This is a midday report, as the author will likely not be available for posting at the regularly-scheduled time, shortly after the markets close. A complete report will be posted at some point, probably in the early evening.
Stocks started the day lower, as expected, after initial jobless claims came in at 372,000 in the current week, beyond expectations and up 4,000 from the prior week.
Other than that bit of news, existing home sales grew at an annual rate of 4.47M in July, after a reading of 4.37M in June.
At the time of this posing, stocks are down broadly, but beginning to pare losses. Regardless, if the Dow closes lower today, it will be the fourth consecutive losing session, an expected development, after Tuesday's "double-engulfing, outside" day.
Gold and silver are sharply higher, with silver up more than $1.00 at the time of this posting.
Dow 13,100.13, -72.63 (0.55%)
Nasdaq 3,065.85, -7.82 (0.25%)
S&P 500 1,407.54, -5.95 (0.42%)
10-Yr Bond 1.67%, -0.05
Thursday, August 23, 2012
Wednesday, August 22, 2012
Stocks Split in Another Lackluster Session
There were heaps of indecision and disbelief after yesterday's rise and fall led to a stumbling session for US stocks on Wednesday, with the major indices split after a midday rally pushed the S&P and NASDAQ modestly into positive territory, but left the Dow and Composite with marginal losses.
With literally no data points on which to trade, investors were mostly in a defensive posture until FOMC minutes were released at 2:00 pm EDT. The idea that the Fed might still be considering some easing before the November elections lit a fire under some traders, though the size of the move was unconvincing.
It's unlikely that the Fed would move decisively soon unless there are overt signs of weakness in the economy to a greater degree than has already been proven. Fed Chairman Ben Bernanke and the rest of the world's elite traders, economists and analysts will gather at Jackson Hole, Wyoming, next week for an annual economic symposium, though skepticism over whether the Chairman will make any earth-shattering announcements abounds.
That is primarily what has the the bulls running for cover, because the economy has been sullen and without forward momentum, even while stocks have recorded strong gains through the summer. The entire June-August rally may have been built on false hopes and pipe dreams of another round of quantitative easing.
Without a monetary boost, stocks could suffer anything from a mild to severe correction within the next two weeks, and the charts are beginning to show signs that Tuesday's double top was something to actually be concerned about.
With little in the way of economic data this week (New and existing home sales, initial unemployment claims and durable orders), traders have little upon which to trade, so the late summer doldrums should continue, at least into the early portion of next week and possibly through Labor Day.
After that, the experts will be back on the street with new strategies or old ones, based entirely on best guesses as to the outcome of the elections and how long European leaders can keep their juggling act going without dropping all of the balls.
It's a strange state for the markets, full of uncertainty and doubt, though very close to 52-week highs. It's ripe for something - either a breakout to the upside or a 5-15% slide. And, while everyone has opinions, nobody is really putting out convincing arguments on either side.
The market bears close scrutiny at this juncture, as the next move may be decisive and worth playing, but only if one has guts and conviction to stick with trades over the next couple of months, because, as has been shown all year long, this market likes to gyrate like a lithe belly dancer without giving off any signs of where it's headed next.
Our money is on the downside, but we've been in that posture for a long time and have been in cash or equivalents for the better part of the past four years. If the precious metals continue to gather momentum, that could convince us to take a flier on some puts or shorts in selected stocks or indices. If new highs - new lows continue to compress tomorrow and the A-D line opens negative, we could be all in on Diamond (DIA) and/or Spider (SPY) October puts.
Both gold and silver have broken out of their recent ranges and could put in a long, strong run through the end of the year, so the buying opportunity window may be closing quickly on the metals, a favorable trade the past twelve years, despite persistent meddling and price fixing by major and central banks.
Dow 13,172.76, -30.82 (0.23%)
NASDAQ 3,073.67, +6.41 (0.21%)
S&P 500 1,413.49, +0.32 (0.02%)
NYSE Composite 8,079.02, -3.66 (0.05%)
NASDAQ Volume 1,426,827,000
NYSE Volume 2,809,365,750
Combined NYSE & NASDAQ Advance - Decline: 2122-3396
Combined NYSE & NASDAQ New highs - New lows: 93-53 (compression)
WTI crude oil: 97.26, +0.42
Gold: 1,656.80, +16.30
Silver: 29.84, +0.28
With literally no data points on which to trade, investors were mostly in a defensive posture until FOMC minutes were released at 2:00 pm EDT. The idea that the Fed might still be considering some easing before the November elections lit a fire under some traders, though the size of the move was unconvincing.
