Stocks Finish Week Badly

The only catalyst needed to send stocks into a pre-holiday funk was word that existing home sales fell for the 8th time in the last nine months. Right from the opening bell, investors were selling and getting out of town.

Market lows came early on - prior to noon - and stocks drifted in a negative range all session long. And while the housing news was widely expected, it served as just another reminder that the US economy has a long way to go towards recovery.

e Dow 12,479.63 -145.99; NASDAQ 2,444.67 -19.91; S&P 500 1,375.93 -18.42; NYSE Composite 9,315.78 -117.57

Declining issues outpaced advancers by the widest margin of the week, 4335-1742. New lows opened a huge gap over new highs, 212-65, the widest in weeks.

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Even though volume was very light - typical of a pre-holiday get-away - the hangover effects of a horrible end to the week will certainly spill over into the final week of May and into June, a period normally highlighted by sluggish trade and nitpicking over corporate details.

Many investors find that May-August are best spent on the beach or the vacation home and a rally this summer would certainly be something of a lark.

Crude oil regained $1.38 to close out the week at $132.19, while gold advanced $7.50 to $925.80 and silver edged 27 cents higher to $18.29.

All told, the Dow lost 3.5% for the week with other major indices following suit.

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NYSE Volume 1,105,550,000
NASDAQ Volume 1,727,578,000

Wall St.: Going Nowhere, Slowly

The markets traded in a tight, positive range on Thursday, on extremely low volume characterized by choppiness all session long.

Little more can be said about one of the most lackluster sessions in recent memory.

There was no shocking news on the housing front (wait until tomorrow for that, when Existing Home Sales data is released), few analyst advisories of note, no big Fed speeches or astounding earnings figures.

It was a relief, of sorts, after two consecutive days of deep declines. Investors have to weigh the relative merits of buying into new positions or taking profits as we head into a long and very uncertain summer.

Dow 12,625.62 +24.43; NASDAQ 2,464.58 +16.31; S&P 500 1,394.35 +3.64; NYSE Composite 9,433.35 +36.32

The price of oil on the futures market actually took a breather for a change, dropping $2.36, to $130.81. It's almost as though the schemers in the futures pits realize that the entire world's attention is now focused on them and it was time to take a little froth off the top.

As I've mentioned here previously, oil and energy prices hold the potential for worldwide economic maladies, forcing all manner of inequities in prices for food, especially, and just about any other aspect of human life. Speculation in oil futures has been largely overblown, and, like any orderly market, some kind of correction should be on the horizon.

The oil markets, however, are obviously not orderly. In fact, they are one among the most misunderstood and unregulated of any commodities. There simply are too many sources of data and conflicting readings for anyone to actually have a handle on the true value of a barrel of crude.

Thus, the futures take the path of least resistance, and possibly that of outright manipulation, heading up. Bringing down prices will almost certainly take something approaching an act of God, since there is no hard-and-fast pricing mechanism. Only one thing is certain. We all pay more for heating homes and driving autos.

Advancing issues took a slight edge over decliners, 3476-2548, though new lows once again trumped new highs, 180-91. The recent see-sawing between the new highs-lows and advance-decline metrics continues to suggest more sideways trading with a bearish bent.

It is worth noting that today's spread between the new lows-highs (89) is among the largest in recent vintages.

Gold lost $10.80 to $918.30, while silver dropped just 3 cents to close at $18.03.

With tomorrow the final session before a three-day weekend, another 100+ point loss on the Dow would not be surprising in the least, though another day just like today is probably more likely.

NYSE Volume 1,187,776,000
NASDAQ Volume 1,964,569,000

Markets Mashed Again

Taking its cue from yesterday's day-long sell-a-thon, investors took some time Wednesday morning determining the direction of the market. The major indices hugged the flatline or traded slightly negative all morning, but, by 2 PM, the selling had accelerated into another rout of the bulls.

Dow 12,601.19 -227.49; NASDAQ 2,448.27 -43.99; S&P 500 1,390.71 -22.69 NYSE Composite 9,397.03 -138.98

The precipitous drop in stocks coincided with the release of minutes from the Fed's April meeting. The Fed governors apparently were very close to not cutting rates at all (they cut federal funds .25%) and indicated that the economy was very weak, with stresses from the high price of oil, gas and food; credit issues; and continued weakness in the housing market were paramount concerns.

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Once again, oil exploded to another record high price, settling at $133.17, up a dramatic $4.19 in just one day. This also contributed to the selling of stocks, with oil markets reacting to a large, unexpected drop in US crude inventories.

Normally, Fed minutes and oil inventory figures would not prompt such a strong reaction, but, given the market's jittery current composition, sentiment sent stocks to shocking new lows.

