Stocks gapped up again at the open, this time to the tune of 140 points on the Dow Jones Industrials, shutting out the small players to - no doubt - the grand delight of the insiders weaving this month of May madness.
The big upside opening move was not unprecedented, as most of May trading has witnessed wild swings at the open, all predicated on overseas news flows, markets or even nothing at all.
Today, stocks held their gains and tacked on even more in an impressive performance of the "greater fool" theory - that being the kind of market action in which one sells, seeking a greater fool to buy at a new, higher price level. In a microcosm, Thursday's action was reminiscent of late 1999 or early 2000, where there seemed to be an absolute absence of sellers (that actually was the case, then), though the timing and duration are almost completely different.
Dow 10,258.99, +284.54 (2.85%)
NASDAQ 2,277.68, +81.80 (3.73%)
S&P 500 1,103.06, +35.11 (3.29%)
NYSE Composite 6,893.29, +261.93 (3.95%)
The trade was decidedly one-sided, with advancing issues absolutely pummeling losers, 5885-754. The margin of new highs to new lows was not as dramatic, with highs taking the lead, 108-64. What was different was the volume, quite a bit lower than recent days and notable that it slowed on the market's biggest advance in months. Conventional wisdom would assume that participation was low due to the surprise nature and overall point gain of the move, both of which were well out of ordinary ranges.
NYSE Volume 6,289,912,500
NASDAQ Volume 2,392,074,250
Commodities also were unsurprising, especially the highly-manipulated crude oil futures, which soared again, up $3.04, to $74.55, just in the nick of time to gouge motorists traveling on the first long holiday weekend of Summer. Anybody who believes that the oil companies are run by the greediest bastards ever to walk the earth (excepting maybe our current crop of bankers), gets a gold star for good judgement. Bear in mind that oil was selling for under $68/barrel less than a week ago.
Gold lost $1.50, to $1,211.90, while silver added 16 cents, to $18.46.
The roller coaster of May continues, fortunately ending tomorrow. There's no guarantee that June will be any better, but one can only hope that the extremely unfair gap-up and gap-lower openings and wild intra-day swings will soon diminish.
Thursday, May 27, 2010
Wednesday, May 26, 2010
Down, then Up; Up, then Down; Market is a Total Scam
Anybody who hasn't kept up with my daily diatribe ought to read yesterday's post, or any of the last three hundred or so, many of which described how completely rigged and corrupted US equity trading markets have become.
Today was no different than any of the usual scam trading days which favor the Wall Street professionals over the average investor, who, naturally, holds no chance of success in such a manipulated and under-regulated environment.
Stocks gapped up at the open, just like they gapped lower at the open yesterday, freezing out everybody but insiders and forcing up bids. By 10:45, the Dow and other indices had generally reached their peaks, with the Dow up 135 points, but from there it was Chinese water torture in a slow, steady decline which finally put stocks in the red about fifteen minutes after three o'clock, eventually closing at the lows of the day.
Closing for the first time under the magic 10,000 mark since February 8, the major indices are in treacherous territory, which, again, I've been spouting off about for the past three weeks. Our nascent recovery isn't going all that well, despite some very strong numbers released today on new home sales and a steady report on durable goods.
The April new homes sales data were skewed by the April 30 deadline for the federal $8000 tax credit for new home buyers. Many buyers rushed in to take advantage, just as they did last year when the first stimulus credit expired in November. May figures, therefore, are almost certain to be disappointing, so today's release was severely discounted.
Durable goods are still at a run rate well below those of anything resembling a robust economy, so comparisons to last year are just whistling in the wind. If they were not improved, that would be a story. As it is, the manufacturing sector is mainly holding its own and not expanding.
Dow 9,974.45, -69.30 (0.69%)
NASDAQ 2,195.88, -15.07 (0.68%)
S&P 500 1,067.95, -6.08 (0.57%)
NYSE Composite 6,631.36, -34.47 (0.52%)
Surprisingly, advancers beat decliners by a healthy margin, 3827-2713, so some truly organized selling of specific issues has been undertaken by the insider syndicate currently in control of the world's money. New lows maintained their edge over new highs, 109-96, with elevated volume once again.
