Stocks closed sharply higher on Wednesday after Intel (INTC) released 1t quarter results that handily beat street estimates.
The Dow Jones Industrial average sprinted to its best close in 19 months. The NASDAQ and S&P 500 each cleared psychological hurdles at 2500 and 1200, respectively. Investors were cheered by strong earnings results, a benign reading on inflation and optimistic sentiment ion the trading floor.
The government announced that Consumer prices (CPI) grew at an annualized rate of just 0.1%, with core CPI (excluding food and energy components) flat for March. This spurred speculation that the Fed would keep rates at their absurdly low levels into the third quarter, though deflationists warned that the numbers reflect not a recovery, but a flat-lining in economic growth.
Investors were not dissuaded, however, boosting shares of technology stocks ahead of the broader market.
Dow 11,123.11, +103.69 (0.94%)
NASDAQ 2,504.86, +38.87 (1.58%)
S&P 500 1,210.65, +13.35 (1.12%)
NYSE Composite 7,728.96, +90.61 (1.24%)
Advancing issues blew past decliners, 5014-1459, a margin of better-than 3:1. New highs erupted to 1222, with only 95 stocks making new 52-week lows. Volume was impressive on the NASDAQ, but subdued on the NYSE, an ongoing trend.
NYSE Volume 4,512,912,000
NASDAQ Volume 2,799,845,500
Commodities joined in the rally, with crude oil futures gaining $2.84, to $85.84. Gold was higher by $6.20, to, $1,159.00, while silver added 16 cents, to $18.40.
The Dow is up 12% since the February 8 bottom at 9908. Investors will be keeping a close eye on initial unemployment claims on Thursday, as employment and housing continue to lag the stock market. Any good news from either sector will help keep the rally going.
Thursday, April 15, 2010
Tuesday, April 13, 2010
Greece Gets Great Loans; Talbot's a Loser; Stocks Tack on More Gains
If anybody out there can offer advice on how to write the same story 33 different ways, I'll be your first subscriber, because that has been my primary task since February 8, the date of the last interim bottom on the Dow.
While the index hasn't been going straight up, it often seems that way, as, over the span of the past 44 trading days, the Dow has advanced 33 of them. That's a 3-1 ratio of up days over down, and a winning investing formula in anyone's book. I admit, due to my disbelief in the overall economic recovery that everyone keeps talking about but nobody sees, to have completely missed this 1100+ point rally.
That's my fault, but I'm also not about to jump in at these seemingly inflated levels, either. I remain steadfastly, stubbornly, in cash, and it's not a matter of wanting to catch the next low, because I probably won't be investing in stocks for the next few years, at least not US stocks.
Today was more of the broken record variety of days on the Street. Stocks were up, though not by much. Earnings are beginning to trickle into investor equations, with Alcoa (AA) announcing earnings in line with forecasts on Monday at 10 cents per share in the 1st quarter on revenue of $4.9 billion, lower than consensus estimates of $5.24 billion.
After the closing bell today, Intel (INTC) announced 1st quarter results of 43 cents per share, beating the street consensus of 38 cents. Revenue for the chip giant was $10.3 billion, on expectations of $9.84 billion.
Earnings season is off to a good start. Even a company like Talbot's showed a profit of 7 cents per share, even better if you exclude one-time items (Why not? It's a party!). The women's retailer then shows 13 cents per share.
The company had been on the brink of failure, but has redefined itself over the past two years. Still, it's profit was a mere $4.1 million for the quarter, but shares rose significantly due to the amount of short interest. Selling at nearly $15 per share, investors are taking a pretty heavy risk with Talbot's. The company shows negative return on equity, virtually no growth, a p/e of 27 and nearly a half billion dollars in debt. That debt burden alone is enough to keep heavy volume investors away and the shorts making their downside bets.
Talbot's looks a lot like the nation of Greece, which should be the subject of some focus due to the favorable loans it secured from the EU and IMF. Greece will be able to finance its debts at around 5%, or about 100-120 basis points below market rates. The unusually-generous terms have been applied because all of the European finance ministers understand that a Greek default would likely have a severe domino effect on countries like Portugal, Italy, Ireland and Spain. The stronger nations, especially Germany, would likewise be affected, either having to underwrite immense losses or suffer a collapse of its own economy or the Euro.
