The time has come, at last.
Almost anybody who is anybody on Wall Street is in agreement that the Fed's POMO-and-ZIRP-induced party has come to an end, and like all good party-goers, the hangovers are beginning to be felt.
Laughably, Goldman Sachs, the evil giant squid which everyone loves to hate, expects the party to go on without end, today boosting its outlook for oil to something ridiculous at about $130/barrel. Somebody needs to ease the Goldman boys away from the punch bowl, because they've obviously had too much. It takes less than a genius rationalization to understand that if everything begins going in reverse, oil cannot be priced higher. This simple, fundamental fact has apparently escaped the great minds in Goldman's glassy, lower-Manhattan towers.
Elsewhere, Greece steps closer and closer to defaulting on its debt. Not that Greece might one day default; it is an eventuality, and the sooner it gets over with it, the better. Yields on 10-year greek bonds have been running at about 25%, which would be a real find if they were actually going to pay them back. Of course, they're not, so whomever is loaning them money (there are a lot of silly people in this world) is exacting a pretty hefty price for the privilege.
Stocks went up, then down, then back up and finally, down into the close, a nifty continuation trade that began a few weeks ago and has been gathering momentum. The close today was rather dramtic, with loads of selling on pretty solid volume. Sooner or later, there will be a final flushing out of all the weak hands - and there are many - and a cataclysmic collapse in all the US - and global - stock indices.
We are heading into a frightening period of economic history, as nothing less than the actual value of money will be center stage. Today, $10 US could buy a couple of raw 8 oz. steaks of less-than premium quality. Tomorrow, who knows, maybe the same money could buy only a pound of bologna, or perhaps one could purchase premium sirloins. It all depends on the politics, the players and the public's acceptance of the value of a dollar, or two, or ten.
For the present, the US dollar still holds some value and still buys oil globally. That is the good news. The bad news is that there are a multitude of competing currencies, pricing strategies and unknowns that could change the course of economic history in a very short time. As the Fed unwinds its massive funding and balance sheet, all manner of nastiness could occur, though the current betting is on a mild dose of deflation, probably through the end of this year and into the first and second quarters of next. In other words, another year of fear, uncertainty and doubt (FUD). After that, nobody knows, so plan accordingly. HA, ha, ha.
Dow 12,356.21, -25.05 (0.20%)
NASDAQ 2,746.16, -12.74 (0.46%)
S&P 500 1,316.28, -1.09 (0.08%)
NYSE Composite 8,252.46, -15.91 (0.19%)
Not unexpectedly, declining issues bettered advancers, 3587-2941. NASDAQ new highs: 48; new lows: 79. NYSE new highs: 74; new lows: 32. Combined new highs: 122; new lows: 111. A tenuous win for the bulls, but on slight, sell-weighted volume.
NASDAQ Volume 1,880,249,750
NYSE Volume 3,867,757,500
Crude oil popped back over $100 per barrel on the back of Goldman's call, but it didn't hold, finishing with a gain of $1.89, to $99.59. Gold tracked higher by $8.10, currently at $1525.30. Silver blasted higher by $1.50, to $36.57. Apparently, faith in physical silver holdings has regained some degree of confidence, though there will certainly be more raids led by JP Morgan, hoping to keep a lid on the price. That's another eventuality; Morgan will fail.
Cash continues to hold a place of prominence in a multitude of portfolios, and for good reason. Bargains pop up nearly every day, and savvy buyers are keen to take appropriate advantage, though they should beware, as price discovery is more than ever more art than science.
Tuesday, May 24, 2011
Monday, May 23, 2011
Euro Debt Crisis Exacting Heavy Toll on Global Markets
Make no mistake about it, today was the start of the great reckoning. The beginning of the end of easy money policies, of kicking the can down the road, of failing to come face-to-face with the reality of the global credit crisis that began in 2008 and never really ended.
Oddly enough, it comes on a day in which the US President, Mr. Obama, is headed to Europe for a meeting of the G-8, in which the globalist governors will mete out whatever they see fit for the peasantry of their populous nations. It's a little like playing Russian roulette with all the chambers loaded. You're going to get it no matter how lucky you are.
The interesting aspect of the day's trading happened not specifically today, but actually last Friday, when futures went limit down shortly after the US close. It was a weekend warning shot that the powers in control would be taking their various pounds of flash come Monday. And they did, sending markets around the planet down by one, two and three per cent.
Here in the USA, one-month lows were the order of the day, though that's hardly exciting news. The pertinent take-away is that the great unwind of asset values has begun - or resumed - as the major indices finished the session today less than 4% off their recent multi-year highs.
