Stocks continued in their recently intractable manner on Friday, as interest rates, high energy costs and the overall sustainability of the US economy weighed on markets.
Closing near the lowest levels of the session, the bellwether Dow Jones Industrials lost another 185 points to end the week down by 278 points, .
Dow 13,360.26 -185.58; NASDAQ 2,588.96 -28.00; S&P 500 1,502.56 -19.63; NYSE Composite 9,848.98 -111.81
The selling was as broad-based as the headline number would indicate, with only one Dow component - DuPont (DD) - showing up in positive territory.
Volume was moderate to heavy in advance of next week's FOMC meeting on interest rates and policy. Declining issues outpaced advancers by a 5-2 margin.
182 new lows nearly surpassed 196 new highs, suggesting further profit-taking, but that strong positions were still being maintained in top-performing issues.
There remains a cushion for stocks, with interim support in the 13,260 to 13,290 range on the Dow. Should the index fall through that level, a 4-7% decline over the short term could be in the offing. Even a setback of that magnitude would still leave the Dow - and likely, the other indices - in positive territory for the year, with the 3rd and 4th quarters still ahead.
Oil futures were higher again, with July contracts turned over to August. Light crude was up another 49 cents to end the week at $69.14.
While higher oil and gas prices have done damage to the overall economy, they haven't done enough to completely cripple it... yet, and prospects going forward are for some moderation as the summer holidays pass.
Prices at the pump are at a level that the oil companies have to see risk in the demand side of the equation. Any further hikes may induce American consumers to finally take draconian conservation measures, the result of which could cause an outright collapse in the industry and radically lower prices.
Don't count on it, though; the oil company execs have a couple of fingers firmly on America's arterial pulse and aren't about to kill the patient. They have gotten the price up above the desired $3.00/gallon for unleaded regular and will likely keep it there for the foreseeable future. It's a point at which their profits are already gargantuan and there's no need to go to the obscenity of outright gouging, even though many drivers presently maintain they're being gouged at current prices.
Gold and silver parted ways on the day, with gold higher by $2.80, closing at $357.00, as silver shed 7 cents to close at $13.02 per ounce.
Friday, June 22, 2007
Thursday, June 21, 2007
Joe Batt's Slam Dunk
As soon as I heard that perma-bull Joe Battipaglia - a frequent commentator on CNBC and elsewhere in the garf-spewing analyst world, was predicting a slow-down in the economy and expectations that corporate profits would wither in the second half of 2007, I knew I was right about the direction of the markets.
Mr. Battipaglia is an analyst for some big hot-shot Wall Street firm (it's really not important which one) and he's famous for being bullish during the entire dotcom collapse of 2000-2001 and forever after. He's actually been on somewhat of a winning streak over the past 3 years, as anyone who said the market would be up was right by default.
To my knowledge, today's prediction by Joe Batts is the first time he's ever hinted at being bearish, and, being such a reliable contrary indicator, I take his negative view as a huge positive "thumbs up" for US equities over the near term.
Today's turn-around, on the heels of Wednesday's baffling downdraft, was confirmation that Joe Battipaglia, along with most other Wall Street analysts, aren't worth a tenth of what they're paid. Many are nothing more than paid shills for their firm's largest holdings and the lot of them wouldn't know a sell signal if it bit them on their dialing fingers.
Dow 13,545.84 +56.42; NASDAQ 2,616.96 +17.00; S&P 500 1,522.19 +9.35; NYSE Composite 9,960.79 +55.71
While today's gains didn't pick up all of Wednesday's losses, it did stanch the selling amid some less-than-positive news (unemployment claims hit a 3-month high and oil futures soared early in the day), so the trend is still a friend, for now.
Beginning tomorrow, the waiting on the Fed game may begin, and the markets may trade in very narrow ranges unless there's some major news or surprising economic reports.
Advancers were ahead narrowly, nearly 5-4, though the spread between new highs and new lows tightened considerably, with 209 highs to 181 lows. Some fluctuation in the high-low scenario is expected and, to some degree, welcome, so the markets don't indicate overheating.
Today's market action could have been tied more than anything to oil futures, which actually fell 21 cents to $68.65 after hitting an absurd high of $69.85.
Gold dropped $5.40 to $654.20 and silver was down 16 cents to $13.09. How many ways can I say "These are bad investments. Sell?"
Mr. Battipaglia is an analyst for some big hot-shot Wall Street firm (it's really not important which one) and he's famous for being bullish during the entire dotcom collapse of 2000-2001 and forever after. He's actually been on somewhat of a winning streak over the past 3 years, as anyone who said the market would be up was right by default.
