Like overeager rookies who ignore the third base coach's stop sign and instead bowl headlong towrd home plate only to be thrown out, traders today simply looked past negative economic data and piled into stocks on the grounds that the market was oversold.
Sure, stocks have hit the skids of late, but for good reasons, like the debt contagion in Europe, the weak and stinking banking system in the US, continuing unemployment woes and the threat of a double-dip recession, but the old "oversold" mindset was front and center on this day, despite new home sales checking in for July at 298,000 units on a consensus of 310,000 and last month's figures revised lower, from 312K to 300K.
According to the logic of traders, housing doesn't really matter, and neither did that rare Northeast earthquake just after 2:00 pm, or the Richmond Fed's Factory Index, which fell from a reading of -1 in July to -10 in August.
Nope. Market's oversold, despite all recent data and expert opinion pointing at a weak second half at best and a full-blown deflationary depression at worst. Maybe somebody tipped then all off that the chairman, Ben Bernanke, will simply announce, in his Jackson Hole speech on Friday, that he will print more greenbacks if the economy continues to slide towards insolvency and desperation.
Then again, the primary players in this little financial drama are mostly momentum-chasers and day-traders, so maybe it all makes perfect sense. After all, the Wall Street of 2011 is not for investing, it is for immediate profit and self-gratification. Kum-bye-yah! It's a new age phenomenon.
While stocks were quickly eviscerating last week's losses, not all of them were going skyward, especially Bank of America, which touched down at a new 2 1/2 year low of 6.01 before mid-day. The mighty BofA is beset on all sides by questions over the veracity of its own numbers, the grinding legal costs associated with faulty mortgage dealings and a surprising shortage of capital - after being bailed out and getting preferential, secret treatment from the Fed during the financial crisis of 2008-09 - which may force the lender to sell off whatever good assets it has remaining and/or still need to make a secondary offering in the market in order to satisfy new, more stringent capital requirements a few months down the road. Bank of America (BAC) closed down 12 cents at 6.30, a new, 2 1/2-year, closing low.
Let's face it. Bank of America looks more like a shabby slumlord than a quality mortgage lender and it's only a matter of time before they go belly up or are taken over by the government and broken up in pieces to rivals like JP Morgan, Wells Fargo and Goldman Sachs.
Not that those banks are any more secure or trustworthy. In fact, Goldman Sachs (GS) has troubles of its own, despite following the market and posting a measly 0.35 gain today, closing at 106.86. The stock peaked in January at 175. Simple math says that's a nasty loss since then.
Whatever. The market is oversold, people. Buy more.
Dow 11,176.76, +322.11 (2.97%)
NASDAQ 2,446.06, +100.68 (4.29%)
S&P 500 1,162.35, +38.53 (3.43%)
NYSE Composite 7,209.59, +228.97 (3.28%)
Advancers smacked down declining issues, 5440-1239. The NASDAQ finished the day with seven (7) new highs and 146 new lows, while the NYSE posted 13 new highs and 169 new bottoms. The combined, 317-20 edge for new highs over new lows reiterates the strong sell signal the market has been blaring for three weeks. Yes, it may be oversold, but a today's gains were more the knee-jerk, dead cat bounce variety rather than a solid gain on fundamentals, which would be sustainable, should such fundamentals ever appear.
The trouble with investors and this market in particular is that nobody wants to face the undeniable fact that although most companies are lean, mean and posting solid profits, new quarter and next year's numbers will be up against some strong results, those provided by artificial stimulus and excessive monetary easing. Additionally, the bear market rally that began in March of 2009 is getting a bit long in the tooth. At 30 months, it may be time for a long term change of direction and sentiment.
Volume, on such a big run as today's, would have been much more robust if there was deep, underlying commitment by traders and investors. Maybe the traders have commitment or should be committed. Real investors are in cash, gold, silver and hard assets these days. What substitutes for a real equity market is all hype and subterfuge, devoid of substance.
NASDAQ Volume 2,129,302,500
NYSE Volume 5,913,402,500
Today was also a banner day for "gold is in a bubble, but we're running out of oil" preachers. WTI crude was up $1.02, to $85.44, and if you don't think gas has come down with the price of oil, you're right, though CBS news offered some blatant propaganda (likely prepared right from a press release by the American Petroleum Institute) as to why that is the case. It was pure bunk, delivered with the straight-faced lie that gas could drop another 40 cents by Christmas. Geez, Louise, thanks, we'll keep that in mind as we all go broke well before December.
As for gold, no "silver-slap-down" margin hikes were required (correction: the Shanghai Gold Exchange lifted gold margins for forward contracts the second time this month to 12% beginning on Friday - tip of hat to Tyler Durden at Zerohedge.com) to send the yellow stuff down $68.70, to $1829.40, after it had breached the $1900 level (hitting a peak of $1917.90) in Asian trading. Silver was also trampled by the fiat-leverage folks, losing $1.83, to $41.89. So much for the safety of hard assets, eh?