NYSE Volume 7,941,076,500
NASDAQ Volume 3,047,107,250
Oil popped back to life, just in time to keep fuel prices high over the upcoming Memorial Day weekend in America. July crude surged $2.76, to $71.51. Gold gained $15.50, to $1,213.30, while silver pushed 53 cents higher, to $18.29.
Investors need not bother watching markets for the remainder of the week as it's a good bet that they'll maintain a somewhat neutral stance heading into a long weekend. On the other hand, as well-oiled as is the machinery of manipulation, anything could happen, but chances of a global meltdown just prior to the kick-off of summer is a long shot. Chances of some major event that would roil markets when they re-open on Tuesday, however, is a strong possibility.
Today was no different than any of the usual scam trading days which favor the Wall Street professionals over the average investor, who, naturally, holds no chance of success in such a manipulated and under-regulated environment.
Stocks gapped up at the open, just like they gapped lower at the open yesterday, freezing out everybody but insiders and forcing up bids. By 10:45, the Dow and other indices had generally reached their peaks, with the Dow up 135 points, but from there it was Chinese water torture in a slow, steady decline which finally put stocks in the red about fifteen minutes after three o'clock, eventually closing at the lows of the day.
Closing for the first time under the magic 10,000 mark since February 8, the major indices are in treacherous territory, which, again, I've been spouting off about for the past three weeks. Our nascent recovery isn't going all that well, despite some very strong numbers released today on new home sales and a steady report on durable goods.
The April new homes sales data were skewed by the April 30 deadline for the federal $8000 tax credit for new home buyers. Many buyers rushed in to take advantage, just as they did last year when the first stimulus credit expired in November. May figures, therefore, are almost certain to be disappointing, so today's release was severely discounted.
Durable goods are still at a run rate well below those of anything resembling a robust economy, so comparisons to last year are just whistling in the wind. If they were not improved, that would be a story. As it is, the manufacturing sector is mainly holding its own and not expanding.
Dow 9,974.45, -69.30 (0.69%)
NASDAQ 2,195.88, -15.07 (0.68%)
S&P 500 1,067.95, -6.08 (0.57%)
NYSE Composite 6,631.36, -34.47 (0.52%)
Surprisingly, advancers beat decliners by a healthy margin, 3827-2713, so some truly organized selling of specific issues has been undertaken by the insider syndicate currently in control of the world's money. New lows maintained their edge over new highs, 109-96, with elevated volume once again.
NYSE Volume 7,941,076,500
NASDAQ Volume 3,047,107,250
Oil popped back to life, just in time to keep fuel prices high over the upcoming Memorial Day weekend in America. July crude surged $2.76, to $71.51. Gold gained $15.50, to $1,213.30, while silver pushed 53 cents higher, to $18.29.
Investors need not bother watching markets for the remainder of the week as it's a good bet that they'll maintain a somewhat neutral stance heading into a long weekend. On the other hand, as well-oiled as is the machinery of manipulation, anything could happen, but chances of a global meltdown just prior to the kick-off of summer is a long shot. Chances of some major event that would roil markets when they re-open on Tuesday, however, is a strong possibility.
Tuesday, May 25, 2010
Money At Risk: Dow Plunges 290, Recovers, Gives Investors False Hope
Just like the "flash crash" of May 6, there will be no explanation given for the reversal of fortunes today in stocks. When all of the other major global markets - Japan, China, Hong Kong, Korea, France, Great Britain, Germany, Brazil - were down anywhere from two to four per cent, and US markets initially crash, but then recover to walk away barely bruised, what does that tell you?
That we're special, somehow? That the US is in so much better shape than the rest of the world that if their economies all imploded, ours would receive hardly a scratch? Anyone who buys into such cockeyed logic should have "MORON" stamped upon their forehead.
No, what that tells anybody with any knowledge of how deeply corrupted our stock exchanges have become, is that they are a massively rigged game, and the winners are mostly insiders at banks and brokerages pushing the market in whichever ways delights their fancies and fattens their bottom lines.
Stocks fell to levels below both the 1000-point flash crash and below all preceding 2010 lows. That happened right out of the gate, within 15 minutes of the open. Stock futures had been forewarning a brutal open, with Dow futures down as much as 250 points prior to the bell-ringing. These kinds of gap opens serve only to benefit inside traders, to the detriment of individual investors and fund managers who cannot move massive amounts of stock without really rattling markets.