To my knowledge, today's prediction by Joe Batts is the first time he's ever hinted at being bearish, and, being such a reliable contrary indicator, I take his negative view as a huge positive "thumbs up" for US equities over the near term.
Today's turn-around, on the heels of Wednesday's baffling downdraft, was confirmation that Joe Battipaglia, along with most other Wall Street analysts, aren't worth a tenth of what they're paid. Many are nothing more than paid shills for their firm's largest holdings and the lot of them wouldn't know a sell signal if it bit them on their dialing fingers.
Dow 13,545.84 +56.42; NASDAQ 2,616.96 +17.00; S&P 500 1,522.19 +9.35; NYSE Composite 9,960.79 +55.71
While today's gains didn't pick up all of Wednesday's losses, it did stanch the selling amid some less-than-positive news (unemployment claims hit a 3-month high and oil futures soared early in the day), so the trend is still a friend, for now.
Beginning tomorrow, the waiting on the Fed game may begin, and the markets may trade in very narrow ranges unless there's some major news or surprising economic reports.
Advancers were ahead narrowly, nearly 5-4, though the spread between new highs and new lows tightened considerably, with 209 highs to 181 lows. Some fluctuation in the high-low scenario is expected and, to some degree, welcome, so the markets don't indicate overheating.
Today's market action could have been tied more than anything to oil futures, which actually fell 21 cents to $68.65 after hitting an absurd high of $69.85.
Gold dropped $5.40 to $654.20 and silver was down 16 cents to $13.09. How many ways can I say "These are bad investments. Sell?"
Wednesday, June 20, 2007
Traders Find Fork in Road
Baseball's Yogi Berra is known to have said, "When you come to a fork in the road, take it," and traders did just that today, taking the low road out of Wall Street in a spirited afternoon selloff which saw the Dow drop 150 points in the final three hours of trading.
Since events such as this do not exist in a vacuum, some perspective may be gleaned from underlying currents in the markets.
Dow 13,489.42 -146.00; Nasdaq 2,599.96 -26.80; S&P 500 1,512.84 -0.86; NYSE Composite 9,905.08 -121.44
While the pain was spread somewhat equally over the 30 Dow stocks, with only 5 issues showing up positive, two commodity-based companies, Exxon-Mobil and Alcoa, were the biggest losers. This coincided with a fairly significant sell-off in oil futures on higher supply figures and actually makes more sense than the ersatz argument that a slight rise in interest rates (the 10-year note was up a measly 0.037 to yield 5.14%) was the cause for today's decline.
Any indication that the oil tyranny is meeting resistance would be welcome news, but that barely fits today's declines. While oil fell 91 cents to close at $68.19, futures dropped as low as $67.35 during the day. Those numbers are still likely to be about $15 above reality, put in place by sheiks, and monopolistic traders who have kept the price of crude artificially high for better than two years. To say that the oil futures markets are not even partially rigged is tantamount to saying no baseball players ever took steroids.
So, what actually moved the markets today? Like a well-orchestrated ballet, this was probably organized selling at the highest quarters of the trading spectrum and may be only the beginning of a long unwinding of positions in blue chips and large-cap stocks.
While the numbers show a broad selling mood today - declining issues were 3-1 winners over advancing ones - there was little movement in the high-low metric. There were 374 new highs and 124 new lows, indicating that most stocks making recent moves were not affected and that the selling was concentrated simply on dumping perceived underperformers.
It bears watching whether this selling - on solid volume - will spill over into all issues and continue. The markets are more than ever on the look-out for a significant correction, especially with the Fed meeting next week to take a long look at base interest rates.
Traders may be forced into a position that the stock market indices cannot move forward without a few steps back, and it may be that the sluggish nature of the past few weeks is a precursor to a larger dip. With the potential for a recession slight, a correction would send a message that the markets are essentially sound and worthy of re-investment. The short answer to today's trade is that investors were freeing up cash for the next round of buying.
Yes, gold and silver were hit again today. If you don't like gold at $660 per ounce and are holding, you're likely to like it a lot less at $580. Bulls don't run forever, and the gold (and silver) bull has developed a noticeable limp.
Since events such as this do not exist in a vacuum, some perspective may be gleaned from underlying currents in the markets.
