The markets often find ways to correct their errant ways - like yesterday's late-day, computer-trade-driven sell-off - with immediate and powerful results. Such was the case on Thursday as stocks gained right out of the gate, fueled by better-than-expected results from Cisco (CSCO) and lower-than-expected initial jobless claims. The stunning number, however, was October productivity, which chimed in at +9.5%, well ahead of expectations of 6.5% and the strongest indication to date that companies are on the verge of hiring workers.
Productivity gains of such magnitude suggest that employers are getting every last ounce of effort from trimmed-down staffs and it may be time to begin expanding the labor force in a variety of industries. Tomorrow's Non-farm payroll report for October will fill in the last piece of the puzzle, though by all indications, investors feel comfortable being in the market prior to the 8:30 am release of the data, sending the Dow back up over 10,000 and the S&P past a key 1065 level.
Dow 10,005.96, +203.82 (2.08%)
NASDAQ 2,105.32, +49.80 (2.42%)
S&P 500 1,066.63, +20.13 (1.92%)
NYSE Composite 6,950.14, +119.71 (1.75%)
Once again, simple indicators told the story of a broad-based rally with considerable strength behind the headline numbers. Advancing issues pounded decliners, 5095-1389, and new highs soared ahead of new lows, 161-57.
Volume was less than usual, a somewhat sobering fact, though tracking the markets via volume has not been a particularly solid indicator during this rally. Lower-than-usual has been the case so often that lower volume figures have actually become normalized.
NYSE Volume 5,480,293,000
NASDAQ Volume 2,121,401,500
Commodities were muted as the dollar index remained relatively unchanged throughout the day. That stocks can move forward with such aplomb without the aid of a weaker dollar speaks volumes about the prospects for a robust recovery. On the day, oil lost ground, dropping 78 cents, to $79.62 at the close. Gold added $2.20, to $1,089.50, while silver dipped a penny, to $17.40.
A number of retailers released same-store sales figures for October, with results all over the map due to the recession, odd comparisons to last year because the damage to the economy was just beginning, and various discounting and inventory issues which varied by retailer. With the holiday shopping season just weeks away, investors will be turning their attention to retailers, with an eye toward an improvement over last year's near-disaster.
Tomorrow's jobs data should be market-moving, especially the unemployment figure which continues to hover close to 10%. That is the number many fear, that if the government announces unemployment at that level, it will trigger an all-out selling spree in equities as investors flee from speculative issues back into fixed assets. A reading of 9.8% might be just good enough to keep confidence high.
No matter the case, it seems that there is no ceiling on stocks. The turn-back over the past few weeks has been all but recovered, and the overall drop was another smallish 5-6% decline, instead of the "correction" of 10-15% that many of the so-called "experts" have been calling for since May. There's almost no reason to believe that stocks will pull back 10% any time soon, though tomorrow's jobs data could change that arithmetic.
For now, however, the recovery appears on solid ground. The final key is jobs and when they will come back.
Thursday, November 5, 2009
Wednesday, November 4, 2009
Fed Watchers Get what They Want; Disappoint Late
Stocks were up solidly early in the day, an exceptional note of optimism ahead of the 2:15 pm Fed rate policy decision. The Dow gained as much as 140 points in the early going, with the other indices tagging along with similar percentage gains of roughly 1-1.35%.
When the Fed finally released its statement, Bulls got exactly what they wanted, little to no change in the overall verbiage, with no change in rates. After the normal, brief zig-zagging, the indices stabilized roughly where they were before the announcement, though began to descend slightly between 2:45 and 3:15. With just 45 minutes left in the session, however, a vicious sell-off was undertaken, trimming about 100 points off the Dow's gains and sending the NASDAQ into the red.
As such, stocks finished mixed again, though this time the only index below the unchanged line was the unfortunate NASDAQ, which is a bit confounding, since tech and speculative stocks in the NASDAQ have been responsible for much of the rally over the past 8 months. Monday will mark the end of the 8th month of the rally which began in earnest on March 9, 2009.
