No POMO, No Follow-through, BTFD

For the uninitiated, BTFD is an acronym for Buy The F---ing Dip, as relates to stocks in the Bernanke free-money era in which we are currently ensconced. Today's dip, though not great, may be yet another buying opportunity for the momentum-chasers still convinced that buying stocks presents the best profit potential with limits to the downside.

One can hardly argue with the reasoning of the Mo-mo crowd over the past 4 1/2 months, as stocks have been on a tear since Labor day, 2010, and are up whopping amounts from their March 9, 2009 lows. Since it's still smartest to buy low and sell high, any decline, no matter how tiny, represents another chance to cash in on short-term trades, especially those of long duration, which today means a day or longer.

What may have riled markets today were a raft of displeasing data, beginning with a ramp up in initial unemployment claims, reported at 445,000 for the week, as opposed to the "expected" 415,000 and prior week of 410,000. Those figures are seasonally adjusted, with non-seasonally adjusted coming in some 230,000 higher, thus laying sufficient ground that the BLS figures are mostly for show and have not been trustworthy since the early days of the Bush administration.

While the mainstream media continues to drone on about the nascent recovery of the US economy, more than just casual observers are noting that said recovery has never much existed on Main Street and the various stimuli applied to the economy have benefited most Wall Street bankers and politicians who favor the status quo over real action or reform.

On top of the sorry-looking unemployment claims numbers came a PPI that was not very surprising, up 1.1% in December, with the core, which excludes food and energy, up a mere 0.2%, again unsurprising since just about anyone who drives or eats - and that would include just about everybody - has seen rocketing prices at the pump and the checkout counters in supermarkets. Food and fuel prices are accelerating far faster than the economy is growing, which is the express intent of Ben Bernanke's QE efforts, so we are now seeing the first signs of runaway inflation, with surely more to follow.

Stocks took a nose dive at the open, recovered, fell again and then raced higher into the close on short-covering by deft day-traders, which is just about everyone these days. Buy and hold and the former principles of investing have long ago been thrown unceremoniously out the window along with transparency and fair markets. The pre-planned hike by the Fed and Wall Street is working according to plan, and that plan is to squeeze every last dollar out of the middle class until they are on the verge of bankruptcy, starvation or revolt, or a combination of all three.

It is widely assumed that once the middle class is put under such dire conditions, the Fed will ease off the monetary gas pedal and all will return to the normalcy of peace, prosperity, milk, honey, wine and roses. This is assuming much, including that the bankers and other .01% of the population that benefits from the deprivation of the middle class will be sated and allow prices to lower and people to eat, breathe and drive freely without undue economic or political restraint. That is a rather large and unwieldy assumption and the Fed is asking for major trouble should they not know when to apply the brakes, which, if we are to take the nearly 100 years of Fed history as a guide, will not occur as planned, sending the economy careening into a wall of higher prices, stagnant wages, permanent high unemployment and lowered standards of living. Of course, this is all well and good, if you are a globalist, which our leaders in congress, the White House, on wall Street and at the Fed most certainly are.

Dow 11,731.90, -23.54 (0.20%)
NASDAQ 2,735.29, -2.04 (0.07%)
S&P 500 1,283.76, -2.20 (0.17%)
NYSE Composite 8,119.43, -3.55 (0.04%)

As one would expect, declining issues led the charge over advancers, 3530-2909. There were 208 new highs and 10 new lows on the NASDAQ; on the NYSE, 246 new highs to 108 new lows was something out of the ordinary, with the new lows ramping up to levels not seen this year. Volume remained stagnant at low levels as usual.

NASDAQ Volume 1,960,601,750
NYSE Volume 4,822,930,000

Commodities trended lower, except in the agriculture space, where all grains were higher. Crude oil for February delivery shed 46 cents on the NYMEX, to $91.40, still at elevated levels despite storms slowing the rate of travel for the past three weeks. Gold took a major hit, down $14.00 late in the day, to $1374.00. Silver also was bombarded by selling, losing 91 cents, to $28.74. The metals, not conforming to a massive drop in the dollar index - off 0.85, to 79.20, are telling us nothing about current conditions except that the markets simply aren't making much sense right now. Stocks normally would have been up on such a large (>1.0%) move, though the effects of the unemployment condition and inflation gauge may have ameliorated such effect.

Global populations are in for a double-kick of inflation, with energy and food prices leading the way. If this is somehow good for global growth - a starving, immobile mass of humanity - it is beyond the scope of most economic experts. It is only in this new age of never-ending money supply inflation that the world now turns, for better or for worse, 'til death, taxes or $4/gallon gasoline do we part.