While a decoupling from the Euro might be the very best thing for the Germans and the continent as a whole, scrapping the entire Euro project has not been something widely anticipated, though it could very well happen within the next 2-3 years. The Southern countries aren't nearly as industrious as their Northern neighbors, and the German populace isn't taking kindly to the concept of bailing out countries which cannot manage their internal budgets. Giving Greece better terms than the very best borrowers, when they are, in fact, sub-prime, at best, reeks of the kind of unfair "picking winners" that was a hallmark of the infamous bank bailouts in the US.
With Greece, failure is being rewarded. With Talbot's, failure has only been delayed. The losers will be the investors who could not judge the risk, as it should be.
Dow 11,019.42, +13.45 (0.12%)
NASDAQ 2,465.99, +8.12 (0.33%)
S&P 500 1,197.30, +0.82 (0.07%)
NYSE Composite 7,638.35, -3.40 (0.04%)
Volume was a little bit perkier than normal, possibly owing to options expiration on Friday or the flood of earnings announcements due out over the next two weeks. Advancing issues outnumbered losers, though marginally, 3362-3108. New highs bettered new lows, 646-50.
NYSE Volume 5,806,878,000
NASDAQ Volume 2,557,582,750
As oil dropped for the fifth straight day, CNN Money ran this headline, Oil declines on oversupply worries. All we can say, after watching naked speculation take the price above $87 last week is, "no kidding?" Crude dropped another 29 cents, to $84.05 on the day, which is still $20-35 above where it should be. The oil speculators are so concerned about keeping the price this high due to imminent, continuing threats of production cuts by the oil-rich nations of the mid-East. Their economies are teetering on insolvency and a price of at least $80 per barrel is needed to keep them current on payments. Eventually, somebody's going to see the light and force the price lower, despite the economic realities facing the royal Suadis and other potentates in the region. Maybe Russia.
Gold dropped $8.80, to $1,152.80, while silver slid 16 cents to $18.24. Once again, the metals are unable to break out to new highs, for reasons that should, by now, be pretty obvious to everyone.
Where are the jobs, and how about that housing market?
While the index hasn't been going straight up, it often seems that way, as, over the span of the past 44 trading days, the Dow has advanced 33 of them. That's a 3-1 ratio of up days over down, and a winning investing formula in anyone's book. I admit, due to my disbelief in the overall economic recovery that everyone keeps talking about but nobody sees, to have completely missed this 1100+ point rally.
That's my fault, but I'm also not about to jump in at these seemingly inflated levels, either. I remain steadfastly, stubbornly, in cash, and it's not a matter of wanting to catch the next low, because I probably won't be investing in stocks for the next few years, at least not US stocks.
Today was more of the broken record variety of days on the Street. Stocks were up, though not by much. Earnings are beginning to trickle into investor equations, with Alcoa (AA) announcing earnings in line with forecasts on Monday at 10 cents per share in the 1st quarter on revenue of $4.9 billion, lower than consensus estimates of $5.24 billion.
After the closing bell today, Intel (INTC) announced 1st quarter results of 43 cents per share, beating the street consensus of 38 cents. Revenue for the chip giant was $10.3 billion, on expectations of $9.84 billion.
Earnings season is off to a good start. Even a company like Talbot's showed a profit of 7 cents per share, even better if you exclude one-time items (Why not? It's a party!). The women's retailer then shows 13 cents per share.
The company had been on the brink of failure, but has redefined itself over the past two years. Still, it's profit was a mere $4.1 million for the quarter, but shares rose significantly due to the amount of short interest. Selling at nearly $15 per share, investors are taking a pretty heavy risk with Talbot's. The company shows negative return on equity, virtually no growth, a p/e of 27 and nearly a half billion dollars in debt. That debt burden alone is enough to keep heavy volume investors away and the shorts making their downside bets.
