On Tuesday, the Federal Reserve purchased $1.74 billion in Treasury inflation-protected securities, otherwise known as TIPS, in an outright purchase as part of the $600+ billion QE2 program. The extra gobs of money created a nifty rise in securities - doesn't it always? - as the major stock indices rose to new highs. It is looking like January will see a positive "January Effect," a term that will be bandied about over the next two weeks if the markets are able to hold onto the gains made thus far or improve upon them.
The January Effect, as it is known to traders, is the theoretical assumption that as the markets go in January, so will they go the remainder of the year. This gauge is supposedly right something along the lines of 85% of the time if January is positive. Over the past two years - both of which saw falling equity prices - the "effect" was not seen, as both 2009 and 2010 turned in impressive upside performances.
While it might not correlate to downside Januaries, two consecutive years of non-conformation raises the issue of whether Fed meddling has rendered all "old" measures of anticipated returns nil. With this January off like gangbusters, what is the chance of ending the year lower? Well, we've got 11 more months to find out, but, if the Fed continues its inflationary policies, stocks will most likely end the year higher, if only to keep pace with the "moderate" inflation, which could turn into "unwieldy" in the second half of the year or sooner.
Wall Street is certainly having its way on the easy money train of late, and while it's probably not too late to jump on the bandwagon for some quick-turn profits, there still is considerable risk, even though nobody will admit to it.
Upward we go, as earnings this week will flow like mother's milk.
Dow 11,837.93, +50.55 (0.43%)
NASDAQ 2,765.85, +10.55 (0.38%)
S&P 500 1,295.02, +1.78 (0.14%)
NYSE Composite 8,190.91, +16.79 (0.21%)
Considering today's gains, the A/D line did not come in heavily on the side of advancers, which nonetheless beat decliners, 3464-3073. On the NASDAQ, new highs overwhelmed new lows, 269-12. On the NYSE, the beat was not quite as robust, with new highs checking in at 304, against 47 new lows. Volume was fairly strong, but not solid enough from which to draw any conclusions about future direction.
NASDAQ Volume 2,032,031,375
NYSE Volume 5,828,719,500
The front-end (February) crude oil contract on the NYMEX was nearly flat, losing 16 cents, to $91.38. Oil remains at elevated levels. Gold rebounded from last week's drubbing, picking up $7.70, to $1,368.20, with silver adding 58 cents, to $28.91.
There doesn't seem to be any downside to buying equities these days. Even in the case of Apple (APPL), where founder and CEO Steve Jobs announced a six-month medical leave of absence, the stock fell more than 7 points during the session, but recovered back most of that in after-hours trading as the company posted numbers in excess of Street estimates. IBM also reported and beat, while Citigroup announced a 50% miss (.04 cents on expectations of .08) prior to the opening bell.
Tuesday, January 18, 2011
Friday, January 14, 2011
Stocks Extend Gains for 7th Straight Week
In its latest POMO, the Fed purchased another $7.3 billion in bonds from the Primary Dealers on Friday, which, of course, made buying yesterday's dip the right move for equity traders.
Stocks rallied sharply off a quiet beginning, with all major indices getting a diagonal lift throughout the day. The market has now overextended an already extended position, as new highs were hit in all the majors. Those calling for a pull-back thus far have been sorely disappointed and probably are feeling a bit embarrassed at doubting the power of the Fed and fiat money created out of thin air.
Leading the way were bank and computer chip firms after JP Morgan Chase (JPM) and Intel (INTC) both reported earnings better-than street estimates.
Investors took December retail sales (up 0.5%), capacity utilization (76%) and industrial production (+0.8%) as positive signs that the recovery was continuing apace. A higher-than-normal CPI, which came in at 0.5%, did little to contain the enthusiasm.
Dow 11,787.38, +55.48 (0.47%)
NASDAQ 2,755.30, +20.01 (0.73%)
S&P 500 1,293.24, +9.48 (0.74%)
NYSE Composite 8,174.12, +54.69 (0.67%)
Advancing issues far outpaced decliners, 3972-2547. There were 233 new highs and 112 new lows on the NASDAQ; On the NYSE, there were 234 new highs and 153 new lows, the lows dominated by Municipal Bond funds, which have been hard hit in the aftermath of Meredith Whitney's call that there will be hundreds of municipal defaults this year. Nobody seems to be doubting her as states and cities struggle with bloated budgets and slim tax receipts.
Volume was at its best level of the week, a fitting conclusion to a week characterized by high drama and low reactions.
NASDAQ Volume 2,030,708,125.00
NYSE Volume 5,228,476,000
Oil tacked on a 14 cent gain, to $91.54, but the precious metals were savaged again. Gold traded down $26.50, to $1,360.50, its lowest level in some months, while silver was whipsawed lower by 94 cents, coming in at $28.32. The level of complacency in all trading areas - outside of the muni bond complex - is stunning. There simply is no risk aversion, a recipe for disaster, which the Fed has so far been able to contain.
Stocks rallied sharply off a quiet beginning, with all major indices getting a diagonal lift throughout the day. The market has now overextended an already extended position, as new highs were hit in all the majors. Those calling for a pull-back thus far have been sorely disappointed and probably are feeling a bit embarrassed at doubting the power of the Fed and fiat money created out of thin air.
Leading the way were bank and computer chip firms after JP Morgan Chase (JPM) and Intel (INTC) both reported earnings better-than street estimates.
Investors took December retail sales (up 0.5%), capacity utilization (76%) and industrial production (+0.8%) as positive signs that the recovery was continuing apace. A higher-than-normal CPI, which came in at 0.5%, did little to contain the enthusiasm.
Dow 11,787.38, +55.48 (0.47%)
NASDAQ 2,755.30, +20.01 (0.73%)
S&P 500 1,293.24, +9.48 (0.74%)
NYSE Composite 8,174.12, +54.69 (0.67%)
Advancing issues far outpaced decliners, 3972-2547. There were 233 new highs and 112 new lows on the NASDAQ; On the NYSE, there were 234 new highs and 153 new lows, the lows dominated by Municipal Bond funds, which have been hard hit in the aftermath of Meredith Whitney's call that there will be hundreds of municipal defaults this year. Nobody seems to be doubting her as states and cities struggle with bloated budgets and slim tax receipts.
Volume was at its best level of the week, a fitting conclusion to a week characterized by high drama and low reactions.
NASDAQ Volume 2,030,708,125.00
NYSE Volume 5,228,476,000
Oil tacked on a 14 cent gain, to $91.54, but the precious metals were savaged again. Gold traded down $26.50, to $1,360.50, its lowest level in some months, while silver was whipsawed lower by 94 cents, coming in at $28.32. The level of complacency in all trading areas - outside of the muni bond complex - is stunning. There simply is no risk aversion, a recipe for disaster, which the Fed has so far been able to contain.
Thursday, January 13, 2011
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.
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.
Wednesday, January 12, 2011
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.
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.
Tuesday, January 11, 2011
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.
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.
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