After taking a hiatus Monday - genuflecting to congress and Andrew Cuomo - investors continued their spirited bear market rally on Tuesday, racking up huge gains on all indices. The NASDAQ, yesterday's big loser, was the day's top performer.
Stocks took a little while to get going in the morning, though as soon as it became clear that the politicians were blowing a lot of hot air over the AIG bonuses, and that AIG would not budge from its position that its employees earned and deserved those bonuses, stocks resumed their inexorable rise.
I have to admit to naivety and a total misread on the AIG issue. Neither Wall Street nor Washington is in reality the least bit concerned over revelations of the insurance giant's counterparties to the $170 billion of government largesse and the bonuses are nothing more than a side show. This bull run will continue at least until options are played out this Friday. After that, where it goes is anybody's guess, but one thing's for sure, the American public is being taken to the cleaners by the main protagonists in this economic drama: the politicians and Wall Street's masters of the universe.
Using their media shills to maximum effectiveness, the public has been sufficiently pacified to believe that all is well in the American and world economy. Never mind those trillions of dollars of derivatives overhanging everything like the Sword of Damacles or the fact that AIG paid off on credit default insurance to the very same companies which were receiving government assistance (and now claim they no longer need any help).
The greatest fraud ever perpetrated has nearly run its course. Nobody has been indicted. None of the major players have even lost their jobs. Only in America can one lose billions of dollars, nearly implode the entire financial system and not only not get fired, but be the beneficiary of enormous bonuses paid for by the very people you are robbing. It's incredible, but true.
Just like Americans muddled through 8 years of the George Bush administration's abuse and shredding of the constitution, so too will they have their livelihoods and retirements yanked away from them without a fight. Washington and Wall Street win. We elected some. Others were merely put in place and pleasured by those elected officials. The money spent by financial firms in lobby activity is proof of government's complicity in the grand fraud.
Americans soldier on in the most over-regulated, overtaxed, slavish parody of democracy that has ever existed. It took nearly forty years of deceit, corruption and apathy, but we finally have arrived at the final destination: the death of the land of the free and the home of the brave. It has been abruptly replaced with land of the fleece and the home of the knave.
Dow 7,395.70, +178.73 (2.48%)
NASDAQ 1,462.11, +58.09 (4.14%)
S&P 500 778.12, +24.23 (3.21%)
NYSE Composite 4,868.14, +139.23 (2.94%)
Advancers bettered decliners by a wide margin, 4997-1506, but new lows did not roll over, still ahead of new highs on the day, 111-13. Volume ramped up mightily in the final half-hour, keeping in line with recent trading activity, though a touch lower overall.
NYSE Volume 1,492,070,000
NASDAQ Volume 2,105,405,000
Oil gained $1.81, to close near the highs, at $49.16. Gold dipped $5.20, to $916.80. Silver followed lower, down 22 cents, to $12.67, At least some markets are making sense, though the price of oil is going far too high, much too quickly, considering the demand destruction caused by conservation, last year's gouging and the current weak economic conditions.
With options expiration approaching, the rally could end abruptly, though the general mood on Wall Street is currently one without fear, determined to run up to resistance, which next appears around 8000 on the Dow.
Tuesday, March 17, 2009
Monday, March 16, 2009
Fear Factor: AIG, Cuomo, Obama Kill Rally
After jawboning the economy higher last week with announcements from Citigroup, Bank of America and JP Morgan CEOs that their respective banking enterprises were making money, Tim Geithner's appearance on the Charlie Rose show and Sunday's 60 Minutes interview with Fed Chair Ben Bernanke, the greed and avarice that is still alive and well on Wall Street finally put an end to the madness on Monday.
Amid reports that failed insurance black hole AIG had been using government bailout monies to make payments to foreign and American financial institutions - in the form of credit default swaps payouts and other payments - and also planned to pay out over $1.2 billion in bonuses, first the President, and later, NY Attorney General Andrew Cuomo issued stern statements that AIG must come clean and stop paying bonuses with taxpayer money.
Cuomo demanded a list of names of AIG bonus recipients. The AG threatened to issue subpoenas for the names if he was not in receipt of the list by the close of trading (4:00 pm).
