The Year That Was: Investors Bid 2018 GOOD RIDDANCE; Worst Year Since 2008

Should all acquaintance be forgot and never brought to mind,
Should all acquaintance be forgot and the days of auld lang syne.
For auld lang syne, my dear, for auld lang syne,
We'll take a cup of kindness yet for the sake of auld lang syne.
Let's have a drink or maybe two or maybe three or four
Or five or six or seven or eight or maybe even more.

A cup of kindness, indeed. It's what some investors would have liked in December, or October, or maybe February or March.

Those were the worst months for stocks.

Dow loss, February, 2018: -1120.19
March, 2018: -926.09
October, 2018: -1341.55
December, 2018: -2211.10

As the year wore on, conditions proceeded to deteriorate for holders of US large cap equities. On the S&P and the NASDAQ, some stocks suffered losses of 30, 40, 50% or more.

Facebook (FB) was the poster child for tech stocks breaking bad. On July 25, the famous brainchild of Mark Zuckerberg topped out at 217.50. As of December 24, it bottomed out at a closing price of 124.06, a 43% loss. It wasn't a very merry Christmas for Facebook. Still, Zuckerberg is still one of the richest persons in the world, just not quite as rich as he used to be.

Netflix (NFLX) was another one being hammered in the second half of the year. Closing at 418.97 on July 9, the streaming video service lost 44% by December 24, closing that session at 233.88.

Stocks weren't the only asset class that was sucker-punched during the year. One standout of the commodities class was crude oil, where the price of a barrel of West Texas Intermediate (WTI) shot up from $60 to $76 in October - coincidentally, on the same day the Dow peaked - before retreating to under $45 nearing the end of December, striking a low of $42.53 on Christmas Day.

In similar manner, precious metals were abused during the year. Gold spent the early part of the year fluctuating in the $1300-1350 per ounce range, never closing above $1352. By June, signs of weakness were appearing, with the metal of kings dipping into the $1200 range, eventually bottoming out at $1178 by August. With stocks on the decline in the fourth quarter, gold was the beneficiary, ending the year at $1278 per ounce.

Silver was damaged more severely. Peaking at $17.52 per ounce on January 25, silver slumped all the way to 13.97 in November. December was the best month of the year for gentleman's coin, as it closed at a five-month high on December 31, with a price of $15.46. Both gold and silver ended the year on high notes, suggesting that they are due for a long-overdue rally.

Bonds were perhaps the most entertaining of the financial assets, with investors watching for an inversion in the treasury yield curve between the two and 10-year notes. While that did not materialize, a smaller inversion between 2 and three-year and the five-year yield presented itself in December, but only persisted for three weeks. The five-year was actually yielding less than both the 2s and 3s on December 4, but corrected back to normalcy - with yields rising over duration - on December 21. Still, it was a wake-up call to investors fearing a recession in 2019 and may have contributed to some of the panic selling during the final month of 2018.

Yield on the barometric 10-year note ended the year at an 11-month low, checking in at 2.69% on New Year's Eve. The 30-year was also pushed lower. By year's end, it was yielding a mere 3.02%, all of this occurring in the face of four quarterly federal funds rate hikes over the course of the annum. Surely, the bond vigilantes are out in force, and as the year of 2018 comes to a close, fear is winning out over greed in rather obvious manner.

What 2019 will bring is anyone's guess, considering the continuing dysfunction coming out of the nation's capitol. Republicans and Democrats are at war, leaving the American people to fend as best they can as casualties or collaterally-damaged bystanders. Rhetoric from both sides of the aisle has been inflamed to a combustible state, and, with the partial government shutdown already in its second week, when the Democrats seize control of the House of Representatives on January 3, chaos will reign.

Despite honest effort from President Trump, nothing good will come out of Washington this year, unless one considers complete rejection of government by the people to be constructive, because that is precisely where the swamp dwellers inside the beltway - with ample assistance from a media that operates as a free press in name only - are taking the country.

2019 may be a year worse than the one preceding it, perhaps much worse, as the political leaders of the greatest nation on the planet can do no better than bicker, posture, and fail in their duties.

Until and unless Washington changes its ways, the financial picture will be clouded by the politicians, whose only aim seems to be one of destroying anything good in the country. While the Democrats can largely be blamed for inciting division, Republicans in the Senate share nearly equal responsibility for not standing up for the public.

