Stocks took a 180 degree turn after the highly-anticipated announcement by the FOMC of the Federal Reserve, first blasting higher (the Dow pushing beyond 9900), but just as suddenly reversing course, heading straight down into the close to finish with the largest losses in nearly a month.
Alarmists will say that this is the beginning of a correction, which they said in May, June and July and again at the end of August, but they will still be wrong. The reasons are simple. First, the Fed announcement was probably their rosiest and most bullish since the financial crisis of a year ago. Second, they - the Fed - hasn't stopped pumping money into markets and reiterated that they would continue that posture. Third, the Fed kept interest rates essentially at zero, right where it's been for a year, and they're surely not backing off from that. Fourth, the timing of the sell-out (as opposed to a sell-off, I'll explain below) was extremely suspect and more than likely engineered by some very large players. Those would be the usual suspects from the failed banks and brokerages at Goldman Sachs, Morgan Stanley, JP Morgan Chase and Bank of America.
This kind of unexpected turn has gotten to be expected by market pros, and they're not going to be swayed into selling, though those who bought in anticipation of the market going higher on the Fed announcement (which it did, initially), may have a while before they get back to even. This was mostly planned, well-organized selling, something like the reverse of a short squeeze, with the big money taking theirs off the top. The rally, which is now more than six months old, remains intact and stocks will recover, probably in a very short time. There simply isn't any better place to put money to work. There's also plenty of support in the Dow 9400-9600 range. This was simply profit-taking and nothing more than that since the fundamentals of the market did not change.
Dow 9,748.55, -81.32 (0.83%)
NASDAQ 2,131.42, -14.88 (0.69%)
S&P 500 1,060.87, -10.79 (1.01%)
NYSE Composite 6,964.69, -82.44 (1.17%)
Declining issues beat advancers, 4080-2388, but evidence of the rally remained in the new highs vs. new lows metric. There were 507 new highs on top of 68 new lows, a very wide margin in a trend that continues to suggest higher stock prices. Volume was solid, though much of that volume had to do with the upside achieved earlier in the day. All told, the sell-out was not impressive and unlikely to encourage those of a bearish inclination very much.
NYSE Volume 6,319,143,500
NASDAQ Volume 2,699,233,750
What may have been more significant was action in commodities and in the dollar index. Right after the Fed announcement, the dollar fell abruptly, but soon after reversed course and finished higher, just the opposite of what stocks did.
Oil was absolutely shattered on the day, finishing down $2.79, to $68.97. The metals did not align, though they were lower. Gold sold off by only $1.10, finishing at $1,014.40. Silver fell 21 cents, to $16.91.
What happens next depends completely upon market sentiment, which has been somewhat positive and isn't likely to change soon, unless Thursday's unemployment claims data - both initial and continuing - come in below expectations. The time has come for employment, even though it is a lagging indicator, to start doing something other than tread water. Ditto the real estate market. Existing home sales data is on tap for Thursday at 10:00 am.
If these numbers are poor or show only incremental improvement, stocks could take an even worse beating, though judging by the exquisite timing by the big money players, there's probably going to be a return to the rally in short order. Obviously, one day does not make a trend, and as unexpected and swift was this decline, coming out of nowhere and running a full 150+ points on the Dow in the final 90 minutes of trading, qualifies as a one off event, completely orchestrated by the crooks and swindlers who brought you 9/11, the financial collapse, the TARP and every other suspect financial event of the past 20 years.
Don't be swayed. Their own greed tells us that stocks will have to go much higher short term.
Wednesday, September 23, 2009
Tuesday, September 22, 2009
Up and Down
Over the past two days, the markets have been practically at a standstill, with trading ensconced in a fairly tight range. After closing down 41 points on Monday, the Dow rose 51 on Tuesday, for a net gain of 10 points. This kind of range-bound gyration is probably due to a number of factors, one being that the market has been on somewhat of a tear and has cooled off for some profit taking, and also the usual waiting game prior to the Fed rate announcement (due Wednesday at 2:15 pm).
While the Fed is poised to do nothing once again, it's probable that they'll spice up the language somewhat, the accompanying press release stating that there are incipient signs of recovery in various parts of the country, though jobs and real estate prices are still acting as a drag on the economy.
Since none of that is anything new, traders will be - more and more every day - looking at stocks from a valuation standpoint, seeking companies that are well-managed, stable, and with solid cash-debt positions. There's also something of a speculative movement ongoing as well in this trader's market. With so many small firms trading at very low prices, investors have been nibbling and gnawing at stocks mostly priced under $20 per share. There are loads of them, some good, others not, but that's a matter for which markets are built.
The orderliness of the current rally has been something marvelous. Creeping upwards little by little nearly every day, this 6 1/2-month-old boom has not gotten overextended, and still appears reasonably priced considering current conditions. Any good news from the real estate world or job creation front should send it soaring off like a Roman candle.
Dow 9,829.87, +51.01 (0.52%)
NASDAQ 2,146.30, +8.26 (0.39%)
S&P 500 1,071.66, +7.00 (0.66%)
NYSE Composite 7,047.13, +78.54 (1.13%)
Advancing issues finished smartly ahead of decliners on Tuesday, 4259-2214. New highs outpaced new lows, 458-60, continuing a nearly 3-month-old trend that now appears unbreakable. Volume was moderate, tending toward high.
NYSE Volume 5,923,928,000
NASDAQ Volume 2,504,479,500
Commodities were mostly higher on a weaker US dollar. Oil rose $1.84, to $71.55, though it remains stuck in a price range between $65 and $75. Gold bounded higher by $10.60, to $1,015.50. Silver bounced back 24 cents, to $17.12.
While the Fed is poised to do nothing once again, it's probable that they'll spice up the language somewhat, the accompanying press release stating that there are incipient signs of recovery in various parts of the country, though jobs and real estate prices are still acting as a drag on the economy.
Since none of that is anything new, traders will be - more and more every day - looking at stocks from a valuation standpoint, seeking companies that are well-managed, stable, and with solid cash-debt positions. There's also something of a speculative movement ongoing as well in this trader's market. With so many small firms trading at very low prices, investors have been nibbling and gnawing at stocks mostly priced under $20 per share. There are loads of them, some good, others not, but that's a matter for which markets are built.
The orderliness of the current rally has been something marvelous. Creeping upwards little by little nearly every day, this 6 1/2-month-old boom has not gotten overextended, and still appears reasonably priced considering current conditions. Any good news from the real estate world or job creation front should send it soaring off like a Roman candle.
Dow 9,829.87, +51.01 (0.52%)
NASDAQ 2,146.30, +8.26 (0.39%)
S&P 500 1,071.66, +7.00 (0.66%)
NYSE Composite 7,047.13, +78.54 (1.13%)
Advancing issues finished smartly ahead of decliners on Tuesday, 4259-2214. New highs outpaced new lows, 458-60, continuing a nearly 3-month-old trend that now appears unbreakable. Volume was moderate, tending toward high.
NYSE Volume 5,923,928,000
NASDAQ Volume 2,504,479,500
Commodities were mostly higher on a weaker US dollar. Oil rose $1.84, to $71.55, though it remains stuck in a price range between $65 and $75. Gold bounded higher by $10.60, to $1,015.50. Silver bounced back 24 cents, to $17.12.
Friday, September 18, 2009
Tight Range, High Volume
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.
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.
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.
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