Stocks Slammed As Interest Rates Climb; Fed Officials Not Concerned

While the losses on Thursday weren't quite at the disaster level, the declines were significant enough to get people's attention. The Dow lost 200 points, the first time that has occurred since July 11 (-219.21), though it could have been much worse. The 30 blue chips were down more than 350 points early in the afternoon, but some "buy the dip" specialists stepped in to rally stocks into the close.

The NASDAQ fared much worse than its peers, as investors scrambled out of speculative tech stocks, some of which carry significant debt loads. With interest rates rising, debt servicing costs are going to be scrutinized as they can materially contribute to deterioration of bottom lines.

With a decline of 1.81%, the NASDAQ losses were nearly one percent worse than the S&P (-0.82%) and easily outdid the Dow Industrials (-0.75%).

Blaming rising interest rates for all equity woes might be a bit of a stretch, but it is becoming more of a concern as the 10-year note yield kicked higher, reaching 3.20%, an attractive number for those who wish to reduced risk, and apparently, many do.

Other indices slid lower as well, with the Russell 2000 and Dow Transports also in the red. This indicates that investor sentiment may have soured, and this could be serious, coming so close to reporting of third quarter earnings.

An interesting development is the Federal Reserve's ebullient attitude toward the US economy. Chairman Jerome Powell seems to be in the camp that the economy will continue to expand, and he is echoed by other Fed officials, though their giddy projections are in stark contrast to some of the biggest players on Wall Street, including Ray Dalio, Peter Boockvar, and Stanley Druckenmiller, to name just a few. The insightful article is posted at investopedia.com by Matthew Johnston, and can be found here.

That Fed officials are touting the economy is more than a little disconcerting, being that they're cold-hearted bankers and have held interest rates down near zero for a long time. Additionally, they're in the process of unloading trillions in excess securities and they'd like nothing more than to see that proceed smoothly. Surely, they'd like to collect more interest from everybody, so their comments about the strength of the economy are extremely self-serving.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08
10/4/18	26,627.48	-200.91	+169.17

At the Close, Thursday, October 4, 2018:
Dow Jones Industrial Average: 26,627.48, -200.91 (-0.75%)
NASDAQ: 7,879.51, -145.57 (-1.81%)
S&P 500: 2,901.61, -23.90 (-0.82%)
NYSE Composite: 13,042.29, -76.25 (-0.58%)

Donald Trump Is Goldilocks In Disguise; Stocks Rally; Treasury Yields Rocket Higher

Odd thing about politics: As soon as one man comes into the picture promising to fix everything that's broken with the US economy, all the other politicians instantly hate him, fight him, and actively try to get rid of him... by any means necessary.

That man, of course, is none other than the current president, Donald J. Trump, who has fended off non-stop assaults from Democrats, members of his own party, even having to defend himself against attacks from within his own administration, such as the FBI and the Justice Department.

Meanwhile, Trump, while he hasn't kept all of his election promises, has delivered on a good number of them, especially those dealing with the economy, trade, and taxes.

Trump has cut taxes for many, he's re-negotiated bad trade deals such as NAFTA, and he's presided over an economy that by most accounts is booming.

Yet, the vast majority of politicians, bureaucrats, and Baltway insiders still want him gone. They'd love to impeach him, shame him into resigning, or otherwise undermine his America First policies.

Why?

Because they're jealous, and they're petty, and Trump has exposed them as swamp dwellers whose sole interests are enriching themselves at the public's expense and getting re-elected.

Trump has delivered - with assistance from the Federal Reserve and some members of congress - the United States into the goldilocks economy: not too hot, not too cold, just right. Stocks are up, yields on treasury bonds are rising, but inflation and unemployment are low. There's so much good going o in the US economy it's actually difficult to find problem areas.

401k accounts are fatter, paychecks have less tax taken from them, incomes are rising. Just what about all of this isn't to like? Ask Diane Feinstein, Chuck (sellout) Schumer, Nancy Pelosi or any of a handful of petty thieves masquerading as honorable congress-people. They have no answer and they're worried about losing their prestige and power in the upcoming mid-term elections. That's why they and their lackeys in the media are so intent on tearing down everything related to Trump and his successes. They accuse his Supreme Court nominee of sexual assault that supposedly happened more than 35 years ago, when Brett Kavenaugh - who will almost surely be confirmed by the Senate - was a teenager in high school.

The attacks and assaults will continue up to the November elections and beyond. Russia and collusion will be thumbed up again by the wicked special prosecutor from hell (and hopefully soon to return there). The New York Times will continue to run stories in vain attempts to tarnish President Trump's image. None of it will work. The American people see results and see through the media attacks, the howling senatorial rhetoric, and the baseless accusations. Jobs are plentiful. Money is flowing. Things are good, very good.

The Dow Jones Industrial Average closed at yet another record high today, despite backing off substantially from intra-day highs. The yield on the benchmark 10-year-note reached the highest point in more than a decade, at 3.16%, a number that has Fed officials smiling, lenders beaming, and most consumers and small business owners a little bit piqued, but still not worried or upset. Interest rates are still low compared to other times; mortgages are reasonably priced. With business prosperity, the cost of money should be a little higher and it's not at a point that it does damage to one's bottom line.

Goldilocks has arrived and his name is Trump.

(Plus, baseball playoffs are underway and Alabama is #1 in college football.)

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08

At the Close, Wednesday, October 3, 2018:
Dow Jones Industrial Average: 26,828.39, +54.45 (+0.20%)
NASDAQ: 8,025.08, +25.54 (+0.32%)
S&P 500: 2,925.51, +2.08 (+0.07%)
NYSE Composite: 13,118.55, +12.54 (+0.10%)

Why Does the Dow Go Up When Everything Else Goes Down?

Divergence between the NASDAQ and the Dow Industrials has been a persistent feature over the past year, although recently, the up versus down daily routine has taken on nw dimensions, with the 30 Dow stocks outperforming all other indices routinely.

Tuesday was a case in point as all major indices, including the S&P 500, NASDAQ, Dow Transportation Index, and the Russell 2000 all ended in the red, while the Dow rose majestically to a new all-time closing high. Additionally, almost all foreign markets finished lower on the day.

While there has been no rationale to sufficiently explain the phenomenon, one might easily conclude that the Dow stocks are more stable than the more speculative offerings on other indices, or that Dow stocks, in addition to steady appreciation, offer regular dividends and are generally regarded as the best behemoth companies in the American market.

None of this can fully explain why the Dow gains while other stocks fall, but the pattern has been so obvious and consistent for so long, it merits further investigation.

Conspiracy theorists can claim manipulation in order to keep the unsuspecting masses complacent, as the Dow Jones Industrial Average is the most-widely watched index on the planet. Such an explanation would be difficult, if not impossible, to prove.

Others rightly point out that the Dow is unique in that it is not a weighted average, and gains or losses by the highest-priced offerings can send the index up or down in rather large ways.