What was notable was the changing of the guard on the new highs - new lows indicator. For more than two years - with only slight variations - new highs have exceeded new lows on both the NYSE and the NASDAQ. Today, new lows outnumbered new highs on the NASDAQ and the gap narrowed on the NYSE. Even though this is not the first time this has happened recently, its frequency and narrow range makes it a particularly potent indicator at this point in time. Once this turns, it tends to remain in place for quite a while, periods between changes in leadership are measured in years.
Market movements are often subtle and difficult to pinpoint, though this one has been telegraphed for quite some time. The debt condition of Greece, Portugal, Belgium, Italy, Spain and Ireland are unsustainable situations as is the salve of QE2 and ZIRP here in the US. Japan, literally and figuratively, has been swept off the face of leading economic nations and uprisings across the Middle East and North Africa (called the MENA region, for short) threaten the global economy.
Even the leaders of the most powerful nations know that this little game of chicken, complete with artificial stimuli, bailouts, buybacks, swaps, jawboning and other gimmicks cannot proceed forever. Europe must get serious about its long-term structural deficiencies and the US must confront the debt limit and its own burgeoning solvency problem, and both must do so quickly. Thus, preparedness for financial armageddon is underway, and, if one listens closely to the pundits and analysts populating the airwaves and internet, most are calling upon investors to take a pause, pare back on stocks and raise cash, which is, in the parlance of Wall Street, like saying, "run for your life!"
There's an opportunity for the globalist agenda to sail through this period of austerity, consolidation and downgrading of the private sector fairly unscathed, but be assured that the plan is afoot and the stock indices will bear the brunt of what will amount to a massive global deflation. In a year or two, they will once again announce victory over the forces of debt and monetary destruction and proceed to blow the bubbles once more.
In this environment, no asset class is safe, though cash and equivalents, gold and silver, are good starting points. Growth will be minimal, as measured by GDP, if positive at all, and the opportunity for fresh recessions are abundant. Today was just another in a series of well-timed warning shots. Prepare or die.
Dow 12,381.26, -130.78 (1.05%)
NASDAQ 2,758.90, -44.42 (1.58%)
S&P 500 1,317.37, -15.90 (1.19%)
NYSE Composite 8,236.55, -120.98 (1.45%)
Losers soared over winners on the session, 5257-1342, a 4:1 ratio, though hardly a complete rout. It could have been much worse. On the NASDAQ, 37 new highs, but 86 new lows. The NYSE recorded 51 new highs and 44 new lows, the smallest gap in nearly two months. Taken together, the 88 new highs do not reach up to the 130 new lows, and that is the important set of figures to watch, the combined number. Continued weakness has been forecasting a more serious tumble for the past two months. Volume, despite the massive decline, remained at severely low levels. Once again, the major players have been unable to draw in the usually-gullible public, which is tapped out and wants no part of the Wall Street circus. Thus, they play amongst themselves, like a pack of starving wolves who will eventually turn upon each other.
NASDAQ Volume 1,806,104,625
NYSE Volume 3,761,192,500
Crude took another turn down, the front-end NYMEX contract for WTI losing $2.40, to $97.70. Gold managed a gain of $3.70, to $1517.20, while silver advanced by only a penny, to $35.07.
The major indices completed three straight weeks of negative results on Friday. Monday's opening gambit to the downside portends worse to come. March Durable Goods Orders data on Wednesday and the second 2nd quarter GDP estimate on Thursday will most likely add to the sense of pervasive desperation.
Oddly enough, it comes on a day in which the US President, Mr. Obama, is headed to Europe for a meeting of the G-8, in which the globalist governors will mete out whatever they see fit for the peasantry of their populous nations. It's a little like playing Russian roulette with all the chambers loaded. You're going to get it no matter how lucky you are.
The interesting aspect of the day's trading happened not specifically today, but actually last Friday, when futures went limit down shortly after the US close. It was a weekend warning shot that the powers in control would be taking their various pounds of flash come Monday. And they did, sending markets around the planet down by one, two and three per cent.
Here in the USA, one-month lows were the order of the day, though that's hardly exciting news. The pertinent take-away is that the great unwind of asset values has begun - or resumed - as the major indices finished the session today less than 4% off their recent multi-year highs.
What was notable was the changing of the guard on the new highs - new lows indicator. For more than two years - with only slight variations - new highs have exceeded new lows on both the NYSE and the NASDAQ. Today, new lows outnumbered new highs on the NASDAQ and the gap narrowed on the NYSE. Even though this is not the first time this has happened recently, its frequency and narrow range makes it a particularly potent indicator at this point in time. Once this turns, it tends to remain in place for quite a while, periods between changes in leadership are measured in years.
Market movements are often subtle and difficult to pinpoint, though this one has been telegraphed for quite some time. The debt condition of Greece, Portugal, Belgium, Italy, Spain and Ireland are unsustainable situations as is the salve of QE2 and ZIRP here in the US. Japan, literally and figuratively, has been swept off the face of leading economic nations and uprisings across the Middle East and North Africa (called the MENA region, for short) threaten the global economy.
