Call it what you will, but today's action was indicative - as all of the past week has been - of uncertainty about further stock market advances and profit-taking.
Stocks have stalled on low volume, though with the steady supply of cheap money being fed into the system, the small, fractional gains could continue, though sharper players probably have already exited profitable positions.
Dow 10,624.69, +12.85 (0.12%)
NASDAQ 2,367.66, -0.80 (0.03%)
S&P 500 1,149.99, -0.25 (0.02%)
NYSE Composite 7,362.85, +9.61 (0.13%)
Internal indicators are still positive, however, with advancing issues eking out a win over decliners, 3378-3127. That was the closest margin in days, if not weeks. New highs came in explosively, at 805, but the number of new lows also climbed, to 69 on the day. Volume continues to be stuck in neutral; very low participation is indicated.
NYSE Volume 5,506,876,500
NASDAQ Volume 2,035,983,000
Commodities were flat, with oil dipping 6 cents, to $81.24. Gold lost $1.20, to $1,107.00, and silver fell 17 cents, to $17.03. An interesting indicator is the gold-silver ratio, which has been out of whack since 2003, but on pull-backs, silver, with more industrial uses than gold, usually gets hit harder. It's an interesting dynamic. Silver will follow gold to the upside, but generally underperform it. On the downside, it may be instructive as a predictor of future gold moves. Since silver is more closely tied to the real economy, it goes to reason that it would feel the pinch prior to its cousin gold, which is almost entirely an investment instrument.
A couple of data points should have moved the market, and might have been partially responsible for the poor showing on Friday. Retail sales were strong in February, up 0.3%, but january was revised sharply lower, from +0.5 to +0.1. That revision may have put a scare into investors, sensing that the current numbers were likely overstated. If so, that would jibe with the Michigan Sentiment survey, which fell to 72.5 from 73.6 in February.
Additionally, inventories were flat when the expectation was for a noticeable build. It didn't occur, thus, skepticism prevailed, and the market doesn't appreciate any kind of uncertainty, of which there is more than enough to go around.
At least the weather is improving and can't be blamed for anything.
Friday, March 12, 2010
Invest Like the Pros
While some may bemoan that their returns on stock market investments aren't what they should be, others have taken action by going to an advisory service or asset allocation model like the ones at MarketRiders.
With investment strategies designed by some of the most capable minds in the field, like David Swensen of Yale, John Bogle, founder of the Vanguard group of funds, Burton Malkiel of Princeton and Dr. William Sharpe of Stanford, investing doesn't have to be a guessing game any more.
The proper asset allocation will help achieve the long-term goals you desire from your portfolio and allow you to rest easy during turbulent market conditions.
Advanced portfolio management designed by professionals could be the key to success in the market, whether you're a frequent trader into small caps, large caps, or need to execute a 401k rollover or are saving and planning for retirement or a college education. Going it alone, rather than relying on trusted, proven advice, discipline and strategies, could actually cost you more than you know.
With investment strategies designed by some of the most capable minds in the field, like David Swensen of Yale, John Bogle, founder of the Vanguard group of funds, Burton Malkiel of Princeton and Dr. William Sharpe of Stanford, investing doesn't have to be a guessing game any more.
The proper asset allocation will help achieve the long-term goals you desire from your portfolio and allow you to rest easy during turbulent market conditions.
Advanced portfolio management designed by professionals could be the key to success in the market, whether you're a frequent trader into small caps, large caps, or need to execute a 401k rollover or are saving and planning for retirement or a college education. Going it alone, rather than relying on trusted, proven advice, discipline and strategies, could actually cost you more than you know.
Thursday, March 11, 2010
No Change Must Be Good
Nothing much of importance happened today, giving market participants yet another opportunity to do what they've been doing for nine of the last twelve sessions: bid stocks higher.
There must be something quite enticing about owning stocks nowadays because there seems to be no shortage of buyers. Whatever the reasons, stocks continue to add to gains, day after day after day. It's becoming something of a bore.
Suppose the congress went home for a month, two months, six months, or just simply hung around and enacted no new legislation. Suppose the Fed kept short term interest rates permanently at zero. Suppose government debt was paid for with more government debt and that banks could continue to keep poisoned, rotten assets off their balance sheets.
Add in real unemployment at about 16%, 15% of all homeowners either behind on mortgage payments or already in foreclosure.
We'd have exactly the conditions we have today, though how all of that relates to being positive for stocks or the more general economy is a quizzer.
