Spain today, tomorrow jobs, next day China. Wholesale inventories are growing.
That's how the markets seem to be lurching from one crisis to the next, though overall performance in equity markets has - until the past five days - been outstanding.
Today's deep declines in Europe and the US notwithstanding, global economies have withstood more than three years of relentless pressure and are still standing.
This kind of vacillation leaves most analysts red-eyed and weary at the ends of most weeks and casual market observers in a state of dumbfounded blurriness.
Recapping the losses in US equity markets today need not lead one to conclude that the economy is falling over a cliff; indeed, stocks have been on a 30% tear since October, and the recent five-day decline has only clipped off a small percentage. And, it's just the start of earnings season for the first quarter, one which is predicted to be less-than-outstanding, withe the estimate for earnings growth to be less than one percent.
The Dow is on its worst five-day losing streak since August of 2011; meanwhile the S&P and NASDAQ have suffered their biggest drops since late November. The S&P broke through support at 1370 and continued down from there, slicing through its 50-day moving average, while the NASDAQ busted below 3000, a beachhead just recently breached.
Fear? Greed? Take your pick. Stocks finished close to their lows of the day, setting up just about anything for Wednesday, though the overhand from Spain's 10-year bond hovering around 6% is troubling to all.
On the bright side, Alcoa (AA) opened earnings season with a surprise, posting a nine-cent per share first quarter profit on expectations of a four-cent loss. On the other hand, last year's first quarter profit was 27 cents per share.
The 10-year US treasury closed below 2% (1.98%) for the first time in a month and WTI crude oil ended the day at roughly the same level it was at on December 30 of last year.
Most corporate economists are calling for 2-3% growth for 2012, though their track record is of misses so wide that one would be a fool to invite them onto the bar darts team.
A couple of clues to keep on the radar over the next few days, because they will be telling: the advance-decline line has been anemic for the past two weeks and the past two days have been decidedly bearish; the VIX has spiked 30% in the past eight sessions; Dow transports never confirmed the recent rally and have been taking a beating recently; new highs - new lows has rolled over in three of the past four sessions; and, crude oil has tanked.
All of these indicators are important, but it's still too early to call a trend, especially as we head into the heart of earnings season over the next two weeks. It will pay to keep a very close eye on developments. The recent downturn could easily be nothing more than profit-taking or the forerunner of a severe downturn.
So, take your pick. Up, down, left, right, forward, backwards. If you have a job, keep it. If you have some money, save it. If you need to eat, buy some food (it's still relatively cheap), if you don't have to drive, don't, and, if you think life is still pretty good, enjoy it, because, in this environment, one never knows how long the good times will last.
Keep an eye on sunrise and sunset times and any variance from published expectations.
Dow 12,715.93, -213.66 (1.65%)
NASDAQ 2,991.22, -55.86 (1.83%)
S&P 500 1,358.59, -23.61 (1.71%)
NYSE Composite 7,842.00, -150.32 (1.88%)
NASDAQ Volume 1,916,928,125
NYSE Volume 4,651,426,500
Combined NYSE & NASDAQ Advance - Decline: 924-4713
Combined NYSE & NASDAQ New highs - New lows: 45-157
WTI crude oil: 101.02, -1.44
Gold: 1,660.70, +16.80
Silver: 31.68, +0.16
Tuesday, April 10, 2012
Monday, April 9, 2012
Economic Dark Clouds Forming in Aftermath of Non-Farm Payroll Miss
Even though US markets were closed on Friday, the BLS did release the monthly non-farm payroll data for March at its regularly-scheduled time, and the results were not pleasant to those of the bullish, "recovery" persuasion.
Non-farm payrolls for March showed an increase of 120,000 net new jobs on expectations of 205,000, a horrific miss that sent shock waves around the globe.
Far eastern markets were the first to react on Monday morning, with the majority sporting hefty losses. European markets were closed for Easter Monday, so their reaction will be registered on the morrow.
