Stocks began the day and finished it in mixed fashion, as the Dow was the only major index to close above the break-even line. Especially hard-hit was the NASDAQ, which suffered from a very downbeat report from Baidu.com (BIDU), China's version of Google, when the company reported third quarter earnings, but guided investors of a revenue shortfall upcoming due to a change in advertising placements. The stock opened down 77 points, but recovered to close only 49 points in the red. Still, the stock took an 11% hit by the end of the trading session.
The Dow was helped along by three components: ExxonMobil (XOM), Chevron (CVX) and IBM (IBM), which accounted for almost all of the smallish upside. The two oil majors were helped by a positive 3rd quarter from British Petroleum (BP), while IBM announced a $5 billion increase to its stock buy-back program.
Dow 9,882.17, +14.21 (0.14%)
NASDAQ 2,116.09, -25.76 (1.20%)
S&P 500 1,063.41, -3.54 (0.33%)
NYSE Composite 6,932.04, -28.05 (0.40%)
The session was overall a weak one, as declining issues beat gainers by a wide margin, 4263-2205. What is of particular interest is the small margin of new highs over new lows (123-71), the worst performance for new highs since that particular metric rolled over back in May. The easy comparisons to last year's stock prices, especially off the monstrous 7-month+ rally, would normally presume a large number of new highs, which was evidenced during the summer and early fall, but the recent pullback has changed the outlook considerably.
Volume on the day was in line with the overall trend of the past two to three weeks.
NYSE Volume 6,203,113,500
NASDAQ Volume 2,405,401,500
Commodities, like stocks, were tied somewhat to the stronger dollar, as gold fell $7.40, to $1,035.40, silver dropped 56 cents, to $16.54, but oil bucked the general trend, gaining 87 cents, to $79.55, though the $80 mark continues to appear to be a led on price. Demand is simply not high enough to support a price over $80, much less in the $70s. Additionally, supply is robust, with nary a shortage anywhere in the world. Price of energy commodities will continue to be pressured by warmer-then-normal weather in the Northern Hemisphere, which is predicted through December.
Investors, through their trading stratagems, are offering a very good insight into how earnings results are being played. With most of the big names already having reported, unless companies are beating both earnings and revenue projections, they are being bid up prior to the release of their reports and quickly sold off. This has all the earmarks that would accompany a market top, and the indices are generally 3% below the heights reached last week.
A 5-8% dip from here would be no surprise, especially with some severe headwinds approaching in terms of 3rd quarter GDP (Thursday), though first September Durable Goods orders before the bell tomorrow, which yesterday I incorrectly said would be reported today (hanks to Yahoo Finance).
Tuesday, October 27, 2009
Monday, October 26, 2009
Trend Reversal on Dollar Strength?
As perverse as our economic system and financial trading regimen (the stock market) has become, today's action should have surprised none but the greenest rookie investor. Stocks hit triple tops (at Dow 10,100 and S&P 1100) in the past two weeks, and the reversal has been underway since Friday, when stocks took a nosedive.
Monday's early gains (Dow up nearly 100 points) were erased in one swift movement between 11:15 and 12:10, when stocks went from close to their highs of the day to the lows of the session, conveniently blamed upon strength in the US dollar, which rallied sharply against a basket of currencies. The dollar move was well telegraphed. Being short the dollar was one of the most overcrowded trades seen in the history of the market. Sooner or later, this condition was bound to unwind, and today was probably just the beginning - or, more to the point - just another data point on the way to eventual dollar strength, the demise of gold and the stock market.
Dow 9,867.96, -104.22 (1.05%)
Nasdaq 2,141.85, -12.62 (0.59%)
S&P 500 1,066.95, -12.65 (1.17%)
NYSE Composite 6,960.09, -106.71 (1.51%)
Simple indicators confirmed the oversized downside. Declining issues beat advancers handily, 4796-1687. The bias was evident in the new highs-lows, in which the highs only surpassed the new lows by a score of 262-63, one of the smallest margins in months, especially important against the backdrop of last year's meltdown and easy comparisons to today.
