As one can plainly see from the headline numbers below, not much happened on stock markets today. Thin trade in a fairly tight range was the order of the day as BP agreed to set aside $20 billion in a separate escrow fund to pay for costs associated with the Gulf of Mexico spill. The company also announced it would not pay out the upcoming quarterly dividend.
Dow 10,409.46, +4.69 (0.05%)
NASDAQ 2,305.93, +0.05 (0.00%)
S&P 500 1,114.61, -0.62 (0.06%)
NYSE Composite 6,976.08, -13.80 (0.20%)
Decliners finished ahead of advancers, 3756-2723. New highs bettered new lows, 154-72. Volume was light.
NYSE Volume 5,653,750,500
NASDAQ Volume 1,946,411,125
Crude oil futures gained 73 cents, to $77.67. Gold lost $3.90, finishing at $1,229.30. Silver shed 14 cents, to $18.43.
I found out how to legally force banks to walk away from your mortgage. It's called "right of recision." Interesting stuff.
Wednesday, June 16, 2010
Tuesday, June 15, 2010
Nice Gains on No News is Not Good?
Today's spectacular run by US equities will be viewed by most as a positive, though there are probably many who believe it's a chimera, that like most rallies, it is only temporary.
Problems and imbalances persist throughout the global financial space, but that does not preclude traders and brokers from doing their jobs, one of which apparently was to push the S&P through it's 200-day moving average. Mission accomplished.
What will be more interesting to watch is whether the averages continue to rally and stay above the magic 200-day MA level. It surely will be tested for support in the near future. Not much to read into one day's data, as normal, though the case for a counter-trend has developed.
Dow 10,404.77, +213.88 (2.10%)
NASDAQ 2,305.88, +61.92 (2.76%)
S&P 500 1,115.23, +25.60 (2.35%)
NYSE Composite 6,989.88, +171.91 (2.52%)
Advancers led decliners, 5413-1177. New highs overarched new lows, 149-55. Volume was in the high end of moderate.
NYSE Volume 5,299,700,500
NASDAQ Volume 2,257,801,750
Oil was up $1.82, to $76.94. As much as I hate to admit it, the view is for oil to remain in this range throughout the summer months. $85 should prove a high side of the range, though gas prices over $3.00 are a drag on productivity, a tax on the middle class. Gold rebounded $9.90, to $1,233.20. Silver galloped ahead, up another 17 cents, to $18.57.
The mid-week void in news was helpful to equity markets, especially considering that nothing new occurred to shake things to the downside. With the news cycle so contrived and difficult to believe at times, there's little doubt that more issues will emerge to drive confidence into the ground. Economic numbers, such as tomorrow's housing starts and PPI, both due out at 8:30 am, may have a chilling effect. Producer prices should be flat to down, a real bummer for the inflationist camp, and for stocks.
Deflation does, on the other hand, offer some benefit for US consumers, most of whom haven't had a rise in income over the past decade or longer. Purchasing power is firmly in the grips of the consumer, but they're actually using it prudently, another cog in the deflation wheel.
Problems and imbalances persist throughout the global financial space, but that does not preclude traders and brokers from doing their jobs, one of which apparently was to push the S&P through it's 200-day moving average. Mission accomplished.
What will be more interesting to watch is whether the averages continue to rally and stay above the magic 200-day MA level. It surely will be tested for support in the near future. Not much to read into one day's data, as normal, though the case for a counter-trend has developed.
Dow 10,404.77, +213.88 (2.10%)
NASDAQ 2,305.88, +61.92 (2.76%)
S&P 500 1,115.23, +25.60 (2.35%)
NYSE Composite 6,989.88, +171.91 (2.52%)
Advancers led decliners, 5413-1177. New highs overarched new lows, 149-55. Volume was in the high end of moderate.
NYSE Volume 5,299,700,500
NASDAQ Volume 2,257,801,750
Oil was up $1.82, to $76.94. As much as I hate to admit it, the view is for oil to remain in this range throughout the summer months. $85 should prove a high side of the range, though gas prices over $3.00 are a drag on productivity, a tax on the middle class. Gold rebounded $9.90, to $1,233.20. Silver galloped ahead, up another 17 cents, to $18.57.
The mid-week void in news was helpful to equity markets, especially considering that nothing new occurred to shake things to the downside. With the news cycle so contrived and difficult to believe at times, there's little doubt that more issues will emerge to drive confidence into the ground. Economic numbers, such as tomorrow's housing starts and PPI, both due out at 8:30 am, may have a chilling effect. Producer prices should be flat to down, a real bummer for the inflationist camp, and for stocks.
