At long last the market responded to extreme oversold conditions and ramped up for the biggest gains of the year.
Dow 6,926.49, +379.44 (5.80%)
Nasdaq 1,358.28, +89.64 (7.07%)
S&P 500 719.60, +43.07 (6.37%)
NYSE Composite 4,499.38, +273.07 (6.46%)
The impetus was provided by Citigroup CEO Vikram Pandit's comment that his beleaguered bank had performed well enough to be profitable (minus some odious one-time charges and government money) over the first two months of the year.
It was more than likely nothing more than than a well-timed fabrication, but investors were so starved for any kind of good news, they bought it and ran with it. The resultant gains will probably last for some time, as the market is simply worn out from selling. In fact, there's nothing resembling even the slightest resistance in the charts all the way up to 8000 on the Dow, so this could turn into a lengthy, extended bear market rally.
This move is off fresh multi-year lows, so there's no telling where stocks will go from here, though it was pleasant to see such enthusiasm over such a broad base of stocks.
Advancers absolutely trounced declining issues, 5815-863, about a 7-1 ratio. Still, new lows maintained their long-standing edge over new highs, 354-14, so, obviously, there's more work to be done before anyone starts calling a bottom, though another day or two on the upside will bring on the perma-bulls. Volume was also very strong, another factor that will bring out the bellows for a bottom being in place, which is probably more wishful thinking than actual analysis.
NYSE Volume 2,186,757,000
Nasdaq Volume 2,424,305,000
Commodities, for the most part, were the one area that did not participate in Wall Street's celebration. Oil fell $1.31, to $45.71. Gold dropped $22.10, to $895.90, back under the $900 barrier, and silver sold off in sympathy, losing 40 cents, to close at $12.54. a multi-week low.
To illustrate the absurdity of today's gigantic move forward, Citigroup was up a whopping 38%, gaining 40 cents to $1.42. Noting that, Pandit's baby will have to double and then almost double again in order for many fund investors to actually be able to trade in the stock under their charters. Citi has been under $5/share for nearly two months, and now that the United States owns roughly 36% of the company - about 6 shares for every person in America - the entire population should be beaming that they own such a hot investment.
Of course, I'm being cynical, because Citi is not a very sound bank. They, along with Bank of America, AIG and JP Morgan Chase have all been the recipients of government largesse, and are largely unsound and quite possibly insolvent. That's why there was an urgent need to "talk up" the market. Just about everybody with a high school education is angry at the banks and the government, so a rally was ordered up and they got it, in spades.
Not like this rally wasn't predictable, markets don't go straight down (as they have been) for long without some kind of snap back. The tricky part will be determining when it all falls apart again and the bears take over. It could be 3 months or 3 days.
The best trades in the world are the short term variety, and this is a perfect spot for experienced hands with steel in their veins.
Tuesday, March 10, 2009
Monday, March 9, 2009
No News, Stocks Lose
In a very choppy trading session, the major indices fell further to the downside on Monday, as investors were largely left without guideposts. There were no meaningful economic reports nor corporate releases upon which to trade, so the overwhelming overhang of a continuing negative feedback loop sent investors bailing again.
Dow 6,547.05, -79.89 (1.21%)
NASDAQ 1,268.64, -25.21 (1.95%)
S&P 500 676.53, -6.85 (1.00%)
NYSE Composite 4,226.31, -58.18 (1.36%)
Stocks opened lower at the open, but quickly rebounded and traded in positive territory for a while, but by 11:00 am, the bears had taken control again. The only encouraging news was merger-related, though the combinations were deemed dilutive to two companies, one a Dow component: Merck (MRK) and Dow Chemical (DOW). In the pharma sector, Merck signed definitive agreements to purchase Schering-Plough for $41.1 billion in stock and cash. Dow Chemical, meanwhile, convened talks with buyout target Rohm & Haas to resolve thorny issues which have resulted in litigation. Merck lost 1.75, to close at 20.99, the largest percentage decliner on the Dow at a loss of 7.78%. Dow Chemical lost 0.79, to close at 6.32, an 11% loss.
Overall, the Dow finished with 14 stocks up and 16 down, but the severity of the losses was far greater than what amounted to skimpy gains.
In the general market, declining issues outnumbered advancers, 4613-1947, The number of stocks making new lows was again very high, at 1244. There were only 6 new highs. Volume was less than it was last week, reflecting some degree of disinterest or outright exhaustion.
