After taking the deepest extended dive in over a year, there's little surprise that a few days like today would eventually emerge. After all, nothing moves in straight lines, as much as we'd like them to, so the orderly evaporation of wealth requires the occasional speculative upside trade and the covering of shorts.
There was no good news upon which the market could hang a hat today; indeed, there was little to no news whatsoever. Thus, the strong gains of Tuesday cna be seen clearly for what they are: a purely technical response to very short-term oversold conditions. In layman's terms, today was the bounce that failed to materialize on Monday.
Dow 9,939.98, +123.49 (1.26%)
NASDAQ 2,170.57, -3.33 (0.15%)
S&P 500 1,062.00, +11.53 (1.10%)
NYSE Composite 6,596.12, +83.70 (1.29%)
Advancing issues took back the advantage over decliners, though narrowly, 3389-3114. More important to the direction going forward was the revealing win for new lows over new highs, 345-81. Both the A/D line and Low-high figures tell us in no uncertain terms that bias is still strongly negative and that short term bearish condition remain intact. Volume was strong, that being the only indicator to somewhat counter the general trend against the headline.
NYSE Volume 7,335,040,500.00
NASDAQ Volume 2,660,945,000.00
Crude oil posted a reasonable gain of 55 cents, closing at $71.99, still stuck in a range between $67 and $76, where it has generally been found for the past ten months. There's little to suggest movement of oil in either direction, unless widespread economic slowdown dramatically reduced demand, and thus, price.
Gold reached all-time intra-day and closing highs, finishing at $1,244.00, up $4.70. Silver gained as well, adding 32 cents, to $18.47, though that is still well below the 2008 all-time high. Silver continues to lag gold, as the latter is in a more favorable position as an alternative to fiat money.
Some of the most interesting action is currently in bonds and currencies, both markets the province of specialists and professionals, hardly the place for individuals, despite what aggressive ad campaigns may be touting. US Treasuries and German Bunds have become safe-havens for those fearful of the future of equity markets, while denominations in anything but Euros seems to have become the most-favored trade in the currency community.
With Euro contagion spreading like wildfire from Greece to Spain to Turkey to Ireland, many question the overall validity of the 12-year-old currency experiment which aimed to become a unified force to counteract the willful US Dollar. The value of the Euro vis-a-vis the US Dollar is now roughly where it began back in 1998, right around the $1.18 mark. Highlighting the situation in Europe was a Sunday Telegraph article over the weekend that saw a majority of British economists express an opinion that the Euro would cease to exist within the next five years, quite a dire prediction and one that just months ago would have been considered lunacy.
Joining the lunacy-to-reality progression is British Petroleum (BP), now on the hook for billions of dollars in damages stemming from the continuous leakage of oil into the Gulf of Mexico. BP was added to our Death Spiral Watch List last week.
The latest salvo in the reality check department comes from oil expert Matthew Simmons, who appeared on CNBC's Fast Money Tuesday afternoon, saying that he'd be surprised if BP lasted the summer as a going concern.
Simmons also appeared on MSNBC's Dylan Ratigan Show. Here is the segment of video in which he outlines various doomsday-like outcomes.
BP closed down 2.08 today, at 34.68.
Joining BP on the Death Spiral Watch List from last week was eBay, an unlikely choice to some, though obvious to those in the know. Prior to full implementation of the latest of CEO John Donahoe's "disruptive innovations", eBay closed the trading session of March 25 at 27.56. Despite a small gain on the day, eBay ended today at 21.69, representing a 21% haircut in about 2 1/2 months' time.
Price targets on both companies are actually ZERO, though for the sake of argument, we put an expected price of $4 on ebay and $6 on BP. We expect both to go under within 6-18 months.
Tuesday, June 8, 2010
Monday, June 7, 2010
This Cat Can't Bounce
Editor's Note: It's just a few minutes before 2:00 pm on the East Coast, and with markets little changed from their opening levels, I'm confident in my title for this post. After Friday's jobs report post-mortem, this market is due to fall at least another 10% from here, though it's unlikely to do so today. Owing to commitments (Monday golf league), Monday's edition of Money Daily will be delayed until about 9:00 pm EDT from today until mid-October.