Deflation does, on the other hand, offer some benefit for US consumers, most of whom haven't had a rise in income over the past decade or longer. Purchasing power is firmly in the grips of the consumer, but they're actually using it prudently, another cog in the deflation wheel.
Monday, June 14, 2010
GET OUT AND STAY OUT OF THE STOCK MARKET
OK, so what was the excuse for today's failed rally? Technical? Fundamentals? Fear? Greed?
Whatever was the case, functional real markets do not act in this manner. Rigged, useless, casino-style markets in heavy secular bull trends do.
The stock market used to be a place where an INVESTOR could safely place his or her money and expect a reasonable return. Nowadays, it's just crap shoot. The dotcom bubble proved that. If you needed more proof, how about the 52-month bull market during the Bush administration's failed war in Iraq? Or maybe you'd be more convinced by the absurdity of the 2008 crash, complete with bank bailouts and exorbitant executive pay while average Americans' wages stalled or declined and corporate America shed six million jobs.
If you haven't been convinced that these markets are for professional gamblers only, and not for individuals or pension funds, maybe the sharp rally off the March '09 lows brought you some measure of faith.
If so, YOU ARE A MORON. MORON. STUPID, IGNORANT, IDIOT.
Toady's market was a perfect example of a trader's market, a casino, though the odds are stacked more favorably toward big players and insiders, so an unfair casino, a controlled crap game with loaded dice and blackjack tables with magic drawers which produce mystery cards for the dealers.
Anybody with a red cent invested in the stock market is simply throwing away their money. You may think you have an edge at some point. You will have profitable trades, but you cannot buy stock in a company based on fundamentals and hold it, collect dividend checks and still make a gain. Not in this market. Stocks with strong dividends are temporary. Their dividend yields improve as the price of shares decline, eroding your capital. It's a sucker's market, but the insiders are running out of suckers. Soon they will be eating off each other's own flesh.
Why was the Dow up 116 points early in the day? The talking heads on CNBC tell you that it was because fund managers buy on Monday. Well, if that's the case, they just had their asses handed to them, because whatever they bought early in the day is now lower in value because the insiders sold them off. Yes, since there are fewer suckers on which to feed, and since the bankers have had their way with taxpayer money via the government and need more, they are actively going after pension fund holdings through organized short selling and other tactics at which they are expert.
So, now you know why the market went up, and also why it went down.
Therefore, if you are a person with a pension fund which you think is going to provide for you during your "retirement" years, the crooks on Wall Street just took a little of that away today. Tomorrow, they will take a little more, and when the market crashes for good, later this year or early next year, or maybe in 2012 or 2013, you'll be told that your pension fund has no money and your retirement is going to SUCK OUT LOUD. You'll probably have to keep working until you're 80.
Deal with it. This is the new reality caused by decades of Americans trusting politicians and bankers with their life savings. They will steal all of it and leave you with nothing. The best advice I can offer - which I offered first in 2007 - is, if you have a 401k or other personal retirement account, to take it all out in cash, pay whatever penalty they're going to throw on you and put it in gold, silver. arable land, or tools of trade. Otherwise, like the government employees who are being led down a primrose path to absolute desolation, you will end up with nothing.
Dow 10,190.89, -20.18 (0.20%)
NASDAQ 2,243.96, +0.36 (0.02%)
S&P 500 1,089.63, -1.97 (0.18%)
NYSE Composite 6,817.97, +3.21 (0.05%)
Naturally, there were more advancing stocks than decliners and more new highs than new lows. That's how the ultimate financial con works. The volume was so absurdly low as to be laughable, but that's also how these expert crooks operate. They don't steal all of your money all at once. That would be too obvious. They take a little at a time. Some day's they even give you some of it back, so you'll stay in the game. That way, they get to take all of it, little by little, day by day, stock by stock.
NYSE Volume 5,173,854,000.00
NASDAQ Volume 1,902,072,875.00
Commodities were just as absurdly priced as stocks. Oil was up $1.34, to $75.12, but gold was down $5.60, to $1,223.30 and silver was ahead by 18 cents, to $18.40. Why? simple. The oil futures market is the most controlled, contrived, manipulated market ever invented, thinly traded and controlled by six or seven major interest groups. Gold is constantly being hammered down by Wall Street banks, particularly the House of Morgan criminal enterprise, and silver, well, who the hell knows? Id' say silver is probably one of the safest investments on the planet, especially if you're buying old US coins at melt value, though even that can prove risky. At least the coins will be worth something, like gold, forever, but without the constant interference from unscrupulous traders, central banks and the IMF.
