On the day Americans celebrate the man who discovered our continent - Christopher Columbus - investors were discovering new 2009 highs on three of the four major indices. The Dow Jones Industrials, S&P 500 and NYSE Composite all closed at highs of the year, with the Dow eclipsing an intra-day high with the new mark now 9931.82, just 69 points shy of the enormously psychological 10,000 mark.
Stocks were up sharply in the opening hour, but weakened into the afternoon, and sold off sharply between 2:00 and 2:30 pm, sending the Dow and NASDAQ into negative territory. The Dow recovered to close modestly positive, but the NASDAQ, surprisingly weak on the session, finished fractionally lower. It was the only major index to close in the red. The sudden drop on the indices, though very sharp, was probably due to options expiration this week, as a major trader likely closed a large number of positions. The general market didn't seem to make much of it, as all of the indices recovered nicely with strong buying into the close.
Interestingly, the Dow Jones Transports sported solid gains on the day. The transports have been something of a laggard in recent sessions, but showed remarkable strength into the close, led by Ryder Systems (R) nearly 10% one-day move.
The act that the Transportation Index also closed at a new 2009 high is a bullish signal, inferring that rail and truck transport - the things that move goods across the nation and to the ports - are showing signs of recovery. Those issues are at the bottom of the economy, with shipping of energy - coal, natural gas, oil - and goods of all manner on the rise.
Dow 9,885.80, +20.86 (0.21%)
NASDAQ 2,139.14, -0.14 (0.01%)
S&P 500 1,076.18, +4.69 (0.44%)
NYSE Composite 7,051.16, +35.62 (0.51%)
Market internals were positive, in line with the headline numbers. Advancing issues beat decliners, 3386-3002, though there were quite a few more losers than gainers on the NASDAQ. There were 731 new highs to 67 new lows, a bullish sign. The new high-new low indicator has been the most reliable metric for market movement, though there is some fear that stocks may be getting to an overbought condition as earnings begin rolling out. Companies will have to show top-line growth this quarter in order to keep pace with their high valuations.
Volume was low due to the observance of Columbus Day.
NYSE Volume 4,169,401,250
NASDAQ Volume 1,758,818,250
Commodities were a big story on the day. Oil sipped past the $73.00 mark, gaining $1.50, to close at $73.27. Gold caught a bid higher, by $8.90, to finish at $1,057.50. Silver also gained 13 cents, to $17.82. The resumption of the rally in the precious metals seems to have been re-ignited by oil's gains.
The only notable earnings-related news was from Black & Decker, which pre-announced better-than-expected results. Market direction for Tuesday may be guided by Johnson & Johnson (JNJ), which is supposed to released 3rd quarter earnings prior to the bell. There will be some anticipation concerning Intel (INTC), which reports after the close.
Monday, October 12, 2009
Friday, October 9, 2009
Blowing The Top Off
On strength in the health care and technology sectors, US equities managed to finish one of their best weeks of the year with a strongly positive session. IBM led the Dow to new 52-week and 2009 highs, while the S&P finished just .17 short of its high for the year, set back on September 22 (1071.66). The NASDAQ also closed within shouting distance of its 200 closing high, just 7 points short of 2146.30, also the close on September 22.
The major indices closed higher every day this week except for the Dow, which posted a 6-point loss on Wednesday. This sets up an interesting scenario for the first big week of earnings season. A number of highly-traded stocks report next week, including Charles Schwab (SCHW) on Monday; Intel (INTC) and Johnson & Johnson (JNJ) on Tuesday; JP Morgan Chase (JPM) on Wednesday; Citigroup (C), Cypress Semi (CY), Goldman Sachs (GS), Google (GOOG), IBM (IBM) and Nokia (NOK) on Thursday; and Bank of America (BAC) and General Electric (GE) on Friday.
Dow 9,864.94, +78.07 (0.80%)
NASDAQ 2,139.28, +15.35 (0.72%)
S&P 500 1,071.49, +6.01 (0.56%)
NYSE Composite 7,015.54, +24.87 (0.36%)
Advancing issues beat decliners, 3942-2445, though the gains were not as broadly-based as earlier in the week. New highs beat new lows, 482-45. Volume was significantly below the levels of the rest of the week, but nobody seemed to care, with stocks soaring, even on a day in which the markets decoupled from the dollar trade, which was strengthened through intervention by the Bank of Japan and some veiled comments from the Fed Chairman, friendly uncle Ben Bernanke.
NYSE Volume 4,310,388,500
NASDAQ Volume 1,900,588,625
Due to the strong dollar, moves in the commodity markets were muted, though oil managed to gain 8 cents, to $71.77. Gold kicked back from its three-day record run, losing $7.70, to $1,048.60. Silver relinquished 13 cents to close at $17.69.
