US stocks made good gains on the first full day of post-holiday trading. Seemingly, not enough investors received notice that September is a bad month for stocks. Notwithstanding last year's debacle, it may take iron wills to keep the current rally going, though after a brief pullback in the prior week, the major indices seem to have shaken off much of the pessimism being preached at the school of the short. In fact, the one big down day seems to have been simply repositioning by large traders, who took profits and shifted risk from one sector to another.
While the rally of Friday just past may have been tied to some short-covering in advance of the three-day weekend, there was little doubt about the direction on Tuesday as the Dow, NASDAQ and S&P all opened positive and remained to the upside throughout the session. The Dow ended within shouting distance of the high for the year, which is 9580.63, achieved on August 27.
In the broader markets, the gains were substantial, with the NYSE Composite sporting a 1.34% increase on the day. The NASDAQ closed at an 11-month high.
Dow 9,497.34, +56.07 (0.59%)
NASDAQ 2,037.77, +18.99 (0.94%)
S&P 500 1,025.39, +8.99 (0.88%)
NYSE Composite 6,726.07, +88.94 (1.34%)
Simple indicators are shouting "buy" again, as advancers beat down decliners, 4478-1926, and new highs outpaced new lows, 271-58. The high-low indicator has headed in a direction that has not been seen in over two years, where the number of daily new highs have exceeded new lows for more than a month without a break. As simple an indicator as can be imagined, this one has been reliably predicting rises and falls since August of 2007 and it is now saying that the rally will continue. Even though the pace may be slow, it shows every sign that it will be steady. Volume, once again, was on the low side, though this has become the norm - around 2 billion shares on the NASDAQ and between 1.3 and 1.7 billion on the NYSE.
NYSE Volume 1,396,714,000
NASDAQ Volume 2,010,061,000
While stocks continued their climb for the third straight session, commodities were gaining in price as well. Crude oil surged $3.08, to $71.10; gold traded above $1000 for the first time in over a year, closing at $999.80, up $3.10. Silver has had an impressive run of late as well, closing today at $16.51, up another 23 cents.
Despite the howls from the doom-and-gloomers, all asset classes seem to be on the rise again as the world economies crawl back from the brink of economic catastrophe. Since price realization is a matter better handled by artists than statisticians, the maintenance of smoothly-functioning markets has brought back some level of speculation, though it has been extremely cautious over the past three to four weeks. Investors are still working with a backdrop of last fall and winter and even the crises of 9/11 and the dotcom bubble-bursting are still fresh in many psyches.
It will take some time before full optimism returns to markets and consumers alike, though by the time that occurs, most of the good gains will have been taken. The recent run up demonstrates that most traders believe the worst of the "depression-scare" is behind us. Conspiracy theorists will contend that the entire September surprise of 2008 was a massive swindle by the banks on the American public and designed to elect a Democratic president. They may be on to something, and, if correct, then only good times lie ahead for the US economy.
There is a mountain of debt to overcome, however, and, at the federal and state levels, that debt is still building. Government coffers are going to have to be replenished, and soon, before the aging populace - especially the fast-approaching retirees from the baby boomer generation - devours all accumulated wealth and leaves future generations high and dry. That scenario will take years to play out, though, and the best guesses by the geniuses in their ivory towers in NYC and DC are that the US economy will once more regain prominence.
Those discussions are better suited for late-evenings over beers and sandwiches. For now, the recovery seems to be well underway, with the best parts still ahead. We're now in the final month of the 3rd quarter. Expectations are high that the economy - as measured by GDP - will show a positive number for the quarter. As most seasoned players will concede, we won't know whether we're out a the recession until it's over, but there continues to be considerable signage alone recovery road to suggest that plus signs will stand in front of the next-released numbers.
As for the September theories, they seem not to apply presently. The conditions are vastly different than when most historic declines occurred. While some pullback seems inevitable, nothing really is, and the party continues.