The average Jane or Joe who doesn't keep an eye peeled on CNBC all day long may only notice the Dow was down 20 points and be happy with that, never knowing that it was lower by 290 just 15 minutes into the session. The S&P 500 actually finished with a fractional gain, after being down by as many as 32 points.
Possibly the most egregious display of manipulation was in the NASDAQ, which was down by as many as 73 points but recovered to finish down only two points.
Did the issues which hammered all other markets simply go away by the time US markets were trading? No. Those issues were belligerent behavior by North Korea toward their neighbors to the South, a slowdown of economic activity and a potential real estate bubble in China and the continuing fiscal woes of the entire continent of Europe, though more specifically, the potential default of the governments of Greece and Spain.
What most casual observers and investors may not realize is that the markets will return to those lows. Whether they do that tomorrow, Thursday, Friday, next week or next month is immaterial. The major indices all fell below their 200-day moving averages last week and continue to mostly reside there. One day's action will not change the fact that new lows were set in place and such lows will almost always be retested. The Dow and S&P were in the throes of a triple bottom breakdown, falling below the lows of February and early May. That kind of violation of support just doesn't go away, stocks have to be handled to erase losses and fresh bottoms.
Call it whatever you like, but today set up a new bottom and one of the more severe head fakes ever seen. Downside risk is still predominant and there's a high likelihood that the final push - after 3:00 - was caused mostly by short covering. US markets should not be considered a safe haven for any investor, simply because they are so obviously rigged. They may move strongly in one direction or the other - or both, like today - without reason.
Dow 10,043.75, -22.82 (0.23%)
NASDAQ 2,210.95, -2.60 (0.12%)
S&P 500 1,074.03, +0.38 (0.04%)
NYSE Composite 6,665.83, -0.91 (0.01%)
Market internals offer much better perspective. Declining issues were dominant over advancers, 4334-2242. New lows maintained their advantage over new highs and actually expanded their edge, 369-88. Volume was heavy, owing to the fact that a lot of stock had to be moved around to erase those early losses.
NYSE Volume 8,458,538,000.00
NASDAQ Volume 2,893,359,500.00
Another indication of what really happened today in markets comes from the commodity pits, where July Crude was down $1.68, to $68.75, a fresh closing contract low. Gold finished up $4.00, to $1,197.80, though silver closed down 22 cents, at $17.76.
The deflation trade is still on, meaning one should be either in cash or equivalents, short, living in another country, or all of the above. Money at risk stays at risk, especially in markets so obviously flawed.
Please pay particular attention to anyone who tells you that 1140 on the S&P is a "bottom." You are advised to run - as quickly as possible - as far away as possible from anyone holding that point of view.
That we're special, somehow? That the US is in so much better shape than the rest of the world that if their economies all imploded, ours would receive hardly a scratch? Anyone who buys into such cockeyed logic should have "MORON" stamped upon their forehead.
No, what that tells anybody with any knowledge of how deeply corrupted our stock exchanges have become, is that they are a massively rigged game, and the winners are mostly insiders at banks and brokerages pushing the market in whichever ways delights their fancies and fattens their bottom lines.
Stocks fell to levels below both the 1000-point flash crash and below all preceding 2010 lows. That happened right out of the gate, within 15 minutes of the open. Stock futures had been forewarning a brutal open, with Dow futures down as much as 250 points prior to the bell-ringing. These kinds of gap opens serve only to benefit inside traders, to the detriment of individual investors and fund managers who cannot move massive amounts of stock without really rattling markets.
The average Jane or Joe who doesn't keep an eye peeled on CNBC all day long may only notice the Dow was down 20 points and be happy with that, never knowing that it was lower by 290 just 15 minutes into the session. The S&P 500 actually finished with a fractional gain, after being down by as many as 32 points.
Possibly the most egregious display of manipulation was in the NASDAQ, which was down by as many as 73 points but recovered to finish down only two points.
