Stocks traded lower early, then rebounded quickly, but remained mixed throughout most of the session Tuesday following Monday's big gains. The follow-though was encouraging to the bulls, who now are becoming more confident that the nearly 2-year bear market has relented and the US economy is on a path back to growth.
There are positive signs beginning to blossom everywhere, much more so than in the Spring, when the "green shoots" mentality hit the market. Though stocks stumbled through June, July was the best in 20 years, and August is already sporting gains. How much further the rally can continue and whether or not it is actually a bull market remain on the consciouses of traders, analysts and investors worldwide.
Dow 9,320.19, +33.63 (0.36%)
NASDAQ 2,011.31, +2.70 (0.13%)
S&P 500 1,005.65, +3.02 (0.30%)
NYSE Composite 6,569.14, +3.49 (0.05%)
Among the highlights of the most recent rally has been both the advance-decline line and the major shift in new highs vs. new lows, despite the market making comparison with some very poor 2008 prices. These indicators remain very positive short term and should continue to guide trading. On the day, winners outpaced losers, 3728-2702 and new highs galloped ahead of new lows, 250-88. Volume was expectedly moderate, owing to the mid-summer time frame and general skittishness of many investors who may still be on the sidelines.
The big bet is whether or not the most severe banking crisis since the 1930s has finally been averted and it seems that could be the case. With a good deal of sleight-of-hand by the Fed, Treasury and the easing of accounting standards, the banks have survived, even if only as shells of their former selves. Banks such as Bank of America and Citigroup may be technically bankrupt, but nobody wants to hear that story, so life goes on as though they were pure as driven snow in their balance sheets.
Obviously, there are still bargains aplenty in the US markets and elsewhere around the world. The Far East, including China, Indonesia, Malaysia and parts of the East Asian peninsula may be offering the best investment opportunities on the planet, with South America coming in a strong second. These underdeveloped nations could benefit from perceived low costs for raw materials, making way for a great global infrastructure expansion. Surely , this is the case in China, and other countries are following suit.
While the rest of the world may actually outstrip the USA in terms of growth, America is still seen by many as the most prosperous and developed nation, for good reason. The US is a world leader in many markets, despite having off-shored much of its manufacturing in recent years. The upside is that aging and ancient plants built with 19th or 20th century technology should make way for more efficient building and greater technical opportunities. Its still a mixed bag of blessings hidden within the darker clouds overhanging Wall Street, but the resilience of American enterprise is legendary and must not be viewed as a failure by any means.
NYSE Volume 1,355,576,000
NASDAQ Volume 2,255,762,000
Commodities were mixed as September Light Crude dipped 16 cents to $71.42, while gold gained prodigiously, up $10.90, to $969.70. Silver followed suit with a 44 cent rise, to $14.70.
On tap for Wednesday is the ADP Employment Change for July, a key number which should move the markets. The expectation is that the economy shed only 350,000 jobs during the month. Should that be the case, it would be very positive for the market and the overall sentiment. The report is due to hit the news wires at 8:15 am.
Tuesday, August 4, 2009
Thursday, July 30, 2009
Sharp Rally Ends Softly on GDP Worries
US stock indices were up sharply early in the day on nothing in particular, though a more technical outlook might have foreseen the advance in the making after four days of sluggishness and little movement in US stocks.
The NASDAQ soared above 2000 for the first time since October, 2008, a span of ten months. The Dow and S&P reached 9-month highs during the session. Pent-up demand and an extension of the 5-month-long rally pushed stocks to their best levels of the year and had investors cheering despite contrary economic indicators and
Initial unemployment claims came in at 584,000, a touch higher than expected and a fairly sizable leap from the revised 559,000 of the prior week. Unemployment continues to be a key issue, though stocks don't seem to mind the unusually high levels of joblessness, probably a serious mistake.
In earnings news, markets were bolstered by positive developments in Avon Products (AVP), which saw profits plunge, but recruitment of sales representatives grow by 11%. Despite the poor quarter, the company actually bettered expectations and also announced layoffs of 1200 office staff. The stock trader up 2.41 (8.2%) on the news.
Other companies beating street estimates were Barrick Gold (ABX), health insurer Cigna (SI), Medifast (MED), Dow Chemical (DOW) and OfficeMax, which narrowed its quarterly loss by implementing a severe cost-cutting effort across the company.