Tuesday, September 8, 2009
Friday, September 4, 2009
Markets Refuse to Buckle
Though just about everybody waited until Friday morning's release of non-farm payroll data from the Labor Dept., the anticipation was overblown as the numbers came in better than expected and were presaged by Wednesday's ADP private payroll report.
The Labor Department reported a loss of 216,000 jobs in August, the lowest level in 12 months. The unemployment rate ticked up to 9.7%, though that didn't seem to bother investors as stocks made gradual gains through the first four hours of trading and then leveled off into the close, prior to the long holiday weekend. Markets are closed Monday in observance of Labor Day.
Dow 9,441.27, +96.66 (1.03%)
NASDAQ 2,018.78, +35.58 (1.79%)
S&P 500 1,016.40, +13.16 (1.31%)
NYSE Composite 6,637.13, +90.53 (1.38%)
Even though volume was extremely light, stocks still ramped up across the board. Advancers beat back decliners, 4937-1455. There were 152 new highs and just 39 new lows, indicating that not only has the much-ballyhooed "correction" not taken place, it may be replaced by a continuation of the 6-month-old rally that continues to arch toward a full-blown bull market.
NYSE Volume 1,154,949,000
NASDAQ Volume 1,743,171,000
In the commodity markets, the metals relaxed following huge price gains this week. Gold was down $1.00, to $$996.70, while silver shed a penny, to close the week at $16.29. Crude oil for October delivery gained just 6 cents, to finish at $68.02.
When all was said and done, stocks gained back almost all of the losses suffered on Tuesday and appear to have stabilized into a consolidated trading range. The next move, unless some economic data appears to contradict recent reports, should be again to the upside. The short breather over the past two weeks has given traders time to take profits, rotate into other secotrs and stake out new positions.
September, usually a dour month, may turn out to be something much better than expected. Stocks are only down marginally and the charts seem to be indicating another surge to the upside is in short order.
The Labor Department reported a loss of 216,000 jobs in August, the lowest level in 12 months. The unemployment rate ticked up to 9.7%, though that didn't seem to bother investors as stocks made gradual gains through the first four hours of trading and then leveled off into the close, prior to the long holiday weekend. Markets are closed Monday in observance of Labor Day.
Dow 9,441.27, +96.66 (1.03%)
NASDAQ 2,018.78, +35.58 (1.79%)
S&P 500 1,016.40, +13.16 (1.31%)
NYSE Composite 6,637.13, +90.53 (1.38%)
Even though volume was extremely light, stocks still ramped up across the board. Advancers beat back decliners, 4937-1455. There were 152 new highs and just 39 new lows, indicating that not only has the much-ballyhooed "correction" not taken place, it may be replaced by a continuation of the 6-month-old rally that continues to arch toward a full-blown bull market.
NYSE Volume 1,154,949,000
NASDAQ Volume 1,743,171,000
In the commodity markets, the metals relaxed following huge price gains this week. Gold was down $1.00, to $$996.70, while silver shed a penny, to close the week at $16.29. Crude oil for October delivery gained just 6 cents, to finish at $68.02.
When all was said and done, stocks gained back almost all of the losses suffered on Tuesday and appear to have stabilized into a consolidated trading range. The next move, unless some economic data appears to contradict recent reports, should be again to the upside. The short breather over the past two weeks has given traders time to take profits, rotate into other secotrs and stake out new positions.
September, usually a dour month, may turn out to be something much better than expected. Stocks are only down marginally and the charts seem to be indicating another surge to the upside is in short order.
Thursday, September 3, 2009
Bulls Take Initiative; Economic Outlook More Positive
It's a big world and US investors seem to be gaining confidence - little by little - in certain companies' ability to deliver goods and/or services at a profit. While governments enjoy the luxury of fiscal irresponsibility, running enormous deficits, businesses are treated rather differently, especially on Wall Street, where no earnings equals no share price. There are enough good companies listed on the major exchanges to continue the current long term upward trend for many more months, notwithstanding the effects of macroeconomic factors, especially job growth and capital formation.
