Responding to positive September same-store sales data from a wide array of national retail chains in virtually every category and improving new unemployment claims figures, stocks rolled into positive territory at the open and remained there the entire session. Finishing well off the highs, possibly due to nervousness over the shaky success of a 30-year Treasury bond auction and other factors in the market, stocks nonetheless responded positively to solid economic news.
Following Wednesday's closing bell, Alcoa (AA) reported and that company's street beat gave the market strong footing from which to launch new gains.
The dollar-equity reverse trade remained well in place. Oil and gold were sharply higher. Demand for commodities is noticeably gaining momentum and prices are following.
Dow 9,786.87, +61.29 (0.63%)
NASDAQ 2,123.93, +13.60 (0.64%)
S&P 500 1,065.48, +7.90 (0.75%)
NYSE Composite 6,990.67, +78.02 (1.13%)
Internals were wildly positive for the 4th straight session. Advancing issues galloped ahead of decliners, 4285-2147. There were an extraordinary 672 new highs - the highest in over two years - and only 54 new lows. Volume was steady and in line with recent days.
NYSE Volume 5,833,707,500
NASDAQ Volume 2,425,962,750
Oil finished at $71.69, up $2.12. Gold set another record high at $1,056.30, a gain of $11.90. Silver continued to rally along, up 32 cents, to $17.82. The metals, in particular, are staging an enormous rally, being caught in the perfect storm of rising demand, competitive pressure, a general worldwide commodity boom and a declining dollar. Conditions are perfect for a parabolic move, or, pardon the expression, a bubble, though not soon, especially concerning the precious metals, whose values have been depressed for many years and are gaining as larger concerns unwind losing positions.
While it's difficult to imagine a world in which gold and equities could peacefully coexist for long, that's the current hand being dealt and it should be played. General economic conditions are improving in various locales around the globe and eventually will leak into American prosperity. There are simply too many embedded interests for stocks and the global economy not to survive and succeed, regardless of the brainless policies of politicians and other government numbskulls. The sheer amount of money that has been thrown at the problems confronting the American people and American business is enough to keep things humming for several more months, if not years.
Eventually, inflation will destroy all gains, unless you secure assets quickly, quietly and are in the proper allocations. The disruptions in the bond markets today may be worth watching. Yields on longer term debt instruments may have bottomed as of yesterday. Interest rates cannot remain this low - and they are exceedingly low - for more than another 4-6 months. Sooner or later, the Fed will act, and they are likely to be too late as is their habit. However, well-measured small incremental increases spread over time - not necessarily in a succession, another bad Fed habit - could keep the economy on an even keel once its stabilized, which likely date is sometime in early Spring, if not sooner. Until then, the bull market will proceed without much more than the occasional hiccup.
Thursday, October 8, 2009
Wednesday, October 7, 2009
Alcoa Worth the Wait; Gold Makes Another New High
The rally took a bit of a breather on Wall Street Wednesday, as traders awaited word from aluminum giant Alcoa (AA) on third quarter earnings. Traditionally the first Dow 30 stock to report, the company did not disappoint, reporting earnings of 4 cents per share and revenues of $4.62 billion, well ahead of analyst expectations of a 9 cent loss on revenue of $4.55 billion. Alcoa closed up 31 cents (14.20) at the close of regular trading, but, after their upside surprise, was about 6% higher, at 15.00, in extended trading.
This followed a day in which stocks vacillated along the break even line, in a narrowly split decision. Of the major averages, only the Dow finished in negative territory, and that was marginally there.
Dow 9,725.58, -5.67 (0.06%)
Nasdaq 2,110.33, +6.76 (0.32%)
S&P 500 1,057.58, +2.86 (0.27%)
NYSE Composite 6,912.65, +12.97 (0.19%)
Advancing issues beat decliners by a slight margin, 3284-3021, and new highs trounced new lows, 365-48. Volume was a bit on the low side, owing to the anticipatory nature of the market, kicking off 3rd quarter earnings season.
NYSE Volume 4,890,557,000
Nasdaq Volume 2,239,362,000
Commodities were split as the dollar gained some strength, though very little. Crude oil closed down $1.31, to $69.57, but gold set a new all-time high for the second day in a row, up $4.70, to $1,044.40. Silver tagged along for a gain of 21 cents, to $17.50, its high for the year. Analysts expect resistance for gold at $1050, but expect it to blast through that, and, with the weakened greenback, to reach $1100 by the end of the year.