I've been following stocks and studying economics for many years, and I can safely say that I've never seen stock markets so blatantly manipulated as I am seeing right now. Most stocks, even if they aren't already wickedly overvalued - which means nothing - are eventually only profit vehicles for Wall Street insiders. They'll crush a good stock for short term gain just as easily as they'll boost worthless shares. It's all about making a profit on a trade, not investing, these days.
I also heard today that the federal government wanted BP to open an escrow account to pay for the cleanup and associated costs in the Gulf of Mexico. I won't even bother to link to any story, but the number being throw around was $1 billion, which is so agonizingly low as to be considered off the table. Louisiana governor Booby Jindal (more than likely a phony name) said that any such fund should start at $5 billion.
Both figures are completely wrong. The costs of cleaning up the Gulf and paying the wages of the hundreds of thousands of people and businesses who have suffered economic hardship are going to top $100 billion, easily. BP - that's BRITISH PETROLEUM - should be out of business within six months, but it seems that our federal government is going to do everything within its power to save the company and screw over the taxpayers, AGAIN.
How much more will Americans take before they have had enough?
Sadly, more than anyone wishes to believe. The Americans of today are going to watch the utter destruction of the best democracy that ever existed on the planet, and, for the majority of them, they won't even raise an arm in anger.
Whatever was the case, functional real markets do not act in this manner. Rigged, useless, casino-style markets in heavy secular bull trends do.
The stock market used to be a place where an INVESTOR could safely place his or her money and expect a reasonable return. Nowadays, it's just crap shoot. The dotcom bubble proved that. If you needed more proof, how about the 52-month bull market during the Bush administration's failed war in Iraq? Or maybe you'd be more convinced by the absurdity of the 2008 crash, complete with bank bailouts and exorbitant executive pay while average Americans' wages stalled or declined and corporate America shed six million jobs.
If you haven't been convinced that these markets are for professional gamblers only, and not for individuals or pension funds, maybe the sharp rally off the March '09 lows brought you some measure of faith.
If so, YOU ARE A MORON. MORON. STUPID, IGNORANT, IDIOT.
Toady's market was a perfect example of a trader's market, a casino, though the odds are stacked more favorably toward big players and insiders, so an unfair casino, a controlled crap game with loaded dice and blackjack tables with magic drawers which produce mystery cards for the dealers.
Anybody with a red cent invested in the stock market is simply throwing away their money. You may think you have an edge at some point. You will have profitable trades, but you cannot buy stock in a company based on fundamentals and hold it, collect dividend checks and still make a gain. Not in this market. Stocks with strong dividends are temporary. Their dividend yields improve as the price of shares decline, eroding your capital. It's a sucker's market, but the insiders are running out of suckers. Soon they will be eating off each other's own flesh.
Why was the Dow up 116 points early in the day? The talking heads on CNBC tell you that it was because fund managers buy on Monday. Well, if that's the case, they just had their asses handed to them, because whatever they bought early in the day is now lower in value because the insiders sold them off. Yes, since there are fewer suckers on which to feed, and since the bankers have had their way with taxpayer money via the government and need more, they are actively going after pension fund holdings through organized short selling and other tactics at which they are expert.
So, now you know why the market went up, and also why it went down.
Therefore, if you are a person with a pension fund which you think is going to provide for you during your "retirement" years, the crooks on Wall Street just took a little of that away today. Tomorrow, they will take a little more, and when the market crashes for good, later this year or early next year, or maybe in 2012 or 2013, you'll be told that your pension fund has no money and your retirement is going to SUCK OUT LOUD. You'll probably have to keep working until you're 80.
Deal with it. This is the new reality caused by decades of Americans trusting politicians and bankers with their life savings. They will steal all of it and leave you with nothing. The best advice I can offer - which I offered first in 2007 - is, if you have a 401k or other personal retirement account, to take it all out in cash, pay whatever penalty they're going to throw on you and put it in gold, silver. arable land, or tools of trade. Otherwise, like the government employees who are being led down a primrose path to absolute desolation, you will end up with nothing.