President Obama ordered Treasury Secretary Timothy Geithner to use "every single legal avenue" available to block the bonuses.
While all of this was swirling through the news wires and trading desks, stocks (except for the NASDAQ, which was up only briefly) were well on their way to a 5th straight day of gains. The plan, or so it seemed, was to make outsize profits in call options on a wide variety of stocks and indices. With options expiring on Friday, today and Tuesday, appeared to be prime times to cash in on the recent rally.
Case in point on the options front was the trade in JP Morgan, which was up as high as 25.27 today (up 1.52), but finished with a 0.66 loss, at 23.09. Trading in the March 24 and 25 options was a wild ride. Ditto General Electric, which popped up over 10.00, but closed up just 0.04 at 9.66.
All of that changed shortly before 2:00 pm, when the Dow reached its high of the day at 7392, nearly a 750 point rise in less than five days. From there, it was straight down as Wall Street and savvy investors figured that the jig was up on AIG and the major banking scam that makes Bernie Madoff look like a rank amateur.
As I've said countless times on this blog, AIG is a black hole, with no money to pay off TRILLIONS OF DOLLARS WORTH OF CREDIT DEFAULT SWAPS COVERING NEAR-WORTHLESS SECURITIZED DEBT.
Wall Street's unending greed has finally ignited a public backlash to which the politicians are responding. This monumental struggle - between the bandits (Wall St.) and the benefactors (Washington) - is more than likely to get much worse before it gets better, culminating not just in subpoenas, but in trials, convictions and hopefully, jail time for many of the CEOs still running the defaulted banks.
Make no doubt about it, this is the beginning of the end. The final phase of the market meltdown begins today. There has not yet been a final capitulation, but it is sure to come, probably before the end of summer, if not sooner.
By the end of the session, stocks had given up all of their gains, except on the NYSE Composite, which finished marginally higher. As happens so often during bear market rallies, complacent bulls were mauled today by the most ferocious bears the market has ever experienced. Anyone who did not get out today could greet tomorrow's opening with a huge gap down at the open, completely shut out of profits. By Monday of next week - if not sooner - the Dow should almost certainly be trading below 7000 again.
One week of manufactured "happy news" cannot replace months of honestly bad reports. Mostly ignored were today's economic reports: The New York State Empire Manufacturing Index for March fell to its lowest level ever, at -38.2. Capacity utilization continued to decline, from 71.9% in January to 70.9% in February. Industrial production took another hit last month, falling 1.4%.
Dow 7,216.97, -7.01 (0.10%)
Nasdaq 1,404.02, -27.48 (1.92%)
S&P 500 753.89, -2.66 (0.35%)
NYSE Composite 4,728.91, +7.91 (0.17%)
Market internals finished in line with the turmoil. Advancing issues outpaced declining ones, by the slightest of margins, 3476-3073. New lows were again subdued in number, but held their edge over new highs, 101-14.
Volume was roughly the same as last week's levels, indicating that the rally may have more gas in the tank, or that the buying of stocks was replaced by selling late in the day.
NYSE Volume 1,898,380,000
Nasdaq Volume 2,159,946,000
Oil finished up just a nickel, at $46.30. The precious metals were both losers, with gold off $8.10, to $922.00 and silver down 33 cents, to $12.89.
Tomorrow morning should be fascinating, with February PPI announced prior to the open - at 8:30 am - along with February figures for New Home Sales and Building Permits.
Amid reports that failed insurance black hole AIG had been using government bailout monies to make payments to foreign and American financial institutions - in the form of credit default swaps payouts and other payments - and also planned to pay out over $1.2 billion in bonuses, first the President, and later, NY Attorney General Andrew Cuomo issued stern statements that AIG must come clean and stop paying bonuses with taxpayer money.
Cuomo demanded a list of names of AIG bonus recipients. The AG threatened to issue subpoenas for the names if he was not in receipt of the list by the close of trading (4:00 pm).
President Obama ordered Treasury Secretary Timothy Geithner to use "every single legal avenue" available to block the bonuses.
While all of this was swirling through the news wires and trading desks, stocks (except for the NASDAQ, which was up only briefly) were well on their way to a 5th straight day of gains. The plan, or so it seemed, was to make outsize profits in call options on a wide variety of stocks and indices. With options expiring on Friday, today and Tuesday, appeared to be prime times to cash in on the recent rally.