Dow 9,816.49 115.48 (1.16%)
NASDAQ 2,173.90 45.27 (2.04%)
S&P 500 1,050.47 14.41 (1.35%)
NYSE Compos 6,512.42 87.85 (1.33%)
Declining issues overwhelmed advancers, 5032-1552. New lows trounced new highs, 268-76. Volume was higher than most of the last two weeks, though hardly overdone. The clear signal is that selling continues, or, the next wave of selling has begun.
NYSE Volume 6,385,006,500
NASDAQ Volume 2,222,428,000
Oil dipped an ever-so-slight four cents, to $71.44. Gold rocketed higher by $23.10, to $1,239.30, approaching all-time highs. Silver exploded higher by 5%, to $18.15, a gain of 86 cents.
Without a doubt, investors are nervous and unwilling to hold anything but gilded assets, though few are available. The major averages are at their lows of the year, having pierced support levels long ago and again today in grand fashion. A full resumption of the bear market is upon us. Equities should be disposed of as quickly as possible, if you're actually stuid enough to be holding any. Valuations are out the window as risk has resurfaced in every conceivable manner.
Cash, land, and tools of trades are all that should comprise a proper portfolio.
My golf game is poor (55 for 9 holes, bordering on embarrassing), but it shines in comparison to every technical and fundamental measure of global equity markets. Stocks today are generally overvalued or mispriced.
Dow 9,816.49 115.48 (1.16%)
NASDAQ 2,173.90 45.27 (2.04%)
S&P 500 1,050.47 14.41 (1.35%)
NYSE Compos 6,512.42 87.85 (1.33%)
Declining issues overwhelmed advancers, 5032-1552. New lows trounced new highs, 268-76. Volume was higher than most of the last two weeks, though hardly overdone. The clear signal is that selling continues, or, the next wave of selling has begun.
NYSE Volume 6,385,006,500
NASDAQ Volume 2,222,428,000
Oil dipped an ever-so-slight four cents, to $71.44. Gold rocketed higher by $23.10, to $1,239.30, approaching all-time highs. Silver exploded higher by 5%, to $18.15, a gain of 86 cents.
Without a doubt, investors are nervous and unwilling to hold anything but gilded assets, though few are available. The major averages are at their lows of the year, having pierced support levels long ago and again today in grand fashion. A full resumption of the bear market is upon us. Equities should be disposed of as quickly as possible, if you're actually stuid enough to be holding any. Valuations are out the window as risk has resurfaced in every conceivable manner.
Cash, land, and tools of trades are all that should comprise a proper portfolio.
My golf game is poor (55 for 9 holes, bordering on embarrassing), but it shines in comparison to every technical and fundamental measure of global equity markets. Stocks today are generally overvalued or mispriced.
Friday, June 4, 2010
Disappointing Jobs Data Destroys Stocks
While one hates to gloat over predictable bad news, that's the condition in which I find myself at the close of the Friday session.
Not only have I been lambasting politicians and stock jockeys for months that the "recovery" was nothing more than an illusion created by lazy media and a crooked, manipulated, insider-trading Wall Street machine, but I also pointed out yesterday - and the month before, and for many months before that - that the ADP private sector employment numbers were more realistic than those released by the government.
When the BLS put out its monthly non farm payroll report at 8:30 am, it was as though somebody had shot a cannonball through the front of the NY Stock exchange building. Traders went scurrying for cover as quickly as they could, primarily because what they were led to believe was going to be a positive report, showing robust job creation in America during the month of May, turned out to be such a big-time stinker that all bets on economic recovery were put onto back burners or otherwise discarded.
The government showed a gain of 431,000 jobs for the month of May, but 411,000 of those were temporary hires related to completing the 2010 census, and even those jobs fell under considerable scrutiny later in the day as analysts began scouring around for a supposed army of nearly 1/2 million census workers. These workers were ostensibly hired to piece together missing data in the simple census form which was mailed to millions of homes back in February and March.