Stocks Head Higher on Portugal Good News

Stocks got a big boost today without assistance from the Fed, though it is reasonable to assume that the more then $15 billion in POMOs over the previous two days should have given the big banks enough ammo to fire away at will at equities.

Some of the excitement seemed to be baked into Portugal's raising a billion or so Euros in a treasury auction with participation by China and Japan. The duo with money from the Orient seems intent on buying up whatever they can of the failing states of Europe. More power to them though these investments seem less than shrewd.

What the market didn't (or maybe they did) take into account was the excessive rise in import prices, up 1.1% in December after a similar rise in October and a 1.5% increase in November. With imports flashing inflation were traders more giddy with anticipation over rising prices for all assets, including equities, or do they believe that this is yet another "manageable" situation that has nothing at all to do with QE2? It's hard not to see the effects of the Fed's non-stop printing of greenbacks anywhere else on the planet. They are exporting inflation worldwide, with food prices up everywhere, especially in developing countries, which can least afford it.

Elsewhere, Wells-Fargo upgraded the entire banking sector, which is something akin to declaring yourself the winner of a golf tournament which you organized, scored, competed in and handicapped. It just reeks of self-dealing, but, other market participants seem inclined to go along, as the indices popped to new highs.

In the housing market, home price declines are accelerating and have reached a level more severe than during the Great Depression. Various reasons include high foreclosure rates, underwater mortgages, high unemployment and a glut of homes on the market.

Dow 11,755.44, +83.56 (0.72%)
NASDAQ 2,737.33, +20.50 (0.75%)
S&P 500 1,285.96, +11.48 (0.90%)
NYSE Composite 8,122.98, +104.30 (1.30%)

Naturally, advancing issued far outpaced decliners, 4617-1925. On the NASDAQ, there were 288 new highs and 8 new lows. On the NYSE, 310 and 42, respectively. Volume was low again, though after a year and a half of this thin market, is now being reported as "normal," being part of the "new normal" group-think.

NASDAQ Volume 1,887,035,375
NYSE Volume 4,782,270,000

Crude oil moderated a bit, but still managed to gain 75 cents, to $91.86. Gold had a gain of $1.50, to $1,385.80, and silver added five cents, to $29.54.

The Street seems to be well ahead of itself on the upper end of a four-month plus rally which has taken the Dow up 1740 points since the end of August. The S&P and NASDAQ have performed in similar fashion, the NASDAQ being the best of all the indices in percentage terms.

With 4th quarter earnings about to roll out in earnest next week, one wonders how much more lift there can be with markets already at elevated levels. We'll find out soon enough whether January's rise is sustainable or merely pushing on a string.

Stocks Move Forward on POMO of $7.8 Billion

Like it or not, the Federal Reserve continues to pump fresh money into the hands of the Primary Dealers, keeping the markets propped up in a thoroughly unconventional manner. Monday's POMO of $7.79 billion Outright Coupon Purchase, was followed again today by a slightly larger Outright Coupon Purchase POMO of $7.802 billion.

While the Fed and the PDs do their thing t make America great (or line their own pockets with taxpayer dollars, as the case may be), stocks have just kind of languished around, levitating today just above the flat line.

Dow 11,671.88, +34.43 (0.30%)
NASDAQ 2,716.83, +9.03 (0.33%)
S&P 500 1,274.48, +4.73 (0.37%)
NYSE Composite 8,018.68, +52.59 (0.66%)
NASDAQ Volume 1,907,460,750
NYSE Volume 4,489,686,000

Meanwhile, New York City braces for another wicked snowstorm, scheduled to hit the city and other large metro areas overnight. Should the Big Apple receive another foot of snow that they're unable to deal with, the stock market - for the reason that traders may not be able to make it to lower Manhattan and the lack of a Wednesday POMO - might experience a little bit of a time out and stocks may drift lower.

They should drift lower no matter what happens, as the indices are nearing a five-month rally without a break, also unusual, but not in this environment.

Advancing issues dominated decliners, 4016-2457, volume was light and there were 226 new highs on the NASDAQ, to just 12 new lows. On the NYSE, the numbers were 237-8, in favor of new highs.