Generally speaking, most public companies are weathering the recession better than the average consumer, though companies are narrowing losses or turning profits more from cost-cutting, labor force reductions, inventory depletion and other intra-company disciplines rather than increased sales. Most companies reporting this quarter have shown revenue declines from year-ago periods.
Those corporate results are what have many analysts baffled. With a healthy recovery nowhere in sight yet, stocks continue to gain in almost all sectors. While profits are still attainable, they have come on the heads of hourly or salaried workers or at the expense of organic growth. Profit expectations have been lowered nearly everywhere; still, the market gallops ahead as though the country were in a boom rather than at the mid-point of a major bust. There is likely to be a backlash and second leg down to price in the realities of a smaller overall economy in which companies are hardly flourishing but rather just hanging on.
Dow 9,154.46, -83.74 (0.92%)
NASDAQ 1,984.30, -16.54 (0.84%)
S&P 500 986.75, -11.60 (1.19%)
NYSE Composite 6,384.31, -103.74 (1.65%)
Late-day selling (after 3:30 pm) wiped out more than half of the gains on the major indices, however. The Dow, which had been up 175 points, finished higher by just 83. The NASDAQ drooped back below 2000 and the S&P failed to reach the magical 1000 mark. Advancers still beat decliners handily, 4784-1586. New highs skyrocketed to 267, versus just 106 new lows. A sign of the Wall Street mania could be seen in Starbucks (SBUX), which recorded a new 52-week high. Volume was improved over previous sessions, but was still not what would be seen in a serious bull market rally.
NYSE Volume 1,358,965,000
NASDAQ Volume 2,557,626,000
Commodities did an abrupt about-face in light of the positive tone on Wall Street. How much the street influences action in raw materials and other commodities is unknown, though today it seemed to be a major factor. Oil for September delivery rebounded $3.59, to $66.94. Gold spiked $7.60, to $937.30 and silver gained 23 cents, to $13.49. The sudden surge in prices may have had more to do with attitude than reality. Oil demand and gas usage is down, and unwinding upside-down positions may have influenced today's commodity action, though strong demand for a 7-year note auction by the Treasury was seen as a major positive. The debt machine continues to pump nearly non-stop, as though there is no limit to the unprecedented credit creation which is supposed to save us all.
The final numbers from Wall Street - especially considering the halving of gains in the final half-hour - were in anticipation of a major announcement tomorrow morning. At 8:30 am, the government announces preliminary second quarter GDP, the most relevant gauge of growth available, and it became obvious that there are some jangled nerves anticipating what many expect to be a very positive - though negative - number. The self-appointed "experts" say the economy shrank at the rate of 1.5% (annualized) in the three months ended June 30. That would be an enormous improvement over the average of 5.9% from the previous 6 months.
A negative growth rate ensures that the nation is still in recession, though the smaller number would indicate that conditions are improving. What that means as far as the second half of 2009 and all of 2010 are concerned is a matter of great conjecture. Nobody knows what the future holds, but most straight-thinking economists don't expect a very robust recovery. Of course, many of them have been wrong before, but tomorrow's opening bell should be a real loud clanger.
The NASDAQ soared above 2000 for the first time since October, 2008, a span of ten months. The Dow and S&P reached 9-month highs during the session. Pent-up demand and an extension of the 5-month-long rally pushed stocks to their best levels of the year and had investors cheering despite contrary economic indicators and
Initial unemployment claims came in at 584,000, a touch higher than expected and a fairly sizable leap from the revised 559,000 of the prior week. Unemployment continues to be a key issue, though stocks don't seem to mind the unusually high levels of joblessness, probably a serious mistake.
In earnings news, markets were bolstered by positive developments in Avon Products (AVP), which saw profits plunge, but recruitment of sales representatives grow by 11%. Despite the poor quarter, the company actually bettered expectations and also announced layoffs of 1200 office staff. The stock trader up 2.41 (8.2%) on the news.
Other companies beating street estimates were Barrick Gold (ABX), health insurer Cigna (SI), Medifast (MED), Dow Chemical (DOW) and OfficeMax, which narrowed its quarterly loss by implementing a severe cost-cutting effort across the company.
Generally speaking, most public companies are weathering the recession better than the average consumer, though companies are narrowing losses or turning profits more from cost-cutting, labor force reductions, inventory depletion and other intra-company disciplines rather than increased sales. Most companies reporting this quarter have shown revenue declines from year-ago periods.
