Like the iron pyrite miners mistook for the real thing in gold rush days, this week's market has all the metallic luster and brassy hue of Fool's Gold, and similarly, nothing of real value.
As was noted profusely and extravagantly in yesterday's post, this market has all the tell-tale signals of intense manipulation by people with an interest in keeping the status quo intact. What that means for Mr. and Mrs. Average Investor is a great deal of knock ups (and downs) without any endurance.
Tuesday's squeamish advance was a case in point.
Stocks hovered around the flat line, as they often do on Fedspeak days such as this, until 2:15, when Ben Bernanke and the FOMC board announced that they would again do nothing, neither raising nor lowering key rates, keeping the Federal Funds rate at its year-long level of 5.25%.
The reaction by Wall Street was tantalizingly dubious, as stocks first fell to their lows of the session, only to bounce back an astonishing 250 points between 2:30 and 3:30, before finally exhausting themselves for nothing more than a modest bounce to the plus side.
Dow 13,504.30 +35.52; NASDAQ 2,561.60 +14.27; S&P 500 1,476.71 +9.04; NYSE Composite 9,606.07 +52.30
Once again, we have to recognize the not-so-invisible hand of the Plunge Protection Team (PPT) involved in boosting prices in the later stages of the trading day. 250-point moves don't just appear out of thin air, especially after a disappointing proposition from the Fed.
It can be safely assumed that the Fed is in such a bind right now that standing pat may save face, but it's hardly prudent. Many people (mostly people ignorant of the real depth of the financial mess Wall Street is in) were rooting for a rate decrease, when it is just that kind of thinking and policy - looser credit - that got the financial world into the current dreariness in the first place.
Those more astute in these matter would rather see the Fed ratchet up both the rhetoric and the rate, inflict a bit of short term pain, but set off for a long term solution. Doing nothing only extends and exacerbates the condition. We're in for a cold end of the summer.
As they've been for most of the past to weeks, market internals were just short of miserable. Advancing issues actually outplayed decliners by a 4-3 margin, though new lows swamped new highs, 792-168. It's kind of like the Yankees playing their single-A farm club. It's a nice show, but eventually it's still a beating.
One also gets the feeling that the only people who understand what's really happening are bond and commodity traders. While I won't attempt to match wits with the fixed-return community, traders of oil futures showed signs that the jig may be up. Prices advanced slightly, up 36 cents, to $72.42 and moved in a mostly negative band as low as $71.20. We're on the verge of seeing oil dip below $70 as the summer turns to fall and drivers take less trips.
Gold and silver are now screaming buys as they've retraced only slightly from recent highs. While stocks are set for more poignant plunges, the metals offer safe haven. Tomorrow's almost certain to be witness to a sell-off, with bigger blows possible later this week. The last two days were nothing more than relief via fondling.
Tuesday, August 7, 2007
Monday, August 6, 2007
Shades of 2001
Today's rally reminded me of another time - not so long ago - in which the markets experienced volatile swings to the upside and down. It was the Summer of 2001 and the markets were being roiled by fraud scandals (Enron, WorldCom, et. al.) and weak economic numbers.
The story begins with the Dow trading to an intra-day high on June 29 of 10,729.18 and hitting an intra-day low of 9.431.07 on September 10.
We all remember what happened the following day. On September 11, two airliners crashed into the World Trade Center in New York City, resulting in the worst single man-made catastrophe on mainland America in our history. The financial markets were closed down for a week, and when they reopened on Monday, Sept. 17, the Dow lost another 685 points, as panicked investors scrambled to get out of positions.
Three trading sessions later, on September 20, the Dow lost another 383 points, followed by another 140 point loss the following day. The total loss for that week was a staggering 1,370 points.
Eventually, the market would bottom, though it took more than a year, with the Dow hitting a closing low of 7,286.27 on October 9, 2002. The NASDAQ fared much worse.