Oil caught another big bid today, gaining $1.86, to $91.11 on the front-end NYMEX contract. Gold rolled up a gain of $10.20, to $1,384.30, while silver rocketed 64 cents higher, to $29.50. Outside of the commodities space, there simply wasn't much action, as has been the case for most of the past six weeks, though with earnings starting to trickle out - Alcoa (AA) started out with an .02 beat of Street estimates yesterday after the bell - that should provide some excitement, though computers - those machines actually executing 70-80% of all trades - are notoriously unemotional.

Some day, something may change. In the meantime, it's not how one reacts to news and events, but how well prepared one is for all contingencies.

More of the Same Old Broken Market

Instead of sounding like a broken record, just the brutal number, and note that stocks were well into the red (Dow down 100 points) early on, but just kept climbing all day.

Dow 11,637.45, -37.31 (0.32%)
NASDAQ 2,707.80, +4.63 (0.17%)
S&P 500 1,269.75, -1.75 (0.14%)
NYSE Composite 7,966.09, -14.23 (0.18%)

Advancing issues actually beat decliners, 3545-3074. NASDAQ new highs: 158; new lows: 10. NTSE new highs: 132; new lows: 13. Volume was horrible. This is a dead market with dead money.

NASDAQ Volume 1,887,066,625.00
NYSE Volume 4,552,878,000

Oil futures were priced higher because of a BP spill in the Trans-Atlantic Pipeline, proving that even when the oil companies screw up, they screw us. NYMEX crude was up $1.22, to $89.25. Gold gained $5.20, to $1,374.10. Silver was up 19 cents, to $28.86.

I have to kick my tenants out of a house I was renting to them. Apparently, the Lease/Purchase deal I made with them for $400/month (no, that's not a typo) was not good enough. They haven't paid January rent. Unbelievable.

I also un-friended (that is not a word... dis-friended?) a guy I knew from high school on Facebook. He's an overbearing bully who is one of those people who is always right, no matter what. In high school he was just overbearing. The bully part probably came from being married, having kids and needing numerous operations.

I decided to quit communicating with him because of unsatisfactory feelings every time I made contact. His loss, I suppose. Facebook is a joke in many regards because people aren't all open and cheery and sharing. Most people are somewhat secretive and tend to argue. Facebook will become more of a battleground than a "social" network. Dis-friending will be a new trend in 2011.

Banks Lose in Mass. Case; Jobs Short; Predictions 2011, Part 3

Outside of the first fifteen minutes of trading on Monday, the markets for 2011 have been essentially flat, and with good reason, as they were customarily topped out by the end of December, Monday's (January 3rd) exuberant explosion to the upside a mere phantom rally based on nothing other than bloated expectations.

what everyone anxiously held their collective breaths for - December non-farm payroll data - was released just as usual, though the results were anything but. The number printed at 109,000 new jobs over the month, well below expectations, but the "official" unemployment rate fell to 9.4%, the lowest in something like a year and a half, but pure farce, based upon some 500,000 former workers ceasing to collect unemployment insurance.

Since the Bureau of Labor Statistics is quickly becoming known as an Orwellian Bureau of Disinformation for their gently-massaged, highly-suspect numbers from month to month, the rosy outlook from the 0.4% drop in the unemployment rate merely masks the reality of half a million Americans being switched from once-productive members of society to then-unemployed to now permanent membership of the underclass of welfare and food stamp recipients.

Stocks took a bit of a nose-dive on the news, and traded in the red the entire session, though recovered some of the ground late in the day. There was nothing to lift stocks except the unhappy comedy of whirring computers and drugged-up Americans believing anything being said on the great gizmo of propaganda tube.

We now have two or three different economies co-existing in the nation. There's the super-rich, who could give a damn about anything other than profits and skimming, who are seldom seen in public but variously fund and plunder from the other classes. There's an upper-middle class of suburban Americans who, though stretched thin by taxes, utilities and inflation, still have enough in the tank to keep believing in the American dream.

Those two groups probably account for maybe 35% of the nation's population, many of them part of the corporate culture, others either working for some form of government entity or drawing retirement benefits from one. Down below is the other 65% of the population, the massive, but shrinking, middle class, which has seen upward mobility destroyed by decades of debt and wage stagnation, their incomes reduced by the dual forces of inflation and a weakening dollar. They are becoming an endangered species, being dragged closer and closer to a wall of insolvency wherein lives the impoverished underclass, though many, thanks to food stamps, rent subsidies and outright handouts from the government live as well as the middle class, without the stress of having to work, pay taxes or any other kind of bill.