Dow 10,190.89, -20.18 (0.20%)
NASDAQ 2,243.96, +0.36 (0.02%)
S&P 500 1,089.63, -1.97 (0.18%)
NYSE Composite 6,817.97, +3.21 (0.05%)
Naturally, there were more advancing stocks than decliners and more new highs than new lows. That's how the ultimate financial con works. The volume was so absurdly low as to be laughable, but that's also how these expert crooks operate. They don't steal all of your money all at once. That would be too obvious. They take a little at a time. Some day's they even give you some of it back, so you'll stay in the game. That way, they get to take all of it, little by little, day by day, stock by stock.
NYSE Volume 5,173,854,000.00
NASDAQ Volume 1,902,072,875.00
Commodities were just as absurdly priced as stocks. Oil was up $1.34, to $75.12, but gold was down $5.60, to $1,223.30 and silver was ahead by 18 cents, to $18.40. Why? simple. The oil futures market is the most controlled, contrived, manipulated market ever invented, thinly traded and controlled by six or seven major interest groups. Gold is constantly being hammered down by Wall Street banks, particularly the House of Morgan criminal enterprise, and silver, well, who the hell knows? Id' say silver is probably one of the safest investments on the planet, especially if you're buying old US coins at melt value, though even that can prove risky. At least the coins will be worth something, like gold, forever, but without the constant interference from unscrupulous traders, central banks and the IMF.
I've been following stocks and studying economics for many years, and I can safely say that I've never seen stock markets so blatantly manipulated as I am seeing right now. Most stocks, even if they aren't already wickedly overvalued - which means nothing - are eventually only profit vehicles for Wall Street insiders. They'll crush a good stock for short term gain just as easily as they'll boost worthless shares. It's all about making a profit on a trade, not investing, these days.
I also heard today that the federal government wanted BP to open an escrow account to pay for the cleanup and associated costs in the Gulf of Mexico. I won't even bother to link to any story, but the number being throw around was $1 billion, which is so agonizingly low as to be considered off the table. Louisiana governor Booby Jindal (more than likely a phony name) said that any such fund should start at $5 billion.
Both figures are completely wrong. The costs of cleaning up the Gulf and paying the wages of the hundreds of thousands of people and businesses who have suffered economic hardship are going to top $100 billion, easily. BP - that's BRITISH PETROLEUM - should be out of business within six months, but it seems that our federal government is going to do everything within its power to save the company and screw over the taxpayers, AGAIN.
How much more will Americans take before they have had enough?
Sadly, more than anyone wishes to believe. The Americans of today are going to watch the utter destruction of the best democracy that ever existed on the planet, and, for the majority of them, they won't even raise an arm in anger.
Friday, June 11, 2010
Stocks Finish First Positive Week in Last Four
Thanks to the rally from nowhere, based upon nothing, that materialized on Thursday, all of the major equity indices will finish with their first weekly gain in the past four weeks.
Investors were stunned prior to the opening bell on Friday with a report on May retail sales that showed Americans spending at a rate 1.2% lower than in April. The news was another disconcerting data point for the bulls, coming just a week after the unnerving non farm payroll report which quite graphically demonstrated that the "recovery" had ceased creating jobs in the private sector, if it was even creating any at all prior to May.
The little piece of news wasn't at all expected by the expert economists who track - or, apparently guess at - these kinds of things, who were looking for a gain in retail sales in the neighborhood of 0.2%. The stark difference between expectations and reality points up just how juiced the media has been with all the phony recovery talk over the past six months.
Anybody who simply lives in an average American community can see for themselves that business conditions are not optimal. Stores in retail strip malls and spaces in enclosed malls go begging for tenants, jobs are hard to come by and state and local governments are dealing with budget deficits brought on by lower tax receipts and shrinking tax revenues, all effects of the recession and the lack of a powerful recovery.
Wall Street is about the only place in the country which seems to be of the opinion that all's well in the USA and the economy, though the recent declines in the market make clear that not everyone is euphoric over future prospects. The headwinds of future taxation, continued high unemployment and a critically ill housing market are beginning to take their tolls on even the most ardent bulls.
Strains in the European Union banking complex and the continuous flow of oil from deep beneath the Gulf of Mexico - putting thousands of shrimpers, clammers and fishermen out of work - certainly aren't helping matters.