Talbot's looks a lot like the nation of Greece, which should be the subject of some focus due to the favorable loans it secured from the EU and IMF. Greece will be able to finance its debts at around 5%, or about 100-120 basis points below market rates. The unusually-generous terms have been applied because all of the European finance ministers understand that a Greek default would likely have a severe domino effect on countries like Portugal, Italy, Ireland and Spain. The stronger nations, especially Germany, would likewise be affected, either having to underwrite immense losses or suffer a collapse of its own economy or the Euro.
While a decoupling from the Euro might be the very best thing for the Germans and the continent as a whole, scrapping the entire Euro project has not been something widely anticipated, though it could very well happen within the next 2-3 years. The Southern countries aren't nearly as industrious as their Northern neighbors, and the German populace isn't taking kindly to the concept of bailing out countries which cannot manage their internal budgets. Giving Greece better terms than the very best borrowers, when they are, in fact, sub-prime, at best, reeks of the kind of unfair "picking winners" that was a hallmark of the infamous bank bailouts in the US.
With Greece, failure is being rewarded. With Talbot's, failure has only been delayed. The losers will be the investors who could not judge the risk, as it should be.
Dow 11,019.42, +13.45 (0.12%)
NASDAQ 2,465.99, +8.12 (0.33%)
S&P 500 1,197.30, +0.82 (0.07%)
NYSE Composite 7,638.35, -3.40 (0.04%)
Volume was a little bit perkier than normal, possibly owing to options expiration on Friday or the flood of earnings announcements due out over the next two weeks. Advancing issues outnumbered losers, though marginally, 3362-3108. New highs bettered new lows, 646-50.
NYSE Volume 5,806,878,000
NASDAQ Volume 2,557,582,750
As oil dropped for the fifth straight day, CNN Money ran this headline, Oil declines on oversupply worries. All we can say, after watching naked speculation take the price above $87 last week is, "no kidding?" Crude dropped another 29 cents, to $84.05 on the day, which is still $20-35 above where it should be. The oil speculators are so concerned about keeping the price this high due to imminent, continuing threats of production cuts by the oil-rich nations of the mid-East. Their economies are teetering on insolvency and a price of at least $80 per barrel is needed to keep them current on payments. Eventually, somebody's going to see the light and force the price lower, despite the economic realities facing the royal Suadis and other potentates in the region. Maybe Russia.
Gold dropped $8.80, to $1,152.80, while silver slid 16 cents to $18.24. Once again, the metals are unable to break out to new highs, for reasons that should, by now, be pretty obvious to everyone.
Where are the jobs, and how about that housing market?
Monday, April 12, 2010
The Numbers Racket
We are entering a glorious new age of prosperity and health, where no person will want for any thing, be it large or small. The government and the brilliant men and women running our largest corporate enterprises shall ensure that the necessities of our lives will be provided to all.
OK, now that kind of statement is right out of the Orwell handbook, but it is apparently the kind of Kool-Aid that Wall Street and the financial media seem to want to project. At least that's the impression left by 13 months of non-stop gains in the markets and another small, but still significant, rise today which pushed the Dow past 11,000 for the first time since September, 2008, some 20 months ago. It's a meaningless number, just like 2500 on the NASDAQ and 2000 on the S&P, both figures within hailing distance. They're just round and big, and that's why they get noticed. Look, even I'm mentioning them.
If you're paid to watch these things and/or report on them, then you might want to make the case that certain benchmarks are actually meaningful whether they are or not.
Dow 11,005.97, +8.62 (0.08%)
NASDAQ 2,457.87, +3.82 (0.16%)
S&P 500 1,196.48, +2.11 (0.18%)
NYSE Composite 7,641.75, +12.70 (0.17%)
Gainers knocked losers for the umpteenth time in the past two months, 3704-2780. On the 8th of February, the Dow closed at 9908.39. Since then - two months time - the index has gained 1100 points (11%). It is running at an annual rate of 66%. Those kinds of gains are not normal, and anyone who tells you they are is a liar. Simply put, the market is running on fumes and cheap dollars. The rally is as unrealistic as it is unsustainable.
New highs were prolific at 900. There were but 90 new lows. Volume was still limp and lacking.