Simple math alone tells us that these 411,000 "workers" would have to individually count a total of about 750 people each to get around to the number of people in America, a job that should take maybe a week. We're told that many of these temporary census workers will be on the job until sometime in the fall, meaning that, like most government work, they'll just have to do little more than show up in order to get paid. Maybe I'm old-fashioned, but hiring 400,000 people for three months to do head-counting seems a little extreme, especially given that most (something on the order of 60%) Americans sent their census forms in through the mail, as required.
Besides the absurdity of the census, misleading statements by both the president and vice president earlier this week, and by once-again discredited Goldman Sachs' analyst Jan Hatzius, who predicted on Thursday that the May figure would come in at 600,000, there are some questions of impropriety which likely will never be addressed, including why the two top officials in this administration and an analyst working for a Wall Street firm under investigation for fraud, would so willingly lead people to believe that the jobs figure would be a solid one?
Not to jump on the conspiracy bandwagon wearing a tin-foil hat, but after government has shown an unseemly willingness to do whatever the lords of Wall Street seem to want, the old qui bono? (who benefits?) must be on the mind of more Americans than just little old me.
Whatever the case, the horrible jobs report, even though it was the most jobs created in one month since March 2003, was so pathetically bad that investors, traders and fund managers got very busy, dumping stocks all day long.
Dow 9,931.97, -323.31 (3.15%)
NASDAQ 2,219.17, -83.86 (3.64%)
S&P 500 1,064.88, -37.95 (3.44%)
NYSE Composite 6,600.28, -260.11 (3.79%)
Declining issues swallowed up advancers in a sea of red, 5786-796, or a better than 6:1 ratio, and new lows took back the advantage from new highs, 173-93. Volume was elevated to levels not seen in over a week, but nothing extreme, leading one to believe that a lot of smart sellers were already out of the way before the jobs data was released.
NYSE Volume 7,241,763,000
NASDAQ Volume 2,338,401,500
Oil was slammed, losing $3.10, to $71.51. Gold gained $7.90, to $1,216.20, but silver a a major loser, down 63 cents (3 1/2%) to $17.29.
Damage inflicted on holders of equities was severe. The Dow suffered its fifth weekly loss in the last six, and finished at its lowest point since February 8, 2010, though markets now appear poised to take out even lower levels. With so many investors sucked into the recovery mantra, economic data over the next four to five weeks will be crucial, leading up to an even more critical 2nd quarter earnings season.
More troubling news came from Europe, with Hungary now suggesting it is close to sovereign default, putting more pressure on the Euro, which fell below 1.20 to the dollar, a level not seen since 2006. The global debt crisis still not anywhere near resolution, expectations from honest economists are for significant slowing of global growth, especially among developed nations.
Rosy projections for 3.5 to 4% growth in US GDP for the year are being reassessed due to evidence that the recovery - if one eve exists at all - will be sluggish at best.
Holders of gold, cash and tools of trades should pat themselves on their collective backs on days like today, but not too vigorously, as more of them are likely to occur during the next 18 to 36 months.
Sorry to sound so negative on a lovely Friday afternoon, but facts are facts, and the US government has dug us a hole of debt so deep as to undermine the very existence of what would be considered a normal, functioning economy. Other developed nations, particularly those in the Euro-zone, have done similar harm to their own economies, We continue to wade through the throes of an enormously deflationary event, caused by 25 years of profligate spending by governments, businesses and households alike.
Two types of belts are encouraged. One for tightening, and another, of your favorite pain-relieving decoction.
Not only have I been lambasting politicians and stock jockeys for months that the "recovery" was nothing more than an illusion created by lazy media and a crooked, manipulated, insider-trading Wall Street machine, but I also pointed out yesterday - and the month before, and for many months before that - that the ADP private sector employment numbers were more realistic than those released by the government.
