Weekend Wrap: Friday's Pathetic Finish Prelude To Sell The News Fireworks

Stocks ended the week in a rather disturbing manner, with all the major indices limping home nearly unchanged for the day. That such a disappointment would occur on what's normally an options expiration day (it was), the lack of interest and volatility can be seen as a sign that either a) everybody who is anybody is on vacation, or, b) the market has reached saturation levels and is about to make a short term reversal.

None of the four averages followed at Money Daily closed more than one tenth of one percent from the previous day's finish. Trading was akin to a grandparent's canasta tournament. Nothing was risked. Nothing was lost. Nothing was gained.

Friday's trading can also be seen as an thumbnail sketch for the week. Within narrow ranges, the majors all finished up the week not far from where they had begun. It was simply one of the dullest weeks of trading in recent memory.

As expressed in Thursday's post, "Crossroads," there appears to be a stopping point for everything, especially the Dow Industrials at the level of 25,000- 25,300. The Dow was weakened materially in February, and, despite glowing employment and unemployment figures, plus an expected second quarter GDP estimate of over four percent to be made public this coming week (8:30 am EDT, Friday) the industrial average has yet to re-approach the previous all-time high (26,616.71, January 23, 2018).

With such a well-telegraphed number expected, a 4% GDP for the second quarter is likely already well-baked into most portfolio cakes, thus it may be wise to sit out this particular glowing government data headline release.

That the new high event continues to fade into memory without the Dow making a significant rally attempt tells a great deal about current market conditions. It signals that there is something seriously damaged in the economy, and it's probably not confined to the United States, since the central banks have acted as first-movers and lenders of last resort since 2008-09.

Change is afoot, and with change there are usually winners and a good share of casualties along the way. A major shakeout in the market is long overdue, despite the united forces of central banks forestalling such a watershed event. This has been the overriding theme of the past decade. While it may not end this week or next, it will end, and the result will be a general decline of 30-50 percent in major stock indices.

Otherwise, all the math in the world can be throw out the nearest window.

In the meantime, trade cautiously with an eye on fundamentals, which eventually will guide the way.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48
7/18/18	25,199.29	+79.40	+927.88
7/19/18	25,064.50	-134.79	+793.09
7/20/18	25,058.12	-6.38	+786.71

At the Close, Friday, July 20, 2018:
Dow Jones Industrial Average: 25,058.12, -6.38 (-0.03%)
NASDAQ: 7,820.20, -5.10 (-0.07%)
S&P 500: 2,801.83, -2.66 (-0.09%)
NYSE Composite: 12,789.91, +3.43 (+0.03%)

For the Week:
Dow: +38.71 (+0.15%)
NASDAQ: -5.78 (-0.07%)
S&P 500: +0.52 (+0.02%)
NYSE Composite: +20.41 (+0.16%)

Crossroads

The best version of the Cream´s Classic ´´Crossroads´´ from the 1968 Album ´´Wheels of Fire´´ even though the video is from the live concert at Winterland.

Simply put, if the Dow cannot close above 25,335.74 (March 9, 2018) the existence of a bear market will be on full display.

Granted, that number is more than 1300 points below the January 23 high of 26,616.71, but the point is this secondary high has yet to be exceeded, despite at least four (probably five) attempts.

Assuredly, the US economy is currently healthy and robust, but so are the warts and wounds, the result of many years of mismanagement. The Fed, working against expansion via its selfish balance sheet reduction scheme and relentless interest rate hikes, adds fuel to the eventual deflationary fire.

Today's nosedive - only the third negative close in 13 trading days this month - may have been nothing more than consolidation (profit taking), but the trading level is suspiciously bearish, considering the failed highs of the past four months.

Keep eyes on the numbers. The have been, and will continue to provide significant market signals.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48
7/18/18	25,199.29	+79.40	+927.88
7/19/18	25,064.50	-134.79	+793.09

At the Close, Thursday, July 19, 2018:
Dow Jones Industrial Average: 25,064.50, -134.79 (-0.53%)
NASDAQ: 7,825.30, -29.15 (-0.37%)
S&P 500: 2,804.49, -11.13 (-0.40%)
NYSE Composite: 12,786.48, -36.75 (-0.29%)

Dow Rally Continues Through Fifth Straight Session

The beat goes on...

For the month of July, the Dow Industrials have closed to the upside on 10 of the 12 trading sessions (five in a row) and is up nearly 1000 points over that span.

Conventional wisdom would suggest that this kind of winning cannot be sustained over the near term.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48
7/18/18	25,199.29	+79.40	+927.88

At the Close, Wednesday, July 18, 2018:
Dow Jones Industrial Average: 25,199.29, +79.40 (+0.32%)
NASDAQ: 7,854.44, -0.67 (-0.01%)
S&P 500: 2,815.62, +6.07 (+0.22%)
NYSE Composite: 12,823.23, +44.01 (+0.34%)

Fed Chairman Powell Mastering Greenspan-speak; Some Investors Pleased, Others Confused

Fed Chairman Jerome Powell was grilled today by members of the Senate Banking Committee, and was asked by senator Pat Toomey of Pennsylvania about the flattening (or tightening) of the yield curve.

Toomey expressed his question to the Chairman, thusly:
“Some people are concerned that a flattening curve or inverted curve correlates with economic recession. Here’s my question: does a dramatic change in the shape of the yield curve in any way influence the trajectory you guys [the Fed] are on with respect to normalizing interest rates and the balance sheet?”

Quoting Chairman Powell's answer from the story:

“I think what really matters [about the yield curve] is what the neutral rate of interest is,” Powell said.

“And I think people look at the shape of the curve because they think that there’s a message in longer-run rates — which reflect many things — but that longer-run rates also tell us something, along with other things, about what the longer-run neutral rate is. That’s really, I think, why the slope of the yield curve matters. So I look directly at that.”

Literally, Powell did not answer the question, taking a page from the master of obscurity, mumbling, and ambiguity, former Fed Chairman, Alan Greenspan, who was notorious for answering questions and outlining positions in such an arcane and circuitous manner that it took the likes of William Safire to figure out just what he was saying, and even then, nobody was absolutely certain their analysis was correct.

Powell's rhetoric appeared to be pleasing to stock jockeys on Wall Street, who bid up prices a bit on the day, closing at its best level since June 14 (25,175.31). Perhaps Powell is embarking on a back-to-the-future nomenclature for the Federal Reserve, wherein the general public is to stand in awe of the special powers of the central bank and not question its motives.

That's how it was before and during Greenspan's reign as Chairman and maybe it might not be such a bad thing for the Fed to be less engaging and transparent today.