NYSE Volume 1,556,423,000
NASDAQ Volume 2,053,304,000
Commodities were split once again, with oil rising $1.55, to $47.07 on word of more desperate OPEC supply cuts, despite heating oil and natural gas both finishing lower. Natural gas finished at a seasonal low of $3.87, a sign that milder weather through the latter part of February and into March has led to lower consumer demand.
Gold dropped $24.70, to $918.00; silver fell 39 cents, to $12.94.
There is continuing evidence of price destruction in the US and beyond, which will no doubt put pressure on many corporate profits this quarter. Looking out 6 weeks at the next earnings season, prospects continue to dim, and that was reflected in Monday's sluggish trade.
Stocks have now fallen in 14 of the last 18 sessions, resulting in a net loss of 1392 points on the Dow. The DJIA is now off 25% for the year.
Dow 6,547.05, -79.89 (1.21%)
NASDAQ 1,268.64, -25.21 (1.95%)
S&P 500 676.53, -6.85 (1.00%)
NYSE Composite 4,226.31, -58.18 (1.36%)
Stocks opened lower at the open, but quickly rebounded and traded in positive territory for a while, but by 11:00 am, the bears had taken control again. The only encouraging news was merger-related, though the combinations were deemed dilutive to two companies, one a Dow component: Merck (MRK) and Dow Chemical (DOW). In the pharma sector, Merck signed definitive agreements to purchase Schering-Plough for $41.1 billion in stock and cash. Dow Chemical, meanwhile, convened talks with buyout target Rohm & Haas to resolve thorny issues which have resulted in litigation. Merck lost 1.75, to close at 20.99, the largest percentage decliner on the Dow at a loss of 7.78%. Dow Chemical lost 0.79, to close at 6.32, an 11% loss.
Overall, the Dow finished with 14 stocks up and 16 down, but the severity of the losses was far greater than what amounted to skimpy gains.
In the general market, declining issues outnumbered advancers, 4613-1947, The number of stocks making new lows was again very high, at 1244. There were only 6 new highs. Volume was less than it was last week, reflecting some degree of disinterest or outright exhaustion.
NYSE Volume 1,556,423,000
NASDAQ Volume 2,053,304,000
Commodities were split once again, with oil rising $1.55, to $47.07 on word of more desperate OPEC supply cuts, despite heating oil and natural gas both finishing lower. Natural gas finished at a seasonal low of $3.87, a sign that milder weather through the latter part of February and into March has led to lower consumer demand.
Gold dropped $24.70, to $918.00; silver fell 39 cents, to $12.94.
There is continuing evidence of price destruction in the US and beyond, which will no doubt put pressure on many corporate profits this quarter. Looking out 6 weeks at the next earnings season, prospects continue to dim, and that was reflected in Monday's sluggish trade.
Stocks have now fallen in 14 of the last 18 sessions, resulting in a net loss of 1392 points on the Dow. The DJIA is now off 25% for the year.
Friday, March 6, 2009
Late Rally Saves Dow, S&P; NASDAQ Lower
Bed news for investors continued today, as the BLS released the Non-farms labor report for February, showing the nation lost another 651,000 jobs over the period. The Bureau also revised December and January figures even lower and boosted the official jobless rate to 8.1%, a further blow to confidence.
After gaining initially, the major indices soon feel into the red again, and stayed down most of the session, which was one of the more lackluster of recent vintage. At the end of the day, stocks rallied on a combination of short-covering, staking out of positions and a general oversold condition. It was not enough, however, to prevent the indices from falling for the 8th week out of nine so far in 2009.
Dow 6,626.94, +32.50 (0.49%)
NASDAQ 1,293.85, -5.74 (0.44%)
S&P 500 683.38, +0.83 (0.12%)
NYSE Composite 4,284.49, +16.89 (0.40%)
The Dow ended the session with 16 components up and 14 down, in line with the moderately higher closing figures.
Declining issues outweighed advancers, 3786-2782, so the buying which produced the gains was quite selective. New lows tallied 1684, to a mere 8 new highs. The disparity in the lows-highs this week has been the widest since the collapse back in the September-November wipeout of 2008. Volume was the among the highest of the week, indicating that there are still those who believe the worst is not over, and, alternately, a large share of bargain hunting.
NYSE Volume 1,771,049,000
NASDAQ Volume 2,489,014,000
Commodities were generally up, with oil gaining $1.91, to $45.52. Gold gained $14.90, recovering some of the ground lost over the past week's profit taking, to $942.70. Silver remained strong, adding 21 cents, to $13.33.
The late-day rally in stocks sets up an intriguing scenario for next week. In the absence of earnings reports from companies, the market will continue to focus on economic numbers and outside events.