With Alcoa's strong showing, stocks should be on the move to the upside again on Thursday.
This followed a day in which stocks vacillated along the break even line, in a narrowly split decision. Of the major averages, only the Dow finished in negative territory, and that was marginally there.
Dow 9,725.58, -5.67 (0.06%)
Nasdaq 2,110.33, +6.76 (0.32%)
S&P 500 1,057.58, +2.86 (0.27%)
NYSE Composite 6,912.65, +12.97 (0.19%)
Advancing issues beat decliners by a slight margin, 3284-3021, and new highs trounced new lows, 365-48. Volume was a bit on the low side, owing to the anticipatory nature of the market, kicking off 3rd quarter earnings season.
NYSE Volume 4,890,557,000
Nasdaq Volume 2,239,362,000
Commodities were split as the dollar gained some strength, though very little. Crude oil closed down $1.31, to $69.57, but gold set a new all-time high for the second day in a row, up $4.70, to $1,044.40. Silver tagged along for a gain of 21 cents, to $17.50, its high for the year. Analysts expect resistance for gold at $1050, but expect it to blast through that, and, with the weakened greenback, to reach $1100 by the end of the year.
With Alcoa's strong showing, stocks should be on the move to the upside again on Thursday.
Tuesday, October 6, 2009
Gold Soars to New Highs; Stocks Up Big to Open Week
With earnings season about to begin, investors were jumping not only into stocks of all varieties, but especially into gold and other commodities in the first two trading days of the week, sprouting big gains in all sectors and sending gold to all-time highs above $1040 in NY trading.
The Dow and other major averages erased the losses of last week associated with the poor jobs data from September and began looking ahead to corporate earnings reports which begin on Tuesday with Yum Brands (YUM) and proceed into Wednesday with Monsanto (MON) reporting before the opening bell and Alcoa (AA) after the close.
As of this writing, YUM reported better-than-expected earnings of 69 cents per share in the third quarter, topping expectations of 58 cents per share, even though revenue slowed and same-store sales slipped 6% for the owners of Pizza Hut, Taco Bell and other national food outlets.
The moves in the market have been largely associated with a weakening dollar, which continues to delight stock traders but worries those who look at the macro-economic picture. A weaker dollar causes imports to cost more, wages to stagnate, but boosts profits on exports as their lower prices spur demand in foreign countries.
The greenback has been slumping of late, especially on Tuesday, as the Australian Central Bank increased key interest rates, saying that their economy was basically back on a sound footing. That sent the dollar index into a tailspin, boosting the price of commodities, in particular, gold.
Dow 9,731.25, +131.50 (1.37%)
Nasdaq 2,103.57, +35.42 (1.71%)
S&P 500 1,054.72, +14.26 (1.37%)
NYSE Composite 6,899.68, +104.55 (1.54%)
Stocks put in their second consecutive strong session, with all sectors positive and advancing issues beating decliners, 4965-1499, or better than 3-1. New highs were popping up everywhere, with 510 stocks making new 52-week tops, as compared to just 49 new lows. Volume was lighter than many trading veterans would have liked to have seen, though lower volumes have been a trademark of the now-7-month-old rally.
NYSE Volume 5,894,104,000
Nasdaq Volume 2,430,495,250
The commodity story was all positive, with crude oil advancing 47 cents, to $70.88; gold officially closing in New York up $21.90, at $1,039.70, and silver adding 76 cents, at $17.30.
Traders will be looking at earnings results from Monsanto (MON) before the market opens and will likely cheer the results of Yum! Brands, looking to go 3-for-3 in gains on the week.
The Dow and other major averages erased the losses of last week associated with the poor jobs data from September and began looking ahead to corporate earnings reports which begin on Tuesday with Yum Brands (YUM) and proceed into Wednesday with Monsanto (MON) reporting before the opening bell and Alcoa (AA) after the close.
As of this writing, YUM reported better-than-expected earnings of 69 cents per share in the third quarter, topping expectations of 58 cents per share, even though revenue slowed and same-store sales slipped 6% for the owners of Pizza Hut, Taco Bell and other national food outlets.