After all, nobody really understands what the Fed is talking about, including the Fed governors and presidents of the regional Fed banks, so why bother to try to explain it all to ordinary plebes, whose only wishes are to be left alone and offered a reasonable return on their investments?

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48

At the Close, Tuesday, July 17, 2018:
Dow Jones Industrial Average: 25,119.89, +55.53 (+0.22%)
NASDAQ: 7,855.12, +49.40 (+0.63%)
S&P 500: 2,809.55, +11.12 (+0.40%)
NYSE Composite: 12,779.22, +30.44 (+0.24%)

Summer Trading Is Typically Slow; Precious Metals Hammered Of Late

Low volume and tight ranges on all the indices are telling the obvious. It's summer, many large traders are off to vacation spots, investors are sitting pat, and, despite it being the heart of second quarter earnings season, there simply isn't anything to get truly excited about, either on the bull or the bear side.

The Dow spent the entire session within a 90-point range, never falling more than 40 points from the pervious close, finishing the day with a modest gain. The Dow has finished higher eight of the 10 trading days in July.

There's more action in commodities of late, especially in the precious metals, which have been sliding for the past month after peaking short-term in mid-June. Silver slipped below $15 per ounce last week and has been trading in a tight range between $15.70 and $15.95. It appears that hopes for a rebound in real money have been dashed once again and gold also is trading at a one-year low, $1240 per troy ounce.

The price of crude took a hit today as well, with WTI finishing below $68 per barrel for the first time since June 25. The market is fully saturated and demand is flat, so prices should move down gradually for raw crude as well as gas at the pump.

This is really one of the more disinterested or distracted markets in some time. Likely, it's best to sit and wait for some indicator to signal direction.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95

At the Close, Monday, July 16, 2018:
Dow Jones Industrial Average: 25,064.36, +44.95 (+0.18%)
NASDAQ: 7,805.72, -20.26 (-0.26%)
S&P 500: 2,798.43, -2.88 (-0.10%)
NYSE Composite: 12,748.78, -20.73 (-0.16%)

Weekend Wrap: Stocks Got A Good Rip This Week For No Apparent Reason

In the grand scheme of things, this past week was a victory for normalcy bias.

Stocks gained.

Bonds held steady.

The government continued to operate as a complete farce.

Nothing really changed at all.

Even Money Daily, the grand encapsulator of financial media, began its commentary with the same opening line twice on consecutive days. For purposes only serving to further the case for degeneracy and laziness, the line was, "So much for summer doldrums."

Feel free to look it up, but, presently, the editors of Money Daily have no intention of clicking on any more links or checking anything for accuracy.

It's a shoot and miss environment. Six months from now, nothing that happened this week will be of any relevance.

For what it's worth, the Dow is up exactly 748 points in July. Numerologists may point out that this number reduces to 19, or 1, both of which are prime numbers. At least in the case of "1" the signal is for newness, birth, rebirth, a fresh start.

Sounds good.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00

At the Close, Friday, July 13, 2108:
Dow Jones Industrial Average: 25,019.41, +94.52 (+0.38%)
NASDAQ: 7,825.98, +2.06 (+0.03%)
S&P 500: 2,801.31, +3.02 (+0.11%)
NYSE Composite: 12,769.50, +8.04 (+0.06%)

For the week:
Dow: +562.93 (+2.30%)
NASDAQ: +137.59 (+1.79%)
S&P 500: +41.49 (1.50%)
NYSE Composite: +104.62 (+0.83%)

Stocks Gain, Dow Approaching Resistance Around 25,000

Stocks ramped higher on Thursday, taking back all of the losses from the prior day and advancing to its highest level since June 18. What lay ahead for the industrials is a trading areas that has proven to offer some resistance around and above 25,000.

In mid-June, at the tail end of a four-day rally, the Dow topped out at 25,322.31 (June 11), then stalled, sending the index tumbling more than 1200 points to 24,117.59 by June 27.

Will the pattern repeat? Obviously, it's too early to tell, but charts are suggesting that there will be some selling in this area. What may prompt any trading action are the emerging second quarter earnings reports, especially those on Friday from major banks.

Prior to Friday's open, the nation's largest bank by assets ($2.6 trillion), JP Morgan Chase (JPM) reported adjusted revenue of $28.39 billion, beating estimates of $27.34 billion and EPS of $2.29, also topping expectations of $2.2. Net income rose 18%, to $8.3 billion.

Citigroup (C) reported higher EPS, but missed on the revenue line. Shares were selling off slightly in pre-market trading.

Wells-Fargo (WFC) was down sharply prior to the opening bell after reporting a decline in net income applicable to common stock, which dipped to $4.79 billion, or 98 cents per share, in the quarter ended June 30, from $5.45 billion, or $1.08 per share a year ago. Analysts expected $1.12 per share.

Mixed results from the financial sector come as no surprise. Squeezed margins from the flattening yield curve has put pressure on bank stocks for some months. The financial sector has been one of the weakest through the second quarter and the pressure does not appear to be relenting any time soon.

Friday should be full of fireworks.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48

At the Close, Thursday, July 12, 2018:
Dow Jones Industrial Average: 24,924.89, +224.44 (+0.91%)
NASDAQ: 7,823.92, +107.30 (+1.39%)
S&P 500: 2,798.29, +24.27 (+0.87%)
NYSE Composite: 12,761.46, +79.87 (+0.63%)

Stock Selling Pressures Emerge As Bonds Present A Developing Skeptical Outlook

So much for summer doldrums.

Yes, that was the opening line of yesterday's post.

It's that kind of market, one that can turn on a dime, or a tweet, or, maybe even a look, a glance, a suggestion.

This is not for market neophytes, who will get skewered royally if they attempt to play and are not prepared to suffer small losses should positions prove unfavorable. Because small losses, left unaddressed, usually lead to larger losses, it's important to monitor all trades closely. Similarly, profits may be fleeting and momentary. It may be better to take short term gains under these conditions, than wait out months of bumps and grinds in expectation of sustained profits.

Current market conditions are strung out like an addict needing a fix. Any twitch can set it off, as evidenced on Wednesday, as short term euphoria faded into tight panic overnight.

Call it Trump-enomics, trade sabre-rattling, currency collapse, kind dollar, or whatever you like, what is underway is nothing less than a massive reordering of priorities. From individual well-being to international survival, nothing is off the table.

While stocks continue to zig-zag - the Dow fell once again into negative territory for the year - bonds seemingly know only one direction, toward the middle, as yield spreads on treasuries keep tightening.

Since the Fed has raised rates six times since December 2015, the yield on longer-dated maturities has not moved in tandem. In a growing, vibrant economy, yields on 10-year and 30-year bonds would be spiking higher in reaction to higher short-term rates, but presently, they are resistant. Thus, short-term rates are rising faster than longer-term, making it difficult for financial institutions to make money since they depend on the spread, i.e., borrowing short-term to lend long-term.

