One of the wildest weeks in US stock market history came to a rather anti-climactic close on Friday, with modest gains on all of the major indices, though the close was well off the highs of the session.
The Dow was the biggest winner of the day in percentage terms, suggesting that money is being plowed into the global behemoths for their international reach and dividend yields, but the week-ending rally was well short of spectacular and the Dow ended the day close to the middle of the range after it had been up 203 points at the high.
The S&P 500 had been as high as 1189 before losing more than half its gains through the afternoon. So too, the NASDAQ, which was up as much as 32 points before surrendering much of those gains as the day wore on.
For the week, all the major averages were lower. The Dow gave up 175 points over the roller coaster week; the NASDAQ lost 25 points, or about one percent, and the S&P shed 20 points, closer to 2%.
It was the third straight week of losses for the major averages, though hardly as bad as it could have been, measured by the lows set in place on Wednesday. The troubling characteristics of the week's trading were extreme volatility, high volume and the uncanny ability - in the near future - for indices to retest lows before making decisive moves.
With Europe still unresolved and US problems probably put away for a while with the start of preseason football, Friday turned out to be a day of celebration, not for the gains of the session, but for the fact that markets did not continue to slide as the week wore on and out.
Another troubling aspect was the 10:00 am reading from the University of Michigan's survey of consumer sentiment, which plunged to an 31-year low of 54.9, after a reading of 63.7 in July.
On the other hand, retail sales posted positive gains for July according to the Department of Commerce, though their readings and estimates have proven in the past to be more hot air than fact.
Not to hose down anyone's equity parade, but the global economy is still rather shaky, and unless long-term, structural problems with debt and the global currencies themselves are addressed, we are sure to repeat this kind of market behavior and sluggish economic growth. As it is, it's been nearly three years since the collapse of Lehman Brothers and the world is hardly a better place. Investments have become short term holdings, while real money has gravitated to bonds, gold or hard assets.
Dow 11,269.02, +125.71 (1.13%)
NASDAQ 2,507.98, +15.30 (0.61%)
S&P 500 1,178.81, +6.17 (0.53%)
NYSE Composite 7,303.88, +46.30 (0.64%)
Advancing issues topped decliners, though the margin was slight, 3965-2678. New highs on the NASDAQ numbered just four (4), with 60 new lows. On the NYSE, there were only seven (7) new highs and 24 new lows. The combined total of 11 new highs and 84 new lows - low numbers on both sides - suggests exactly what the market shows, that we are in a mid-range between a rally and collapse, with a bias to the negative.
Volume dropped off substantially, as traders were worn out and some caution and reason was applied to today's trading.
NASDAQ Volume 2,222,537,500
NYSE Volume 5,581,791,000
Commodities were sluggish. Oil fell 34 cents, to $85.38. Gold dipped $8.90, ending the week at $1,742.60, while silver speculators snapped back at onerous margin requirements, gaining 45 cents, to $39.11.
At the end, it was a smooth finish, but hardly inspiring to the bulls. After all, this is a three-week skid and the major markets are still bound between correction (-10%) and a bear market (-20%). It will likely take more than a few good days of trading to come to some understanding of future direction.
Friday, August 12, 2011
Thursday, August 11, 2011
Markets in Stupid Mode
Sorry, but nobody can accurately analyze four consecutive days of 400+ point moves on the Dow.
It's just not normal, but this is what we get when there are no regulators, lax controls and machines doing 90% of the trading.
The only thing one can possibly take away from this is that markets, and most traders, have no idea what to expect from day-to-day and the entire equity complex is more than likely rigged to benefit high frequency traders and the TBTF banks.
Fundamental analysis more or less died in 2008, and now we are seeing the effects of a completely broken price discovery mechanism.
It's tough to get excited about a 400-point move higher when the day before was a 500-point move to the downside. Any attempt to justify this kind of activity should be met with blank stares and an excessive amount of skepticism because, over the past four days, nothing has fundamentally changed except the price people - or machines - are willing to pay for stocks, options, ETFs and mutual funds.
Seriously, it's not even worth attempting to analyze today's movements because tomorrow's are likely to be something completely different, rendering any judgments incorrect.