As for that final piece of the puzzle, the 15% of the "better off" homeowners in America falling behind, that info comes via the Mortgage Bankers Association, a group which should know the reality of homeownership, in this Washington Post article from February 20, 2010. Maybe you missed it.
The key passages are these:
"About 9.47 percent of all borrowers were delinquent on mortgages during the fourth quarter, according to a survey. The number is down slightly from the previous quarter, the highest on record, but was the second-highest level ever seen. An additional 4.58 percent of homeowners were somewhere in the foreclosure process.
This means that about 15 percent, or 7.9 million mortgages, were in trouble during the quarter, according to the industry group. It is the highest level recorded by the survey, which has been conducted since 1972, and up from 11 percent, or 6.4 million loans, during the corresponding period in 2008."
That is simply not encouraging.
As for unemployment, the weekly initial claims data was released early today, showing another 462,000 people filed new claims in the most recent reporting period. There were also more than 4,500,000 people still collecting unemployment benefits and congress just approved another extension. There are people out there who have been receiving benefits since March, 2008. Maybe you know some of them.
The 9.7% unemployment rate the government likes to tout is a neat fabrication which doesn't include "discouraged" workers or those who have taken lower-paying part-time jobs. As claimed earlier, real unemployment is about 16% of the available labor pool. It's much higher for specific groups, such as teens and minorities.
Somehow, all of this makes stocks good investments. Sorry, but some of us disagree. Anybody buying stocks with real money these days is simply gambling, and much of what's out there appear to be bad bets.
Dow 10,611.84, +44.51 (0.42%)
NASDAQ 2,368.46, +9.51 (0.40%)
S&P 500 1,150.24, +4.63 (0.40%)
NYSE Composite 7,353.21, +25.54 (0.35%)
Advancers beat down decliners, 3690-2702. New highs beat new lows, 563-51. That gap will begin to slowly decline. By August or September, possibly sooner, new lows should retake the advantage. Volume continued at a trickle. Goldman Sachs alone is probably responsible for 30% off all the trading volume on the exchanges, possibly as much as 45%.
NYSE Volume 5,093,085,000
NASDAQ Volume 2,093,398,875
Commodity prices moderated. Oil only gained 16 cents, but is priced now at $82.25 per barrel. Gold was absolutely flat, at $1108.10. Silver gained 15 cents, to $17.17.
There will be a reckoning for the current rallying folly. And it really is foolishness of a high degree. Stocks are close to recent highs, so when were we supposed to buy stocks? When they were high? We all know the answer to that question.
Friday will bring some economic data. Retail sales for February, along with the Michigan Sentiment survey for March and January business inventories will cumulatively tell us that nothing is going on in one way or another.
Stocks will rise again.
There must be something quite enticing about owning stocks nowadays because there seems to be no shortage of buyers. Whatever the reasons, stocks continue to add to gains, day after day after day. It's becoming something of a bore.
Suppose the congress went home for a month, two months, six months, or just simply hung around and enacted no new legislation. Suppose the Fed kept short term interest rates permanently at zero. Suppose government debt was paid for with more government debt and that banks could continue to keep poisoned, rotten assets off their balance sheets.
Add in real unemployment at about 16%, 15% of all homeowners either behind on mortgage payments or already in foreclosure.
We'd have exactly the conditions we have today, though how all of that relates to being positive for stocks or the more general economy is a quizzer.
As for that final piece of the puzzle, the 15% of the "better off" homeowners in America falling behind, that info comes via the Mortgage Bankers Association, a group which should know the reality of homeownership, in this Washington Post article from February 20, 2010. Maybe you missed it.
The key passages are these:
"About 9.47 percent of all borrowers were delinquent on mortgages during the fourth quarter, according to a survey. The number is down slightly from the previous quarter, the highest on record, but was the second-highest level ever seen. An additional 4.58 percent of homeowners were somewhere in the foreclosure process.
This means that about 15 percent, or 7.9 million mortgages, were in trouble during the quarter, according to the industry group. It is the highest level recorded by the survey, which has been conducted since 1972, and up from 11 percent, or 6.4 million loans, during the corresponding period in 2008."
That is simply not encouraging.
As for unemployment, the weekly initial claims data was released early today, showing another 462,000 people filed new claims in the most recent reporting period. There were also more than 4,500,000 people still collecting unemployment benefits and congress just approved another extension. There are people out there who have been receiving benefits since March, 2008. Maybe you know some of them.
The 9.7% unemployment rate the government likes to tout is a neat fabrication which doesn't include "discouraged" workers or those who have taken lower-paying part-time jobs. As claimed earlier, real unemployment is about 16% of the available labor pool. It's much higher for specific groups, such as teens and minorities.