Dow 13,489.42 -146.00; Nasdaq 2,599.96 -26.80; S&P 500 1,512.84 -0.86; NYSE Composite 9,905.08 -121.44
While the pain was spread somewhat equally over the 30 Dow stocks, with only 5 issues showing up positive, two commodity-based companies, Exxon-Mobil and Alcoa, were the biggest losers. This coincided with a fairly significant sell-off in oil futures on higher supply figures and actually makes more sense than the ersatz argument that a slight rise in interest rates (the 10-year note was up a measly 0.037 to yield 5.14%) was the cause for today's decline.
Any indication that the oil tyranny is meeting resistance would be welcome news, but that barely fits today's declines. While oil fell 91 cents to close at $68.19, futures dropped as low as $67.35 during the day. Those numbers are still likely to be about $15 above reality, put in place by sheiks, and monopolistic traders who have kept the price of crude artificially high for better than two years. To say that the oil futures markets are not even partially rigged is tantamount to saying no baseball players ever took steroids.
So, what actually moved the markets today? Like a well-orchestrated ballet, this was probably organized selling at the highest quarters of the trading spectrum and may be only the beginning of a long unwinding of positions in blue chips and large-cap stocks.
While the numbers show a broad selling mood today - declining issues were 3-1 winners over advancing ones - there was little movement in the high-low metric. There were 374 new highs and 124 new lows, indicating that most stocks making recent moves were not affected and that the selling was concentrated simply on dumping perceived underperformers.
It bears watching whether this selling - on solid volume - will spill over into all issues and continue. The markets are more than ever on the look-out for a significant correction, especially with the Fed meeting next week to take a long look at base interest rates.
Traders may be forced into a position that the stock market indices cannot move forward without a few steps back, and it may be that the sluggish nature of the past few weeks is a precursor to a larger dip. With the potential for a recession slight, a correction would send a message that the markets are essentially sound and worthy of re-investment. The short answer to today's trade is that investors were freeing up cash for the next round of buying.
Yes, gold and silver were hit again today. If you don't like gold at $660 per ounce and are holding, you're likely to like it a lot less at $580. Bulls don't run forever, and the gold (and silver) bull has developed a noticeable limp.
Tuesday, June 19, 2007
Another Quiet Trading Day
Stocks moved marginally higher on Tuesday, after sobering news from the Census Bureau of the Department of Commerce, which reported that new home and apartment starts were down 2% in May.
Just like yesterday, when all indices moved in tandem (to the downside), today saw them all making positive noise.
Dow 13,635.42 +22.44; NASDAQ 2,626.76 +0.16; S&P 500 1,533.70 +2.65; NYSE Composite 10,026.52 +21.05
Volume was moderate to low, with advancing issues beating out decliners by a 4-3 margin. New highs were again solid at 374, as opposed to just 101 new lows.
Oil futures only moved up a penny to $69.10, while gold gained 4.80 to $664.70 and silver added 9 cents to $13.33.
This is shaping up to be one of the slower weeks of trading for the year as there is no noteworthy economic news of note and the Federal Reserve's FOMC meeting is scheduled for next week.
The market's in a holding pattern, waiting for some kind of catalyst before making its next move. The Fed meeting should provide some decision-making fodder.
Just like yesterday, when all indices moved in tandem (to the downside), today saw them all making positive noise.
Dow 13,635.42 +22.44; NASDAQ 2,626.76 +0.16; S&P 500 1,533.70 +2.65; NYSE Composite 10,026.52 +21.05
Volume was moderate to low, with advancing issues beating out decliners by a 4-3 margin. New highs were again solid at 374, as opposed to just 101 new lows.
Oil futures only moved up a penny to $69.10, while gold gained 4.80 to $664.70 and silver added 9 cents to $13.33.
This is shaping up to be one of the slower weeks of trading for the year as there is no noteworthy economic news of note and the Federal Reserve's FOMC meeting is scheduled for next week.
The market's in a holding pattern, waiting for some kind of catalyst before making its next move. The Fed meeting should provide some decision-making fodder.
Monday, June 18, 2007
Bailing Out: eBay and Yahoo
From time to time, I like to mention stocks I like or don't like. In all cases I will tell you whether I own the stocks (full disclosure). The stocks I am highlighting today - eBay and Yahoo - I do not own. Nor would I. These are two of the oldest internet properties and both have had their ups and downs, but lately, I see little to no upside, in terms of share price appreciation, for either of them.
Let's look at Yahoo first. Six years ago, they were the leaders in just about every measurable internet category. They had traffic, were the leader in search, news aggregation, games, etc. Then along came Google and stole their search crown. Other competitors sliced away at other categories. And while Yahoo still has impressive traffic numbers, they lack what every great internet company needs - innovation - and that's why their profits and share price are down.