It's unlikely that the Fed would move decisively soon unless there are overt signs of weakness in the economy to a greater degree than has already been proven. Fed Chairman Ben Bernanke and the rest of the world's elite traders, economists and analysts will gather at Jackson Hole, Wyoming, next week for an annual economic symposium, though skepticism over whether the Chairman will make any earth-shattering announcements abounds.
That is primarily what has the the bulls running for cover, because the economy has been sullen and without forward momentum, even while stocks have recorded strong gains through the summer. The entire June-August rally may have been built on false hopes and pipe dreams of another round of quantitative easing.
Without a monetary boost, stocks could suffer anything from a mild to severe correction within the next two weeks, and the charts are beginning to show signs that Tuesday's double top was something to actually be concerned about.
With little in the way of economic data this week (New and existing home sales, initial unemployment claims and durable orders), traders have little upon which to trade, so the late summer doldrums should continue, at least into the early portion of next week and possibly through Labor Day.
After that, the experts will be back on the street with new strategies or old ones, based entirely on best guesses as to the outcome of the elections and how long European leaders can keep their juggling act going without dropping all of the balls.
It's a strange state for the markets, full of uncertainty and doubt, though very close to 52-week highs. It's ripe for something - either a breakout to the upside or a 5-15% slide. And, while everyone has opinions, nobody is really putting out convincing arguments on either side.
The market bears close scrutiny at this juncture, as the next move may be decisive and worth playing, but only if one has guts and conviction to stick with trades over the next couple of months, because, as has been shown all year long, this market likes to gyrate like a lithe belly dancer without giving off any signs of where it's headed next.
Our money is on the downside, but we've been in that posture for a long time and have been in cash or equivalents for the better part of the past four years. If the precious metals continue to gather momentum, that could convince us to take a flier on some puts or shorts in selected stocks or indices. If new highs - new lows continue to compress tomorrow and the A-D line opens negative, we could be all in on Diamond (DIA) and/or Spider (SPY) October puts.
Both gold and silver have broken out of their recent ranges and could put in a long, strong run through the end of the year, so the buying opportunity window may be closing quickly on the metals, a favorable trade the past twelve years, despite persistent meddling and price fixing by major and central banks.
Dow 13,172.76, -30.82 (0.23%)
NASDAQ 3,073.67, +6.41 (0.21%)
S&P 500 1,413.49, +0.32 (0.02%)
NYSE Composite 8,079.02, -3.66 (0.05%)
NASDAQ Volume 1,426,827,000
NYSE Volume 2,809,365,750
Combined NYSE & NASDAQ Advance - Decline: 2122-3396
Combined NYSE & NASDAQ New highs - New lows: 93-53 (compression)
WTI crude oil: 97.26, +0.42
Gold: 1,656.80, +16.30
Silver: 29.84, +0.28
Tuesday, August 21, 2012
Market Chart Alert: Dow Double Engulfing Day Signals Start of Turnaround
For as long as just about anyone who charts stocks and indices can remember, the pattern which appeared in today's session should be a primary signal that stocks are ready for an abrupt turn - and this one is decidedly to the downside.
Notwithstanding ongoing market manipulation to the contrary, which has pushed stocks to extreme levels over the past few months when just the opposite appeared more likely on poor data, low volume and other bearish signals, the double engulfing pattern - in which the high and low of today exceeded the highs and lows of the previous two sessions - is a bright red flashing light to chartists everywhere.
The Dow Jones Industrials took a rather abrupt turn late morning. After a slow start, the index reached the high point of the day (13,330.76) just before 11:00 am EDT, hovered in that area, then began a serious decline a short time later, finally dipping into the red around noon.
For the rest of the session, the Dow, carrying the other major indices along with it, continued a slow descent until bottoming out around 3:15 pm EDT at 13,186.60, eventually finishing just 16 points off the low, yet another bearish signal.
The trading range of 144 points exceeded the highs and lows from Friday and Monday's trading, on both sides and was the widest range since August 3rd, when the index ranged 148 points, but finished higher by 111 points.
The headwinds that have been pushing against stocks for a while (could be two months, two quarters or two years, depending on perspective) may finally be taking its toll on the trading community, though there's also sufficient data to determine that stocks have reached the upper limit for the short turn, coming a whisker within the 52-week high of 13,338.66, achieved on May 1st.