In any case, the Dow keeps going up, no matter what other markets or indices are doing.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63

At the Close, Tuesday, October 2, 2018:
Dow Jones Industrial Average: 26,773.94, +122.73 (+0.46%)
NASDAQ: 7,999.55, -37.76 (-0.47%)
S&P 500: 2,923.43, -1.16 (-0.04%)
NYSE Composite: 13,106.01, -19.34 (-0.15%)

Stocks Enter Fourth Quarter With A Bang, NASDAQ Fades To Red, Oil Rallies

At the open, on the first day of trading in the fourth quarter, stocks powered ahead, posting massive gains on the back of President Trump's successful renegotiation of the NAFTA treaty with Mexico and Canada.

It was a giddy start to October, generally a month with plenty of volatility, due partially to funds which tend to close out their books prior to November, short and long term rules of capital gains taxation, and sometimes explosive conditions in the political realm prior to November elections.

On the trade Monday, the divergence pattern which has persisted for more than a year now, appeared again, as the NASDAQ sold off while the Dow and S&P held onto gains. This divergence of mainstream vs. largely tech stocks has been confounding to index and passive investors, as the old world and new have often traded in opposite directions. The solution has been to own some of both sides, with Dow and dividend-paying stocks on one side and speculative, tech stocks on the other.

In such a case, Monday's moves were a win for the old school, as the Dow powered ahead while the NASDAQ soured during the day. Over the long term, the two varieties of stocks have moved up in tandem, producing quality gains this year.

While stocks were hot and bonds stable, the big move of the day was in the oil field, with WTI crude futures up sharply, above 75.50 into the close. The higher price is possibly a reflection of easing of concerns over trade wars, with the new North American agreement at the forefront. In addition, coming sanctions on Iran - which begin on November 4 - are expected to crimp supply. Crude prices are currently trending at four-year highs. If the condition persists, high prices at the pump for consumers could hurt holiday sales, with the big shopping season less than two months ahead.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90

At the Close, Monday, October 1, 2018:
Dow Jones Industrial Average: 26,651.21, +192.90 (+0.73%)
NASDAQ: 8,037.30, -9.05 (-0.11%)
S&P 500: 2,924.59, +10.61 (+0.36%)
NYSE Composite: 13,125.35, +42.83 (+0.33%)

Weekend Wrap: Stocks Slip, Yields Rise, Precious Metals Bid

Stocks closed out the week n subdued fashion, with the major averages hugging the unchanged line throughout most of Friday's session.

Overall, the close-out of the quarter was less dramatic than usual, with little to no "window dressing" done by traders and/or speculators. Stocks were generally down for the week, with the notable exception of the NASDAQ, which was the only one of the major indices to post a weekly gain.

Other than Tesla (TSLA), in which, over the weekend, CEO Elon Musk's deal with the SEC on the heels of their lawsuit, there was little to hang a trade on in the final week of the month. Musk agreed to pay a $20 million fine and the same amount from company coffers. While Musk was stripped of his role as chairman of the Tesla board of directors for three years, he will continue on as CEO.

Stocks remained near all-time highs, and October usually brings additional volatility, such with elections on the horizon and third quarter earnings trickling out after the first week of the month.

After the Fed's FOMC raised the federal funds rate to 2.00-2.25% on Wednesday, stocks fell somewhat out of favor, as bond yields continue to attract large, safety-seeking money. The 10-year note finished the week comfortably above the 3.00% demarkation line, at 3.056%, a number some analysts suggest may cause the demise of some stocks, especially the more speculative variety (read: tech) and those that do not offer a steady dividend.

Crude oil was higher for the week, with WTI topping out over $73 per barrel, a four-year high. Pinching drivers at the pump may not be conducive to gains in equity prices. High gas prices act as a tax on all consumers, but affect the poor and middle class the hardest.

Gold and silver caught some bids late in the week though they continue to wallow in a prolonged slump near three-year lows. Inflation, being still somewhat tame, will likely keep a lid on the prices of precious metals and commodities overall.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68
9/24/18	26,562.05	-181.45	+597.23
9/25/18	26,492.21	-69.84	+527.39
9/26/18	26,385.28	-106.93	+420.46
9/27/18	26,439.93	+54.65	+475.11
9/28/18	26,458.31	+18.38	+493.49

At the Close, Friday, September 28, 2018:
Dow Jones Industrial Average: 26,458.31, +18.38 (+0.07%)
NASDAQ: 8,046.35, +4.38 (+0.05%)
S&P 500: 2,913.98, -0.02 (0.00%)
NYSE Composite: 13,082.52, -23.20 (-0.18%)

For the Week:
Dow: -285.19 (-1.07%)
NASDAQ: +59.40 (+0.74%)
S&P 500: -15.69 (-0.54%)
NYSE Composite: -153.92 (-1.16%)

Stocks Gain On Positive Economic Data; Elon Musk, Tesla Sued By SEC

The Dow Jones Industrial Average snapped a three-day losing streak and the S&P ended its own four-day skein as positive economic numbers boosted confidence, leading to spirited buying early in the session.

Euphoria faded as the day wore on, however. The Dow was up nearly 170 points close to 1:00 pm EDT, but sold off through the afternoon into the close, losing two-thirds of the day's gains. Similar patters were noted on the S&P and the NYSE Composite. The NASDAQ lost some value, though the afternoon swoon was not nearly as severe as on other indices.

The good news came prior to the opening bell. The third estimate of second quarter GDP held steady at 4.2% and durable goods orders for August soared by 4.5%. Upon further review, the durable goods number appeared much weaker than the headline, as much of the increase was supplied by non-defense aircraft orders, which were up 69% and defense capital goods order were up 44%.

Late in the day, word circulated that Elon Musk, CEO of Tesla Motors (TSLA) was being sued for fraud by the SEC.

The SEC alleged that Musk made "false and misleading statements" when he casually stated and tweeted that he could take the company private at $420 a share and also alleged that Musk's tweets caused market chaos, harming investors.

If the SEC's claims hold water, Musk could be stripped of his position and barred from ever running a publicly-traded company. He would also face stiff fines.

The news came too late in the day to affect trading on Thursday, though the stock was down between 10 and 13 percent in pre-market trading Friday morning.

Musk has been a controversial leader of the company he founded, but seems to be beset by psychological demons and may be bi-polar. In addition to his frequent affronts to sensibility, the company has never turned a profit and is deeply in debt. Additionally, Tesla autos have been known to burst into flames upon impact and its auto-pilot feature has been cited by some as a cause for lack of control, leading to a high rate of accidents.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68
9/24/18	26,562.05	-181.45	+597.23
9/25/18	26,492.21	-69.84	+527.39
9/26/18	26,385.28	-106.93	+420.46
9/27/18	26,439.93	+54.65	+475.11

At the Close, Thursday, September 27, 2018:
Dow Jones Industrial Average: 26,439.93, +54.65 (+0.21%)
NASDAQ: 8,041.97, +51.60 (+0.65%)
S&P 500: 2,914.00, +8.03 (+0.28%)
NYSE Composite: 13,105.72, +3.77 (+0.03%)

Fed Raises Rates, Stocks Tank, Regular People Get Squeezed

Sometimes, there's just too much of a good thing.

Like booze, or sex, or food, or federal funds interest rate increases.

Yes, one of those is different from the others, but, if you're a big brain at the Federal Reserve, maybe not. People who live for an love money might have the same kind of reactions ordinary people have to normal stimuli from money-induced pleasure.