Simply put, it's tough to make much profit on a one percent (or less) margin.

This dynamic has and will continue to scare equity market participants, whose fear is that their investments will rise only very gradually, if at all. The longer-dated treasuries serve as a hedge against the inherent risk in stocks. Even though they may not keep pace with inflation, the risk of losing money is nearly nil.

There are, of course, many more forces at play, including devastated markets in Japan and Europe, which recently (and presently) toyed with negative interest rates, forcing all yields lower. Thus, the US yields look generous by comparison with limited risk exposure.

For a more detailed analysis of interest rates and the dangers of an inverted yield curve, Investopedia offers a reasonable explanation, here.

A simplified approach may be developing as a new norm: minimize risk, accept lower returns, preserve capital rather than seeking bold - and thus, risky - profits.

The bond market, which is much larger than the equity market, often serves as a lid on runaway speculation in stocks. Currently, the lid is being lowered, slowly, but steadily.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04

At the Close, Wednesday, July 11, 2018:
Dow Jones Industrial Average: 24,700.45, -219.21 (-0.88%)
NASDAQ: 7,716.61, -42.59 (-0.55%)
S&P 500: 2,774.02, -19.82 (-0.71%)
NYSE Composite: 12,681.59, -133.05 (-1.04%)

Stock Investors Taking Advantage Of Calm Conditions

So much for summer doldrums.

In the first six trading days of July, the Dow Industrials have tacked on a hefty 648 points, leading many to begin believing that the minor correction from February was just that, minor, and now stocks are ready to be bought again nilly-willy. There has been only one negative close for the Dow this month and that came on the shortened session on the Tuesday prior to the Independence Day holiday.

For the past few days, an odd dynamic has taken place, with the Dow leading the other indices - especially out-performing the NASDAQ - which may be signaling a reversal from the prior three months. This change probably has little to do with the recent favorite whipping-boy: tariffs, but, there is the possibility that after closer analysis, many of the Dow stocks may be in position to benefit.

This is at least what seems to be occurring, though another possibility is that NASDAQ stocks have been overbought while the Dow was being oversold, thus the change in positions.

Whatever the case, investors in blue chips have been enjoying excellent gains and nobody is going to complain about that. With earnings about to take center stage in the Wall Street drama, Dow stocks may continue to rise, given optimistic projections for second quarter GDP and the part Dow stocks have played in this mini-rally.

Realistically, geopolitics have calmed for the time being, though under the surface there are relevant issues, not the least of which being England's struggle with post-Brexit negotiations, which has left Prime Minister Teresa May in quite the quandary.

May is promising a "soft Brexit" plan, due to be announced on Thursday via a white paper outlining the plan. Whatever May offers is sure to anger many and placate few, as nobody appears to be happy with half-measures, which has been the norm since the vote to leave the European Union two years ago. Not much has changed on the island nation and the process has been slow, disorderly, and generally lacking direction.

Look for the story to take on new life later in the week.

Back in the United States, President Trump seems to have thwarted almost all of his opponents, especially the ill-concieved Mueller investigation into Russia collusion in the 2016 presidential election. The entire affair is nothing but a complete farce, and the tide has turned against the special prosecutor and any friends he many have left in the deep state, liberal, leftist, obstructionist Democrats in congress.

With mid-term elections less than four months ahead, desperate Democrats have tried every conceivable attack on Trump and have come up empty-handed, even with a compliant press corps which seems also intent on demonizing Mr. Trump.

Meanwhile, some tariffs have already gone into effect, though the real implications are unlikely to be felt for some time, giving traders, fund managers and speculators ample time to play whatever games they feel fit to capture gains in this see-saw market.

If there is trouble ahead, it hasn't yet materialized, as unemployment remains low and the economy continues to show nascent signs of improvement. Inflation also has not truly had much effect, though the Federal Reserve's simultaneous deleveraging and rate hiking could cause significant problems.

For now, the market is maintaining a good demeanor and bonds are behaving, despite the ever-flattening yield curve. 2s-10s persist at 28 basis points, while 5s-10s and 10s-30s each sport a decade-low 10 basis point spread.

The summer may turn out to be one of pleasant recreation, though veteran traders and market analysts should be always vigilant for abrupt changes in sentiment.

Right now, it's smooth sailing and everybody's along for the ride.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25

At the Close, Tuesday, July 10, 2018:
Dow Jones Industrial Average: 24,919.66, +143.07 (+0.58%)
NASDAQ: 7,759.20, +3.00 (+0.04%)
S&P 500: 2,793.84, +9.67 (+0.35%)
NYSE Composite: 12,814.64, +37.71 (+0.30%)

No News Sends Stocks Soaring

Animal spirits were alive and well on Wall Street to open the week, putting aside all the phony fears over President Trump's trade war with China and the rest of the known world.

Shrugging and buying has become a trademark of the easy money days since the crash in 2008 and recovered which started in 2009. Monday's buying spree comes at the tail end of the second longest bull market in history, and is likely a sign that the market is nearing exhaustion rather than a sign that everything is going swimmingly.

There was no noteworthy news to bring out the buyers.

Oddly enough it was the Dow Jones Industrial Average that led the way, posting its best gain in month. On June 6, the Dow ramped higher by +346.41.

Even odder, the three other indices posted identical gains of 0.88%.

Oddities will continue as traders pore over a flood of second quarter earnings reports the next few weeks.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18

At the Close, Monday, July 9, 2018:
Dow Jones Industrial Average: 24,776.59, +320.11 (+1.31%)
NASDAQ: 7,756.20, +67.81 (+0.88%)
S&P 500: 2,784.17, +24.35 (+0.88%)
NYSE Composite: 12,776.92, +112.04 (+0.88%)

Weekend Wrap: Stocks Celebrate The 4th With Solid Gains

Stocks bubbled up after the BLS reported June job gains of 213,000 in the non-farm payroll report, though the official unemployment rate rose to four percent as more people entered the workforce.

The increase, being more than the expected 195,000, was a positive spur to trading instincts and helped end one of the better weeks of the year, with all four major indices posting gains for the day and the week.

Fears of an extended trade war with China were put aside for the time being. With the nation basking in the glow of an Independence Day week, only one down day was recorded, that being Tuesday's shortened session, which seemed more an adjustment to price levels rather than a trend-starting event.

Earnings reports for the second quarter will soon be the talk of the town and with that narrative taking precedence, there's a very good chance that stocks may see some solid support for the rest of the month.

