Yesterday's rumor that China would report first quarter GDP of upwards of 9% growth - which fueled the ramp-up in stocks on Thursday - turned into today's reality that China's economy is slowing, and quickly.
When the news that China's economy grew less than expected - by 8.1%, the slowest rate of growth in the world's most populous country in nearly three years - traders in Europe and the US could not sell shares of selected equities quickly enough. By the time US markets opened, futures had cratered to their lowest levels of the morning and the selling continued throughout the lackluster session.
By he close, Thursday's gains were all but eviscerated, leaving investors to wonder what comes next in terms of the global economic condition.
Also, prior to the open, two major banks, JP Morgan Chase (JPM) and Wells-Fargo (WFC) announced first quarter earnings. Both beat estimates, but the stocks sold off on the reports, many analysts citing bookkeeping chicanery for the better-than-expected returns.
By the end of the day, JPM dropped 3.64%, while WFC lost 3.47%. Both stocks are near 52-week highs and are currently looking like serious short-sell candidates.
The Chinese data should not have come as a surprise. Since most of China's recent growth has been tied to exports - mainly to the US and Europe - slack demand has crimped output and China's nascent middle class is not yet robost enough to fill in the growth gap. Concerns over the debt condition of the Eurozone have not abated, and, in fact, may be exacerbated as Spain's situation worsens.
Sooner or later, principals are going to have to come to terms with the global condition of faltering sovereign nations, an excessive overhang of debt and limited solutions from fiscal and monetary authorities. The search for yield has many investors scrambling again into dividend-paying stocks or the marginal returns of US treasuries, which rallied once more, the ten-year dipping to 1.99% at the close of trading.
In such an environment, there is no safe harbor except for hard assets, though even oil, gold and silver were pounded lower on the news.
The major averages finished the week with losses of around two percent. The idea that stocks sporting solid gains for the first quarter have been selling off nevertheless, portends more downside for equity investors.
Deflation is a cruel environment, for which most in the financial arena are ill-prepared. The global economy is close to stall speed, which, for most ordinary people, is bliss, though the highly-leveraged worldwide financial system is surely strained at present.
Dow 12,849.67, -136.91 (1.05%)
NASDAQ 3,011.33, -44.22 (1.45%)
S&P 500 1,370.27, -17.30 (1.25%)
NYSE Composite 7,937.65, -102.31 (1.27%)
NASDAQ Volume 1,437,334,625
NYSE Volume 3,433,928,000
Combined NYSE & NASDAQ Advance - Decline: 1332-4234
Combined NYSE & NASDAQ New highs - New lows: 95-69
WTI crude oil: 102.83, -0.81
Gold: 1,660.20, -20.40
Silver: 31.39, -1.14
Friday, April 13, 2012
Thursday, April 12, 2012
Stocks Continue Roller Coaster Ride; Google Pops on Earnings
In this space a couple of days ago, it was theorized that stocks were not offering directional signs to investors, and that was on a nearly 200-point drop on the Dow.
Since then, just two days hence, the major indices have erased those ugly losses and added to the upside, with gusto.
Despite the highest number of initial unemployment claims since January (380,000) being announced prior to the opening bell stocks started a slow progression to the upside which lasted all session long, no doubt spurred on by the whirring computer algos which, as machines, only do as they are programmed.
The paucity of trades didn't slow the market in the least, as volume was, as per usual, non-existent for the most part. Somewhere in between the flat PPI reading (no kidding, PPI was unchanged for March) and Google's first quarter earnings announcement, somebody let slip a rumor of more QE from the Fed, or something like that, at the computer-traders lapped it up like so much cheery data, even though none of the recent spate of speeches by Fed governors included any mention of further easing, except on an iffy basis, that being a severe downturn in the economy.
The markets being more akin to a roller coaster rather than the usual casino-like environment of late, the day-trading brokerages and hedge funds had a field day skewering shorts until they screamed for mercy.
