Stocks ended mixed after the Federal Open Market Committee of the Federal Reserve issued the following statement at 2:15 pm EDT. I have decided to republish the entire release, interspersed with my notes in italics. It is also quite noteworthy that this is by far the most terse statement the Fed has released in many years. My feelings, essentially, are, that since they have little to do to stem the continuation of dour economic conditions within an essentially deflationary environment, they have little to say. For that, they deserve some small credit. For the rest, they deserve what currency manipulators always earn: ire and scorn.
Release Date: June 23, 2010
For immediate release
Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually.
This opening statement is an absolute lie. If anybody should know a thing or two about economic conditions and the labor market, it would be the Fed. Even as a casual observer, it is quite easy to refute the foregoing statement. Labor conditions continue to worsen and the economy is embarking upon another retraction.
Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.
I won't even bother to check. Maybe "official" government statistics show household spending increasing, but anyone who's worked for a living in the private sector knows that wages have been stagnant for at least the last 20 years. Any excess spending is likely coming from people who are not paying their mortgage or from government subsidies. So, the statement may be true, but look at their qualifiers, then, add mine.
Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls.
Business spending on infrastructure is probably increasing, but most businesses are also hoarding cash. The telling statement is "investment in nonresidential structures continues to be weak." Commercial real estate is in free-fall. Note that they mention unemployment again as an impediment to growth.
Housing starts remain at a depressed level.
Obviously.
Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.
Read the first part of the sentence. The second part desires to shift blame to Europe. It's BS. We have enough of our own problems. Europe's only make them worse.
Bank lending has continued to contract in recent months.
Actually, I am somewhat surprised they would say this, as bank lending has been depressed since 2008.
Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time.
This statement is just a wish. There is no evidence that the economy will grow substantially in the near term. Watch what happens to the term, "resource utilization" in the remainder of the statement. Also, make note of their mention of price stability and inflation, never using the term, "deflation." The "D-word" scares them to death, because they, and all other Keynesian economists have no answers for the bottomless pit of deflation.
Prices of energy and other commodities have declined somewhat in recent months, and underlying inflation has trended lower.
Deflation.
With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
Deflation.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
In other words, they've thrown up the white flag of surrender here. They admit that they have no solutions except to keep lending money at ZERO percent. THEY cannot make money. They have failed. The US economy, from which, over the past nearly 100 years, the Federal Reserve has stolen almost all wealth from the nation, is bankrupt. There needs to be no more evidence than this statement to make the case that the Federal Reserve should be dissolved. Their policies, over the course of the past 96 years, has destroyed the capacity for the US economy to produce and grow. Ben Bernanke should step down and the governors of the Fed should declare bankruptcy and turn their assets over to the United States government for proper disposal.
Make particular note that they mention "low rates of resource utilization" when in the previous paragraph they said, "the Committee anticipates a gradual return to higher levels of resource utilization..." They are wishing. They are clueless. They have nothing. "Gradual" could mean six months just as easily as six years.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.
They have no more policy tools to employ. They have no more gimmicks to steal more money from the Treasury. They have nothing. They are worthless and defunct. Ordinary Americans have more power to promote economic prosperity - by hiring a kid to mow a lawn - than the Federal Reserve and they openly admit it.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly.
This final piece was probably entered upon the insistence of Mr. Hoenig, who, for whatever purpose (maybe to avoid hanging) wishes to separate himself from the lying majority. His effort to save himself should be applauded, though the addition of this statement is more than likely the most damaging blow to the unity of the Federal Reserve board of governors since its inception.
------------------------- End of FOMC Statement ---------------------------------
OK, readers can agree with my assessment in whole or in part or disagree as they please. In a nutshell, I'd say that we, as a nation, are in for a world of hurt. As I've been saying for the better part of the last three years, maybe four, our current economic path is unsustainable, and here is a stab to the heart of the US economy. The Federal Reserve today serves our nation no useful purpose except to delay the inevitable, while their cronies and friends steal as much more wealth as possible before they flee the country.
As for our friendly criminal enterprise known as Wall Street, well, they couldn't just sell everything all at once, could they? Their response was measured and cynical. They realize that the Fed has failed and that the underground economy - the part of the nation that avoids taxes, regulations and government intervention - will flourish far beyond the prospects of the "measured" economy.