Case in point on the options front was the trade in JP Morgan, which was up as high as 25.27 today (up 1.52), but finished with a 0.66 loss, at 23.09. Trading in the March 24 and 25 options was a wild ride. Ditto General Electric, which popped up over 10.00, but closed up just 0.04 at 9.66.
All of that changed shortly before 2:00 pm, when the Dow reached its high of the day at 7392, nearly a 750 point rise in less than five days. From there, it was straight down as Wall Street and savvy investors figured that the jig was up on AIG and the major banking scam that makes Bernie Madoff look like a rank amateur.
As I've said countless times on this blog, AIG is a black hole, with no money to pay off TRILLIONS OF DOLLARS WORTH OF CREDIT DEFAULT SWAPS COVERING NEAR-WORTHLESS SECURITIZED DEBT.
Wall Street's unending greed has finally ignited a public backlash to which the politicians are responding. This monumental struggle - between the bandits (Wall St.) and the benefactors (Washington) - is more than likely to get much worse before it gets better, culminating not just in subpoenas, but in trials, convictions and hopefully, jail time for many of the CEOs still running the defaulted banks.
Make no doubt about it, this is the beginning of the end. The final phase of the market meltdown begins today. There has not yet been a final capitulation, but it is sure to come, probably before the end of summer, if not sooner.
By the end of the session, stocks had given up all of their gains, except on the NYSE Composite, which finished marginally higher. As happens so often during bear market rallies, complacent bulls were mauled today by the most ferocious bears the market has ever experienced. Anyone who did not get out today could greet tomorrow's opening with a huge gap down at the open, completely shut out of profits. By Monday of next week - if not sooner - the Dow should almost certainly be trading below 7000 again.
One week of manufactured "happy news" cannot replace months of honestly bad reports. Mostly ignored were today's economic reports: The New York State Empire Manufacturing Index for March fell to its lowest level ever, at -38.2. Capacity utilization continued to decline, from 71.9% in January to 70.9% in February. Industrial production took another hit last month, falling 1.4%.
Dow 7,216.97, -7.01 (0.10%)
Nasdaq 1,404.02, -27.48 (1.92%)
S&P 500 753.89, -2.66 (0.35%)
NYSE Composite 4,728.91, +7.91 (0.17%)
Market internals finished in line with the turmoil. Advancing issues outpaced declining ones, by the slightest of margins, 3476-3073. New lows were again subdued in number, but held their edge over new highs, 101-14.
Volume was roughly the same as last week's levels, indicating that the rally may have more gas in the tank, or that the buying of stocks was replaced by selling late in the day.
NYSE Volume 1,898,380,000
Nasdaq Volume 2,159,946,000
Oil finished up just a nickel, at $46.30. The precious metals were both losers, with gold off $8.10, to $922.00 and silver down 33 cents, to $12.89.
Tomorrow morning should be fascinating, with February PPI announced prior to the open - at 8:30 am - along with February figures for New Home Sales and Building Permits.
Saturday, March 14, 2009
Markets Go 4-for-4
What a difference a week makes.
On Monday, stocks fell to their lowest levels in roughly 12 years as the news flow continued to beat down on investors with a cacophony of flim-flams, trillion dollar deficits, banking black holes and enough assorted global meltdown fear to scare even the hardiest bulls out of the market.
Seemingly overnight, between Monday and Tuesday, a switch in sentiment - begun by something as benign as a banker's leaked memo, in fact, Citigroup's Vikram Pandit's note that his bank had performed well over the prior two months - sparked a rally that extended four days.
Stocks finished the week on the rise again, with everything suddenly seeming not so dire, so terrible, so untenable. Maybe it was that bank memo, or maybe the appearance of robins on the lawn. The winter in the Northeast has been long and unrelentingly cold, and it was time for a break. It could have just been that investors and traders were worm out from selling, or that there were a load of bargains at the bottom of the market.
Whatever it was, it turned into the best week for stocks in many months. The Dow gained an impressive 597 points for the week and 677 from the close on Monday, and while it was welcome relief, almost nobody believes we have seen a final bottom in the markets, but it was a nice change and only the second weekly gain out of 10 for the year.