The Dow is already ahead for July, despite still being more than 2000 points from the January all-time highs. With trading volumes down, it won't take much tome markets and the mood has shifted to a summery, feeling-good groove.

Bonds being moribund, stocks will bear some near term interest. The longer term still appears shaky or shady on a fundamental basis.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07

At the Close, Friday, July 6, 2018:
Dow Jones Industrial Average: 24,456.48, +99.74 (+0.41%)
NASDAQ: 7,688.39, +101.96 (+1.34%)
S&P 500: 2,759.82, +23.21 (+0.85%)
NYSE Composite: 12,664.88, +79.67 (+0.63%)

For the Week:
Dow: +185.07 (+0.76%)
NASDAQ: +178.08 (+2.37%)
S&P 500: +41.45 (+1.52%)
NYSE Composite: +160.63 (+1.28%)

Stocks, Bonds In Game Of Chicken With Fed, Economy

Who will blink first?

That's the essential question, especially whenever stocks advance in the face of disappointing news or data.

Just today, basking in the afterglow of Independence Day, the data was far from convincing of the official narrative that the economy is clicking, unemployment is low and happy days for all are just over the horizon.

Unemployment claims were higher than expected. For the last week of June, 231,000 were receiving government benefits. The low number of unemployment claims is partially due to a number of factors the government number crunchers don't readily report. First, there are no more extended claims. In most states, it's 26 weeks. That's it. Find a job in six months or be relegated to the "out of workforce" brigade, which are not counted in the official figures.

Additionally, with so many baby boomers retiring (supposedly at a rate of 10,000 a day, though it's likely much lower), there should be jobs aplenty. However, many of those older folks are not being replaced. Corporations are saving through attrition, or, at best, hiring replacements at much lower wages with fewer benefits.

Then there's job growth. The numbers delivered by ADP this morning were uninspiring. Private employers added 177,000 to their payrolls, well below the expected 190,000. Prior to the opening bell on Friday, the BLS releases the non-farm payroll data for June, which is expected to come in at around 195,000 new jobs, but whether the numbers match expectations or not, almost anybody with a functioning brain knows that the data is largely fudged and massaged and generally not reflective of local conditions.

Thus, the wizards on Wall Street are playing chicken in the market, and well they should. The Wall Street elite have the ability to hedge, shed positions before the general public, and make moves faster than anybody else, especially the home-gaming day-traders. They are selling when everyone else is buying and vice versa. They're pros. That's why they're making mega-bucks on Wall Street and you're not.

The Federal Reserve released the minutes from June's FOMC meeting at 2:00 today, which initially sent stocks down, but they recovered to close near their highs. The minutes sent mixed signals, but little to suggest that the Fed would not raise the federal funds rate by another 25 basis points in September, despite a flattening treasury yield curve, which is a harbinger of an economic downturn.

Again, the market pros played chicken and bid up stocks in the face of the Fed minutes which revealed little beyond what was already known.

Bond yields edged slightly higher, except for the 30-year, which shed one basis point to 2.95%. Spreads on the 2s-10s dipped to 29 basis points, and the 2s-30s dropped to 40 bips. Bond traders are staring directly at a flatline instead of a curve, with potential for inversion a real concern. They're selling the short end, buying the long, challenging the Fed to tighten twice more this year, a move that almost certainly would send wild signals through the trading community.

If all of that isn't enough to churn the stomach, Trump's China tariffs go into effect at midnight EDT.

Chicken. It's not what's for dinner. It's what Wall Street plays these days.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33

At the Close, Thursday, July 5, 2018:
Dow Jones Industrial Average: 24,345.44, +181.92 (+0.71%)
NASDAQ: 7,579.59, +83.75 (+1.03%)
S&P 500: 2,735.07, +21.85 (+0.81%)
NYSE Composite: 12,564.92, +90.53 (+0.56%)

Stocks Turn Ugly In Short Session: Time Out On Wall Street

The Dow took a nearly 300-point round trip from top to bottom on the second trading day of the third quarter, rising by more than 137 points before collapsing in the final hour to close 1/2 percent lower. The NASDAQ was beaten down further, off 65 points on the day (-0.86%).

Markets can become discouraged by many factors, but for this current one, it seems to be merely a matter of during out after nine-plus years of unprecedented fantasy. Speculators, those eager early-day traders who took it on the chin today as they have on many other recent sessions, have to be concerned that investors might catch on to the fact that the global economy is not all roses and unicorns, but rather a patchwork of central bank machinations that have distorted what used to be free markets into stealthy, clandestine, controlled entities.

If that becomes the case, the second leg of the bear market will commence in short order and likely not cease until well after the Dow falls 20% from the January 26 high (26,616.71), a process that could last anywhere from three to six months. This is shaping up to be a long drawdown of asset values, considering that the central bankers will not readily abandon their chosen "low unemployment and moderate inflation" narrative, of which practically everyone who matters is in disbelief already. The proof is in stock market and bond returns, both of which suggest contraction instead of a healthy growth environment.

July 4, Independence Day in the United States, will be an anchor on foreign markets because there will be no trading on the day. China has already intervened in their equity markets to stem the outflows. Italy, and thus, all of the EU, is staring directly at a major solvency crisis which could explode and uncouple the southern nation from the rest of Europe. Already, the new Italian government has ECB officials on edge.

Argentina is already a basket case, as is Venezuela, with Brazil close to chaos as well.

Maybe it's time the politicians in Washington stop focusing on the "evil" Russians (who are doing quite well, despite sanctions and expulsions of their diplomats by the US), and begin taking account of the rest of the world, which seems to be not right at all.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59

At the Close, Tuesday, July 3, 2018:
Dow Jones Industrial Average: 24,174.82, -132.36 (-0.54%)
NASDAQ: 7,502.67, -65.01 (-0.86%)
S&P 500: 2,713.22, -13.49 (-0.49%)
NYSE Composite: 12,494.70, +9.12 (+0.07%)

Stocks Start Slow, Finish Well To Open Third Quarter

Starting off the third quarter by stumbling into the red, US stock indices bounced off their early lows to erase the losses and post gains late in the afternoon.

With the notable exception of the NYSE Composite, the major exchanges posted small advances in what really looked like coordinated buying by forces unseen (hint: central banks, led by the Federal Reserve and the PPT).

Most of the rest of the world finished lower on the day, so the US market appears to be an outlier, because, well, America rocks, ya know.