Expect unreported income to far outstrip the GDP over the next 3-5 years. Expect small businesses to alternately fail and prosper, depending on how well they are able to skirt the laws and taxation. Expect a renaissance of personal responsibility and resourcefulness and the utter destruction of governance.
Greed, corruption, theft and incompetence have their consequences. This is the second phase of the post-government era, in which individuals will take matters even more into their own hands. Millionaires will mysteriously appear from the dust of destroyed cities. The stock market will crash or be held afloat by the criminals who operate under the now-discredited idea that big business is at the heart of American prosperity.
Economic and social dislocation will occur on a daily, even momentary basis, as individuals seize monetary power from the dethroned "masters of the universe" embodied in the money center banks and publicly-owned firms in general.
Today's market data is meaningful only in the internals.
Dow 10,298.44, +4.92 (0.05%)
NASDAQ 2,254.23, -7.57 (0.33%)
S&P 500 1,092.04, -3.27 (0.30%)
NYSE Composite 6,850.05, -8.90 (0.13%)
NOTABLE: declining issues led advancers, 3441-2978. NOTABLE: new lows surpassed new highs, 116-73. NOTABLE: Volume was anemic. Fear has fully gripped the trading community.
NYSE Volume 5,294,169,500
NASDAQ Volume 1,895,673,875
One would have expected gold and silver to rise off the back of the Fed announcement. Since they are serially controlled and manipulated by central banks and money center banks, they did not. Gold dipped $5.40, to $1,234.10. Silver fell 44 cents, to $18.45. These price levels will not maintain. Either there will be massive liquidation shortly, due to another financial crisis, or the dye has already been cast, that fiat money is dead and a new gold standard is about to emerge, the eventuality of which is now without doubt. It may not be advisable to buy gold or silver at these prices, but by no means should anybody be selling any until the prevailing economic conditions are resolved and the global economies are at healthy status.
Prices may decline for some time, but they will surely rise, most likely well beyond these levels. Cash or land are now useful converters into gold. If you find somebody willing to exchange equities or bonds for gold or silver, by all means take their hard assets at whatever discount comforts you. Gold and silver will endure. Paper money and certificates will not.
Oil dropped $1.50, to $76.35. Expect this price to settle at its true level of $35/barrel within the next three years. Outside of absolute manipulation, oil will not see $80/barrel for at least another 15 years.
Had enough?
I'll be back tomorrow, and the next day and many more after that. The party is just getting interesting.
Wednesday, June 23, 2010
New Home Sales Bomb; Market Reaction: Numb
If there was any more proof needed that the US residential housing market was about to take another turn for the worse, May data on new homes sales may have not only provided that, but threaten to push the entire economy into another recession.
Dogged by relentlessly-high unemployment, tight financing issues and coming the first month after expiration of the government's new home buyer tax credit, May new home sales fell to a record low of 300,000 units (seasonally adjusted), the worst sales figure since data was recorded, back in 1963.
Not only was the number 32.7% below April's downwardly-revised figure of 446,000, but the decline was also 18.6% lower year-over-year. The news, which was released at 10:00 am EDT, was met with little more than a yawn on Wall Street, where stocks were marginally lower in anticipation of the Fed's rate policy decision later in the day (2:00 pm EDT).
Traders may be disappointed by whatever it is the Fed will do as they already have the fed funds rate at ZERO, so they have no loosening mechanism left in place to staunch another economic downturn except a couple of bad choices, those being, reinstitution of quantitative easing (printing money to buy more Treasury debt), or, expansion of the already-bloated balance sheet with the purchase of more mortgage debt, most of it toxic sludge which nobody wants to touch.
What the Fed does today will be important only in the minds of those who actually believe that they and the federal government can rescue the economy from the worst economic nightmare since the Great Depression, possibly the worst economic slowdown of all time. While most lame media pundits still put some degree of faith in the exigencies of Keynesian economics, more stable-minded Austrian thinkers feel that nothing can be done to stem the deflationary decline except writing off bad investments, involving a great deal of pain and suffering, much more than is currently being felt in the grandest global economies.
The FMOC rate decision will be released shortly after 2:00 pm ET. A full report, with closing numbers, will be reported in a subsequent post after the close of trading today.
Dogged by relentlessly-high unemployment, tight financing issues and coming the first month after expiration of the government's new home buyer tax credit, May new home sales fell to a record low of 300,000 units (seasonally adjusted), the worst sales figure since data was recorded, back in 1963.