Keeping interest rates at near zero for such a long time, from 2008 to 2015, had to be hard on people at the Fed. There was a lot of stress during that time, and the FOMC governors and presidents of the regional banking hubs had to make up for their lack of money pleasure (ZIRP) by printing oodles of dollars out of thin air (QE). It was an artificial high, a necessary evil to some, and everybody knew it would have to come to an end.

Nothing brings a smile to the face of a banker, central or otherwise, than interest rate increases. It means more money in their silk-lined pockets.

Ordinary humans may not be able to comprehend the exhilaration of a 0.25% increase in the federal funds rate, but central bankers do. They revel in it. Imagine, with one simple policy announcement, making an extra $2.5 billion per year. That's real excitement. And that's just the interest on a trillion dollars. The Fed is handling one heck of a lot more than just a didly trillion. By golly, that's just pocket change.

Rest assured, there are a lot of bemused smiles at the Fed this afternoon. Probably some good old back-slapping, toasting with fine wine, and smoking of expensive cigars, such is the wont of the central banking elite. They've made themselves a mighty handy profit today, and you're paying for it, on your credit cards, mortgages, personal loans, car loans and leases and just about every other negotiable debt instrument you can think of. Business is paying the piper as well. In spades.

So, does the market reaction to the Fed's scheme surprise anybody? Nope. Higher interest rates are always bad for consumers, especially those carrying debt, which is just about everybody these days.

The major indices were cruising along with decent gains until the Fed's announcement at 2:00 pm EDT. After a pause and a slight rise, stocks began to slip. From it's intra-day peak at 2:15 pm, the Dow shed 231 points, the NASDAQ lost 78 points. The move was significant. The Dow has posted losses three days in a row. Correlation, in this case, seems to imply causation.

Wall Street investors aren't immune to the interest rate malaise. They know where their bread is buttered and some surely shifted some dough out of stocks and into bonds, or cash, or art, or expensive cars.

The Fed's insistence on raising rates every quarter has gotten to be a pretty definable pattern by now, but some people are beginning to question when it's all going to end and also, how it's going to end.

Will the stock market and all those juicy profits go down in flames? Hard to say, but a 3.10% yield on a ten-year treasury note ($31,000 a year risk free on a $1,000,000 investment) isn't hard to take, and, in the world of rich people with millions of dollars, yen, or euros to throw around, many will take it.

The rich just got a little bit richer. The poor didn't get any poorer, but the people in the middle (debtors) did.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68
9/24/18	26,562.05	-181.45	+597.23
9/25/18	26,492.21	-69.84	+527.39
9/26/18	26,385.28	-106.93	+420.46

At the Close, Wednesday, September 26, 2018:
Dow Jones Industrial Average: 26,385.28, -106.93 (-0.40%)
NASDAQ: 7,990.37, -17.10 (-0.21%)
S&P 500: 2,905.97, -9.59 (-0.33%)
NYSE Composite: 13,102.68, -57.92 (-0.44%)

Dow Lower Again As Investors Ponder Fed Wisdom

Well, if you're content with having a bunch of highly-paid academics controlling your finances, you're in luck. The Federal Reserve has been hard at work for over 100 years to guarantee that they get a cut of everybody's money, mostly because they create it themselves, out of thin air, with no backing with tangible assets, like gold, or silver, or anything like that.

As it says on their debt instruments, full faith and credit.

Therein lies the problem. Most people, if they understood how the Federal Reserve operates - mostly in secret, and outside the boundaries of government (it is a private banking system, after all. Shhh!) - would pine for foregone days when gold and silver were the coin of the realm, so to speak, when people and businesses weren't amortized and taxed to the bare bones of their existence.

Full faith is something the Fed takes for granted, assuming that 99% of the public has no idea how money works. Credit is their life blood. Every dollar created by the Fed is a debt, which is why the so called "national debt" can never be repaid. If it was, there would be no money. Everybody would be broke.

Is that what is occupying the minds of the great investors and traders of Wall Street and their bankers, brokers, cronies and insiders? Probably not. They're more interested in getting and keeping as much of the Federal Reserve money they can, investing it in more stocks, bonds, debentures, options, futures and maybe along the way, some real assets like real estate, gold, silver, art, vehicles, machinery.

Almost nobody really cares about how the Fed or other central banks operate. It's a fact. Most people are caught up in the matrix of jobs, bills, rents, taxes, and debt. They don't have time to study the intricate workings of central banks, which, of course, is how the central bankers wish. The less scrutiny on them, the more they and their member banks (all the big ones) make, unaudited and without interference.

What the traders on the exchanges today were contemplating was whether or not the Fed will actually raise the federal funds rate (the rate banks charge each other for overnight loans) to 2.00-2.25% tomorrow at 2:00 pm EDT when the FOMC policy rate decision is announced.

The simple answer is that they almost certainly will. The market has priced this in. At the least, the 10-year treasury note has gotten the memo. It's holding pretty steady at 3.10% yield, anticipating the Fed's very well-telegraphed interest rate ploy.

To many of the top traders and investors, the Fed's bold actions, in the face of a somewhat gradual economic improvement, are already too much and too soon. Some analysts are suggesting that with the 10-year note over three percent, big money will forego the risks inherent in the stock market and shift more money into bonds. The 10-year is a benchmark. Better returns can be made in corporate debt offerings, junk bonds, shorter term offerings, or munis, all of which carry more risk, but not significantly so.

Thus, the market will tell everybody, including the wizened old men and women at the Fed, what the federal funds rate should be by voting with their feet. If stocks continue to rise, it gives the Fed a free pass to increase rates another 25 basis points in December. If the market declines, the Fed will be on its own.

The Fed has raised rates at a very steady pace since December 2016, adding 0.25% every quarter, in March, June, September, and December. They may be nearing a point at which they need to take a break.

The questions are whether or not they will see it, understand it, and how they will act upon it.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68
9/24/18	26,562.05	-181.45	+597.23
9/25/18	26,492.21	-69.84	+527.39

At the Close, Tuesday, September 25, 2018:
Dow Jones Industrial Average: 26,492.21, -69.84 (-0.26%)
NASDAQ: 8,007.47, +14.22 (+0.18%)
S&P 500: 2,915.56, -3.81 (-0.13%)
NYSE Composite: 13,161.64, -0.42 (0.00%)

Dow Losses Tied To Nothing Other Than Profit-Taking

There's almost no chance - as Yahoo! News blared in a headline late Monday afternoon - that Brett Kavenaugh's Supreme Court nomination had anything to do with the 181-point drop on the Dow.

The continuing false narrative foisted by the financial media is about as fake as fake news can get. Every day, there has to be a reason for stocks rising or falling, there just has to be. Otherwise, how would the 24-hour squawking about stocks, finance, and your money justify its existence.

Sure enough, there are days that movements in stocks is correlated to some economic event, data drop, or newsworthy story, but most of the time trading actions are the result of some analysis, some emotion, and largely, some advance planning. Big firms don't just jump in and out of positions on the news of the day, their positions, and the allocation of their capital, is guided by profit and loss, gauging risk and reward, greed and fear.