Speaking of new lows, there were 216 of them, compared to 204 new highs, somewhat of a surprise considering the breadth and depth of the sell-off. With trading characterized best as "one-sided," decliners outnumbered advancing issues, 4201-1820. These internal figures are still rather modest. More concerted selling and borderline panic would show the gap between new lows and highs much more pronounced, while the decline-advance ratio would be more like 4-1 or 5-1, rather than today's 2-1 ratio.

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With only two sessions remaining before a three-day holiday weekend, it's difficult to see investors staking out significant positions in stocks on Thursday and Friday. More likely, the markets will mark time, squaring up solid positions while dumping weak sisters.

Now that the markets have broken out of their tight 4-week trading range (see yesterday's posting), the stage is set for a retest of the March lows. This could occur rapidly, as sentiment has turned decidedly negative of late, but a gradual drift back to 12,000 seems to be in the cards over the coming two weeks.

The metals continued their sustained rally, with gold advancing $8.40 to $928.60 and silver gaining 33 cents to $18.05.

NYSE Volume 1,389,451,000
NASDAQ Volume 2,192,166,000

Stocks in Full Retreat Mode

Stocks continued their 23-session-long see-sawing as indeterminate investors pushed the major indices back down throughout the day on Tuesday.

Using the Dow as a guide, the markets have traded in roughly the same range since April 18. During that span, the blue-chip index has seen a maximum closing low and high of 12,745 and 13,058, a stretch of just over 300 points, or, just a bit more than 3%.

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The sideways trade is frustrating for both longs and shorts. Direction must be determined at some point, and one likely scenario (bearish) is for a full-blown shakeout back to retest the March lows. Bulls will say the market is consolidating at a new level for a burst higher. Either condition could prevail. In the absence of corporate earnings until mid-July, news, economic reports and consensus opinion will determine direction over the near term.

Dow 12,828.68 -199.48; NASDAQ 2,492.26 -23.83; S&P 500 1,413.40 -13.23; NYSE Composite 9,536.01 -66.77

Not unexpectedly, advancing issues took a back seat to a deluge of decliners, 3795-2264. New lows regained the edge over new highs as well, 182-143.

The major catalysts on the day were more bleak news from the financial center, as Oppenheimer analyst Meredith Whitney predicted the credit crisis would continue into 2009. First quarter results from Home Depot (HD, 27.37, -1.50) beat lowered estimates, but still were disappointing. The PPI shot up 0.2%, with core PPI up more than expected, 0.4%. Naturally, the price of oil continued to another record close. The superfecta of bad news just was too much to overcome.

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Oil shot up another $2.26, to close at $128.98. Gold gained $14.40 to $920.20. Silver improved 70 cents to $17.73 per ounce.

Essentially, it was a bad day to hold anything you couldn't touch or feel.

The balance of the week doesn't hold much promise with few economic reports due. Only April existing home sales on Friday at 10:00 am offers a blockbuster number, and that could be very bad, as has been the case since August of last year.

I remain somewhat bearish, though mindful that the market could take off without any kind of impetus. However, we've witnessed a triple top in the 13,020-13,058 range and the market just can't seem to break through that level.

NYSE Volume 1,236,900,000
NASDAQ Volume 2,018,207,000

Reversal of Fortune

The kind of action seen today on the indices is usually reserved for a Turbulent Tuesday or a Turnaround Thursday, but today being Monday, we'll just have to call it an Afternoon About-face.

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When the Conference Board released their Index of Leading Economic Indicators for April, investors bought up stocks based on the second straight monthly gain of 0.1%.

By mid-afternoon, with all the indices up smartly (the Dow hit an intraday high of 13,136.39), the reality of such a smallish gain just hit traders over the head like a bag of hammers and brisk, widespread selling began in earnest, taking the Dow down to nearly break-even and sinking the other indices into the red, especially the NASDAQ, which suffered the worst decline of the day.

Dow 13,028.16 +41.36; NASDAQ 2,516.09 -12.76; S&P 500 1,426.63 +1.28; NYSE Composite 9,602.78 -0.23

Outside of the Conference Board's report, there was little else upon which to hang a rally as stocks lost value late in the day even more quickly than they gained in the AM. Again, the catalyst may have been oil or just sentiment that the market is basically outrunning itself ahead of expectations that sent stocks sliding, but, whatever it was, it certainly looked serious, with the drops coming all of a sudden or in waves of high volume.

Internals were expectedly mixed, with declining issues beating advancers, 3336-2708. New highs continued to lead new lows, 248-154, suggesting that there's more from where this rally has come.

Crude oil closed with a gain of 77 cents to $127.06 -another record. The metals crossed key thresholds as gold advanced $5.90 to $905.80 and silver gained 7 cents to close at $17.03 per ounce.

The market is continuing to send mixed signals, though the bias is beginning to tilt towards the positive. Many in the market remain unconvinced, however, as today's sell-off surely showed.

NYSE Volume 1,149,216,000
NASDAQ Volume 2,263,051,000