Did the issues which hammered all other markets simply go away by the time US markets were trading? No. Those issues were belligerent behavior by North Korea toward their neighbors to the South, a slowdown of economic activity and a potential real estate bubble in China and the continuing fiscal woes of the entire continent of Europe, though more specifically, the potential default of the governments of Greece and Spain.
What most casual observers and investors may not realize is that the markets will return to those lows. Whether they do that tomorrow, Thursday, Friday, next week or next month is immaterial. The major indices all fell below their 200-day moving averages last week and continue to mostly reside there. One day's action will not change the fact that new lows were set in place and such lows will almost always be retested. The Dow and S&P were in the throes of a triple bottom breakdown, falling below the lows of February and early May. That kind of violation of support just doesn't go away, stocks have to be handled to erase losses and fresh bottoms.
Call it whatever you like, but today set up a new bottom and one of the more severe head fakes ever seen. Downside risk is still predominant and there's a high likelihood that the final push - after 3:00 - was caused mostly by short covering. US markets should not be considered a safe haven for any investor, simply because they are so obviously rigged. They may move strongly in one direction or the other - or both, like today - without reason.
Dow 10,043.75, -22.82 (0.23%)
NASDAQ 2,210.95, -2.60 (0.12%)
S&P 500 1,074.03, +0.38 (0.04%)
NYSE Composite 6,665.83, -0.91 (0.01%)
Market internals offer much better perspective. Declining issues were dominant over advancers, 4334-2242. New lows maintained their advantage over new highs and actually expanded their edge, 369-88. Volume was heavy, owing to the fact that a lot of stock had to be moved around to erase those early losses.
NYSE Volume 8,458,538,000.00
NASDAQ Volume 2,893,359,500.00
Another indication of what really happened today in markets comes from the commodity pits, where July Crude was down $1.68, to $68.75, a fresh closing contract low. Gold finished up $4.00, to $1,197.80, though silver closed down 22 cents, at $17.76.
The deflation trade is still on, meaning one should be either in cash or equivalents, short, living in another country, or all of the above. Money at risk stays at risk, especially in markets so obviously flawed.
Please pay particular attention to anyone who tells you that 1140 on the S&P is a "bottom." You are advised to run - as quickly as possible - as far away as possible from anyone holding that point of view.
Monday, May 24, 2010
Still Sliding: Stocks Clobbered Once Again
Stocks continued to trade in very choppy manner, apparently awaiting the next shoe to drop for the global economy. The shock could come from Greece, Spain, Goldman Sachs, the Gulf of Mexico or any sector of any market, or from some completely unrelated area of commerce, politics or society.
Lindsay Lohan could give up drinking for a week and it might be enough for stocks to chalk down significant losses, that's how fragile world equity markets have become.
A canary in the proverbial coal mine might have been Spain's CajaSur bank, which was seized by Spain's central bank. The small savings bank signaled that the debt crisis in Europe may be expanding into the private sector and well beyond the borders of the "PIIGS" nations - Portugal, Italy, Ireland, Greece and Spain.
After an initial slow start, stocks gained momentum, with the Dow Jones Industrials briefly going positive around the noon hour and again at 1:00 pm. After that, however, it was mostly selling, as no market participants appear to have any conviction whatsoever. Even a solid report from the National Assn. of Realtors on April existing home sales - up 7.6% from a month ago and 22.8% from April 2009 - was tempered by an 11.5% increase in existing homes available for sale, to 4.04 million, roughly an 8 1/2-month supply.
Stocks gathered downside momentum in the final fifteen minutes of trade, with all major indices trading within earshot of their lows for the day. The Dow stumbled to its lowest close since February 10 (10,038.38), along with the S&P. Showing strength and trading in positive territory most of the session, even the NASDAQ finished well into the red.
Either a significant upside catalyst must emerge over the next two weeks - which could be in the form or improved jobs numbers next Friday (though that's a risky bet) - or stocks will either churn sideways to lower or fall completely over the cliff. The markets are in a mid-quarter correction of a cyclical bull inside a secular bear market. In other words, upside is severely limited near term and probably out the window, longer term. The 13-month-long rally of 2009-10 is already over, and a significant retracing is underway. Since stocks have barely breached the 10% level, downside risk is exaggerated at this juncture.