Those corporate results are what have many analysts baffled. With a healthy recovery nowhere in sight yet, stocks continue to gain in almost all sectors. While profits are still attainable, they have come on the heads of hourly or salaried workers or at the expense of organic growth. Profit expectations have been lowered nearly everywhere; still, the market gallops ahead as though the country were in a boom rather than at the mid-point of a major bust. There is likely to be a backlash and second leg down to price in the realities of a smaller overall economy in which companies are hardly flourishing but rather just hanging on.
Dow 9,154.46, -83.74 (0.92%)
NASDAQ 1,984.30, -16.54 (0.84%)
S&P 500 986.75, -11.60 (1.19%)
NYSE Composite 6,384.31, -103.74 (1.65%)
Late-day selling (after 3:30 pm) wiped out more than half of the gains on the major indices, however. The Dow, which had been up 175 points, finished higher by just 83. The NASDAQ drooped back below 2000 and the S&P failed to reach the magical 1000 mark. Advancers still beat decliners handily, 4784-1586. New highs skyrocketed to 267, versus just 106 new lows. A sign of the Wall Street mania could be seen in Starbucks (SBUX), which recorded a new 52-week high. Volume was improved over previous sessions, but was still not what would be seen in a serious bull market rally.
NYSE Volume 1,358,965,000
NASDAQ Volume 2,557,626,000
Commodities did an abrupt about-face in light of the positive tone on Wall Street. How much the street influences action in raw materials and other commodities is unknown, though today it seemed to be a major factor. Oil for September delivery rebounded $3.59, to $66.94. Gold spiked $7.60, to $937.30 and silver gained 23 cents, to $13.49. The sudden surge in prices may have had more to do with attitude than reality. Oil demand and gas usage is down, and unwinding upside-down positions may have influenced today's commodity action, though strong demand for a 7-year note auction by the Treasury was seen as a major positive. The debt machine continues to pump nearly non-stop, as though there is no limit to the unprecedented credit creation which is supposed to save us all.
The final numbers from Wall Street - especially considering the halving of gains in the final half-hour - were in anticipation of a major announcement tomorrow morning. At 8:30 am, the government announces preliminary second quarter GDP, the most relevant gauge of growth available, and it became obvious that there are some jangled nerves anticipating what many expect to be a very positive - though negative - number. The self-appointed "experts" say the economy shrank at the rate of 1.5% (annualized) in the three months ended June 30. That would be an enormous improvement over the average of 5.9% from the previous 6 months.
A negative growth rate ensures that the nation is still in recession, though the smaller number would indicate that conditions are improving. What that means as far as the second half of 2009 and all of 2010 are concerned is a matter of great conjecture. Nobody knows what the future holds, but most straight-thinking economists don't expect a very robust recovery. Of course, many of them have been wrong before, but tomorrow's opening bell should be a real loud clanger.
Wednesday, July 29, 2009
Stumbling Along Wall Street
Stocks extended their prolonged stagger into a fourth consecutive session. Trading was murky, directionless and, in many cases, pointless, as the debate over whether or not the economy was improving continued amid mixed signals from corporations posting earnings and generally positive tones from economic news and data. Meanwhile, the hoodlums in congress sounded downright belligerent as Barney Frank, Chairman of the House Financial Services Committee threatened the banks with forced writedown on mortgages if the banks don't stop the flood of foreclosures themselves.
Frank must think he's running for re-election soon (even-numbered years, Barney) to make such a blustery statement as he did today.
Dow 9,070.72, -26.00 (0.29%)
NASDAQ 1,967.76, -7.75 (0.39%)
S&P 500 975.15, -4.47 (0.46%)
NYSE Composite 6,280.57, -48.10 (0.76%)
The tone was definitely more to the negative today, however, as decliners raced past advancing issues, 3909-2416. New highs continued their dominance over new lows, 138-53. Volume was sluggish again, a trend which has persisted for months.
NYSE Volume 1,258,526,000
NASDAQ Volume 2,126,488,000
While stocks were just dawling along, commodities were taking it on the chin in a big, deflationary way. September crude fell $3.38, to $63.35. Gold was off sharply for the second straight day, losing $12.00, to $929.70. Silver also slid 48 cents, back down to $13.26. In the raw materials of the commodity world, where reality has a definite price, the outlook continues to sour. Due to the worldwide slowdown in industrial output, there is a glut of everything on the market; from livestock to oil to precious metals to grain, copper and natural gas, the abundance is evident on the ground, in the ground and above the ground. The deflationary spiral the Fed and other central banks have so stridently attempted to avoid is now becoming an unmistakable fact of life. Nobody's buying. All prices will fall, and continue to fall, for at least another six to twelve months.