The moves in the market have been largely associated with a weakening dollar, which continues to delight stock traders but worries those who look at the macro-economic picture. A weaker dollar causes imports to cost more, wages to stagnate, but boosts profits on exports as their lower prices spur demand in foreign countries.
The greenback has been slumping of late, especially on Tuesday, as the Australian Central Bank increased key interest rates, saying that their economy was basically back on a sound footing. That sent the dollar index into a tailspin, boosting the price of commodities, in particular, gold.
Dow 9,731.25, +131.50 (1.37%)
Nasdaq 2,103.57, +35.42 (1.71%)
S&P 500 1,054.72, +14.26 (1.37%)
NYSE Composite 6,899.68, +104.55 (1.54%)
Stocks put in their second consecutive strong session, with all sectors positive and advancing issues beating decliners, 4965-1499, or better than 3-1. New highs were popping up everywhere, with 510 stocks making new 52-week tops, as compared to just 49 new lows. Volume was lighter than many trading veterans would have liked to have seen, though lower volumes have been a trademark of the now-7-month-old rally.
NYSE Volume 5,894,104,000
Nasdaq Volume 2,430,495,250
The commodity story was all positive, with crude oil advancing 47 cents, to $70.88; gold officially closing in New York up $21.90, at $1,039.70, and silver adding 76 cents, at $17.30.
Traders will be looking at earnings results from Monsanto (MON) before the market opens and will likely cheer the results of Yum! Brands, looking to go 3-for-3 in gains on the week.
Friday, October 2, 2009
Nervous Trading on Poor Employment Picture; Health Care Causing Problem
September's Non-farm payroll report was far worse than anyone expected, showing a loss of 263,000 jobs for the month when the market was expecting job losses somewhere around 180,000. Not only was the number far worse than expectations, it was worse than the previous month, a real break in the momentum of the recovery.
It has become increasingly clear that employers are not about to do any serious re-hiring or new hiring until the Congress gets off the entire health care reform kick. Legislation has been sloshing around the halls of Congress for months and have stalled, but, more importantly, business owners are holding back on hiring because of all the uncertainty, fearing increased costs or taxes on employees and the underlying businesses.
The longer Congress diddles with the health care issue, the longer the joblessness will continue in the USA. Also clear is that the Obama stimulus act of the Spring has not done nearly enough to boost recovery efforts. While the stimulus may have helped stabilize the situation, real job creation remains a distant mirage.
Also weighing on investors are the burgeoning foreclosures and number of Americans falling further into debt. Credit card and loan delinquencies are quickly reaching panic levels and unless those are somehow stemmed, the rally in stocks is going to be not only cut short, but trampled into dust. The level of fear in the marketplace has risen palpably over the past two weeks and especially over the past two days.
Despite the headline numbers from the major indices which showed marginal declines, the day on the market was actually much worse. First, a new short-term low was put in with stocks selling off right at the open. After a day-long rally back to positive territory, selling resumed just before the close, suggesting that Friday's trade was an unsafe bet heading closer to earnings season, though that will be preceded by Alcoa's earnings announcement on Wednesday and retail sales figures from the nation's largest vendors on Thursday of next week.
The technical damage done to the major indices over the past two days was significant, and, even though today's losses were modest compared to Thursday's massive selling effort, more damage was done today by the fact that the market did not properly respond to the horrible employment data. Because stocks set in a new low (9430 on the Dow, a 79-point loss) and closed near the mid-point of the day's trade, it created a situation similar to what occurred on Wednesday, when stocks put in a new low and finished well ahead of it. That telegraphed the next day's action, which, as we now know, was rampant selling.
Dow 9,487.67, -21.61 (0.23%)
NASDAQ 2,048.11, -9.37 (0.46%)
S&P 500 1,025.21, -4.64 (0.45%)
NYSE Composite 6,674.57, -43.48 (0.65%)
Simple indicators were a far better gauge of the damage than the closing numbers. Declining issues were ahead of advancers, 4253-2145 (2-1), and new highs tallied just 144, significantly lower than recent figures, while new lows ramped up to 59. Volume was lower than on Thursday, a real indication that the smart money was all-out on Thursday instead of waiting around and holding in front of the payroll data on Friday. Smart money is always out of the way first, and this seems to be the case currently.