Looking at current global conditions, all the earmarks of severe deflation are present. Capital formation has been at a standstill for months, the real estate market in the US and Europe are still depressed, corporations have no pricing power, thus fueling long-lasting high unemployment. Debt overhang on state and national budgets is still severe. The losses by the banks from 2007-2008 are still sitting in the Fed's balance sheet and Europe is quickly becoming a basket case. A dissolution of the EU - even the expulsion of a few member countries - or debasement of the Euro could cause massive disruptions in global commerce and a worsening of global deflation.
To the surprise of nobody, financial stocks led the market lower. Technology was the best-performing sector, though only because others were so badly harmed. Unnerving was the fact that the Dow broke a string of ten consecutive Mondays with positive finishes, a signal that the individual investor has been nearly completely spooked out of the market and mutual fund managers may be moving more into cash.
Dow 10,066.57, -126.82 (1.24%)
NASDAQ 2,213.55, -15.49 (0.69%)
S&P 500 1,073.65, -14.04 (1.29%)
NYSE Composite 6,666.74, -108.71 (1.60%)
Losing issues beat winners, 4077-2405. New lows maintained their advantage over new highs, 112-69. Volume was subdued.
NYSE Volume 5,918,380,000
NASDAQ Volume 2,075,873,625
The winners were the metals, with gold ahead by a whopping $18.10, to $1,193.80. Silver followed with a gain of 35 cents, to $17.98. July crude finished at $70.21, up a mere 17 cents. Oil is poised to fall to even lower levels, despite the usual buying into summer months. The price was overbought during the winter, an a correction back to more reasonable levels around $60/barrel would not be out of the question.
Lindsay Lohan could give up drinking for a week and it might be enough for stocks to chalk down significant losses, that's how fragile world equity markets have become.
A canary in the proverbial coal mine might have been Spain's CajaSur bank, which was seized by Spain's central bank. The small savings bank signaled that the debt crisis in Europe may be expanding into the private sector and well beyond the borders of the "PIIGS" nations - Portugal, Italy, Ireland, Greece and Spain.
After an initial slow start, stocks gained momentum, with the Dow Jones Industrials briefly going positive around the noon hour and again at 1:00 pm. After that, however, it was mostly selling, as no market participants appear to have any conviction whatsoever. Even a solid report from the National Assn. of Realtors on April existing home sales - up 7.6% from a month ago and 22.8% from April 2009 - was tempered by an 11.5% increase in existing homes available for sale, to 4.04 million, roughly an 8 1/2-month supply.
Stocks gathered downside momentum in the final fifteen minutes of trade, with all major indices trading within earshot of their lows for the day. The Dow stumbled to its lowest close since February 10 (10,038.38), along with the S&P. Showing strength and trading in positive territory most of the session, even the NASDAQ finished well into the red.
Either a significant upside catalyst must emerge over the next two weeks - which could be in the form or improved jobs numbers next Friday (though that's a risky bet) - or stocks will either churn sideways to lower or fall completely over the cliff. The markets are in a mid-quarter correction of a cyclical bull inside a secular bear market. In other words, upside is severely limited near term and probably out the window, longer term. The 13-month-long rally of 2009-10 is already over, and a significant retracing is underway. Since stocks have barely breached the 10% level, downside risk is exaggerated at this juncture.
Looking at current global conditions, all the earmarks of severe deflation are present. Capital formation has been at a standstill for months, the real estate market in the US and Europe are still depressed, corporations have no pricing power, thus fueling long-lasting high unemployment. Debt overhang on state and national budgets is still severe. The losses by the banks from 2007-2008 are still sitting in the Fed's balance sheet and Europe is quickly becoming a basket case. A dissolution of the EU - even the expulsion of a few member countries - or debasement of the Euro could cause massive disruptions in global commerce and a worsening of global deflation.
To the surprise of nobody, financial stocks led the market lower. Technology was the best-performing sector, though only because others were so badly harmed. Unnerving was the fact that the Dow broke a string of ten consecutive Mondays with positive finishes, a signal that the individual investor has been nearly completely spooked out of the market and mutual fund managers may be moving more into cash.
