Bank Failures Spook Wall Street

Monday was another in a series of bad days for investors as a pair of bank failures over the weekend rocked the stock market once again, sending the major indices down 2% on average.

Forex Beginner's Resource Website
Forex Foreign Currency Exchange Trading Beginner's Resource Center.

forexforexforexforex.com

Amidst one of the most serious economic crises in US history, investors of all stripes are losing faith in not only the financial sector, but government leaders and institutions that were supposed to be a safeguard against the kind of wholesale collapse which seems to have overtaken the US economy.

Over the weekend, the FDIC closed two undercapitalized regional banks - First National Bank of Nevada and First Heritage Bank - the sixth and seventh bank failures of 2008. The news was not widely spread until Monday's market open and it hit investors like a ton of bricks.

While the Dow was up briefly in early morning trading, the other indices fell quickly into the red and spent the rest of the day under the flat line and losing ground. Stocks ended at their lows of the day.

Dow 11,131.08 -239.61; NASDAQ 2,264.22 -46.31; S&P 500 1,234.37 -23.39; NYSE Composite 8,260.19 -135.39

Selling was broad-based, with all 10 sectors posting losses. Decliners buried advancing issues by a nearly 3-1 margin, 4611-1660. New lows continued to dominate new highs, 240-71.

Substantial Wealth and Riches Creation
The Path of Substantial Wealth and Riches: Your Parents' Influence on Your Finances
substantialincomes.com

Today's close on the Dow was just 168 points above the recent mid-July bottom of 10,962.54. The other averages are also nearing their recent lows. Volume was very light, but the selling pressure was relentless.

Oil rose $1.47, to $124.73. The metals continued to demonstrate weakness, with gold up a mere 90 cents, to $937.80 and silver off 9 cents, to $17.47 the ounce.

As second quarter earnings continue to roll out, investors are not pleased nor in a mood for any kind of speculation going forward until there is some cataclysmic event or resolution to the housing/credit mess.

NYSE Volume 1,173,196,000
NASDAQ Volume 1,967,769,000

Durable Goods Bump Helps Stocks

Of late, economic news has been more or less discouraging to investors, but the week ended with some upbeat data on durable goods orders, which increased by 0.8% when analysts were expecting a downturn of -0.3.

That bit of positive news was enough to boost the averages into a higher close at week's end.

Dow 11,370.69 +21.41; NASDAQ 2,310.53 +30.42; S&P 500 1,257.76 +5.22; NYSE Composite 8,395.58 +25.67

Volume on the exchanges was typically light for a mid-summer session and somewhat of a relief after Thursday's deep drubbing.

Advancing issues finished ahead of decliners, 3654-2561, though new lows retained their edge over new highs, 236-99.

Forex Beginner's Resource Website
Forex Foreign Currency Exchange Trading Beginner's Resource Center.

forexforexforexforex.com

The price of crude oil continued its descent, dropping another $2.23, to $123.26. The metals rebounded slightly after days of losses. Gold was up $4.60, to $936.90; silver gained 8 cents to close at $17.38.

Corporate earnings were also generally pleasing, with no downward surprises or 3rd quarter warnings from companies reporting, but, despite the spate of good news, the markets were choppy and directionless.

Investors are still uneasy and uncertain. Housing, banking and credit continue to be the main sources of concern and those are simply not going to improve readily. Additionally, layoffs and unemployment are seen as rising over the next few months. A weak labor market may emerge as the greatest threat to economic expansion. These conditions will likely continue until at least the November elections.

NYSE Volume 1,287,772,000
NASDAQ Volume 2,016,542,000

Stocks Routed on Housing, Labor Fears

If the stock market and economy wasn't so dreadful, one might say it's a "funny" market, though there doesn't seem to be much news lately that would engender smiles or even a modicum of happiness or contentment.

On Thursday, the National Association of Realtors (NAR) announced that existing home sales in June fell by 2.6% from the prior month and were off 15.5% from a year ago.

The market had already been spooked prior to the open by unemployment data, which showed initial claims rising to 406,000 in the most recent week. When the NAR release hit the streets, the rout was on, as investors began unwinding positions, many of which were just begun a week earlier.