I mention this not because I think there is going to be another 9/11 (though history does tend to repeat itself). We may already have witnessed our planned disaster for the year - the Minnesota bridge collapse - without the nasty side effect of a tumbling stock market. I may be going overboard on a conspiracy tangent, but I wish to point out the similarities between the market of 2007 and that of 2001.
We are definitely in a bear market, and that's made all the more obvious by the conspicuous presence of rather large, late-day rallies, like Monday's. But all along, the market continues on a downward path. There is certainly more downside to come.
Dow 13,468.78 +286.87; NASDAQ 2,547.33 +36.08; S&P 500 1,467.67 +34.61; NYSE Composite 9,553.77 +183.17
Today's rally was also one of the narrowest on record. Declining issues actually outdid advancers, 3194 - 3185 and new lows swamped new highs, 1176-102. There are 6546 stocks on the NYSE and NASDAQ combined. That many lows mean that nearly 18% of all stocks hit 52-week lows. A 286-point gain on the Dow can surely hide a lot of evils.
Of the 30 Dow stocks, only one - Alcoa - showed a loss.
One more comparison to 2001 is in order. Tomorrow the Federal Open market Committee of the Federal Reserve meets to consider any rate changes. There is a growing number of cries for a 25 basis point decrease from 5.25 to 5 percent. The August 21 FOMC meeting release reads as follows:
Now, just as then, the Fed may be thinking that it's time to loosen credit again. Sadly, that's what got us into this mess to begin with. Further loosening will only exacerbate an already bad situation. Better to tighten rate policy and inflict some small degree of suffering than risk an overwhelming, years long, inflationary stagnation.
Meanwhile, oil was dumped in a large way, with futures falling $3.42 to $72.06. The handwriting is on the wall. The hand-wringing has yet to begin.
And just how does ExxonMobil gain 1.46 (1.76%) on that news? Somebody enlighten me to the new math and the new market dynamics because I'd say I'm confused, but I'm not. The kinds of things that occurred today are just not supposed to happen... unless, of course, somebody's tinkering with the machinery of the free market.
Gold and silver posted marginal losses. Stock up.
The story begins with the Dow trading to an intra-day high on June 29 of 10,729.18 and hitting an intra-day low of 9.431.07 on September 10.
Dow losses July, August, Sept., 2001
July 6 -227, July 12 +237, July 23 -152, July 24 -177, July 25 +164
Aug. 8 -165, Aug. 17 -152, Aug. 21 -146, Aug. 24 +194, Aug. 28 -160, Aug. 30 -171
Sept. 6 -193 Sept. 7 -235
On September 10, the market had one of the most volatile sessions ever, a range of more than 400 points, eventually losing 0.34. No, that is not a misprint. On September 10, the Dow Jones Industrials lost thirty-four cents.July 6 -227, July 12 +237, July 23 -152, July 24 -177, July 25 +164
Aug. 8 -165, Aug. 17 -152, Aug. 21 -146, Aug. 24 +194, Aug. 28 -160, Aug. 30 -171
Sept. 6 -193 Sept. 7 -235
We all remember what happened the following day. On September 11, two airliners crashed into the World Trade Center in New York City, resulting in the worst single man-made catastrophe on mainland America in our history. The financial markets were closed down for a week, and when they reopened on Monday, Sept. 17, the Dow lost another 685 points, as panicked investors scrambled to get out of positions.
Three trading sessions later, on September 20, the Dow lost another 383 points, followed by another 140 point loss the following day. The total loss for that week was a staggering 1,370 points.
Eventually, the market would bottom, though it took more than a year, with the Dow hitting a closing low of 7,286.27 on October 9, 2002. The NASDAQ fared much worse.
I mention this not because I think there is going to be another 9/11 (though history does tend to repeat itself). We may already have witnessed our planned disaster for the year - the Minnesota bridge collapse - without the nasty side effect of a tumbling stock market. I may be going overboard on a conspiracy tangent, but I wish to point out the similarities between the market of 2007 and that of 2001.