Dow 9,802.14, +30.23 (0.31%)
NASDAQ 2,055.52, -1.80 (0.09%)
S&P 500 1,046.50, +1.09 (0.10%)
NYSE Composite 6,830.43, +17.73 (0.26%)
Advancing issues were barely beaten by decliners, 3238-3236, with the emphasis on the downside clearly in NASDAQ stocks. However, the subtle change in the high-low indicator augurs better days ahead and a possible end to the market funk of the past two weeks. New highs outpaced new lows, 142-74, the best showing in a week and easily the best so far this month.
Volume was low, another positive, especially considering the late-day sell-off, which, many suspect was nothing more than shrewd tape-painting by insiders seeking an edge for Thursday.
NYSE Volume 6,510,982,000
NASDAQ Volume 2,134,476,250
Commodities were all priced higher as the dollar was weaker throughout the day. Oil was up 80 cents, to $80.40. Gold reached new highs, closing up $2.10, at $1,087.00, though it traded as high as $1095.00. Silver added 22 cents to $17.40.
Prior to the market open, more economic data was released. the ADP Employment Report showed a loss of 203,000 private sector jobs in October, an improvement over September's revised reading of -227,000, but still on the high side. This also bodes well for the October Non-farm payroll report due out prior to Friday's opening bell. First, the ADP report from last month was -254,000 unrevised, and has been revised lower by 27,000. The September non-farm payroll figure was 263,000, just a bit higher than the ADP reading. If the government revises lower, as ADP did, and remains somewhat in line with forecasts, we could see the first reading below 200,000 in over a year on Friday, which would be a real boost to the market.
Some indication of improvement in the jobs picture came on Monday, in the ISM manufacturing index, which showed improvement in the employment outlook segment. The expectation is for a loss of 175-220,000 jobs in the month, though anything below 210,000 would be positive.
Retail sales figures for October will be released prior to the open and they are expected to be solid.
Cisco (CSCO) reported excellent figures for their fiscal 1st quarter after the bell - .36 per share on expectations of .31, and higher revenue than expected - with the stock moving 3-4% higher after hours, hovering around 24.00 per share.
When the Fed finally released its statement, Bulls got exactly what they wanted, little to no change in the overall verbiage, with no change in rates. After the normal, brief zig-zagging, the indices stabilized roughly where they were before the announcement, though began to descend slightly between 2:45 and 3:15. With just 45 minutes left in the session, however, a vicious sell-off was undertaken, trimming about 100 points off the Dow's gains and sending the NASDAQ into the red.
As such, stocks finished mixed again, though this time the only index below the unchanged line was the unfortunate NASDAQ, which is a bit confounding, since tech and speculative stocks in the NASDAQ have been responsible for much of the rally over the past 8 months. Monday will mark the end of the 8th month of the rally which began in earnest on March 9, 2009.
Dow 9,802.14, +30.23 (0.31%)
NASDAQ 2,055.52, -1.80 (0.09%)
S&P 500 1,046.50, +1.09 (0.10%)
NYSE Composite 6,830.43, +17.73 (0.26%)
Advancing issues were barely beaten by decliners, 3238-3236, with the emphasis on the downside clearly in NASDAQ stocks. However, the subtle change in the high-low indicator augurs better days ahead and a possible end to the market funk of the past two weeks. New highs outpaced new lows, 142-74, the best showing in a week and easily the best so far this month.
Volume was low, another positive, especially considering the late-day sell-off, which, many suspect was nothing more than shrewd tape-painting by insiders seeking an edge for Thursday.
NYSE Volume 6,510,982,000
NASDAQ Volume 2,134,476,250
Commodities were all priced higher as the dollar was weaker throughout the day. Oil was up 80 cents, to $80.40. Gold reached new highs, closing up $2.10, at $1,087.00, though it traded as high as $1095.00. Silver added 22 cents to $17.40.