Surely, employment will still be in focus. Any large-scale layoffs might spook already exhausted sellers, though if the news is more benign (and just about everyone believes the bad news has to take a break at some point), it could spark a fairly sharp rally. The global economy hasn't completely fallen off the cliff, so there are pockets of hope and some very attractive prices in stocks.
If anything, the market is more than overdue for a multi-week bounce to the upside. Of course, by April, the banks may be reporting the results of their government-sponsored "stress tests" and that should put the kibosh on any gains.
Sentiment remains stoic and bearish, but traders being the aggressive beasts they are, 1000 points to the upside in short order is not out of the question at this juncture.
After gaining initially, the major indices soon feel into the red again, and stayed down most of the session, which was one of the more lackluster of recent vintage. At the end of the day, stocks rallied on a combination of short-covering, staking out of positions and a general oversold condition. It was not enough, however, to prevent the indices from falling for the 8th week out of nine so far in 2009.
Dow 6,626.94, +32.50 (0.49%)
NASDAQ 1,293.85, -5.74 (0.44%)
S&P 500 683.38, +0.83 (0.12%)
NYSE Composite 4,284.49, +16.89 (0.40%)
The Dow ended the session with 16 components up and 14 down, in line with the moderately higher closing figures.
Declining issues outweighed advancers, 3786-2782, so the buying which produced the gains was quite selective. New lows tallied 1684, to a mere 8 new highs. The disparity in the lows-highs this week has been the widest since the collapse back in the September-November wipeout of 2008. Volume was the among the highest of the week, indicating that there are still those who believe the worst is not over, and, alternately, a large share of bargain hunting.
NYSE Volume 1,771,049,000
NASDAQ Volume 2,489,014,000
Commodities were generally up, with oil gaining $1.91, to $45.52. Gold gained $14.90, recovering some of the ground lost over the past week's profit taking, to $942.70. Silver remained strong, adding 21 cents, to $13.33.
The late-day rally in stocks sets up an intriguing scenario for next week. In the absence of earnings reports from companies, the market will continue to focus on economic numbers and outside events.
Surely, employment will still be in focus. Any large-scale layoffs might spook already exhausted sellers, though if the news is more benign (and just about everyone believes the bad news has to take a break at some point), it could spark a fairly sharp rally. The global economy hasn't completely fallen off the cliff, so there are pockets of hope and some very attractive prices in stocks.
If anything, the market is more than overdue for a multi-week bounce to the upside. Of course, by April, the banks may be reporting the results of their government-sponsored "stress tests" and that should put the kibosh on any gains.
Sentiment remains stoic and bearish, but traders being the aggressive beasts they are, 1000 points to the upside in short order is not out of the question at this juncture.
Thursday, March 5, 2009
Stocks Routed Worldwide; NASDAQ Capitulates
Stock indices from Tokyo to Toronto suffered major losses again on Thursday as the global depression deepened and General Motors (GM) contemplated bankruptcy unless it receives additional financial support from the US government.
As the steady pounding continued, following the first gains in a week (yesterday), investors wiped out nearly double the amount of Wednesday's gains.
Dow 6,594.44, -281.40 (4.09%)
NASDAQ 1,299.59, -54.15 (4.00%)
S&P 500 682.55, -30.32 (4.25%)
NYSE Compos 4,267.60, -197.29 (4.42%)
There was no standout sector or industry spared from the widespread carnage, as the NASDAQ finally became the 4th major index to fall below the previous, November 20 lows. On that date, the NASDAQ closed at 1313. Today's close was 1% lower and comparable to October 2002 levels, when the NASDAQ bottomed out following the dotcom bust on October 9, at 1114.11.
As has been the case for months, US banks were at the center of the storm. Citigroup (C) traded below $1.00 for a brief time during the morning, closing down another 0.11, at 1.02. Bank of America (BAC) closed down 0.42, to 3.17, while JP Morgan Chase (JPM) tumbled 2.70, to 16.60. All of those were among the major losers of Dow components, though General Motors took the prize as the day's biggest, losing 0.34, to 1.86, a decline of 15.45%.
On the Dow, only 2 of 30 components gained ground. Pfizer (PFE) added 0.17, to 12.67. Wal-Mart (WMT) was up 1.26, to 49.75, as the nation's largest retailer saw improved same-store sales for February and increased its dividend to shareholders.
Market internals were a shambles, with decliners overwhelming advancing issues, 5823-842, a 7-1 ratio. New lows shot up to levels seen only in the September-November meltdown, with 1527 stocks reaching new 52-week lows versus only 7 new highs. Volume remained elevated, as it has over the past 7 sessions.