Volume indicated more selling to come, at elevated levels.
NYSE Volume 6,480,251,000
Nasdaq Volume 2,344,048,750
Commodities were a major part of the story, erasing outsize gains from the past few weeks. Oil tumbled $1.82, to $78.68. Gold slid $13.60, to $1,042.80. Silver fell 63 cents, to $17.10. Once again, there is no denying deflationary pressure.
Tomorrow marks a day with more earnings from major companies, though earnings season has quickly become the sideshow as investors await Thursday morning's preliminary release of 3rd quarter GDP from the federal government. Prior to that, though, durable goods orders from September, the Case-Shiller Home Price Index and October consumer confidence numbers will move the markets.
Probably not overtly stated, there is more angst and aggravation with government meddling, especially with Barney Frank and the Fed's attempts to define regulations around "too big to fail" companies, than any financial commentator is willing to admit. The threat of government takeover of individual businesses is a threat the market will not handle kindly.
Monday's early gains (Dow up nearly 100 points) were erased in one swift movement between 11:15 and 12:10, when stocks went from close to their highs of the day to the lows of the session, conveniently blamed upon strength in the US dollar, which rallied sharply against a basket of currencies. The dollar move was well telegraphed. Being short the dollar was one of the most overcrowded trades seen in the history of the market. Sooner or later, this condition was bound to unwind, and today was probably just the beginning - or, more to the point - just another data point on the way to eventual dollar strength, the demise of gold and the stock market.
Dow 9,867.96, -104.22 (1.05%)
Nasdaq 2,141.85, -12.62 (0.59%)
S&P 500 1,066.95, -12.65 (1.17%)
NYSE Composite 6,960.09, -106.71 (1.51%)
Simple indicators confirmed the oversized downside. Declining issues beat advancers handily, 4796-1687. The bias was evident in the new highs-lows, in which the highs only surpassed the new lows by a score of 262-63, one of the smallest margins in months, especially important against the backdrop of last year's meltdown and easy comparisons to today.
Volume indicated more selling to come, at elevated levels.
NYSE Volume 6,480,251,000
Nasdaq Volume 2,344,048,750
Commodities were a major part of the story, erasing outsize gains from the past few weeks. Oil tumbled $1.82, to $78.68. Gold slid $13.60, to $1,042.80. Silver fell 63 cents, to $17.10. Once again, there is no denying deflationary pressure.
Tomorrow marks a day with more earnings from major companies, though earnings season has quickly become the sideshow as investors await Thursday morning's preliminary release of 3rd quarter GDP from the federal government. Prior to that, though, durable goods orders from September, the Case-Shiller Home Price Index and October consumer confidence numbers will move the markets.
Probably not overtly stated, there is more angst and aggravation with government meddling, especially with Barney Frank and the Fed's attempts to define regulations around "too big to fail" companies, than any financial commentator is willing to admit. The threat of government takeover of individual businesses is a threat the market will not handle kindly.
Friday, October 23, 2009
Economy Worries Overshadow Tech Titans
Stocks slid badly on Friday, marring an otherwise upbeat earnings week by ending marginally lower. The Dow Jones Industrial Average, which crashed through the 10,000 mark on Monday, and closed at the high point for 2008, wavered back and forth all week, finally capitulating on Friday, finishing 24 points in the red for the week. Other averages reacted in similar manner, with the NASDAQ losing just more than two points and the S&P 500 dropping 8 points. The NYSE Composite, the broadest measure, was down by 68 points for the 5 days.
Investor skepticism over the health of the economy dimmed the outstanding results from Amazon (AMZN) and Microsoft (MSFT), both of which blew away analyst estimates when reporting 3rd quarter results. Amazon was by far the biggest winner, gaining 25 points, to 118.49, an historic high for the stock, and a one-day gain of nearly 27% for the world's largest internet retailer. Volume on the stock was 9 times the average daily.