As inexplicable as Thursday's rally was, today's late-day trade was equally out-of-the-blue. The Dow, which had, along with the S&P, spent nearly the entire session in negative territory, tacked on 75 points in the final three-quarters of the hour, helping push all the indices into plus territory. Once again, organized trading by a consortium of insiders or perhaps machine-driven, stocks ran counter-trend late in the day.
Dow 10,211.07, +38.54 (0.38%)
NASDAQ 2,243.60, +24.89 (1.12%)
S&P 500 1,091.60, +4.76 (0.44%)
NYSE Composite 6,814.76, +31.25 (0.46%)
In spite of the late-session tape-painting, advancing issues finished well ahead of decliners, 4619-1830. New highs broke through above new lows, 125-76, in a temporary reversal of the trend. Volume, however, was absolutely pathetic, the lowest in months.
NYSE Volume 4,672,237,500.00
NASDAQ Volume 1,731,446,375.00
Crude oil sold off, losing $1.49, to $73.99, which made sense in light of the sour retail figures. Precious metals were split, with gold gaining $5.70, to $1,228.10, while silver dipped 12 cents, to $18.24.
Looking ahead to next week, trading decisions will be led largely by out-of-market forces, those being the situation the in Gulf, the debt contagion in Europe and the advancement of the Financial Reform bill in congress, though mid-week economic data, including PPI, CPI, industrial production, capacity utilization and housing starts may provide some surprises.
Investors were stunned prior to the opening bell on Friday with a report on May retail sales that showed Americans spending at a rate 1.2% lower than in April. The news was another disconcerting data point for the bulls, coming just a week after the unnerving non farm payroll report which quite graphically demonstrated that the "recovery" had ceased creating jobs in the private sector, if it was even creating any at all prior to May.
The little piece of news wasn't at all expected by the expert economists who track - or, apparently guess at - these kinds of things, who were looking for a gain in retail sales in the neighborhood of 0.2%. The stark difference between expectations and reality points up just how juiced the media has been with all the phony recovery talk over the past six months.
Anybody who simply lives in an average American community can see for themselves that business conditions are not optimal. Stores in retail strip malls and spaces in enclosed malls go begging for tenants, jobs are hard to come by and state and local governments are dealing with budget deficits brought on by lower tax receipts and shrinking tax revenues, all effects of the recession and the lack of a powerful recovery.
Wall Street is about the only place in the country which seems to be of the opinion that all's well in the USA and the economy, though the recent declines in the market make clear that not everyone is euphoric over future prospects. The headwinds of future taxation, continued high unemployment and a critically ill housing market are beginning to take their tolls on even the most ardent bulls.
Strains in the European Union banking complex and the continuous flow of oil from deep beneath the Gulf of Mexico - putting thousands of shrimpers, clammers and fishermen out of work - certainly aren't helping matters.
As inexplicable as Thursday's rally was, today's late-day trade was equally out-of-the-blue. The Dow, which had, along with the S&P, spent nearly the entire session in negative territory, tacked on 75 points in the final three-quarters of the hour, helping push all the indices into plus territory. Once again, organized trading by a consortium of insiders or perhaps machine-driven, stocks ran counter-trend late in the day.
Dow 10,211.07, +38.54 (0.38%)
NASDAQ 2,243.60, +24.89 (1.12%)
S&P 500 1,091.60, +4.76 (0.44%)
NYSE Composite 6,814.76, +31.25 (0.46%)
In spite of the late-session tape-painting, advancing issues finished well ahead of decliners, 4619-1830. New highs broke through above new lows, 125-76, in a temporary reversal of the trend. Volume, however, was absolutely pathetic, the lowest in months.
NYSE Volume 4,672,237,500.00
NASDAQ Volume 1,731,446,375.00
Crude oil sold off, losing $1.49, to $73.99, which made sense in light of the sour retail figures. Precious metals were split, with gold gaining $5.70, to $1,228.10, while silver dipped 12 cents, to $18.24.
Looking ahead to next week, trading decisions will be led largely by out-of-market forces, those being the situation the in Gulf, the debt contagion in Europe and the advancement of the Financial Reform bill in congress, though mid-week economic data, including PPI, CPI, industrial production, capacity utilization and housing starts may provide some surprises.
Thursday, June 10, 2010
Sucker Rally, Part Two: Rally 'Round BP
Whatever yesterday's steep sell-off was about, today's gap-up rally was about making up lost ground, in a hurry.