So much for the 650 point rally the Dow staged over the prior six sessions. In one day, nearly half of the gains were eviscerated.

Once again, the troublesome part of all this is that Wall Street - the geniuses who got us all into this mess to begin with - should have been anticipating more bad news and failed to do so. There has been absolutely no talk of a bottom being put in and investors who thought it was safe to venture into the market again were handed their hats and walking papers.

Dow 11,349.28 -283.10; NASDAQ 2,280.11 -45.77; S&P 500 1,252.54 -29.65; NYSE Composite 8,369.91 -210.66

The declines were broad-based, as decliners led advancers by a wide margin - more than 3-1 - 4739-1559. The moderation in new highs-lows was evident once more, however. There were 239 new lows to just 86 new highs, not a very large spread.

Crude oil gained $1.05, to $125.49. Gold lost another 50 cents, to $922.30, while silver gave back 16 cents, at $17.30.

Winnipeg Theme Room Hotel Rooms
Enjoy all the comforts of home on your next trip.
qualityhotelwinnipeg.com

Corporate earnings continue to come in as a mixed bag, though firms showing exceptional second quarter results are few and far between.

This is a very dangerous market, one that is best avoided by buy-and-hold types at the present time. Wild swings have become the norm, a wonderland for astute and wily day-traders.

The bias is still to the downside long-term, while predicting short-term trends has become a task not even psychics wish to undertake. It's like trying to figure out when a manic depressive's mood will change.

Keeping in touch with trends is more important than ever. These are both exciting and depressing times for traders.

What fun!

NYSE Volume 1,534,348,000
NASDAQ Volume 2,545,402,000

Oil, Gold Signaling Recession

While the stock exchanges all recorded another positive session, the sudden, explosive price drops in oil, fold and silver are sending unmistakable signals of an upcoming recession.

High prices for food and energy may have been the tipping point for the US economy and certainly, those prices have already led to riots and disturbances in a handful of emerging nations.

When oil hit $145 per barrel and gas prices spiked above $4.00 per gallon in the US, even the ordinary citizen knew that level of gouging was unsustainable and the inevitable occurred - people began changing habits, buying less, conserving more and generally putting the brakes on the demand side. American consumers were already exceptionally strapped as it was, high prices just exacerbated the pain and suffering.

$100 Car Payments
Edmonton, Vancouver, Bad Credit, Divorced, Bankruptcy OK. Apply online.
secondchancefinance.ca

What we're currently witnessing is one of the marvels of the modern free market system. Prices are coming down post haste. The market is making the adjustment without intervention.

The problem is that the forces which pushed prices higher - mostly speculation and fear - are now out of the picture, having been replaced by conservation and prudence and that's really being manifested in the metals and oil markets.

Oil dropped another $3.98, ending the day at $124.44. Gold fell by a stunning $25.70, to $922.80, and silver lost 55 cents to $17.46. The systematic unwinding of futures and hard positions has been underway for the better part of three weeks and is accelerating.

Recessions are widely defined as negative growth, but two elements that are usually in play are job losses and negative pricing pressure. In the absence of a stable, growing labor force, companies have trouble raising prices, which, in turn, puts pressure on profits and cyclically engenders even more layoffs. The cycle is beginning to churn more swiftly of late, and there's little the Fed or any governmental agency can do to slow it or stop it.

Dow 11,632.38 +29.88; NASDAQ 2,325.88 +21.92; S&P 500 1,282.18 +5.18; NYSE Composite 8,580.57 +13.92

As for stocks, advancers beat decliners, 3791-2515. New lows remained ahead of new highs, 187-133, much closer to parity than at any time over the past 2+ months. Once this reading breaks in favor of the new highs, expect it to last for some time - maybe two to three weeks - before markets begin heading lower again.

Forex Beginner's Resource Website
Forex Foreign Currency Exchange Trading Beginner's Resource Center.

forexforexforexforex.com

That particular metric is going to become a more difficult read in coming weeks. Remember that the first wave of the bear market began in August of 2007, so it has been nearly a year of declining fortunes on Wall Street. Making more new lows is going to be difficult and we may see some days when the markets are sharply lower but there are more new highs than new lows.