Not only was the number 32.7% below April's downwardly-revised figure of 446,000, but the decline was also 18.6% lower year-over-year. The news, which was released at 10:00 am EDT, was met with little more than a yawn on Wall Street, where stocks were marginally lower in anticipation of the Fed's rate policy decision later in the day (2:00 pm EDT).
Traders may be disappointed by whatever it is the Fed will do as they already have the fed funds rate at ZERO, so they have no loosening mechanism left in place to staunch another economic downturn except a couple of bad choices, those being, reinstitution of quantitative easing (printing money to buy more Treasury debt), or, expansion of the already-bloated balance sheet with the purchase of more mortgage debt, most of it toxic sludge which nobody wants to touch.
What the Fed does today will be important only in the minds of those who actually believe that they and the federal government can rescue the economy from the worst economic nightmare since the Great Depression, possibly the worst economic slowdown of all time. While most lame media pundits still put some degree of faith in the exigencies of Keynesian economics, more stable-minded Austrian thinkers feel that nothing can be done to stem the deflationary decline except writing off bad investments, involving a great deal of pain and suffering, much more than is currently being felt in the grandest global economies.
The FMOC rate decision will be released shortly after 2:00 pm ET. A full report, with closing numbers, will be reported in a subsequent post after the close of trading today.
Tuesday, June 22, 2010
All Global Markets Feeling the Pinch; Jobs, Housing Apply Pressure
Maybe I was a bit too harsh in recent postings, calling US stock exchanges things like, "the laughing stock of the world," and "overtly manipulated."
This was the conclusion I came to after seeing this headline: Europe shares fall, ending 9-day rally; BP slides, as I had no idea that the European bourses had embarked upon such a ridiculous rally. Knowing they had been advancing in recent days, along with the Euro itself, seemed commonplace, until the headline shook me out of the doldrums and back to reality.
It makes a great deal of sense, realistically, that the Euro-zone nations would ply the same heavy-handed collusion that makes US markets zig, zag, sway to and fro on a moments notice, with or without news or even rumors, until after the fact. All of the European economies and those in North America are under the same gun: they must print money or die, as their currencies become more and more worthless pieces of paper. Accordingly, officials at the various central banks must look dutiful, despite knowing their vain efforts will eventually come to naught.
A nine-day rally across the continent is thus no surprise, merely an extension of the supra-market powers held by the major banks and financial institutions, blessed by the central banking cartel. Their only option is to inflate assets, create money and pray that they may liquidate their own assets and run to a developing nation before the populace comes for them with pitchforks in hand and torches ablaze.
This makes even more sense in light of Monday's faux rally, based entirely on hopes that China's revaluation of the Yuan might stimulate some economic activity for their beleaguered economies. Apparently, most of the insider financiers forgot that China is primarily an importer of raw materials and an exporter of finished goods, and that condition doesn't necessarily stack up to much of anything positive for the Euro-Anglo-American alliance, which has gone from Empire to empty over the past 60 years.
China continues on a powerful growth pathway, along with India, Brazil, Russia and many other previously-underdeveloped countries which now benefit from globalization without the excessive burden of decades worth of unfunded liabilities in health care and pensions. One can also throw Japan into the failing-developed world mix, since they began an accelerated path of destruction nearly twenty years ago and haven't been able to shake off persistent deflation in their internal economy.
Once it was clear that European markets were heading South, it didn't take long for the US to follow the lead on Tuesday. With the S&P and Dow crossing over the flat line throughout the morning and early afternoon, the NASDAQ finally succumbed and headed permanently into the red zone after 2:00 pm as stocks closed at or near session lows for the second straight day. Losses in all the major US indices accelerated through the closing hour of trade. The Dow and S&P closed below their respective 200-day moving averages, while the NASDAQ finished precariously hovering over its own 200-day MA.
Adding to the nightmarish scenario was more data suggesting another round of price declines in the US housing market, though much different in quality from the subprime bust of 2008-2009. The new paradigm is closely related to jobs, which still are not being created in the private sector and likely won't. No jobs means no mortgage payment and further defaults and foreclosures for the major banks.
The vicious deflationary cycle is gaining momentum on the back of deplorable employment and housing environments. Today's release of existing home sales for May by the NAR evidenced a 2.2% decline month-over-month. The weak housing market is being exacerbated by continued weakness in the jobs market and resetting of millions of adjustable rate mortgages sold from 2005-2006, most of which carry a balloon second loan set to expire - and need to be refinanced - this year and next.