The absence of pricing power will continue to cause economic disruptions, especially in areas in which prices are fixed, such as taxation. Property values have plunged, but governments have been slow and/or reluctant to re-assess property in accordance with the new reality. Thus, the coming wave of foreclosures will not only include mortgages, but municipalities are facing an avalanche of tax deliquencies and, subsequently, revenue shortfalls. The dance of death for governments across the landscape is only in the third inning of a nine-inning game and the big hitters are just beginning to get a bead on the ball. Upside-down balance sheets for towns, cities and states are quickly becoming the norm and not all the money created out of thin air by the Fed will save them.
This is the catastrophe which cannot be fixed by stimulus or bailout legislation. It will take an actual reordering of priorites by governments of all size, to stop the bloat at every level and make drastic cuts in expenses, personnel, pensions and benefits. If you thought the economy was on the mend, just wait until the end of the third quarter when the facts of life become naked to the eye. Americans are wallowing in seas of red ink in both the private and public sectors. Manufacturing has completely crumbled. Cottage indutries and home businesses will sprout from coast to coast in order to bring in extra cash or merely to survive.
Stocks are only a part of the bigger picture. The government has failed miserably and still won't admit it. Our political structure has been poisoned by lobbyists and liars in high position. Our social fabric is being held together with string and safety pins. Be prepared for another dip in the economy which may come out of the blue this time, not as well telegraphed as the October surprise of 2008.
Frank must think he's running for re-election soon (even-numbered years, Barney) to make such a blustery statement as he did today.
Dow 9,070.72, -26.00 (0.29%)
NASDAQ 1,967.76, -7.75 (0.39%)
S&P 500 975.15, -4.47 (0.46%)
NYSE Composite 6,280.57, -48.10 (0.76%)
The tone was definitely more to the negative today, however, as decliners raced past advancing issues, 3909-2416. New highs continued their dominance over new lows, 138-53. Volume was sluggish again, a trend which has persisted for months.
NYSE Volume 1,258,526,000
NASDAQ Volume 2,126,488,000
While stocks were just dawling along, commodities were taking it on the chin in a big, deflationary way. September crude fell $3.38, to $63.35. Gold was off sharply for the second straight day, losing $12.00, to $929.70. Silver also slid 48 cents, back down to $13.26. In the raw materials of the commodity world, where reality has a definite price, the outlook continues to sour. Due to the worldwide slowdown in industrial output, there is a glut of everything on the market; from livestock to oil to precious metals to grain, copper and natural gas, the abundance is evident on the ground, in the ground and above the ground. The deflationary spiral the Fed and other central banks have so stridently attempted to avoid is now becoming an unmistakable fact of life. Nobody's buying. All prices will fall, and continue to fall, for at least another six to twelve months.
The absence of pricing power will continue to cause economic disruptions, especially in areas in which prices are fixed, such as taxation. Property values have plunged, but governments have been slow and/or reluctant to re-assess property in accordance with the new reality. Thus, the coming wave of foreclosures will not only include mortgages, but municipalities are facing an avalanche of tax deliquencies and, subsequently, revenue shortfalls. The dance of death for governments across the landscape is only in the third inning of a nine-inning game and the big hitters are just beginning to get a bead on the ball. Upside-down balance sheets for towns, cities and states are quickly becoming the norm and not all the money created out of thin air by the Fed will save them.
This is the catastrophe which cannot be fixed by stimulus or bailout legislation. It will take an actual reordering of priorites by governments of all size, to stop the bloat at every level and make drastic cuts in expenses, personnel, pensions and benefits. If you thought the economy was on the mend, just wait until the end of the third quarter when the facts of life become naked to the eye. Americans are wallowing in seas of red ink in both the private and public sectors. Manufacturing has completely crumbled. Cottage indutries and home businesses will sprout from coast to coast in order to bring in extra cash or merely to survive.
Stocks are only a part of the bigger picture. The government has failed miserably and still won't admit it. Our political structure has been poisoned by lobbyists and liars in high position. Our social fabric is being held together with string and safety pins. Be prepared for another dip in the economy which may come out of the blue this time, not as well telegraphed as the October surprise of 2008.