US market participants waited patiently until Monday morning to move on the news, though market futures provided a clear guide even as early as Friday morning, when Dow futures were down 120 points, almost exactly where the market eventually opened following the weekend.
As anticipated, the move downward was swift, right at the open, and markets drifted along the lower range until midday, when a hint of a rally materialized, though it was not materially significant and faded badly into the close.
Technical damage was evident. The advance decline ratio was substantially impaired, with decliners outpacing advancers by a 4:1 ratio and the new highs to new lows measure completely flipped over, marking the lowest number of new highs and the highest number of new lows in at least six months.
Those technical indicators should not be dismissed out of hand, as they could be presaging a violent reversal from the immediate highs of just a week ago. Entering an earnings season which is widely considered to come in weaker than those of the recent past, the stage is set for a serious short-term market correction at exactly the wrong time, as traditionalists and day-traders alike will be taking caution and pulling profits off the table at the earliest opportunity.
Late Spring and Summer have established historical precedents which indicate a long, slow slog approaching the fall and the boorish election season.
The rhetoric out of Washington and the bullying bullishness from Wall Street will only resound louder as earnings are released through the month of April and into early May. While pundits and perma-bulls are already calling this a temporary bounce, those same voices are calling for another round of QE from the magnanimous Federal Reserve. With a FOMC meeting just two weeks hence, rumors will be circulated on both sides of that argument, though the bulls will be caught in an untenable position, because, if the economy is actually doing well, then no further easing is necessary.
The cards are on the table and the Fed, it appears, has drawn a dead hand, as has the general economy and the Wall Street crowd. The result may well be an empty pot with nobody willing to make an opening bid.
Interestingly, about the only instrument that rose on the day was gold. Equity market volume was at levels heretofore unseen, even in this era of non-participation.
Dow 12,929.59, -130.55 (1.00%)
NASDAQ 3,047.08, -33.42 (1.08%)
S&P 500 1,382.20, -15.88 (1.14%)
NYSE Composite 7,992.32, -89.03 (1.10%)
NASDAQ Volume 1,369,666,125
NYSE Volume 3,142,976,500
Combined NYSE & NASDAQ Advance - Decline: 1110-4539
Combined NYSE & NASDAQ New highs - New lows: 46-125
WTI crude oil: 102.46, -0.85
Gold: 1,643.90, +13.80
Silver: 31.52, -0.21
Non-farm payrolls for March showed an increase of 120,000 net new jobs on expectations of 205,000, a horrific miss that sent shock waves around the globe.
Far eastern markets were the first to react on Monday morning, with the majority sporting hefty losses. European markets were closed for Easter Monday, so their reaction will be registered on the morrow.
US market participants waited patiently until Monday morning to move on the news, though market futures provided a clear guide even as early as Friday morning, when Dow futures were down 120 points, almost exactly where the market eventually opened following the weekend.
As anticipated, the move downward was swift, right at the open, and markets drifted along the lower range until midday, when a hint of a rally materialized, though it was not materially significant and faded badly into the close.
Technical damage was evident. The advance decline ratio was substantially impaired, with decliners outpacing advancers by a 4:1 ratio and the new highs to new lows measure completely flipped over, marking the lowest number of new highs and the highest number of new lows in at least six months.
Those technical indicators should not be dismissed out of hand, as they could be presaging a violent reversal from the immediate highs of just a week ago. Entering an earnings season which is widely considered to come in weaker than those of the recent past, the stage is set for a serious short-term market correction at exactly the wrong time, as traditionalists and day-traders alike will be taking caution and pulling profits off the table at the earliest opportunity.
Late Spring and Summer have established historical precedents which indicate a long, slow slog approaching the fall and the boorish election season.