With employment conditions as poor as they are, many homeowners in this condition will not be able to secure bridge financing and will fall into default and foreclosure, adding more of a glut to an already-over-saturated residential market. The result will be another breakdown in price by anywhere from 10-25%, depending on the market.
Dow 10,293.52, -148.89 (1.43%)
NASDAQ 2,261.80, -27.29 (1.19%)
S&P 500 1,095.31, -17.89 (1.61%)
NYSE Composite 6,858.95, -119.91 (1.72%)
Declining issues continued to dominate advancers, just as they had on Monday, 5054-1483, but the bearish camp had additional ammunition for their argument Tuesday as new lows nearly surpassed new highs, losing out narrowly, 105-93. Volume was decidedly thin, though velocity may not be an issue during what seems to be setting up as a long, hot summer of decline.
NYSE Volume 5,205,686,000
NASDAQ Volume 1,801,127,500
Commodities did little better than equities on the day. Oil lost 61 cents, to $77.21, while gold added a marginal gain of 20 cents to finish at $1,239.90. Silver added 9 cents in price, to $18.90.
Stocks continue to be highly speculative, volatile and risky in this environment and no place for retirement savings, which is, unfortunately, where most of Americans are invested, either through their own 401K plans or state-funded pensions. Another severe downturn in stocks could easily spark a panic similar to the one in 2008, though this time the consequences may be even more severe.
The doomsday scenario may take as long as another five to seven years in which to be played out, so many investors and hard-working middle class Americans may still have time to fortify their financial defenses.
Reiterating the advice of the past year and a half: Cash and equivalents, arable land and tools of trade are suitable long-term investments for financial survival.
A double dip in virtually all important measures of economic activity seems almost a certainty at this point. Stocks could tumble as much as 30% by year's end, if not more.
This was the conclusion I came to after seeing this headline: Europe shares fall, ending 9-day rally; BP slides, as I had no idea that the European bourses had embarked upon such a ridiculous rally. Knowing they had been advancing in recent days, along with the Euro itself, seemed commonplace, until the headline shook me out of the doldrums and back to reality.
It makes a great deal of sense, realistically, that the Euro-zone nations would ply the same heavy-handed collusion that makes US markets zig, zag, sway to and fro on a moments notice, with or without news or even rumors, until after the fact. All of the European economies and those in North America are under the same gun: they must print money or die, as their currencies become more and more worthless pieces of paper. Accordingly, officials at the various central banks must look dutiful, despite knowing their vain efforts will eventually come to naught.
A nine-day rally across the continent is thus no surprise, merely an extension of the supra-market powers held by the major banks and financial institutions, blessed by the central banking cartel. Their only option is to inflate assets, create money and pray that they may liquidate their own assets and run to a developing nation before the populace comes for them with pitchforks in hand and torches ablaze.
This makes even more sense in light of Monday's faux rally, based entirely on hopes that China's revaluation of the Yuan might stimulate some economic activity for their beleaguered economies. Apparently, most of the insider financiers forgot that China is primarily an importer of raw materials and an exporter of finished goods, and that condition doesn't necessarily stack up to much of anything positive for the Euro-Anglo-American alliance, which has gone from Empire to empty over the past 60 years.
China continues on a powerful growth pathway, along with India, Brazil, Russia and many other previously-underdeveloped countries which now benefit from globalization without the excessive burden of decades worth of unfunded liabilities in health care and pensions. One can also throw Japan into the failing-developed world mix, since they began an accelerated path of destruction nearly twenty years ago and haven't been able to shake off persistent deflation in their internal economy.
Once it was clear that European markets were heading South, it didn't take long for the US to follow the lead on Tuesday. With the S&P and Dow crossing over the flat line throughout the morning and early afternoon, the NASDAQ finally succumbed and headed permanently into the red zone after 2:00 pm as stocks closed at or near session lows for the second straight day. Losses in all the major US indices accelerated through the closing hour of trade. The Dow and S&P closed below their respective 200-day moving averages, while the NASDAQ finished precariously hovering over its own 200-day MA.
Adding to the nightmarish scenario was more data suggesting another round of price declines in the US housing market, though much different in quality from the subprime bust of 2008-2009. The new paradigm is closely related to jobs, which still are not being created in the private sector and likely won't. No jobs means no mortgage payment and further defaults and foreclosures for the major banks.