With over 100 companies reporting earnings on the day, the major news was that $25 decline in gold. If gold price cracks, expect everything else to come tumbling down as well. All goods and services will be less expensive, but, how many people will have jobs - and money - to buy the newly-lower-priced items?

Something to ponder over the next 6-9 months.

NYSE Volume 1,725,843,000
NASDAQ Volume 2,726,705,000

Suspicious Surge Sends Stocks Soaring

Stocks on US indices dawdled along through most of the session, with the major indices just barely breaking into positive territory. That tepid mood was shattered in the final 45 minutes, as a trading frenzy sent the Dow - which was up only 30 points at 3:15 pm - up an additional 100 points. The other major indices responded in similar fashion.

Dow 11,602.50 +135.16; NASDAQ 2,303.96 +24.43; S&P 500 1,277.00 +17.00; NYSE Composite 8,566.65 +66.91

As these kinds of surprise surges have become more commonplace of late, this one was a bit more spectacular than most, whether it was the PPT plying their trade, or short sellers in a rush to cover, the result was a parabolic rise that sent waves of euphoria across the financial world.

Winnipeg Theme Room Hotel Rooms
Enjoy all the comforts of home on your next trip.
qualityhotelwinnipeg.com

Much of those good feelings have been felt in the financial sector, which is up a stunning 25% over the past five sessions. Leading the way are the major commercial, regional and specialized banks.

The entire sector movement is curious... and probably overdone. These are the same characters that caused the current and ongoing crisis, and there's no good evidence that the danger has completely passed. This looks more like organized buying and some degree of speculation that the Fannie Mae and Freddie Mac episode marked the ultimate bottom of the market.

As much as anyone would like to call an end to our economic malaise, it's not like the Fed and Treasury waved a magic wand and made everything and everyone whole. Wachovia Bank (WB), which reported today, posted an $8.9 billion loss for the second quarter, cut its dividend 87% and announced layoffs affecting 10,750 people, mostly in the mortgage departments of their business.

$100 Car Payments
Edmonton, Vancouver, Bad Credit, Divorced, Bankruptcy OK. Apply online.
secondchancefinance.ca

So, for people working and living in and around Charlotte, NC, where the bank is headquartered, the gains on Wall Street are a real slap in the face. Following those wretched results, Wachovia ended the day higher by 27% (16.79, +3.61). Of course, that's still a far cry from Wachovia's high of 53 last October, but there's little doubt the market today has divorced itself from reality.

Home foreclosures are still running at a record rate. The dollar's decline continues unabated. Oil, while down somewhat of late, is still pricey. Over 100 banks in this country are in danger of failing, and the kicker, layoffs, have just begun to stir. Two months from now, the upward moves of the past week will look silly in retrospect.

Huge Profits in Options
Stocks go up, stocks go down. Make money in both directions with monthly options advisor newsletter.
optionsadvisor.php

This move is either technical - a condition of an oversold market - or pure fiction put out there by the slimy Wall Street and government manipulators who don't want the American people to know the truth. It's probably a bit of both.

On the day, gaining stocks rolled past losers, 4278-2009. New lows continued to beat down new highs, 211-105.

Oil finished lower by $3.40, to $128.42. Gold was slapped down $15.20, to $948.50 and silver lost 42 cents to $18.01 the ounce. As has been the case recently, commodities are being slammed back to earth by slack demand. Nobody wants to pay high prices and many have sought alternatives. It's the market, and it works.

Stocks are likely to continue on their merry way through next week as earnings pour in with sullen results, but brokers call it the end of the line and good times are just around the corner.

They're mostly liars and con men, people who think the economy is in good shape. It's about to fall over a cliff, and a steep one at that. The rallies of the past five sessions have the fingerprints of Ben Bernanke, Henry Paulson and their agents at Goldman Sachs, Lehman Bros. and Merrill all over them.

NYSE Volume 1,377,470,000
NASDAQ Volume 2,546,640,000