Today was moving day.
Traders moved in and out of positions, realigning their portfolios into what they believe to be the best stocks over the near term, that time frame likely being through December and the holiday season. That is why sector rotation was so evident today, as investors shed shares in basic materials, conglomerates, transportation and energy (the 4 sectors which closed in the red) and into consumer cyclical and non-cyclical stocks. Those two sectors were the biggest movers, up 0.71% and 1.11%, respectively, and another reason why volume was high, but the range in which stocks traded was very tight.
The Dow moved a total of 63 points from top to bottom, which would normally be suggesting a sluggish market, but the overall picture was more dynamic, as volumes exceeded the prior two days.
Dow 9,820.20, +36.28 (0.37%)
Nasdaq 2,132.86, +6.11 (0.29%)
S&P 500 1,068.30, +2.81 (0.26%)
NYSE Composite 7,016.92, +14.75 (0.21%)
The lack of breadth also contributed to the smallish gains. Advancers beat decliners narrowly, 3561-2887. New highs finished ahead of new lows, but not nearly with as much room between them as on Wednesday, 360-44. Notably, the number of new lows was cut in half from most of this week's daily count, an encouraging sign.
Readers will note a major change in how NYSE volume is expressed. Instead of using simple closed volume, from this day forward, we will display consolidated volume, which includes extraneous trading platforms unrecognized by straight Big Board volume calculations.
NYSE Volume 6,744,731,000
Nasdaq Volume 3,107,309,750
There was no economic news released by any government agency, though the Bureau of Labor Statistics did report that unemployment has reached levels above the national average (9.7%) in 14 states. The hardest hit was Michigan, at 15.4%, while the best place to keep a job is in North Dakota, which reported unemployment at 4.3%. We're unsure what people actually do in North Dakota, but apparently, nearly everybody is doing it.
While the mid-section of the country is hardly suffering at all, the far West - California, Nevada and Oregon, specifically - has been hit the worst, with unemployment above 12% in each of those states. Nearly every Southern state has reached or exceeded 10%, along with Ohio and Illinois.
Those figures did not matter much to Wall Street, which is becoming more and more focused on 3rd quarter earnings reports, which will begin flowing to the market within 3 weeks. Expectations, once again, are quite high that companies will show top-line growth as opposed to profits squeezed from cost-cutting and job elimination.
That lies ahead. For now, the rally lives on.
Friday, September 18, 2009
Thursday, September 17, 2009
Profit Pause
Today was the day to take profits and/or jump onto the rally bandwagon. The major indices hugged the flatline most of the day, but early afternoon was the most opportune time to stake out a position. With most stocks down at that time - and there wasn't much time to do so - it was prime time for buyers, of whom there are plenty these days.
At some point, this market will turn back, but it wasn't today, and, as mentioned yesterday, is an event which is difficult, if not impossible, to predict.
Dow 9,783.92, -7.79 (0.08%)
NASDAQ 2,126.75, -6.40 (0.30%)
S&P 500 1,065.49, -3.27 (0.31%)
NYSE Composite 7,002.17, -35.97 (0.51%)
The downside close, however slight, ended a three-day winning streak for stocks, which have closed to the upside 8 of the previous 10 sessions. Decliners led advancing issues, 3492-2984, but new highs remained ahead of new lows by a widening margin, 517-95. Volume was once again strong.
NYSE Volume 1,512,904,000
NASDAQ Volume 2,641,632,000
Commodities also cooled off, with light crude for October delivery declining 4 cents, to $72.47. Gold gave back $6.70, to $1,013.50, while silver fell 17 cents to $17.27.
Initial jobless claims were lower for the most recent period, as were continuing claims. Building permits and new home starts showed a slight increase for August. The Philadelphia Fed reported an uptick in regional business activity index, to 14.1 in September, a substantial rise from the 4.2 figure recorded in August.
The market just shrugged off these positive developments as traders focused on rotating out of winners and losers, taking profits and planning their next moves.
With a day such as this setting the stage for Friday, markets could go any which way, though the impetus still rmains to the upside. It is understandable that the market pause like this before surging ahead to new ground as stocks have been on a strong tear for months. Booking profits at this juncture seems prudent, though there certainly appears to be more strong days just ahead.
At some point, this market will turn back, but it wasn't today, and, as mentioned yesterday, is an event which is difficult, if not impossible, to predict.
Dow 9,783.92, -7.79 (0.08%)
NASDAQ 2,126.75, -6.40 (0.30%)
S&P 500 1,065.49, -3.27 (0.31%)
NYSE Composite 7,002.17, -35.97 (0.51%)
The downside close, however slight, ended a three-day winning streak for stocks, which have closed to the upside 8 of the previous 10 sessions. Decliners led advancing issues, 3492-2984, but new highs remained ahead of new lows by a widening margin, 517-95. Volume was once again strong.