Somehow, all of this makes stocks good investments. Sorry, but some of us disagree. Anybody buying stocks with real money these days is simply gambling, and much of what's out there appear to be bad bets.
Dow 10,611.84, +44.51 (0.42%)
NASDAQ 2,368.46, +9.51 (0.40%)
S&P 500 1,150.24, +4.63 (0.40%)
NYSE Composite 7,353.21, +25.54 (0.35%)
Advancers beat down decliners, 3690-2702. New highs beat new lows, 563-51. That gap will begin to slowly decline. By August or September, possibly sooner, new lows should retake the advantage. Volume continued at a trickle. Goldman Sachs alone is probably responsible for 30% off all the trading volume on the exchanges, possibly as much as 45%.
NYSE Volume 5,093,085,000
NASDAQ Volume 2,093,398,875
Commodity prices moderated. Oil only gained 16 cents, but is priced now at $82.25 per barrel. Gold was absolutely flat, at $1108.10. Silver gained 15 cents, to $17.17.
There will be a reckoning for the current rallying folly. And it really is foolishness of a high degree. Stocks are close to recent highs, so when were we supposed to buy stocks? When they were high? We all know the answer to that question.
Friday will bring some economic data. Retail sales for February, along with the Michigan Sentiment survey for March and January business inventories will cumulatively tell us that nothing is going on in one way or another.
Stocks will rise again.
Wednesday, March 10, 2010
Oy! Tech Keeps Stocks on the Upswing
Tech stocks continued to dominate the gainers once again as stocks continued their month-long ascent. The NASDAQ easily outpaced the other major averages. Investors are coming to realize that tech companies are more financially capable and less in debt than their traditional industrial, material or financial counterparts.
It goes to reason, since most of the strong tech companies - Apple, Cisco, Amazon in particular - are young and have little to no debt service, separating them in material ways from other companies which may be struggling with finances, debt service, bond issuance and legacy costs (pensions, health care, etc.).
The general economy is still somewhat in a confused state of non-denial. While most indicators are benign or improving - other than housing and employment (Is there anything else that matters?) - sentiment remains steadfastly cautious. It actually has set up a nice paradigm for traders, especially those with more guile and shorter time horizons. In other words, the majority of the market is running on momentum, a tricky mistress, which can turn on a dime.
So long as stocks continue to gain in value, I'll reassert that they're not sufficiently discounting the future, which looks horrid. The government's plan seems to be to continually kick the can further down the road, applying patches along the way. There cannot be stability or prosperity until the government sector cleans up its act and tackles the issues of debt and entitlements head on, something few elected officials wish to do.
Eventually, piling debt upon debt is going to cause an implosion and dislocation, as it did in the fall of 2008. Current policies are leading to more spectacular failures, as exposure is now greater and includes not only financial institutions, but government entities such as the Fed, Treasury, and the unmentionable messes contained within Fannie Mae, Freddie Mac and the soon-to-flame-out FHA.
Fixed income gains are increasingly scarce and many unstable. Witness the note redemptions by Fannie and Freddie on defaulted mortgages within MBS, tight spreads and few alternatives. Flat-lining fixed income is inducing more equity investment, forcing stocks higher, eventually to unsustainable levels. It's a no-win, unless you're completely in cash because of declining asset values almost everywhere else. The stock market is nothing more than a chimera, an abstraction of the global economy and plenty of opinions. Short-term gains are possible. So are permanent losses.
Dow 10,567.33, +2.95 (0.03%)
NASDAQ 2,358.95, +18.27 (0.78%)
S&P 500 1,145.61, +5.17 (0.45%)
NYSE Composite 7,327.67, +33.65 (0.46%)
Winners beat losers, 4325-2192. New Highs: 773; New Lows: 51. Volume was substantially better than recent sluggish sessions. Lots of stock changed hands, but movement was constrained.
NYSE Volume 6,089,594,500
NASDAQ Volume 2,502,965,000
Oil posted another ridiculous gain of 51 cents, to $82.09, despite another in a series of inventory builds. The energy complex is wickedly overpriced and reversion is a certainty. Current prices cannot be maintained with reduced demand levels. Gold fell $14.10, to $1,108.20. Silver dipped 3 cents to $17.31.
Economic data has been slim and incapable of providing direction.
It goes to reason, since most of the strong tech companies - Apple, Cisco, Amazon in particular - are young and have little to no debt service, separating them in material ways from other companies which may be struggling with finances, debt service, bond issuance and legacy costs (pensions, health care, etc.).