NYSE Volume 1,878,339,000
NASDAQ Volume 2,314,223,000
Oil futures were off $1.77, to $43.61. Gold emerged as a safe haven, up $21.10, to $927.80. Silver added 21 cents, to $13.12.
Prior to the opening bell on Friday, the Bureau of labor Statistics releases February Non-farm Payroll numbers. Expectations are for another 630,000 job losses.
As the steady pounding continued, following the first gains in a week (yesterday), investors wiped out nearly double the amount of Wednesday's gains.
Dow 6,594.44, -281.40 (4.09%)
NASDAQ 1,299.59, -54.15 (4.00%)
S&P 500 682.55, -30.32 (4.25%)
NYSE Compos 4,267.60, -197.29 (4.42%)
There was no standout sector or industry spared from the widespread carnage, as the NASDAQ finally became the 4th major index to fall below the previous, November 20 lows. On that date, the NASDAQ closed at 1313. Today's close was 1% lower and comparable to October 2002 levels, when the NASDAQ bottomed out following the dotcom bust on October 9, at 1114.11.
As has been the case for months, US banks were at the center of the storm. Citigroup (C) traded below $1.00 for a brief time during the morning, closing down another 0.11, at 1.02. Bank of America (BAC) closed down 0.42, to 3.17, while JP Morgan Chase (JPM) tumbled 2.70, to 16.60. All of those were among the major losers of Dow components, though General Motors took the prize as the day's biggest, losing 0.34, to 1.86, a decline of 15.45%.
On the Dow, only 2 of 30 components gained ground. Pfizer (PFE) added 0.17, to 12.67. Wal-Mart (WMT) was up 1.26, to 49.75, as the nation's largest retailer saw improved same-store sales for February and increased its dividend to shareholders.
Market internals were a shambles, with decliners overwhelming advancing issues, 5823-842, a 7-1 ratio. New lows shot up to levels seen only in the September-November meltdown, with 1527 stocks reaching new 52-week lows versus only 7 new highs. Volume remained elevated, as it has over the past 7 sessions.
NYSE Volume 1,878,339,000
NASDAQ Volume 2,314,223,000
Oil futures were off $1.77, to $43.61. Gold emerged as a safe haven, up $21.10, to $927.80. Silver added 21 cents, to $13.12.
Prior to the opening bell on Friday, the Bureau of labor Statistics releases February Non-farm Payroll numbers. Expectations are for another 630,000 job losses.
Wednesday, March 4, 2009
Bargain Hunters and Bottom Fishers
After a rocky start, US stock indices finally put in a day of solid gains, thanks in large part from the seemingly never-ending supply of optimists seeking bargains after stocks plunge to new lows.
By no means is the recession or the drumbeat of downbeat economic news subsiding. In fact, this latest round of selling - pushing to Dow, S&P and NYSE Comp. to 12-year lows - was possibly the most brutal and merciless yet. Even today, the news was decidedly bad. The ADP Employment Report for February showed that another 697,000 private sector jobs were lost in the month of February. In the good-producing sector, it was the 26th consecutive month of US job losses; manufacturing fell for the 36th straight month, according to the firm.
Inside ADP's numbers was an alarming revelation: that most of the losses were from medium and small firms employing less than 500 individuals. The takeaway was that job-chopping by major firms has peaked, but now the recession is spreading down to smaller firms, even to the very mom-and-pop type small businesses that are the backbone of the economy.
For Wall Street, those figures, coupled with an oversold condition in the market, provided enough of a green light to let the bargain hunters loose, boosting stocks in an overdue, broad rally. At 2:00 pm, the Fed released the Beige Book, an anecdotal accounting which showed economic conditions deteriorating across all 12 regions.
That didn't dampen the mood much, until late in the session, when the Dow shed nearly 100 points in the last 20 minutes of trading.
As the Dow goes, it came just short of the new psychological barrier at 7000, paused and then fell away. That late-day downturn is surely cause for concern going forward, though if the 7000 level is breached, there's not much in the way of resistance until the 8000 level, so the opportunity for a short-term rally exists over the next four to six weeks.
Of course, there are still hurdles to overcome, and the chance that another bank may blow up or some other circumstance contribute to the overall malaise is paramount.