The recovery in progress is one of the more quiet in recent recollection. Many analysts and investors don't even believe it's at all real, that the economy will sink back to less-than-optimum conditions, such as existed in the fall of 2008 and the winter of 2009. Unfortunately, the conditions present then are not even an approximation of economic reality today. Nothing stays down forever; nothing moves in a straight line; no indicator is infallible. We tend to trust ours, as much as our own eyes and ears some times, and that's a danger, but Thursday came in pretty much as expected. Some bulls got a little anxious and moved enough stocks ahead to finish with all the major averages sporting reasonable gains.
Dow 9,344.61, +63.94 (0.69%)
NASDAQ 1,983.20, +16.13 (0.82%)
S&P 500 1,003.24, +8.49 (0.85%)
NYSE Composite 6,546.60, +71.81 (1.11%)
Advancing issues rolled past decliners, 4477-1789. It was a nice little turn aided by some nervous short covering. Betting against rallies can be hazardous to your portfolio and this one is no exception. Economic reports have been neutral to good, evincing signs of a nascent recovery. It's not pretty... yet. New highs also led new lows, 114-46, on now normal, low volume.
NYSE Volume 4,624,282,000
NASDAQ Volume 1,905,575,000
While oil was barely changed, down 9 cents, to $67.96, the metals were skyrocketing. Gold bounded ahead $19.20, while silver added a massive 93 cents, to close at $16.29, a 12-month high.
Friday gets off with either a bang or a yawn as the August non-farms payroll data is released prior to the bell. Heading into the last holiday of summer, there probably won't be a huge reaction in the markets and the afternoon is usually dull. The markets are stabilized as much as possible with sentiment leaning in both directions. It's a nice set-up if your a prudent bull.
The recovery in progress is one of the more quiet in recent recollection. Many analysts and investors don't even believe it's at all real, that the economy will sink back to less-than-optimum conditions, such as existed in the fall of 2008 and the winter of 2009. Unfortunately, the conditions present then are not even an approximation of economic reality today. Nothing stays down forever; nothing moves in a straight line; no indicator is infallible. We tend to trust ours, as much as our own eyes and ears some times, and that's a danger, but Thursday came in pretty much as expected. Some bulls got a little anxious and moved enough stocks ahead to finish with all the major averages sporting reasonable gains.
Dow 9,344.61, +63.94 (0.69%)
NASDAQ 1,983.20, +16.13 (0.82%)
S&P 500 1,003.24, +8.49 (0.85%)
NYSE Composite 6,546.60, +71.81 (1.11%)
Advancing issues rolled past decliners, 4477-1789. It was a nice little turn aided by some nervous short covering. Betting against rallies can be hazardous to your portfolio and this one is no exception. Economic reports have been neutral to good, evincing signs of a nascent recovery. It's not pretty... yet. New highs also led new lows, 114-46, on now normal, low volume.
NYSE Volume 4,624,282,000
NASDAQ Volume 1,905,575,000
While oil was barely changed, down 9 cents, to $67.96, the metals were skyrocketing. Gold bounded ahead $19.20, while silver added a massive 93 cents, to close at $16.29, a 12-month high.
Friday gets off with either a bang or a yawn as the August non-farms payroll data is released prior to the bell. Heading into the last holiday of summer, there probably won't be a huge reaction in the markets and the afternoon is usually dull. The markets are stabilized as much as possible with sentiment leaning in both directions. It's a nice set-up if your a prudent bull.
Wednesday, September 2, 2009
No Follow-Through to Downside
There really wasn't much to trade upon on Wednesday, unless one is prone to picking up bargains the day after a substantial decline. The major indices traded in very narrow ranges and finished with marginal losses across the board. While a fourth straight losing session for the S&P may be significant in a chartist's world, today's close brings that average down to whare it was two weeks ago, hardly a cause for concern.