Monday's finish was nothing more than market noise and should be regarded as such. Tuesday's session is shortened so that the brokers and dealers can beat the traffic out to the Hamptons. The exchanges will close at 1:00 pm EDT and remain closed on Wednesday, July 4, in appreciation of Independence Day.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77

At the Close, Monday, July 2, 2018:
Dow Jones Industrial Average: 24,307.18, +35.77 (+0.15%)
NASDAQ: 7,567.69, +57.38 (+0.76%)
S&P 500: 2,726.71, +8.34 (+0.31%)
NYSE Composite: 12,485.58, -18.67 (-0.15%)

Weekend Wrap: End Of Quarter Fade Troubling at Half-Year Mark

Stocks were flying higher early on Friday, the final trading session of the second quarter, but, late in the day, waves of selling sent all of the major indices well off their highs by the close.

While the selling did not sent the averages into negative ground, sentiment the past two weeks has not been satisfying to investors, neither those with longer term aspirations nor for the speculative excesses in the short and day-trading regime.

The S&P and NASDAQ closed out the quarter with better success than the Dow, though the 30 industrial stocks comprising the Dow Jones Industrial Average continue to lead the market in the US and to a large extent are a barometer for business globally.

Thus, the Dow ended the month of June with a 144-point loss, and the quarter with a squeamish advance of 158.97 (April, +50.81; May +252.59), less than one percent.

At the year's midpoint, the Dow is down just over one percent. The S&P 500 is up better than two percent, while the NASDAQ is sporting a 9% gain, well into bubble territory.

2018 is turning out to be less and less impressive with each passing day. The search for yield is an everyday affair under current conditions, leaving little room for error. Investors are finding out rather suddenly that small mistakes are becoming more frequent, leading to steeper general losses. The trading environment is not for the faint of heart; cash is becoming more attractive, especially with the dollar resilient against many major foreign currencies.

Bloomberg’s Michael Regan noted Friday that global market caps have lost about $10 trillion since peaking in late January.

Bonds continue to fluctuate in narrow ranges, though consistently flattening the yield curve, with both short and long durations taking turns at lower yields. The 30-year bond ended the quarter at 2.98%, the 10-year note held at 2.85%, the five, 2.73%, and the 2-year, 2.52%.

Oil spiked in the final days of the month, just in time for the largest holiday travel week of summer.

The vix remains elevated with precious metals largely in the dumps. The most significant development for the upcoming, holiday-shortened week is Friday's non-farm payroll report for June. The expected number is +198,000 net new jobs for the month. It may be academic if the report comes close to consensus. A miss would surely be met with a negative reaction

With six months in the books, the second half kicks off on a very nervous note.

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
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
6/27/18	24,117.59	-165.52	-298.25
6/28/18	24,216.05	+98.46	-199.79
6/29/18	24,271.41	+55.36	-144.43

At the Close, Friday, June 29, 2018:
Dow Jones Industrial Average: 24,271.41, +55.36 (+0.23%)
NASDAQ: 7,510.30, +6.62 (+0.09%)
S&P 500: 2,718.37, +2.06 (+0.08%)
NYSE Composite: 12,504.25, +28.27 (+0.23%)

For the Week:
Dow: -309.48 (-1.26%)
NASDAQ: -182.51 (-2.37%)
S&P 500: -36.51 (-1.33%)
NYSE Composite: -135.32 (-1.07%)

Stocks Gain From Oversold Condition; 1Q GDP 2.0%

Nothing really to see here on the second-to-last trading day of the quarter, as stocks were due for a bit of a relief rally, which is exactly what this was, despite the bad news that first quarter GDP was revised lower, to 2.0% annualized.

The final estimate of GDP came as a bit of a shock to the know-it-alls on Wall Street, who collectively were looking for somewhere between 2.2% and 2.3% for the final figure. The fact that GDP underperformed (despite metrics that include everything other than drug dealing and prostitution) speaks volumes about the true state of the US economy, and, to a larger extent, that of the world.

Fading the Fed's favored position that the economy is solid, one would be better advised to consult one's stock broker or neighbor for a more accurate read on economic conditions. Savvy investors realize that GDP, as much as its inflated figures and inclusion of government expenditures belie a weakened state, isn't a very good measure of the health of an economy. The figures can be massaged and pushed around to fit any narrative, and usually are. What's happening in reality is that any growth is easily being eaten away by inflation, and any profits are funneled to the top 10% of the income gatherers, leaving the bottom 90% craving more and spending on credit while saving little to nothing.

A panoply of exaggerated expectations and flimsy figures is what the government number crunchers present, and it is so putrid that even their best efforts to make it appear palatable fall short. The United States has a hollowed out economy, devoid of a thriving middle class, replaced, over the past 20 years, with debt-ridden wannabes whose status is ultimately dependent on enormous wads of credit, from mortgages to school loans, to credit cards, to auto loans and leases, it is all a huge fallacy.

That stocks are able to even maintain some semblance of vigor is owed only to stock buybacks and the largesse of the central bank, which has fueled the massive facade with enough hot money and hot air to lift what is a limp and lifeless corpse off the deathbed... for now.

Numbers don't lie, and the best come from the bond pits, which was relatively calm, but still flatter in the middle, with the spread on 5s-10s falling to a mere 11 basis points. The 30-year bond remained steady at 2.97%, while the ten year ticked up one bip, making the 10s-30s spread just 13 basis points, which is not much interest for 20 years of waiting. Bonds continue to tell the real story, and it's not a happy one. Credit is tightening, slowly but certainly, and the Fed is creating a chokepoint for the economy which will lead only in one direction, to recession.

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
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
6/27/18	24,117.59	-165.52	-298.25
6/28/18	24,216.05	+98.46	-199.79

At the Close, Thursday, June 28, 2018:
Dow Jones Industrial Average: 24,216.05, +98.46 (+0.41%)
NASDAQ: 7,503.68, +58.60 (+0.79%)
S&P 500: 2,716.31, +16.68 (+0.62%)
NYSE Composite: 12,475.98, +63.91 (+0.51%)

Dow Approaching Correction Territory; NASDAQ Smashed Lower Again

After calling yesterday's trading the "worst dead cat bounce ever", equity markets in the US clambered back into the high green on Wednesday morning. Running on nothing but day-trading and short-selling fumes, the markets turned dramatically just before noon and were in the red over the final two hours, led lower by the now-dead NASDAQ.

To say that the NASDAQ has nosedived recently would be putting it lightly, as the index has had only one winning session in the past five, and has shed some 336 points over that span, or, about 4.5% percent.

There has also been some pain over on the S&P 500, which really stalled out after making a double top around 2780 (2,782.00, June 11; 2779.66, June 15), is down a little more than three percent over the past two weeks.

While the Dow Industrials were down the least, percentage-wise, the point loss was the greatest among the various indices and the Dow also is leading the charge downhill, already well into the red for the year (-2.5%).