Unfortunately, market participants were taking hard-fought gains in other companies amid speculation that the recovery may not be as robust as previously assumed. Underscoring the market sentiment was the massive downside slide on the Dow Jones Transportation Index (^DJT), which slid 137.73 points, a decline of 3.5%.
The major issue upon which many are dwelling is still unemployment, or the lack of new job creation, and the government's abject refusal to offer programs which would stimulate job creation. The halls of congress and the White House have been focused on a partisan health care debate, no doubt a matter of great importance, but paling by comparison to the general welfare of the American people and their need for steady, solid employment.
Talk of a "jobless recovery" has begun to circulate, though even the most ardent proponents of fiscal stimulus have to admit that a recovery without new jobs is really not a recovery at all. There is also growing impatience with the federal government on their handling of the financial crisis and various "socialist" policies, not the least of which is capping executive pay via proclamation from their "pay czar" Kenneth R. Feinberg, who this week proposed 50-90% pay cuts for executives whose companies received TARP funds and have yet to repay.
If there has been one culprit responsible for any slowness in the nascent recovery, the finger can be pointed directly at he White House and congress, whose plodding pace and partisan bickering have been a detriment, rather than a benefit, to the public welfare. With the huge federal government out of the way, the American people and American businesspeople could surely forge a new way forward, but threats of pay cuts and excessive taxation are killing the attitude of everyone from Main Street to Wall Street and from Skid Row to Beverly Hills.
Then again, stocks have been rocketing skyward for some time now, and the market seems to have run considerably out of steam. even though roughly half the companies in the S&P 500 have already reported, the indices haven't budged out of a range from 9950 to 10,100 for more than a week.
Dow 9,972.18, -109.13 (1.08%)
NASDAQ 2,154.47, -10.82 (0.50%)
S&P 500 1,079.60, -13.31 (1.22%)
NYSE Composite 7,066.80, -116.11 (1.62%)
Simple indicators offer a snapshot of the depth and breadth of Friday's decline. Losers hammered winners, 4881-1566, a better than 3-1 ratio, the worst in some time. New highs were 356, to just 54 new lows. Volume was roughly in line with the pace set Tuesday through Thursday.
NYSE Volume 5,506,861,000
NASDAQ Volume 2,476,571,750
Commodity prices continued to retreat from mid-week highs. Oil slipped 69 cents, to $80.50. Gold was off $2.20, to $1,056.40, but silver bucked the trend, gaining 18 cents, to $17.72.
More companies report next week in what will be the busiest week for earnings reports. It's also a busy week for economic reports, highlighted by Thursday's preliminary release of 3rd quarter GDP, which will be a market mover.
Investor skepticism over the health of the economy dimmed the outstanding results from Amazon (AMZN) and Microsoft (MSFT), both of which blew away analyst estimates when reporting 3rd quarter results. Amazon was by far the biggest winner, gaining 25 points, to 118.49, an historic high for the stock, and a one-day gain of nearly 27% for the world's largest internet retailer. Volume on the stock was 9 times the average daily.
Unfortunately, market participants were taking hard-fought gains in other companies amid speculation that the recovery may not be as robust as previously assumed. Underscoring the market sentiment was the massive downside slide on the Dow Jones Transportation Index (^DJT), which slid 137.73 points, a decline of 3.5%.
The major issue upon which many are dwelling is still unemployment, or the lack of new job creation, and the government's abject refusal to offer programs which would stimulate job creation. The halls of congress and the White House have been focused on a partisan health care debate, no doubt a matter of great importance, but paling by comparison to the general welfare of the American people and their need for steady, solid employment.
Talk of a "jobless recovery" has begun to circulate, though even the most ardent proponents of fiscal stimulus have to admit that a recovery without new jobs is really not a recovery at all. There is also growing impatience with the federal government on their handling of the financial crisis and various "socialist" policies, not the least of which is capping executive pay via proclamation from their "pay czar" Kenneth R. Feinberg, who this week proposed 50-90% pay cuts for executives whose companies received TARP funds and have yet to repay.
