With 2nd-quarter corporate earnings reports on the horizon this week (Alcoa announced after the close, posting earnings of 81 cents per share, in line with estimates, but down 4 cents from the same period in 2006), investors took a cautiously-positive tone in a session characterized by sluggish trade and squaring widely-held positions. There was little in the way of speculation, as most of the action over the next few weeks will have earnings as a catalyst.
Dow 13,649.97 +38.29; NASDAQ 2,670.02 +3.51; S&P 500 1,531.85 +1.41; NYSE Composite 10,099.60 +24.21
This is a very heady time for the market and one in which savvy players will make significant plays on stocks. The most animated of the trading will likely be next week, when the bulk of the S&P 500 stocks report and options expire (July 20).
New highs were again well ahead of new lows, 564-100, though advancers and decliners were virtually in a dead heat. Once again, these internals demonstrate that investors are buying stocks that are already showing gains, and shedding losers, though at a reduced rate. We're almost certain to see more of a leveling between the new highs and lows as the quarterlies flow to the market and the media.
With more than 5500 stocks on the NYSE and NASDAQ not represented in the daily high-low numbers, a smart strategy at this juncture would be to go long on companies approaching their 52-week high and either avoid, short-sell or buy puts on those nearing the bottoms of their ranges. You're likely to find winners on both sides of the trade, depending on how much risk you can maintain and how far you wish to spread your money. a few big winners could give the usually pedestrian month of July a bit of luster.
Oil actually fell back a bit today, down 72 cents to $72.19, though it is still extraordinarily high. Oil futures prices have yet to be reflected in pain at the pump, but it's certainly coming, probably right around the time of the Labor Day holiday weekend, which falls on September 1, 2 and 3 this year, coinciding with back-to-school, one of the busiest driving seasons of the year. It hopefully will be Big Oil's last gasp, as the political storm currently percolating in Washington, DC should be blowing its top at that time.
Naturally, politics don't make markets, but some swing in the consensus - especially concerning Iraq - could foment radical changes in corporate governance and oversight down the road. It may be wishful thinking by liberals and free-marketers alike, but change has been in the winds for months. Watch the month of August for signs that the bull is about to wind down or make a significant correction.
Gold and silver made gains today, though they're almost certain to give them back during the course of the week, if not tomorrow.
Monday, July 9, 2007
Friday, July 6, 2007
Benign Jobs Data Spurs Stocks
The Labor Department set the tone on Friday, with a report suggesting the US economy is growing at a moderate pace, creating 132,000 new jobs in June. On the news - released an hour prior to the opening bell, investors snatched up shares even as oil prices approached all-time highs.
Dow 13,611.68 +45.84; NASDAQ 2,666.51 +9.86; S&P 500 1,530.44 +5.04; NYSE Composite 10,075.39 +49.15
While the new jobs created were in line with expectations, the continuing rise in the price of oil - up a full $1 on the NYMERC to $72.81 - may be expected, though hardly welcome.
Advancing issues outpaced decliners by a 7-5 margin, There were 459 new highs to just 112 new lows. The numbers suggest the markets are ready for another upsurge, with the Dow poised just 65 points short of recent highs set on June 4.
Gold and silver fought back to levels seen on Tuesday. Overall, the week was more marking time for the metals than anything substantive.
Dow 13,611.68 +45.84; NASDAQ 2,666.51 +9.86; S&P 500 1,530.44 +5.04; NYSE Composite 10,075.39 +49.15
While the new jobs created were in line with expectations, the continuing rise in the price of oil - up a full $1 on the NYMERC to $72.81 - may be expected, though hardly welcome.
Advancing issues outpaced decliners by a 7-5 margin, There were 459 new highs to just 112 new lows. The numbers suggest the markets are ready for another upsurge, with the Dow poised just 65 points short of recent highs set on June 4.
Gold and silver fought back to levels seen on Tuesday. Overall, the week was more marking time for the metals than anything substantive.
Thursday, July 5, 2007
Oil or Jobs: Which Will Turn Markets?
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.
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.
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.
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