Don't be dissuaded by one-off moves prompted by the evil fornicators of the global banking cartel. Hard assets will outshine, out-gain and outperform all paper assets in the long run, and already have for the past 11 years running. Paper money, backed by nothing but ungodly, unpayable levels of indebtedness are going to die an awful death and the grim reaper is already sharpening his scythe. Either that, or all the paper money in the world buys less than it did yesterday, for eternity.
Finally, for those with a morbid fascination or those who know the meaning of the apocryphal acronym TEOTWAWKI (look it up), here's our old pal Henry Blodget expounding on why Bank of America's real capital needs may be more in the $100-200 billion range than the controlled-media's claims of $20-30 billion and Bank of America's response that he is making "exaggerated and unwarranted claims."
Tuesday, August 23, 2011
Monday, August 22, 2011
US Banking Sector Flattened as Secret Fed Loans Are Revealed
If you're fond of following foreign markets (and who isn't in today's meltdown environment?), the oddest of patterns emerged as planet Earth spun East to West.
Most Asian markets opened with gains, though ended up sporting losses by the end of their trading sessions. As the focus turned to Europe, gains were seen across the board early, though those faded late in the day, with the German DAX finishing slightly in the red.
When it was America's turn, the futures pointed to a bright open following a dismal end to the prior week and the Dow burst to an early 200-point gain. After that initial boost of enthusiasm, with the major indices hitting their highs of the day in the opening minutes, it was mostly downhill as investors sold the rally and the markets ended essentially flat for the week's opening session.
To the surprise of almost nobody, financial stocks were hard hit again, led downward by old, reliable Bank of America (BAC), which is facing a serious liquidity/solvency/honesty/continuity crisis after announcing on Friday that it intended to cut 3,500 jobs in the third quarter, with perhaps as many as 10,000 job cuts by the second quarter of 2012. Bank of America closed down 55 cents, at 6.42. The funeral dirges should begin any moment for the nation's largest bank by deposits.
While that news was certainly a disheartening blow to the non-productive paper-shufflers in the financial cesspool sector, a story that has gone largely unreported by the mainstream media was quite possibly the underlying cause for much of the weakness in the banking business.
Bloomberg reports that the Federal Reserve secretly doled out as much as $1.2 trillion to US banks, foreign banks and other financial and non-financial firms - including McDonald's and Caterpillar - from 2007 to 2010. Not of word of the story was spoken on CNBC, though the news spread rapidly through the blogosphere and the web's alternative media.
Reactions ranged from disgust to contempt, with a healthy dose of outrage from most astute followers of the Fed's financial foibles. It is unprecedented that the Fed would stoop to such lows as to attempt to conceal transactions from the prying eyes of the press and the American public, though it is hardly unexpected.
What may be worse than the contemptible actions by the Fed is the depth of the subterfuge within the halls of congress and the White House. The bulk of these secret loans were being made while the public was languishing over the absurdity of TARP and the Obama stimulus in early 2009. How many congressional members and presidents - Bush and Obama - knew of the skullduggery while it was being undertaken are questions to which the American people deserve answers, though judging by how many firms received loans over such a long period of time and with a Justice department that is loathe to issue subpoenas to anyone connected in any way with the financial services industry, the wait for such answers may be a long time in coming, if ever.
The information was obtained by Bloomberg through a Freedom of Information Act request that was continually blocked, challenged and evaded by the Fed. Now that it is out, it's evident that most of the popular media wants no part of the story, focusing instead on the fall of Tripoli and the end of the reign of Colonel Gaddafi in Lybia. The implications of tis story are breathtaking in scope and what it means for democracy and freedom, not only in America, but in the rest of the world, against an increasingly desperate global banking oligarchy.
Of course, with the media hitting the ignore button on the story and most Americans less-than-concerned with the fate of their own country, it's likely that the thievery and secrecy will continue unabated without even a hint of impropriety at the highest levels of the government.
One more story caught the attention of traders late in the day, that being reported first by Reuters with about 20 minutes remaining in the session. Apparently, Goldman Sachs CEO Lloyd Blankfein - yes, the very one who equated the business of Goldman Sach's with "doing God's work" - has hired, along with other executives at the firm, attorney Reid H. Weingarten, a partner with Steptoe & Johnson in Washington D.C. amid accusations that his firm acted fraudulently leading up to and during the 2008 financial crisis.
Goldman Sachs (GS) ended the day off 5.25 points (nearly 5%) on the day, with all of the losses occurring in the final fifteen minutes of the session.
Speculation will almost certainly run rampant with this news, but it could be yet more evidence that the global banking system has run completely afoul of the totally-corrupt political system and the long knives are about to be unsheathed. Should Blankfein and others from his firm be criminally charged, the end of fiat money could be at hand in short order with many undetected and unknowable circumstances to follow.