If there has been one culprit responsible for any slowness in the nascent recovery, the finger can be pointed directly at he White House and congress, whose plodding pace and partisan bickering have been a detriment, rather than a benefit, to the public welfare. With the huge federal government out of the way, the American people and American businesspeople could surely forge a new way forward, but threats of pay cuts and excessive taxation are killing the attitude of everyone from Main Street to Wall Street and from Skid Row to Beverly Hills.
Then again, stocks have been rocketing skyward for some time now, and the market seems to have run considerably out of steam. even though roughly half the companies in the S&P 500 have already reported, the indices haven't budged out of a range from 9950 to 10,100 for more than a week.
Dow 9,972.18, -109.13 (1.08%)
NASDAQ 2,154.47, -10.82 (0.50%)
S&P 500 1,079.60, -13.31 (1.22%)
NYSE Composite 7,066.80, -116.11 (1.62%)
Simple indicators offer a snapshot of the depth and breadth of Friday's decline. Losers hammered winners, 4881-1566, a better than 3-1 ratio, the worst in some time. New highs were 356, to just 54 new lows. Volume was roughly in line with the pace set Tuesday through Thursday.
NYSE Volume 5,506,861,000
NASDAQ Volume 2,476,571,750
Commodity prices continued to retreat from mid-week highs. Oil slipped 69 cents, to $80.50. Gold was off $2.20, to $1,056.40, but silver bucked the trend, gaining 18 cents, to $17.72.
More companies report next week in what will be the busiest week for earnings reports. It's also a busy week for economic reports, highlighted by Thursday's preliminary release of 3rd quarter GDP, which will be a market mover.
Thursday, October 22, 2009
Amazon Blows Away Estimates After Huge Up Day
Markets were mixed early, but a day-long rally, helped along by earnings results from key Dow components including AT&T (T), McDonald's (MCD) and others, pushed stocks back near recent highs after yesterday's late-day sell-off.
After the bell, online retailer Amazon (AMZN) blew away estimates for the quarter, posting earnings of 45 cents per share on $199 million profit, far ahead of estimates of 33 cents per share and well ahead of the prior year's 3rd quarter of 27 cents and $118 million in profits.
On a day which witnessed the largest number of S&P companies reporting to date, stocks flew higher and prospects on the back of Amazon's earnings look especially juicy for technology companies. Microsoft, the undisputed world's leader in personal computer operating systems, reports before the bell on Friday.
Dow 10,081.31, +131.95 (1.33%)
Nasdaq 2,165.29, +14.56 (0.68%)
S&P 500 1,092.91, +11.51 (1.06%)
NYSE Composite 7,182.91, +75.70 (1.07%)
Advancing issues, which were beaten down earlier in the day, handily beat decliners, 4142-2301. There were 263 new highs and 43 new lows, both numbers negatively affected by the trading range of the past week, between 9500 and 10,100. Volume was in line with most active days over the past two weeks.
NYSE Volume 5,985,040,500
Nasdaq Volume 2,282,756,500
Commodities were held down after strong recent advances. Oil for December delivery fell 18 cents, to $81.19. Gold was clipped $5.90, to $1,058.60, while silver slid 28 cents, to $17.55.
More earnings are being released after hours and early on Friday. The markets are set to record yet another week of gains, though this week will be rather muted in comparison to others unless markets soar again on the final day of the week.
After the bell, online retailer Amazon (AMZN) blew away estimates for the quarter, posting earnings of 45 cents per share on $199 million profit, far ahead of estimates of 33 cents per share and well ahead of the prior year's 3rd quarter of 27 cents and $118 million in profits.
On a day which witnessed the largest number of S&P companies reporting to date, stocks flew higher and prospects on the back of Amazon's earnings look especially juicy for technology companies. Microsoft, the undisputed world's leader in personal computer operating systems, reports before the bell on Friday.