Dow 7,223.98, +53.92 (0.75%)
Nasdaq 1,431.50, +5.40 (0.38%)
S&P 500 756.55, +5.81 (0.77%)
NYSE Composite 4,721.00, +36.01 (0.77%)
There was little in the way of economic news on Friday, except that consumer confidence improved by a small amount, from 56.3 in February to 56.6 in March. Other than that, investors were more or less left to their own devices and they continued to be in a buying mood for most of the session.
Gainers held sway over decliners, 4011-2509. The difference between new lows and new highs narrowed significantly. There were only 16 new highs, there were only 107 new lows, as compared to over 1000 on a regular, daily basis, just last week. we are rapidly approaching a date when these numbers will roll over, an event which has only occurred - more new highs than lows - only 5 or 6 times over the past 16 months, and not at all since this past summer.
Volume was not as strong as previous session, but still solid.
NYSE Volume 1,611,209,000
Nasdaq Volume 2,073,777,000
Commodities participated in a rather dull session, with oil finishing lower by 78 cents, to $46.25; gold up $6.10, to $930.10; and silver ahead by 22 cents to $13.22.
The rally may continue for some time, so long as news flows don't become frightening again and the negative feedback loop cycles again, though sentiment changes can occur at the drop of a hat, as evidenced by this week's upheaval. The most odd feature of this week's rally is that to a man or woman, not a single person said that Monday was the absolute bottom. Not one commentator was so bold as to call the bottom, and oddly enough, that's usually precisely when they happen, when nobody believes the worst is over.
Monday could very well have been the bottom, but I'm neither brave enough nor smart enough to call it. Time will tell, though I would not be at all surprised if it holds for longer than anyone suspects.
On Monday, stocks fell to their lowest levels in roughly 12 years as the news flow continued to beat down on investors with a cacophony of flim-flams, trillion dollar deficits, banking black holes and enough assorted global meltdown fear to scare even the hardiest bulls out of the market.
Seemingly overnight, between Monday and Tuesday, a switch in sentiment - begun by something as benign as a banker's leaked memo, in fact, Citigroup's Vikram Pandit's note that his bank had performed well over the prior two months - sparked a rally that extended four days.
Stocks finished the week on the rise again, with everything suddenly seeming not so dire, so terrible, so untenable. Maybe it was that bank memo, or maybe the appearance of robins on the lawn. The winter in the Northeast has been long and unrelentingly cold, and it was time for a break. It could have just been that investors and traders were worm out from selling, or that there were a load of bargains at the bottom of the market.
Whatever it was, it turned into the best week for stocks in many months. The Dow gained an impressive 597 points for the week and 677 from the close on Monday, and while it was welcome relief, almost nobody believes we have seen a final bottom in the markets, but it was a nice change and only the second weekly gain out of 10 for the year.
Dow 7,223.98, +53.92 (0.75%)
Nasdaq 1,431.50, +5.40 (0.38%)
S&P 500 756.55, +5.81 (0.77%)
NYSE Composite 4,721.00, +36.01 (0.77%)
There was little in the way of economic news on Friday, except that consumer confidence improved by a small amount, from 56.3 in February to 56.6 in March. Other than that, investors were more or less left to their own devices and they continued to be in a buying mood for most of the session.
Gainers held sway over decliners, 4011-2509. The difference between new lows and new highs narrowed significantly. There were only 16 new highs, there were only 107 new lows, as compared to over 1000 on a regular, daily basis, just last week. we are rapidly approaching a date when these numbers will roll over, an event which has only occurred - more new highs than lows - only 5 or 6 times over the past 16 months, and not at all since this past summer.
Volume was not as strong as previous session, but still solid.
NYSE Volume 1,611,209,000
Nasdaq Volume 2,073,777,000
Commodities participated in a rather dull session, with oil finishing lower by 78 cents, to $46.25; gold up $6.10, to $930.10; and silver ahead by 22 cents to $13.22.