Yahoo is exploring partnerships and integrations with local newspapers to improve the ad spending and reach in major local markets. This is a strategy that has great potential to backfire. Local ad spending on the 'net is the last great frontier, as yet unexploited by the giants. But large, clunky local newspapers, which have been slow to adopt best practices regarding their web offerings, while established entities, may not be the best prospects for innovative ad deals.
There's that word again. Innovation. Many of the largest chains of newspapers have been slow on the uptake and are still, like it or not, tied to the big bucks in print ad sales. The old tree-killing, mash-to-pulp-to-print mantra still resonates in newsrooms and ad departments across America. Teaching the old dogs of newspaper ad sales new tricks is going to be challenging, and likely unprofitable for some time to come, if ever. Ad reps at large newspapers have entrenched customer bases, many of them are in their 50s or 60s and make six-figures, so they're a tough bunch to crack. Why should they offer internet ads to their big-time clients? If it ain't broke don't fix it.
Yahoo would do better to seek out new internet-only local entities, like bloggers, wikis and ultra-local small websites. But they're stuck in that "bigger-is-better" corporate mindset, and that's yet another reason they're in failure mode.
Local ad markets represent some of the most fiercely-fought-over turfs in any selling regimen. Yahoo is in for a long, tough fight in which the landscape shifts from market to market and sometimes day to day. Good luck. It's a losing battle for both the newspapers and Yahoo. In the innovation war, they've come to a gunfight with a switchblade.
Just as i was finishing up this entry, Yahoo announced that CEO Terry Semel is stepping down and will be replaced by co-founder Jerry Yang. Leave it to Yahoo. News about their own company, and they get scooped by CNN Money. I'll stand by my prediction for short term gloom, however. This company needs more than a face-change at the top.
As for eBay, I'll just keep it simple. If it wasn't for their purchase of payment processor PayPal back around 2002, they'd be sunk lower than they already are. The company has made various large acquisitions that don't seem to offer much synergy. Take Skype, for instance. What good does a free long-distance telephone service offer a company that depends on online retail sales for 60% or more of its revenue?
If you're scratching your head on that one, you're not alone. Analysts, merchants and users of the big, fat internet auction shopping site are still trying to figure that one out.
eBay had made other questionable calls on acquisitions and they seem to have lost their focus, if they ever had one in the first place. It's almost as though they feel that the online auction format is not sustainable long term, and maybe they're right. They haven't made the one fundamental change to the auction format that could change the paradigm - taking the time element out of the auction. Most offerings on eBay languish for days before getting bids in the final minutes or seconds, if at all.
The chiefs at eBay haven't noticed that they could make more money with a better, more exciting user experience in the company's 10 year history. Already this summer, listings are down on the flagship US site. It bodes evil for the future of the auction king.
Once again, failure to innovate plagues this company as it does Yahoo. The only advancements eBay has made over the years to their core product are bloated extras that have the potential to boost their bottom line. eBay is missing the web's new wave in very noticeable ways.
Currently trading around 31, eBay should languish in the 20s for some time to come and underperform the S&P 500 through 2008, or until there's a management shake-up.
Yahoo, already trading slightly below 30, may make it's way down to the teens by the end of 2007. They've offered nothing new for so long, major shareholders may begin to bail soon.
Now, today's markets: Dull. With a capital D. Get used to it. It's summer and these kinds of days are the norm. Volume was very light and the indices didn't budge far from the flat line, though they all closed on the downside.
Dow 13,612.98 -26.50; NASDAQ 2,626.60 -0.11; S&P 500 1,531.05 -1.86; NYSE Composite 10,005.47 -8.46
Declining issues lead advancers marginally, by roughly a 10-9 margin, but new highs still superseded new lows, 427-92.
Oil was up over $68... and $69, ending $1.09 higher at $69.09. They're out of their minds, these oil people, and they deserve to see everyone in America walk to work or take alternative transportation for two months. It won't happen, but they, the sheiks and the Big Oil execs deserve a fate much, much worse than death. They're raping the US economy, the world economy, and trying to rape Iraq and next, Iran. Brutal.
Gold and silver went in opposite directions, but not far. The metals are so dull, they are barely worth reporting. A timely strategy might be to sell all your precious metal holdings now and buy back in a year from now. These particular commodities have had their days in the sun and have been treading water for months. A major fall is coming soon.