As for the aforementioned Google (GOOG) earnings report, the company - which reported after the bell - blew away estimates by earning $10.08 per share, well beyond the expected $9.66 offered by analysts. The company also announced a 2-for-1 stock split, though the proposal will not be voted on until June, though it is widely considered that it will meet with shareholder approval.
The beat goes on, despite occasional dissonance along the way.
Wells Fargo (WFC) and JP Morgan Chase (JPM) are next up on the earnings parade, reporting well before the bell on Friday morning.
Dow 12,986.58, +181.19 (1.41%)
NASDAQ 3,055.55, +39.09 (1.30%)
S&P 500 1,387.57, +18.86 (1.38%)
NYSE Composite 8,039.95, +127.10 (1.61%)
NASDAQ Volume 1,491,138,875
NYSE Volume 3,543,994,000
Combined NYSE & NASDAQ Advance - Decline: 4410-1193
Combined NYSE & NASDAQ New highs - New lows: 103-39
WTI crude oil: 103.64, +0.94
Gold: 1,680.60, +20.30
Silver: 32.52, +1.00
Since then, just two days hence, the major indices have erased those ugly losses and added to the upside, with gusto.
Despite the highest number of initial unemployment claims since January (380,000) being announced prior to the opening bell stocks started a slow progression to the upside which lasted all session long, no doubt spurred on by the whirring computer algos which, as machines, only do as they are programmed.
The paucity of trades didn't slow the market in the least, as volume was, as per usual, non-existent for the most part. Somewhere in between the flat PPI reading (no kidding, PPI was unchanged for March) and Google's first quarter earnings announcement, somebody let slip a rumor of more QE from the Fed, or something like that, at the computer-traders lapped it up like so much cheery data, even though none of the recent spate of speeches by Fed governors included any mention of further easing, except on an iffy basis, that being a severe downturn in the economy.
The markets being more akin to a roller coaster rather than the usual casino-like environment of late, the day-trading brokerages and hedge funds had a field day skewering shorts until they screamed for mercy.
As for the aforementioned Google (GOOG) earnings report, the company - which reported after the bell - blew away estimates by earning $10.08 per share, well beyond the expected $9.66 offered by analysts. The company also announced a 2-for-1 stock split, though the proposal will not be voted on until June, though it is widely considered that it will meet with shareholder approval.
The beat goes on, despite occasional dissonance along the way.
Wells Fargo (WFC) and JP Morgan Chase (JPM) are next up on the earnings parade, reporting well before the bell on Friday morning.
Dow 12,986.58, +181.19 (1.41%)
NASDAQ 3,055.55, +39.09 (1.30%)
S&P 500 1,387.57, +18.86 (1.38%)
NYSE Composite 8,039.95, +127.10 (1.61%)
NASDAQ Volume 1,491,138,875
NYSE Volume 3,543,994,000
Combined NYSE & NASDAQ Advance - Decline: 4410-1193
Combined NYSE & NASDAQ New highs - New lows: 103-39
WTI crude oil: 103.64, +0.94
Gold: 1,680.60, +20.30
Silver: 32.52, +1.00
Wednesday, April 11, 2012
US Stocks Bounce Back, But Close Flat on Weak Volume
Yesterday's deep decline was followed on Wednesday by the typical knee-jerk, snap-back, dead cat bounce rally, which occurred at the market open but quickly ran out of steam.
For the remainder of the session after 11:00 am EDT, stocks drifted about in a narrow range and volume was noticeably tepid, considering that Tuesday's volume was among the highest of the year. It was also confirmed that Monday's incredibly weak showing was the second lowest volume day of the year, yet another example of how, despite the best efforts of Wall Street hucksters and Federal Reserve pumping, individual investors and practically anybody who is not a fund manager or professional of some ilk simply does not want to be in this market for equities.
Today's lackluster showing was in spite of Alcoa's strong earnings report after the bell on Tuesday, a pleasant earnings kick-off surprise that was promptly disregarded.