There are times in which herd mentality takes over and swings sectors or even entire markets one way or the other, but, by and large, such huge swings are already programmed by the big trading firms, which almost never leave their positions vulnerable to unforeseen events. They are protected by covered calls or puts or any of a variety of risk-reducing strategies. Nobody with any experience trading stocks is rushing to their terminals to buy or sell on whatever nonsense is being cooked up by the crooks running the federal government in Washington, DC, because what happens on Capitol Hill usually has little to nothing to do with real capital being flung far and wide from Wall Street.

Firm in the knowledge that big positions were not being liquidated by major traders, what did cause the dip on the Dow Monday?

Chalk it up to profit-taking on short-term positions. Of the 30 Dow stocks, only seven were winners on the day, leaving 23 in the loss column. Two of the winner - ExxonMobil and Chevron - were tied almost directly to oil prices, which were up not just on the day, but for the past few weeks, as WTI crude hit a four-year high above $72/barrel on Monday. Three were chip or computer-related, as Apple, Microsoft and Intel were up, and the other two, Disney and United Health, were based on some perceived valuation play.

The rest of the stocks were lower, and it's probably a good idea to discount it as nothing more than random noise. The Dow just reached all-time highs this past Thursday and was even higher on Friday, so traders had plenty of time over the weekend to figure their positions, their profits, and how to take them. Since the move was less than one percent there's reason to believe that many traders - who, via groupthink, share many of the same strategies, knowledge, and objectives - saw an opportunity to book profits and move on to the next big thing, whatever that might be.

And, when they discover the next profitable trade, it's a safe bet that you won't be privy to it, but that many of the bigger traders on the street will know. It will have nothing to do with the news, politics, the soybean crop report, or the color of Lady Gaga's hair. You can bet on that.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68
9/24/18	26,562.05	-181.45	+597.23

At the Close, Monday, September 24, 2018:
Dow Jones Industrial Average: 26,562.05, -181.45 (-0.68%)
NASDAQ: 7,993.25, +6.29 (+0.08%)
S&P 500: 2,919.37, -10.30 (-0.35%)
NYSE Composite: 13,162.05, -74.39 (-0.56%)

Weekend Wrap: Dow, S&P At Record Levels, Tech Shunned, Fed To Raise Rates

This was a banner week for the Dow Jones Industrial Average, ramping nearly 590 points - the most since late March - and eclipsing the old record high close from January 26 (26,616.71) and leaving it in the dust.

While the Dow and S&P set records, tech stocks didn't fare as well, closing down for the week as investors continued to shed shares of some of the more widely-held US companies, like Facebook (FB), Netflix (NFLX), Alphabet, nee Google (GOOG), Amazon (AMZN), and Apple (AAPL).

The biggest losers were Amazon (-55.18, -2.80%) and Apple (-6.18, -2.76%) as traders recorded record volume on the AA's of the so-called FAANGs.

Bond yields spiked, with the 10-year note rising beyond the Maginot line of 3.00%, ending the week with a yield of 3.07%.

Precious metals continued to remain in the doldrums, with gold and silver still hovering just above three-year lows.

The week ahead should provide some volatility as the Fed's FOMC policy meeting convenes Tuesday and Wednesday, with a policy announcement set for Wednesday afternoon which is anticipated to raise the federal funds rate for the seventh consecutive quarter, to 2.00-2.25%.

Playing a dangerous game of chicken with the market, the Fed continues its attempt to pour cold water on the emerging strong economy and the even-stronger US dollar, which has smashed currencies in countries from Turkey to Argentina into financial chaos.

The Fed insists upon rate increases to slow the economy, though it's unclear that the US economy is expanding at anything approaching red-hot status. While second quarter GDP came in higher than expectations, at 4.2 percent annualized, the three prior readings, from the third and fourth quarters of 2017 and the 2018 first quarter were still cool, at 2.8%, 2.3%, and 2.2%, respectively.

GDP in the second quarter was the highest since the third quarter of 2014. More than a few analysts and economists have expressed fears of a second half downturn in GDP growth. Should their forecasts come to fruition it would be seen as a strike against the aggressive Fed rate-hiking and an appeal for them to stop before they crush the nascent American expansion.

After the Fed's policy announcement this week, the third estimate of GDP growth will be revealed on Thursday, September 27.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16
9/21/18	26,743.50	+86.52	+778.68

At the Close, Friday, September 21, 2018:
Dow Jones Industrial Average: 26,743.50, +86.52 (+0.32%)
NASDAQ: 7,986.96, -41.28 (-0.51%)
S&P 500: 2,929.67, -1.08 (-0.04%)
NYSE Composite: 13,236.44, +11.33 (+0.09%)

For the Week:
Dow: +588.83 (+2.25%)
NASDAQ: -23.09 (-0.29%)
S&P 500: +24.69 (+0.85%)
NYSE Composite: +185.92 (+1.42%)

Dow Theory Thwarted; Bulls Back In Charge As Industrials Register New All-Time High

In what has to be regarded as a false signal from the Dow Theory tracking primary trends, the Dow Jones Industrial Average posted a new all-time closing high on Thursday, finishing the session at 26,656.98, eclipsing the previous record close of 26,616.71 reached on January 26, 2108.

In the interim, the Dow suffered through a shallow correction in February and March, gradually regaining its momentum in the second quarter, gaining 158.97 points for all of April, May, and June. During that period, however, other indices were exhibiting strength, especially the NASDAQ, which soared to record highs in June, followed by more all-time highs in July and August.

The S&P 500 took longer to recover, finally reaching a new apex on August 24, though the index showed considerable resilience and strength from April though the summer. It too finished at a record, gaining 22.80 points, it's best single-day gain in nearly two months.

The bear market, primary trend reversal signal sent via Dow Theory was initially triggered when the industrial average made a new short-term low on March 23, at 23,533.20, and confirmed on April 9, when the Transportation Index also closed at a new recent low of 10,119.35.

Skeptics noted that the transports, immediately after reaching that critical low, immediately rebounded with a 650-point rally over the next seven sessions. The aftermath from the signal forward didn't appear to be anything even remotely resembling a bear market, and if it was, the signal was too late and not useful for trading purposes. In fact, had one paid heed to the primary trend signal, one would have missed out on some sizable gains from April though the present.

The transportation index made a fresh record close at 11,436.35, on August 21 and has since finished higher than that on a tuber of occasions. The new high close on the Dow Jones Transportation Index was the first signal that the primary market trend was about to reverse again. It was just a matter of time and playing catch-up for the Dow to achieve a new record.

Whatever the market rationale - be it the Trump effect, animal spirits, or simply the general attractiveness of US markets caused by the recent strong dollar - stocks continue to be the best investments available to the general public and the larger institutional investing community.

Where the market goes from here is, as always, an open question, though it appears that the longest bull market in history will continue apace. Nothing, not even regular, quarterly interest rate increases by the Federal Reserve, has been able to slow down the US equity express.

On the heels of solid performances in July and August, the Dow is poised to post the best quarterly results of the year when the third quarter concludes in just one week, September 28. The Dow added 1143.78 points in July, 557.29 in August, and has racked up a gain of 692.16 in September.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94
9/20/18	26,656.98	+251.22	+692.16

At the Close, Thursday, September 20, 2018:
Dow Jones Industrial Average: 26,656.98, +251.22 (+0.95%)
NASDAQ: 8,028.23, +78.19 (+0.98%)
S&P 500: 2,930.75, +22.80 (+0.78%)
NYSE Composite: 13,225.11, +103.14 (+0.79%)

Blue Chips Gain, Dow, S&P Closing In On Records

As the Dow zipped ahead Wednesday, tech stocks on the NASDAQ were shunned and the S&P 500 was nearly flat, though approaching its all-time high (2,914.04, August 29).