The vicious deflationary cycle is gaining momentum on the back of deplorable employment and housing environments. Today's release of existing home sales for May by the NAR evidenced a 2.2% decline month-over-month. The weak housing market is being exacerbated by continued weakness in the jobs market and resetting of millions of adjustable rate mortgages sold from 2005-2006, most of which carry a balloon second loan set to expire - and need to be refinanced - this year and next.
With employment conditions as poor as they are, many homeowners in this condition will not be able to secure bridge financing and will fall into default and foreclosure, adding more of a glut to an already-over-saturated residential market. The result will be another breakdown in price by anywhere from 10-25%, depending on the market.
Dow 10,293.52, -148.89 (1.43%)
NASDAQ 2,261.80, -27.29 (1.19%)
S&P 500 1,095.31, -17.89 (1.61%)
NYSE Composite 6,858.95, -119.91 (1.72%)
Declining issues continued to dominate advancers, just as they had on Monday, 5054-1483, but the bearish camp had additional ammunition for their argument Tuesday as new lows nearly surpassed new highs, losing out narrowly, 105-93. Volume was decidedly thin, though velocity may not be an issue during what seems to be setting up as a long, hot summer of decline.
NYSE Volume 5,205,686,000
NASDAQ Volume 1,801,127,500
Commodities did little better than equities on the day. Oil lost 61 cents, to $77.21, while gold added a marginal gain of 20 cents to finish at $1,239.90. Silver added 9 cents in price, to $18.90.
Stocks continue to be highly speculative, volatile and risky in this environment and no place for retirement savings, which is, unfortunately, where most of Americans are invested, either through their own 401K plans or state-funded pensions. Another severe downturn in stocks could easily spark a panic similar to the one in 2008, though this time the consequences may be even more severe.
The doomsday scenario may take as long as another five to seven years in which to be played out, so many investors and hard-working middle class Americans may still have time to fortify their financial defenses.
Reiterating the advice of the past year and a half: Cash and equivalents, arable land and tools of trade are suitable long-term investments for financial survival.
A double dip in virtually all important measures of economic activity seems almost a certainty at this point. Stocks could tumble as much as 30% by year's end, if not more.
Global Economy Set to Implode
Once again the supposed "Masters of the Universe," sitting high inside their glassy offices in lower Manhattan, managed to persuade stocks to gap higher at the open. These geniuses then managed to sell managed positions all day long at a profit as the faux rally fizzled before the collective public eyes.
The Dow Jones Industrials were up nearly 150 points by 10:00 am, but stocks finished close to their lows of the day, actually rallying 50 points in the final minutes of trading to produce an artificial, moderately-lower close.
This is what the US stock markets have become, the paradise of insider traders and the laughing stock of the world. The "Masters of the Universe" are about to go down in flames lit with worthless paper currencies, backed by nothing more than the good word of scoundrels, cheats, liars and thieves.
Inexorably, stocks will lose value over time during any secular bear market, current company - which began in late summer, 2007 - included. daily fluctuations with accompanying conflicting internal data, such as today's, are trademarks of primary trend bear markets.
Dow 10,442.41, -8.23 (0.08%)
NASDAQ 2,289.09, -20.71 (0.90%)
S&P 500 1,113.20, 0.00 (0.00%)
NYSE Composite 6,978.86, -9.38 (0.13%)
Volume was moderate to low, but decliners far outnumbered advancing issues, 3986-2577, though the number of new highs, goosed by the mammoth opening head-fake, outweighed the new lows, 229-77. It is just this kind on non-confirmation and divergence that spells bear market in simple terms. The session was also an engulfing event, with the highs and lows exceeding those of the previous day, a sure set-up for an immediate market turn.
NYSE Volume 5,192,862,000.00
NASDAQ Volume 1,916,218,625.00
By deceiving most of the US market into believing that n upward revaluation of the Yuan was a positive for the Americas, the Wall Street insider swine managed to create a perfect selling opportunity for already-overpriced stocks they desperately sought to unload. It is why market-opening gaps - higher or lower - are never of any benefit to small investors, who all-too-often buy into these fake rallies and are subsequently left holding positions of lesser value by the end of the day.
Today's result was garden-variety manipulation, nothing that hasn't been seen countless times over the past three years, though it surely is a signal to get out of stocks with all due urgency.