The rally may continue for some time, so long as news flows don't become frightening again and the negative feedback loop cycles again, though sentiment changes can occur at the drop of a hat, as evidenced by this week's upheaval. The most odd feature of this week's rally is that to a man or woman, not a single person said that Monday was the absolute bottom. Not one commentator was so bold as to call the bottom, and oddly enough, that's usually precisely when they happen, when nobody believes the worst is over.
Monday could very well have been the bottom, but I'm neither brave enough nor smart enough to call it. Time will tell, though I would not be at all surprised if it holds for longer than anyone suspects.
Thursday, March 12, 2009
Mark-to-Market Mark Up
Stocks made it three in a row for the Bulls, with impressive gains on all major indices, thanks to some benign economic data, a downgrade of GE's credit rating (already priced in) and a promise from the Federal Accounting Standards Board (FASB) to review and revise mark-to-market rules within three weeks.
Largely ignored was the rampaging unemployment ravaging US businesses, which saw another 654,000 new unemployment claims and a record of 5.3 million now receiving benefits.
Retail sales for February were down just 0.1%, which was less than expected. January retail sales were revised higher, to a 1.8% gain, from the previous read of +1.0%. Business inventories continue to decline as companies shed excesses, down 1.1% in January, a figure likely to be revised lower next month.
General Electric's (GE) credit rating was dropped by Standard & Poors to AA from AAA, though that piece of news was widely expected and already priced into the stock price. GE was one of the best gainers of the day for Dow stocks, up 1.08, to 9.57, a gain of more than 112%. Overall, 28 of 30 Dow components priced higher on the day. The only losses were in Boeing (BA) and Microsoft (MSFT).
A panel of representatives in the House urged the FASB to issue new guidance on mark-to market accounting for financial institutions. The rule is largely regarded as undervaluing bank assets such as mortgage-backed-securities, which have contributed greatly to the economic malaise of the past six months.
Two major resistance points were exceeded by today's upswing: the Dow crossed over the 7000 mark and - perhaps more importantly - the S&P passed 730. As a bonus, the NASDAQ flew by 1400 for the first time in two weeks.
The day's gains - indeed, the gains from Tuesday and Wednesday also - were aided by furious short-covering as investors scramble out of positions predicated on stocks falling rather than rising. All of these elements contributed to an unstoppable rally that sent stocks of all stripes soaring.
Dow 7,170.06, +239.66 (3.46%)
NASDAQ 1,426.10, +54.46 (3.97%)
S&P 500 750.74, +29.38 (4.07%)
NYSE Composite 4,684.99, +179.61 (3.99%
Market internals affirmed the upside move. Gainers beat losers by a huge margin of moer than 5-1, 5550-1015. New highs vs. new lows remained muted, with the lows ahead 220-16. Volume was very strong again as investors made sure not to miss out on the opportunity for short-term gains.
NYSE Volume 1,804,937,000
NASDAQ Volume 2,456,664,000
Commodities participated in the rally as well, especially oil, which gained $4.70, to $47.03. Gold was up $13.10, to $923.80. Silver added 14 cents to $12.94. Most other commodities were higher, including food stocks which continued to gain.
Of the companies showing the best gains were Bank of America (BAC), the big winner on the day, up 0.92, to 5.85, an 18% rise. JP Morgan Chase (JPM) also was up sharply, gaining 2.80, to 23.20. Both Jamie Daimon and Ken Lewis, CEOs of JPM and BofA, respectively, issued memos that their businesses were profitable during January and February. This seemed to be an orchestrated round of PR by the banks, fast on the heels of Vikram Pandit's assertion that Citigroup (C) was making money in the first two months of 2009. Health care and pharmaceuticals were also higher. Pfizer (PFE) and Merck (MRK) both posted gains of more than 9.5%.
The market has responded to its formerly-oversold condition with considerable aplomb. The news flow, especially the interventionary advice offered by the congressional panel on accounting rules, has been decidedly favorable this week and there aren't any caution signs on the road ahead. As previously stated, this bounce could turn into an outright boom, though how long it will last is surely an unknown.
The best bet is to jump in and use tight stops on the downside in the event Wall Street wakes up from this daydream. No true bottom has been put in at this juncture and the market is near overbought conditions. In just three days, the Dow has risen an astonishing 623 points. These sharp moves are always features confined to bear markets and are not at all unusual. Knowing when to get out of the way of the bears is the key to keeping any profits. The swings can be gut-wrenching.