Sadly, Washington has made it clear that it wants to be all-important, all the time. The cost will be borne by the people in ways that exceed mere finance.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96
12/21/18	22,445.37	-414.23	-3093.19
12/24/18	21,792.20	-653.17	-3746.36
12/26/18	22,878.45	+1086.25	-2660.11
12/27/18	22,878.45	+260.37	-2399.74
12/28/18	23,062.40	-76.42	-2476.16
12/31/18	23,327.46	+265.06	-2211.10

At the Close, Monday, December 31, 2019:
Dow Jones Industrial Average: 23,327.46, +265.06 (+1.15%)
NASDAQ: 6,635.28, +50.76 (+0.77%)
S&P 500: 2,506.85, +21.11 (+0.85%)
NYSE Composite: 11,374.39, +83.44 (+0.74%)

Another Blue Monday As Stocks Slammed Hard All Day; Techs Lead Losers

Whew!

This is becoming serious. Last week, when stock traders had a day off for observance of Veterans Day, the week opened with a 600-point loss. Today, the start of a new week, sees stocks tank to the tune of nearly 400 points.

It's not just the start of the week that's been bad of late, it's a recurring trend for the Dow and NASDAQ to slide by triple digits over the course of one session. The down days are beginning to add up, suggesting that something bigger is on the immediate horizon, and it's happening at a time which is usually a good one for stocks. November and December are among the better months for stock gains, though that doesn't look to be the case this season (Is it too early to say "Happy Holidays?").

Most of the selling on Monday came early. Shortly after noon in New York, the Dow had already shed more than 60 points. For the remainder of the session the blue chip index bounced around in a 100-point range, as some tepid buying emerged, though there was not wide enough commitment to keep stocks from near the lows of the day.

Faring even worse was the NASDAQ, which lost more than 100 points for the eighth time in the past seven weeks. In for particular harsh treatment are, and have been, tech stocks. It seems as though any company with a CEO under 40 or with any connection to computers or the internet has been targeted for extermination.

Here are some of the more notable Silicon Valley names on the Wall Street hit list:

• Facebook: hit a high of 217 in July, closed today at 131.55.
• Alphabet (Google): August 29: 1,249.30; Today: 1,020.00
• Netflix: August 30: 370.98; Today: 270.60
• Apple: September 4: 227.57; Today: 185.86
• Nvidia: September 4: 283.70; Today: 144.70
• Amazon: August 31: 2,012.71; Today: 1,512.29

These stocks were among the leaders during the long run-up from 2016 and prior. Now they are the loss-leaders. Amazon's peak is of interest because that was also the day the NASDAQ finished what looks like a pretty solid double top. It closed on August 29 at 8109.69 and on the 31st at 8109.54. It's been downhill since, the NASDAQ sporting a 13% decline since then.

Nobody knows exactly where this is all going, but, from recent market action, it looks to be headed to a not very nice place.

Dow Jones Industrial Average November Scorecard:

Date	Close	Gain/Loss	Cum. G/L
11/1/18	25,380.74	+264.98	+264.98
11/2/18	25,270.83	-109.91	+155.07
11/5/18	25,461.70	+190.87	+345.94
11/6/18	25,635.01	+173.31	+519.25
11/7/18	26,180.30	+545.29	+1064.54
11/8/18	26,191.22	+10.92	+1075.46
11/9/18	25,989.30	-201.92	+873.54
11/12/18	25,387.18	-602.12	+271.42
11/13/18	25,286.49	-100.69	+170.27
11/14/18	25,080.50	-205.99	-35.72
11/15/18	25,289.27	+208.77	+173.05
11/16/18	25,413.22	+123.95	+297.00
11/19/18	25,017.44	-395.78	-98.78

At the Close, Monday, November 19, 2018:
Dow Jones Industrial Average: 25,017.44, -395.78 (-1.56%)
NASDAQ: 7,028.48, -219.40 (-3.03%)
S&P 500: 2,690.73, -45.54 (-1.66%)
NYSE Composite: 12,280.91, -119.37 (-0.96%)

Weekend Wrap: Investors Disappointed, Spurring September Selloff; Tesla On The Ropes; EM Bears

Tech and transportation stocks, the Dow, and the S&P 500 all registered positive gains in August, but once the three-day Labor Day holiday turned the calendar to September, much of summer's optimism turned to autumn angst as all four of the major indices - lead by tech and the NASDAQ - began showing signs of weariness.

The NASDAQ lost ground in all four of the short week's trading sessions, combining for a 2.55% decline in the first week of September. While much of the losses can be attributed to profit-taking, the biggest declines belonged to the beloved FAANGs, all of which fell in a wide-based tech retreat. Facebook (FB) Amazon (AMZN), Apple (APPL), Netflix (NFLX) and Alphabet, parent of Google (GOOG) all suffered losses, though the biggest decline was seen on the stock of Tesla (TSLA), as continuing concerns over the health not only of the company's finances, but of founder and CEO, Elon Musk, snatched nearly 13% off its price in four days.

Shares of the electric car-maker are down 30% since reaching a peak of 379.57 on August 7. Tesla closed out the week at 263.24, within 10 points of its 52-week low due to a rash of executive departures and strange behavior by Musk, which included threats to critics, talk of taking the company private, crying, drinking, and taking a toke on a joint during a podcast interview.