The highly-anticipated trade wars touted by the Trump-hating press have yet to materialize, and multi-national corporations are adjusting to the new world of tariffs as opposed to the falsely-defined "free trade" policies of the past three decades.

With President Trump rewriting the parameters of global commerce, US companies are, as they should, making adjustments to currency distortions and disputes arising from the sudden departure from the past. That being the case, Dow stocks are performing favorably, while tech vacillates. The key to direction seems to be headed by the banking and financial sectors, which underpin all commercial activity.

Seeking to normalize interest rates, the Fed is set to raise the federal funds rate again in less than a week, at their September 25-26 FOMC meeting. Bank stocks have been largely untouched by any kind of organized selling pressure, which leads to complacency on trading desks and within investor portfolios. Passive index funds continue to perform well, despite perceived distress over presidential policies and political hijinks.

There's so much bullishness apparent that contrary practitioners have toes in the water, many of them already burned by bounces in the market structure. This is not an environment in which one would readily short stocks, as the bull market rages on without so much as a five percent pullback since the lows of February and March.

The money is out there, most funds fully invested without a worry in the world. That's a condition that usually leads to disaster, though this time looks to be truly different. If President Trump MAGA promise can be gauged at all, the stock market might be a proxy for the health of the American economy and it is doing quite well.

The Dow has posted gains in six of the last seven sessions, adding nearly 550 points over that span.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14
9/19/18	26,405.76	+158.80	+440.94

At the Close, Wednesday, September 19, 2018:
Dow Jones Industrial Average: 26,405.76, +158.80 (+0.61%)
NASDAQ: 7,950.04, -6.07 (-0.08%)
S&P 500: 2,907.95, +3.64 (+0.13%)
NYSE Composite: 13,121.97, +29.99 (+0.23%)

Traders Shrug, Stocks Rip Higher

Bear market in Emerging Markets? No problem.

Upcoming Fed rate hike? Why worry?

Trade war with China? Nah.

The general attitude on Tuesday - following a somewhat dismal start to the week - seemed to be the old "buy the dip" mantra that boosted stocks high for most of the last ten years in the extended bull market.

As long as nothing major appears to disrupt the global money flow, traders in New York seem to be content buying stocks at just about any price, any multiple, any day, any time.

Tuesday's trading was a textbook example of momentum trading on the absence of news, good, bad, or otherwise. Stocks got off to a solid start and added to their gains throughout the session, with the markets in lockstep for a change.

The Dow was led higher by a wide swatch of companies, from Boeing (BA) to Nike (NKE), to Pfizer (PFE), Intel (INTC), and Home Depot (HD), all of which gained more than one percent on the day. 25 of 30 Dow components were winners, with just five losing ground.

Blue chips closed at their best level since the end of January, eclipsing the losses incurred in February and March, which are now fading into the deep recesses of trading memory. The Dow Jones Industrial Average is less than 400 points from making a new all-time high. Such a move would negate the Dow Theory bear market signal issued in April, as the Dow Transportation Index has already broken above its previous high.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30
9/18/18	26,246.96	+184.84	+282.14

At the Close, Tuesday, September 18, 2018:
Dow Jones Industrial Average: 26,246.96, +184.84 (+0.71%)
NASDAQ: 7,956.11, +60.32 (+0.76%)
S&P 500: 2,904.31, +15.51 (+0.54%)
NYSE Composite: 13,091.98, +60.07 (+0.46%)

Apple Leads Dow, Stocks Lower On Valuation, Dividend Yield Concerns

It's not like Apple (AAPL) isn't a rock-solid stock. The Cupertino, California-based company which has given the world smartphones, smart watches and really zippy computers isn't the world's largest company by market cap for nothing.

The issue is more one of value over speculation. Apple is fully-capitalized, has doubled in price in less than two years, but the kicker might be the dividend of 2.92 is less than one-and-a-half percent (1.30%), while the 10-year treasury note is currently yielding three percent and probably is going to be higher in coming months.

Those numbers have to give serious investors pause to reflect on whether the tech giant - a mature company, not an instant start-up by any means - can continue to provide appreciation value in excess to their dividend. T-bills offer yield with nearly zero risk. All stocks carry risk to the downside, and Apple may have peaked a few weeks ago when it hit an all-time high of 228.35 at the September 4 closing bell.

Investing isn't a game of chasing winners, it's a matter of timing, though most advisors will deny the thought of market-timing. Proper discipline would have one buying Apple when it looks like it's cheap. With a P/E of just under 20, it's close to being expensive, so some players are obviously taking chips off the table while the gains are fresh and probably taxed at the long-term capital rate. It would make sense to do so. There are other stocks which may perform better in the near future and the allure of risk-free money at three percent is strong.

Whatever the reason, Apple has been leveling off, but the selling got serious on Monday, with volume above 36 million shares, about 10 million higher than average. The stock closed down 5.96 points (-2.66%), leading all Dow components as the Dow and NASDAQ suffered outsized losses, the NASDAQ especially, down nearly 1.5%.

Google (GOOG) also took a pretty big hit on Monday, losing 16.48 (1.41%), as did tech darling, Netflix (NFLX), which was broadly sold, -14.21 (3.90%), to 350.35.

The Dow Jones Industrial Average saw an even split with 15 gainers to 15 losers, but of the six stocks that trade for more than 200 per share, five of them declined, led by Apple. The others were Boeing (BA), UnitedHealth (UNH), Goldman Sachs (GS) and Home Depot (HD). The sole 200+ share price winner was 3M (MMM), which finished at 209.53, up 1.65 points (+0.79%).

Markets overall took a bit of a beating on Monday, though it wasn't enough for anybody to start yelling 'fire' on Wall Street. That may come when the Fed meets next week (September 24-25) and announces the third rate hike of 2018. That may prove to be more this market can bear.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30

At the Close, Monday, September 17, 2018:
Dow Jones Industrial Average: 26,062.12, -92.55 (-0.35%)
NASDAQ: 7,895.79, -114.25 (-1.43%)
S&P 500: 2,888.80, -16.18 (-0.56%)
NYSE Composite: 13,031.91, -18.61 (-0.14%)

Weekend Wrap: Dull Markets Post Solid Gains For Week

As far as financial highlights and highjinks were concerned, the second week of September was rather uneventful though fairly propitious for investors in high-quality stocks.

The Dow closed out the week at its best level in seven months, just 500 points from the all-time high set back in January (26,616.71).

The NASDAQ posted the best gains of the week, rising 1.36%.

Pretty standard stuff. Elon Musk didn't even do anything weird.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85

At the Close, Friday, September 14, 2108:
Dow Jones Industrial Average: 26,154.67, +8.68 (+0.03%)
NASDAQ: 8,010.04, -3.67 (-0.05%)
S&P 500: 2,904.98, +0.80 (+0.03%)
NYSE Composite: 13,050.52, +15.91 (+0.12%)

For the Week:
Dow: +238.13 (+0.92%)
NASDAQ: +107.50 (+1.36%)
S&P 500: +33.30 (+1.16)
NYSE Composite: +139.40 (+1.08%)

Stocks Gain To Best Levels Of September

Stocks posted their best gains in more than three weeks and the S&P came just short of closing at an all-time high.