Even the leaders of the most powerful nations know that this little game of chicken, complete with artificial stimuli, bailouts, buybacks, swaps, jawboning and other gimmicks cannot proceed forever. Europe must get serious about its long-term structural deficiencies and the US must confront the debt limit and its own burgeoning solvency problem, and both must do so quickly. Thus, preparedness for financial armageddon is underway, and, if one listens closely to the pundits and analysts populating the airwaves and internet, most are calling upon investors to take a pause, pare back on stocks and raise cash, which is, in the parlance of Wall Street, like saying, "run for your life!"
There's an opportunity for the globalist agenda to sail through this period of austerity, consolidation and downgrading of the private sector fairly unscathed, but be assured that the plan is afoot and the stock indices will bear the brunt of what will amount to a massive global deflation. In a year or two, they will once again announce victory over the forces of debt and monetary destruction and proceed to blow the bubbles once more.
In this environment, no asset class is safe, though cash and equivalents, gold and silver, are good starting points. Growth will be minimal, as measured by GDP, if positive at all, and the opportunity for fresh recessions are abundant. Today was just another in a series of well-timed warning shots. Prepare or die.
Dow 12,381.26, -130.78 (1.05%)
NASDAQ 2,758.90, -44.42 (1.58%)
S&P 500 1,317.37, -15.90 (1.19%)
NYSE Composite 8,236.55, -120.98 (1.45%)
Losers soared over winners on the session, 5257-1342, a 4:1 ratio, though hardly a complete rout. It could have been much worse. On the NASDAQ, 37 new highs, but 86 new lows. The NYSE recorded 51 new highs and 44 new lows, the smallest gap in nearly two months. Taken together, the 88 new highs do not reach up to the 130 new lows, and that is the important set of figures to watch, the combined number. Continued weakness has been forecasting a more serious tumble for the past two months. Volume, despite the massive decline, remained at severely low levels. Once again, the major players have been unable to draw in the usually-gullible public, which is tapped out and wants no part of the Wall Street circus. Thus, they play amongst themselves, like a pack of starving wolves who will eventually turn upon each other.
NASDAQ Volume 1,806,104,625
NYSE Volume 3,761,192,500
Crude took another turn down, the front-end NYMEX contract for WTI losing $2.40, to $97.70. Gold managed a gain of $3.70, to $1517.20, while silver advanced by only a penny, to $35.07.
The major indices completed three straight weeks of negative results on Friday. Monday's opening gambit to the downside portends worse to come. March Durable Goods Orders data on Wednesday and the second 2nd quarter GDP estimate on Thursday will most likely add to the sense of pervasive desperation.
Friday, May 20, 2011
Random Notes as Stocks Slump Near Lows of Month
In the absence of earnings or economic data, let us suffice to say that stocks did today what they should have done yesterday, given the housing and Philly Fed data. That said, it seems we now are actually getting somewhere in the coming great unwind, which must happen if QE2 ends.
With the close of the Dow today, we can see that the decline is going to be gradual - about 100 points per week on average - which should get the Dow down to around 11,000 by Labor Day.
Along those lines, allow me to close the week with some random thoughts on the current working environment and the accelerating deflation:
Current economic conditions are fostering an environment where work has changed and what you call the "existential needs" might more reasonably be filled by the technology-marginalized workers, such as home gardening, DYI home repair and generally more resourcefulness and less dependence on the "system", the grid.
I am one of these technology-marginal types, in my own home business, with very limited overhead, having to actually do work about five to six hours a day, and that only four days a week. The rest of my time is spent raising my own vegetables, making my home more energy efficient and sourcing other income streams. It's actually a pretty sweet spot.
The promise of technology was always presented - back in the 60s and 70s - as more leisure time, but the banksters and politicians stole that luxury lifestyle from the common man. However, through their own rampant greed, this is backfiring, because more people are now on welfare (read: government-supplied leisure), not paying mortgages (bankster inspired leisure), and working less (congress, thanks for doing nothing).
With all this free time on their hands, common folks - the smart ones - are devising ways to capitalize and take back their leisure, which has some new definitions, such as, leisure as not spending, leisure as self-education, leisure as efficiency.
Deflation is going to hurt the most at the top of the food chain. Those already at or near the bottom will be scarcely affected, while the smartest of that group will actually prosper, just as during the Great Depression. Fortunes will be lost, but many others will be made.
It's all coming at very slow speed, thanks to the Fed's unending fight against deflation, but it's coming, no matter what. There is no other good alternative.
Always remember - and I don't know where I got this, maybe Malcolm Gladwell - but economies are always created at the margins. It't not LinkedIn with a $10 billion capitalization that will make change - that is simply a misallocation of capital on a grand scale - but the guy building solar heaters in his garage, or the people in Cleveland harvesting fish and vegetables in the same facility.