NYSE Volume 6,468,782,500
NASDAQ Volume 2,385,079,250
Commodities were mixed, with oil trading down 87 cents, to $69.95; gold up $3.60, to $1,004.30; and silver down 21 cents, to $16.23.
As for the Dow components, reflected the bifurcated nature of the market, 19 were down and 11 closed higher, with IBM, Coca-Cola (KO), Merck (MRK) and JP Morgan Chase (JPM) providing most of the upside boost throughout the day. Without their participation, another triple-digit loss would almost certainly have ensued. Watch for those four to lead lower in coming days as their gains were largely unwarranted.
Today also marked the 7th day out of the past 8 that stocks have traded lower. The trend is clearly favoring the bulls right now and that sentiment should remain in place until some catalyst us found by investors to shake off the current funk. What that may be is difficult to fathom, the depth of distress caused by the reversal of the employment trend casting a heavy pall on the entire economic picture as the 4th quarter begins.
One technical note: this chart shows just how dangerous a position the Dow is at currently. The index touched its 50-day moving average today - something it hasn't done since the June-July timeframe. While it bounced right off it today - nobody in the financial media bothered to express this salient point - the prior period resulted in a very congested trading range to a small downside. The Dow could be in for a two-week consolidation period which may be sloppy and misconstrued as a return of the bear, though it's likely not. Look for a drop to the 9100-9250 range before earnings season begins in earnest.
It has become increasingly clear that employers are not about to do any serious re-hiring or new hiring until the Congress gets off the entire health care reform kick. Legislation has been sloshing around the halls of Congress for months and have stalled, but, more importantly, business owners are holding back on hiring because of all the uncertainty, fearing increased costs or taxes on employees and the underlying businesses.
The longer Congress diddles with the health care issue, the longer the joblessness will continue in the USA. Also clear is that the Obama stimulus act of the Spring has not done nearly enough to boost recovery efforts. While the stimulus may have helped stabilize the situation, real job creation remains a distant mirage.
Also weighing on investors are the burgeoning foreclosures and number of Americans falling further into debt. Credit card and loan delinquencies are quickly reaching panic levels and unless those are somehow stemmed, the rally in stocks is going to be not only cut short, but trampled into dust. The level of fear in the marketplace has risen palpably over the past two weeks and especially over the past two days.
Despite the headline numbers from the major indices which showed marginal declines, the day on the market was actually much worse. First, a new short-term low was put in with stocks selling off right at the open. After a day-long rally back to positive territory, selling resumed just before the close, suggesting that Friday's trade was an unsafe bet heading closer to earnings season, though that will be preceded by Alcoa's earnings announcement on Wednesday and retail sales figures from the nation's largest vendors on Thursday of next week.
The technical damage done to the major indices over the past two days was significant, and, even though today's losses were modest compared to Thursday's massive selling effort, more damage was done today by the fact that the market did not properly respond to the horrible employment data. Because stocks set in a new low (9430 on the Dow, a 79-point loss) and closed near the mid-point of the day's trade, it created a situation similar to what occurred on Wednesday, when stocks put in a new low and finished well ahead of it. That telegraphed the next day's action, which, as we now know, was rampant selling.
Dow 9,487.67, -21.61 (0.23%)
NASDAQ 2,048.11, -9.37 (0.46%)
S&P 500 1,025.21, -4.64 (0.45%)
NYSE Composite 6,674.57, -43.48 (0.65%)
Simple indicators were a far better gauge of the damage than the closing numbers. Declining issues were ahead of advancers, 4253-2145 (2-1), and new highs tallied just 144, significantly lower than recent figures, while new lows ramped up to 59. Volume was lower than on Thursday, a real indication that the smart money was all-out on Thursday instead of waiting around and holding in front of the payroll data on Friday. Smart money is always out of the way first, and this seems to be the case currently.
NYSE Volume 6,468,782,500
NASDAQ Volume 2,385,079,250
Commodities were mixed, with oil trading down 87 cents, to $69.95; gold up $3.60, to $1,004.30; and silver down 21 cents, to $16.23.