NYSE Volume 5,071,607,000
NASDAQ Volume 2,066,159,250
Some interesting merger news today involved Haliburton (HAL) which will purchase Boots & Coots (WEL), Cerberus will take private Dyncorp International (DCP), and Reliant Energy (RRI 4.53) and Mirant (MIR 12.68) will engage in an all stock merger. Though all separate deals, they are actually part of the same umbrella, all engaged in Mid-eastern politics, war, oil and security. The Cerberus deal is likely the most nefarious, since Dyncorp is heavily involved in procurement, security and god--knows-what-else in both Iraq and Afghanistan.
Of course, Cerberus is the company that brilliantly took Chrysler private in 2007 and had to be bailed out by the government in 2008. According to published reports, Cerberus was supposed to have "eliminated" its 80% equity stake in Chrysler, but maintain a controlling stake in Chrysler Financial. About a year ago, Cerberus was supposed to have utilized the first $2 billion in proceeds from its Chrysler Financial holding to backstop a loan allocated to Chrysler automotive in December by the Treasury Department.
Whether or not that exact deal took place or not is unknown, though the murkiness of all of the bailout flotsam has become de rigeur. A private company like Cerberus, with seemingly unlimited amounts of capital to invest, can do pretty much what it wants, especially when it gets stamped "approved" by the friendly federales.
As for commodities, oil fell 58 cents, to $84.34. This should come as no surprise to anyone, as $86 oil is about as welcome as $3/gallon gasoline, and we're already approaching that threshold. Gold gained 50 cents, to $1,161.60. Silver gained 6 cents, to $18.40. That's not surprising. What will be interesting is to see which cartel breaks apart first: the oil price riggers, the metals and gold bugs, or the stock jocks.
It's a racket. A numbers racket.
OK, now that kind of statement is right out of the Orwell handbook, but it is apparently the kind of Kool-Aid that Wall Street and the financial media seem to want to project. At least that's the impression left by 13 months of non-stop gains in the markets and another small, but still significant, rise today which pushed the Dow past 11,000 for the first time since September, 2008, some 20 months ago. It's a meaningless number, just like 2500 on the NASDAQ and 2000 on the S&P, both figures within hailing distance. They're just round and big, and that's why they get noticed. Look, even I'm mentioning them.
If you're paid to watch these things and/or report on them, then you might want to make the case that certain benchmarks are actually meaningful whether they are or not.
Dow 11,005.97, +8.62 (0.08%)
NASDAQ 2,457.87, +3.82 (0.16%)
S&P 500 1,196.48, +2.11 (0.18%)
NYSE Composite 7,641.75, +12.70 (0.17%)
Gainers knocked losers for the umpteenth time in the past two months, 3704-2780. On the 8th of February, the Dow closed at 9908.39. Since then - two months time - the index has gained 1100 points (11%). It is running at an annual rate of 66%. Those kinds of gains are not normal, and anyone who tells you they are is a liar. Simply put, the market is running on fumes and cheap dollars. The rally is as unrealistic as it is unsustainable.
New highs were prolific at 900. There were but 90 new lows. Volume was still limp and lacking.
NYSE Volume 5,071,607,000
NASDAQ Volume 2,066,159,250
Some interesting merger news today involved Haliburton (HAL) which will purchase Boots & Coots (WEL), Cerberus will take private Dyncorp International (DCP), and Reliant Energy (RRI 4.53) and Mirant (MIR 12.68) will engage in an all stock merger. Though all separate deals, they are actually part of the same umbrella, all engaged in Mid-eastern politics, war, oil and security. The Cerberus deal is likely the most nefarious, since Dyncorp is heavily involved in procurement, security and god--knows-what-else in both Iraq and Afghanistan.
Of course, Cerberus is the company that brilliantly took Chrysler private in 2007 and had to be bailed out by the government in 2008. According to published reports, Cerberus was supposed to have "eliminated" its 80% equity stake in Chrysler, but maintain a controlling stake in Chrysler Financial. About a year ago, Cerberus was supposed to have utilized the first $2 billion in proceeds from its Chrysler Financial holding to backstop a loan allocated to Chrysler automotive in December by the Treasury Department.