The rhetoric out of Washington and the bullying bullishness from Wall Street will only resound louder as earnings are released through the month of April and into early May. While pundits and perma-bulls are already calling this a temporary bounce, those same voices are calling for another round of QE from the magnanimous Federal Reserve. With a FOMC meeting just two weeks hence, rumors will be circulated on both sides of that argument, though the bulls will be caught in an untenable position, because, if the economy is actually doing well, then no further easing is necessary.
The cards are on the table and the Fed, it appears, has drawn a dead hand, as has the general economy and the Wall Street crowd. The result may well be an empty pot with nobody willing to make an opening bid.
Interestingly, about the only instrument that rose on the day was gold. Equity market volume was at levels heretofore unseen, even in this era of non-participation.
Dow 12,929.59, -130.55 (1.00%)
NASDAQ 3,047.08, -33.42 (1.08%)
S&P 500 1,382.20, -15.88 (1.14%)
NYSE Composite 7,992.32, -89.03 (1.10%)
NASDAQ Volume 1,369,666,125
NYSE Volume 3,142,976,500
Combined NYSE & NASDAQ Advance - Decline: 1110-4539
Combined NYSE & NASDAQ New highs - New lows: 46-125
WTI crude oil: 102.46, -0.85
Gold: 1,643.90, +13.80
Silver: 31.52, -0.21
Friday, April 6, 2012
Holding Hard Assets a Growing Trend
With the economy still in crisis mode and the future value of the US dollar (and other fiat currencies) very much in doubt, more and more people have pulled money out of stocks and mutual funds and into hard assets, such as vintage automobiles, fine art, collectibles, and, of course, precious metals, such as silver, gold and platinum.
While most of these assets aren't easily traded for quick money, the current perception is that they'll appreciate faster than inflation and aren't subject to the wild swings and other vagueries of the equity and bond markets.
Hard assets are more of a safe investment and a store of value and are especially coveted by people who have already amassed a comfortable level of wealth and wish to keep what they have.
Even if one is not in perfect financial condition, certain hard assets can help one sleep better at night, safe in the knowledge that their assets are in their own possession and not held in some virtual online account which may or may not be secure from hackers, margin calls and market miscues.
What everyone holding hard assets needs more than ever these days is security. That's why gun sales have never been better and safe manufacturers have put on extra shifts in order to meet the overwhelming demand, but nothing beats a solid Home Security system for peace of mind, whether you're at home or away.
While a gun may be the ultimate defense, against intruders and safes are perfect for keeping prying eyes (and hands) away from your precious assets, there isn't a thief alive who will dare break into a home that has a good security system in place, usually with a sign that says the house is well-monitored.
Good systems come in all price ranges, from simple DIY installation of motion detectors with lights and sirens to advanced wired or wireless security apparatus that can signal a local or national security center or even the police when tripped.
Holding hard assets will likely continue to be a favored investment for all classes of people, and the companies who make things that keep them secure are almost certain to profit handsomely.
While most of these assets aren't easily traded for quick money, the current perception is that they'll appreciate faster than inflation and aren't subject to the wild swings and other vagueries of the equity and bond markets.
Hard assets are more of a safe investment and a store of value and are especially coveted by people who have already amassed a comfortable level of wealth and wish to keep what they have.
Even if one is not in perfect financial condition, certain hard assets can help one sleep better at night, safe in the knowledge that their assets are in their own possession and not held in some virtual online account which may or may not be secure from hackers, margin calls and market miscues.
What everyone holding hard assets needs more than ever these days is security. That's why gun sales have never been better and safe manufacturers have put on extra shifts in order to meet the overwhelming demand, but nothing beats a solid Home Security system for peace of mind, whether you're at home or away.
While a gun may be the ultimate defense, against intruders and safes are perfect for keeping prying eyes (and hands) away from your precious assets, there isn't a thief alive who will dare break into a home that has a good security system in place, usually with a sign that says the house is well-monitored.