Prior to the market open, more economic data was released. the ADP Employment Report showed a loss of 203,000 private sector jobs in October, an improvement over September's revised reading of -227,000, but still on the high side. This also bodes well for the October Non-farm payroll report due out prior to Friday's opening bell. First, the ADP report from last month was -254,000 unrevised, and has been revised lower by 27,000. The September non-farm payroll figure was 263,000, just a bit higher than the ADP reading. If the government revises lower, as ADP did, and remains somewhat in line with forecasts, we could see the first reading below 200,000 in over a year on Friday, which would be a real boost to the market.
Some indication of improvement in the jobs picture came on Monday, in the ISM manufacturing index, which showed improvement in the employment outlook segment. The expectation is for a loss of 175-220,000 jobs in the month, though anything below 210,000 would be positive.
Retail sales figures for October will be released prior to the open and they are expected to be solid.
Cisco (CSCO) reported excellent figures for their fiscal 1st quarter after the bell - .36 per share on expectations of .31, and higher revenue than expected - with the stock moving 3-4% higher after hours, hovering around 24.00 per share.
Tuesday, November 3, 2009
Sideways Stagger Ahead of Fed
Markets spent most of the day on Tuesday trading in a narrow range in slightly negative territory, with the Dow Industrials the most pressured stocks of the session. In the end, markets finished in mixed fashion as investors weighed a shift in the dollar-commodity-stocks relationship and a mega-deal by Warren Buffett while awaiting a policy decision from the Fed on the morrow.
Overall, stocks began the session lower and gained strength throughout the day, especially in the case of the NASDAQ, which finished on the uptick. Markets are still very much undecided about direction. Additionally, there was some measure of decoupling of gold from the dollar, as the yellow metal soared in price on a sale of 200 metric tons from the International Monetary Fund (IMF) to India's Central Bank, setting a record price in the process.
The extraordinary rise in the price of gold came in the face of a stronger dollar, which is absolutely counter to the prevailing trend. Though the dollar weakened through the day, oil and silver also gained in price, but the relationship was badly dented, with the commodities working on their own path, unrelated to that of the greenback.
This conundrum had heads spinning in the trading pits, from futures to forex. The implications of such a huge buy by India's Central Bank, without any hint of a discount - and with the understanding that they are prepared to purchase more - leaves dollar traders in the lurch if India's intent is to partially back the rupee with physical gold. It represents a dramatic shift away from fiat currency to hard assets.
Another item buttressing the markets was Berkshire Hathaway's Warren Buffet announcing the purchase of one of the largest railroad operations in the country, Burlington Northern Santa fe (BNI). The $44 billion deal, Berkshire's largest ever, will be paid in stock and cash. Additionally, Berkshire Hathaway announced a 50-for-1 split of its Class B common stock, which will make the pricey shares more attractive to the general public. The ticker symbol BRK-B currently trades in a range around 3,300 per share, putting even ten shares out of reach of the ordinary investor. After the split, the stock will sell initially around a much more reasonable price of 66 per share.
On the news, Burlington Northern (BNI) gained 20.93, to 97.00 at the close.
Dow 9,771.91, -17.53 (0.18%)
Nasdaq 2,057.32, +8.12 (0.40%)
S&P 500 1,045.41. +2.53 (0.24%)
NYSE Composite 6,812.70, +27.76 (0.41%)
On the day, advancing issues beat decliners, 3888-2563. New highs regained the high ground over new lows, though by the narrowest of margins, 98-94. Evidently, investors are standing pat until after the Fed speaks. Oddly enough, the Fed is not expected to say much, if anything, different from policy statements from the past 8 months. Investors are looking for any subtle change in wording of their statement which might indicate a willingness to raise rates in the near term. The outlook is for the Fed to keep rates at their absurdly low levels until Spring. What also is weighing on investors' minds is the unemployment picture. While the govrnment's Non-farms payroll data will be released on Friday, the market will get an early glimpse tomorrow morning when ADP releases it's proprietary private sector employment report for October.
Volumes were muted, without a doubt in anticipation of the FOMC rate decision on Wednesday at 2:00 pm. Instead of outright selling, investors are showing a good deal of resolve, especially in the face of recent market weakness, preferring to hold stocks and simply not stake out new positions presently.