With today's closing price, the Dow is down 9.4% from the January 26 high (26,616.71), on the brink of making a second excursion into correction territory. Meanwhile, the S&P and NASDAQ are still clinging to gains YTD, but are off the January highs as well. The NASDAQ is down just a fraction from January, but the S&P is down six percent over the same span.

Today's Dow downdraft was the 10th session with a negative close in the past 12, as the Dow turned a 903-point gain in June into a 298-point loss, a rapid, 1200-point descent. Whatever can be said about the demise of the Dow over the past three weeks it certainly is not good and does not portend well for the remaining two trading days of the month. Avoiding another correction is probably at the top of the list for the bulls still standing, because this foray will likely be more lasting and also lead to further losses.

Bonds were being bought with both hands on the day, with the yield on the 10-year note down five basis points to 2.83%, the lowest yield since April 17. The 30-year bond lost six bips, closing below 3.00%, at 2.97. This is 13 basis points below the close of 3.10% on the date of the latest FOMC rate hike, June 13. That's quite significant, since the Fed is intent on pushing rates higher, but the market is steadfastly resisting.

This recent spree of bond buying is signaling some dire consequences ahead. If the economy is strong enough to raise rates - as the Fed believes - then why is the market heading in the opposite direction? It's obvious that somebody is wrong-footed, and in this case, the money's on the Fed, which is usually well behind the trend, but currently is seeking to create the trend, something that is pretty much impossible, regardless of how much weight and force the central bank wants to exert on markets.

A explosive, toxic condition is at hand. The Fed and financial media are pushing a narrative of "all's well," but the market is saying, "I don't think so." Something is about to give, and soon. Expect stocks to continue their summer swoon, along with the requisite bouts of euphoria (short covering), though the fear factor will eventually take strong hold of conditions.

As has been stated ad nauseum on these pages for months, "this is a bear market. Trade accordingly."

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
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
6/27/18	24,117.59	-165.52	-298.25

At the Close, Wednesday, June 27, 2018:
Dow Jones Industrial Average: 24,117.59, -165.52 (-0.68%)
NASDAQ: 7,445.08, -116.54 (-1.54%)
S&P 500: 2,699.63, -23.43 (-0.86%)
NYSE Composite: 12,412.06, -98.49 (-0.79%)

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.

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%)

Dow, NASDAQ Hammered As Investors Continue Flight, FAANGs Pounded; What a Mess!

How's this for a healthy economy?

Facebook (FB): 196.35, -5.39 (-2.67%)
Amazon (AMZN): 1,663.15, -52.52 (-3.06%)
Apple (AAPL): 182.17, -2.75 (-1.49%)
Netflix (NFLX): 384.48, -26.61 (-6.47%)
Google (Alphabet, GOOG): 1,124.81, -30.67 (-2.65%)

...and, for good measure,

Tesla (TSLA): 333.01, -0.62 (-0.19%)

Tesla gets special consideration because its demise will be swift, painful and awe-inspiring for a variety of reasons. First, the company is run by a person (Elon Musk) who is almost certainly bi-polar, meaning he's brilliant, but eventually a nut-case, like a Pee Wee Herman on steroids. Second, the company has mountains of debt which will not likely be serviced in an orderly manner. Third, the cars keep bursting into flames. Fourth, and possibly most important, the competition in the eVehicle category is fierce and will swallow up the upstart. Everybody from Porsche, to BMW, to Jaguar has invested heavily in battery powered vehicles and these companies have more expertise and money than little Tesla.

Telsa is one of those companies that is wildly overvalued and ripe for a fall. It was spared today because nobody has any nterest in selling it just yet. They're all along for the ride (pardon the pun). When the bugs start getting squashed on the windshield, so to speak, it will be epic. Tesla's EPS is a humorous (if you're not an investor) -13.97 per share. Yep, they're losing money on every car they sell, and they don't make it up on volume. This one's a definite long-term short.

As for the rest of the market, one can only assume that seasoned veterans of the investing business see what's ahead. Trade wars don't help, but they're certainly not the only cause. Stock buybacks will prove to be disastrous once the price drops become permanent (soon, within months or weeks). The FAANGs in particular have been responsible for up to 75% of the recent gains on the NASDAQ, and they're based on nothing more than herd behavior. The stocks were hot, everybody got in. When everybody tries to get out, days like today are the result. Expect more of them over the next 3-5 months.

Lest one needs reminding, the Dow confirmed bear market conditions on April 9, and that HAS NOT CHANGED. Nor will it. Stocks will continue to be out of favor for the foreseeable future. Selected, mostly-defensive stocks will fare better than the recent high-flyers, but most money managers who can are turning aggressively to cash because they see no way out of an end-of-cycle bust scenario.

The market decline, top to bottom, could take another 12 to 18 months, having begun in February of this year and we haven't even hit recession yet, which is likely to occur in the fourth quarter of this year or the Q1 2019, though a third quarter negative read is not yet off the table, though unlikely.

The initial panic phase caused by the February correction on the Dow was only the beginning. The Dow is closing in on a second correction at 23,954. It will have to fall below 21,292 to be officially called a bear market (-20%), but by then, it's probably too late for many, who will be forced to take the ride down to wherever it finally rests. Anybody paying attention has already been on alert and hopefully divesting with profits.

While the next market bear bottom will be substantially lower than where it is today, it is unlikely to be the end of the world, though to many, it will seem like it. The current phase is slower and more grinding, such as witnessed over the past two weeks. The Dow has only seen one close to the upside in the last 10 sessions, and this was the largest decline since May 29 (-391.64), though there have been more than enough triple-digit declines and gains in the interim and surely more to come.

Today's drop on the Dow wiped out all of June's gains and is within 140 points of flushing the gains from April (+50) and May (+252), which would make the second quarter a loser, just like the first, although, with nothing to backstop markets here, still be not equal than the losses experienced in the first quarter. There's only four more trading days left in the quarter and the scramble is underway to shed losers and find safe havens.

Good luck with that.

Next stop for the Dow, on the downside, is somewhere between 22,700 and 23,300. It should get a bounce of maybe 400-600 points from there, but the trend is surely to the downside for the near and long term.

The treasury yield curve flattened just a touch on the day, with two particularly interesting flavors. The 5s-10s spread is now a measly 12 basis points (2.75%, 2.87%). That's not much of a premium on the benchmark 10-year note over the five. Why wait an additional five years to get your money back at basically the same rate? The 10s-30s spread is only 16 bips (3.02%). That's flat. As a pancake. If the 5s-10s invert, all hell breaks loose, and it's not out of the question that it could happen, soon, possibly within weeks.

