With the Fed's FOMC deliberating interest rates and a statement due tomorrow, investors apparently felt little reason to continue the waiting game, sending stocks soaring in the afternoon of Wednesday's session.
Led by technology stocks, the NASDAQ led all other indices in percentage gain, up 1.21% as compared to the Dow's +0.68%
Dow 13,427.73 +90.07; NASDAQ 2,605.35 +31.19; S&P 500 1,506.34 +13.45; NYSE Composite 9,848.91 +74.62
Traders may have simply seen the market in a short term oversold position, moving quickly to bolster positions and snatch up bargains. With the Fed on track to keep rates stable at 5.25%, the risk of a downturn has virtually been eliminated, so buyers got busy and a little bit of piling on ensued late in the day.
Internal indicators were mixed, as advancing issues trounced decliners by a nearly 3-1 margin, but new lows kept ahead of new highs for the second consecutive day - 240-166 - suggesting that this mini-rally may only be getting started.
The Fed, as inconsequential as this particular meeting may be, still holds some power, though that is debated vigorously by proponents on both sides of the issue. Detractors claim that the Fed is antiquated and that their interest rate adjustments are generally lagging reality by 6 months or more and do more harm than good. Adherents of Fed-policy economics see the Fed as a necessary market mechanism, providing stability in an otherwise volatile environment.
In either case, there shouldn't be much to complain about with rates in a still-accomodative range. Rate increases, even to 6%, would still be in a comfortable range, though the chances for either tightening or loosening are roughly the same - nil.
Some people who haven't yet gotten the memo are those trading oil futures, up again today by $1.20 to $68.97. Since it is summer, the oil nutjobs seem compelled to keep oil prices near historical highs. Some day, hopefully, they will get their just desserts when the world's people begin to awaken to the realities of oil politics and the truth about world reserves (hint: there's enough to last another 60 years easily).
Apparently, gold and silver traders are beginning to acquiesce to the reality that the bull market in metals and - commodities overall - is waning and likely over and done with. Both metals were down marginally, seemingly unable to rebound off recent selling sprees.
Wednesday, June 27, 2007
Tuesday, June 26, 2007
Six Reasons to Hate Google
The markets vacillated wildly across and around the flatline on Tuesday in anticipation of the Fed's Open Market Committee meeting on Wednesday and Thursday. The Fed is expected to do noting regarding interest rates, so the markets ended up mostly marking time, drifting to the downside.
Dow 13,337.66 -14.39; NASDAQ 2,574.16 -2.92; S&P 500 1,492.89 -4.85; NYSE Composite 9,774.29 -32.89
Volume was on the heavy side with plenty of money changing hands and some consequence. Losing issues outpaced gainers by a 7-5 margin. New highs rolled over and died, finally, with new lows leading, 224-142.
Oil futures eased a welcome $1.41 to end the day at $67.77. The selloff in precious metals continued with gold losing $9.40 to close at $645.30. Silver lost nearly 5%, 60 cents, ending the day at $12.28.
In the absence of any meaningful market news (all will be forgiven after the Fed meeting), I give you my screeching anti-Google homily.
I generally dislike huge, multi-billion dollar companies as a rule, but Google is one over which I stumble at least a couple of times daily, and I felt it was time the Googlers at the Googleplex (there's a good reason to hate them right there - moronic nomenclature) - to be taken to task for being more hype than reality.
With the share price hovering close to all-time highs (as I write it's at 530), Google is the darling of Wall Street. No more time to waste, let's start the list:
There are more reasons to dislike, despise or hold Google and their culture in contempt. These are but a few. A word of caution: reading this may cause you to lose PageRank. Just kidding, but, on a serious note, Google looks like the perfect short candidate at this time. In the second quarter, they eliminated a gaggle (of course, nobody knows for sure how many because that's a secret) of arbitrageurs from their AdWords/AdSense program and lost out on at least ten days worth of eBay advertising when the auction giant pulled all of their ad campaigns in response to Google's anti-eBay, pro-Google Checkout protest, planned to coincide with eBay Live.