We are definitely in a bear market, and that's made all the more obvious by the conspicuous presence of rather large, late-day rallies, like Monday's. But all along, the market continues on a downward path. There is certainly more downside to come.
Dow 13,468.78 +286.87; NASDAQ 2,547.33 +36.08; S&P 500 1,467.67 +34.61; NYSE Composite 9,553.77 +183.17
Today's rally was also one of the narrowest on record. Declining issues actually outdid advancers, 3194 - 3185 and new lows swamped new highs, 1176-102. There are 6546 stocks on the NYSE and NASDAQ combined. That many lows mean that nearly 18% of all stocks hit 52-week lows. A 286-point gain on the Dow can surely hide a lot of evils.
Of the 30 Dow stocks, only one - Alcoa - showed a loss.
Substantial Wealth and Riches Creation
The Path of Substantial Wealth and Riches: Your Parents' Influence on Your Finances
substantialincomes.com
Once again, somebody is playing favorites. This has to be one of the phoniest rallies ever. Get ready for another scoop from FOX News. When 18% of the market is hitting new 52-week lows, the rest of the market is usually not euphoric. There's manipulation of a massive degree being foisted upon unsuspecting investors - mostly individual traders and mutual fund holders. You see big gains on one hand, though on the other, your stocks, or your funds, are down.The Path of Substantial Wealth and Riches: Your Parents' Influence on Your Finances
substantialincomes.com
One more comparison to 2001 is in order. Tomorrow the Federal Open market Committee of the Federal Reserve meets to consider any rate changes. There is a growing number of cries for a 25 basis point decrease from 5.25 to 5 percent. The August 21 FOMC meeting release reads as follows:
Release Date: August 21, 2001
The Federal Open Market Committee at its meeting today decided to lower its target for the federal funds rate by 25 basis points to 3-1/2 percent. In a related action, the Board of Governors approved a 25 basis point reduction in the discount rate to 3 percent. Today's action by the FOMC brings the decline in the target federal funds rate since the beginning of the year to 300 basis points.
Now, just as then, the Fed may be thinking that it's time to loosen credit again. Sadly, that's what got us into this mess to begin with. Further loosening will only exacerbate an already bad situation. Better to tighten rate policy and inflict some small degree of suffering than risk an overwhelming, years long, inflationary stagnation.
Meanwhile, oil was dumped in a large way, with futures falling $3.42 to $72.06. The handwriting is on the wall. The hand-wringing has yet to begin.
And just how does ExxonMobil gain 1.46 (1.76%) on that news? Somebody enlighten me to the new math and the new market dynamics because I'd say I'm confused, but I'm not. The kinds of things that occurred today are just not supposed to happen... unless, of course, somebody's tinkering with the machinery of the free market.
Gold and silver posted marginal losses. Stock up.
Friday, August 3, 2007
Bad Finish
The end of the week always seems to provide some perspective, even if it occurs as an afterthought. I've been saying right along that the markets were shaky and Friday's figures indicate that I've been very much on the right track, so pay attention!
Head for the hills. Today was another in a continuing series of ugly trading sessions.
Dow 13,181.91 -281.42; NASDAQ 2,511.25 -64.73; S&P 500 1,433.06 -39.14; NYSE Composite 9,370.60 -248.73
Prior to the market opening, the Labor Dept. announced that July payrolls came in well below expectations of 135,000 new jobs, with the addition of just 92,000. According to some people's fudgy math, this translates into a 0.8% annual rate of growth which, by some accounts, would be sufficient to keep real GDP growth at the expected rate of 2.75% for the second half of the year. Dream on. The labor figures have been cooked, fried, refried, baked, grilled and fricasied to a point at which they are scarcely believable.
The day dawdled on until about 2:00 pm, when the floodgates opened and sellers spilled blood into the streets.
Market internals took a turn from nearly OK to horrific. Declining issues overwhelmed advancing ones at a 5-1 clip. New lows were once again beyond reason, with 792 issues (that's a whopping 13% of the whole market) hitting the skids. There were just 126 new highs.