Anybody holding gold or silver should be selling if not altogether out by now. The PMs have been a poor choice since 2012, but the silver lining is that they will be even cheaper in coming months. The metals, through the magic of rampant manipulation by central banks, are mirroring stocks presently, and, as they did during the GFC of 2008-09, will be ripped lower on redemptions and hustles for cash, but will likely be the first to recover.

It's advisable to sell out of PMs now and buy them back at a lower price come later this year. Gold may hit $950, and silver $13.50 before any bounce.

Invest wisely. Drink Kambucha. Drive a Porsche.

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
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

At the Close, Monday, June 25, 2018:
Dow Jones Industrial Average: 24,252.80, -328.09 (-1.33%)
NASDAQ: 7,532.01, -160.81 (-2.09%)
S&P 500: 2,717.07, -37.81 (-1.37%)
NYSE Composite: 12,481.60, -157.97 (-1.25%)

Weekend Wrap: Dow Ends Losing Streak at 8, Week Was Rough For Stocks

In what could easily bee seen as a week of transition - either from fantasy to reality or speculation to fundamental investing - all of the major averages lost value, led by the Dow Industrials, which suffered its worst weekly loss (-2.03%) since mid-March.

Since the day before the Fed raised rates on June 13, the Dow had been in a free-fall, losing 860 points over a span of eight trading sessions, before receiving on Friday to post a somewhat insignificant, symbolic gain. It was almost as though the Dow Industrials were collectively saying, "we're OK, we're still here, don't worry," while all along the smart money was leaving in droves for either safety in bonds, higher yields in the risky NASDAQ, or the venerable hideout in the Hamptons for the summer. In some cases, all three avenues of escape were likely employed.

Not that any of them did anybody any good, as the NASDAQ took its first weekly spill in the past five and bonds vacillated around the unchanged mark for the week. The 10-year-note closed out the week at 2.90%, well below any expectations from the runaway inflation and "solid" economy promoted by the Federal Reserve. If inflation and the economy were truly getting away, bonds would surely reflect the condition, but they are instead contracting, with the yield curve continuing to point toward inversion, and, if not a complete recession within the next 6 months to two years, at least a slowdown or moderation.

Neither result would be particularly beneficial to the interests of the Fed, which has to try to keep a straight face while propagandizing the condition of the economy. Spreads on the 2s-30s contracted one basis point on the week, to 48; the 2s-10s dropped two basis points to 34, while the 5s-30s expanded from 25 to 27 basis points.

After last Friday's smackdown, precious metals saw little change over the course of the week, though silver (16.45) fared better than gold (1271.10). Persistent calls for a breakout among the prominent "bug" pundits have produced nothing but a series of short-term run-ups followed by timely price busts.

Oil was the place to be on Friday, when OPEC failed to announce expected production increases. On Saturday, however, with markets closed, OPEC and a number of oil-producing countries such as Russia, Mexico and Kazakhstan, agreed to share an increase of a million barrels per day.

How the increases would be shared was not immediately disclosed, but, the Saturday announcement is sure to snap back against the 3.74 (+5.71%) gain on Friday that pushed the price of WTI crude oil to $69.28 per barrel.

With summer officially arriving on Thursday (June 21), the pessimistic view of stocks could begin to prevail, as the adage of "sell in May" might more aptly be applied as "swoon in June."

The Dow slipped back to a point where it is more than 2000 points below the January high (26,616.71, January 26), and prospects going forward - as a drop-off in earnings is expected over the next three quarters - are not yet dire, though they may be characterized as "challenging."

A powerful (and very long) article on fiat money, gold, silver, and cryptocurrencies by former member of the US House of Representatives and candidate for president, Ron Paul, is on the Mises Institute website, here.

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
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

At the Close, Friday, June 22, 2018:
Dow Jones Industrial Average: 24,580.89, +119.19 (+0.49%)
NASDAQ: 7,692.82, -20.14 (-0.26%)
S&P 500: 2,754.88, +5.12 (+0.19%)
NYSE Composite: 12,639.57, +79.34 (+0.63%)

For the Week:
Dow: -509.59 (-2.03%)
NASDAQ: -53.56 (-0.69%)
S&P 500: -24.78 (-0.89%)
NYSE Composite: -95.07 (-0.75%)

Dow Industrials Down 8th Straight Day, Damage Spreading

Well, there goes (almost) all of the gains made on the Dow between June 1 and June 11. Eight-day losing streaks (as any addicted gambler will tell you) can do nasty things to your bottom line. In this case, it's looking squarely at end-of-quarter results, which, at this exact juncture, is a small gain. April was +50.81, May +252.59, June +45.86, for a whopping grand total of 349.26, a little short of 1 1/2 percent gain.

While there are still six trading days left in June and in the quarter, there's the distinct possibility that the Dow, already in a confirmed bear market since April 9, is heading still lower, looking at the recent (March 23) bottom of 23,533.20 for any kind of support.

As the Dow continues the longest consecutive daily slide in the past 40 years, dating back to 1978, the recent losses have wiped out all gains for the year, leaving the Dow down one percent YTD. The record for longest daily losing Dow streak is 11 days, that level of pain occurring in 1971 (Nixon closes the gold window) and 1973 (OPEC?).

All is not gloom and doom, however. The NASDAQ is still 12% higher for the year and the S&P 500 is holding onto about a three percent gain for the year.

Losses are beginning to spread. The S&P has lost 37 points since June 12, and the NASDAQ was down 68 points just today. Whether these losses will stick and markets begin to behave more rationally, like the Dow, is a matter for the future. Since the February correction, analysts have warned investors that this is a stock pickers' market, noting that the easy days of just buying an index fund or playing the widely held stocks has come to an end. It's more about being adroit and making in-and-out moves, much like a day-trader. It's really nowhere for long term investors to be playing, as many stocks are still near all-time highs and are still carrying overpriced valuations, many based on earnings that have been manipulated higher by buyback sleight-of-hand.

Non-believers in the Dow Theory, which confirmed a primary trend change from a bull to a bear market on April 9, may be getting a bit nervous, though the recent bidding on the NASDAQ and Russell 2000 would suggest otherwise.

Once the floodgates are fully open, a condition which feels very much like all of this week, there will be no place to run to, nowhere to hide, except, maybe bonds, which have been stubborn but steady, the 10-year-note holding at 2.90% as of today, though there are indications the yield could go lower, given the number of investors seeking a safe place for their money.

So much for the Fed's grand plan to hike interest rates and unload their massive balance sheet into the public sphere. Since they play with make-believe money which they themselves conjured out of thin air, losses don't really matter to them, since they can make it all up with a few kind keystrokes on their magical money-printing computers.

As usual, it's the serfs that will get forty lashes in the form of lower stock prices and higher consumer prices... so, make that 80 lashes.