Google backed down (yes, they're weenies, too) and eBay began running ads again, but it's estimated that eBay's annual spend is upwards of $300 million, so Google may be short about $8 million from that one source. Meeting their quarterly estimates may be a challenge this time around.
My suggestion is to buy August 480 puts at around $3.50 currently. Google announced earnings on the 19th and the options expire on the 20th, so the July puts are cutting it a little close. But should they miss, a 50-point shave could be in the offing. Happy Trading.
Dow 13,337.66 -14.39; NASDAQ 2,574.16 -2.92; S&P 500 1,492.89 -4.85; NYSE Composite 9,774.29 -32.89
Volume was on the heavy side with plenty of money changing hands and some consequence. Losing issues outpaced gainers by a 7-5 margin. New highs rolled over and died, finally, with new lows leading, 224-142.
Oil futures eased a welcome $1.41 to end the day at $67.77. The selloff in precious metals continued with gold losing $9.40 to close at $645.30. Silver lost nearly 5%, 60 cents, ending the day at $12.28.
In the absence of any meaningful market news (all will be forgiven after the Fed meeting), I give you my screeching anti-Google homily.
I generally dislike huge, multi-billion dollar companies as a rule, but Google is one over which I stumble at least a couple of times daily, and I felt it was time the Googlers at the Googleplex (there's a good reason to hate them right there - moronic nomenclature) - to be taken to task for being more hype than reality.
With the share price hovering close to all-time highs (as I write it's at 530), Google is the darling of Wall Street. No more time to waste, let's start the list:
- Google's share price. It's too expensive to own more than maybe 100 shares for most people, self included. A solid reason to hate them being that you can't even join them to any satisfactory degree. Worse yet, nearly 25% of the shares aren't publicly traded, meaning that the company, and it's 40+ p/e ratio is even more overvalued than at first blush.
- Valuation: Investors value Google at $165 billion. To put that in perspective, if you spent a million dollars a day, it would take you 452 years to spend all of it. Google will likely be a footnote in history books by then (circa 2469), which brings me to the next point...
- Google and their founders, Sergey Brin and Larry Page are so filthy rich because they invented what? A supposedly better way to find web sites CREATED BY OTHER PEOPLE. Yes, their vaunted algorithm is just an overzealous channel flipper. Big deal. Lots of other companies (Yahoo, MSN, Ask.com) have created search engines, many of which work just as well as Google's. And finding - and capitalizing - on other people's work, which is how search engine companies make money, is a purely parasitical practice.
- Google is a one-trick pony. They've got their search engine, but roughly 98% of their revenue comes from various ad schemes, serving ads on their search engine results pages (SERPs), and, again, on other people's web sites. All of that money is being made on the backs of small businesses (and some large ones).
- Secrecy: Google keeps most of their business practices shrouded under a cloud of secrecy. How their search algorithm works is secret. How much they pay out to publishers in their Adsense program is a secret. Disclosure is cause to be banned. As a publisher, I have only myself to blame for signing on to a closed-ended contract. I don't know how much Google keeps on every click on my site, but I'm certain it's more than the usual 15-20% agency fee. Likely, it's a lot more.
- The Don't be evil motto. This is probably the most annoying statement of anything I've ever read. Google has stepped on the toes of millions of webmasters, run afoul of copyrights in numerous instances and complied with the censorship issues of the Chinese government. Through all of this, they maintain a "good" image. The truth is they're as ruthless and profit-driven as any old-school corporation.