There may be the Googles and eBays of the world which created great shareholder value, but, both of those companies profited on the margin of hundreds of thousands, maybe millions, of small entrepreneurs, buying and selling ads, goods, services.
I tend to think the raw data on the level of entrepreneurship in this country is vastly understated because so many people are not reporting what they are doing nor what they are making because of the absurdly high level of government invasion and regulation. There's more wealth hidden in the underground economy than ever.
Sound familiar? Same thing happened during prohibition. Read the book, "Last Call" for a clue.
Dow 12,512.04, -93.28 (0.74%)
NASDAQ 2,803.32, -19.99 (0.71%)
S&P 500 1,333.27, -10.33 (0.77%)
NYSE Composite 8,357.53, -70.42 (0.84%)
Declining issues finished well ahead of advancers on the day, 4314-2224. On the NASDAQ, 58 new highs and 53 new lows. The NYSE was ever the outlier, with 97 new highs and 22 new lows. However, all week we've witnessed the gap between the new highs and new lows narrow and considering the dipsy-do taken in July and August of last year, may not revisit equilibrium until the end of summer. The stimulus is still being worked through the system, but cracks have become visible in the facade of recovery.
Volume was once again light, though considering that it was an options expiration day, it was actually horribly so. Fewer players means lower velocity, leading eventually to atrophy.
NASDAQ Volume 1,786,991,750
NYSE Volume 4,011,100,500
WTI crude oil was lower by as much as $2.00 during the morning, but finished the day with a gain of $1.05, closing at $99.49. Gold rocketed $20.50, to $1514.30, though silver barely budged, up 11 cents, to $35.05 per ounce.
This choppiness in commodities and stocks should persist until traders are more certain of the future, which could be a long, long time, considering the state of negotiations on the debt limit and the 2012 budget in Washington. They are at standstills on both issues. Our president and congress should be absolutely ashamed of themselves as they dawdle over pressing issues.
This is the worst government, on the federal level, maybe of all time.
With the close of the Dow today, we can see that the decline is going to be gradual - about 100 points per week on average - which should get the Dow down to around 11,000 by Labor Day.
Along those lines, allow me to close the week with some random thoughts on the current working environment and the accelerating deflation:
Current economic conditions are fostering an environment where work has changed and what you call the "existential needs" might more reasonably be filled by the technology-marginalized workers, such as home gardening, DYI home repair and generally more resourcefulness and less dependence on the "system", the grid.
I am one of these technology-marginal types, in my own home business, with very limited overhead, having to actually do work about five to six hours a day, and that only four days a week. The rest of my time is spent raising my own vegetables, making my home more energy efficient and sourcing other income streams. It's actually a pretty sweet spot.
The promise of technology was always presented - back in the 60s and 70s - as more leisure time, but the banksters and politicians stole that luxury lifestyle from the common man. However, through their own rampant greed, this is backfiring, because more people are now on welfare (read: government-supplied leisure), not paying mortgages (bankster inspired leisure), and working less (congress, thanks for doing nothing).
With all this free time on their hands, common folks - the smart ones - are devising ways to capitalize and take back their leisure, which has some new definitions, such as, leisure as not spending, leisure as self-education, leisure as efficiency.
Deflation is going to hurt the most at the top of the food chain. Those already at or near the bottom will be scarcely affected, while the smartest of that group will actually prosper, just as during the Great Depression. Fortunes will be lost, but many others will be made.
It's all coming at very slow speed, thanks to the Fed's unending fight against deflation, but it's coming, no matter what. There is no other good alternative.
Always remember - and I don't know where I got this, maybe Malcolm Gladwell - but economies are always created at the margins. It't not LinkedIn with a $10 billion capitalization that will make change - that is simply a misallocation of capital on a grand scale - but the guy building solar heaters in his garage, or the people in Cleveland harvesting fish and vegetables in the same facility.
There may be the Googles and eBays of the world which created great shareholder value, but, both of those companies profited on the margin of hundreds of thousands, maybe millions, of small entrepreneurs, buying and selling ads, goods, services.
I tend to think the raw data on the level of entrepreneurship in this country is vastly understated because so many people are not reporting what they are doing nor what they are making because of the absurdly high level of government invasion and regulation. There's more wealth hidden in the underground economy than ever.
Sound familiar? Same thing happened during prohibition. Read the book, "Last Call" for a clue.
Dow 12,512.04, -93.28 (0.74%)
NASDAQ 2,803.32, -19.99 (0.71%)
S&P 500 1,333.27, -10.33 (0.77%)
NYSE Composite 8,357.53, -70.42 (0.84%)
Declining issues finished well ahead of advancers on the day, 4314-2224. On the NASDAQ, 58 new highs and 53 new lows. The NYSE was ever the outlier, with 97 new highs and 22 new lows. However, all week we've witnessed the gap between the new highs and new lows narrow and considering the dipsy-do taken in July and August of last year, may not revisit equilibrium until the end of summer. The stimulus is still being worked through the system, but cracks have become visible in the facade of recovery.