Tuesday, July 28, 2009
Markets Take a Breather... Topped Out?
Just a quick peed at a short term chart of the Dow indicates that stocks have stalled over the last three sessions as earnings season winds down. What seems to be a psychological barrier exists at the 9100 level, but underpinning the pressure on traders is the non-confirmation in the Dow Jones Transportation Index (DJT) that was spoken of here last week.
Without confirmation of a breakout in the transports above the 3717 (January 6, 2009) level (currently 3523), there will be no talk of a new bull market, even though the possibility of one emerging still exists. Traders and analysts are becoming increasingly cautious about making market predictions, still reeling from the effects of last Autumn's tsunami of price declines.
There's also some confusion about just where stocks would have to go in order for a new bull to be proclaimed. Since the current bear is closing in on two years of age (October 2007), this bear may not have much further to proceed. At the very least, the rebound from March is encouraging to the bulls, as the incipient rally will soon reach 5 months. As bear market rallies go, that's a reasonable time frame. Naturally, continued gains would produce the much-desired "V bottom," though macro forces and experience tell us that a "W" is more likely, with the potential for either a truncated or extended third leg possible. For reference, take a look at a Dow chart of 2002-2003, where the Index bottomed just above 7500 at the end of September 2002, and rallied for a short time until hitting the next bottom around 7850 in March, 2003, just over 5 months later.
There were more zig-zags and I am oversimplifying, but the pattern is there for analysis, and could be re-emerging. Also notable is that the War in Iraq began with the beginning of the bull in March, 2003. There may be comparable political and military implications afoot, with increased troop presence in Afghanistan, though other conditions are not so closely aligned.
The issue is whether stocks on the Industrial and Transport indices have to reach January 2009 levels for confirmation or go back to November 2008 rebound highs. There's a big difference. On the Industrials, the November high was 9625; for the transports, a nip over 4000 is the sweet spot.
In any case, hedging for another down leg might be the prudent course at this point in time.
Dow 9,096.72, -11.79 (0.13%)
NASDAQ 1,975.51, +7.62 (0.39%)
S&P 500 979.62, -2.56 (0.26%)
NYSE Composite 6,328.67, -35.99 (0.57%)
The major indices spent almost the entire session in the red, with only the NASDAQ ending positive, a recurring theme. advancing issues held sway slightly over losers, 3163-3130. There were 165 new highs to just 71 new lows, lending credence to the bull ideology. Volume was moderately better than the past two sessions, another bullish signal.
NYSE Volume 1,280,160,000
NASDAQ Volume 2,236,427,000
If the stock market is taking a pause from screaming "recovery," commodities are singing a deflationary tune. September crude fell $1.15, to $67.23. Gold dropped $14.60, to $941.70. Silver lost 25 cents, to $13.74, though the precious metals are coming off two productive weeks of gains. Livestock and grain futures continued to experience price pressures.
There was little in the way of corporate earnings, though Office Depot (ODP) experienced a large second quarter loss. With businesses of every size cutting back, that's not much of a surprise. The stock lost nearly 20%, down 97 cents, to 4.38.
US Steel (X) reported a loss of $392 million, or $2.92 per share for the quarter ended June 30. Sagging demand for steel and steel products has pushed prices lower and crippled most producers. Fallout from the auto business is seen as a major factor affecting both prices and the profits of steel companies. The loss was the second straight quarterly for US Steel.
The S&P/Case-Shiller Home Price Index showed its first gain in nearly three years, though it could be more of a one-off than anything else. After dropping for 34 straight months, the 0.5% increase may amount to nothing more than a rounding error. With foreclosures still extremely high and unemployment showing few signs of abating, home prices may do a double-dip, just like stocks.
Without confirmation of a breakout in the transports above the 3717 (January 6, 2009) level (currently 3523), there will be no talk of a new bull market, even though the possibility of one emerging still exists. Traders and analysts are becoming increasingly cautious about making market predictions, still reeling from the effects of last Autumn's tsunami of price declines.
There's also some confusion about just where stocks would have to go in order for a new bull to be proclaimed. Since the current bear is closing in on two years of age (October 2007), this bear may not have much further to proceed. At the very least, the rebound from March is encouraging to the bulls, as the incipient rally will soon reach 5 months. As bear market rallies go, that's a reasonable time frame. Naturally, continued gains would produce the much-desired "V bottom," though macro forces and experience tell us that a "W" is more likely, with the potential for either a truncated or extended third leg possible. For reference, take a look at a Dow chart of 2002-2003, where the Index bottomed just above 7500 at the end of September 2002, and rallied for a short time until hitting the next bottom around 7850 in March, 2003, just over 5 months later.