Whether or not that exact deal took place or not is unknown, though the murkiness of all of the bailout flotsam has become de rigeur. A private company like Cerberus, with seemingly unlimited amounts of capital to invest, can do pretty much what it wants, especially when it gets stamped "approved" by the friendly federales.
As for commodities, oil fell 58 cents, to $84.34. This should come as no surprise to anyone, as $86 oil is about as welcome as $3/gallon gasoline, and we're already approaching that threshold. Gold gained 50 cents, to $1,161.60. Silver gained 6 cents, to $18.40. That's not surprising. What will be interesting is to see which cartel breaks apart first: the oil price riggers, the metals and gold bugs, or the stock jocks.
It's a racket. A numbers racket.
Friday, April 9, 2010
Rally in Stocks Continues Despite Global Headwinds
If you understand anything about Socionomics, the widely-misunderstood study of people and markets which has Elliott Wave principles at its roots, you'd understand that the current, prolonged rally is nothing more than part of a corrective phase.
For Dow Theorists, the rally represents a bull move inside of of a secular bear market, or primary trend.
Either of those theories would be sufficient to explain away the outstanding gains of the past 13 months, but, it appears to be getting long in the tooth (though I've been saying that since January, so I'll take my forty lashes now, thank you), especially as 1st quarter earnings season approaches forthwith.
Much of the earnings expectations for stocks has already been "baked into the cake," so to speak, and, if that's the case, both the Dow Theorists and Elliott Wavers will be proven right over the next three weeks. However, nobody knows the future and nobody has yet invented a fool-proof predictive tool for markets, so we look upon this week's and todays gains as something of a marvel of modern media. Either that or there's a serious short squeeze going on out there.
For the second straight session, stocks have started slowly and gained momentum, finishing at or near their highs, usually a solid sign for the bulls, but today's reversion to low volume puts a less-optimistic spin on the day's trading.
Dow 10,997.35, +70.28 (0.64%)
NASDAQ 2,454.05, +17.24 (0.71%)
S&P 500 1,194.37, +7.94 (0.67%)
NYSE Composite 7,628.99, +63.66 (0.84%)
Advancing issues out-muscled decliners, 4028-2392; new highs jumped again, to 686; new lows were up as well, but only to 61. Volume fell back into its dull habits. Once again, stocks are being driven higher by speculation, not fundamentals, and, even though social mood may be improving, the overall dynamics of the global economy remain challenging. Greece comes to mind, as does California and New York states.
NYSE Volume 4,972,624,000
NASDAQ Volume 2,056,057,875
Commodities were mixed once more, with oil down for the third straight day, off 49 cents, to $84.92, though gold was higher by $8.90, to $1,161.10 and silver picked up 22 cents, to finish the week at $18.34. Gold is at a 3-month high, while silver has made its thrid foray above the $18 mark since November. It has not been able to continue rallies past the $18.25-18.55 range.
What this all means for stocks, money and your personal economy depends entirely on your allocation and how long you intend to remain invested. Cash appears to be less of a choice right now, which is as good a reason as any to build cash reserves. when nobody else is doing it, it's usually the perfect time.
In the coming weeks, we'll determine how prescient that idea is.
For Dow Theorists, the rally represents a bull move inside of of a secular bear market, or primary trend.
Either of those theories would be sufficient to explain away the outstanding gains of the past 13 months, but, it appears to be getting long in the tooth (though I've been saying that since January, so I'll take my forty lashes now, thank you), especially as 1st quarter earnings season approaches forthwith.
Much of the earnings expectations for stocks has already been "baked into the cake," so to speak, and, if that's the case, both the Dow Theorists and Elliott Wavers will be proven right over the next three weeks. However, nobody knows the future and nobody has yet invented a fool-proof predictive tool for markets, so we look upon this week's and todays gains as something of a marvel of modern media. Either that or there's a serious short squeeze going on out there.
For the second straight session, stocks have started slowly and gained momentum, finishing at or near their highs, usually a solid sign for the bulls, but today's reversion to low volume puts a less-optimistic spin on the day's trading.