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
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

At the Close, Thursday, June 21, 2018:
Dow Jones Industrial Average: 24,461.70, -196.10 (-0.80%)
NASDAQ: 7,712.95, -68.56 (-0.88%)
S&P 500: 2,749.76, -17.56 (-0.63%)
NYSE Composite: 12,560.24, -88.50 (-0.70%)

Dow Losing Streak Reaches Seven Days; Walgreens To Replace GE In Dow Index

No analysis needed to spot the recurring pattern of trading prominent on Wednesday. The Dow suffered its seventh straight losing session while the NASDAQ powered to new highs, mostly on the backs of the beloved tech stocks known as the FAANGs.

In the news, Walgreens Boots Alliance (WBA) is set to replace General Electric (GE) in the Dow Jones Industrial Average, effective prior to the open of trading on June 26. Walgreens is trading for 64.61, down from its all-time high of 86.55, June of 2015.

General Electric, which has been under pressure since near the end of last year, has lost nearly two thirds of its value in the past eight months. Shares have fallen from 31.60 per share in October, 2016, to the current per share price of 12.96. The company has lost over 80 percent of its value since 2000.

General Electric was an original member of the Dow when it was formed by Charles Dow in 1896 and a continuous member since 1907.

Since Walgreens is trading at five times the value of GE, an adjustment will be made to the Dow divisor, lest the index experience a rapid upside explosion due to the change. This is exactly how the Dow works, replacing weaker companies with stronger ones.

The is the 15th change in the structure of the Dow since 2004. Some of the companies formerly a part of the index but since removed in the 21st century include Eastman Kodak, International Paper, AT&T, AIG, Citigroup, Bank of America, General Motors, and Honeywell.

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
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

At the Close, Wednesday, June 20, 2018:
Dow Jones Industrial Average: 24,657.80, -42.41 (-0.17%)
NASDAQ: 7,781.51, +55.93 (+0.72%)
S&P 500: 2,767.32, +4.73 (+0.17%)
NYSE Composite: 12,648.74, +9.76 (+0.08%)

Stocks Clobbered As US-China Trade War Heats Up

Today's tired showing by stocks, globally, demonstrated just how fragile the world's economic system is and how easily the best laid investment plans can go awry.

After President Trump announced plans for $50 billion in tariffs on Chinese imports and the Chinese countered with $50 billion of their own on US goods, Trump upped the ante by calling on his main trade representative to prepare another $200 billion in Chinese goods to be tariffed, should the Chinese actually go through with their retaliation.

As usual, the Dow Jones Industrial Average took the brunt of the day's carnage, shedding more than one percent, while the NASDAQ and S&P showed smaller percentage losses. The decline was the sixth straight for the mighty Dow, which has been under pressure since February of this year and is now even for the year (-19 points).

The other averages have fared better, but 2018 is not shaping up to be a year of excessive profit for equity investors.

Amid the chaos, bond yields continued to fall. The rush to safety is accelerating as the yield curve flattened even more through the day. The spread on the 2s-10s is now just 35 basis points, 5s-30s held steady at 25, 2s-30s are at 48, down one more basis point, the tightening spread making it more and more difficult for financial institutions to generate alpha, or profit, but the herd is heading in one direction and it's toward a recession.

As far as President Trump's intentions are concerned, "the Donald" is perfectly aware of what he's doing. By imposing steep tariffs on foreign goods he will bring most of the planet to its knees and likely cause a recession, though the timing couldn't be more perfect in political terms.

If a recession occurs within the next six to nine months, it would likely be over well before the next presidential race heats up in 2020. Figuring on a recession beginning in January or February of 2019 and running the average of 16 months, the economy would be on the upswing by July or August 2020, giving the president plenty of time to explain how some pain was necessary to restore vibrancy and a level playing field to the US economy.

It's not balderdash. It's the art of the deal.

And thus, with today's losses, more than two thirds of the gains made earlier in the month have been eviscerated.

It's only money.

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
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

At the Close, Tuesday, June 19, 2018:
Dow Jones Industrial Average: 24,700.21, -287.26 (-1.15%)
NASDAQ: 7,725.58, -21.44 (-0.28%)
S&P 500: 2,762.57, -11.18 (-0.40%)
NYSE Composite: 12,637.23, -71.40 (-0.56%)

Dow Losing Streak at Five Days; NASDAQ Resistant to Reality

After losing 84 points on Friday, the Dow extended its losing streak to five days, shedding 103 points to open the trading week. The total loss since June 11 is nothing to get excited about, a mere 335 points, less than 1 1/2 percent, but the lows set in intra-day trading both Friday and Monday were successively deeper.

Friday's low of 24,902.01, was exceeded Monday at 24,825.77, which was set just minutes into the session. The pattern of lower lows and lower closes over the past five sessions is a worrying sign to macro market watchers.

While the Dow slides, the NASDAQ continues to hold its own or make new gains, though the opening on Monday was ugly, with the NAZ down 70 points just after the bell. Today's tiny gain failed to excite anybody but the most committed bulls, who may be charging into a classic trap, with declining volume and indications from the Dow that aren't exactly encouraging.

This week got off to a poor start and there is little in the way of data to support any kind of news-driven uptick. It may turn out to be one of the duller weeks of the summer, which officially begins on Wednesday, June 20.

What's driving investors into speculative positions in the NASDAQ is the lack of positive returns from either Dow stocks or treasury bonds. The former appears too risky, with dividend yields ranging from 1.75% to 2.75% on the individual components, while the bond market continues to defy the Fed, as the 10-year note refuses to bang through the three percent mark.

Bonds barely budged today, but the yield curve tightened as the two year bill yield added one basis point to 2.56, and the 10-year slipped to 2.92, leaving the 2s-10s spread at a decade low 36 basis points.

That's a notable number, as the last time the spread was so slim was in 2007, just prior to one of the worst financial crashes in market history. As is sometimes quoted, "history may not always repeat, but it does often rhyme." Treasuries seem to be rhyming well with conditions prior to the GFC. Unrestrained credit, high leverage, overvaluation prominent in financial assets. In 2007, it was mostly hard assets, i.e., houses, that were rocketing in value. Today's only difference is that it's now stocks which are out of bounds for all but the most speculative players and plungers.

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
6/15/18	25,090.48	-84.83	+674.64
6/18/18	24,987.47	-103.01	+571.63

At the Close, Monday, June 18, 2018:
Dow Jones Industrial Average: 24,987.47, -103.01 (-0.41%)
NASDAQ: 7,747.02, +0.65 (+0.01%)
S&P 500: 2,773.87, -5.79 (-0.21%)
NYSE Composite: 12,706.73, -27.91 (-0.22%)