The Dow Jones Industrials gapped up at the open - once again shutting out all but the insider firms - 150 points, and by 10:00 am, it was up nearly 250. This kind of quick-start rally doesn't occur in a vacuum, so most of the clueless analysts attributed the rise to explosive numbers coming out of China, saying that exports increased at a rate of 48.5% year-over-year.
Suffice it to say that nobody wanted to mention that a year ago, exports were at an absolute nadir, Chinese officials were doing their best to control riotous laid-off workers and that global trading conditions were abysmal. Some comparisons, especially those which favor the bullish case, are almost always kept out of view, as was the case today.
Concerns over the sudden revitalization of stock-buying fervor were put on the back burner for the day, allowing investors to bask in the glow of at least some temporary relief to what has been a relentless decline since the beginning of May, and that's why bear market rallies are never useful barometers of market health. This one, like all others, will be soon forgotten, for it is only speculative and quite possibly just a trading phenomenon, likely linked to options expiration only a week away.
Besides the obvious rallying around poor, misunderstood British Petroleum (BP), financial stocks also rallies, perhaps on suspicion that congressional debate on financial regulation seems to be going the way the bankers would like, toward a watered-down bill that is nothing more than cosmetic, allowing the political class to find some cover heading into the fall election cycle.
The pols have their hands in the banks' pockets and vice versa, so don't expect anything hard-hitting to come of "FinReg," despite the inclusion of Senator Blanche Lincoln's controversial derivatives proposal, which threatens to drive as much as 30% of large bank profits overseas. The bill is in the hands of the conference committee, chaired by Barney Frank, which will reconcile differences between the Senate and House versions.
So, was this the mother of all sucker rallies, or does this mark the end of the month-long decline in equities and the beginning of a new bull run?
The jury's still out, but consider, if you will, the key numbers that will tell the story in coming days. On Friday, June 4, after the non farms payroll report showed little progress in private sector employment, stocks sank to a closing low of 9931.97 on the Dow and 1064.88 on the S&P. The follow-on sell-off Monday, June 7, saw the Dow close below the previous interim low (February 8), finishing at 9816.49. The S&P likewise closed below its previous low, ending the day at 1050.47.
Bottom pierced, any chartist with rudimentary skills would have promoted the idea that further downside risk was being telegraphed. Then came Tuesday's sharp rally, Wednesday's failed rally and today's super rally, on low volume, and on suspect news from - of all places - China. To believe that strength in Chinese markets somehow translates to good news for US firms requires a requisite leap of faith, when the obvious truth was that this rally was really all about saving the prospects of BP, the incomes of one out of seven British pensioners, and keeping the world awash in crude oil (both figuratively and, in the Gulf, literally).
For the bulls, their new targets are 11,205.03 on the Dow and 1217.28 on the S&P, somewhat of a stretch from where stocks have currently settled. Even from today's lofty closing values, a rally of 11% would be needed to return to the previous highs, whereas a decline of just 3.5% would send the two main indices back below their recently-achieved bottoms.
Sideways trading leaves us in a state of suspended animation, though investors will be mulling the news from the BP oil gusher and Europe's deteriorating debt condition over the next four weeks prior to earnings season, which could be a bellwether or a Waterloo, depending on results. Chances still seem to favor the bearish case, with much of this week's trading being perceived as mere "noise."
Dow 10,172.53, +273.28 (2.76%)
NASDAQ 2,218.71, +59.86 (2.77%)
S&P 500 1,086.84, +31.15 (2.95%)
NYSE Composite 6,783.53, +223.82 (3.41%)
As expected on such a huge upside move, advancers dominated decliners, 5550-1011, though new lows maintained their edge over new highs, 120-104. That, and low volume, are very telling signals to where the market is intended.
NYSE Volume 5,718,455,000.00
NASDAQ Volume 2,023,046,625.00
Oil gained again today, picking up $1.07, to $75.45. Gold fell for the second straight day, down $7.70, to $1,220.80, with silver up 18 cents, to $18.34. Confusing variations in the commodity space lends credence to the directionless market theory and to a resumption of the bearish case in short order.
Goldman Sachs (GS) was under pressure again today as the SEC began examining another mortgage investment for potential fraud - Hudson Mezzanine - and was hit with a $1 billion lawsuit from Basis Capital, an Australian hedge fund that invested in Timberwolf, an MBS that Goldman sold in 2007. The troubles just keep mounting on the investment bank everyone loves to hate.