Dow 11,143.31, +423.37 (3.95%)
NASDAQ 2,492.68, +111.63 (4.69%)
S&P 500 1,172.64, +51.88 (4.63%)
NYSE Composite 7,257.57, +319.34 (4.60%)
Advancers beat decliners, 5816-965. On the NASDAQ, there were five (5) new highs and 131 new lows; the NYSE saw seven (7) stocks reach new highs, but 127 make new lows. It should be of some benefit to keep a close eye on the new highs-new lows indicator. Even on a massive upside day like today, very few stocks made new highs, though an inordinate number made new lows. That's a definitely bearish trend which has remained in place throughout the market turmoil.
Volume was on the high side again, though not nearly as robust as on the days when the markets turned lower. One gets the feeling that most of the trades are very short-term, and once the money's been made, the traders will exit and go looking for fresh meat. This isn't a stock market any more. It's close to being a casino, though that would give casinos a bad name.
NASDAQ Volume 3,091,521,750
NYSE Volume 7,798,956,500
Oil priced higher again, gaining $2.83, to close the NYMEX session at $85.72. Would it surprise anyone to see oil back above $90 shortly, with no change at all in prices for gasoline at the pump? It's all part of the elitists' plan to destroy the middle class.
Gold was slapped down after the CME announced it would raise margin requirements by 22%, losing $32.80, to $1,751.50. Silver nose-dived 66 cents, to $38.67.
A couple of things are for certain. The powers that be don't like gold and silver rising in price and the general direction of the market is down. We're still in correction territory, down more than 10% on the major indices, and these powerful rallies are fueled, in part, by short covering, the machine-driven trading and the allocations required by ETFs, one of the worst financial innovations of the last fifty years.
If ETFs are going to continue to be part of the market, they need to be excluded from making up part of the averages. In other words, spill them out into their own exchange, which would eliminate a lot of the volatility in markets today.
Of course, that will never happen.
Thank goodness tomorrow is Friday.
It's just not normal, but this is what we get when there are no regulators, lax controls and machines doing 90% of the trading.
The only thing one can possibly take away from this is that markets, and most traders, have no idea what to expect from day-to-day and the entire equity complex is more than likely rigged to benefit high frequency traders and the TBTF banks.
Fundamental analysis more or less died in 2008, and now we are seeing the effects of a completely broken price discovery mechanism.
It's tough to get excited about a 400-point move higher when the day before was a 500-point move to the downside. Any attempt to justify this kind of activity should be met with blank stares and an excessive amount of skepticism because, over the past four days, nothing has fundamentally changed except the price people - or machines - are willing to pay for stocks, options, ETFs and mutual funds.
Seriously, it's not even worth attempting to analyze today's movements because tomorrow's are likely to be something completely different, rendering any judgments incorrect.
Dow 11,143.31, +423.37 (3.95%)
NASDAQ 2,492.68, +111.63 (4.69%)
S&P 500 1,172.64, +51.88 (4.63%)
NYSE Composite 7,257.57, +319.34 (4.60%)
Advancers beat decliners, 5816-965. On the NASDAQ, there were five (5) new highs and 131 new lows; the NYSE saw seven (7) stocks reach new highs, but 127 make new lows. It should be of some benefit to keep a close eye on the new highs-new lows indicator. Even on a massive upside day like today, very few stocks made new highs, though an inordinate number made new lows. That's a definitely bearish trend which has remained in place throughout the market turmoil.
Volume was on the high side again, though not nearly as robust as on the days when the markets turned lower. One gets the feeling that most of the trades are very short-term, and once the money's been made, the traders will exit and go looking for fresh meat. This isn't a stock market any more. It's close to being a casino, though that would give casinos a bad name.
NASDAQ Volume 3,091,521,750
NYSE Volume 7,798,956,500
Oil priced higher again, gaining $2.83, to close the NYMEX session at $85.72. Would it surprise anyone to see oil back above $90 shortly, with no change at all in prices for gasoline at the pump? It's all part of the elitists' plan to destroy the middle class.
Gold was slapped down after the CME announced it would raise margin requirements by 22%, losing $32.80, to $1,751.50. Silver nose-dived 66 cents, to $38.67.
