Wall Street Rallies Back

In the face of a continuing credit crisis, a woeful housing market and whispers of recession in the air, US investors drove stocks forward for the second straight day.

Dow 13,289.45 +331.01; NASDAQ 2,662.91 +82.11; S&P 500 1,469.02 +40.79; NYSE Composite 9,791.05 +269.29

Early news to the markets was less-than-jovial, with the National Association of Realtors announcing the 8th consecutive month of lower existing home sales, news that the market had expected. Unexpected was the pronouncement by Fed Governor Donald Kohn, who told the Council on Foreign Relations in New York, "should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses."

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Additionally, Kohn mentioned that the Fed would remain "nimble" in the face of any setbacks. Fed watchers took this as a clear signal that the Federal Reserve would vote to reduce the federal funds rate another 1/4 point at its next meeting, December 11.

While that can hardly account for the massive run-up in stocks over the past two days - the best two day performance in five years - most of the financial press was heralding more rate cuts (and the coincident weakening of the dollar) as the savior for the sickening US economy.

The financial news is nearly as insipid and useless as what passes for mainstream media these days. They swallow even the most blatant lies from corporate types and it seems as if the scripts for the never-ending rally have been penned by out-of-work Hollywood screenwriters.

Everybody's a pitch man and the news is always upbeat and jovial. With Rupert Murdoch taking over the Wall Street Journal and launching his own Fox Financial Network, it's likely to get worse before it gets better.

There's little in the way of honest analysis, as every word is spun to the positive, led all the way by the drooling cheerleader Jim Cramer on CNBC.

So, today's rally can be seen as a victory of sorts of media over material reality. Nothing really changed in the overall economic scheme other than the minds of the investing horde.

In any case, advancing issues got the nod over decliners, 5343-1095. New lows retained their long-standing advantage over new highs, however, 325-131.

More upbeat news came the way of the oil trade, where crude slid another $3.80 on the day, closing at $90.62. Gold lost $14.00 to $807.20, and silver fell 15 cents to $14.53.

Despite the two days of gains in the markets, there are still storm clouds on the horizon, if not directly overhead. Bear in mind that Wall Street's gains were predicated on the notion that the economy would continue to lose steam, prompting Fed cuts. It's simply pretzel logic at it's very best.

Please, don't swallow the whole thing at once.

NYSE Volume 4,610,242,500
NASDAQ Volume 2,543,293,000

Volatility and Violation

Stocks surged today on all major exchanges, despite generally dour economic news, including another poor reading on consumer confidence and a report on existing home sales which was also market-deflating.

Consumer confidence fell to 87.3, from 95.6 in October. Analysts were expecting a reading of 92.0. The S&P/Case-Shiller Home Price Index showed a 4.5% year-over-year decline for the 3rd quarter, adding more fuel to the sub-prime/housing/credit fire.

Stocks, which were buoyed at the open by news that CitiGroup (C) would receive a $7.5 billion injection of cash from the Abu Dhabi Investment Authority for a 4.9% stake in the troubled financial firm, fell quickly at 10:00 am when both the consumer confidence and home sales figures were released.

Dow 12,958.44 +215.00; NASDAQ 2,580.80 +39.81; S&P 500 1,428.23 +21.01; NYSE Composite 9,521.76 +132.26

But, in a day full of volatility and violation of key support and resistance levels at various times, stocks soared to intra-day highs before and after the noon hour, with the Dow leading the way - at one point up more than 240 points.

The afternoon witnessed a series of rapid sell-offs and rebounds, culminating in a mammoth 100-point spike with half an hour left in the trading day.

Despite the rise, stocks continue to be mired in a negative funk, though recently the markets have become extremely volatile. Stocks were up sharply on Friday, down hugely on Monday, only to be followed by Tuesday's massive upswing.

Inside the markets, advancers beat decliners, 3978-1421, though new highs were trounced again by new lows, 666-80. The bias continues explicitly to the downside.