The general economy is still somewhat in a confused state of non-denial. While most indicators are benign or improving - other than housing and employment (Is there anything else that matters?) - sentiment remains steadfastly cautious. It actually has set up a nice paradigm for traders, especially those with more guile and shorter time horizons. In other words, the majority of the market is running on momentum, a tricky mistress, which can turn on a dime.
So long as stocks continue to gain in value, I'll reassert that they're not sufficiently discounting the future, which looks horrid. The government's plan seems to be to continually kick the can further down the road, applying patches along the way. There cannot be stability or prosperity until the government sector cleans up its act and tackles the issues of debt and entitlements head on, something few elected officials wish to do.
Eventually, piling debt upon debt is going to cause an implosion and dislocation, as it did in the fall of 2008. Current policies are leading to more spectacular failures, as exposure is now greater and includes not only financial institutions, but government entities such as the Fed, Treasury, and the unmentionable messes contained within Fannie Mae, Freddie Mac and the soon-to-flame-out FHA.
Fixed income gains are increasingly scarce and many unstable. Witness the note redemptions by Fannie and Freddie on defaulted mortgages within MBS, tight spreads and few alternatives. Flat-lining fixed income is inducing more equity investment, forcing stocks higher, eventually to unsustainable levels. It's a no-win, unless you're completely in cash because of declining asset values almost everywhere else. The stock market is nothing more than a chimera, an abstraction of the global economy and plenty of opinions. Short-term gains are possible. So are permanent losses.
Dow 10,567.33, +2.95 (0.03%)
NASDAQ 2,358.95, +18.27 (0.78%)
S&P 500 1,145.61, +5.17 (0.45%)
NYSE Composite 7,327.67, +33.65 (0.46%)
Winners beat losers, 4325-2192. New Highs: 773; New Lows: 51. Volume was substantially better than recent sluggish sessions. Lots of stock changed hands, but movement was constrained.
NYSE Volume 6,089,594,500
NASDAQ Volume 2,502,965,000
Oil posted another ridiculous gain of 51 cents, to $82.09, despite another in a series of inventory builds. The energy complex is wickedly overpriced and reversion is a certainty. Current prices cannot be maintained with reduced demand levels. Gold fell $14.10, to $1,108.20. Silver dipped 3 cents to $17.31.
Economic data has been slim and incapable of providing direction.
Tuesday, March 9, 2010
Premature Celebration
Yesterday, all anyone could talk about was the one-year anniversary of the market bottom. This was all the fashion on America's financial network, CNBC, where the usual suspect hosts were gushing with numbers and statistics about the "rally" off the bottom from March 9, 2009. Jim Cramer, the Mad Money host and serial bull%*( artist, even adorned his set with a cake replete with candles.
Sad to say, but the celebratory theme was a day early, as today, by most calendars, is March 9, not yesterday, and the market was responsive, at least in the early going, as investors kept shoveling money into stocks, pushing the Dow up 60 points at its zenith.
However, right around 2:30 in the afternoon, some people were apparently having second thoughts, and the rally was truncated, eventually sending all of the major indices briefly into the red shortly after 3:00 pm. Cooler heads, we suppose, prevailed in the end, with stocks finishing with small gains on low volume.
One wonders where markets are headed now that the "recovery" is underway. Or is it? The stock market rally of the past 12 months was built on bailout money, cheap credit and arguably depressed prices. We stand today at something approaching fair value, yet bulls abound. It seems to be something approaching heresy to suggest that stocks should correct, take a breather or cool off in some fashion. That would not please investors, understandably, but these markets have been so hot for so long, values have become distorted and bubbles - those things that caused the '08 collapse - could be developing once again.
We don't have Alan Greenspan around to suggest that markets are experiencing "irrational exuberance." He's been replaced by the scholarly Mr. Bernanke, who's been forced into a no-win condition at the Fed with the federal funds rate at zero and the balance sheet bloated with toxic mortgage-backed securities (MBS) that still nobody wants to own at face value. It's likely that Mr. Bernanke would like to raise interest rates a little bit, but he is so bound to keeping them low and keeping the fledgling recovery going that he dare not make a move, at least not presently. Eventually, however, he must raise rates, and when he does, the chorus of booing and hissing from Wall Street will probably be heard on the Santa Monica Pier.
Of course, now that the double-dip argument has been roundly discredited, nothing could be better for stocks and the economy than a nice, relaxing hiatus. Profits could be taken and reinvested in other companies at lower prices, but that idea is still anathema to those who only know one way for stocks to go... up, up, and away.