Volume was once again light, though considering that it was an options expiration day, it was actually horribly so. Fewer players means lower velocity, leading eventually to atrophy.
NASDAQ Volume 1,786,991,750
NYSE Volume 4,011,100,500
WTI crude oil was lower by as much as $2.00 during the morning, but finished the day with a gain of $1.05, closing at $99.49. Gold rocketed $20.50, to $1514.30, though silver barely budged, up 11 cents, to $35.05 per ounce.
This choppiness in commodities and stocks should persist until traders are more certain of the future, which could be a long, long time, considering the state of negotiations on the debt limit and the 2012 budget in Washington. They are at standstills on both issues. Our president and congress should be absolutely ashamed of themselves as they dawdle over pressing issues.
This is the worst government, on the federal level, maybe of all time.
Thursday, May 19, 2011
Despite Poor Housing Data, Philly Fed Big Miss, Stocks Rock On
Following yesterday's exercise in exposing how Wall Street makes money at the expense of almost everyone else, confirmation today as stocks gained despite continued horrible data from the housing sector and a huge miss in the Philadelphia Fed's latest report on economic conditions in the region.
According to the NAR, existing home sales for the month of April dipped 0.8% nationally to a seasonally adjusted annual rate of 5.05 million.
Chief economist, Lawrence Yun said:
Median price for a single-family home fell 5.4% year-over-year, to $163,200. Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, and the NAR feels this is amount is a 9-month supply. Their figures are probably not inclusive of the two to four million homes in the so-called "shadow inventory" which includes houses in foreclosure, off the market and in the hands of the banks (REO) and other distressed properties.
That, my friends, was the good news.
The report from the Philadelphia Fed was a little more alarming, where its business activity index slumped to 3.9 from 18.5 in April. Ah, yes, that recovering economy just continues to click along in places like the Northeast business section of the country.
Stocks actually lost ground for a few moments after these two sets of data reached Wall Street at 10:00 am EDT, but then the computers running the trading floor were reminded that tomorrow is stock option expiration and their human masters would be in need of more money for hookers and cocaine, so back up they went, on volume so thin Charlie Sheen was brought in to cut it.
That was, except for the darling IPO of the day, LinkedIn (LNKD), the business/social website that was priced at $45/share, but opened at $85 and traded as high as 122 before setting for the day at 94.25. That price places the company's market cap at around $10 billion, which is more than 65% of the companies listed on the S&P 500. The trading frenzy over what amounts to a web-based rolodex brought back memories of the 1999 tech bobble. Some traders actually shed tears of nostalgia.
Dow 12,605.32, +45.14 (0.36%)
NASDAQ 2,823.31, +8.31 (0.30%)
S&P 500 1,343.60, +2.92 (0.22%)
NYSE Composite 8,427.95, +20.47 (0.24%)
Advancing issues held sway over decliners, 3603-2911. On the NASDAQ, 81 new highs and 38 new lows, while the NYSE showed 179 new highs and a mere 17 new lows. Volume was slight, though the A/D line hints that there was a smattering of caution, likely concerning the forward-looking trends set by the Philly Fed and housing data, to say nothing of the impending end of QE2, which accepted 1.9 billion in outright coupon purchases today. Ted Fed has released the schedule through June 9. Some time after that, the operation is supposed to end, though few doubt that the easy money will come to a complete halt.
NASDAQ Volume 1,739,600,875
NYSE Volume 3,625,738,000
The price of oil eased, down $1.66, to $98.44 per barrel of WTI. Gold traded down $2.30, to $1494.60. Silver was off seven cents, at $34.95 per troy ounce.
With options expiring tomorrow and the Fed dealing another $5-6 billion in POMO, unless nuclear war breaks out somewhere - and even if it does - stocks should show more gains, at least in the morning.
According to the NAR, existing home sales for the month of April dipped 0.8% nationally to a seasonally adjusted annual rate of 5.05 million.
Chief economist, Lawrence Yun said:
“Given the great affordability conditions, job creation and pent-up demand, home sales should be stronger...”Naturally, Mr. Yun, an economist, hasn't set foot outside his office for some time and hasn't taken into account the facts that banks aren't lending, jobs are scarce and those who do have regular jobs haven't received a raise in a while, all along dealing with higher energy and food prices.
Median price for a single-family home fell 5.4% year-over-year, to $163,200. Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, and the NAR feels this is amount is a 9-month supply. Their figures are probably not inclusive of the two to four million homes in the so-called "shadow inventory" which includes houses in foreclosure, off the market and in the hands of the banks (REO) and other distressed properties.