Commodities contributed to some of the upside in stocks. Oil for January delivery lost $3.28 to $94.42 on the NY Merc. Gold lost $12.50 to close at $814.00, while silver fell 35 cents to 14.49.

While buyers were dancing through most of the day, Wednesday could bear witness to another dramatic turn around. The National Association of Realtors (NAR) announce their own reading on existing home sales at 10:00 am and crude inventories - which have been next-to-impossible to predict recently - come out at 10:30 am.

While the news from the NAR is somewhat predictable, an unexpected decline in oil and gas reserves could trigger more price gains in crude and derail any chance of a continuation of today's rally.

Of course, considering today's wicked trading patterns, there's also the possibility of insiders working the markets to the upside, in their ongoing effort to prevent the inevitable meltdown.

The Abu Dhabi investment in CitiGroup serves as clear evidence that America is losing ground in the war on terror. While we have yet to suffer another attack, the original main target - financial companies - are now being bought by Arab nations, along with plenty of other American companies.

In the long run, it may be best to just sell out to foreigners - for now. When the investments go bust, American taxpayers and investors will be able to pick them up on the cheap.

NYSE Volume 4,273,844,000
NASDAQ Volume 2,220,407,250

Stocks Trampled Into Correction

Remember that little 180-point Black Friday rally on the Dow?

Well, forget about it. On Monday, the Dow wiped out all of that half-session gain and then some, pushing the Dow into negative territory for the year and the blue chip index officially into a correction - down 10% from the highs.

Dow 12,743.44 -237.44; NASDAQ 2,540.99 -55.61; S&P 500 1,407.22 -33.48; NYSE Composite 9,389.50 -193.48

Additionally, Monday - the first full day of trading during the "holiday season" - saw the S&P 500 fall into negative territory for the year.

The NASDAQ fell into "correction" territory as well, off its October 31 high of 2859.12. It has shed more than 11% of its value in less than a month - 17 trading sessions.

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As usual, the main culprit for the fall in US equities was the continuing credit/mortgage/housing crisis. Two stories were front and center on the topic. CitiGroup (C) announced that another round of cost-cutting might include layoffs, and financial network CNBC commented that the layoffs could number 45,000.

Embattled lender Countrywide Financial (CFC) was the subject of a letter from NY Senator Charles Schumer, who sought a probe of more than $50 billion Countrywide borrowed from the Federal Home Loan Bank system.

Countrywide fell $1.01, or 10 percent to $8.64, while CitiGroup slumped 1.00 (3.15%) to $30.70.

In the overall market, declining issues led advancers, 4843 to 1603, a ratio of better than 3 to 1. New lows surged to 627, as opposed to 99 new highs. While housing and credit are getting most of the headlines, the declines are being seen in all market segments.

Oil dropped 48 cents to settle at $97.70 per barrel on the New York Mercantile Exchange. Gold and silver posted modest gains, though commodities were barely the focus of Monday's trading.

The 200-point decline on the Dow was the 6th of that magnitude this month, making November easily the worst month for the markets this year. In all, the Dow has lost 1187 points during the penultimate month of 2007.

NYSE Volume 3,706,467,250
NASDAQ Volume 2,019,342,250

Dow Pounded to 7-Month Low

In a wild, pre-holiday session on Wednesday, the Dow Jones Industrials, with all other major indices in tow, crashed through near-term support levels and closed at a 7-month low.

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The April 17 close of 12,773.04 was the last time the Dow closed below 13,000, leaving the blue-chip average up just 336 points for the year, or just over 3%.

The NASDAQ and S&P 500 closed at a 3-month low, the NASDAQ just 20 points above the lows registered in August, while the S&P ended 10 points higher than the August 16 low. While the NASDAQ is still trading up 4% for the year, the S&P fell into negative territory for 2007. The widely-watched average closed at 1418.30 on December 31 of 2006.

The NYSE Composite Index, the broadest measure of stocks, remained well above the August 16 low of 9,087.10 and remains in positive territory for the year.