Corruption at the highest levels of government has been a feature in America for many years. The only remaining question is when Americans will finally have had enough of it.
Dow 10,854.65, +37.00 (0.34%)
NASDAQ 2,345.38, +3.54 (0.15%)
S&P 500 1,123.82, +0.29 (0.03%)
NYSE Composite 6,980.62, +10.52 (0.15%)
On a day in which volume was repulsively weak, declining issues led advancers, 3562-3027. New highs on the NASDAQ numbered just nine (9), with 244 stocks reaching new 52-week lows. On the NYSE, a similar story, with just 13 new highs and 247 new lows. The combined tally of 22 new highs and 491 new lows is a screaming sell signal.
NASDAQ Volume 1,983,095,500
NYSE Volume 5,436,260,000
While it was expected that oil prices would decline upon the fall of Lybia, since that nation's supply would soon go back online again, Brent crude fell, though the other oligarchy - that of the oil barons - managed to tighten its grip on the American consumer a bit, raising WTI crude futures $1.86, to $84.12 per barrel.
The largely unguided public is fighting back against the perception of fraud and debauchery and the failure of the global economy by buying precious metals with gusto. Gold set yet another record, rising $39.70 on the COMEX, to $1,891.90, though being reported at kitco.com at $1907.20. Silver gained 89 cents, to $43.32, but, as of this writing, was quoted at $43.85.
Events are moving a breakneck speed, despite Wall Street attempting to cool off prior to Fed Chairman Ben Bernanke's Jackson Hole speech on Friday. While many pundits await the all-clear signal from the chairman for another round of quantitative easing (money printing), the evidence is clear that the first two rounds - QE1 and QE2 - did more harm than good in the overall scheme of things, plus, in light of the breaking news by Bloomberg, the chairman and his cronies in the banking business and politics will do as they please, the public be damned.
This is the environment in which we must now tread. It is one of complete disregard for laws, principles of economics or even the most simple forms of common decency, honesty and principle.
Most Asian markets opened with gains, though ended up sporting losses by the end of their trading sessions. As the focus turned to Europe, gains were seen across the board early, though those faded late in the day, with the German DAX finishing slightly in the red.
When it was America's turn, the futures pointed to a bright open following a dismal end to the prior week and the Dow burst to an early 200-point gain. After that initial boost of enthusiasm, with the major indices hitting their highs of the day in the opening minutes, it was mostly downhill as investors sold the rally and the markets ended essentially flat for the week's opening session.
To the surprise of almost nobody, financial stocks were hard hit again, led downward by old, reliable Bank of America (BAC), which is facing a serious liquidity/solvency/honesty/continuity crisis after announcing on Friday that it intended to cut 3,500 jobs in the third quarter, with perhaps as many as 10,000 job cuts by the second quarter of 2012. Bank of America closed down 55 cents, at 6.42. The funeral dirges should begin any moment for the nation's largest bank by deposits.
While that news was certainly a disheartening blow to the non-productive paper-shufflers in the financial cesspool sector, a story that has gone largely unreported by the mainstream media was quite possibly the underlying cause for much of the weakness in the banking business.
Bloomberg reports that the Federal Reserve secretly doled out as much as $1.2 trillion to US banks, foreign banks and other financial and non-financial firms - including McDonald's and Caterpillar - from 2007 to 2010. Not of word of the story was spoken on CNBC, though the news spread rapidly through the blogosphere and the web's alternative media.
Reactions ranged from disgust to contempt, with a healthy dose of outrage from most astute followers of the Fed's financial foibles. It is unprecedented that the Fed would stoop to such lows as to attempt to conceal transactions from the prying eyes of the press and the American public, though it is hardly unexpected.
What may be worse than the contemptible actions by the Fed is the depth of the subterfuge within the halls of congress and the White House. The bulk of these secret loans were being made while the public was languishing over the absurdity of TARP and the Obama stimulus in early 2009. How many congressional members and presidents - Bush and Obama - knew of the skullduggery while it was being undertaken are questions to which the American people deserve answers, though judging by how many firms received loans over such a long period of time and with a Justice department that is loathe to issue subpoenas to anyone connected in any way with the financial services industry, the wait for such answers may be a long time in coming, if ever.
The information was obtained by Bloomberg through a Freedom of Information Act request that was continually blocked, challenged and evaded by the Fed. Now that it is out, it's evident that most of the popular media wants no part of the story, focusing instead on the fall of Tripoli and the end of the reign of Colonel Gaddafi in Lybia. The implications of tis story are breathtaking in scope and what it means for democracy and freedom, not only in America, but in the rest of the world, against an increasingly desperate global banking oligarchy.
Of course, with the media hitting the ignore button on the story and most Americans less-than-concerned with the fate of their own country, it's likely that the thievery and secrecy will continue unabated without even a hint of impropriety at the highest levels of the government.