A couple of things are for certain. The powers that be don't like gold and silver rising in price and the general direction of the market is down. We're still in correction territory, down more than 10% on the major indices, and these powerful rallies are fueled, in part, by short covering, the machine-driven trading and the allocations required by ETFs, one of the worst financial innovations of the last fifty years.
If ETFs are going to continue to be part of the market, they need to be excluded from making up part of the averages. In other words, spill them out into their own exchange, which would eliminate a lot of the volatility in markets today.
Of course, that will never happen.
Thank goodness tomorrow is Friday.
Wednesday, August 10, 2011
Fear Factor: Wall Street, Europe in Full Retreat; Dow Down Another 520 Points
Wall Street suffered one of its worst losses of all time and the third major loss in the last week.
Stocks were battered right from the opening bell, though selling accelerated in the final two hours of trading, just after stocks had reached their highs of the session.
The culprits - just in case anyone needs a good villain for the orderly destruction of capital - today were European banks such as France's Societe Generale, Germany's Duetsche Bank and Italy's Unicredit. European liquidity is being pinched again, just as it was during the global financial meltdown in 2008-09, though most of the players involved do not yet see the risk as severe.
The markets are telling different story, with stocks suffering deep declines for the third time in five days. Tuesday's enormous snap-back rally was completely overwhelmed by today's selling, and the end of the crisis seems well into the future.
To put matters into perspective as to how deep these recent losses are, consider:
A pretty picture this is not. Additionally, there's nowhere to park money with any kind of real return. The 10-year note fell to an historic low of 2.09%, the 30-year bond dropped to 3.50% at the close, while a 2-year bill fetches a ridiculous 17/100ths of a percent in interest. Might as well stuff dollar bills into a mattress for the next few years as it's likely a safer place than the bond markets.
Even after yesterday's stunning announcement by the Federal Reserve that it would keep the federal funds rate at near zero for the next two years, markets were still unrelieved. What the Fed did, in effect, was broadcast deflation with about as big a bullhorn as they could, saying that unemployment was getting worse, the housing crisis has not been resolved and prospects for further deterioration in the economy outweighed the chances for meaningful recovery.
Meanwhile, most of congress is off on its annual month-long vacation, supposedly back in their various states and legislative districts, watching the mess from as far away as they can get. It would be interesting to see how many are out of the country, and, if this stock market malaise continues, how many of those come back to face the music.
Here's the sad story of the day in numbers:
Dow 10,719.94, -519.83 (4.62%)
NASDAQ 2,381.05, -101.47 (4.09%)
S&P 500 1,120.76, -51.77 (4.42%)
NYSE Composite 6,938.23, -319.81 (4.41%)
Losing issues belted advancers again, 5050-1691, though, by those figures, there was at least a smattering of selectivity in the sell-off. On the NASDAQ, six (6) new highs were offset by 232 new lows. Over on the NYSE, a mere three (3) stocks posted new highs, while 221 made new lows. The combined total of 9 new highs and 453 new lows is indicative of yesterday's smash-up, which set many stocks above their recent lows, though the feeling is that it's only a matter of a few more days before the new lows reach well beyond the 1000 mark.
Volume was robust again, in keeping with the current trend of being "all in."
NASDAQ Volume 3,437,055,500
NYSE Volume 9,282,671,000
Oil stopped skidding for a day, gaining $3.59, to $82.89. Gold briefly priced at over $1800, but fell back, to $1,784.30, a $41.30 gain on the day. Silver picked up finally, gaining $1.44, to $39.33. Both gold and silver are up as trading heads to Asian markets.
Tomorrow will begin with an 8:30 read of initial unemployment claims, which is still expected to be hovering around the 400,000 mark. It will likely be a non-market-moving number, as the macro condition is truly driving the declines.
Some are already saying that stocks are cheap, but many were saying that a few weeks ago, before the bottom began falling out.
Cheap is such a relative term. A particular asset may be "cheap" to some and pricey to others. Right now, stocks look like they're being sold as fast as they can, before they lose even more value.
Maybe the worst thing about this sudden crashing is that it's only Wednesday. There are still two more trading days to get through.