NYSE Volume 6,209,336,000
Nasdaq Volume 2,042,206,500
As mentioned above, commodities took off on their own trajectory today. Oil gained $1.47, to $79.60. Gold soared $31.20 to a new all-time high of $1,085.20. Silver gained in sympathy, up a very healthy 75 cents, to $17.19, close to its highs for the year.
Uncertainty reigns at the moment, though the current tightness should abate with the release of key economic data and the Fed announcement. With stocks off roughly 5% from their recent highs, there should be no lack of demand pent up for stock speculation into the holidays.
Overall, stocks began the session lower and gained strength throughout the day, especially in the case of the NASDAQ, which finished on the uptick. Markets are still very much undecided about direction. Additionally, there was some measure of decoupling of gold from the dollar, as the yellow metal soared in price on a sale of 200 metric tons from the International Monetary Fund (IMF) to India's Central Bank, setting a record price in the process.
The extraordinary rise in the price of gold came in the face of a stronger dollar, which is absolutely counter to the prevailing trend. Though the dollar weakened through the day, oil and silver also gained in price, but the relationship was badly dented, with the commodities working on their own path, unrelated to that of the greenback.
This conundrum had heads spinning in the trading pits, from futures to forex. The implications of such a huge buy by India's Central Bank, without any hint of a discount - and with the understanding that they are prepared to purchase more - leaves dollar traders in the lurch if India's intent is to partially back the rupee with physical gold. It represents a dramatic shift away from fiat currency to hard assets.
Another item buttressing the markets was Berkshire Hathaway's Warren Buffet announcing the purchase of one of the largest railroad operations in the country, Burlington Northern Santa fe (BNI). The $44 billion deal, Berkshire's largest ever, will be paid in stock and cash. Additionally, Berkshire Hathaway announced a 50-for-1 split of its Class B common stock, which will make the pricey shares more attractive to the general public. The ticker symbol BRK-B currently trades in a range around 3,300 per share, putting even ten shares out of reach of the ordinary investor. After the split, the stock will sell initially around a much more reasonable price of 66 per share.
On the news, Burlington Northern (BNI) gained 20.93, to 97.00 at the close.
Dow 9,771.91, -17.53 (0.18%)
Nasdaq 2,057.32, +8.12 (0.40%)
S&P 500 1,045.41. +2.53 (0.24%)
NYSE Composite 6,812.70, +27.76 (0.41%)
On the day, advancing issues beat decliners, 3888-2563. New highs regained the high ground over new lows, though by the narrowest of margins, 98-94. Evidently, investors are standing pat until after the Fed speaks. Oddly enough, the Fed is not expected to say much, if anything, different from policy statements from the past 8 months. Investors are looking for any subtle change in wording of their statement which might indicate a willingness to raise rates in the near term. The outlook is for the Fed to keep rates at their absurdly low levels until Spring. What also is weighing on investors' minds is the unemployment picture. While the govrnment's Non-farms payroll data will be released on Friday, the market will get an early glimpse tomorrow morning when ADP releases it's proprietary private sector employment report for October.
Volumes were muted, without a doubt in anticipation of the FOMC rate decision on Wednesday at 2:00 pm. Instead of outright selling, investors are showing a good deal of resolve, especially in the face of recent market weakness, preferring to hold stocks and simply not stake out new positions presently.
NYSE Volume 6,209,336,000
Nasdaq Volume 2,042,206,500
As mentioned above, commodities took off on their own trajectory today. Oil gained $1.47, to $79.60. Gold soared $31.20 to a new all-time high of $1,085.20. Silver gained in sympathy, up a very healthy 75 cents, to $17.19, close to its highs for the year.
Uncertainty reigns at the moment, though the current tightness should abate with the release of key economic data and the Fed announcement. With stocks off roughly 5% from their recent highs, there should be no lack of demand pent up for stock speculation into the holidays.
Monday, November 2, 2009
Markets Remain Volatile Despite Solid Economic Reports
The extreme volatility which reappeared last week was back again on Monday, as stocks whipsawed though an up-down-up session, with the major indices finally deciding on a positive close at the end of the day.