Dow 6,875.84, +149.82 (2.23%)
NASDAQ 1,353.74, +32.73 (2.48%)
S&P 500 712.87, +16.54 (2.38%)
NYSE Composite 4,464.89, +130.19 (3.00%)
Twenty-five of thirty Dow components sported gains, but the five which suffered losses revealed quite a bit about the overall tone of trading. Bank of America (BAC), Citigroup (C), American Express (AXP), General Electric (GE) and JP Morgan Chase (JPM) all have one thing in common. They are either banks or substantially tied to finance in their business operations. JPM took the biggest hit of all, down 8.14%, closing at 19.30, -1.71. The major banks still have unresolved issues and most of them relate back to derivatives and credit default swaps in the black hole of AIG.
Market internals were largely in line with the closing numbers. Advancers clobbered losers for the first time in over a week, 4955-1639. New lows moderated back to 676, though only three (3) stocks reached new highs. Volume remained at the elevated levels of the past week.
NYSE Volume 1,796,873,000
NASDAQ Volume 2,349,450,000
Oil ramped up on news of a surprise drawdown in US supply. Crude futures for April delivery gained $3.73, to $45.38. Gold continued losing, down another $6.90, to $906.70. Gold has lost nearly $100 in just over a week's time. Silver fared better (somebody is obviously taking my advice), gaining 20 cents to $12.92, still bargain territory (under $13 per ounce).
Optimism was abundantly everywhere. All commodity prices were up sharply with the notable exception of gold. This is likely an aberration, as is the stock market move, though there is a technical set-up for a short term bounce.
Stay tuned.
By no means is the recession or the drumbeat of downbeat economic news subsiding. In fact, this latest round of selling - pushing to Dow, S&P and NYSE Comp. to 12-year lows - was possibly the most brutal and merciless yet. Even today, the news was decidedly bad. The ADP Employment Report for February showed that another 697,000 private sector jobs were lost in the month of February. In the good-producing sector, it was the 26th consecutive month of US job losses; manufacturing fell for the 36th straight month, according to the firm.
Inside ADP's numbers was an alarming revelation: that most of the losses were from medium and small firms employing less than 500 individuals. The takeaway was that job-chopping by major firms has peaked, but now the recession is spreading down to smaller firms, even to the very mom-and-pop type small businesses that are the backbone of the economy.
For Wall Street, those figures, coupled with an oversold condition in the market, provided enough of a green light to let the bargain hunters loose, boosting stocks in an overdue, broad rally. At 2:00 pm, the Fed released the Beige Book, an anecdotal accounting which showed economic conditions deteriorating across all 12 regions.
That didn't dampen the mood much, until late in the session, when the Dow shed nearly 100 points in the last 20 minutes of trading.
As the Dow goes, it came just short of the new psychological barrier at 7000, paused and then fell away. That late-day downturn is surely cause for concern going forward, though if the 7000 level is breached, there's not much in the way of resistance until the 8000 level, so the opportunity for a short-term rally exists over the next four to six weeks.
Of course, there are still hurdles to overcome, and the chance that another bank may blow up or some other circumstance contribute to the overall malaise is paramount.
Dow 6,875.84, +149.82 (2.23%)
NASDAQ 1,353.74, +32.73 (2.48%)
S&P 500 712.87, +16.54 (2.38%)
NYSE Composite 4,464.89, +130.19 (3.00%)
Twenty-five of thirty Dow components sported gains, but the five which suffered losses revealed quite a bit about the overall tone of trading. Bank of America (BAC), Citigroup (C), American Express (AXP), General Electric (GE) and JP Morgan Chase (JPM) all have one thing in common. They are either banks or substantially tied to finance in their business operations. JPM took the biggest hit of all, down 8.14%, closing at 19.30, -1.71. The major banks still have unresolved issues and most of them relate back to derivatives and credit default swaps in the black hole of AIG.
Market internals were largely in line with the closing numbers. Advancers clobbered losers for the first time in over a week, 4955-1639. New lows moderated back to 676, though only three (3) stocks reached new highs. Volume remained at the elevated levels of the past week.
NYSE Volume 1,796,873,000
NASDAQ Volume 2,349,450,000
Oil ramped up on news of a surprise drawdown in US supply. Crude futures for April delivery gained $3.73, to $45.38. Gold continued losing, down another $6.90, to $906.70. Gold has lost nearly $100 in just over a week's time. Silver fared better (somebody is obviously taking my advice), gaining 20 cents to $12.92, still bargain territory (under $13 per ounce).
Optimism was abundantly everywhere. All commodity prices were up sharply with the notable exception of gold. This is likely an aberration, as is the stock market move, though there is a technical set-up for a short term bounce.
Stay tuned.
Subscribe to:
Posts (Atom)
Posts