Once again, the spreading contagion from the credit markets made it sensible to leave stocks alone. The US financial system, already under stress from years of government spending waste and an enormous trade deficit, is in tatters from the largely-unregulated mortgage business that is forcing people into foreclosure at record numbers.
While the big wigs in Washington - people like Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke - continue to spread the word that risks from the sub-prime mortgage mess are "contained" and "not serious", investors are taking whatever profits they have and leaving town.
The credit crunch even has people in the oil pits worried. Seriously, if there's going to be a recession - and it looks like it could be a long and serious one - there's no way oil will be able to maintain its current pricing structure. At some point, the demand side of the equation will send oil and gas prices tumbling. Crude for September delivery lost $1.38, closing at $75.48.
The precious metals finally made headway, as the future looks all the more certain - gloomy - which is good for gold bugs. Gold rose $7.80 to $684.40, while silver added 16 cents to $13.16. A good hedge would be to buy as much silver as possible as soon as you can.
Happy hunting.
Head for the hills. Today was another in a continuing series of ugly trading sessions.
Dow 13,181.91 -281.42; NASDAQ 2,511.25 -64.73; S&P 500 1,433.06 -39.14; NYSE Composite 9,370.60 -248.73
Prior to the market opening, the Labor Dept. announced that July payrolls came in well below expectations of 135,000 new jobs, with the addition of just 92,000. According to some people's fudgy math, this translates into a 0.8% annual rate of growth which, by some accounts, would be sufficient to keep real GDP growth at the expected rate of 2.75% for the second half of the year. Dream on. The labor figures have been cooked, fried, refried, baked, grilled and fricasied to a point at which they are scarcely believable.
The day dawdled on until about 2:00 pm, when the floodgates opened and sellers spilled blood into the streets.
Market internals took a turn from nearly OK to horrific. Declining issues overwhelmed advancing ones at a 5-1 clip. New lows were once again beyond reason, with 792 issues (that's a whopping 13% of the whole market) hitting the skids. There were just 126 new highs.
Once again, the spreading contagion from the credit markets made it sensible to leave stocks alone. The US financial system, already under stress from years of government spending waste and an enormous trade deficit, is in tatters from the largely-unregulated mortgage business that is forcing people into foreclosure at record numbers.
While the big wigs in Washington - people like Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke - continue to spread the word that risks from the sub-prime mortgage mess are "contained" and "not serious", investors are taking whatever profits they have and leaving town.
The credit crunch even has people in the oil pits worried. Seriously, if there's going to be a recession - and it looks like it could be a long and serious one - there's no way oil will be able to maintain its current pricing structure. At some point, the demand side of the equation will send oil and gas prices tumbling. Crude for September delivery lost $1.38, closing at $75.48.
The precious metals finally made headway, as the future looks all the more certain - gloomy - which is good for gold bugs. Gold rose $7.80 to $684.40, while silver added 16 cents to $13.16. A good hedge would be to buy as much silver as possible as soon as you can.
Happy hunting.
Thursday, August 2, 2007
The PPT Plans to Save the Nation
They did it again.
It wasn't as dramatic as yesterday's 200-point move in 35 minutes, but there it was again, our guardians of the economy, the guiding hand of the Treasury, Federal Reserve, SEC and the Commodity Futures Trading Commission, acting in concert, pumped the Dow Jones Industrial Average another 120 points between 3:00 and 3:30 pm. They then allowed the market to readjust and close with another 100-point gain.
This time they took the NASDAQ along for the ride and left the S&P and the poor sister NYSE Composite behind; up, but by a lesser percentage than their favored 30 Dow stocks. The tally today was 25 gainers and just five losers within the Dow component stocks. Nice. Healthy. Bullscoot.