When the BLS put out its monthly non farm payroll report at 8:30 am, it was as though somebody had shot a cannonball through the front of the NY Stock exchange building. Traders went scurrying for cover as quickly as they could, primarily because what they were led to believe was going to be a positive report, showing robust job creation in America during the month of May, turned out to be such a big-time stinker that all bets on economic recovery were put onto back burners or otherwise discarded.
The government showed a gain of 431,000 jobs for the month of May, but 411,000 of those were temporary hires related to completing the 2010 census, and even those jobs fell under considerable scrutiny later in the day as analysts began scouring around for a supposed army of nearly 1/2 million census workers. These workers were ostensibly hired to piece together missing data in the simple census form which was mailed to millions of homes back in February and March.
Simple math alone tells us that these 411,000 "workers" would have to individually count a total of about 750 people each to get around to the number of people in America, a job that should take maybe a week. We're told that many of these temporary census workers will be on the job until sometime in the fall, meaning that, like most government work, they'll just have to do little more than show up in order to get paid. Maybe I'm old-fashioned, but hiring 400,000 people for three months to do head-counting seems a little extreme, especially given that most (something on the order of 60%) Americans sent their census forms in through the mail, as required.
Besides the absurdity of the census, misleading statements by both the president and vice president earlier this week, and by once-again discredited Goldman Sachs' analyst Jan Hatzius, who predicted on Thursday that the May figure would come in at 600,000, there are some questions of impropriety which likely will never be addressed, including why the two top officials in this administration and an analyst working for a Wall Street firm under investigation for fraud, would so willingly lead people to believe that the jobs figure would be a solid one?
Not to jump on the conspiracy bandwagon wearing a tin-foil hat, but after government has shown an unseemly willingness to do whatever the lords of Wall Street seem to want, the old qui bono? (who benefits?) must be on the mind of more Americans than just little old me.
Whatever the case, the horrible jobs report, even though it was the most jobs created in one month since March 2003, was so pathetically bad that investors, traders and fund managers got very busy, dumping stocks all day long.
Dow 9,931.97, -323.31 (3.15%)
NASDAQ 2,219.17, -83.86 (3.64%)
S&P 500 1,064.88, -37.95 (3.44%)
NYSE Composite 6,600.28, -260.11 (3.79%)
Declining issues swallowed up advancers in a sea of red, 5786-796, or a better than 6:1 ratio, and new lows took back the advantage from new highs, 173-93. Volume was elevated to levels not seen in over a week, but nothing extreme, leading one to believe that a lot of smart sellers were already out of the way before the jobs data was released.
NYSE Volume 7,241,763,000
NASDAQ Volume 2,338,401,500
Oil was slammed, losing $3.10, to $71.51. Gold gained $7.90, to $1,216.20, but silver a a major loser, down 63 cents (3 1/2%) to $17.29.
Damage inflicted on holders of equities was severe. The Dow suffered its fifth weekly loss in the last six, and finished at its lowest point since February 8, 2010, though markets now appear poised to take out even lower levels. With so many investors sucked into the recovery mantra, economic data over the next four to five weeks will be crucial, leading up to an even more critical 2nd quarter earnings season.
More troubling news came from Europe, with Hungary now suggesting it is close to sovereign default, putting more pressure on the Euro, which fell below 1.20 to the dollar, a level not seen since 2006. The global debt crisis still not anywhere near resolution, expectations from honest economists are for significant slowing of global growth, especially among developed nations.
Rosy projections for 3.5 to 4% growth in US GDP for the year are being reassessed due to evidence that the recovery - if one eve exists at all - will be sluggish at best.
Holders of gold, cash and tools of trades should pat themselves on their collective backs on days like today, but not too vigorously, as more of them are likely to occur during the next 18 to 36 months.
Sorry to sound so negative on a lovely Friday afternoon, but facts are facts, and the US government has dug us a hole of debt so deep as to undermine the very existence of what would be considered a normal, functioning economy. Other developed nations, particularly those in the Euro-zone, have done similar harm to their own economies, We continue to wade through the throes of an enormously deflationary event, caused by 25 years of profligate spending by governments, businesses and households alike.
