Trading on Wall Street was less than dramatic today with a split decision among the majors, though there was little left to the imagination over on the oil futures pits.
Light crude for August delivery rose as high as $72.35/barrel before falling back to close up 40 cents at $71.81. The price was the highest of 2007 and close to the all-time high of $72.17 in April of 2006.
Dow 13,565.84 -11.46; NASDAQ 2,656.65 +11.70; S&P 500 1,525.40 +0.53; NYSE Composite 10,026.24 -6.37
Internally, the market displayed the nature of the day's trade. Decliners led advancers marginally, by a 10-9 margin, though new highs still held sway over new lows, 423-139.
This leaves the end of the week as an open question. Despite ample inventories, oil still remains a threat to take down the entire economy. Tomorrow, the June jobs report is due out at 8:30 am - prior to the market's opening - setting the stage for potential calm or calamity.
Judging by the tenor of today's trade, oil continues to be the elephant in the middle of the room, coloring all investment decisions. By now, it's apparent to most wizened investors that the big oil companies are operating under the guise of an illegal, price-fixing cartel, and that the government is in no case about to lift even a finger to curtail their activities. In fact, the Supreme Court ruled last week that producers and retailers could fix prices without penalty, in effect overturning a key provision of the Sherman Anti-Trust act. The court essentially gave a green light to oil companies and any other group of manufacturers to dictate prices at the retail level. It's a tremendous boon to corporate interests, and a severe blow to consumer protection.
As though the oil combine weren't enough about which to worry, tomorrow's jobs report may be a bombshell which sets off a major selling session. If the consensus is correct, it will be uninspiring to either side, but if the report shows less than 120,000 new jobs, investor reaction may be extremely negative. Recent economic reports have been less than favorable, and this would be another nail in the US fiscal coffin.
On the other hand, if there's a significant surprise in the aforementioned report along the lines of 150,000 new jobs, it would serve as a significant buy sign. The probability of an upside to the jobs report is low, however, at roughly 20%. In other words, don't bet on it. Coupled with the continuation of the oil rally, the jobs report has about a 40% chance that it will miss the already low bar. The other 40% probability is that the new jobs created will come in at a level of 120-135,000. The chance of oil selling off is practically nil.
Despite what occurs on Friday, any move may be short-lived, as second quarter earnings reports are now on the horizon and will serve as drivers for the indices through the first week of August. That jobs reports, though, may set some tone and give an indication of where the US economy and, to an uneven extent, the stock markets, are headed.
In related commodity news, gold lost $4.80 to end the day at $650.60; silver was off another 11 cents to $12.58. The metals are sinking under their own weight.
Thursday, July 5, 2007
Tuesday, July 3, 2007
Stocks 2-for-2 Prior to Holiday
The major indices all recorded gains for the second straight day in a shortened session which ended at 1:00 EDT. Investors will get back to trading after a 1-day hiatus for the 4th of July, and the Thursday and Friday sessions could be turbulent.
With just two hours left in the session, the National Association of Realtors released their May Index of Pending Home Sales, showing a decline of 3.5%, close to a 6-year low. The continued weakness in the housing markets is no longer news, despite the protestations of Secretary of the Treasury Henry Paulson, Fed Chief Ben Bernanke and former Fed head Alan Greenspan, who all describe the situation as either "contained" or "manageable."
The value of their short-winded explanations can be summed up by an equally brief quip: HOGWASH. It was Greenspan's easy-money policy that created the bubble in real estate, and now that it's deflating, they're too chicken-hearted to own up to the truth. Prices are falling like rain, consumers are tapped out and the sub-prime financial debacle is going to get worse - probably much worse - before it gets better.
The reality of the housing crisis in America is that financially strapped homeowners are increasingly unable to keep up with rising mortgage payments in ARMs, interest-only and other nefarious mortgage instruments created by banks with tacit approval by the Fed, the bulk of which have yet to re-price.
Attempting to unload their sub-prime backed instruments as quietly and as quickly as possible, the hedgies are finding few takers and by fall, outright dumping will be the rule of the day. Hundreds of billions of wasted dollars are going to be taken right out of circulation when the hedge funds go belly up and they will likely have a major impact on all markets in a cascading series of defaults and banking busts. The end game will be a calamity for stocks as investment dollars are ground out of existence.
Fortunately, due to the size of the American and world markets, much of the carnage will come in waves, beginning in late summer to early fall, though they will accelerate through 2008. Most investments are safe for the time being, though the latter part of this quarter and all of the 4th quarter could be quite dicey.