Dow 13,463.33 +100.96; NASDAQ 2,575.98 +22.11; S&P 500 1,472.20 +6.39; NYSE Composite 9,619.33 +46.28
The market internals were somewhat improved today, with advancers actually outdoing decliners by better than a 3-2 margin. New lows continued to lead new highs, however, 417-133. The markets are coming back toward equilibrium, but it's not going to last - the underlying forces of the sub-prime meltdown are simply too powerful.
Oil traded 33 cents to the upside, closing at $76.86. Gold and silver were up marginally, with silver right at $13.00 per ounce.
There are compelling reasons to buy into the metals, though those markets seem to be as manipulated - lower - as the Dow Jones. With Rupert Murdoch set to take the reins at the Wall Street Journal - a sad day for us all - the FOX is actually going to be in the hen house.
Make no mistake, the powers that be are in no mood to allow the Dow and other indices to drift lower. That said, it needs to be pointed out that the chances of making new highs are also quite remote. The credit markets are busting and the worst is still to come, right about time for a nice little election in the US, so the blame can be laid at the feet of the party soon to be (or already) in charge. History will be rewritten. It is every day, and it's all absolutely rubbish.
It wasn't as dramatic as yesterday's 200-point move in 35 minutes, but there it was again, our guardians of the economy, the guiding hand of the Treasury, Federal Reserve, SEC and the Commodity Futures Trading Commission, acting in concert, pumped the Dow Jones Industrial Average another 120 points between 3:00 and 3:30 pm. They then allowed the market to readjust and close with another 100-point gain.
This time they took the NASDAQ along for the ride and left the S&P and the poor sister NYSE Composite behind; up, but by a lesser percentage than their favored 30 Dow stocks. The tally today was 25 gainers and just five losers within the Dow component stocks. Nice. Healthy. Bullscoot.
Dow 13,463.33 +100.96; NASDAQ 2,575.98 +22.11; S&P 500 1,472.20 +6.39; NYSE Composite 9,619.33 +46.28
The market internals were somewhat improved today, with advancers actually outdoing decliners by better than a 3-2 margin. New lows continued to lead new highs, however, 417-133. The markets are coming back toward equilibrium, but it's not going to last - the underlying forces of the sub-prime meltdown are simply too powerful.
Oil traded 33 cents to the upside, closing at $76.86. Gold and silver were up marginally, with silver right at $13.00 per ounce.
There are compelling reasons to buy into the metals, though those markets seem to be as manipulated - lower - as the Dow Jones. With Rupert Murdoch set to take the reins at the Wall Street Journal - a sad day for us all - the FOX is actually going to be in the hen house.
Make no mistake, the powers that be are in no mood to allow the Dow and other indices to drift lower. That said, it needs to be pointed out that the chances of making new highs are also quite remote. The credit markets are busting and the worst is still to come, right about time for a nice little election in the US, so the blame can be laid at the feet of the party soon to be (or already) in charge. History will be rewritten. It is every day, and it's all absolutely rubbish.
Wednesday, August 1, 2007
Dow Funny Business
Realistically, a 152-point rise on the Dow will divert most people's attention away from the systemic economic problems faced by the US economy and the cynical pumping of selected stocks by the PPT (Plunge Protection Team, Working Group on Financial Markets).
Anyone paying a little closer attention (like me) would notice that the Dow outperformed the NASDAQ and NYSE Composite by nearly a full percentage point on the day and dragged the S&P 500 up 0.72% due to the overlap between the indices.
Dow 13,362.37 +150.38 (1.14%); NASDAQ 2,553.87 +7.60 (0.30%); S&P 500 1,465.81 +10.54 (0.72%); NYSE Composite 9,572.87 +18.37 (0.19%)
Also, only two of the 30 Dow stocks finished in the red. Contrast that to the broader market, where declining issues led the way over advancers, 3748-2602, or roughly 3-2. Hmmm... a 28-2 upside trouncing by Dow stocks, but a 3-2 downside whipping for the overall market? Somebody's toying with us.
Surely. Absolutely. Without a doubt.