There were more zig-zags and I am oversimplifying, but the pattern is there for analysis, and could be re-emerging. Also notable is that the War in Iraq began with the beginning of the bull in March, 2003. There may be comparable political and military implications afoot, with increased troop presence in Afghanistan, though other conditions are not so closely aligned.
The issue is whether stocks on the Industrial and Transport indices have to reach January 2009 levels for confirmation or go back to November 2008 rebound highs. There's a big difference. On the Industrials, the November high was 9625; for the transports, a nip over 4000 is the sweet spot.
In any case, hedging for another down leg might be the prudent course at this point in time.
Dow 9,096.72, -11.79 (0.13%)
NASDAQ 1,975.51, +7.62 (0.39%)
S&P 500 979.62, -2.56 (0.26%)
NYSE Composite 6,328.67, -35.99 (0.57%)
The major indices spent almost the entire session in the red, with only the NASDAQ ending positive, a recurring theme. advancing issues held sway slightly over losers, 3163-3130. There were 165 new highs to just 71 new lows, lending credence to the bull ideology. Volume was moderately better than the past two sessions, another bullish signal.
NYSE Volume 1,280,160,000
NASDAQ Volume 2,236,427,000
If the stock market is taking a pause from screaming "recovery," commodities are singing a deflationary tune. September crude fell $1.15, to $67.23. Gold dropped $14.60, to $941.70. Silver lost 25 cents, to $13.74, though the precious metals are coming off two productive weeks of gains. Livestock and grain futures continued to experience price pressures.
There was little in the way of corporate earnings, though Office Depot (ODP) experienced a large second quarter loss. With businesses of every size cutting back, that's not much of a surprise. The stock lost nearly 20%, down 97 cents, to 4.38.
US Steel (X) reported a loss of $392 million, or $2.92 per share for the quarter ended June 30. Sagging demand for steel and steel products has pushed prices lower and crippled most producers. Fallout from the auto business is seen as a major factor affecting both prices and the profits of steel companies. The loss was the second straight quarterly for US Steel.
The S&P/Case-Shiller Home Price Index showed its first gain in nearly three years, though it could be more of a one-off than anything else. After dropping for 34 straight months, the 0.5% increase may amount to nothing more than a rounding error. With foreclosures still extremely high and unemployment showing few signs of abating, home prices may do a double-dip, just like stocks.
Monday, July 27, 2009
Stocks Flat As Consolidation Appears Likely
US stocks spent the majority of the session in negative territory, only to catch a bid late in the day and record modest gains. As there were few major companies reporting earnings, traders searched for signs of a recovering economy in new home sales data, which surged 11% from the previous month.
At this point, such news from the housing sector is extremely positive, though foreclosures continue to escalate in hardest-hit areas of the county, such as Michigan, California and the Southwest.
Dow 9,108.51, +15.27 (0.17%)
NASDAQ 1,967.89, +1.93 (0.10%)
S&P 500 982.18, +2.92 (0.30%)
NYSE Composite 6,364.66, +27.20 (0.43%)
Internals were in line with the headline numbers, though the trading range was extremely narrow (80 points on the Dow). Not to put too fine a point on it, but nothing much was moving in any direction following a week of relatively strong gains. Advancing issues outnumbered decliners, 3886-2522 and new highs continued their recent reign over new lows, 213-86. Volume was moderate, as traders change positions in what may be another consolidation phase.
NYSE Volume 1,045,247,000
NASDAQ Volume 2,159,129,000
The issue for markets is once again technical, as indices have surged again to positions indicating a recovering economy and possible renewed growth, though signs of such are remain few and far between. With many of the major companies already having reported, the market is likely to experience a bout of profit-taking near term, though many indicators are pointing towards a continuation of the rally.
It would be nice to be able to sound the "all clear" horn, but macro-economic forces, especially the solvency and liquidity issues in the banking fortress, are still in a state of virtual shutdown. Further out, the only geopolitical zone which shows any potential for long-term growth is the Pacific Rim, India and China. The US and Europe remain basket cases with far too much overhang in government deficits, an indirect result of last fall's near catastrophe. Money to lend remains on short leashes, with only the best credit-worthy of borrowers able to dip into the pool. Small business in the private sector offers great potential, but is being stifled without financing, causing a serious negative feedback loop into the general economy.