NYSE Volume 1,512,904,000
NASDAQ Volume 2,641,632,000
Commodities also cooled off, with light crude for October delivery declining 4 cents, to $72.47. Gold gave back $6.70, to $1,013.50, while silver fell 17 cents to $17.27.
Initial jobless claims were lower for the most recent period, as were continuing claims. Building permits and new home starts showed a slight increase for August. The Philadelphia Fed reported an uptick in regional business activity index, to 14.1 in September, a substantial rise from the 4.2 figure recorded in August.
The market just shrugged off these positive developments as traders focused on rotating out of winners and losers, taking profits and planning their next moves.
With a day such as this setting the stage for Friday, markets could go any which way, though the impetus still rmains to the upside. It is understandable that the market pause like this before surging ahead to new ground as stocks have been on a strong tear for months. Booking profits at this juncture seems prudent, though there certainly appears to be more strong days just ahead.
Wednesday, September 16, 2009
Stocks Continue to Pop on Production; Gold Soars
There was no slowing down the upside freight train as the major indices posted their 8th gain in the past 9 sessions and third straight winner at mid-week.
All sectors were positive, led by conglomerates, financials, basic materials and capital goods. Economic news included improved industrial production, up 0.8% in August, with capacity utilization gaining to 69.6% from a revised July figure of 69.0. CPI was benign, up 0.4%, with the core number up 0.1. Continuing a string of positive economic data, investors clambered back into the markets for more of the financial feast currently unfolding.
That this rally has not only legs, but now, euphemistically, wings, and is soaring, is remarkable considering where we were just a year ago, on the brink of global financial collapse. Through whatever means, the Fed and Treasury, working alongside central banks from countries around the globe, managed to avert severity and bring markets back to functional, realistic levels. How much further economic recovery can bring the market at this juncture is still a bit problematic and stressing, though the general consensus has now shifted to extreme positivism.
At some point, the market will balk and give back some share of profits, but timing that event is a foolhardy endeavor. Those who blanch at the first signs of weakness are likely to leave money on the table as any downturn will probably be short-lived and small. While some are calling this a stock-pickers market it appears to be anything but, as shares of just about anything have participated in this rally. Companies with clean balance sheets, strong management and stable product or service lines have fared the best. Companies are once again executing on their business plans with the worst fears behind them. Any money that has not participated as of yet has missed some of the most substantial gains though there are surely more to come.
The absence of any competition for stocks is also fueling the rally. So long as the Fed keeps rates at zero, this kind of activity in markets is to be expected. Money must go somewhere and the best returns are currently in equities.
Dow 9,791.71, +108.30 (1.12%)
NASDAQ 2,133.15, +30.51 (1.45%)
S&P 500 1,068.76, +16.13 (1.53%)
NYSE Composite 7,038.14, +121.07 (1.75%)
Simple indicators confirmed the headline numbers from the averages. Gainers beat losers by the widest margin in weeks, 5009-1499, while new highs ramped up dramatically, to another multi-year daily high of 586. There were 97 new lows. Those high-low numbers should begin to become even more dramatic, as stocks retrace the collapse of last year. This trend has completely reversed, signifying a new, healthy, bull market. Volume on the day was also at elevated levels. Stocks are close to overheating, though nobody will sound an alarm when they do. The risk of another tumultuous collapse has been all but washed out. Confidence is returning in a very big way.
NYSE Volume 1,581,164,000
NASDAQ Volume 2,738,888,000
Commodities also joined in the fun. Oil kicked up another $1.58 at $72.51, but the metals were the real story, with gold gaining $13.90, to $1,020.20, and silver up another 43 cents, to $17.43. Gold is once again being viewed as a solid hedge against the declining US currency and all the government deficits and guarantees of financial institutions that have fueled the comeback. Gold could easily top $1200 in coming months as there is still a good deal of work to be done on the overall global economy. Even eventual dollar stability should not be able to stop the run in gold and silver through the next 12-18 months.
This rally train left the station long ago, and it's running at nearly full speed. Options players have also enjoyed a heyday, with expiration on Friday. With that in mind, a slight pullback for profit-taking would not be surprising, though, honestly, in this environment, it may only last a manner of minutes.
All sectors were positive, led by conglomerates, financials, basic materials and capital goods. Economic news included improved industrial production, up 0.8% in August, with capacity utilization gaining to 69.6% from a revised July figure of 69.0. CPI was benign, up 0.4%, with the core number up 0.1. Continuing a string of positive economic data, investors clambered back into the markets for more of the financial feast currently unfolding.