That, my friends, was the good news.
The report from the Philadelphia Fed was a little more alarming, where its business activity index slumped to 3.9 from 18.5 in April. Ah, yes, that recovering economy just continues to click along in places like the Northeast business section of the country.
Stocks actually lost ground for a few moments after these two sets of data reached Wall Street at 10:00 am EDT, but then the computers running the trading floor were reminded that tomorrow is stock option expiration and their human masters would be in need of more money for hookers and cocaine, so back up they went, on volume so thin Charlie Sheen was brought in to cut it.
That was, except for the darling IPO of the day, LinkedIn (LNKD), the business/social website that was priced at $45/share, but opened at $85 and traded as high as 122 before setting for the day at 94.25. That price places the company's market cap at around $10 billion, which is more than 65% of the companies listed on the S&P 500. The trading frenzy over what amounts to a web-based rolodex brought back memories of the 1999 tech bobble. Some traders actually shed tears of nostalgia.
Dow 12,605.32, +45.14 (0.36%)
NASDAQ 2,823.31, +8.31 (0.30%)
S&P 500 1,343.60, +2.92 (0.22%)
NYSE Composite 8,427.95, +20.47 (0.24%)
Advancing issues held sway over decliners, 3603-2911. On the NASDAQ, 81 new highs and 38 new lows, while the NYSE showed 179 new highs and a mere 17 new lows. Volume was slight, though the A/D line hints that there was a smattering of caution, likely concerning the forward-looking trends set by the Philly Fed and housing data, to say nothing of the impending end of QE2, which accepted 1.9 billion in outright coupon purchases today. Ted Fed has released the schedule through June 9. Some time after that, the operation is supposed to end, though few doubt that the easy money will come to a complete halt.
NASDAQ Volume 1,739,600,875
NYSE Volume 3,625,738,000
The price of oil eased, down $1.66, to $98.44 per barrel of WTI. Gold traded down $2.30, to $1494.60. Silver was off seven cents, at $34.95 per troy ounce.
With options expiring tomorrow and the Fed dealing another $5-6 billion in POMO, unless nuclear war breaks out somewhere - and even if it does - stocks should show more gains, at least in the morning.
Wednesday, May 18, 2011
Making Money at the Margins and Why the Rigged Game Doesn't Matter
OK, all you wise guys who think they know how the markets work and how to make money in them. If you've been paying attention the past few weeks and months, you may have noticed some kinds of patterns that have developed, both in individual stocks and in the general indices.
One such pattern is playing out right now, and, of course, as all things on Wall Street are now played out in factors of milliseconds, this one and its tangential cousin, is pretty obvious.
First, let's look at the overall picture and then we'll jump into the tangent by-product of what is essentially a swing trade that takes place over the span of a few weeks, but can be played by the day, hour, or, if you have ultra-fast connections, the millisecond.
It's all about movement and that herky-jerky, up-down action that's become so common over the past ten years or so. Taking a look at the movement of the Dow Jones Industrials over the past two weeks (actually, 13 trading sessions, or the month of May, to date), we find the following:
So, we see stocks go up, stocks go down, but, by the end of the day, the RANGE, from the highs to the lows, are amplified double, triple or many more times the amount of gain.
Why is this significant? Because, if you know which way the market is going, minute-to-minute, day-to-day, obviously, you can make a fortune. And you know those sharpies at Goldman Sachs, Merrill Lynch (owned by Bank of America), Morgan Stanley and JP Morgan have all been boasting some awesome profits on their trades. Most of them will go entire quarters without having more than one or two losing days.
How do they do it, and why can't you and I? Because, they pretty much are the market. Their volume of trades is probably 75% or more of the total volume trading. They can move individual stocks any way they like, whole indices if they work in collusion. Funny word, that collusion. In its barest form, it is defined as: Secret or illegal cooperation or conspiracy, esp. in order to cheat or deceive others. Oh, yeah, and it's very, very illegal.
Now, I'm not saying that these big Wall Street firms are engaging in anything illegal. After all, the government just bailed them out with billions of dollars of taxpayer dollars a few years ago and the Fed keeps shuffling them money nearly every day via their POMOs. So, why would they need to cheat?
Well, nobody has to cheat, but it sure makes the game a heck of a lot easier if you do. And, judging by what these very same firms did when they were hurling mortgage-backed securities and credit default swaps around, they've shown a propensity for, uh, cutting corners and shading the truth, all to their advantage.
By determining the direction of the market due to the size of their cumulative trades, they almost have to make money every day, every minute, every, yes, millisecond. They are the best at their craft, no doubt about that, and they can shave every last dollar off an individual investor's hide. No doubt, they are not very concerned with the success or failure of anybody but themselves and their largest clients, who are likely clued into the game and whose money they use to goose or deflate stocks and whole markets.