This end group is what America is quickly becoming: a dumbed-down horde of mindless babblers, poorly educated and without hope for anything but a dismal future. Those in their twenties or thirties wonder when the next shoe will drop, when their job will be cut, not when they will be promoted or receive the largesse of a raise. Those are the disillusioned, while their elders have already given up. In a world dominated by crooked politicians and ruthless bankers, democracy has been overwhelmed by neo-feudalism, cleverly disguised as a functioning society. Those below the arc of the curve, the 65%ers, have had their rights stripped away, their futures blunted, their wealth taken by the power of the state. For them, and for most of us on the fringe, the future never looked so stark, bleak and devoid of hope.

Wall Street, however, where prosperity is measured by the minute in point-gains and losses, might as well be off in another universe, it is so far removed, perceptually and philosophically, from the rest of the culture. They own, we rent. They take, we give. They win, we lose. The times are indeed precarious.

Dow 11,674.76, -22.55 (0.19%)
NASDAQ 2,703.17, -6.72 (0.25%)
S&P 500 1,271.50, -2.35 (0.18%)
NYSE Composite 7,980.32, -20.58 (0.26%)

Aligned with the headline number, losers beat gainers, 3884-2595. On the NASDAQ, there were 148 new highs and just 8 new lows. On the NYSE, the numbers were similar, with 141 new highs and 9 new lows. Volume was lower than any other day this week as the rats jump off the ship.

NASDAQ Volume 1,991,273,500
NYSE Volume 5,659,220,000

Crude oil futures finished down again, losing 35 cents, to $88.03. Gold continued to stall, down $2.80, to $1,368.90. Silver was in even worse shape, losing 45 cents, to $28.67.

In Massachusetts, the state's Supreme Court, in what promises to be a landmark decision, threw out foreclosures brought by US Bancorp and Wells Fargo, saying that the jumbled maze of mortgage assignments and security pooling agreements does not constitute proof of ownership of a note and mortgage, thus making the plaintiffs in the action, the banks, without legal standing to foreclose. In other words, the court told the banks, "no note, no mortgage and no foreclosure. See ya," and dismissed the actions.

The ruling was a notable win for advocates of homeowners and middle class Americans and a potentially-fatal wound to the banks.

Predictions 2011: Stocks, Bonds, Politics and Social Trends

Stocks will languish in 2011, and share prices on January 1st, this past Monday, could well mark the highs of the year, since they were at the height of a four-month-long rally. Rather than another banner year like 2009 and 2010, truth will come out at last, that the economy isn't really recovering all that well, stimulus will have to come to an end at some point and valuations will be ratcheted downward. Corporate earnings will be hard-pressed to match year-ago figures, putting top-end pressure on securities.

Depending on data and also what Republicans in congress do about the debt ceiling, the situation could become even more dire than it already is, though the impression is that it's in everybody's best interest to just keep moving along until 2012, when the presidential and congressional elections will bring out the worst in everyone.

The following are the trading ranges I envisage for the major indices:
Dow: 9250-12000
NASDAQ: 2100-2750
S&P 500: 875-1300
NYSE Comp: 5650-8100

Bonds can't go much higher in yield for fer of exploding deficits and they surely won't decline radically in what appears to be an inflationary environment. The curve will flatten as longer-dated maturities remain calm while the short end inflates on the yield curve. Short term rates have been held down too low for too long, but they're there for a reason, and a big move is not expected.

Food and fuel prices will rise, Lady Gaga will dominate the cultural landscape as will "leaving it behind," a trend based on people fully giving up on the entire system of low wages, high taxes and costs out of control. Oil will not break above $100/barrel as it would be catastrophic and truly cause a depression. Again, that may wait until 2012.

In politics, the Republicans and Democrats will both try to appear adult, measured and in control, when in reality they have no idea what they're doing. 2011 will be another year of massive policy and monetary mistakes which won't be fully appreciated for years. The mortgage/foreclosure mess will cycle out of control and there may actually be prosecutions for some big Wall Street types, though not the top honchos. Any litigation will be for show.

There may be riots (some may already be occurring) over housing, food, jobs, welfare and anything the underclass needs to get by on, and an occasional murder, for vengeance, could take out a rich banker or two.

Mostly, it will be a year of hand-ringing over nothing. Industrious types will find new ways to make a living, while more and more people will fall into poverty, real poverty, not the kind displayed on TV. Tent cities could begin to become more than an eyesore, but a health issue as well, and we'll still be in Iraq and Afghanistan fighting wars for no good reason. China will continue to ascend as America's decline accelerates.