That this rally has not only legs, but now, euphemistically, wings, and is soaring, is remarkable considering where we were just a year ago, on the brink of global financial collapse. Through whatever means, the Fed and Treasury, working alongside central banks from countries around the globe, managed to avert severity and bring markets back to functional, realistic levels. How much further economic recovery can bring the market at this juncture is still a bit problematic and stressing, though the general consensus has now shifted to extreme positivism.
At some point, the market will balk and give back some share of profits, but timing that event is a foolhardy endeavor. Those who blanch at the first signs of weakness are likely to leave money on the table as any downturn will probably be short-lived and small. While some are calling this a stock-pickers market it appears to be anything but, as shares of just about anything have participated in this rally. Companies with clean balance sheets, strong management and stable product or service lines have fared the best. Companies are once again executing on their business plans with the worst fears behind them. Any money that has not participated as of yet has missed some of the most substantial gains though there are surely more to come.
The absence of any competition for stocks is also fueling the rally. So long as the Fed keeps rates at zero, this kind of activity in markets is to be expected. Money must go somewhere and the best returns are currently in equities.
Dow 9,791.71, +108.30 (1.12%)
NASDAQ 2,133.15, +30.51 (1.45%)
S&P 500 1,068.76, +16.13 (1.53%)
NYSE Composite 7,038.14, +121.07 (1.75%)
Simple indicators confirmed the headline numbers from the averages. Gainers beat losers by the widest margin in weeks, 5009-1499, while new highs ramped up dramatically, to another multi-year daily high of 586. There were 97 new lows. Those high-low numbers should begin to become even more dramatic, as stocks retrace the collapse of last year. This trend has completely reversed, signifying a new, healthy, bull market. Volume on the day was also at elevated levels. Stocks are close to overheating, though nobody will sound an alarm when they do. The risk of another tumultuous collapse has been all but washed out. Confidence is returning in a very big way.
NYSE Volume 1,581,164,000
NASDAQ Volume 2,738,888,000
Commodities also joined in the fun. Oil kicked up another $1.58 at $72.51, but the metals were the real story, with gold gaining $13.90, to $1,020.20, and silver up another 43 cents, to $17.43. Gold is once again being viewed as a solid hedge against the declining US currency and all the government deficits and guarantees of financial institutions that have fueled the comeback. Gold could easily top $1200 in coming months as there is still a good deal of work to be done on the overall global economy. Even eventual dollar stability should not be able to stop the run in gold and silver through the next 12-18 months.
This rally train left the station long ago, and it's running at nearly full speed. Options players have also enjoyed a heyday, with expiration on Friday. With that in mind, a slight pullback for profit-taking would not be surprising, though, honestly, in this environment, it may only last a manner of minutes.
Tuesday, September 15, 2009
Double Top Breakout for Stocks; Silver Tops $17
The markets continued to tack on gains Monday and Tuesday, confirming a double top breakout on the latter, promising more gains straight ahead. Tuesday's trade was touch-and-go early on, as the market digested solid August retail sales figures (up 2.7%, +1.1 ex-autos) and an uptick in the Producer's Price Index (PPI), which was up a solid 1.7% (+0.2% core). What gave investor's caution was Best Buy's (BBY) quarterly report, in which the nation's largest electronics retailer missed earnings estimates - 0.37 actual vs. 0.42 estimate - but raised guidance for the year.
Expecting much more from the retailer, especially since Best Buy was poised to benefit greatly from the demise of Circuit City, which went bankrupt and closed all its stores earlier this year, the stock sold off, losing 2.09, to $38.32, a dip of more than 5%. The overall market viewed this as another sign that the consumer is not yet ready to open the wallet for discretionary purchases such as LCD TVs, game consoles and other electronic and high-ticket items.
Shortly after 10:00 am, during a question-and-answer period, Fed Chairman Ben Bernanke let it slip that the recession was "probably over" which gave everyone a small boost of confidence. Markets really didn't begin to take off until after President Barack Obama's first speech of the day, which ended about 11:30 am. It was as though traders were waiting to see if eithre Bernanke or Obama would drop a verbal bomb. When they didn't, it was off to the races in a broad-based strong rally.