Largely ignored was the rampaging unemployment ravaging US businesses, which saw another 654,000 new unemployment claims and a record of 5.3 million now receiving benefits.
Retail sales for February were down just 0.1%, which was less than expected. January retail sales were revised higher, to a 1.8% gain, from the previous read of +1.0%. Business inventories continue to decline as companies shed excesses, down 1.1% in January, a figure likely to be revised lower next month.
General Electric's (GE) credit rating was dropped by Standard & Poors to AA from AAA, though that piece of news was widely expected and already priced into the stock price. GE was one of the best gainers of the day for Dow stocks, up 1.08, to 9.57, a gain of more than 112%. Overall, 28 of 30 Dow components priced higher on the day. The only losses were in Boeing (BA) and Microsoft (MSFT).
A panel of representatives in the House urged the FASB to issue new guidance on mark-to market accounting for financial institutions. The rule is largely regarded as undervaluing bank assets such as mortgage-backed-securities, which have contributed greatly to the economic malaise of the past six months.
Two major resistance points were exceeded by today's upswing: the Dow crossed over the 7000 mark and - perhaps more importantly - the S&P passed 730. As a bonus, the NASDAQ flew by 1400 for the first time in two weeks.
The day's gains - indeed, the gains from Tuesday and Wednesday also - were aided by furious short-covering as investors scramble out of positions predicated on stocks falling rather than rising. All of these elements contributed to an unstoppable rally that sent stocks of all stripes soaring.
Dow 7,170.06, +239.66 (3.46%)
NASDAQ 1,426.10, +54.46 (3.97%)
S&P 500 750.74, +29.38 (4.07%)
NYSE Composite 4,684.99, +179.61 (3.99%
Market internals affirmed the upside move. Gainers beat losers by a huge margin of moer than 5-1, 5550-1015. New highs vs. new lows remained muted, with the lows ahead 220-16. Volume was very strong again as investors made sure not to miss out on the opportunity for short-term gains.
NYSE Volume 1,804,937,000
NASDAQ Volume 2,456,664,000
Commodities participated in the rally as well, especially oil, which gained $4.70, to $47.03. Gold was up $13.10, to $923.80. Silver added 14 cents to $12.94. Most other commodities were higher, including food stocks which continued to gain.
Of the companies showing the best gains were Bank of America (BAC), the big winner on the day, up 0.92, to 5.85, an 18% rise. JP Morgan Chase (JPM) also was up sharply, gaining 2.80, to 23.20. Both Jamie Daimon and Ken Lewis, CEOs of JPM and BofA, respectively, issued memos that their businesses were profitable during January and February. This seemed to be an orchestrated round of PR by the banks, fast on the heels of Vikram Pandit's assertion that Citigroup (C) was making money in the first two months of 2009. Health care and pharmaceuticals were also higher. Pfizer (PFE) and Merck (MRK) both posted gains of more than 9.5%.
The market has responded to its formerly-oversold condition with considerable aplomb. The news flow, especially the interventionary advice offered by the congressional panel on accounting rules, has been decidedly favorable this week and there aren't any caution signs on the road ahead. As previously stated, this bounce could turn into an outright boom, though how long it will last is surely an unknown.
The best bet is to jump in and use tight stops on the downside in the event Wall Street wakes up from this daydream. No true bottom has been put in at this juncture and the market is near overbought conditions. In just three days, the Dow has risen an astonishing 623 points. These sharp moves are always features confined to bear markets and are not at all unusual. Knowing when to get out of the way of the bears is the key to keeping any profits. The swings can be gut-wrenching.
Wednesday, March 11, 2009
Follow Through or Not, Upside Looks Better for Now
Stocks crossed back and forth across the break even line en route to a marginally higher finish, which is good news for those bullish on stocks. The fear was that after Tuesday's outsize gains, profit taking and a resumption of negative attitudes would sink the markets and send investors back into their six-month-long funk.