One more story caught the attention of traders late in the day, that being reported first by Reuters with about 20 minutes remaining in the session. Apparently, Goldman Sachs CEO Lloyd Blankfein - yes, the very one who equated the business of Goldman Sach's with "doing God's work" - has hired, along with other executives at the firm, attorney Reid H. Weingarten, a partner with Steptoe & Johnson in Washington D.C. amid accusations that his firm acted fraudulently leading up to and during the 2008 financial crisis.
Goldman Sachs (GS) ended the day off 5.25 points (nearly 5%) on the day, with all of the losses occurring in the final fifteen minutes of the session.
Speculation will almost certainly run rampant with this news, but it could be yet more evidence that the global banking system has run completely afoul of the totally-corrupt political system and the long knives are about to be unsheathed. Should Blankfein and others from his firm be criminally charged, the end of fiat money could be at hand in short order with many undetected and unknowable circumstances to follow.
Corruption at the highest levels of government has been a feature in America for many years. The only remaining question is when Americans will finally have had enough of it.
Dow 10,854.65, +37.00 (0.34%)
NASDAQ 2,345.38, +3.54 (0.15%)
S&P 500 1,123.82, +0.29 (0.03%)
NYSE Composite 6,980.62, +10.52 (0.15%)
On a day in which volume was repulsively weak, declining issues led advancers, 3562-3027. New highs on the NASDAQ numbered just nine (9), with 244 stocks reaching new 52-week lows. On the NYSE, a similar story, with just 13 new highs and 247 new lows. The combined tally of 22 new highs and 491 new lows is a screaming sell signal.
NASDAQ Volume 1,983,095,500
NYSE Volume 5,436,260,000
While it was expected that oil prices would decline upon the fall of Lybia, since that nation's supply would soon go back online again, Brent crude fell, though the other oligarchy - that of the oil barons - managed to tighten its grip on the American consumer a bit, raising WTI crude futures $1.86, to $84.12 per barrel.
The largely unguided public is fighting back against the perception of fraud and debauchery and the failure of the global economy by buying precious metals with gusto. Gold set yet another record, rising $39.70 on the COMEX, to $1,891.90, though being reported at kitco.com at $1907.20. Silver gained 89 cents, to $43.32, but, as of this writing, was quoted at $43.85.
Events are moving a breakneck speed, despite Wall Street attempting to cool off prior to Fed Chairman Ben Bernanke's Jackson Hole speech on Friday. While many pundits await the all-clear signal from the chairman for another round of quantitative easing (money printing), the evidence is clear that the first two rounds - QE1 and QE2 - did more harm than good in the overall scheme of things, plus, in light of the breaking news by Bloomberg, the chairman and his cronies in the banking business and politics will do as they please, the public be damned.
This is the environment in which we must now tread. It is one of complete disregard for laws, principles of economics or even the most simple forms of common decency, honesty and principle.
Friday, August 19, 2011
Stocks Continue Dive with 4th Straight Week of Losses
Not much changed overnight, and that was reflected in the performance of stock prices globally. The same themes continue popping up, causing confusion and derision among investors. The shaky situation in Europe, complete with protests and riots in England and Germany, the continued weak outlook for jobs in America and growth slowing to a standstill almost worldwide has fomented a rolling, four-week-long slide that has brought many of the national and sub-national indices close to bear territory.
In fact, adding in today's losses, the NASDAQ is on the precipice of becoming more than a correction, down 531 points since its April 29 highs, has lost 18.48%, only 1.52% from becoming a technical bear market.
The other averages are not quite so close. The Dow needs to lose roughly another 450 points before its losses from recent highs reach the dreaded 20% level, though the S&P 500 is closing ground, down 17.60%. Another drop of 35 points would not only send the highly-watched index into bear territory but underneath the psychologically important 1100 level.
After Asian markets tumbled and Europe continued the assault on investments, things looked dicey for US stocks prior to the opening, with futures sporting large downsides. After an initial thrust into the abyss, however, all the major US indices rebounded to post healthy gains by mid-morning.
But they were not to last. By 11:00 am EDT, most of the gains were wiped out and by 1:00 pm, the slide lower had resumed in earnest. Stocks eventually hit their low points of the day just minutes before the closing bell, a terrifying omen for Monday's trading.
Thus, trading ended badly, with major indices slumping for their fourth consecutive week.
Dow 10,817.65, -172.93 (1.57%)
NASDAQ 2,341.84, -38.59 (1.62%)
S&P 500 1,123.53, -17.12 (1.50%)
NYSE Composite 6,970.10, -109.31 (1.54%)
Declining issues beat back advancers, 4799-1807. New highs on the NASDAQ totaled just five (5), with 316 new lows. On the NYSE, there were only seven (7) new highs, but 279 new lows, putting the combined total at 12 new highs to 595 new lows. Citing those figures, anyone who believes this correction to have bottomed needs to seek professional help, preferably from any astute market watcher.