Two types of belts are encouraged. One for tightening, and another, of your favorite pain-relieving decoction.
Thursday, June 3, 2010
Amidst Confusion, NASDAQ Gains; Jobs Data Looms
There are more than just a few trades riding on the release of tomorrow's BLS non farm payroll report for May. Estimates for the number of jobs created in the US economy during the month run the gamut from 250,000 to 600,000, the latter number suggested as a best guess by the intrepid mind of Jan Hatzius at Goldman Sachs, who has a history of being generally close, often far off, but almost always too optimistic.
The Hatzius estimate is anecdotally cute, in that he calls for private sector job growth of just 150,000, with the rest of the number comprised of temporary census hires.
A couple of hints as to how strong the job growth was during the month came from a few sources. On Wednesday, both President Obama and Vice President Biden hinted strongly in separate speeches that the figures would be substantial, but on Thursday, two real pieces of economic data, the ADP private sector report [PDF] and the weekly report of new and continuing unemployment claims, suggested something of the opposite.
The ADP report, which is generally reliable to be as accurate or even moreso than the overly-massaged government figures, pegged private sector job growth for May at a fairly tepid 55,000. Initial unemployment claims came in at 453,000, still stubbornly high, with continuing claims at 4.67 million, a staggering figure and suggestive that job creation simply isn't occurring in the private sector, or at least that permanent jobs are not being created.
Meanwhile, pesky problems such as the European debt crisis, the Gulf of Mexico oil slick, and China canceling a planned trip to the country by US Secretary of Defense Robert Gates, dogged investors throughout the session.
Stocks zig-zagged all over the map, with internals reflecting the rocky trading. The Dow was up 65 points early, down 75 points by midday, and rallied off the lows into the close for a fairly flat trade. The NASDAQ demonstrated leadership in energy and tech shares, the index positive throughout the session.
The NASDAQ is also the only one of the majors to show positive returns for the year.
Dow 10,255.28, +5.74 (0.06%)
NASDAQ 2,303.03, +21.96 (0.96%)
S&P 500 1,102.83, +4.45 (0.41%)
NYSE Composite 6,860.43, +20.82 (0.30%)
By the end of the session, advancers held a solid advantage over declining issues, 5015-2447, and new highs took back the edge over new lows, 154-70. Volume was light once again, as many traders have stepped away in advance of the non farm payroll report.
NYSE Volume 5,404,948,000.00
NASDAQ Volume 2,063,167,375.00
Commodities were mixed. Crude oil for July delivery gained $1.75, to $74.61, on a government report that showed a decrease in supply. The oddity of the oil market is its apparent one-way bias. During the winter, when the same weekly report as today's continually showed excess supply, the price advanced regardless. With supply down, it's logical for prices to rise, though the opposite should be true on oversupply, but it isn't.
Gold fell sharply, down one percent, or $12.30, to $1,208.30. Silver also lost ground, giving up 38 cents, to settle at $17.92.
As is usually the case the first week of any month, too much emphasis is being placed on the jobs data, especially considering that the numbers coming from government are often wildly off-the-mark and subject to massive revisions in future months.
After Wednesday's huge run-up and the flatness of Thursday's trade, it appears that a robust number has already been priced in, and traders could be in for a rout. The alternative, under consideration that the jobs numbers come in solid or surprisingly better than expected, is for investors and momentum players to swing sentiment to wildly optimistic and end the week with another mammoth gain.
Either scenario could emerge, though this may prove to be the economy's last stand before more realistic data confirms or denies the existence of any kind of recovery. From what's been shown thus far, the billions and trillions of dollars thrown into stimulus and for the sake of saving numerous financial institutions has produced at best a weak rebound.
The Hatzius estimate is anecdotally cute, in that he calls for private sector job growth of just 150,000, with the rest of the number comprised of temporary census hires.
A couple of hints as to how strong the job growth was during the month came from a few sources. On Wednesday, both President Obama and Vice President Biden hinted strongly in separate speeches that the figures would be substantial, but on Thursday, two real pieces of economic data, the ADP private sector report [PDF] and the weekly report of new and continuing unemployment claims, suggested something of the opposite.