Dow 9,683.41, +56.61 (0.59%)
NASDAQ 2,102.64, +10.86 (0.52%)
S&P 500 1,052.63, +3.29 (0.31%)
NYSE Composite 6,917.07, +37.08 (0.54%)
Advancing issues outpaced decliners by a solid margin, 4183-2254, while new highs registered their highest one-day total since October 2007, at 412. There were 87 new lows, with only 8 of them appearing on the NASDAQ. Volume was once again above normal, as investors rushed to get into equities. The rally continued almost through the end of the session, with stocks closing near their highs. Longer term, the current bull run is more than six months old, though the performance for September, thus far, has been exceptional and in strong opposition to many who were calling for a pull-back.
NYSE Volume 1,496,974,000
NASDAQ Volume 2,400,533,000
Commodities got in on the action as well. Crude oil for October delivery gained $2.07, to $70.93. Gold rebounded, up $5.20, to $1,006.30, but silver was the star of the day, picking up 38 cents per ounce, to $17.00, and higher after the close in New York.
In general terms, this six-month-old rally is getting a little bit winded, as daily gains are measured and not overly large, though by and large the bull market seems to be intact and booming, though a blow-off top could occur at any stage, now that the double top has been confirmed over 9650 on the Dow.
Investors have been taking some money off the table, though much seems to be going right back in to the market, either in sector rotation or buying the same shares on dips, even though there hasn't been much of a break in the upside action.
All the data and speeches by the Fed Chair and the President have set a very positive tone heading into fall and the upcoming earnings season. The downside is that any disappointments will likely be dealt with in rather harsh manners. Companies which fail to meet expectations in the coming weeks could see their share prices slashed without mercy. On the other hand, data continues to point towards recovery. The issue is whether companies can extract profits as a normal function of business, since the past two quarters' profits have come largely from cost-cutting.
Housing and employment continue to underpin the markets, keeping a lid loosely over stocks, for now.
Expecting much more from the retailer, especially since Best Buy was poised to benefit greatly from the demise of Circuit City, which went bankrupt and closed all its stores earlier this year, the stock sold off, losing 2.09, to $38.32, a dip of more than 5%. The overall market viewed this as another sign that the consumer is not yet ready to open the wallet for discretionary purchases such as LCD TVs, game consoles and other electronic and high-ticket items.
Shortly after 10:00 am, during a question-and-answer period, Fed Chairman Ben Bernanke let it slip that the recession was "probably over" which gave everyone a small boost of confidence. Markets really didn't begin to take off until after President Barack Obama's first speech of the day, which ended about 11:30 am. It was as though traders were waiting to see if eithre Bernanke or Obama would drop a verbal bomb. When they didn't, it was off to the races in a broad-based strong rally.
Dow 9,683.41, +56.61 (0.59%)
NASDAQ 2,102.64, +10.86 (0.52%)
S&P 500 1,052.63, +3.29 (0.31%)
NYSE Composite 6,917.07, +37.08 (0.54%)
Advancing issues outpaced decliners by a solid margin, 4183-2254, while new highs registered their highest one-day total since October 2007, at 412. There were 87 new lows, with only 8 of them appearing on the NASDAQ. Volume was once again above normal, as investors rushed to get into equities. The rally continued almost through the end of the session, with stocks closing near their highs. Longer term, the current bull run is more than six months old, though the performance for September, thus far, has been exceptional and in strong opposition to many who were calling for a pull-back.
NYSE Volume 1,496,974,000
NASDAQ Volume 2,400,533,000
Commodities got in on the action as well. Crude oil for October delivery gained $2.07, to $70.93. Gold rebounded, up $5.20, to $1,006.30, but silver was the star of the day, picking up 38 cents per ounce, to $17.00, and higher after the close in New York.
In general terms, this six-month-old rally is getting a little bit winded, as daily gains are measured and not overly large, though by and large the bull market seems to be intact and booming, though a blow-off top could occur at any stage, now that the double top has been confirmed over 9650 on the Dow.
Investors have been taking some money off the table, though much seems to be going right back in to the market, either in sector rotation or buying the same shares on dips, even though there hasn't been much of a break in the upside action.
All the data and speeches by the Fed Chair and the President have set a very positive tone heading into fall and the upcoming earnings season. The downside is that any disappointments will likely be dealt with in rather harsh manners. Companies which fail to meet expectations in the coming weeks could see their share prices slashed without mercy. On the other hand, data continues to point towards recovery. The issue is whether companies can extract profits as a normal function of business, since the past two quarters' profits have come largely from cost-cutting.
Housing and employment continue to underpin the markets, keeping a lid loosely over stocks, for now.
Friday, September 11, 2009
Remembering 9/11; No Break for Bears; Gold Tops $1000
The trading day began with moments of silence... remembering the victims of the awful attacks on the World Trade Center 8 years earlier. At the close, strangely enough, the Dow Jones Industrials stood 0.10 lower than the close on September 10, 2001. It was a sombre session, within a tight trading range, the mood almost preoccupied with previous events.