Stocks were battered right from the opening bell, though selling accelerated in the final two hours of trading, just after stocks had reached their highs of the session.
The culprits - just in case anyone needs a good villain for the orderly destruction of capital - today were European banks such as France's Societe Generale, Germany's Duetsche Bank and Italy's Unicredit. European liquidity is being pinched again, just as it was during the global financial meltdown in 2008-09, though most of the players involved do not yet see the risk as severe.
The markets are telling different story, with stocks suffering deep declines for the third time in five days. Tuesday's enormous snap-back rally was completely overwhelmed by today's selling, and the end of the crisis seems well into the future.
To put matters into perspective as to how deep these recent losses are, consider:
- On July 27, the Dow closed at 12,724.41; today's close was 10,719.94, a drop of more than 2000 points in just 14 sessions.
- The NASDAQ topped out at 2858.83 on the 22nd of July; today's close of 2381.05 is a 17.7% drop.
- The Russell 2000, comprised primarily of small and mid-cap names, is already in bear territory, down more than 20% from recent highs
- The Dow Jones Transportation Index, which topped out at 5514.87, closed today at 4377.14, technically signaling a bear market as it is down 21%
- The S&P 500 lost 32 points last Tuesday, another 60 points last Thursday, 80 points on Monday and another 51 points today.
- The Dow Jones Industrials is just 500 points from making a 20% decline and resumption of the Bear market which was interrupted for 53 months by a stimulus and quantitative easing-induced rally that is now evaporating.
A pretty picture this is not. Additionally, there's nowhere to park money with any kind of real return. The 10-year note fell to an historic low of 2.09%, the 30-year bond dropped to 3.50% at the close, while a 2-year bill fetches a ridiculous 17/100ths of a percent in interest. Might as well stuff dollar bills into a mattress for the next few years as it's likely a safer place than the bond markets.
Even after yesterday's stunning announcement by the Federal Reserve that it would keep the federal funds rate at near zero for the next two years, markets were still unrelieved. What the Fed did, in effect, was broadcast deflation with about as big a bullhorn as they could, saying that unemployment was getting worse, the housing crisis has not been resolved and prospects for further deterioration in the economy outweighed the chances for meaningful recovery.
Meanwhile, most of congress is off on its annual month-long vacation, supposedly back in their various states and legislative districts, watching the mess from as far away as they can get. It would be interesting to see how many are out of the country, and, if this stock market malaise continues, how many of those come back to face the music.
Here's the sad story of the day in numbers:
Dow 10,719.94, -519.83 (4.62%)
NASDAQ 2,381.05, -101.47 (4.09%)
S&P 500 1,120.76, -51.77 (4.42%)
NYSE Composite 6,938.23, -319.81 (4.41%)
Losing issues belted advancers again, 5050-1691, though, by those figures, there was at least a smattering of selectivity in the sell-off. On the NASDAQ, six (6) new highs were offset by 232 new lows. Over on the NYSE, a mere three (3) stocks posted new highs, while 221 made new lows. The combined total of 9 new highs and 453 new lows is indicative of yesterday's smash-up, which set many stocks above their recent lows, though the feeling is that it's only a matter of a few more days before the new lows reach well beyond the 1000 mark.
Volume was robust again, in keeping with the current trend of being "all in."
NASDAQ Volume 3,437,055,500
NYSE Volume 9,282,671,000
Oil stopped skidding for a day, gaining $3.59, to $82.89. Gold briefly priced at over $1800, but fell back, to $1,784.30, a $41.30 gain on the day. Silver picked up finally, gaining $1.44, to $39.33. Both gold and silver are up as trading heads to Asian markets.
Tomorrow will begin with an 8:30 read of initial unemployment claims, which is still expected to be hovering around the 400,000 mark. It will likely be a non-market-moving number, as the macro condition is truly driving the declines.
Some are already saying that stocks are cheap, but many were saying that a few weeks ago, before the bottom began falling out.
Cheap is such a relative term. A particular asset may be "cheap" to some and pricey to others. Right now, stocks look like they're being sold as fast as they can, before they lose even more value.
Maybe the worst thing about this sudden crashing is that it's only Wednesday. There are still two more trading days to get through.
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