The ADP report, which is generally reliable to be as accurate or even moreso than the overly-massaged government figures, pegged private sector job growth for May at a fairly tepid 55,000. Initial unemployment claims came in at 453,000, still stubbornly high, with continuing claims at 4.67 million, a staggering figure and suggestive that job creation simply isn't occurring in the private sector, or at least that permanent jobs are not being created.
Meanwhile, pesky problems such as the European debt crisis, the Gulf of Mexico oil slick, and China canceling a planned trip to the country by US Secretary of Defense Robert Gates, dogged investors throughout the session.
Stocks zig-zagged all over the map, with internals reflecting the rocky trading. The Dow was up 65 points early, down 75 points by midday, and rallied off the lows into the close for a fairly flat trade. The NASDAQ demonstrated leadership in energy and tech shares, the index positive throughout the session.
The NASDAQ is also the only one of the majors to show positive returns for the year.
Dow 10,255.28, +5.74 (0.06%)
NASDAQ 2,303.03, +21.96 (0.96%)
S&P 500 1,102.83, +4.45 (0.41%)
NYSE Composite 6,860.43, +20.82 (0.30%)
By the end of the session, advancers held a solid advantage over declining issues, 5015-2447, and new highs took back the edge over new lows, 154-70. Volume was light once again, as many traders have stepped away in advance of the non farm payroll report.
NYSE Volume 5,404,948,000.00
NASDAQ Volume 2,063,167,375.00
Commodities were mixed. Crude oil for July delivery gained $1.75, to $74.61, on a government report that showed a decrease in supply. The oddity of the oil market is its apparent one-way bias. During the winter, when the same weekly report as today's continually showed excess supply, the price advanced regardless. With supply down, it's logical for prices to rise, though the opposite should be true on oversupply, but it isn't.
Gold fell sharply, down one percent, or $12.30, to $1,208.30. Silver also lost ground, giving up 38 cents, to settle at $17.92.
As is usually the case the first week of any month, too much emphasis is being placed on the jobs data, especially considering that the numbers coming from government are often wildly off-the-mark and subject to massive revisions in future months.
After Wednesday's huge run-up and the flatness of Thursday's trade, it appears that a robust number has already been priced in, and traders could be in for a rout. The alternative, under consideration that the jobs numbers come in solid or surprisingly better than expected, is for investors and momentum players to swing sentiment to wildly optimistic and end the week with another mammoth gain.
Either scenario could emerge, though this may prove to be the economy's last stand before more realistic data confirms or denies the existence of any kind of recovery. From what's been shown thus far, the billions and trillions of dollars thrown into stimulus and for the sake of saving numerous financial institutions has produced at best a weak rebound.
Wednesday, June 2, 2010
Stocks Surging in Advance of Jobs, Retail Data
Apparently, market participants are of a mind that upcoming jobs reports, in the form of the May ADP private sector report, Thursday's usual unemployment claims and Friday's BLS non farm payroll report, will outweigh most of the other issues that have been dragging stocks lower recently.
Of course, it could all be a one-day burp in advance of Thursday's retail figures - expected to disappoint - for suckers, or be really nothing at all.
Stocks have been trading in a range, and the only key figure to keep a close eye upon is Dow 11,205.03. That's the most recent closing high, hit back on April 26. If the Dow cannot climb up to and surpass that mark, expect trading to become either range-bound or negative for an extended period. With earnings reports still 5-6 weeks in the future, there needs to be some kind of catalyst, and the gut feeling around here is that the negativity spewing out from the floor of the Gulf of Mexico - in addition to ongoing, overhanging debt fears globally - will be sufficient enough to keep investor optimism constrained.
Today's quick-hit rally, mostly occurring after 2:00 pm, has little meaning in the overall context, especially considering the oversold condition of the market. Another 300-400 points higher on the Dow would not be out of the question over the next two to three weeks, just as a continuation of the downdraft would surprise nobody.