Volume was brisk, though not quite at yesterday's levels, another signal that the losses are only gathering momentum. The likelihood of all the indices falling into bear territory by Labor Day - ten trading sessions from now - is very high, almost a certainty, unless some major economic data changes the future outlook, which has turned from scarcely positive to undeniably negative over the past four weeks.
NASDAQ Volume 2,357,600,000
NYSE Volume 6,004,142,000
A slew of forecasters have cut their outlooks for GDP, including Moody's, which cut its forecast to 2%, and JP Morgan, who sees 4th quarter GDP at 1%, down from their previous 2.5% call and 1st quarter 2012 at 0.5%, down from 1.5% in their earlier outlook.
Citigroup cut its total 2011 growth forecast to 1.6% from 1.7% and lowered its projection for next year to 2.1 percent from 2.7 percent, according to a note to clients dated yesterday.
Of course, these analysts are known to be overly and overtly optimistic, so their tea leaves and crystal balls may not be the best estimates out there. Chances of a recession are being priced into stacks at about 60%.
Amid the carnage, oil prices, which had briefly dipped below $80/barrel early in the morning, went quickly positive when US markets opened, but closed the day with a 12 cent loss, at $82.26.
Once again, the big winners were precious metals, with gold cruising to another record high, up $26.60, at $1851.50 per ounce. Overnight, the intraday high topped out at $1878.90. The best gainer of the day, and also so far this year, was silver, which saw heavy buying, up $2.16 (a move of more than 5%), to $42.80, its highest price since May 3rd, when CME was putting on a series of six margin hikes to cool the shiny metal down.
Now, with the lid off and resistance broken, silver should continue to climb forward. Some strategists see it hitting the $44-46 range before labor day, which, considering today's drive, looks very possible.
One last note before the weekend. The Got Gold Report's Gene Arensberg updates his charts and concludes that silver is "very close to a short-murdering rocket launch again."
In fact, adding in today's losses, the NASDAQ is on the precipice of becoming more than a correction, down 531 points since its April 29 highs, has lost 18.48%, only 1.52% from becoming a technical bear market.
The other averages are not quite so close. The Dow needs to lose roughly another 450 points before its losses from recent highs reach the dreaded 20% level, though the S&P 500 is closing ground, down 17.60%. Another drop of 35 points would not only send the highly-watched index into bear territory but underneath the psychologically important 1100 level.
After Asian markets tumbled and Europe continued the assault on investments, things looked dicey for US stocks prior to the opening, with futures sporting large downsides. After an initial thrust into the abyss, however, all the major US indices rebounded to post healthy gains by mid-morning.
But they were not to last. By 11:00 am EDT, most of the gains were wiped out and by 1:00 pm, the slide lower had resumed in earnest. Stocks eventually hit their low points of the day just minutes before the closing bell, a terrifying omen for Monday's trading.
Thus, trading ended badly, with major indices slumping for their fourth consecutive week.
Dow 10,817.65, -172.93 (1.57%)
NASDAQ 2,341.84, -38.59 (1.62%)
S&P 500 1,123.53, -17.12 (1.50%)
NYSE Composite 6,970.10, -109.31 (1.54%)
Declining issues beat back advancers, 4799-1807. New highs on the NASDAQ totaled just five (5), with 316 new lows. On the NYSE, there were only seven (7) new highs, but 279 new lows, putting the combined total at 12 new highs to 595 new lows. Citing those figures, anyone who believes this correction to have bottomed needs to seek professional help, preferably from any astute market watcher.
Volume was brisk, though not quite at yesterday's levels, another signal that the losses are only gathering momentum. The likelihood of all the indices falling into bear territory by Labor Day - ten trading sessions from now - is very high, almost a certainty, unless some major economic data changes the future outlook, which has turned from scarcely positive to undeniably negative over the past four weeks.
NASDAQ Volume 2,357,600,000
NYSE Volume 6,004,142,000
A slew of forecasters have cut their outlooks for GDP, including Moody's, which cut its forecast to 2%, and JP Morgan, who sees 4th quarter GDP at 1%, down from their previous 2.5% call and 1st quarter 2012 at 0.5%, down from 1.5% in their earlier outlook.
Citigroup cut its total 2011 growth forecast to 1.6% from 1.7% and lowered its projection for next year to 2.1 percent from 2.7 percent, according to a note to clients dated yesterday.
Of course, these analysts are known to be overly and overtly optimistic, so their tea leaves and crystal balls may not be the best estimates out there. Chances of a recession are being priced into stacks at about 60%.
Amid the carnage, oil prices, which had briefly dipped below $80/barrel early in the morning, went quickly positive when US markets opened, but closed the day with a 12 cent loss, at $82.26.