Oddly enough, there seemed to be more fright toward the close, as all the averages were at break even with about 1/2 hour left in the trading day and then drooped. Volume, which was the big story yesterday (read: planned liquidation of some positions mostly accomplished within a two hour period), was back to its usual somber self. There just wasn't anything for anybody to get excited about, not even the ADP private sector jobs data, which revealed that another 298,000 Americans got pink slips in August. The number was worse than expected, but, then again, expectations for a swift recovery are going to be off the mark. That the number was better than the prior month, which was revised lower (fewer job losses) seemed to be good enough to keep markets stable, at least.
Though the ADP number seems to usually upstage the government non-farm payroll data, which always is delivered two days later, investors may still be watchful for that figure, due out on Friday morning prior to the market open. Suffice it to say that it should not be all that dramatic.
Dow 9,280.67, -29.93 (0.32%)
NASDAQ 1,967.07, -1.82 (0.09%)
S&P 500 994.75, -3.29 (0.33%)
NYSE Composite 6,474.79, -13.02 (0.20%)
Decliners held a slight advantage over advancing issues: 3580-2780. but new highs maintained their edge over new lows, 74-51, though the margin narrowed significantly. The risk of the high-low numbers flopping over is pretty good presently, though I'm personally not buying into the "correction" argument until I see actual carnage of 6-8% declines off the top and heavy volume on a consistent basis. Those two conditions have not been met presently.
NYSE Volume 1,565,960,000
NASDAQ Volume 1,989,856,000
Commodities are behaving as one would like them. Oil finished dead flat at $68.05, while gold zoomed up $22.00, to $978.50, and silver appreciated another 31 cents, to $15.37.
We still have deflation, low interest rates and a sluggish, though recovering economy. Conditions could not be much better for business fundamentals. The correction that is supposed to happen is going to be forgotten soon. Economic data has been just good enough to keep the economy chugging along and there's more than enough investment money sloshing about to keep stocks on a high for some time. The alternatives - real estate and fixed income - don't offer much appeal. The former is too risky and the latter offers no profit.
Oddly enough, there seemed to be more fright toward the close, as all the averages were at break even with about 1/2 hour left in the trading day and then drooped. Volume, which was the big story yesterday (read: planned liquidation of some positions mostly accomplished within a two hour period), was back to its usual somber self. There just wasn't anything for anybody to get excited about, not even the ADP private sector jobs data, which revealed that another 298,000 Americans got pink slips in August. The number was worse than expected, but, then again, expectations for a swift recovery are going to be off the mark. That the number was better than the prior month, which was revised lower (fewer job losses) seemed to be good enough to keep markets stable, at least.
Though the ADP number seems to usually upstage the government non-farm payroll data, which always is delivered two days later, investors may still be watchful for that figure, due out on Friday morning prior to the market open. Suffice it to say that it should not be all that dramatic.
Dow 9,280.67, -29.93 (0.32%)
NASDAQ 1,967.07, -1.82 (0.09%)
S&P 500 994.75, -3.29 (0.33%)
NYSE Composite 6,474.79, -13.02 (0.20%)
Decliners held a slight advantage over advancing issues: 3580-2780. but new highs maintained their edge over new lows, 74-51, though the margin narrowed significantly. The risk of the high-low numbers flopping over is pretty good presently, though I'm personally not buying into the "correction" argument until I see actual carnage of 6-8% declines off the top and heavy volume on a consistent basis. Those two conditions have not been met presently.
NYSE Volume 1,565,960,000
NASDAQ Volume 1,989,856,000
Commodities are behaving as one would like them. Oil finished dead flat at $68.05, while gold zoomed up $22.00, to $978.50, and silver appreciated another 31 cents, to $15.37.
We still have deflation, low interest rates and a sluggish, though recovering economy. Conditions could not be much better for business fundamentals. The correction that is supposed to happen is going to be forgotten soon. Economic data has been just good enough to keep the economy chugging along and there's more than enough investment money sloshing about to keep stocks on a high for some time. The alternatives - real estate and fixed income - don't offer much appeal. The former is too risky and the latter offers no profit.