Face it, with four or five big firms handling most of the daily volume, does anybody else really stand a chance? And just how reliable are these stocks which are jumping around in inconceivable patterns on a fundamental basis?
It makes one question the validity and freedom of our markets, something which I've called into question many times here. To be perfectly honest, I've often considered giving up this daily blog, because, when one gets right down to the nitty-gritty details, there's no technical analysis needed, no market savvy needed. All one really has to do is go with the flow, day-by-day, every day, to make money, but that assumes you know which way the flow is going. It would be a full time job, though there's no guarantee that even the smartest, most skilled day-traders, armed with the best data and fastest computers, would come out ahead, only because the big boys on the inside would be skimming at the margins all along.
There's little doubt that the traders on the street, employed by the major firms, have a massive advantage, and it's probably much the same way in commodity markets, forex markets and any other market in which they have established a presence. While the markets may be kind to those at the top, the risk level is quite high for everyone else, and that's why I just write about it. I haven't made a single trade in almost two years, and even then I was playing very lightly.
So, what to do?
Honestly, I don't know. I've advocated silver and gold for the past few years, but we've seen recently what can happen there, especially in the case of silver, which took a 30% haircut in just about two weeks time, proving no market is safe from the ravages of the Wall Street gang.
That covers the general trend here. No about that tangential trade. Referring to the chart above again, notice today's action: an 80 point gain and a mere 128 point range. Today's trading was almost all one-way, and I'll wager that tomorrow will be more of the same, and maybe even Friday, too. Why? Take a look at the calendar. Options expiration is Friday and there's plenty of money out there looking to cash in on the upside.
For all the ups and downs over the past 13 sessions, the Dow is only down 250 points, about 2%. By Friday, there's a very good chance it will be less than that, and a whole bunch of traders will be high-fiving each other over their exploits in the options markets.
Hey, it's a lifestyle.
Dow 12,560.18, +80.60 (0.65%)
NASDAQ 2,815.00, +31.79 (1.14%)
S&P 500 1,340.68, +11.70 (0.88%)
NYSE Composite 8,407.48, +74.41 (0.89%)
Things turned dramatically today for now apparent reason. Advancers trounced decliners, 4999-1573. On the NASDAQ, a dead heat. There were an equal number of stocks making new highs and new lows, 52 of each. Over on the NYSE, new highs led new lows, 121-22. Volume was right back in the old toilet, simply because, as stated above, there aren't that many players.
NASDAQ Volume 1,893,562,500
NYSE Volume 3,871,767,500
Crude oil was up sharply, gaining $3.19, to $100.10 on reports of a drawdown in supply and raging fires in Alberta, Canada, home to major oil operations. While Canada is our largest supplier of oil (no, honey, not those nasty A-Rabs), the amount of crude affected is a small fraction of the daily import total, but that doesn't matter to the market manipulators, apparently. Anything to goose the price at the pump a little higher, they'll use it, whether it makes sense or not.
Gold managed a gain of $9.90, hitting the $1496.90 mark, while silver rocketed higher by $1.11, to $35.02. Word has been circulating that the major shorters of silver have cut back their activity to a level not seen since last fall. That should be a signal to most silver players that it's safe to wade back into the market, as the price manipulators have covered their out-of-line bets and gone to play elsewhere.
What else can one conclude from the wild swings and unusual weather but that ours is a very strange and still quite untamed world.
One such pattern is playing out right now, and, of course, as all things on Wall Street are now played out in factors of milliseconds, this one and its tangential cousin, is pretty obvious.
First, let's look at the overall picture and then we'll jump into the tangent by-product of what is essentially a swing trade that takes place over the span of a few weeks, but can be played by the day, hour, or, if you have ultra-fast connections, the millisecond.
It's all about movement and that herky-jerky, up-down action that's become so common over the past ten years or so. Taking a look at the movement of the Dow Jones Industrials over the past two weeks (actually, 13 trading sessions, or the month of May, to date), we find the following:
| DATE | GAIN/LOSS | RANGE |
| 5/2 | -3 | 174 |
| 5/3 | +0.15 | 190 |
| 5/4 | -84 | 220 |
| 5/5 | -139 | 253 |
| 5/6 | +54 | 208 |
| 5/9 | +46 | 160 |
| 5/10 | +76 | 141 |
| 5/11 | -130 | 171 |
| 5/12 | +66 | 279 |
| 5/13 | -100 | 227 |
| 5/16 | -47 | 194 |
| 5/17 | -69 | 249 |
| 5/18 | +80 | 128 |
So, we see stocks go up, stocks go down, but, by the end of the day, the RANGE, from the highs to the lows, are amplified double, triple or many more times the amount of gain.