Once again, the big winners were precious metals, with gold cruising to another record high, up $26.60, at $1851.50 per ounce. Overnight, the intraday high topped out at $1878.90. The best gainer of the day, and also so far this year, was silver, which saw heavy buying, up $2.16 (a move of more than 5%), to $42.80, its highest price since May 3rd, when CME was putting on a series of six margin hikes to cool the shiny metal down.
Now, with the lid off and resistance broken, silver should continue to climb forward. Some strategists see it hitting the $44-46 range before labor day, which, considering today's drive, looks very possible.
One last note before the weekend. The Got Gold Report's Gene Arensberg updates his charts and concludes that silver is "very close to a short-murdering rocket launch again."
Thursday, August 18, 2011
Here We Go Again: Europe, US Equity Markets Smashed
Like a pop band performing an encore number, the wild, swing days of last week are here with us again, doing a sophisticated limbo beneath the various 200-day moving averages. The continent formerly known as Europe slowly is sinking into a combination of economic atrophy and social anarchy while the country previously preferred to as the greatest democracy ever invented, the USA, shifts and contorts like a belly dancer with stomach cramps and gas.
One could take their pick today from a generous selection of tawdry economic news and data, beginning with the story reported by Zero Hedge that an unnamed European bank (speculation is that its either Societe General or an Italian or Austrian bank) borrowed $500 million from the ECB's emergency lending window at a 1.1% rate.
That got the entertainment kicked off in Europe with a notable bang, as the major bourses in the land of socialism held blood-letting sessions with the national indices down between 4 and 6%, Germany's DAX leading the way lower with a 5.82% decline.
By the time markets opened in New York, futures were careening headlong into the abyss after initial unemployment claims were reported at 408,000 in the most recent reporting period and July CPI came in with a whopping 0.5% rise - a 6% annualized inflation rate - which took almost everybody - except possibly President Obama, who was preparing for a two-week stay at Martha's Vineyard - by surprise, especially after Fed Chairman Ben Bernanke told us all that inflationary pressures were "transitory" (he also confided to Representative and presidential candidate Ron Paul that gold was not money... such a witty fellow).
Were that not enough for the market to digest, a couple more tasty morsels were delivered just a half hour into the trading session. Existing home sales for July were reported at an annualized rate of 4.67 million, after a 4.84 million read last month, but the real hot pepper came from the Philadelphia Fed's Manufacturing Index, which, after posting a tepid 3.2 reading in July, came in - on expectations of a 1.0 reading - at... wait for it... minus 30.7 (yes, -30.7), the lowest number in 2 1/2 years and now on scale with New York's Empire Index which last week posted an equally disturbing negative read of -7.7 on Monday.
Naturally, nobody gave a whit about the New York number, but the Philly fiasco was just too magnificent to ignore. Stocks, already down significantly, swiftly dove further, with the Dow Jones Industrials losing 170 points in the ten minutes following the double dose of decrepitude.
The sudden collapse of index prices was stunning to view, though the gaping maws of CNBC's on-air personalities provided dark comic relief. Stocks drifted for the rest of the day, but managed to stage a last-ditch rally with just ten minutes left in the session, boosting the Dow about 100 points into the close, just in time for options expiry on Friday.
Dow 10,990.58, -419.63 (3.68%)
NASDAQ 2,380.43, -131.05 (5.22%)
S&P 500 1,140.65, -53.24 (4.46%)
NYSE Composite 7,079.41, -339.53 (4.58%)
Declining issues decimated advancers, 6094-634, a nearly 10:1 ratio. New lows overpowered new highs on the NASDAQ, 253-2 (yes, two, as in 2 new 52-week highs), while on the NYSE there were also just two (2) new highs, against 208 new lows. The combined figure of 4 new highs and 461 new lows verifies our repeated suggestion that the highs-lows indicator is as reliable a simple instrument as is available and is currently suggesting that the now-confirmed market correction will shortly morph into a a full blown bear market as Europe and the United State plunge into the fearsome double-dip recession, if not already there.
Volume, despite the ridiculous assumptions made throughout the day by CNBC's dapper Bob Pisani (I really do watch too much TV) that today's volume was not significant, was, in fact, quite strong, and with good reason, as banks in Europe and the US took the brunt of the selloff. European banks were hardest hit, with losses between 6 and 11% on the day.
NASDAQ Volume 2,785,477,500
NYSE Volume 7,141,215,000
Meanwhile, the oil crazies were unloading their gooey stuff as quickly as possible, sending WTI futures down nearly six percent, dropping $5.20, to $82.38.
There were bright spots, and those were in precious metals. Gold rocketed $28.20 to another record price of $1,822.00, while silver tried desperately to keep pace, gaining 38 cents, to $40.69.