There were 861 new lows to just 95 new highs. So, where's the happy pill? The US equity market is about as phony as a Tennessee 3-dollar-bill. Maybe worse. A quick study of the Dow chart for Wednesday, August 1, tells the real story.
The Dow zig-zagged across the flatline until about 3:30, when the Dow was down about 50 points. Since the manipulators could not stomach another down day (make that 5 up and 6 down since the most recent record-high close), they pumped it a full 200 points in the final 35 minutes of trading. Nice! But not really. There are serious problems, as evidenced by the numbers just presented and the late day rally was designed to keep the stock market and our failing economy off the evening news and front pages of newspapers.
Speaking of newspapers, one should begin to be vary wary of anything emanating from the Dow Jones newswire, now that mogul Murdoch has his claws firmly entrenched. The deal was supposedly struck yesterday - or the day before - and it's just another knife into the already-exposed hide of American journalistic integrity. Forget that. You now simply cannot believe anything you read, anywhere. It's all subject to spin and headline writers, wrappers and margin noters. US media is a near-total sham. (Trust me. I at least try to give your the truth.)
While the markets were toying with our psyches, pressure on oil prices eased, losing $1.68 on the day, to close at $76.53. Thank goodness. And you can call off the gold rush. It was down $3.40 to $675.90. Silver dipped 6 cents to $12.96. Those minimal drops may be just small enough to pique some buying interest. Considering the coming banking fiasco, I'd be buying the metals here. A year from now, it could look like a very prudent move. Besides, there really isn't much downside risk in either gold or silver at these levels. You may not make a killing, but you shouldn't lose any value to inflation either.
Anyone paying a little closer attention (like me) would notice that the Dow outperformed the NASDAQ and NYSE Composite by nearly a full percentage point on the day and dragged the S&P 500 up 0.72% due to the overlap between the indices.
Dow 13,362.37 +150.38 (1.14%); NASDAQ 2,553.87 +7.60 (0.30%); S&P 500 1,465.81 +10.54 (0.72%); NYSE Composite 9,572.87 +18.37 (0.19%)
Also, only two of the 30 Dow stocks finished in the red. Contrast that to the broader market, where declining issues led the way over advancers, 3748-2602, or roughly 3-2. Hmmm... a 28-2 upside trouncing by Dow stocks, but a 3-2 downside whipping for the overall market? Somebody's toying with us.
Surely. Absolutely. Without a doubt.
There were 861 new lows to just 95 new highs. So, where's the happy pill? The US equity market is about as phony as a Tennessee 3-dollar-bill. Maybe worse. A quick study of the Dow chart for Wednesday, August 1, tells the real story.
The Dow zig-zagged across the flatline until about 3:30, when the Dow was down about 50 points. Since the manipulators could not stomach another down day (make that 5 up and 6 down since the most recent record-high close), they pumped it a full 200 points in the final 35 minutes of trading. Nice! But not really. There are serious problems, as evidenced by the numbers just presented and the late day rally was designed to keep the stock market and our failing economy off the evening news and front pages of newspapers.
Speaking of newspapers, one should begin to be vary wary of anything emanating from the Dow Jones newswire, now that mogul Murdoch has his claws firmly entrenched. The deal was supposedly struck yesterday - or the day before - and it's just another knife into the already-exposed hide of American journalistic integrity. Forget that. You now simply cannot believe anything you read, anywhere. It's all subject to spin and headline writers, wrappers and margin noters. US media is a near-total sham. (Trust me. I at least try to give your the truth.)
While the markets were toying with our psyches, pressure on oil prices eased, losing $1.68 on the day, to close at $76.53. Thank goodness. And you can call off the gold rush. It was down $3.40 to $675.90. Silver dipped 6 cents to $12.96. Those minimal drops may be just small enough to pique some buying interest. Considering the coming banking fiasco, I'd be buying the metals here. A year from now, it could look like a very prudent move. Besides, there really isn't much downside risk in either gold or silver at these levels. You may not make a killing, but you shouldn't lose any value to inflation either.
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