Dow 10,066.57, -126.82 (1.24%)
NASDAQ 2,213.55, -15.49 (0.69%)
S&P 500 1,073.65, -14.04 (1.29%)
NYSE Composite 6,666.74, -108.71 (1.60%)
Losing issues beat winners, 4077-2405. New lows maintained their advantage over new highs, 112-69. Volume was subdued.
NYSE Volume 5,918,380,000
NASDAQ Volume 2,075,873,625
The winners were the metals, with gold ahead by a whopping $18.10, to $1,193.80. Silver followed with a gain of 35 cents, to $17.98. July crude finished at $70.21, up a mere 17 cents. Oil is poised to fall to even lower levels, despite the usual buying into summer months. The price was overbought during the winter, an a correction back to more reasonable levels around $60/barrel would not be out of the question.
Friday, May 21, 2010
Pausing to Catch a Breath; Markets Bounce to End Dismal Week
Like the punch line to the old joke, "What are 500 lawyers lying dead at the bottom of the ocean?", gaining 125 points the day after the Dow Jones Industrials had just lost nearly 400, is... well, a good start.
However, the internals don't quite match the enthusiasm some may hold for the headline numbers, and, when the indices tumbled out of bed this morning into a ditch, they set new intra-day lows. Further, the whole thrust of today's gallop higher seemed a little out of place and probably had more to do with options expiration and covering short positions than anyone wants to admit.
It was a nice end to a really bad week for equity investors. All of the major averages ended up well below where they began the year, hugging their respective 200-day moving averages, or, in the case of the S&P 500, nestled comfortably below it. Obviously, whatever market worries caused the collapse of the past four weeks, those conditions are still present, and possibly getting worse.
For instance, Europe's $1 Trillion bailout is being called TARP a la EU, likened to the US version unveiled at their height of our own crisis back in the Fall of 2008, and many are saying it isn't enough. The US economy, hailed as the best of a bad bunch, isn't doing very well with real estate markets stuck in a funk and unemployment remaining stubbornly high; China is purposely slowing their own growth (they may not have to; slack global demand may do them in), fearing inflation; oil continues to spew from the floor of the Gulf of Mexico, fouling the Southern coastline and threatening to destroy one of the great ecosystems of the fragile planet; state governments are just beginning to come to grips with austerity measures to combat their own fiscal deficits.
Is there anything good? Well, the price of gas is coming down gradually, but other than that, no, there's nothing good about a financial system teetering on the brink of implosion, the governments of nations nearing collapse, ecological disasters, politicians more focused on being re-elected than actually fixing things and the most corrupt insider game of high finance being played out on Wall Street.
Maybe the entire system needs to be flushed. Maybe an upheaval of the old guard might just lead to better days ahead. Maybe it's time for the rich and greedy to come to understand that impoverishing the entire planet isn't going to necessarily result in their own enrichment.
Today's little bump higher is, as usual, suspect, in that the rally came off an early, deep decline. Within minutes of the opening bell, the Dow was down 145 points, the other indices in a similar fix. The turnabout had all the earmarks of our old friends at the PPT, rushing to the rescue of financial markets which had apparently taken all they could handle. No matter the cause or underhandedness surrounding the Friday push to higher ground, stocks tumbled back into negative territory in the final hour. Technically, the indices made all of the day's gains in the last twenty minutes of trading, so, no, we're not buying it, nor should anybody.
Dow 10,193.39, +125.38 (1.25%)
NASDAQ 2,229.04, +25.03 (1.14%)
S&P 500 1,087.69, +16.10 (1.50%)
NYSE Composite 6,775.45, +122.45 (1.84%)
While advancing issues beat up decliners pretty handily, 4622-1938, new lows overwhelmed new highs for the third consecutive trading session, 295-87, and once that indicator flips in one direction or another, it's usually in it for a long haul, which can last anywhere from 4 to 20 months. Volume was abnormally high, owing to the idea that many shares were being parceled out of options and many short positions covered. Beisdes, it may have taken the insiders boosting stocks a bit more heft than they originally planned. Selling pressure didn't subside. It was just temporarily replaced by coordinated buying.
NYSE Volume 9,276,994,000.00
NASDAQ Volume 3,366,007,500.00
The first day of trading in the July futures contract for crude oil resulted in some price spillage, down 76 cents to the adjusted level of $70.04. Gold continued to retreat, losing $13.10, to $1,175.70, as did silver, down a relatively benign 6 cents, to $17.63.