As for Friday, one should expect a little more of the same, though it is worth noting that these wickedly manipulated markets have a penchant for turning on a dime, as they did last week. Eventually, however, this all ends in tears, as the Euro will be soon dispatched to currency hell, where it belongs, taking the world economy into a place nobody wants to be.
Smoke 'em if you got 'em and live it up while you can. By Christmas, this could be really, really, really, really, really, and I do mean really, ugly.
One could take their pick today from a generous selection of tawdry economic news and data, beginning with the story reported by Zero Hedge that an unnamed European bank (speculation is that its either Societe General or an Italian or Austrian bank) borrowed $500 million from the ECB's emergency lending window at a 1.1% rate.
That got the entertainment kicked off in Europe with a notable bang, as the major bourses in the land of socialism held blood-letting sessions with the national indices down between 4 and 6%, Germany's DAX leading the way lower with a 5.82% decline.
By the time markets opened in New York, futures were careening headlong into the abyss after initial unemployment claims were reported at 408,000 in the most recent reporting period and July CPI came in with a whopping 0.5% rise - a 6% annualized inflation rate - which took almost everybody - except possibly President Obama, who was preparing for a two-week stay at Martha's Vineyard - by surprise, especially after Fed Chairman Ben Bernanke told us all that inflationary pressures were "transitory" (he also confided to Representative and presidential candidate Ron Paul that gold was not money... such a witty fellow).
Were that not enough for the market to digest, a couple more tasty morsels were delivered just a half hour into the trading session. Existing home sales for July were reported at an annualized rate of 4.67 million, after a 4.84 million read last month, but the real hot pepper came from the Philadelphia Fed's Manufacturing Index, which, after posting a tepid 3.2 reading in July, came in - on expectations of a 1.0 reading - at... wait for it... minus 30.7 (yes, -30.7), the lowest number in 2 1/2 years and now on scale with New York's Empire Index which last week posted an equally disturbing negative read of -7.7 on Monday.
Naturally, nobody gave a whit about the New York number, but the Philly fiasco was just too magnificent to ignore. Stocks, already down significantly, swiftly dove further, with the Dow Jones Industrials losing 170 points in the ten minutes following the double dose of decrepitude.
The sudden collapse of index prices was stunning to view, though the gaping maws of CNBC's on-air personalities provided dark comic relief. Stocks drifted for the rest of the day, but managed to stage a last-ditch rally with just ten minutes left in the session, boosting the Dow about 100 points into the close, just in time for options expiry on Friday.
Dow 10,990.58, -419.63 (3.68%)
NASDAQ 2,380.43, -131.05 (5.22%)
S&P 500 1,140.65, -53.24 (4.46%)
NYSE Composite 7,079.41, -339.53 (4.58%)
Declining issues decimated advancers, 6094-634, a nearly 10:1 ratio. New lows overpowered new highs on the NASDAQ, 253-2 (yes, two, as in 2 new 52-week highs), while on the NYSE there were also just two (2) new highs, against 208 new lows. The combined figure of 4 new highs and 461 new lows verifies our repeated suggestion that the highs-lows indicator is as reliable a simple instrument as is available and is currently suggesting that the now-confirmed market correction will shortly morph into a a full blown bear market as Europe and the United State plunge into the fearsome double-dip recession, if not already there.
Volume, despite the ridiculous assumptions made throughout the day by CNBC's dapper Bob Pisani (I really do watch too much TV) that today's volume was not significant, was, in fact, quite strong, and with good reason, as banks in Europe and the US took the brunt of the selloff. European banks were hardest hit, with losses between 6 and 11% on the day.
NASDAQ Volume 2,785,477,500
NYSE Volume 7,141,215,000
Meanwhile, the oil crazies were unloading their gooey stuff as quickly as possible, sending WTI futures down nearly six percent, dropping $5.20, to $82.38.
There were bright spots, and those were in precious metals. Gold rocketed $28.20 to another record price of $1,822.00, while silver tried desperately to keep pace, gaining 38 cents, to $40.69.
As for Friday, one should expect a little more of the same, though it is worth noting that these wickedly manipulated markets have a penchant for turning on a dime, as they did last week. Eventually, however, this all ends in tears, as the Euro will be soon dispatched to currency hell, where it belongs, taking the world economy into a place nobody wants to be.
Smoke 'em if you got 'em and live it up while you can. By Christmas, this could be really, really, really, really, really, and I do mean really, ugly.
Wednesday, August 17, 2011
Market is Sick, Worn-out and Overvalued
One look at the general direction of trading today gives the impression that this is a market running completely on fumes, exhausted from last week's frenzied action and unsure about the immediate future.
Despite three of the four major averages finishing in the green, today's high open and low close are classic technical signals of a market in despair. The volume has subsided, but the VIX is still very high, over 30, and the complacency of trading today was something of a surprise, considering the still-shaky economic conditions in both the US and Europe, though it does seem that outside of the usual gang of day-traders and algo followers most of the retail investors have taken a wait-and-see attitude.