The US is being kept afloat by the patchwork done by the Fed, Treasury and the continued funding of the huge swath of entitlement programs. Payments to beneficiaries of Social Security, state and local pensions, disability, unemployment insurance and welfare are providing a floor upon which the broader economy will try to grow. It's a very bottom-up approach, and entirely built upon the generosity of Congress and borrowed funds from a variety of sources, a good deal of it in the quantitative easing being undertaken at the Fed.
While it is entirely possible that the Obama stimulus plan will provide enough of a boost to avoid a rerun of 2008, there are serious issues such as inflation, ballooning state government deficits and the unusually high rate of unemployment. Until there are actual jobs being created, it's more or less a slowly plodding domestically-based cash economy without real gains in either productivity and job creation. As such, it's difficult to recommend any long-term stock buying. The market remains a casino for quick returns or losses.
Commodity trading was also sluggish. September light crude rose 33 cents, to $68.38. Gold gained 40 cents, to $956.30, and silver was up 12 cents, to $13.99. Oil remains overpriced in consideration of demand, flat to declining even in the full bloom of summer.
More companies report on Tuesday. The ones which will be watched the closest are Deutsche Bank (DB), Hitachi (HIT), Universal Health Services (UHS), United States Steel (X) and Valero Energy (VLO).
At this point, such news from the housing sector is extremely positive, though foreclosures continue to escalate in hardest-hit areas of the county, such as Michigan, California and the Southwest.
Dow 9,108.51, +15.27 (0.17%)
NASDAQ 1,967.89, +1.93 (0.10%)
S&P 500 982.18, +2.92 (0.30%)
NYSE Composite 6,364.66, +27.20 (0.43%)
Internals were in line with the headline numbers, though the trading range was extremely narrow (80 points on the Dow). Not to put too fine a point on it, but nothing much was moving in any direction following a week of relatively strong gains. Advancing issues outnumbered decliners, 3886-2522 and new highs continued their recent reign over new lows, 213-86. Volume was moderate, as traders change positions in what may be another consolidation phase.
NYSE Volume 1,045,247,000
NASDAQ Volume 2,159,129,000
The issue for markets is once again technical, as indices have surged again to positions indicating a recovering economy and possible renewed growth, though signs of such are remain few and far between. With many of the major companies already having reported, the market is likely to experience a bout of profit-taking near term, though many indicators are pointing towards a continuation of the rally.
It would be nice to be able to sound the "all clear" horn, but macro-economic forces, especially the solvency and liquidity issues in the banking fortress, are still in a state of virtual shutdown. Further out, the only geopolitical zone which shows any potential for long-term growth is the Pacific Rim, India and China. The US and Europe remain basket cases with far too much overhang in government deficits, an indirect result of last fall's near catastrophe. Money to lend remains on short leashes, with only the best credit-worthy of borrowers able to dip into the pool. Small business in the private sector offers great potential, but is being stifled without financing, causing a serious negative feedback loop into the general economy.
The US is being kept afloat by the patchwork done by the Fed, Treasury and the continued funding of the huge swath of entitlement programs. Payments to beneficiaries of Social Security, state and local pensions, disability, unemployment insurance and welfare are providing a floor upon which the broader economy will try to grow. It's a very bottom-up approach, and entirely built upon the generosity of Congress and borrowed funds from a variety of sources, a good deal of it in the quantitative easing being undertaken at the Fed.
While it is entirely possible that the Obama stimulus plan will provide enough of a boost to avoid a rerun of 2008, there are serious issues such as inflation, ballooning state government deficits and the unusually high rate of unemployment. Until there are actual jobs being created, it's more or less a slowly plodding domestically-based cash economy without real gains in either productivity and job creation. As such, it's difficult to recommend any long-term stock buying. The market remains a casino for quick returns or losses.
Commodity trading was also sluggish. September light crude rose 33 cents, to $68.38. Gold gained 40 cents, to $956.30, and silver was up 12 cents, to $13.99. Oil remains overpriced in consideration of demand, flat to declining even in the full bloom of summer.
More companies report on Tuesday. The ones which will be watched the closest are Deutsche Bank (DB), Hitachi (HIT), Universal Health Services (UHS), United States Steel (X) and Valero Energy (VLO).
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