While Musk's behavior is certainly a major factor influencing the share price, more concerning are questions over the company's continued viability. Yet to turn a profit, Tesla is burdened with an excessive amount of debt and faces competition in the electric car space from the likes of BMW, Porsche, Audi, and scores of Japanese and American automakers as the number of competitive electric autos already in market or due to be soon has steadily increased over the past 18 months.

With a poor track record, mounting issues with reliability and safety, and Musk's seemingly manic-depressive behavior, investors are bracing for the worst, fleeing in record numbers. With share prices still at stratospheric levels, the declines should continue for the foreseeable future.

As for the other tech titans, it would appear that Apple, Google, and Amazon are still in a safe zone, despite lofty valuations, but Facebook and Netflix may suffer further declines. Both companies have internal and external problems which have yet to be addressed adequately. The numbers suggest that users of the social platform and streaming video service are not increasing at the same rates previously encountered and continued growth is a major question.

The Dow appeared to be the safe space for traders until Friday, when it led markets lower despite positive news on employment, with September jobs increasing by 201,000 in August, ahead of analyst estimates, and wage growth increasing to 2.9% annualized.

Though the numbers were encouraging for the middle class, the investor class may have been eyeing the bullish employment figures with a jaded eye, focusing on the upcoming FOMC meeting at the end of the month (September 25-26), in which the Fed is expected to raise the key federal funds rate another 25 basis points, to 2.00-2.25%. The usual knee-jerk reaction to Fed rate hikes is to sell equities and buy bonds, and that dynamic may well have been in play on Friday and might contribute to further selling in the weeks leading up to the policy meeting.

Also on the minds of investors was the global drawdown in emerging markets, which is approaching or already is in bear market conditions. The strong dollar and use of the US as a safe haven has led to capitulation in currencies and markets, especially in Turkey and Argentina, each of which have suffered sharp currency devaluations over the past six months. Turkey is stubbornly fighting the carnage from within, whereas Argentina has supposedly reached agreement on a bailout loan from the International Monetary Fund (IMF). Argentina's condition in world markets seems to be that of a chronic abuser as this is a repetitive pattern by that deadbeat debtor nation.

While the EM bust has yet to affect US markets in any major way, European and Far East markets have felt some pain, especially in Germany, as the DAX is already in correction, down more than 10% this year. If and when the EM issues become a contagion will be a top of mind issue in the weeks and months ahead.

Precious metals and the entire commodity complex continued to face stiff selling. Gold and silver are trading at three-year lows and are vulnerable to any number of potential market shocks. They are traditionally the first assets sold in a widespread market rout and may be signaling more trouble ahead.

While caution is always advisable, the run-up to the US midterm elections may be particularly volatile as cantankerous political forces vie for control of the enormous state and federal governmental complex.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17
9/6/18	25,995.87	+20.88	+31.05
9/7/18	25,916.54	-79.33	-48.28

At the Close, Friday, September 7, 2018:
Dow Jones Industrial Average: 25,916.54, -79.33 (-0.31%)
NASDAQ: 7,902.54, -20.18 (-0.25%)
S&P 500: 2,871.68, -6.37 (-0.22%)
NYSE Composite: 12,911.12, -27.79 (-0.21%)

For the Week:
Dow: -48.28 (-0.19%)
NASDAQ: -207.00 (-2.55%)
S&P 500: -29.84 (-1.03%)
NYSE Composite: -105.77 (-0.81%)

Dow Lower, NASDAQ Higher; Which One Is Right?

There's been an interesting dynamic to the market over not just the past few days, but for the past six months, though it has become somewhat pronounced recently, and that is the divergence between the staid, centered 30 stocks that comprise the Dow Jones Industrial Average and the thousands which populate the NASDAQ composite exchange.

Whenever the Dow is up, it's almost certain that the NASDAQ will produce gains as well, but, when the Dow is lower, the NASDAQ is often higher, which means there are not only some major differences of opinion on which stocks to own, but also on the general nature and direction of the economy.

It appears that those invested primarily in Dow stocks are probably more conservative in their investment approach, primarily due to the collective pre-eminence of the Dow components and the fact that all stocks in the Dow pay dividends.

The NASDAQ has always been more of a speculator's paradise, where some of the best new technology, finance, energy, and medical stocks reside. It's also home to many smaller firms with limited histories and even more limited earnings records. In fact, many stocks listed on the NASDAQ don't have any earnings at all. Those are fledgling enterprises operating at a loss, a not unusual circumstance, but one of which many funds and investment advisors steer clear.

To say that stocks traded on the NASDAQ are possibly of lower quality long term and risk-sensitive would be an understatement. Consider the leading percentage gainers in today's big move to yet another all-time high.