Generally speaking, it's never a good idea to base very much on one day's trading. The remaining days of the week should provide more clarity.
Dow 10,249.54, +225.52 (2.25%)
NASDAQ 2,281.07, +58.74 (2.64%)
S&P 500 1,098.38, +27.67 (2.58%)
NYSE Composite 6,839.54, +178.44 (2.68%)
Advancers climbed all over decliners, 5353-1220, a 9:2 margin, though our tried and true indicator showed that new highs could not overwhelm new lows, which carried the day, 127-105. Though that margin is narrow, the trend of more new lows than new highs indicates that the market is meeting overhead resistance, and that the market is at least fully priced. Volume, low for the session for the fourth day in a row, indicates the lack of conviction, even in spite of today's outsized headline numbers.
NYSE Volume 5,837,430,000
NASDAQ Volume 2,171,016,000
Oil grabbed a negligible bid of 28 cents, gaining to $72.86. Gold sold off by $4.20, finishing in New York at $1,220.60. Silver was lower as well, losing 24 cents, to $18.30.
While today's gains were overall outstanding, they may be nothing more than an overreaction to a paucity of news, much of which has been bad of late. Bulls being what they are, the momentum could last until something comes along to derail it or send prices even higher, mostly a countertrend move inside overall bear market conditions.
There's also some divergence within the various indices. While the Dow and S&P still trade below their 200-day moving averages, the NASDAQ is poised above its 200 day MA. These conditions usually end up favoring the bearish camp in the long run, but the market being as unpredictable an animal as ever walked out of the jungle, anything is possible.
Of course, it could all be a one-day burp in advance of Thursday's retail figures - expected to disappoint - for suckers, or be really nothing at all.
Stocks have been trading in a range, and the only key figure to keep a close eye upon is Dow 11,205.03. That's the most recent closing high, hit back on April 26. If the Dow cannot climb up to and surpass that mark, expect trading to become either range-bound or negative for an extended period. With earnings reports still 5-6 weeks in the future, there needs to be some kind of catalyst, and the gut feeling around here is that the negativity spewing out from the floor of the Gulf of Mexico - in addition to ongoing, overhanging debt fears globally - will be sufficient enough to keep investor optimism constrained.
Today's quick-hit rally, mostly occurring after 2:00 pm, has little meaning in the overall context, especially considering the oversold condition of the market. Another 300-400 points higher on the Dow would not be out of the question over the next two to three weeks, just as a continuation of the downdraft would surprise nobody.
Generally speaking, it's never a good idea to base very much on one day's trading. The remaining days of the week should provide more clarity.
Dow 10,249.54, +225.52 (2.25%)
NASDAQ 2,281.07, +58.74 (2.64%)
S&P 500 1,098.38, +27.67 (2.58%)
NYSE Composite 6,839.54, +178.44 (2.68%)
Advancers climbed all over decliners, 5353-1220, a 9:2 margin, though our tried and true indicator showed that new highs could not overwhelm new lows, which carried the day, 127-105. Though that margin is narrow, the trend of more new lows than new highs indicates that the market is meeting overhead resistance, and that the market is at least fully priced. Volume, low for the session for the fourth day in a row, indicates the lack of conviction, even in spite of today's outsized headline numbers.
NYSE Volume 5,837,430,000
NASDAQ Volume 2,171,016,000
Oil grabbed a negligible bid of 28 cents, gaining to $72.86. Gold sold off by $4.20, finishing in New York at $1,220.60. Silver was lower as well, losing 24 cents, to $18.30.
While today's gains were overall outstanding, they may be nothing more than an overreaction to a paucity of news, much of which has been bad of late. Bulls being what they are, the momentum could last until something comes along to derail it or send prices even higher, mostly a countertrend move inside overall bear market conditions.
There's also some divergence within the various indices. While the Dow and S&P still trade below their 200-day moving averages, the NASDAQ is poised above its 200 day MA. These conditions usually end up favoring the bearish camp in the long run, but the market being as unpredictable an animal as ever walked out of the jungle, anything is possible.
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