Dow 12,799.04 -211.10; NASDAQ 2,562.15 -4.66; S&P 500 1,416.77 -22.93; NYSE Composite 9,405.22 -170.07

The decline on the Dow was the 5th session registering a loss of 200 or more points and is perilously close to being technically in a correction (down 10%). From it's high, the Dow would have to close below 12,748. Unless Wall Street investors are capable of pulling multiple rabbits from their hats, the Dow will be in a correction by next week.

Credit fears continue to dog the markets and soon the consumer will take center stage, as the holiday shopping season commences on Black Friday, the day after Thanksgiving. Prospects for a buoyant Christmas season are dim for many retailers, who see consumers as tapped out and spending less due to high gas prices, fears of an economic downturn and housing woes. Credit card debt is at an all-time high and more consumers are using credit cards for everyday purchases, an ominous sign.

Measuring market internals, declining issues outpaced advancers, 4578-1788. New lows rang in at 876, with only 67 stocks marking new highs. Both the gap between the new highs/lows and the minuscule number of new highs are alarming and sending strong sell signals.

The price of a gallon of oil remained persistently high, although crude lost 74 cents to $97.29. Gold was up $7.20 to close at $798.60, while silver slipped 8 cents to $14.42.

With all the turmoil and volatility in US markets, the final five weeks of the year should pose significant problems for investors. Adding to the woes of an already troubled - and increasingly skittish - market are concerns about year-end tax selling in addition to what appears to be an uphill climb for retailers this holiday season.

With Thanksgiving tomorrow, investors are probably thankful they still have the opportunity to trim losses, though finding stable stocks to purchase may be a challenge.

NYSE Volume 4,141,169,750
NASDAQ Volume 2,079,205,875

Wild Wall Street Ride

Stocks zigzagged their way to positive closes on the major indices Tuesday, thanks to a late day "miracle" rally, largely credited to a spike in the price of oil and subsequent gains by ExxonMobil (XOM), which finished higher by 3.71 points at 87.82.

What's interesting and almost laughable about that explanation is that higher oil prices are not good for most stocks, only oil stocks, so why did the NASDAQ erase a 34-point decline and close up 3.43? Surely the tech-laden NASDAQ is largely insensitive to oil prices.

The absolute, no-doubt-about-it truth of the matter is that the Plunge Protection Team (PPT) was busy keeping the markets from collapsing again. As it was, the Dow, which was up as much as 150 points early on, lost all of that and was down over 100 points between 2:00 and 3:00 pm. When the PPT got to work on pumping the various market futures, the Dow rose from -80 to +80 in a matter of roughly 20 minutes. All other indices saw similar gains.

Supposedly, these infusions of buying by the Fed, Treasury, and their agents - the brokerages - are good for the market. That might be true if you are ignorant and holding stocks currently, but anyone with a working brain has long since left the market or is short the market. Short-sellers need honest markets, too, and these markets are anything but honest.

Dow 13,010.14 +51.70; NASDAQ 2,596.81 +3.43; S&P 500 1,439.70 +6.43; NYSE Composite 9,575.29 Up 77.96

As usual, proof that the "rally" was a phony as our president lies in the advance/decline line.Declining issues outpaced advancers 3471-2946. New lows cracked the century mark at 1028, as compared to a paltry 92 new highs. Sure the market was up. Inflation, $100/barrel oil, a corrupt federal administration and a credit crisis as severe as any one since the Great Depression naturally sends investors out seeking overpriced stocks with buy orders in both hands. Sure.

The whole rigged racket is droll, so obvious, so blatant and so ignorant that it is often difficult to write about it. I personally want to throw up my hands in disgust whenever I see these absurd price gains across the entire market. Veterans of the exchanges must have gotten used to the abuse by now though mostly they remain silent. After all, their jobs are at stake.

Oil was up $3.39 to close at $98.03. Gold was higher by $13.40 to $791.40. Silver gained 35 cents to close at $14.51.

Thank God Wednesday is a short session. The trading action is highly suspect and I need a break.

NYSE Volume 4,806,186,000
NASDAQ Volume 2,641,784,250