This bull has nearly run its course, and like all good bulls, at the end of the run, it's going to leave behind a sweating, stinking mess.
Dow 13,577.30 +41.87; NASDAQ 2,644.95 +12.65; S&P 500 1,524.87 +5.44; NYSE Composite 10,032.61 +35.18
in addition to the housing woes moving the markets, on Thursday, the government reports crude inventories, which probably won't amount to much, but the markets will be anticipating Friday's June Labor report, about which investors may be somewhat less than enthusiastic. The forecasters are calling for 125-135,000 new jobs, though there's a growing consensus that even that mild reading may be missed. If the jobs report comes in under 100,000 new jobs, there will be a momentary pause by those who think it may give the Fed some more reason to cut interest rates, but then there will be a rush toward the exit doors. Depending on the number of new jobs the Labor Department decides to say were created in June, Friday could be a Bear bash or a bore.
Today's activity was more of a mop-up from yesterday's handsome gains, with some adding to positions without much fanfare. Advancing issues again were ahead of decliners, 3-2. There were 439 new highs to 107 new lows. A solid day all around.
Oil was priced 21 cents higher on the day, at 71.30, while gold fell $3.50 to $655.70 and silver lost 6 cents of its luster, at 12.69.
Happy Independence Day!
With just two hours left in the session, the National Association of Realtors released their May Index of Pending Home Sales, showing a decline of 3.5%, close to a 6-year low. The continued weakness in the housing markets is no longer news, despite the protestations of Secretary of the Treasury Henry Paulson, Fed Chief Ben Bernanke and former Fed head Alan Greenspan, who all describe the situation as either "contained" or "manageable."
The value of their short-winded explanations can be summed up by an equally brief quip: HOGWASH. It was Greenspan's easy-money policy that created the bubble in real estate, and now that it's deflating, they're too chicken-hearted to own up to the truth. Prices are falling like rain, consumers are tapped out and the sub-prime financial debacle is going to get worse - probably much worse - before it gets better.
The reality of the housing crisis in America is that financially strapped homeowners are increasingly unable to keep up with rising mortgage payments in ARMs, interest-only and other nefarious mortgage instruments created by banks with tacit approval by the Fed, the bulk of which have yet to re-price.
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Attempting to unload their sub-prime backed instruments as quietly and as quickly as possible, the hedgies are finding few takers and by fall, outright dumping will be the rule of the day. Hundreds of billions of wasted dollars are going to be taken right out of circulation when the hedge funds go belly up and they will likely have a major impact on all markets in a cascading series of defaults and banking busts. The end game will be a calamity for stocks as investment dollars are ground out of existence.
Fortunately, due to the size of the American and world markets, much of the carnage will come in waves, beginning in late summer to early fall, though they will accelerate through 2008. Most investments are safe for the time being, though the latter part of this quarter and all of the 4th quarter could be quite dicey.
This bull has nearly run its course, and like all good bulls, at the end of the run, it's going to leave behind a sweating, stinking mess.
Dow 13,577.30 +41.87; NASDAQ 2,644.95 +12.65; S&P 500 1,524.87 +5.44; NYSE Composite 10,032.61 +35.18
in addition to the housing woes moving the markets, on Thursday, the government reports crude inventories, which probably won't amount to much, but the markets will be anticipating Friday's June Labor report, about which investors may be somewhat less than enthusiastic. The forecasters are calling for 125-135,000 new jobs, though there's a growing consensus that even that mild reading may be missed. If the jobs report comes in under 100,000 new jobs, there will be a momentary pause by those who think it may give the Fed some more reason to cut interest rates, but then there will be a rush toward the exit doors. Depending on the number of new jobs the Labor Department decides to say were created in June, Friday could be a Bear bash or a bore.
Today's activity was more of a mop-up from yesterday's handsome gains, with some adding to positions without much fanfare. Advancing issues again were ahead of decliners, 3-2. There were 439 new highs to 107 new lows. A solid day all around.
Oil was priced 21 cents higher on the day, at 71.30, while gold fell $3.50 to $655.70 and silver lost 6 cents of its luster, at 12.69.
Happy Independence Day!
Monday, July 2, 2007
Stocks in Broad Rally as 3rd Quarter Ensues
After three weeks of see-saw trading which resulted in less than a 1.5-2% loss on the major exchanges (most of which was recovered today), investors took the beginning of the 3rd quarter as an opportunity to buy.