Officials at the Ministry of Finance (aka Federal Reserve) offered no explanation for the surge in equity trading.

Fiat money might have had some impact.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17

At the Close, Thursday, September 13, 2018:
Dow Jones Industrial Average: 26,145.99, +147.07 (+0.57%)
NASDAQ: 8,013.71, +59.48 (+0.75%)
S&P 500: 2,904.18, +15.26 (+0.53%)
NYSE Composite: 13,034.61, +44.51 (+0.34%)

Stocks Flatlined In Bifurcated Trading; Can Reform MAGA?

Maybe investing should be a little more like Wednesday's activity: boring. Slow. Uninteresting, aside from the continuance of the Dow-NASDAQ dichotomy.

Back in the mid-90s, with the advent of the internet and the CNBCs of the world, stock trading became more akin to fantasy sports than serious investing. Day-trading became the norm, volatility increased and the natural outcome was to favor professionals who had the tools, skills, and patience to ply the market with the requisite aptitude and attitude.

Today's algo-driven compression chamber that is called a "market" is a far cry from the staid and simple concepts of just a generation ago. Prior to the internet explosion of online brokerages and sophisticated strategies, buy and hold was the norm. Investment advisors - at least the honest ones not tied to commissions or performance - put people's money into solid companies with deep backgrounds, decades of dividend payments and reasonable price-earning ratios.

Investors today throw money at companies such as Tesla (TSLA), which hasn't made a dime in earnings. That nomenclature was also the trademark of the dotcom boom and bust. Pets.com, Beyond.com and other pie-in-the-sky, profitless, promising companies fell to the waysides in 2000 after being hyped non-stop on message boards and from boiler room operations such as those prominently featured in movies like "The Wolf of Wall Street."

Not to say that there aren't new-age companies that deserve the backing of the investing public, but it's a crowded space, and valuations on companies like Google (Alphabet, GOOG), Amazon (AMZN) and others are out in the stratosphere somewhere, reflecting future growth of mammoth proportions which may or may not come to fruition.

That's probably why the aforementioned Dow-NASDAQ see-saw exists. Investors in Dow stocks (30 blue chips) are quite a bit more circumspect and conservative than the punters and speculators on stocks covered by the NASDAQ. They're also more likely to hold - or even add to positions - during downturns rather than sell outright and go looking for the next momentum-chasing darling of the day.

In the past, rules and regulations on banking and investment houses kept speculation at reasonable levels. All of that changed with the internet, 24-hour financial news, and, most importantly, changes to the Glass-Steagall act under President Bill Clinton in 1999. Clinton signed into law the Gramm-Leach-Bliley Act, which repealed SOME of the provisions of the Glass-Steagall Act, most notably, those measures which kept the banking business separate from the investment business.

Certainly, the new requirements struck a blow for free markets as the original Glass-Steagall act of 1933 was a response to wide-open conditions which contributed to the Great Depression. But, Clinton's new liberalness may have been a step too far. Since the enactment of Gramm-Leach-Bliley, the US economy has suffered the dotcom crash, the Great Financial Crisis of 2008-09, and various distortions of Federal Reserve policies like ZIRP (Zero Interest Rate Policy) and QE (Quantitative Easing).

Now that the Fed seeks to unwind its bloated balance sheet and normalize interest rates, perhaps it's time to call out the real culprit of financial repression: widespread advantageous policies for the banking sector which crowd out and frustrate individual efforts. While a democratization of the investing world has occurred to some degree with crowd-sourcing, the regulations surrounding the nascent rise of small offerings continue to throttle companies and potential investors with needless rules and strictures.

In a true free market, there would be 1/10th the number of regulations in place today, and most of them would be foisted upon the high-profile trading houses of Wall Street, not the start-up companies that must wade through SEC regulations and countless pages of blue sky laws.

For America to be great again, maybe boring isn't the way to go, but unfair rules which favor the well-heeled over start-ups might need to be examined and revised.

In the meantime, despite the promise of crowd-sourcing and online trading, small investors will continue to be subject to unfair trading practices which puts the interests of Wall Street far ahead those of Main Street.

At the close, Wednesday, September 12, 2018:
Dow Jones Industrial Average: 25,998.92, +27.86 (+0.11%)
NASDAQ: 7,954.23, -18.25 (-0.23%)
S&P 500: 2,888.92, +1.03 (+0.04%)
NYSE Composite: 12,990.10, +37.80 (+0.29%)

Nothing Good Happens After Noon?

A peek at Tuesday's charts - post-closing-bell - reveals that US markets rose relentlessly in the morning, but then leveled off at noon and traded basically unchanged from there the rest of the day.

Not that it's unusual to see a pattern like that - though it actually is - but nothing really surprises anybody anymore, especially since the computer algorithms have thoroughly distorted normal trading patterns.

Apparently, everybody was happy with the returns at noon, and kept them. All afternoon was just churning, and that's no good.

There's fake news, so why not fake markets?

Tuesday's action was very unconvincing. Expect some kind of sell-off Wednesday.\

Before noon, of course.

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
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24

At the Close, Tuesday, September 11, 2018:
Dow Jones Industrial Average: 25,971.06, +113.99 (+0.44%)
NASDAQ: 7,972.47, +48.31 (+0.61%)
S&P 500: 2,887.89, +10.76 (+0.37%)
NYSE Composite: 12,952.30, +23.63 (+0.18%)

Dow Losses Widen, Deepen; Top Four Components Slashed

Stocks flopped around like fish out of water Monday, as investors found nothing on which to hang a positive spin or trade. The Dow gave up early 100+ point gains to finish lower for the second straight session and the fifth time in the last seven.

The NASDAQ put up a better fight, but still could not find adequate footing to stage any meaningful rally. Stocks are unrealistically valued as the business cycle - despite commentary and central bank intervention suggesting that it has been abolished - heads into the latter stages and nears overcapacity.

It is, after all, September, and there's plenty on the minds of individuals and investors, not the least of which being odious debt levels in corporate, government and individual accounts. With interest rates on the rise and winter approaching, concern may be more toward preservation of capital than appreciation of such. Risk is rising for obvious reasons and the global economy is groaning from severe stresses placed upon it by a rising dollar, which has become the go-to currency and the US the trading capitol of the world.

More than a few economists and analysts had predicted a second half slowdown, so, after gains in July and August, September may be the market's Waterloo, forcing the hands of even the most ardent bulls. This week also marks the ten-year anniversary of the fall of Lehman Brothers, as well as another reminder of the 9-11 tragedy of 2001, tomorrow.

Somber as the mood may be, American hearts and minds are forever looking ahead, so a slow week or even a down month is unlikely to unhinge the usual giddiness of the bulls. It's been nearly 10 years since the market retreated in a serious manner, but current conditions don't augur well for a sudden collapse. Rather, a bumpy road lower may be the preferred path as the signs of decay over the past week are beginning to make more of an impact.