Considering the conditions in the market, it was something magnificent to see the Dow soar to a new closing high, but the US economy appears to be something of a coiled spring, about to explode with growth in all directions. Companies have cut the workforce to the bone while recovering from the worst financial crisis since the Great Depression. While there are still voices of macro-economics who believe that our debt levels are too high (they are) and the banking sector too weak (probably not in comparison to the rest of the world) to promote significant expansion, companies and investors are not convinced. Most of the working population is working, though this latest recession and the accompanying stimulus may have created an even larger underclass of unproductive cretins living off the earnings of the producers.
The big fear is that unemployment stays at elevated levels for too long a period. The government, by its actions such as extending unemployment benefits and increasing welfare payments only serves to exacerbate the condition, and washington must reign in its own profligacy. Otherwise, the massive spending the feds have thrown at the problem will create an ever more severe economic crisis in which the government cannot meet the demands of the people it is sworn to serve.
It's likely a very positive development that the dollar exhibited some strength and that bonds have sold off, increasing yields. If anything, the market, especially bond yields, will telegraph the next Fed move to raise interest rates, which seems to be coming sooner rather than later, and would be a good sign of real recovery and strength.
What most economics fail to include in their calculations are the robust dynamics of the US economy and the magic of innovation, which usually serves as a spur to both economic and job growth. The government jawboning about clean and green energy is a step in the right direction, but the markets will be the ultimate arbitrageur of what works and what doesn't. New products continue to come to market, and that builds economic activity more than any feeble weak-dollar trade ever could.
The US economy appears poised to break out into a new era of prosperity and the market is forecasting that development. As trite and cliche as it may sound, those who say that it's a mistake to bet against the US economy are probably dead right.
The major indices closed higher every day this week except for the Dow, which posted a 6-point loss on Wednesday. This sets up an interesting scenario for the first big week of earnings season. A number of highly-traded stocks report next week, including Charles Schwab (SCHW) on Monday; Intel (INTC) and Johnson & Johnson (JNJ) on Tuesday; JP Morgan Chase (JPM) on Wednesday; Citigroup (C), Cypress Semi (CY), Goldman Sachs (GS), Google (GOOG), IBM (IBM) and Nokia (NOK) on Thursday; and Bank of America (BAC) and General Electric (GE) on Friday.
Dow 9,864.94, +78.07 (0.80%)
NASDAQ 2,139.28, +15.35 (0.72%)
S&P 500 1,071.49, +6.01 (0.56%)
NYSE Composite 7,015.54, +24.87 (0.36%)
Advancing issues beat decliners, 3942-2445, though the gains were not as broadly-based as earlier in the week. New highs beat new lows, 482-45. Volume was significantly below the levels of the rest of the week, but nobody seemed to care, with stocks soaring, even on a day in which the markets decoupled from the dollar trade, which was strengthened through intervention by the Bank of Japan and some veiled comments from the Fed Chairman, friendly uncle Ben Bernanke.
NYSE Volume 4,310,388,500
NASDAQ Volume 1,900,588,625
Due to the strong dollar, moves in the commodity markets were muted, though oil managed to gain 8 cents, to $71.77. Gold kicked back from its three-day record run, losing $7.70, to $1,048.60. Silver relinquished 13 cents to close at $17.69.
Considering the conditions in the market, it was something magnificent to see the Dow soar to a new closing high, but the US economy appears to be something of a coiled spring, about to explode with growth in all directions. Companies have cut the workforce to the bone while recovering from the worst financial crisis since the Great Depression. While there are still voices of macro-economics who believe that our debt levels are too high (they are) and the banking sector too weak (probably not in comparison to the rest of the world) to promote significant expansion, companies and investors are not convinced. Most of the working population is working, though this latest recession and the accompanying stimulus may have created an even larger underclass of unproductive cretins living off the earnings of the producers.
The big fear is that unemployment stays at elevated levels for too long a period. The government, by its actions such as extending unemployment benefits and increasing welfare payments only serves to exacerbate the condition, and washington must reign in its own profligacy. Otherwise, the massive spending the feds have thrown at the problem will create an ever more severe economic crisis in which the government cannot meet the demands of the people it is sworn to serve.
It's likely a very positive development that the dollar exhibited some strength and that bonds have sold off, increasing yields. If anything, the market, especially bond yields, will telegraph the next Fed move to raise interest rates, which seems to be coming sooner rather than later, and would be a good sign of real recovery and strength.
What most economics fail to include in their calculations are the robust dynamics of the US economy and the magic of innovation, which usually serves as a spur to both economic and job growth. The government jawboning about clean and green energy is a step in the right direction, but the markets will be the ultimate arbitrageur of what works and what doesn't. New products continue to come to market, and that builds economic activity more than any feeble weak-dollar trade ever could.
The US economy appears poised to break out into a new era of prosperity and the market is forecasting that development. As trite and cliche as it may sound, those who say that it's a mistake to bet against the US economy are probably dead right.
Thursday, October 8, 2009
Jobless Claims Drop; Gold, Retails Rock
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.
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.
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.
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