Tuesday, September 1, 2009
Traders Book Profits; Markets Take a Dip
Contrary to what I posted yesterday about inevitability and the lack thereof in the stock market, investors (many of whom read my blog and no doubt wish to prove me wrong) did what prudence would dictate and booked some profits.
So many profits were booked, in fact, that the selling sparked a mini-panic, sending the major indices down by roughly 2% at the worst of the trading. There's no indication as to what exactly caused all the selling, but it began to occur right after 10:00 am and the worst of it was over by noon, so it looked to be pretty organized, likely by the usual culprits in all this, the Goldman Sachs and Citigroups and JP Morgans.
The brokerages and banks have to book profits, and sending the markets down 2% on volume is nothing to really get excited about. It happens all the time, in bull markets as well as in bears, and there was nothing unusual about this except the overall timing. Market pundits have been calling for this kind of pullback for weeks, so today being the first day of September, it was ripe for the self-fulfilling prophecy trade.
And, while volume was significantly higher, it was still not so extreme as to cause alarm. In fact, large-scale selling of positions that, prior to today, were considered solid, is nothing more than an invitation to buy more because the bull market is really just kicking into a secondary phase in which wild gyrations in both directions will be evident, with the overall result being a slight increase on the indices at the end of each month or quarter.
This one-day event should not cause anyone to second-guess themselves or their positions, except to maybe take a little off the table. Stocks are for the long run, and this is a short-term move. While there's some concern that we may be headed for a "double-dip, " the data doesn't suggest it and the markets won't tolerate any unjustified corrections. September is an odd month, coming at the end of summer and just prior to third quarter earnings. It's essential to stay very focused and not be swayed by short-term thinking as it may all prove to be wrongly-directed.
Dow 9,310.60, -185.68 (1.96%)
NASDAQ 1,968.89, -40.17 (2.00%)
S&P 500 998.04, -22.58 (2.21%)
NYSE Composite 6,487.81, -155.43 (2.34%)
The internals confirmed what was already obvious. Decliners led advancers by a wide margin, 5218-1283, but it is interesting to note that there are still a good number more new highs being posted - even today - than new lows. New highs took the edge once again, 123-48. There were more new highs and fewer new lows than yesterday, which may supply some insight into this little bout of selling, notably, that there were still buyers bidding up the high fliers while not unloading the bottom-feeders. Looks and smells like garden variety profit taking according to those figures. Volume, as noted, was among the top ten highest of the year, but hardly unusual.
NYSE Volume 7,914,128,500
NASDAQ Volume 2,727,714,500
Commodities took the brunt of the selling, mostly those in the energy-related sector. Crude oil for October delivery was thumped again, down $1.91, to $68.05. Natural gas, for which there is an abundance of supply, was smashed lower again, down 16 cents to $2.82. The combination of lower oil, gasoline, heating oil and natural gas has to be seen as a positive for the consumer. Even though Wall Street may not initially appreciate the ramifications of lower energy prices, the gain in purchasing power is to everyone's advantage. Instead of plowing more and more money into non-renewable expenses, consumers, if energy prices continue lower into the winter, will have more discretionary income and spending power. Leading into the final months of 2009, the benefits of a stronger consumer are obvious.
The metals were the only sector showing any gains on the day. Gold added $3.00, gaining to $956.50. Silver was up 14 cents, to $15.06. The silver closing price was the highest since June 11 and continues to indicate higher prices for silver in coming months. Aside from its collectible and intrinsic value, silver enjoys more industrial use than gold, and supply is being strained. If economies worldwide advance, silver could top the $20 it saw in 2008.
Today's trading was expected and hardly a blip on the worldwide equity radar screen. Unless there is significant follow-through Wednesday through Friday, it will be seen as profit-taking and nothing more. If Wednesday's private employment figures from ADP and other data are positive, as today's ISM report was, then the market is taking off on its own tangent and presaging a potential pitfall in months ahead for the US and world economies.