Dow 10,997.35, +70.28 (0.64%)
NASDAQ 2,454.05, +17.24 (0.71%)
S&P 500 1,194.37, +7.94 (0.67%)
NYSE Composite 7,628.99, +63.66 (0.84%)
Advancing issues out-muscled decliners, 4028-2392; new highs jumped again, to 686; new lows were up as well, but only to 61. Volume fell back into its dull habits. Once again, stocks are being driven higher by speculation, not fundamentals, and, even though social mood may be improving, the overall dynamics of the global economy remain challenging. Greece comes to mind, as does California and New York states.
NYSE Volume 4,972,624,000
NASDAQ Volume 2,056,057,875
Commodities were mixed once more, with oil down for the third straight day, off 49 cents, to $84.92, though gold was higher by $8.90, to $1,161.10 and silver picked up 22 cents, to finish the week at $18.34. Gold is at a 3-month high, while silver has made its thrid foray above the $18 mark since November. It has not been able to continue rallies past the $18.25-18.55 range.
What this all means for stocks, money and your personal economy depends entirely on your allocation and how long you intend to remain invested. Cash appears to be less of a choice right now, which is as good a reason as any to build cash reserves. when nobody else is doing it, it's usually the perfect time.
In the coming weeks, we'll determine how prescient that idea is.
Thursday, April 8, 2010
Unemployment, Retail Offer Mixed Picture
Stocks opened the day to the downside, nervous about the persistently high level of unemployment claims. Initial claim came in this morning at 460,000, about 25,000 more than had been expected. They've been in that mid-400,000 range for months and don't seem to be changing much. Continuing claims were down by 131,000, which somewhat tempered the pessimism.
Once stocks began trading, however, everybody became a buyer in what turned into a day-long rally, ending on the upside for all of the major indices. Retail sales figures for March were generally superior, though they did happen to include the week prior to Easter, which fell in April last year, skewing comparisons for same-store sales throughout the industry.
Again, they proved good enough to entice investors to buy, or at least not run screaming from them. Most of the economic data of late has been mixed, except for housing and unemployment, which remain seminally ugly.
Dow 10,927.07, +29.55 (0.27%)
NASDAQ 2,436.81, +5.65 (0.23%)
S&P 500 1,186.43, +3.99 (0.34%)
NYSE Composite 7,565.33, +19.15 (0.25%)
Advancers took back the edge from decliners, 3396-3016. New highs are beginning to come back to earth, only 398 of them today, as opposed to 27 new lows. Volume was better than normal, though still below 2003-07 levels.
NYSE Volume 5,246,828,500
NASDAQ Volume 2,342,815,500
Oil trended lower for the second straight day, losing 49 cents, to $85.39. Gold dipped 10 cents, to $1,152.20 and silver fell 7 cents, to $18.12. The day in commodities lacked clear direction.
More attention was being paid to Tiger Woods' return to golf at the Masters than the prices of stocks today. Between that distraction and generally nice weather, it's surprising anybody even shows up to trade on the Street these days.
Once stocks began trading, however, everybody became a buyer in what turned into a day-long rally, ending on the upside for all of the major indices. Retail sales figures for March were generally superior, though they did happen to include the week prior to Easter, which fell in April last year, skewing comparisons for same-store sales throughout the industry.
Again, they proved good enough to entice investors to buy, or at least not run screaming from them. Most of the economic data of late has been mixed, except for housing and unemployment, which remain seminally ugly.
Dow 10,927.07, +29.55 (0.27%)
NASDAQ 2,436.81, +5.65 (0.23%)
S&P 500 1,186.43, +3.99 (0.34%)
NYSE Composite 7,565.33, +19.15 (0.25%)
Advancers took back the edge from decliners, 3396-3016. New highs are beginning to come back to earth, only 398 of them today, as opposed to 27 new lows. Volume was better than normal, though still below 2003-07 levels.
NYSE Volume 5,246,828,500
NASDAQ Volume 2,342,815,500
Oil trended lower for the second straight day, losing 49 cents, to $85.39. Gold dipped 10 cents, to $1,152.20 and silver fell 7 cents, to $18.12. The day in commodities lacked clear direction.
More attention was being paid to Tiger Woods' return to golf at the Masters than the prices of stocks today. Between that distraction and generally nice weather, it's surprising anybody even shows up to trade on the Street these days.
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