This was not an unexpected occurrence, as noted by the experts, there had been a significant amount of portfolio paring and clipping of losses, with only a small dose of outright profit-taking in winning positions.
The markets were up right out of the gate and the action was steady throughout the session even though volume was relatively light. This being an unusual trading week, with the Independence Day holiday smack in the middle of it, there are surely fewer active traders to be found.
Dow 13,535.43 Up 126.81; NASDAQ 2,632.30 +29.07; S&P 500 1,519.43 +16.08; NYSE Composite 9997.43 +124.41
There was no mistaking the direction of the market on Monday, as advancing issues trounced decliners by a better than 5-2 margin and there were 409 new highs to just 123 new lows.
Stocks weren't the only winners on the first trading day of the 2nd half of the economic year; oil jumped another 41 cents to close at another 2007 high of $71.09. With the biggest holiday of summer just another day away, the oil barons are making sure that American motorists pay through the nose at the pump (pardon the sloppy metaphor).
What may be driving the most recent rise in oil prices is the fact that the holiday will be in mid-week, somewhat limiting long-distance travel and forcing the hand of the oil cartel to jack prices to make up for slack demand. That's how the supply-demand logic works for the oil companies. If they sell less, they'll make up for it with higher prices, and make no doubt, there's price fixing at the very highest levels of industry.
Despite the troubling and potentially criminal behavior of the oil crowd, the US economy still seems to be humming along quite well. Interest rates are still historically low and GDP growth (or lack thereof) probably bottomed out in the 2nd quarter, though we won't know for sure for another 3-4 weeks. By that time, corporate earnings reports will be at full tap, so if news is not good on the overall economy, it could come as a shock. Regardless, corporate earnings are still on a buoyant tack and another rally to new all-time highs is likely to occur within the next 3-4 weeks.
It's prime time to put unused capital to work, shed losers and reinvest in companies that have been meeting or beating street estimates. Tomorrow, and over the next few days' posts, I'll offer some specific stocks and sectors.
Gold and silver posted gains of $8.30 and $0,27, but they look more like a dead cat bounce than anything indicative of a new direction in the metals markets.
This was not an unexpected occurrence, as noted by the experts, there had been a significant amount of portfolio paring and clipping of losses, with only a small dose of outright profit-taking in winning positions.
The markets were up right out of the gate and the action was steady throughout the session even though volume was relatively light. This being an unusual trading week, with the Independence Day holiday smack in the middle of it, there are surely fewer active traders to be found.
Dow 13,535.43 Up 126.81; NASDAQ 2,632.30 +29.07; S&P 500 1,519.43 +16.08; NYSE Composite 9997.43 +124.41
There was no mistaking the direction of the market on Monday, as advancing issues trounced decliners by a better than 5-2 margin and there were 409 new highs to just 123 new lows.
Stocks weren't the only winners on the first trading day of the 2nd half of the economic year; oil jumped another 41 cents to close at another 2007 high of $71.09. With the biggest holiday of summer just another day away, the oil barons are making sure that American motorists pay through the nose at the pump (pardon the sloppy metaphor).
What may be driving the most recent rise in oil prices is the fact that the holiday will be in mid-week, somewhat limiting long-distance travel and forcing the hand of the oil cartel to jack prices to make up for slack demand. That's how the supply-demand logic works for the oil companies. If they sell less, they'll make up for it with higher prices, and make no doubt, there's price fixing at the very highest levels of industry.
Despite the troubling and potentially criminal behavior of the oil crowd, the US economy still seems to be humming along quite well. Interest rates are still historically low and GDP growth (or lack thereof) probably bottomed out in the 2nd quarter, though we won't know for sure for another 3-4 weeks. By that time, corporate earnings reports will be at full tap, so if news is not good on the overall economy, it could come as a shock. Regardless, corporate earnings are still on a buoyant tack and another rally to new all-time highs is likely to occur within the next 3-4 weeks.
It's prime time to put unused capital to work, shed losers and reinvest in companies that have been meeting or beating street estimates. Tomorrow, and over the next few days' posts, I'll offer some specific stocks and sectors.
Gold and silver posted gains of $8.30 and $0,27, but they look more like a dead cat bounce than anything indicative of a new direction in the metals markets.
Friday, June 29, 2007
Rally Fizzles as Quarter Ends
The major indices were all up nicely in positive territory on Friday morning, but as has been the case more often than not this month, sellers moved in and squelched any momentum and sent shares into negative territory.
As I've been noting all along, this sideways-down action is probably more healthy than continued gains, as were witnessed in April and May. A little cooling off was expected and a slow, measured selling period is preferable to a dramatic, surprise downdraft.