Let's look at Yahoo first. Six years ago, they were the leaders in just about every measurable internet category. They had traffic, were the leader in search, news aggregation, games, etc. Then along came Google and stole their search crown. Other competitors sliced away at other categories. And while Yahoo still has impressive traffic numbers, they lack what every great internet company needs - innovation - and that's why their profits and share price are down.
Yahoo is exploring partnerships and integrations with local newspapers to improve the ad spending and reach in major local markets. This is a strategy that has great potential to backfire. Local ad spending on the 'net is the last great frontier, as yet unexploited by the giants. But large, clunky local newspapers, which have been slow to adopt best practices regarding their web offerings, while established entities, may not be the best prospects for innovative ad deals.
There's that word again. Innovation. Many of the largest chains of newspapers have been slow on the uptake and are still, like it or not, tied to the big bucks in print ad sales. The old tree-killing, mash-to-pulp-to-print mantra still resonates in newsrooms and ad departments across America. Teaching the old dogs of newspaper ad sales new tricks is going to be challenging, and likely unprofitable for some time to come, if ever. Ad reps at large newspapers have entrenched customer bases, many of them are in their 50s or 60s and make six-figures, so they're a tough bunch to crack. Why should they offer internet ads to their big-time clients? If it ain't broke don't fix it.
Yahoo would do better to seek out new internet-only local entities, like bloggers, wikis and ultra-local small websites. But they're stuck in that "bigger-is-better" corporate mindset, and that's yet another reason they're in failure mode.
Local ad markets represent some of the most fiercely-fought-over turfs in any selling regimen. Yahoo is in for a long, tough fight in which the landscape shifts from market to market and sometimes day to day. Good luck. It's a losing battle for both the newspapers and Yahoo. In the innovation war, they've come to a gunfight with a switchblade.
Just as i was finishing up this entry, Yahoo announced that CEO Terry Semel is stepping down and will be replaced by co-founder Jerry Yang. Leave it to Yahoo. News about their own company, and they get scooped by CNN Money. I'll stand by my prediction for short term gloom, however. This company needs more than a face-change at the top.
As for eBay, I'll just keep it simple. If it wasn't for their purchase of payment processor PayPal back around 2002, they'd be sunk lower than they already are. The company has made various large acquisitions that don't seem to offer much synergy. Take Skype, for instance. What good does a free long-distance telephone service offer a company that depends on online retail sales for 60% or more of its revenue?
If you're scratching your head on that one, you're not alone. Analysts, merchants and users of the big, fat internet auction shopping site are still trying to figure that one out.
eBay had made other questionable calls on acquisitions and they seem to have lost their focus, if they ever had one in the first place. It's almost as though they feel that the online auction format is not sustainable long term, and maybe they're right. They haven't made the one fundamental change to the auction format that could change the paradigm - taking the time element out of the auction. Most offerings on eBay languish for days before getting bids in the final minutes or seconds, if at all.
The chiefs at eBay haven't noticed that they could make more money with a better, more exciting user experience in the company's 10 year history. Already this summer, listings are down on the flagship US site. It bodes evil for the future of the auction king.
Once again, failure to innovate plagues this company as it does Yahoo. The only advancements eBay has made over the years to their core product are bloated extras that have the potential to boost their bottom line. eBay is missing the web's new wave in very noticeable ways.
Currently trading around 31, eBay should languish in the 20s for some time to come and underperform the S&P 500 through 2008, or until there's a management shake-up.
Yahoo, already trading slightly below 30, may make it's way down to the teens by the end of 2007. They've offered nothing new for so long, major shareholders may begin to bail soon.
Now, today's markets: Dull. With a capital D. Get used to it. It's summer and these kinds of days are the norm. Volume was very light and the indices didn't budge far from the flat line, though they all closed on the downside.
Dow 13,612.98 -26.50; NASDAQ 2,626.60 -0.11; S&P 500 1,531.05 -1.86; NYSE Composite 10,005.47 -8.46
Declining issues lead advancers marginally, by roughly a 10-9 margin, but new highs still superseded new lows, 427-92.
Oil was up over $68... and $69, ending $1.09 higher at $69.09. They're out of their minds, these oil people, and they deserve to see everyone in America walk to work or take alternative transportation for two months. It won't happen, but they, the sheiks and the Big Oil execs deserve a fate much, much worse than death. They're raping the US economy, the world economy, and trying to rape Iraq and next, Iran. Brutal.
Gold and silver went in opposite directions, but not far. The metals are so dull, they are barely worth reporting. A timely strategy might be to sell all your precious metal holdings now and buy back in a year from now. These particular commodities have had their days in the sun and have been treading water for months. A major fall is coming soon.
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