four weeks and has now finally founded direction. Additionally, volume, which was non-existent on Monday, absolutely exploded to near-panic levels today.
NYSE Volume 7,193,685,000
NASDAQ Volume 2,783,303,750
Crude oil tumbled on demand concerns, losing $2.31, to $75.94. Gold saw a little bit of a bid, up $3.80, to $1,242.00, though silver fell 8 cents, to $18.59.
It was one of Wall Street's worst days of this or any year and the general consensus is that it's far from over. With three days remaining to the week and more sensitive data due out, there's no hope for the bullish case.
There is a small amount of support around Dow 9800, though it is very tentative, and likely to be broken without much fuss. The next leg down in the still-unfolding global de-leveraging process is likely to be the steepest from peak to trough and we are only at the beginning of it.
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