Dow 13,408.62 -13.66; NASDAQ 2,603.23 -5.14; S&P 500 1,503.35 -2.36; NYSE Composite 9,873.02 +7.25
The main culprit for today's decline was, again, the nasty oil futures market, which saw fit to push prices for light crude over $70.00, up $1.11 to $70.68 at the close. Inspired by low inventories at specific locations - despite US crude inventories being at 9-year highs - is the first time since August, 2006 that oil has closed above $70/barrel.
The high price of oil and it's derivative, gas, is disconcerting to US motorists, who, it's generally assumed, are not sophisticated enough to understand the vagaries of the oil supply-demand scenario. Likewise, Wall Street frowns upon the continuing hikes in crude and gas and their displeasure shows up on days like today.
Declining issues held a slim advantage of just about 200 stocks over advancers, while new highs held sway over new lows, 284-144.
Gold and silver barely budged, with gold closing at $650.90. Silver ended the week at $12.47.
As I've been noting all along, this sideways-down action is probably more healthy than continued gains, as were witnessed in April and May. A little cooling off was expected and a slow, measured selling period is preferable to a dramatic, surprise downdraft.
Dow 13,408.62 -13.66; NASDAQ 2,603.23 -5.14; S&P 500 1,503.35 -2.36; NYSE Composite 9,873.02 +7.25
The main culprit for today's decline was, again, the nasty oil futures market, which saw fit to push prices for light crude over $70.00, up $1.11 to $70.68 at the close. Inspired by low inventories at specific locations - despite US crude inventories being at 9-year highs - is the first time since August, 2006 that oil has closed above $70/barrel.
The high price of oil and it's derivative, gas, is disconcerting to US motorists, who, it's generally assumed, are not sophisticated enough to understand the vagaries of the oil supply-demand scenario. Likewise, Wall Street frowns upon the continuing hikes in crude and gas and their displeasure shows up on days like today.
Declining issues held a slim advantage of just about 200 stocks over advancers, while new highs held sway over new lows, 284-144.
Gold and silver barely budged, with gold closing at $650.90. Silver ended the week at $12.47.
Thursday, June 28, 2007
Fed, Markets Stay Flat
The Federal Reserve's Open Market Committee voted - for the 8th straight time - to leave the benchmark federal funds rate at 5.25%. The markets zigged and zagged after the 2:15 announcement, eventually settling close to the flatline. As went the Fed, so went the market. The two-day Fed meeting produced mostly yawns from the investment community, as expected.
Dow 13,422.28 -5.45; NASDAQ 2,608.37 +3.02; S&P 500 1,505.71 -0.63; NYSE Composite 9,865.77 +16.86
Market internals expressed the tepid tone. Advancing issues were ahead of decliners by a slim 5-4 margin while new highs rebounded over new lows, 264-105.
Oil ticked up 60 cents to $69.57. Gold and silver made minor moves to the positive in a vain attempt to recover some of the massive losses over the past 3 weeks. Both metals are hovering around inflection price points, but the potential for an outright price collapse is high.
With the Fed meeting a fleeting memory, investors can focus more on economic reports and earnings, the real drivers in the market.
An aside on some picks and pans. Three that I called short, Yahoo, Ebay and Google, were all down marginally. Marvel Enterprises, my one pick to move upwards, gained 7 cents and was up 19 cents in after-hours trading.
Dow 13,422.28 -5.45; NASDAQ 2,608.37 +3.02; S&P 500 1,505.71 -0.63; NYSE Composite 9,865.77 +16.86
Market internals expressed the tepid tone. Advancing issues were ahead of decliners by a slim 5-4 margin while new highs rebounded over new lows, 264-105.
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The high-low see-saw is presaging a new round of buying, which should coincide with the release of second quarter earnings reports by mid-July.Choose your own colors, dates and message for maximum impact.
dtmagazine.com/customtext.html
Oil ticked up 60 cents to $69.57. Gold and silver made minor moves to the positive in a vain attempt to recover some of the massive losses over the past 3 weeks. Both metals are hovering around inflection price points, but the potential for an outright price collapse is high.
With the Fed meeting a fleeting memory, investors can focus more on economic reports and earnings, the real drivers in the market.
An aside on some picks and pans. Three that I called short, Yahoo, Ebay and Google, were all down marginally. Marvel Enterprises, my one pick to move upwards, gained 7 cents and was up 19 cents in after-hours trading.
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