Good systems come in all price ranges, from simple DIY installation of motion detectors with lights and sirens to advanced wired or wireless security apparatus that can signal a local or national security center or even the police when tripped.
Holding hard assets will likely continue to be a favored investment for all classes of people, and the companies who make things that keep them secure are almost certain to profit handsomely.
Thursday, April 5, 2012
Stocks End Shortened Week with Lackluster Session
Markets will be closed on Friday in observance of Good Friday, but some traders apparently left the floor early as trading on the major exchanges was sloppy and limited.
There was only one bit of data that may have contributed to the the overall lack of enthusiasm: initial unemployment claims came in 2,000 above of expectations, at 357K, a number that many believe to be a sign of strength in the economy, though an equal number likely believe it to be still too high to demonstrate any lasting recovery.
The sad truth about unemployment figures - as dodgy as they are - is that they're nowhere near levels indicative of full employment, which would be somewhere in the 280-315,000 range, and probably won't be for the foreseeable future because America is creating jobs, albeit of a lower-paying variety and not in any perceptible hurry.
While America slogs along, now 3 1/2 years since the financial crisis, Europe seems to be careening headlong into a protracted recession, with the southernmost countries bordering on depression (count Greece as already in depression). The more bad news that comes from the continent, the harder it will be for the US to retain any semblance of prosperity, notably a word that hasn't been used much since late 2007, though it occasionally pops up in political speeches full of promises that will never be kept.
Activity today on the markets was so sadly disjointed that the NASDAQ managed to be the only index posting a positive return, primarily due to the presence of Apple (AAPL) and other momentum stocks which routinely get an algo boost while the Dow Industrials flounder.
Traders were also likely to be anxious over Friday's non-farm payroll data, which, despite the markets being closed for trading, will still be released at the normal time of 8:30 am EDT. Estimates abound, but most are focused in an area from 150,000 to 200,000, the latter being upped by Goldman Sachs from a previous 175,000 guess.
That perhaps explains why there was so little interest in staking out or adding to positions on the day. Trading resumes Monday and will be highly correlated to the March jobs data.
Monday also marks the beginning of first quarter earnings season, though traditional first up Alcoa (AA) will report on Tuesday, after the close of trading.
Commodities rebounded slightly from the recent drubbing they've taken, but even with today's gains remain well below levels reached earlier in the year.
New highs outpaced new lows, though not decisively, a notable change from the domination of new highs seen over the past six months and a metric to keep an eye on in upcoming days and weeks.
Dow 13,060.14 14.61 (0.11%)
NASDAQ 3,080.50 12.41 (0.40%)
S&P 500 1,398.08 0.88 (0.06%)
NYSE Compos... 8,081.37 25.42 (0.31%)
NASDAQ Volume... 1,525,375,250.00
NYSE Volume 3,277,506,250
Combined NYSE & NASDAQ Advance - Decline: 2478-3073
Combined NYSE & NASDAQ New highs - New lows: 115-91
WTI crude oil: 103.31, +1.84
Gold: 1,630.10, +16.00
Silver: 31.73, +0.68
There was only one bit of data that may have contributed to the the overall lack of enthusiasm: initial unemployment claims came in 2,000 above of expectations, at 357K, a number that many believe to be a sign of strength in the economy, though an equal number likely believe it to be still too high to demonstrate any lasting recovery.
The sad truth about unemployment figures - as dodgy as they are - is that they're nowhere near levels indicative of full employment, which would be somewhere in the 280-315,000 range, and probably won't be for the foreseeable future because America is creating jobs, albeit of a lower-paying variety and not in any perceptible hurry.
While America slogs along, now 3 1/2 years since the financial crisis, Europe seems to be careening headlong into a protracted recession, with the southernmost countries bordering on depression (count Greece as already in depression). The more bad news that comes from the continent, the harder it will be for the US to retain any semblance of prosperity, notably a word that hasn't been used much since late 2007, though it occasionally pops up in political speeches full of promises that will never be kept.