Destination Maternity (DEST), Etsy (ETSY), Nightstar Therapeutics ADR (NITE), iQIYI ADR (IQ), and Dropbox (DBX) were the five biggest gainers.

Of those, maybe you've heard of Etsy and Dropbox. The others? Probably not. That's where the speculators are playing.

Not only is the NASDAQ home to new ideas and new companies, many of the big tech names are listed there. The top 20 most actives today included the likes of Intel, Cisco, Comcast, 21st Century Fox, Apple, Netflix, Microsoft, Facebook, and Zynga, a pretty good sampling of large, established entertainment and media companies.

Apparently, the NASDAQ is where the action is, as it has outperformed the Dow quite handily this year.

The Dow still carries the weight of the world, though, and it's been sluggish.

Which one is on the correct path? Absolutely, time will tell.

Dow Jones Industrial Average June Scorecard:

Date	Close	Gain/Loss	Cum. G/L
6/1/18	24,635.21	+219.37	+219.37
6/4/18	24,813.69	+178.48	+397.85
6/5/18	24,799.98	-13.71	+384.14
6/6/18	25,146.39	+346.41	+730.55
6/7/18	25,241.41	+95.02	+825.57
6/8/18	25,316.53	+75.12	+900.69
6/11/18	25,322.31	+5.78	+906.47
6/12/18	25,320.73	-1.58	+904.89
6/13/18	25,201.20	-119.53	+785.36
6/14/18	25,175.31	-25.89	+759.47

At the Close, Thursday, June 14, 2018:
Dow Jones Industrial Average: 25,175.31, -25.89 (-0.10%)
NASDAQ: 7,761.04, +65.34 (+0.85%)
S&P 500: 2,782.49, +6.86 (+0.25%)
NYSE Composite: 12,773.15, -12.30 (-0.10%)

Shift From Blue Chips to Tech Starting?

Monday saw unusual movement in the various major indices. While the Dow was slightly lower, the S&P and NYSE up marginally, the NASDAQ powered ahead 20 points. As Friday was options expiration day for May, we can expect to see more of a realistic trading pattern for at least the next three weeks. Earnings for the first quarter are largely behind us, so the markets should move on M&A activity and economic reports.

Additionally, the price of oil and motor fuel should play significant roles in any movement over the next month. US motorists have just about had it with the managed price escalation by Big Oil. Unfortunately, there's little the US consumer can do about it. Nearly everybody in America owns a car out of necessity, except where public transportation is functional, like New York, Washington D.C. or Chicago.

Even in the grand metropolises, public transportation is either incomplete or only a portion of the total people-moving mechanism. Americans are overall tied to their cars and there's no easy solution. Therefore, gas prices are at a point right now that they are eating into disposable income in some classes. In the lower classes, high fuel costs are eating into necessities like food and health, and in some cases, savings.

Dow 13,542.88 -13.65; NASDAQ 2,578.79 +20.34; S&P 500 1,525.10 +2.35; NYSE Composite 9,897.46 +3.72

Keeping with the theme, light crude on the NYMERC shot up another $1.33 on Monday to settle at $66.27, the highest it's been in months. With summer driving season ahead and the American oil companies firmly in control of the pricing, the government, and soon, our wallets, don't expect any relief through the Memorial Day weekend at least. We're being gouged but good, and between our brain-dead (and oil rich) President and the supine Congress, the American public is on its own here. It's either fish or cut bait, or, more appropriately, drive or ride a bike.

Advancing issues held sway over decliners by a 5-3 margin (2-1 on the NASDAQ), and you wouldn't know it just from the headline numbers, but there were an impressive 540 new highs and just 71 new lows. For what looked on the surface like a dull day, there was plenty of movement out of the blue chips on the Dow and into mid-cap tech stocks. Whether this trend holds up over the short and long-term remains to be seen, though this kind of cyclical rotation is normal in bull markets. Sellers are taking profits and re-investing in what they may view as undervalued sectors. Tech is still rebounding from 2000, though it's been growing exceptionally, especially in the internet and computing space.

Gold was up $1.80 and silver gained 13 cents. Both of the precious metals have been depressed for over a year now - not so precious.

Update on Marvel Enterprises (MVL): Well, like I said in my original post on Marvel, the price decline after a stellar earnings report was more options-related and short term profit-taking than anything else. The stock dropped to a low of 25.50 on Friday, the options expiration date for May. Marvel finally closed at 26.25 as the week ended. On Monday, investors could not get enough of the Spidey-stock, boosting it 2.10 (8%) to a finish at 28.35. Volume was 4 times normal. The die has been cast. This one's a keeper in a big way. I re-reinterate my buy recommendation and price target of 38-42.