The final week of May and all of June will be interesting to observe (meaning: do not trade this market) as investors will continue to focus on the issues in Europe, financial regulation and some potential pre-warnings from companies whose fates have turned from rosy to thorny. But, call me a tree-hugger or whatever you like, I have a feeling that the oil spill in the Gulf will dominate the news in a very ugly manner.
However, the internals don't quite match the enthusiasm some may hold for the headline numbers, and, when the indices tumbled out of bed this morning into a ditch, they set new intra-day lows. Further, the whole thrust of today's gallop higher seemed a little out of place and probably had more to do with options expiration and covering short positions than anyone wants to admit.
It was a nice end to a really bad week for equity investors. All of the major averages ended up well below where they began the year, hugging their respective 200-day moving averages, or, in the case of the S&P 500, nestled comfortably below it. Obviously, whatever market worries caused the collapse of the past four weeks, those conditions are still present, and possibly getting worse.
For instance, Europe's $1 Trillion bailout is being called TARP a la EU, likened to the US version unveiled at their height of our own crisis back in the Fall of 2008, and many are saying it isn't enough. The US economy, hailed as the best of a bad bunch, isn't doing very well with real estate markets stuck in a funk and unemployment remaining stubbornly high; China is purposely slowing their own growth (they may not have to; slack global demand may do them in), fearing inflation; oil continues to spew from the floor of the Gulf of Mexico, fouling the Southern coastline and threatening to destroy one of the great ecosystems of the fragile planet; state governments are just beginning to come to grips with austerity measures to combat their own fiscal deficits.
Is there anything good? Well, the price of gas is coming down gradually, but other than that, no, there's nothing good about a financial system teetering on the brink of implosion, the governments of nations nearing collapse, ecological disasters, politicians more focused on being re-elected than actually fixing things and the most corrupt insider game of high finance being played out on Wall Street.
Maybe the entire system needs to be flushed. Maybe an upheaval of the old guard might just lead to better days ahead. Maybe it's time for the rich and greedy to come to understand that impoverishing the entire planet isn't going to necessarily result in their own enrichment.
Today's little bump higher is, as usual, suspect, in that the rally came off an early, deep decline. Within minutes of the opening bell, the Dow was down 145 points, the other indices in a similar fix. The turnabout had all the earmarks of our old friends at the PPT, rushing to the rescue of financial markets which had apparently taken all they could handle. No matter the cause or underhandedness surrounding the Friday push to higher ground, stocks tumbled back into negative territory in the final hour. Technically, the indices made all of the day's gains in the last twenty minutes of trading, so, no, we're not buying it, nor should anybody.
Dow 10,193.39, +125.38 (1.25%)
NASDAQ 2,229.04, +25.03 (1.14%)
S&P 500 1,087.69, +16.10 (1.50%)
NYSE Composite 6,775.45, +122.45 (1.84%)
While advancing issues beat up decliners pretty handily, 4622-1938, new lows overwhelmed new highs for the third consecutive trading session, 295-87, and once that indicator flips in one direction or another, it's usually in it for a long haul, which can last anywhere from 4 to 20 months. Volume was abnormally high, owing to the idea that many shares were being parceled out of options and many short positions covered. Beisdes, it may have taken the insiders boosting stocks a bit more heft than they originally planned. Selling pressure didn't subside. It was just temporarily replaced by coordinated buying.
NYSE Volume 9,276,994,000.00
NASDAQ Volume 3,366,007,500.00
The first day of trading in the July futures contract for crude oil resulted in some price spillage, down 76 cents to the adjusted level of $70.04. Gold continued to retreat, losing $13.10, to $1,175.70, as did silver, down a relatively benign 6 cents, to $17.63.
The final week of May and all of June will be interesting to observe (meaning: do not trade this market) as investors will continue to focus on the issues in Europe, financial regulation and some potential pre-warnings from companies whose fates have turned from rosy to thorny. But, call me a tree-hugger or whatever you like, I have a feeling that the oil spill in the Gulf will dominate the news in a very ugly manner.
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