Crude oil continued it's range-bound run higher, up 64 cents, to $77.82. Meanwhile, precious metals fell precipitously, with gold off by $17.50, to $1,239.70, and silver losing 73 cents, backing down to $18.80 per ounce.
In a rational world, with stocks down, the metals would likely rise, but there is nothing even remotely-resembling rationality in global markets. Nations, central banks and money center banks continue to pile more debt upon existing debt, as truly an unsustainable condition as that which preceded and touched off the crisis of 2008-09.
Paper currency is upon the deathbed, but gold and silver - viable alternatives - are being maintained (controlled, manipulated) at prices anywhere from 30-150% lower than true market value.
Like a stick of dynamite in an untended mine, all it is going to take is somebody or something to light the fuse for the entire global financial system to tumble into a nightmarish decline.
The Dow Jones Industrials were up nearly 150 points by 10:00 am, but stocks finished close to their lows of the day, actually rallying 50 points in the final minutes of trading to produce an artificial, moderately-lower close.
This is what the US stock markets have become, the paradise of insider traders and the laughing stock of the world. The "Masters of the Universe" are about to go down in flames lit with worthless paper currencies, backed by nothing more than the good word of scoundrels, cheats, liars and thieves.
Inexorably, stocks will lose value over time during any secular bear market, current company - which began in late summer, 2007 - included. daily fluctuations with accompanying conflicting internal data, such as today's, are trademarks of primary trend bear markets.
Dow 10,442.41, -8.23 (0.08%)
NASDAQ 2,289.09, -20.71 (0.90%)
S&P 500 1,113.20, 0.00 (0.00%)
NYSE Composite 6,978.86, -9.38 (0.13%)
Volume was moderate to low, but decliners far outnumbered advancing issues, 3986-2577, though the number of new highs, goosed by the mammoth opening head-fake, outweighed the new lows, 229-77. It is just this kind on non-confirmation and divergence that spells bear market in simple terms. The session was also an engulfing event, with the highs and lows exceeding those of the previous day, a sure set-up for an immediate market turn.
NYSE Volume 5,192,862,000.00
NASDAQ Volume 1,916,218,625.00
By deceiving most of the US market into believing that n upward revaluation of the Yuan was a positive for the Americas, the Wall Street insider swine managed to create a perfect selling opportunity for already-overpriced stocks they desperately sought to unload. It is why market-opening gaps - higher or lower - are never of any benefit to small investors, who all-too-often buy into these fake rallies and are subsequently left holding positions of lesser value by the end of the day.
Today's result was garden-variety manipulation, nothing that hasn't been seen countless times over the past three years, though it surely is a signal to get out of stocks with all due urgency.
Crude oil continued it's range-bound run higher, up 64 cents, to $77.82. Meanwhile, precious metals fell precipitously, with gold off by $17.50, to $1,239.70, and silver losing 73 cents, backing down to $18.80 per ounce.
In a rational world, with stocks down, the metals would likely rise, but there is nothing even remotely-resembling rationality in global markets. Nations, central banks and money center banks continue to pile more debt upon existing debt, as truly an unsustainable condition as that which preceded and touched off the crisis of 2008-09.
Paper currency is upon the deathbed, but gold and silver - viable alternatives - are being maintained (controlled, manipulated) at prices anywhere from 30-150% lower than true market value.
Like a stick of dynamite in an untended mine, all it is going to take is somebody or something to light the fuse for the entire global financial system to tumble into a nightmarish decline.
Friday, June 18, 2010
Quad-Witching Became a Quad-Whimper
Quietly ending one of the more unusual weeks on Wall Street, Friday's normally highly-anticipating quadruple witching (market index futures, market index options, stock options and stock futures expiring) ended with abnormally light volume over the final two trading days.
This is a disconcerting episode for traders, as volatile activity is the norm on these days, and the lack of volume suggests that the market is experiencing a severe lack of confidence, even among high-risk types who usually deal in these issues. Also to be considered is the quality of Tuesday's exceptional rally (the Dow gained 214 points), in that much of the options trading which normally could have held until later in the week, was actually conducted on this one, seminal session, making more than just a few traders wonder exactly why stocks were so sought-after on just that one day, as the rest of the week was flat and devoid of velocity.