Today's brief selling might be a clue for investors as to what lies ahead, not immediately, but maybe four to six months from now. If the economy isn't absolutely humming along by then, there will surely be a sell-off, so, let's make sure the pom-pom waving gets more furious and animated over the coming weeks.
Dow 10,564.38, +11.86 (0.11%)
NASDAQ 2,340.68, +8.47 (0.36%)
S&P 500 1,140.44, +1.94 (0.17%)
NYSE Composite 7,294.02, +1.49 (0.02%)
On the session, advancing issues held sway over decliners, 3631-2870. There were fewer new highs than expected, and fewer than yesterday, though their level remains elevated at 740. There were just 59 new lows, though these numbers may begin to fall into more normal patterns as comparisons will increasingly become less stark. Low volume remains a major issue, today being no exception, though it was better than most recent efforts. There simply is not the same level of participation or enthusiasm as there was prior to the collapse.
NYSE Volume 5,802,183,500
NASDAQ Volume 2,558,147,000
Commodity market did actually act somewhat rationally today. Oil lost half a buck, to $81.37, still overpriced by almost any metric. Gold lost $2.20, to $1,121.80, but silver gained 6 cents, to $17.33.
The paucity of economic data leaves investors with little to trade upon, making major moves in either direction difficult, though the bulls remain firmly in control.
Sad to say, but the celebratory theme was a day early, as today, by most calendars, is March 9, not yesterday, and the market was responsive, at least in the early going, as investors kept shoveling money into stocks, pushing the Dow up 60 points at its zenith.
However, right around 2:30 in the afternoon, some people were apparently having second thoughts, and the rally was truncated, eventually sending all of the major indices briefly into the red shortly after 3:00 pm. Cooler heads, we suppose, prevailed in the end, with stocks finishing with small gains on low volume.
One wonders where markets are headed now that the "recovery" is underway. Or is it? The stock market rally of the past 12 months was built on bailout money, cheap credit and arguably depressed prices. We stand today at something approaching fair value, yet bulls abound. It seems to be something approaching heresy to suggest that stocks should correct, take a breather or cool off in some fashion. That would not please investors, understandably, but these markets have been so hot for so long, values have become distorted and bubbles - those things that caused the '08 collapse - could be developing once again.
We don't have Alan Greenspan around to suggest that markets are experiencing "irrational exuberance." He's been replaced by the scholarly Mr. Bernanke, who's been forced into a no-win condition at the Fed with the federal funds rate at zero and the balance sheet bloated with toxic mortgage-backed securities (MBS) that still nobody wants to own at face value. It's likely that Mr. Bernanke would like to raise interest rates a little bit, but he is so bound to keeping them low and keeping the fledgling recovery going that he dare not make a move, at least not presently. Eventually, however, he must raise rates, and when he does, the chorus of booing and hissing from Wall Street will probably be heard on the Santa Monica Pier.
Of course, now that the double-dip argument has been roundly discredited, nothing could be better for stocks and the economy than a nice, relaxing hiatus. Profits could be taken and reinvested in other companies at lower prices, but that idea is still anathema to those who only know one way for stocks to go... up, up, and away.
Today's brief selling might be a clue for investors as to what lies ahead, not immediately, but maybe four to six months from now. If the economy isn't absolutely humming along by then, there will surely be a sell-off, so, let's make sure the pom-pom waving gets more furious and animated over the coming weeks.
Dow 10,564.38, +11.86 (0.11%)
NASDAQ 2,340.68, +8.47 (0.36%)
S&P 500 1,140.44, +1.94 (0.17%)
NYSE Composite 7,294.02, +1.49 (0.02%)
On the session, advancing issues held sway over decliners, 3631-2870. There were fewer new highs than expected, and fewer than yesterday, though their level remains elevated at 740. There were just 59 new lows, though these numbers may begin to fall into more normal patterns as comparisons will increasingly become less stark. Low volume remains a major issue, today being no exception, though it was better than most recent efforts. There simply is not the same level of participation or enthusiasm as there was prior to the collapse.
NYSE Volume 5,802,183,500
NASDAQ Volume 2,558,147,000
Commodity market did actually act somewhat rationally today. Oil lost half a buck, to $81.37, still overpriced by almost any metric. Gold lost $2.20, to $1,121.80, but silver gained 6 cents, to $17.33.
The paucity of economic data leaves investors with little to trade upon, making major moves in either direction difficult, though the bulls remain firmly in control.
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