Dow 10,081.31, +131.95 (1.33%)
Nasdaq 2,165.29, +14.56 (0.68%)
S&P 500 1,092.91, +11.51 (1.06%)
NYSE Composite 7,182.91, +75.70 (1.07%)
Advancing issues, which were beaten down earlier in the day, handily beat decliners, 4142-2301. There were 263 new highs and 43 new lows, both numbers negatively affected by the trading range of the past week, between 9500 and 10,100. Volume was in line with most active days over the past two weeks.
NYSE Volume 5,985,040,500
Nasdaq Volume 2,282,756,500
Commodities were held down after strong recent advances. Oil for December delivery fell 18 cents, to $81.19. Gold was clipped $5.90, to $1,058.60, while silver slid 28 cents, to $17.55.
More earnings are being released after hours and early on Friday. The markets are set to record yet another week of gains, though this week will be rather muted in comparison to others unless markets soar again on the final day of the week.
Wednesday, October 21, 2009
Where the Volatility Came From
Stocks did a complete about-face in a late-day sell-off that had investors scratching their heads for explanation. From a high of 10,119 on the Dow, that index closed near the low of 9945, for a full-day swing of nearly 175 points. It was the most dramatic turnaround to the downside since, well, last October.
At issue is how the actual decline came about. Stocks had been drifting lower since making what would be the highs of the day around 10:45. But, at 3:15, things really got interesting, as the Dow quickly erased a 35 point gain and turned negative, extending those losses into the close with no escape mini-rally.
Some said that a sell recommendation by analyst Dick Bove on Wells Fargo, which had reported before the opening bell, caused it and all of the bank stocks to sell off. Others cited the Obama administration's directive to cut executive pay for financial firms which had accepted TARP funds - Bank of America, Citigroup, Wells Fargo, Morgan Stanley, JP Morgan Chase, others - by as much as 90%, as the culprit. The most succinct explanation came from CNBC's Fast Money contributor Tim Seymour, founder and Managing Partner at Seygem Asset Management, who opined that program trading moved the market in such spectacular fashion. Calling them "the machines," Seymour reiterated his position that the move was technical and that the S&P would be on the rise on the morrow.
While it's plausible that the move was "machine-made," because the move was so sudden and on such high initial volume, it's not easy to accept Seymour's recipe for tomorrow's trade. We'll all know whether he was prescient within 16 hours. In any case, it was an ugly end to a few days of trading that has produced a mid-week loss overall. Today's full-trip stock move produced a double engulfing day, taking out the highs and lows of the previous two sessions, and was close to being a triple or quadruple engulfing move, as it nearly took out the lows of Friday and definitely engulfed all of Thursday's move from last week as well. That is not an encouraging sign for anyone who is long, which is just about everyone. The technicals are screaming sell, as the market also hit a double top today as well on both the Dow and the S&P, when it failed at S&P 1100.
Dow 9,949.36, -92.12 (0.92%)
NASDAQ 2,150.73, -12.74 (0.59%)
S&P 500 1,081.40, -9.66 (0.89%)
NYSE Composite 7,107.21, -51.06 (0.71%)
Simple indicators, all of which were positive most of the day, turned ugly in the final hour. Declining issues battered advancers, 4257-2207, and all sectors (not just the financials), except utilities were down. New highs beat new lows, 608-84, though mostly because of easy comparisons, so these figures have become nearly meaningless, except when taken in the proper context. If new lows expand considerably over the next few sessions, we'll have something then on which to chew. Until then, best ignore the highs-lows.
Volume was considerably higher than most recent sessions, another omen for the downside.
NYSE Volume 6,514,343,500
NASDAQ Volume 2,600,789,500
Another cause give for the decline was the high price of oil, now into the December contract, which gained $2.25, to $81.37 on the day, which many complain may be a price too high. Gold added $5.90, to $1,064.50, and silver gained 27 cents, to $17.83, very close to a 15-month high.