The consensus being positive on that one day, and then nothing, brings up some interesting propositions, none of them particularly positive going forward. Were insiders moving early to avoid what they might consider an imminent turn? Was the rally thus concocted wholly on the backs of options and futures trades, rendering any gains as temporary flights of fancy? Could this just be a sign of the times, with Summer fast approaching, traders simply lost interest?
Supposing the latter of those preceding questions to be the best of a bad lot, good reasons for owning stocks generally have not appeared. Thus, with everyone cautious, the potential for a panic run on the sell side could occur out of thin air, just like much of the funds used to purchase stocks in the first place.
This kind of sentiment also bears the deflationary trademark, in which buyers will defer purchases, thinking prices will be lower tomorrow, the next day, the day after that, and so on, and, in that regard, we are in complete harmony with the instinct of the herd. Deflation manifests itself in many ways, but one clearly recognizable feature is sluggish trade, and if this week's action can't be described as sluggish, then nothing can.
As I've said previously, the market has three to four more weeks of waiting for 2nd quarter earnings reports, and the void may be filled with sell orders or simply a lack of meaningful movement. Whether this analysis is correct or mere whistling in the wind will be fairly known by the end of trading on Tuesday of next week. The market is seeking direction and the initial two days after witching days of any variety are generally reserved for reloading, shoring up strong positions and shedding weaker ones.
Dow 10,450.64, +16.47 (0.16%)
NASDAQ 2,309.80, +2.64 (0.11%)
S&P 500 1,117.51, +1.47 (0.13%)
NYSE Composite 6,988.24, +6.20 (0.09%)
Advancing issues slipped past decliners again, 3615-2861. New highs beat back new lows, 160-77.
NYSE Volume 5,356,428,000
NASDAQ Volume 2,044,128,250
Crude oil for July delivery gained 39 cents, to $77.18. Gold made a new high, gaining $9.70, to $1,257.20, while silver was also impressive, adding 41 cents, to $19.18.
This is a disconcerting episode for traders, as volatile activity is the norm on these days, and the lack of volume suggests that the market is experiencing a severe lack of confidence, even among high-risk types who usually deal in these issues. Also to be considered is the quality of Tuesday's exceptional rally (the Dow gained 214 points), in that much of the options trading which normally could have held until later in the week, was actually conducted on this one, seminal session, making more than just a few traders wonder exactly why stocks were so sought-after on just that one day, as the rest of the week was flat and devoid of velocity.
The consensus being positive on that one day, and then nothing, brings up some interesting propositions, none of them particularly positive going forward. Were insiders moving early to avoid what they might consider an imminent turn? Was the rally thus concocted wholly on the backs of options and futures trades, rendering any gains as temporary flights of fancy? Could this just be a sign of the times, with Summer fast approaching, traders simply lost interest?
Supposing the latter of those preceding questions to be the best of a bad lot, good reasons for owning stocks generally have not appeared. Thus, with everyone cautious, the potential for a panic run on the sell side could occur out of thin air, just like much of the funds used to purchase stocks in the first place.
This kind of sentiment also bears the deflationary trademark, in which buyers will defer purchases, thinking prices will be lower tomorrow, the next day, the day after that, and so on, and, in that regard, we are in complete harmony with the instinct of the herd. Deflation manifests itself in many ways, but one clearly recognizable feature is sluggish trade, and if this week's action can't be described as sluggish, then nothing can.
As I've said previously, the market has three to four more weeks of waiting for 2nd quarter earnings reports, and the void may be filled with sell orders or simply a lack of meaningful movement. Whether this analysis is correct or mere whistling in the wind will be fairly known by the end of trading on Tuesday of next week. The market is seeking direction and the initial two days after witching days of any variety are generally reserved for reloading, shoring up strong positions and shedding weaker ones.
Dow 10,450.64, +16.47 (0.16%)
NASDAQ 2,309.80, +2.64 (0.11%)
S&P 500 1,117.51, +1.47 (0.13%)
NYSE Composite 6,988.24, +6.20 (0.09%)
Advancing issues slipped past decliners again, 3615-2861. New highs beat back new lows, 160-77.
NYSE Volume 5,356,428,000
NASDAQ Volume 2,044,128,250
Crude oil for July delivery gained 39 cents, to $77.18. Gold made a new high, gaining $9.70, to $1,257.20, while silver was also impressive, adding 41 cents, to $19.18.
Subscribe to:
Posts (Atom)
Posts