The Dow can't seem to handle prosperity over 26,000. It has closed above that level a handful of times (three, to be exact) in the last week of August, but beat a hasty retreat once it was revealed to be overbought.

Monday's losers were an odd assortment of UnitedHealth Group (UNH) 259.73, -8.55 (-3.19%); Boeing 341.86, -7.42 (-2.12%); Traveler's 127.60, -2.49 (-1.91%); and, Apple (AAPL) 218.33, -2.97 (-1.34%). These are diverse businesses, the only possible connection being finance, though that's dubious, at best. Adding in Goldman Sachs (GS) 231.91, -2.00 (-0.86%), the other common thread is that Boeing is the most expensive stock on the index, UNH second, GS third, and Apple, fourth. The Travelers (TRV) is a distant 13th-most expensive, the selling in those shares possibly tied to potential losses from Hurricane Florence, which is taking dead aim at the coastal communities of the Carolinas and due to make landfall later this week (likely Thursday morning).

On a positive and somewhat perplexing note, the Dow Jones Transportation Index closed at a new record high, picking up 206 points to finish at 11,554.08. This is not ordinary trading, with the Dow down, the NASDAQ up, along with a record on the transports. Either traders are playing momentum-chasing games or something unseen is occurring out of sight from regular investors. The odd trading patterns that have persisted since the sudden February fallout are bizarre and without explanation. Adding in the commodity shakedown, markets are sending mixed signals which only those with fingers firmly on triggers can apparently comprehend.

On world indices, the Far East continued lower, Europe didn't decline, but gains were marginal, and South American markets returned to their downward trend with gusto.

With a slow start to the week, it's difficult to image a good result as the grind toward the September 25-26 FOMC commences.

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
9/10/18	25,857.07	-59.47	-107.75

At The Close, Monday, September 10, 2018:
Dow Jones Industrial Average: 25,857.07, -59.47 (-0.23%)
NASDAQ: 7,924.16, +21.62 (+0.27%)
S&P 500: 2,877.13, +5.45 (+0.19%)
NYSE Composite: 12,929.01, +17.89 (+0.14%)

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%)

Tech Rout Deepens As Users Shed Facebook, Global Meltdown Continues, Musk Lights Up

As the Dow posted a second straight smallish gain, the NASDAQ was once again bruised as investors reassessed positions in various high-profile social media and internet stocks.

On Thursday and into early trading Friday, equity indices around the world were in a sea of red, though South American stocks rebounded into their Thursday closes as Argentina prepares for a new round of financing from the IMF. Argentina's currency and stocks have been in free fall, and the IMF bailout is yet another in a series of bad financing deals for the South American basket case.

Facebook (FB) suffered another in a continuing series of declines, losing 4.65 points to close at 162.53. The 2.78% loss was the sixth in the last seven session, leaving the troubled social media platform down 55 points since July 25th, the most recent catalyst a Pew Research report that found one in four users deleting the Facebook app from their mobile phones among other startling statistics.

Facebook's problems stem from revelations that they violated their own privacy policies by sharing private user data with third parties, but perhaps more and more people are beginning to realize that the high school acquaintances they've reconnected with on Facebook are still boorish, stupid, or otherwise stuck on themselves.

Being the ultimate tool for narcissism, Facebook's days may be numbered.

Tesla (TSLA) stock was taking a hit (pun intended) after enigmatic founder and CEO, Elon Musk, was seen toking on a blunt filled with tobacco and marijuana on Joe Rogan's popular Podcast. Shares were trending lower, down 1.40% prior to the regular trading open.

Perhaps Musk's message to shareholders should be, "just chill."

Facebook and Tesla shares are both down more than 20% from recent highs.

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

At the Close, Thursday, September 6, 2018:
Dow Jones Industrial Average: 25,995.87, +20.88 (+0.08%)
NASDAQ: 7,922.73, -72.45 (-0.91%)
S&P 500: 2,878.05, -10.55 (-0.37%)
NYSE Composite: 12,938.91, -29.64 (-0.23%)

FAANGs Whacked Again As Investors Pull Back From Tech Space

Netflix was murdered in trading on Wednesday as investors reacted to a report by Morgan Stanley analyst Katy Huberty that Apple plans to launch a competing video service though the company has to date made no announcement.

It was enough to take seriously, and money flowed out of Netflix (NFLX) to the tune of a 22.42-point decline, off a whopping 6.17% at the close. Apple's stock barely budged, but in fact was down 1.49 (-0.65%).

A day after topping $1 trillion in market cap, Amazon (AMZN) shed 44 points to close at 1994.82, a solid two-percent decline.

Alphabet (GOOG), parent of Google was lower by 10.82 (-0.88%), and Tesla lost nearly three percent, closing at 280.74, reaching its lowest closing point since May 25.

Facebook lost nearly four points to finish the day at 167.18, a four-month low.

All of this trading occurred while tech executives were brought before congress to testify in a wide-ranging probe of the unregulated social media space. Facebook’s Sheryl Sandberg and Twitter’s Jack Dorsey faced congressional scrutiny before a select committee of senators and House representatives. It's political theater at its very best, with lawmakers preening and getting in good soundbites in the lead to the midterm elections in two months.

Wishing for nothing less than to regulate free speech on the internet, congress is unlikely to have much impact upon the operation of the social media behemoths. As private enterprises, these mammoth companies are free to do as they please, from banning users who upset their dilettante views to promoting largely socialist idealism.

While the hearings make for some useful political jabbing, the congress shows by its naive use of forums such as these that they are as much a part of the problem as the companies themselves. Since most politicians use social media platforms to promote their particular agendas, dragging big company executives to Capitol Hill is more red herring than serious hearings.

While congress browbeats, investors are keenly aware that some of these companies are seriously overvalued. Tesla, for instance, is down 100 points in less than a month's time, exceeding a 25% decline. Facebook is off 50 points since July 25 and is likewise trading under bear market conditions, down nearly 24% over the last six weeks.

With the current round of tech profit-taking having a serious effect on investor confidence in the space, the staid stocks of the Dow gained slightly on the day, barely moving the needle. Elsewhere, stocks were roiled worldwide, as emerging market conditions continue to deteriorate.

The September swoon is gathering momentum and a more severe decline may be dead ahead for US stocks despite a booming economy and low unemployment. The main problems are rising interest rates and fundamental overvaluation issues.

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

At the Close, Wednesday, September 5, 2018:
Dow Jones Industrial Average: 25,974.99, +22.51 (+0.09%)
NASDAQ: 7,995.17, -96.07 (-1.19%)
S&P 500: 2,888.60, -8.12 (-0.28%)
NYSE Composite: 12,968.55, -1.31 (-0.01%)

Stocks Start September Slowly As Trade Wars Widen, Currencies Collapse In Emerging Markets

The late-summer rally that saw fresh record highs on the NASDAQ and S&P, adding 1600 points to the Dow Jones Industrial Average, may be coming to an abrupt end in September.

As the dollar has soared against emerging market currencies, US markets have become a favorite of foreign money, lifting individual stocks and entire indices from already-high valuations. However, blowback from collapsing economies in emerging markets such and Turkey, Argentina, Indonesia, Brazil, India, and China may become severe if market participants decide its time to repatriate their gains.