For a day, at least, there was no imminent threat of currency or sovereign collapse coming from across the Atlantic where almost all European bourses registered modest gains.
There was little new with which to move markets, a condition which may change on Thursday, as initial unemployment claims and the March PPI figures are released prior to the opening bell. On Friday, JP Morgan Chase (JPM) and Wells-Fargo (WFC) announce first quarter earnings before the open.
In one of the more absurd wastes of taxpayer money, the nearly-invisible Attorney General, Eric Holder, unsheathed a his DOJ sword with a price- fixing antitrust lawsuit against Apple (AAPL) and five book publishers for colluding to fix prices of e-books sold on the iPad platform. Three of the named publishers have already agreed to a settlement, though several states are pursuing civil actions of their own. The suit seeks monetary damages. Apple had no comment.
Clearly, the Department of Justice is completely inept, pursuing nothing other than sure-win, low-hanging fruit variety lawsuits and the federal government is desperate for dough, though what they'll gain from this silly effort is akin to a teaspoon from a barrel of debt.
Dow 12,805.39, +89.46 (0.70%)
NASDAQ 3,016.46, +25.24 (0.84%)
S&P 500 1,368.71, +10.12 (0.74%)
NYSE Composite 7,905.74, +63.82 (0.81%)
NASDAQ Volume 1,504,835,625
NYSE Volume 3,724,551,250
Combined NYSE & NASDAQ Advance - Decline: 4435-1196
Combined NYSE & NASDAQ New highs - New lows: 58-59
WTI crude oil: 102.70, +1.68
Gold: 1,660.30, -0.40
Silver: 31.52, -0.16
For the remainder of the session after 11:00 am EDT, stocks drifted about in a narrow range and volume was noticeably tepid, considering that Tuesday's volume was among the highest of the year. It was also confirmed that Monday's incredibly weak showing was the second lowest volume day of the year, yet another example of how, despite the best efforts of Wall Street hucksters and Federal Reserve pumping, individual investors and practically anybody who is not a fund manager or professional of some ilk simply does not want to be in this market for equities.
Today's lackluster showing was in spite of Alcoa's strong earnings report after the bell on Tuesday, a pleasant earnings kick-off surprise that was promptly disregarded.
For a day, at least, there was no imminent threat of currency or sovereign collapse coming from across the Atlantic where almost all European bourses registered modest gains.
There was little new with which to move markets, a condition which may change on Thursday, as initial unemployment claims and the March PPI figures are released prior to the opening bell. On Friday, JP Morgan Chase (JPM) and Wells-Fargo (WFC) announce first quarter earnings before the open.
In one of the more absurd wastes of taxpayer money, the nearly-invisible Attorney General, Eric Holder, unsheathed a his DOJ sword with a price- fixing antitrust lawsuit against Apple (AAPL) and five book publishers for colluding to fix prices of e-books sold on the iPad platform. Three of the named publishers have already agreed to a settlement, though several states are pursuing civil actions of their own. The suit seeks monetary damages. Apple had no comment.
Clearly, the Department of Justice is completely inept, pursuing nothing other than sure-win, low-hanging fruit variety lawsuits and the federal government is desperate for dough, though what they'll gain from this silly effort is akin to a teaspoon from a barrel of debt.
Dow 12,805.39, +89.46 (0.70%)
NASDAQ 3,016.46, +25.24 (0.84%)
S&P 500 1,368.71, +10.12 (0.74%)
NYSE Composite 7,905.74, +63.82 (0.81%)
NASDAQ Volume 1,504,835,625
NYSE Volume 3,724,551,250
Combined NYSE & NASDAQ Advance - Decline: 4435-1196
Combined NYSE & NASDAQ New highs - New lows: 58-59
WTI crude oil: 102.70, +1.68
Gold: 1,660.30, -0.40
Silver: 31.52, -0.16
Tuesday, April 10, 2012
Markets Offering Few Directional Clues Amidst Continuing Crises
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
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
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
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