Nothing will be set into stone until the government's non-farm payroll report for August hits the wires on Friday. This is a data-heavy week which bears close scrutiny and an iron will.
So many profits were booked, in fact, that the selling sparked a mini-panic, sending the major indices down by roughly 2% at the worst of the trading. There's no indication as to what exactly caused all the selling, but it began to occur right after 10:00 am and the worst of it was over by noon, so it looked to be pretty organized, likely by the usual culprits in all this, the Goldman Sachs and Citigroups and JP Morgans.
The brokerages and banks have to book profits, and sending the markets down 2% on volume is nothing to really get excited about. It happens all the time, in bull markets as well as in bears, and there was nothing unusual about this except the overall timing. Market pundits have been calling for this kind of pullback for weeks, so today being the first day of September, it was ripe for the self-fulfilling prophecy trade.
And, while volume was significantly higher, it was still not so extreme as to cause alarm. In fact, large-scale selling of positions that, prior to today, were considered solid, is nothing more than an invitation to buy more because the bull market is really just kicking into a secondary phase in which wild gyrations in both directions will be evident, with the overall result being a slight increase on the indices at the end of each month or quarter.
This one-day event should not cause anyone to second-guess themselves or their positions, except to maybe take a little off the table. Stocks are for the long run, and this is a short-term move. While there's some concern that we may be headed for a "double-dip, " the data doesn't suggest it and the markets won't tolerate any unjustified corrections. September is an odd month, coming at the end of summer and just prior to third quarter earnings. It's essential to stay very focused and not be swayed by short-term thinking as it may all prove to be wrongly-directed.
Dow 9,310.60, -185.68 (1.96%)
NASDAQ 1,968.89, -40.17 (2.00%)
S&P 500 998.04, -22.58 (2.21%)
NYSE Composite 6,487.81, -155.43 (2.34%)
The internals confirmed what was already obvious. Decliners led advancers by a wide margin, 5218-1283, but it is interesting to note that there are still a good number more new highs being posted - even today - than new lows. New highs took the edge once again, 123-48. There were more new highs and fewer new lows than yesterday, which may supply some insight into this little bout of selling, notably, that there were still buyers bidding up the high fliers while not unloading the bottom-feeders. Looks and smells like garden variety profit taking according to those figures. Volume, as noted, was among the top ten highest of the year, but hardly unusual.
NYSE Volume 7,914,128,500
NASDAQ Volume 2,727,714,500
Commodities took the brunt of the selling, mostly those in the energy-related sector. Crude oil for October delivery was thumped again, down $1.91, to $68.05. Natural gas, for which there is an abundance of supply, was smashed lower again, down 16 cents to $2.82. The combination of lower oil, gasoline, heating oil and natural gas has to be seen as a positive for the consumer. Even though Wall Street may not initially appreciate the ramifications of lower energy prices, the gain in purchasing power is to everyone's advantage. Instead of plowing more and more money into non-renewable expenses, consumers, if energy prices continue lower into the winter, will have more discretionary income and spending power. Leading into the final months of 2009, the benefits of a stronger consumer are obvious.
The metals were the only sector showing any gains on the day. Gold added $3.00, gaining to $956.50. Silver was up 14 cents, to $15.06. The silver closing price was the highest since June 11 and continues to indicate higher prices for silver in coming months. Aside from its collectible and intrinsic value, silver enjoys more industrial use than gold, and supply is being strained. If economies worldwide advance, silver could top the $20 it saw in 2008.
Today's trading was expected and hardly a blip on the worldwide equity radar screen. Unless there is significant follow-through Wednesday through Friday, it will be seen as profit-taking and nothing more. If Wednesday's private employment figures from ADP and other data are positive, as today's ISM report was, then the market is taking off on its own tangent and presaging a potential pitfall in months ahead for the US and world economies.
Nothing will be set into stone until the government's non-farm payroll report for August hits the wires on Friday. This is a data-heavy week which bears close scrutiny and an iron will.
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