After a major sell-off last Friday, stocks started out modestly positive, except for the NASDAQ, which has been a laggard recently. Once data on construction spending, pending home sales and the ISM Index came out at 10:00 am, all of the indices moved markedly higher, with the Dow sporting a gain of more than 140 points.
Construction spending for September registered an increase of 0.8%, blasting estimates for a decline of 0.2%. Pending home sales were up 6.1%, following a reading of +6.4% in August, regarded as an impressive string of increases in the pressured real estate market.
The ISM Index was the real popper of the grouping, however, with the October reading coming in at 55.7, after a solid showing of 52.6 in September.
Around noon, rumors that the US government was seeking to get back its money owed through the TARP program from Citigroup (C) rattled the markets, sending all of the indices temporarily into negative territory around 1:00 pm. Through the remainder of the afternoon, stocks vacillated and moved slightly higher, registering shaky, but modest gains at the close.
Dow 9,789.21, +76.48 (0.79%)
NASDAQ 2,049.20, +4.09 (0.20%)
S&P 500 1,042.88, +6.69 (0.65%)
NYSE Composite 6,784.94, +45.49 (0.67%)
Simple indicators displayed the confusion quite adequately. 3309 stocks advanced, while 3190 declined. There were 78 new highs, but 103 new lows. These figures indicate that the market is unable to determine direction, despite strong signs of economic recovery, probably due to many individual issues being overpriced.
Volume was steady, in line with previous sessions. There still has not been a spike in volume on a positive day, though with the increased volatility, it would be difficult to ascertain whether or not the volume was a contributor to overall gains. Taking today, for instance, up and down volume were virtually even, so it would be difficult to say that any of it was influential one way or the other.
NYSE Volume 7,318,034,000
NASDAQ Volume 2,340,403,500
Commodities took advantage of the weaker dollar to advance. Oil advanced $1.13, to $78.13. Gold was up $13.60, to 1,054.00, and silver added 19 cents, closing at $16.44.
As the number of companies reporting 3rd quarter earnings slows - over 80% of the S&P 500 have already reported - investors will have to rely on economic data and events to move markets. On Wednesday the FOMC of the Federal Reserve issues a policy statement, in which the Fed is widely expected to keep key interest rates the same, though some analysts are looking for a change in wording, especially where the Fed says they expect to keep rates low for "an extended period." A change in that wording could signal that the fed sees signs that it is time to tighten, or raise, interest rates, a move which could roil markets.
Before that, auto sales data for October is due out on Tuesday. Also on Wednesday, ADP issues their montly reading on private sector employment for October, a precursor to Friday's Non-farms payroll report.
Marathon Oil (MRO), Polo Ralph Lauren (RL) and European financial giant UBS (UBS) report prior to tomorrow's opening bell. Tech bellwether Cisco Systems (CSCO) reports after the close on Wednesday.
After a major sell-off last Friday, stocks started out modestly positive, except for the NASDAQ, which has been a laggard recently. Once data on construction spending, pending home sales and the ISM Index came out at 10:00 am, all of the indices moved markedly higher, with the Dow sporting a gain of more than 140 points.
Construction spending for September registered an increase of 0.8%, blasting estimates for a decline of 0.2%. Pending home sales were up 6.1%, following a reading of +6.4% in August, regarded as an impressive string of increases in the pressured real estate market.
The ISM Index was the real popper of the grouping, however, with the October reading coming in at 55.7, after a solid showing of 52.6 in September.
Around noon, rumors that the US government was seeking to get back its money owed through the TARP program from Citigroup (C) rattled the markets, sending all of the indices temporarily into negative territory around 1:00 pm. Through the remainder of the afternoon, stocks vacillated and moved slightly higher, registering shaky, but modest gains at the close.