With President Trump on a tariff crusade, imports from foreign shores are rapidly becoming less valuable to the source exporters and governments are taking note of the erosion in not just their currencies but in their trade balances.

Stock markets in South American countries are being wrecked, with Argentina and Brazil already in bear markets. Exchanges in Japan, China, and most of Europe - especially the powerhouse Dax of Germany - are already in correction territory and not far from becoming full-blown panicked bear markets.

Thus far, the US has been the beneficiary of other nations' pain, but, there's no free lunch and companies with heavy investment outside the US may soonest profits declining in what were recently solid, growing markets for their goods and services.

How the combination of trade warfare and declining currency valuations will play out may prove to be disastrous to all participants. A great decline in international trade was partially responsible for the global Great Depression of the 1930s. History may soon be repeating if countries don't heed the warnings from prior episodes of trade antagonism.

Casualties are beginning to mount with the precious metals complex already heading past the correction phase and closer to bear market conditions. Gold has been trading in the $1190 per troy ounce range after reaching close to $1360 in March. Silver has collapsed from from a high above $18/ounce to $14.15 at the close on Tuesday. That is already in a bear market.

Reminiscent of September 2008, when investors dumped gold and silver holdings to meet margin requirements and governments scrambled to meet current obligations, the precious metals decline may be a harbinger of things to come for the broader markets.

Insofar as US stocks have performed brilliantly since the brief February correction, there exists a danger that stocks have reached a climax and are overdue for a massive selloff.

Speculation and conjecture being worth exactly nothing until real money is put into play, market participants may soon find out just how far a rally can go before everyone runs for the exits at once, desiring to not be left holding a bag half full.

Tuesday, the first trading day of September started with a steep decline at the open. Stocks gained ground gradually throughout the session, eventually posting minor losses. It could have been worse and it's likely not yet over. The rest of the week and the weeks heading toward the next FOMC meeting on September 25 and 26 will be volatile and potentially damaging to heavily-leveraged, diverse portfolios.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34

At the Close, Tuesday, September 4, 2018:
Dow Jones Industrial Average: 25,952.48, -12.34 (-0.05%)
NASDAQ: 8,091.25, -18.29 (-0.23%)
S&P 500: 2,896.72, -4.80 (-0.17%)
NYSE Composite: 12,969.86, -47.03 (-0.36%)

Weekend Wrap: Booming Economy, Gradual Inflation Boosts US Stocks

While the NASDAQ and S&P set multiple intra-day and closing records, the Dow continued its slow progress toward the January 26, all-time closing high of 26,616.71.

Once more, the NASDAQ led all indices in percentage terms, chalking up a two percent gain for the final week in August. The Dow finished up August with a second consecutive monthly gain (+557.29), though it was less than half of July's rise (+1143.78).

Despite two straight losing sessions, the Dow stands just 650 points away from the record.

The strategy being forwarded by the Trump administration has great appeal on Wall Street, as the summer saw many positive gains across all sectors despite efforts by the media to ignore or downplay the president's accomplishments Pointing up potential drawbacks from proposed and enacted tariffs on imports and negotiated trade deals with Mexico and Canada, the left-leaning TV and big-city newspaper media continue a vain attempt to discredit the election of Trump in 2016 via ongoing harassment by the fake Mueller investigation and countless talking heads from former administrations taking every opportunity to trash-talk the current occupant of the White House.

Thus, while the media and proponents of the left side of the political aisle promulgate a false narrative, Donald Trump and his team are actually moving forward on bold economic plans, rescuing America from over a decade of stagnation and building for a better future.

Official and unofficial sources confirm that the two-pronged assault via media and political character assassination are being called into question by US citizens. Seeing bigger paychecks, job openings everywhere and a dramatic decline in Washington war-mongering, the general public simply is not buying with the media, Democrats, and political shills are selling.

With the three-day Labor Day weekend marking an unofficial close to summer, many professional traders will be getting back to serious work approaching the next FOMC meeting (September 25-26). It's accepted that the policy meeting will produce another 25 basis point increase in the target federal funds rate, boosting it to 2.00-2.25%. The effective rate as of July was 1.91%. There is s normal lag between the target and effective rate of a few days or weeks on the lower end. Currently, the effective rate has been rising between the 1.75% and 2.00% target rate set in June.

Two big items on the Fed radar are inflation and the dollar. Having targeted two percent inflation as desirable, official data shows a slow but steady rise, approaching or even exceeding the goal. The strong dollar, however, is acting as a counterweight not only to inflation but to tariffs, the rising dollar able to purchase more foreign goods for the same amount of money.

The strong dollar, rising interest rates, and positive data on the US economy (4.2% GDP growth in the second quarter) offer the additional benefit of making the US the best place to invest, either in equities (growth) or fixed income (stability).

With one month remaining in the third quarter, the US economy engine seems to be operating on all cylinders. Any slowdown, even as predicted by a potential inverted yield curve, is still expected to be at least six months to over a year away. With that kind of time horizon, there's little concern on Wall Street over even the most expensive stocks, such as the FAANGs (Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOG) (Alphabet)), which continue to guide the NASDAQ to new highs.

Such strong speculative conditions should persist past the FOMC meeting into the fourth quarter. More than a few analysts had predicted a weaker second half of 2018, though those forecasts are likely to be tossed upon the scrapheap of financial history.

Donald Trump's "Make America Great Again" jingo is sounding like sweet music to the ears of investors, a condition unlikely to change any time soon.

Dow Jones Industrial Average August Scorecard:

Date	Close	Gain/Loss	Cum. G/L
8/1/18	25,333.82	-81.37	-81.37
8/2/18	25,326.16	-7.66	-89.03
8/3/18	25,462.58	+136.42	+55.05
8/6/18	25,502.18	+39.60	+94.65
8/7/18	25,628.91	+126.73	+221.38
8/8/18	25,583.75	-45.16	+176.22
8/9/18	25,509.23	-74.52	+101.70
8/10/18	25,313.14	-196.09	-94.39
8/13/18	25,187.70	-125.44	-219.83
8/14/18	25,299.92	+112.22	-107.61
8/15/18	25,162.41	-137.51	-245.12
8/16/18	25,558.73	+396.32	+151.20
8/17/18	25,669.32	+110.59	+261.79
8/20/18	25,758.69	+89.37	+351.16
8/21/18	25,822.29	+63.60	+414.76
8/22/18	25,733.60	-88.69	+326.07
8/23/18	25,656.98	-76.62	+249.45
8/24/18	25,790.35	+133.37	+382.82
8/27/18	26,049.64	+259.29	+642.11
8/28/18	26,064.02	+14.38	+656.49
8/29/18	26,124.57	+60.55	+717.04
8/30/18	25,986.92	-137.65	+579.39
8/31/18	25,964.82	-22.10	+557.29

At the Close, Friday, August 31, 2018:
Dow Jones Industrial Average: 25,964.82, -22.10 (-0.09%)
NASDAQ: 8,109.537, +21.174 (+0.26%)
S&P 500: 2,901.52, +0.39 (+0.01%)
NYSE Composite: 13,016.89, -23.04 (-0.18%)


For the Week:
Dow: +174.47 (+0.68%)
NASDAQ: +163.56 (2.06%)
S&P 500: +26.83 (+0.93%)
NYSE Composite: +17.45 (+0.13%)