But, despite a strong sell-off at the close, all indices remained in positive territory, with the NASDAQ, loaded with tech stocks, faring the best of all. A couple of key levels were tested and both were beaten back by vigorous selling: 7000 on the Dow, and 730 on the S&P. The former is more psychological than anything else, the latter considered a key support/resistance area. In both instances, the earlier attempt, right around 10:00 am, was stronger than the final surge in the last hour of trading. It will take more than just positive vibes to exceed these levels. Maybe Ken Lewis can offer encouragement in Bank of America to get the lift needed.
Dow 6,930.40, +3.91 (0.06%)
NASDAQ 1,371.64, +13.36 (0.98%)
S&P 500 721.36, +1.76 (0.24%)
NYSE Composite 4,505.38, +6.00 (0.13%)
Market internals were a bit more positive than the smallish headline numbers would indicate. Advancers were solidly ahead of declining issues, 3876-2886. New lows maintained their advantage over new highs, but the number is shrinking fast. There were 245 new lows to just 9 new highs, but it is conceivable that these numbers could converge and even reverse within the next 5-7 sessions as options expiration approaches on March 20, a triple witching day.
With a two day winning streak under its belt, markets may be a bit bolder as investors snap up bargains and traders view profitable short-term opportunities. In the options markets, there are quite a load of heavy bets on selected stocks and index options far ahead of where stocks now sit. A gambling man - which anyone with any skin in this market no doubt is - would be leaning for more upside at this juncture, with the caveat that all bets are off if the Dow hits 7500-7800 or past March 20, whichever comes first.
Volume was strong once again, keeping with the current tone. There are plenty of trades being made, and unless there's a serious falloff in the next few sessions, another vigorous rally could ensue as shorts would be forced to cover quickly, forcing shares even higher. The market is clearly in the hands of day-traders and short-timers, who will trade relentlessly in search of minor gains. This market is for singles hitters instead of home run bashers, but the cumulative effect could produce a fairly solid bounce. Even some downward motion would be good for traders who have triggers set at lower levels. The area around 6830-6850 on the Dow has emerged as a fairly strong support level which, as yet, remains untouched.
NYSE Volume 1,745,479,000
NASDAQ Volume 2,228,163,000
Commodities were mixed again. Crude oil for April delivery fell $3.38, to $42.33. Gold rebounded off recent selling, picking up $14.80, to finish at $910.70. Silver remained in our target buying range, up 26 cents, to $12.80. The majority of the consumables, including foodstuffs and energy, were lower, reflecting the continuum of demand destruction, which continues on a strong scale. Deflation has become locked into the global economy, and, separate from the banking and housing crises, is contributing to severe price pressure in just about every business activity in the good-producing sectors. This pressure will help keep unemployment high, as companies are loathe to hire when business is slow and prices are down.
A couple of anecdotes which may or may not be of much importance. First, the tent city growing on the outskirts of Sacramento, California is a national disgrace, considering how much money has been thrown at banks as well as at social welfare programs such as food stamps and unemployment insurance. Just about everybody is being propped up except for these people - primarily lower-middle class workers - who have fallen through the cracks. Some of the Billion$ in the TARP program should be made available to help these people.
Second, listening to Treasury Secretary Timothy Geithner speak - without saying anything - is becoming an exercise in frustration. Geithner was the only guest on PBS's Charlie Rose last night. The hour-long interview was pure tedium. Geithner, not as adept as "the Maestro," Alan Greenspan, at complete obfuscation and dithering, clearly has taken some lessons. Listen yourself, the next time he speaks and see whether or not his words actually have substance. The chances are about 99-1 that they will not, and therein lies one of the largest problems facing the world economy today. We are being led by a fellow is too smart for his own good. Eventually, he'll actually be pinned down on an issue and that's when the mask comes off. He doesn't really have any fresh ideas or plans for fixing the banks or the economy. He is reading from a script in his mind which was memorized weeks ago and he's yet to help the condition which with we are faced.
Investors are more sophisticated than the average man or woman on the street and they are not amused by either Geithner, the President or the congress. They will trade this bounce for a while longer, but until there are actual facts to support a real rally, this is nothing but a short term bump in the road. The government is pushing on a string with the economy and the American public (outside the obvious government sector) is not going to take it much longer.