Activity today on the markets was so sadly disjointed that the NASDAQ managed to be the only index posting a positive return, primarily due to the presence of Apple (AAPL) and other momentum stocks which routinely get an algo boost while the Dow Industrials flounder.
Traders were also likely to be anxious over Friday's non-farm payroll data, which, despite the markets being closed for trading, will still be released at the normal time of 8:30 am EDT. Estimates abound, but most are focused in an area from 150,000 to 200,000, the latter being upped by Goldman Sachs from a previous 175,000 guess.
That perhaps explains why there was so little interest in staking out or adding to positions on the day. Trading resumes Monday and will be highly correlated to the March jobs data.
Monday also marks the beginning of first quarter earnings season, though traditional first up Alcoa (AA) will report on Tuesday, after the close of trading.
Commodities rebounded slightly from the recent drubbing they've taken, but even with today's gains remain well below levels reached earlier in the year.
New highs outpaced new lows, though not decisively, a notable change from the domination of new highs seen over the past six months and a metric to keep an eye on in upcoming days and weeks.
Dow 13,060.14 14.61 (0.11%)
NASDAQ 3,080.50 12.41 (0.40%)
S&P 500 1,398.08 0.88 (0.06%)
NYSE Compos... 8,081.37 25.42 (0.31%)
NASDAQ Volume... 1,525,375,250.00
NYSE Volume 3,277,506,250
Combined NYSE & NASDAQ Advance - Decline: 2478-3073
Combined NYSE & NASDAQ New highs - New lows: 115-91
WTI crude oil: 103.31, +1.84
Gold: 1,630.10, +16.00
Silver: 31.73, +0.68
Wednesday, April 4, 2012
S&P Closes Under 1400; Precious Metals Whacked
The follow-on from yesterday's FOMC minutes release, combined with scary data from Australia and China (slowing economies) sent markets tumbling globally.
Asia and Europe each saw aggressive selling, and by the time US markets opened - despite ADP March employment data posting a modest beat of 209,000 jobs - the Dow was set up for a 100-point loss at the open.
The opening move was swiftly lower, taking the other major indices along for the ride. Dow Industrials remained below 13,100 all day, with the S&P 500 - despite a late day rally - eventually closing below 1400 for the first time in eight sessions.
To say that the markets have topped out temporarily would be putting it lightly; rather, stocks seem to be in a steady drift lower, as Winter turns to Spring and investors seek to lock in profits from one of the most rambunctious first quarters in stock market history.
Conditions in Europe once again made noise in the states, as a poor showing for a Spanish bond offering and rumors of another bailout for Portugal fanned the flames of global recession.
While some commentators continue to spout nonsense that the US is "decoupling" from Europe and the rest of the world's economies, such talk is nothing but hot air, mostly from the same people who rightly contended during the struggles in the US that a large portion of US earnings are derived from abroad.
One simply cannot have it both ways. We are either a part of the global economy or we are not and the facts are strongly in favor of the "globalized" economy model.
What concerns investors most during this transitional period are fears of a prolonged slump in Europe which would exacerbate tepid conditions in the US. Economic data has been fragile of late, but hope for a renewal to the rally on first quarter earnings data from US companies is keeping the markets somewhat range-bound and in a position of relative strength, though the thought of the Fed cutting off the easy money with the end of "operation twist" in June are tempering the bullish sentiments.
While stocks were damaged on the day, gold and silver were even harder hit, which makes little sense from an historical perspective. In times of economic distress, the precious metals usually hold up better, but, since they have been turned into trading vehicles by the Wall Street madmen, such assumptions may not hold up this time around. The mood is eerily similar to that of September 2008, when a fragile economy was overturned by a number of random events. The situation is vastly different today, however, but a major crisis anywhere in the world could rapidly spread.