The Dow Jones Industrials gapped up at the open - once again shutting out all but the insider firms - 150 points, and by 10:00 am, it was up nearly 250. This kind of quick-start rally doesn't occur in a vacuum, so most of the clueless analysts attributed the rise to explosive numbers coming out of China, saying that exports increased at a rate of 48.5% year-over-year.
Suffice it to say that nobody wanted to mention that a year ago, exports were at an absolute nadir, Chinese officials were doing their best to control riotous laid-off workers and that global trading conditions were abysmal. Some comparisons, especially those which favor the bullish case, are almost always kept out of view, as was the case today.
Concerns over the sudden revitalization of stock-buying fervor were put on the back burner for the day, allowing investors to bask in the glow of at least some temporary relief to what has been a relentless decline since the beginning of May, and that's why bear market rallies are never useful barometers of market health. This one, like all others, will be soon forgotten, for it is only speculative and quite possibly just a trading phenomenon, likely linked to options expiration only a week away.
Besides the obvious rallying around poor, misunderstood British Petroleum (BP), financial stocks also rallies, perhaps on suspicion that congressional debate on financial regulation seems to be going the way the bankers would like, toward a watered-down bill that is nothing more than cosmetic, allowing the political class to find some cover heading into the fall election cycle.
The pols have their hands in the banks' pockets and vice versa, so don't expect anything hard-hitting to come of "FinReg," despite the inclusion of Senator Blanche Lincoln's controversial derivatives proposal, which threatens to drive as much as 30% of large bank profits overseas. The bill is in the hands of the conference committee, chaired by Barney Frank, which will reconcile differences between the Senate and House versions.
So, was this the mother of all sucker rallies, or does this mark the end of the month-long decline in equities and the beginning of a new bull run?
The jury's still out, but consider, if you will, the key numbers that will tell the story in coming days. On Friday, June 4, after the non farms payroll report showed little progress in private sector employment, stocks sank to a closing low of 9931.97 on the Dow and 1064.88 on the S&P. The follow-on sell-off Monday, June 7, saw the Dow close below the previous interim low (February 8), finishing at 9816.49. The S&P likewise closed below its previous low, ending the day at 1050.47.
Bottom pierced, any chartist with rudimentary skills would have promoted the idea that further downside risk was being telegraphed. Then came Tuesday's sharp rally, Wednesday's failed rally and today's super rally, on low volume, and on suspect news from - of all places - China. To believe that strength in Chinese markets somehow translates to good news for US firms requires a requisite leap of faith, when the obvious truth was that this rally was really all about saving the prospects of BP, the incomes of one out of seven British pensioners, and keeping the world awash in crude oil (both figuratively and, in the Gulf, literally).
For the bulls, their new targets are 11,205.03 on the Dow and 1217.28 on the S&P, somewhat of a stretch from where stocks have currently settled. Even from today's lofty closing values, a rally of 11% would be needed to return to the previous highs, whereas a decline of just 3.5% would send the two main indices back below their recently-achieved bottoms.
Sideways trading leaves us in a state of suspended animation, though investors will be mulling the news from the BP oil gusher and Europe's deteriorating debt condition over the next four weeks prior to earnings season, which could be a bellwether or a Waterloo, depending on results. Chances still seem to favor the bearish case, with much of this week's trading being perceived as mere "noise."
Dow 10,172.53, +273.28 (2.76%)
NASDAQ 2,218.71, +59.86 (2.77%)
S&P 500 1,086.84, +31.15 (2.95%)
NYSE Composite 6,783.53, +223.82 (3.41%)
As expected on such a huge upside move, advancers dominated decliners, 5550-1011, though new lows maintained their edge over new highs, 120-104. That, and low volume, are very telling signals to where the market is intended.
NYSE Volume 5,718,455,000.00
NASDAQ Volume 2,023,046,625.00
Oil gained again today, picking up $1.07, to $75.45. Gold fell for the second straight day, down $7.70, to $1,220.80, with silver up 18 cents, to $18.34. Confusing variations in the commodity space lends credence to the directionless market theory and to a resumption of the bearish case in short order.
Goldman Sachs (GS) was under pressure again today as the SEC began examining another mortgage investment for potential fraud - Hudson Mezzanine - and was hit with a $1 billion lawsuit from Basis Capital, an Australian hedge fund that invested in Timberwolf, an MBS that Goldman sold in 2007. The troubles just keep mounting on the investment bank everyone loves to hate.
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