But, despite a strong sell-off at the close, all indices remained in positive territory, with the NASDAQ, loaded with tech stocks, faring the best of all. A couple of key levels were tested and both were beaten back by vigorous selling: 7000 on the Dow, and 730 on the S&P. The former is more psychological than anything else, the latter considered a key support/resistance area. In both instances, the earlier attempt, right around 10:00 am, was stronger than the final surge in the last hour of trading. It will take more than just positive vibes to exceed these levels. Maybe Ken Lewis can offer encouragement in Bank of America to get the lift needed.
Dow 6,930.40, +3.91 (0.06%)
NASDAQ 1,371.64, +13.36 (0.98%)
S&P 500 721.36, +1.76 (0.24%)
NYSE Composite 4,505.38, +6.00 (0.13%)
Market internals were a bit more positive than the smallish headline numbers would indicate. Advancers were solidly ahead of declining issues, 3876-2886. New lows maintained their advantage over new highs, but the number is shrinking fast. There were 245 new lows to just 9 new highs, but it is conceivable that these numbers could converge and even reverse within the next 5-7 sessions as options expiration approaches on March 20, a triple witching day.
With a two day winning streak under its belt, markets may be a bit bolder as investors snap up bargains and traders view profitable short-term opportunities. In the options markets, there are quite a load of heavy bets on selected stocks and index options far ahead of where stocks now sit. A gambling man - which anyone with any skin in this market no doubt is - would be leaning for more upside at this juncture, with the caveat that all bets are off if the Dow hits 7500-7800 or past March 20, whichever comes first.
Volume was strong once again, keeping with the current tone. There are plenty of trades being made, and unless there's a serious falloff in the next few sessions, another vigorous rally could ensue as shorts would be forced to cover quickly, forcing shares even higher. The market is clearly in the hands of day-traders and short-timers, who will trade relentlessly in search of minor gains. This market is for singles hitters instead of home run bashers, but the cumulative effect could produce a fairly solid bounce. Even some downward motion would be good for traders who have triggers set at lower levels. The area around 6830-6850 on the Dow has emerged as a fairly strong support level which, as yet, remains untouched.
NYSE Volume 1,745,479,000
NASDAQ Volume 2,228,163,000
Commodities were mixed again. Crude oil for April delivery fell $3.38, to $42.33. Gold rebounded off recent selling, picking up $14.80, to finish at $910.70. Silver remained in our target buying range, up 26 cents, to $12.80. The majority of the consumables, including foodstuffs and energy, were lower, reflecting the continuum of demand destruction, which continues on a strong scale. Deflation has become locked into the global economy, and, separate from the banking and housing crises, is contributing to severe price pressure in just about every business activity in the good-producing sectors. This pressure will help keep unemployment high, as companies are loathe to hire when business is slow and prices are down.
A couple of anecdotes which may or may not be of much importance. First, the tent city growing on the outskirts of Sacramento, California is a national disgrace, considering how much money has been thrown at banks as well as at social welfare programs such as food stamps and unemployment insurance. Just about everybody is being propped up except for these people - primarily lower-middle class workers - who have fallen through the cracks. Some of the Billion$ in the TARP program should be made available to help these people.
Second, listening to Treasury Secretary Timothy Geithner speak - without saying anything - is becoming an exercise in frustration. Geithner was the only guest on PBS's Charlie Rose last night. The hour-long interview was pure tedium. Geithner, not as adept as "the Maestro," Alan Greenspan, at complete obfuscation and dithering, clearly has taken some lessons. Listen yourself, the next time he speaks and see whether or not his words actually have substance. The chances are about 99-1 that they will not, and therein lies one of the largest problems facing the world economy today. We are being led by a fellow is too smart for his own good. Eventually, he'll actually be pinned down on an issue and that's when the mask comes off. He doesn't really have any fresh ideas or plans for fixing the banks or the economy. He is reading from a script in his mind which was memorized weeks ago and he's yet to help the condition which with we are faced.
Investors are more sophisticated than the average man or woman on the street and they are not amused by either Geithner, the President or the congress. They will trade this bounce for a while longer, but until there are actual facts to support a real rally, this is nothing but a short term bump in the road. The government is pushing on a string with the economy and the American public (outside the obvious government sector) is not going to take it much longer.
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