Markets are getting very jittery and investors appear to be losing patience with companies, as earnings reports are being scrutinized and tossed into the trash heap on the way to the sell button. Investors are also not very happy with the government's plans for everything from the general economy, to bank executive's salaries to health care reform. The discontent on Wall Street is nothing compared to the rabble-rousing in the streets, which is reaching fever pitch. Stocks may have to come down if only to appease the working man and woman in the US that Wall Street isn't running ahead of the pack and leaving Americans behind (it is).
Whatever the cause of today's collapse, it should not be taken lightly, if only for the reason that it is a technically-reversing pattern. If stocks suffer mildly tomorrow and Friday, it could be time to head for the exits for at least a few weeks. When the dust settles, stocks will be cheaper.
At issue is how the actual decline came about. Stocks had been drifting lower since making what would be the highs of the day around 10:45. But, at 3:15, things really got interesting, as the Dow quickly erased a 35 point gain and turned negative, extending those losses into the close with no escape mini-rally.
Some said that a sell recommendation by analyst Dick Bove on Wells Fargo, which had reported before the opening bell, caused it and all of the bank stocks to sell off. Others cited the Obama administration's directive to cut executive pay for financial firms which had accepted TARP funds - Bank of America, Citigroup, Wells Fargo, Morgan Stanley, JP Morgan Chase, others - by as much as 90%, as the culprit. The most succinct explanation came from CNBC's Fast Money contributor Tim Seymour, founder and Managing Partner at Seygem Asset Management, who opined that program trading moved the market in such spectacular fashion. Calling them "the machines," Seymour reiterated his position that the move was technical and that the S&P would be on the rise on the morrow.
While it's plausible that the move was "machine-made," because the move was so sudden and on such high initial volume, it's not easy to accept Seymour's recipe for tomorrow's trade. We'll all know whether he was prescient within 16 hours. In any case, it was an ugly end to a few days of trading that has produced a mid-week loss overall. Today's full-trip stock move produced a double engulfing day, taking out the highs and lows of the previous two sessions, and was close to being a triple or quadruple engulfing move, as it nearly took out the lows of Friday and definitely engulfed all of Thursday's move from last week as well. That is not an encouraging sign for anyone who is long, which is just about everyone. The technicals are screaming sell, as the market also hit a double top today as well on both the Dow and the S&P, when it failed at S&P 1100.
Dow 9,949.36, -92.12 (0.92%)
NASDAQ 2,150.73, -12.74 (0.59%)
S&P 500 1,081.40, -9.66 (0.89%)
NYSE Composite 7,107.21, -51.06 (0.71%)
Simple indicators, all of which were positive most of the day, turned ugly in the final hour. Declining issues battered advancers, 4257-2207, and all sectors (not just the financials), except utilities were down. New highs beat new lows, 608-84, though mostly because of easy comparisons, so these figures have become nearly meaningless, except when taken in the proper context. If new lows expand considerably over the next few sessions, we'll have something then on which to chew. Until then, best ignore the highs-lows.
Volume was considerably higher than most recent sessions, another omen for the downside.
NYSE Volume 6,514,343,500
NASDAQ Volume 2,600,789,500
Another cause give for the decline was the high price of oil, now into the December contract, which gained $2.25, to $81.37 on the day, which many complain may be a price too high. Gold added $5.90, to $1,064.50, and silver gained 27 cents, to $17.83, very close to a 15-month high.
Markets are getting very jittery and investors appear to be losing patience with companies, as earnings reports are being scrutinized and tossed into the trash heap on the way to the sell button. Investors are also not very happy with the government's plans for everything from the general economy, to bank executive's salaries to health care reform. The discontent on Wall Street is nothing compared to the rabble-rousing in the streets, which is reaching fever pitch. Stocks may have to come down if only to appease the working man and woman in the US that Wall Street isn't running ahead of the pack and leaving Americans behind (it is).
Whatever the cause of today's collapse, it should not be taken lightly, if only for the reason that it is a technically-reversing pattern. If stocks suffer mildly tomorrow and Friday, it could be time to head for the exits for at least a few weeks. When the dust settles, stocks will be cheaper.
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