As for the Dow components, reflected the bifurcated nature of the market, 19 were down and 11 closed higher, with IBM, Coca-Cola (KO), Merck (MRK) and JP Morgan Chase (JPM) providing most of the upside boost throughout the day. Without their participation, another triple-digit loss would almost certainly have ensued. Watch for those four to lead lower in coming days as their gains were largely unwarranted.
Today also marked the 7th day out of the past 8 that stocks have traded lower. The trend is clearly favoring the bulls right now and that sentiment should remain in place until some catalyst us found by investors to shake off the current funk. What that may be is difficult to fathom, the depth of distress caused by the reversal of the employment trend casting a heavy pall on the entire economic picture as the 4th quarter begins.
One technical note: this chart shows just how dangerous a position the Dow is at currently. The index touched its 50-day moving average today - something it hasn't done since the June-July timeframe. While it bounced right off it today - nobody in the financial media bothered to express this salient point - the prior period resulted in a very congested trading range to a small downside. The Dow could be in for a two-week consolidation period which may be sloppy and misconstrued as a return of the bear, though it's likely not. Look for a drop to the 9100-9250 range before earnings season begins in earnest.
Thursday, October 1, 2009
Correction in Motion
Yesterday in this space, it was reported that the stock market was ripe for a major sell-off and that's exactly what happened after the weekly unemployment claims data and a worse-than-expected ISM report hit the Street.
Stocks opened lower and stayed down, erasing Wednesday's bottom by 10:00 am and never recovering. Eventually, all the major averages suffered their worst losses since July 2nd when the Dow was battered 223 points and the S&P declined 27, the same as today. The NASDAQ suffered worse than its counterparts, falling 3.06%, nearly matching the worst one-day loss since the start of the current rally, on April 20.
Thursday's action marked the sixth decline for the market in the past seven sessions. Economic news has been uniformly weak over the past two weeks, leading investors to take profits or abandon positions altogether.
Dow 9,509.28, -203.00 (2.09%)
Nasdaq 2,057.48, -64.94 (3.06%)
S&P 500 1,029.85, -27.23 (2.58%)
NYSE Composite 6,718.05, -192.83 (2.79%)
Simple indicators confirmed the widespread carnage. Declining issues outnumbered advancers, 5314-1139. New highs led new lows, 205-51, though the margin of difference has declined markedly over the past three sessions. Volume was very high, indicating that the losses are not about to end here, especially since the indices ended at their lows of the day.
NYSE Volume 6,905,833,500
Nasdaq Volume 2,751,787,500
Oil finished the day 21 cents higher, at $70.82, but that bucked the overall trend. Gold lost $8.60, to $1,000.70. Silver was down 22 cents, to $16.44.
With the September non-farm payroll data set to appear at 8:30 am, it was obvious that many investors did not want to get in front of that number. All indications are that it will not meet expectations of -175,000. Something in the range of -190,000 to -215,000 would be more likely.
Stocks opened lower and stayed down, erasing Wednesday's bottom by 10:00 am and never recovering. Eventually, all the major averages suffered their worst losses since July 2nd when the Dow was battered 223 points and the S&P declined 27, the same as today. The NASDAQ suffered worse than its counterparts, falling 3.06%, nearly matching the worst one-day loss since the start of the current rally, on April 20.
Thursday's action marked the sixth decline for the market in the past seven sessions. Economic news has been uniformly weak over the past two weeks, leading investors to take profits or abandon positions altogether.
Dow 9,509.28, -203.00 (2.09%)
Nasdaq 2,057.48, -64.94 (3.06%)
S&P 500 1,029.85, -27.23 (2.58%)
NYSE Composite 6,718.05, -192.83 (2.79%)
Simple indicators confirmed the widespread carnage. Declining issues outnumbered advancers, 5314-1139. New highs led new lows, 205-51, though the margin of difference has declined markedly over the past three sessions. Volume was very high, indicating that the losses are not about to end here, especially since the indices ended at their lows of the day.
NYSE Volume 6,905,833,500
Nasdaq Volume 2,751,787,500
Oil finished the day 21 cents higher, at $70.82, but that bucked the overall trend. Gold lost $8.60, to $1,000.70. Silver was down 22 cents, to $16.44.
With the September non-farm payroll data set to appear at 8:30 am, it was obvious that many investors did not want to get in front of that number. All indications are that it will not meet expectations of -175,000. Something in the range of -190,000 to -215,000 would be more likely.
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