In the face of some chaos, the strengthening dollar is at least bringing down oil prices, which should eventually lower the price of gas in the US. The high price of fuel is in itself a condition which could severely slow the already turbid US economy, though the good news for drivers may not be welcomed by equity investors.
The new high - new low indicator flipped to the negative today for the first time in a long while. Any continuation of that trend indicator could signal a prolonged correction, something the three-year-old bull market has not experienced since the flagging days of last summer.
Dow 13,074.75, -124.80 (0.95%)
NASDAQ 3,068.09, -45.48 (1.46%)
S&P 500 1,398.96, -14.42 (1.02%)
NYSE Composite 8,111.48, -105.06 (1.28%)
NASDAQ Volume 1,779,653,500
NYSE Volume 3,810,047,500
Combined NYSE & NASDAQ Advance - Decline: 1079-4563
Combined NYSE & NASDAQ New highs - New lows: 65-109
WTI crude oil: 101.47, -2.54
Gold: 1,614.10, -57.90
Silver: 31.04, -2.22
Asia and Europe each saw aggressive selling, and by the time US markets opened - despite ADP March employment data posting a modest beat of 209,000 jobs - the Dow was set up for a 100-point loss at the open.
The opening move was swiftly lower, taking the other major indices along for the ride. Dow Industrials remained below 13,100 all day, with the S&P 500 - despite a late day rally - eventually closing below 1400 for the first time in eight sessions.
To say that the markets have topped out temporarily would be putting it lightly; rather, stocks seem to be in a steady drift lower, as Winter turns to Spring and investors seek to lock in profits from one of the most rambunctious first quarters in stock market history.
Conditions in Europe once again made noise in the states, as a poor showing for a Spanish bond offering and rumors of another bailout for Portugal fanned the flames of global recession.
While some commentators continue to spout nonsense that the US is "decoupling" from Europe and the rest of the world's economies, such talk is nothing but hot air, mostly from the same people who rightly contended during the struggles in the US that a large portion of US earnings are derived from abroad.
One simply cannot have it both ways. We are either a part of the global economy or we are not and the facts are strongly in favor of the "globalized" economy model.
What concerns investors most during this transitional period are fears of a prolonged slump in Europe which would exacerbate tepid conditions in the US. Economic data has been fragile of late, but hope for a renewal to the rally on first quarter earnings data from US companies is keeping the markets somewhat range-bound and in a position of relative strength, though the thought of the Fed cutting off the easy money with the end of "operation twist" in June are tempering the bullish sentiments.
While stocks were damaged on the day, gold and silver were even harder hit, which makes little sense from an historical perspective. In times of economic distress, the precious metals usually hold up better, but, since they have been turned into trading vehicles by the Wall Street madmen, such assumptions may not hold up this time around. The mood is eerily similar to that of September 2008, when a fragile economy was overturned by a number of random events. The situation is vastly different today, however, but a major crisis anywhere in the world could rapidly spread.
In the face of some chaos, the strengthening dollar is at least bringing down oil prices, which should eventually lower the price of gas in the US. The high price of fuel is in itself a condition which could severely slow the already turbid US economy, though the good news for drivers may not be welcomed by equity investors.
The new high - new low indicator flipped to the negative today for the first time in a long while. Any continuation of that trend indicator could signal a prolonged correction, something the three-year-old bull market has not experienced since the flagging days of last summer.
Dow 13,074.75, -124.80 (0.95%)
NASDAQ 3,068.09, -45.48 (1.46%)
S&P 500 1,398.96, -14.42 (1.02%)
NYSE Composite 8,111.48, -105.06 (1.28%)
NASDAQ Volume 1,779,653,500
NYSE Volume 3,810,047,500
Combined NYSE & NASDAQ Advance - Decline: 1079-4563
Combined NYSE & NASDAQ New highs - New lows: 65-109
WTI crude oil: 101.47, -2.54
Gold: 1,614.10, -57.90
Silver: 31.04, -2.22
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