To that point, it was reported today by the ICI (Investment Company Institute) that mutual fund outflows totaled $40 billion in the past week. From the report, "Investors pulled a net $40.3 billion out of those funds in the week ended Aug. 10, the largest weekly withdrawal since early October 2008, soon after the collapse of Lehman Brothers."
Equity funds were the biggest losers, as investors shed $30 billion worth of exposure to common stocks.
Adding to the negatives was the July PPI number, at a modest 0.2% increase, though core PPI, which excludes energy and food, was up 0.4%, for an annual run rate of nearly 5 percent on a wholesale level. While oil and gas prices haven't exactly come down to reasonable levels, food prices have stabilized, though the core reading shows inflation showing up in other areas.
Bonds edged higher, with the 10-year dropping six basis points to a yield of 2.16% and the 30-year shedding 9 bips, to yield 3.56%. Investors are still looking to safety over risk, and that was evident today in Treasuries and precious metals.
This little pause in the action will last until the next crisis scenario erupts - about a week or two, maybe - and then equity markets will retest the lows set in place last week. From a technical standpoint, a retest of recent lows is almost always warranted before a move higher, so, down we must go in short order.
Dow 11,410.21, +4.28 (0.04%)
NASDAQ 2,511.48, -11.97 (0.47%)
S&P 500 1,193.88, +1.12 (0.09%)
NYSE Composite 7,418.94, +24.45 (0.33%)
Advancers led decliners on the day, though the NASDAQ saw more losers than winners. Overall, the gainers were 3624, to 2909 on the downside. New highs numbered only eight (8), with 58 new lows. The NYSE was nearly evenly split, with 13 new highs and 14 new lows. The combined total of 21 new highs and 72 new lows reinforces the indication for stocks to eventually recede.
Volume was back to moribund levels, as investors have headed for the hills.
NASDAQ Volume 1,919,593,000
NYSE Volume 4,351,417,000
WTI crude oil priced 93 cents higher, at $87.58, despite a government report that showed a significant surplus of the slimy stuff in the most recent week. Gold stopped at another new record of $1,793.80 per ounce, up $8.80 on the day and silver went happily along, picking up 53 cents, to $40.35 the ounce.
Despite three of the four major averages finishing in the green, today's high open and low close are classic technical signals of a market in despair. The volume has subsided, but the VIX is still very high, over 30, and the complacency of trading today was something of a surprise, considering the still-shaky economic conditions in both the US and Europe, though it does seem that outside of the usual gang of day-traders and algo followers most of the retail investors have taken a wait-and-see attitude.
To that point, it was reported today by the ICI (Investment Company Institute) that mutual fund outflows totaled $40 billion in the past week. From the report, "Investors pulled a net $40.3 billion out of those funds in the week ended Aug. 10, the largest weekly withdrawal since early October 2008, soon after the collapse of Lehman Brothers."
Equity funds were the biggest losers, as investors shed $30 billion worth of exposure to common stocks.
Adding to the negatives was the July PPI number, at a modest 0.2% increase, though core PPI, which excludes energy and food, was up 0.4%, for an annual run rate of nearly 5 percent on a wholesale level. While oil and gas prices haven't exactly come down to reasonable levels, food prices have stabilized, though the core reading shows inflation showing up in other areas.
Bonds edged higher, with the 10-year dropping six basis points to a yield of 2.16% and the 30-year shedding 9 bips, to yield 3.56%. Investors are still looking to safety over risk, and that was evident today in Treasuries and precious metals.
This little pause in the action will last until the next crisis scenario erupts - about a week or two, maybe - and then equity markets will retest the lows set in place last week. From a technical standpoint, a retest of recent lows is almost always warranted before a move higher, so, down we must go in short order.
Dow 11,410.21, +4.28 (0.04%)
NASDAQ 2,511.48, -11.97 (0.47%)
S&P 500 1,193.88, +1.12 (0.09%)
NYSE Composite 7,418.94, +24.45 (0.33%)
Advancers led decliners on the day, though the NASDAQ saw more losers than winners. Overall, the gainers were 3624, to 2909 on the downside. New highs numbered only eight (8), with 58 new lows. The NYSE was nearly evenly split, with 13 new highs and 14 new lows. The combined total of 21 new highs and 72 new lows reinforces the indication for stocks to eventually recede.
Volume was back to moribund levels, as investors have headed for the hills.
NASDAQ Volume 1,919,593,000
NYSE Volume 4,351,417,000
WTI crude oil priced 93 cents higher, at $87.58, despite a government report that showed a significant surplus of the slimy stuff in the most recent week. Gold stopped at another new record of $1,793.80 per ounce, up $8.80 on the day and silver went happily along, picking up 53 cents, to $40.35 the ounce.
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