There are more reasons to dislike, despise or hold Google and their culture in contempt. These are but a few. A word of caution: reading this may cause you to lose PageRank. Just kidding, but, on a serious note, Google looks like the perfect short candidate at this time. In the second quarter, they eliminated a gaggle (of course, nobody knows for sure how many because that's a secret) of arbitrageurs from their AdWords/AdSense program and lost out on at least ten days worth of eBay advertising when the auction giant pulled all of their ad campaigns in response to Google's anti-eBay, pro-Google Checkout protest, planned to coincide with eBay Live.
Google backed down (yes, they're weenies, too) and eBay began running ads again, but it's estimated that eBay's annual spend is upwards of $300 million, so Google may be short about $8 million from that one source. Meeting their quarterly estimates may be a challenge this time around.
My suggestion is to buy August 480 puts at around $3.50 currently. Google announced earnings on the 19th and the options expire on the 20th, so the July puts are cutting it a little close. But should they miss, a 50-point shave could be in the offing. Happy Trading.
Monday, June 25, 2007
Markets Blink in Game of Chicken
Everything was going swimmingly on Monday, until... traders apparently remembered that this was Fed Week. All eyes on the Fed. Nothing happens until Ben Bernanke and the FOMC issues its directive.
The selling began about noon and really got rolling in earnest around 2:00, after the Dow was up more than 120 points earlier in the day.
Dow 13,352.05 -8.21; NASDAQ 2,577.08 -11.88; S&P 500 1,497.74 -4.82; NYSE Composite 9,807.18 -41.79
It's a foolish game of chicken the markets are playing with the Fed. The very worst thing the Fed could do at their Wednesday-Thursday meeting this week is raise interest rates 25 basis points (1/4%). They're not going to do it. Despite strong inflationary signals, there are also signs that the economy has slowed to a crawl.
So, what's about to occur? Nothing much. It's a week of noodling and doodling over numbers that, in the larger scheme, are rather mundane and inconsequential. Further, with Independence Day falling on Wednesday of next week, the markets will find it difficult to manage any kind of momentum.
Second quarter corporate earnings reports will begin trickling out the following week, so we could be trading in very sideways fashion for the better part of a month before any significance can be garnered from earnings and profits reports.
For the day, losers outdid gainers by a better than 2-1 margin and new lows finally got the edge on new highs, after days of closing the gap, 213-177. The margin is small, as are the chances for a heavy selloff.
To amplify just how much nothing is happening, crude oil futures rose an entire 4 cents to $69.18. More importantly, gold was off another $2.30 to $654.70 and silver is testing a multi-month low at $12.88, losing 14 cents on the day. There really is a bear in the mine.
The selling began about noon and really got rolling in earnest around 2:00, after the Dow was up more than 120 points earlier in the day.
Dow 13,352.05 -8.21; NASDAQ 2,577.08 -11.88; S&P 500 1,497.74 -4.82; NYSE Composite 9,807.18 -41.79
It's a foolish game of chicken the markets are playing with the Fed. The very worst thing the Fed could do at their Wednesday-Thursday meeting this week is raise interest rates 25 basis points (1/4%). They're not going to do it. Despite strong inflationary signals, there are also signs that the economy has slowed to a crawl.
So, what's about to occur? Nothing much. It's a week of noodling and doodling over numbers that, in the larger scheme, are rather mundane and inconsequential. Further, with Independence Day falling on Wednesday of next week, the markets will find it difficult to manage any kind of momentum.
Second quarter corporate earnings reports will begin trickling out the following week, so we could be trading in very sideways fashion for the better part of a month before any significance can be garnered from earnings and profits reports.
For the day, losers outdid gainers by a better than 2-1 margin and new lows finally got the edge on new highs, after days of closing the gap, 213-177. The margin is small, as are the chances for a heavy selloff.
To amplify just how much nothing is happening, crude oil futures rose an entire 4 cents to $69.18. More importantly, gold was off another $2.30 to $654.70 and silver is testing a multi-month low at $12.88, losing 14 cents on the day. There really is a bear in the mine.
Friday, June 22, 2007
Freaky Friday, But Room Below
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.
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.
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?"
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