Dow 9,789.21, +76.48 (0.79%)
NASDAQ 2,049.20, +4.09 (0.20%)
S&P 500 1,042.88, +6.69 (0.65%)
NYSE Composite 6,784.94, +45.49 (0.67%)
Simple indicators displayed the confusion quite adequately. 3309 stocks advanced, while 3190 declined. There were 78 new highs, but 103 new lows. These figures indicate that the market is unable to determine direction, despite strong signs of economic recovery, probably due to many individual issues being overpriced.
Volume was steady, in line with previous sessions. There still has not been a spike in volume on a positive day, though with the increased volatility, it would be difficult to ascertain whether or not the volume was a contributor to overall gains. Taking today, for instance, up and down volume were virtually even, so it would be difficult to say that any of it was influential one way or the other.
NYSE Volume 7,318,034,000
NASDAQ Volume 2,340,403,500
Commodities took advantage of the weaker dollar to advance. Oil advanced $1.13, to $78.13. Gold was up $13.60, to 1,054.00, and silver added 19 cents, closing at $16.44.
As the number of companies reporting 3rd quarter earnings slows - over 80% of the S&P 500 have already reported - investors will have to rely on economic data and events to move markets. On Wednesday the FOMC of the Federal Reserve issues a policy statement, in which the Fed is widely expected to keep key interest rates the same, though some analysts are looking for a change in wording, especially where the Fed says they expect to keep rates low for "an extended period." A change in that wording could signal that the fed sees signs that it is time to tighten, or raise, interest rates, a move which could roil markets.
Before that, auto sales data for October is due out on Tuesday. Also on Wednesday, ADP issues their montly reading on private sector employment for October, a precursor to Friday's Non-farms payroll report.
Marathon Oil (MRO), Polo Ralph Lauren (RL) and European financial giant UBS (UBS) report prior to tomorrow's opening bell. Tech bellwether Cisco Systems (CSCO) reports after the close on Wednesday.
Sunday, November 1, 2009
How Much Gold Should You Own?
With gold recently soaring past the $1000 mark and making a new high over $1050, more than a few formerly-gold-averse investors have become more interested in adding precious metals investments to their portfolios.
Some have opted to buy the exchange-traded fund (ETF), the SPDR Gold Trust (GLD), though there are any number of reasons to avoid that route and invest in gold coins or purchase gold bullion directly, one of which is the pretty well-determined suspicion that the "Trust" doesn't actually hold or own as much actual gold as it would need to handle a rush of redemptions for investors wanting physical gold in their hands. The other reason is that the ETF doesn't match the moves made by the metal itself. Gold futures and spot prices haven't correlated to similar moves in the ETF.
That's why it is advisable to buy gold coin from a reputable dealer, either in person near your home or on the internet. Either choice is preferable to playing either the ETF or buying mining stocks. Physical gold - or silver or platinum - is easy to store, needs almost no care, and can be instantly converted to cash if necessary, without paperwork or tax issues.
How much a capable investor should hold depends on their needs. Younger, more speculative types may want as little as 5% of their portfolio in gold or silver coins or bullion, while older, more safety-oriented investors may want to hold as much as 20% of their portfolio in gold. In any case, it's an investment that should be part of everyone's diversification.
Some have opted to buy the exchange-traded fund (ETF), the SPDR Gold Trust (GLD), though there are any number of reasons to avoid that route and invest in gold coins or purchase gold bullion directly, one of which is the pretty well-determined suspicion that the "Trust" doesn't actually hold or own as much actual gold as it would need to handle a rush of redemptions for investors wanting physical gold in their hands. The other reason is that the ETF doesn't match the moves made by the metal itself. Gold futures and spot prices haven't correlated to similar moves in the ETF.
That's why it is advisable to buy gold coin from a reputable dealer, either in person near your home or on the internet. Either choice is preferable to playing either the ETF or buying mining stocks. Physical gold - or silver or platinum - is easy to store, needs almost no care, and can be instantly converted to cash if necessary, without paperwork or tax issues.
How much a capable investor should hold depends on their needs. Younger, more speculative types may want as little as 5% of their portfolio in gold or silver coins or bullion, while older, more safety-oriented investors may want to hold as much as 20% of their portfolio in gold. In any case, it's an investment that should be part of everyone's diversification.
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