Why is this significant? Because, if you know which way the market is going, minute-to-minute, day-to-day, obviously, you can make a fortune. And you know those sharpies at Goldman Sachs, Merrill Lynch (owned by Bank of America), Morgan Stanley and JP Morgan have all been boasting some awesome profits on their trades. Most of them will go entire quarters without having more than one or two losing days.
How do they do it, and why can't you and I? Because, they pretty much are the market. Their volume of trades is probably 75% or more of the total volume trading. They can move individual stocks any way they like, whole indices if they work in collusion. Funny word, that collusion. In its barest form, it is defined as: Secret or illegal cooperation or conspiracy, esp. in order to cheat or deceive others. Oh, yeah, and it's very, very illegal.
Now, I'm not saying that these big Wall Street firms are engaging in anything illegal. After all, the government just bailed them out with billions of dollars of taxpayer dollars a few years ago and the Fed keeps shuffling them money nearly every day via their POMOs. So, why would they need to cheat?
Well, nobody has to cheat, but it sure makes the game a heck of a lot easier if you do. And, judging by what these very same firms did when they were hurling mortgage-backed securities and credit default swaps around, they've shown a propensity for, uh, cutting corners and shading the truth, all to their advantage.
By determining the direction of the market due to the size of their cumulative trades, they almost have to make money every day, every minute, every, yes, millisecond. They are the best at their craft, no doubt about that, and they can shave every last dollar off an individual investor's hide. No doubt, they are not very concerned with the success or failure of anybody but themselves and their largest clients, who are likely clued into the game and whose money they use to goose or deflate stocks and whole markets.
Face it, with four or five big firms handling most of the daily volume, does anybody else really stand a chance? And just how reliable are these stocks which are jumping around in inconceivable patterns on a fundamental basis?
It makes one question the validity and freedom of our markets, something which I've called into question many times here. To be perfectly honest, I've often considered giving up this daily blog, because, when one gets right down to the nitty-gritty details, there's no technical analysis needed, no market savvy needed. All one really has to do is go with the flow, day-by-day, every day, to make money, but that assumes you know which way the flow is going. It would be a full time job, though there's no guarantee that even the smartest, most skilled day-traders, armed with the best data and fastest computers, would come out ahead, only because the big boys on the inside would be skimming at the margins all along.
There's little doubt that the traders on the street, employed by the major firms, have a massive advantage, and it's probably much the same way in commodity markets, forex markets and any other market in which they have established a presence. While the markets may be kind to those at the top, the risk level is quite high for everyone else, and that's why I just write about it. I haven't made a single trade in almost two years, and even then I was playing very lightly.
So, what to do?
Honestly, I don't know. I've advocated silver and gold for the past few years, but we've seen recently what can happen there, especially in the case of silver, which took a 30% haircut in just about two weeks time, proving no market is safe from the ravages of the Wall Street gang.
That covers the general trend here. No about that tangential trade. Referring to the chart above again, notice today's action: an 80 point gain and a mere 128 point range. Today's trading was almost all one-way, and I'll wager that tomorrow will be more of the same, and maybe even Friday, too. Why? Take a look at the calendar. Options expiration is Friday and there's plenty of money out there looking to cash in on the upside.
For all the ups and downs over the past 13 sessions, the Dow is only down 250 points, about 2%. By Friday, there's a very good chance it will be less than that, and a whole bunch of traders will be high-fiving each other over their exploits in the options markets.
Hey, it's a lifestyle.
Dow 12,560.18, +80.60 (0.65%)
NASDAQ 2,815.00, +31.79 (1.14%)
S&P 500 1,340.68, +11.70 (0.88%)
NYSE Composite 8,407.48, +74.41 (0.89%)
Things turned dramatically today for now apparent reason. Advancers trounced decliners, 4999-1573. On the NASDAQ, a dead heat. There were an equal number of stocks making new highs and new lows, 52 of each. Over on the NYSE, new highs led new lows, 121-22. Volume was right back in the old toilet, simply because, as stated above, there aren't that many players.
NASDAQ Volume 1,893,562,500
NYSE Volume 3,871,767,500
Crude oil was up sharply, gaining $3.19, to $100.10 on reports of a drawdown in supply and raging fires in Alberta, Canada, home to major oil operations. While Canada is our largest supplier of oil (no, honey, not those nasty A-Rabs), the amount of crude affected is a small fraction of the daily import total, but that doesn't matter to the market manipulators, apparently. Anything to goose the price at the pump a little higher, they'll use it, whether it makes sense or not.
Gold managed a gain of $9.90, hitting the $1496.90 mark, while silver rocketed higher by $1.11, to $35.02. Word has been circulating that the major shorters of silver have cut back their activity to a level not seen since last fall. That should be a signal to most silver players that it's safe to wade back into the market, as the price manipulators have covered their out-of-line bets and gone to play elsewhere.
What else can one conclude from the wild swings and unusual weather but that ours is a very strange and still quite untamed world.
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