While many market participants recalled 9/11, others were focused on more current disasters, namely the fall of Lehman Brothers, which occurred just one year prior. The US economy and the markets have been through a metaphorical wringer since last September, witnessing the near-collapse of the entire financial system, followed, thankfully, by a subsequent recovery.
Though all of the major indices closed lower on the day, ending a five-day winning streak for the bulls, the losses were barely noticeable. For the week, the Dow finished ahead by 164 points, the NASDAQ improved by 62, and the S&P added 26 points, all reinforcing the recovery wind that has swept over the financial landscape.
Dow 9,605.41. -22.07 (0.23%)
NASDAQ 2,080.90, -3.12 (0.15%)
S&P 500 1,042.73, -1.41 (0.14%)
NYSE Composite 6,843.82, -6.99 (0.10%)
Market internals ended on a mixed note, with decliners gaining a small, late advantage over advancing issues, 3223-3205. New highs continued to dominate new lows, however, 349-88, giving every indication that the rally will not wilt soon. Volume returned to its sluggish ways, with trading activity close to the lowest level of the week, though the NASDAQ still seems to be the place to which money is flowing.
NYSE Volume 1,388,797,000
NASDAQ Volume 2,347,513,000
Economic reports offered some vague insights. Consumer sentiment shot up to 70.2 for September, after a showing of 65.7 in August. Wholesale inventories dropped 1.4%, the 11th consecutive monthly decline. This shows that goods are still moving at a very sluggish pace and wholesalers are playing close to the vest, though eventually manufacturers will be called upon to replenish inventories. When that begins to happen, a strong reaction by the markets is almost assured.
Another positive sign came at 2:00, when the US Treasury announced a budget deficit for August of $111.4B, when analysts were expecting much worse, though the markets barely noticed.
Commodities finished in very mixed fashion. Oil was hammered down $2.65, to $69.29, on oversupply concerns, but gold finally topped the $1000 mark, ending with a gain of $9.60, at $1,006.40. Silver lagged, up only 3 cents, to $16.70.
From a chartist's perspective, the trading day was positive for bulls, as stocks advanced in the early going, fell to the lows of the day shortly after noon and then recovered into the close. With the slightly lower finish, it has set the classic bear trap for the opening session next week.
While many market participants recalled 9/11, others were focused on more current disasters, namely the fall of Lehman Brothers, which occurred just one year prior. The US economy and the markets have been through a metaphorical wringer since last September, witnessing the near-collapse of the entire financial system, followed, thankfully, by a subsequent recovery.
Though all of the major indices closed lower on the day, ending a five-day winning streak for the bulls, the losses were barely noticeable. For the week, the Dow finished ahead by 164 points, the NASDAQ improved by 62, and the S&P added 26 points, all reinforcing the recovery wind that has swept over the financial landscape.
Dow 9,605.41. -22.07 (0.23%)
NASDAQ 2,080.90, -3.12 (0.15%)
S&P 500 1,042.73, -1.41 (0.14%)
NYSE Composite 6,843.82, -6.99 (0.10%)
Market internals ended on a mixed note, with decliners gaining a small, late advantage over advancing issues, 3223-3205. New highs continued to dominate new lows, however, 349-88, giving every indication that the rally will not wilt soon. Volume returned to its sluggish ways, with trading activity close to the lowest level of the week, though the NASDAQ still seems to be the place to which money is flowing.
NYSE Volume 1,388,797,000
NASDAQ Volume 2,347,513,000
Economic reports offered some vague insights. Consumer sentiment shot up to 70.2 for September, after a showing of 65.7 in August. Wholesale inventories dropped 1.4%, the 11th consecutive monthly decline. This shows that goods are still moving at a very sluggish pace and wholesalers are playing close to the vest, though eventually manufacturers will be called upon to replenish inventories. When that begins to happen, a strong reaction by the markets is almost assured.
Another positive sign came at 2:00, when the US Treasury announced a budget deficit for August of $111.4B, when analysts were expecting much worse, though the markets barely noticed.
Commodities finished in very mixed fashion. Oil was hammered down $2.65, to $69.29, on oversupply concerns, but gold finally topped the $1000 mark, ending with a gain of $9.60, at $1,006.40. Silver lagged, up only 3 cents, to $16.70.
From a chartist's perspective, the trading day was positive for bulls, as stocks advanced in the early going, fell to the lows of the day shortly after noon and then recovered into the close. With the slightly lower finish, it has set the classic bear trap for the opening session next week.
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