While the chart is eliciting a strong double-top formation, the gain from Dow 12035.09 to today's high - a rally of 1,295 points, or, roughly 10%, from June 4, was built on a series of sharp one-or-two-day upside moves with intermittent, short selloffs in between until the baby-step gains typical of the past two weeks.
In simpler terms, the market may just have run out of gas, the problems in Europe and the coming crucial elections and fiscal cliff all creating significant uncertainty in the minds of investors and traders.
A pull-back from these current nose-bleed levels would not be without precedent; indeed, the month of May shook out to the same amount as the gains in June, July and August combined.
What happens next is anyone's guess, and the transportation average is offering a bit of a clue, having finished the day just 0.23 short of the high made on Friday, a one-month high, but well short of the 52-week high set on May 2nd, 5334.52.
The issues plaguing the market and the general economy still are persistent and a shock to the system may be forthcoming, especially since neither the Europeans nor the Federal Reserve seem committed to further monetary easing, something market participants have been lobbying for over the past four to six months.
With November's elections coming fast, the Fed is very reluctant to make any abrupt announcements, while in Europe, the cries from Germany to stop the Ponzi-like bailouts of the southern sovereigns grows louder with each proceeding day.
Despite market breadth being only moderately negative and new highs - new lows reading nearly off the charts positive, we'll await confirmation from these and/or other metrics before making an all-red bear call.
Adding to the market consternation on the day were the continued run-up in safe haven assets, gold and silver, both reliable indicators of general fear in the marketplace.
As for the ongoing rally in crude oil, that is more a function of the time of year, when market insiders annually push prices to their highest levels preceding the Labor Day holiday, just two weeks hence.
Dow 13,203.58, -68.06 (0.51%)
NASDAQ 3,067.26, -8.95 (0.29%)
S&P 500 1,413.17, -4.96 (0.35%)
NYSE Composite 8,082.68, -11.65 (0.14%)
NASDAQ Volume 1,574,080,875
NYSE Volume 3,249,264,250
Combined NYSE & NASDAQ Advance - Decline: 2408-3071
Combined NYSE & NASDAQ New highs - New lows: 264-32
WTI crude oil: 96.68, +0.71
Gold: 1,642.90, +19.90
Silver: 29.43, +0.83
Notwithstanding ongoing market manipulation to the contrary, which has pushed stocks to extreme levels over the past few months when just the opposite appeared more likely on poor data, low volume and other bearish signals, the double engulfing pattern - in which the high and low of today exceeded the highs and lows of the previous two sessions - is a bright red flashing light to chartists everywhere.
The Dow Jones Industrials took a rather abrupt turn late morning. After a slow start, the index reached the high point of the day (13,330.76) just before 11:00 am EDT, hovered in that area, then began a serious decline a short time later, finally dipping into the red around noon.
For the rest of the session, the Dow, carrying the other major indices along with it, continued a slow descent until bottoming out around 3:15 pm EDT at 13,186.60, eventually finishing just 16 points off the low, yet another bearish signal.
The trading range of 144 points exceeded the highs and lows from Friday and Monday's trading, on both sides and was the widest range since August 3rd, when the index ranged 148 points, but finished higher by 111 points.
The headwinds that have been pushing against stocks for a while (could be two months, two quarters or two years, depending on perspective) may finally be taking its toll on the trading community, though there's also sufficient data to determine that stocks have reached the upper limit for the short turn, coming a whisker within the 52-week high of 13,338.66, achieved on May 1st.
While the chart is eliciting a strong double-top formation, the gain from Dow 12035.09 to today's high - a rally of 1,295 points, or, roughly 10%, from June 4, was built on a series of sharp one-or-two-day upside moves with intermittent, short selloffs in between until the baby-step gains typical of the past two weeks.
In simpler terms, the market may just have run out of gas, the problems in Europe and the coming crucial elections and fiscal cliff all creating significant uncertainty in the minds of investors and traders.
A pull-back from these current nose-bleed levels would not be without precedent; indeed, the month of May shook out to the same amount as the gains in June, July and August combined.
What happens next is anyone's guess, and the transportation average is offering a bit of a clue, having finished the day just 0.23 short of the high made on Friday, a one-month high, but well short of the 52-week high set on May 2nd, 5334.52.
The issues plaguing the market and the general economy still are persistent and a shock to the system may be forthcoming, especially since neither the Europeans nor the Federal Reserve seem committed to further monetary easing, something market participants have been lobbying for over the past four to six months.
With November's elections coming fast, the Fed is very reluctant to make any abrupt announcements, while in Europe, the cries from Germany to stop the Ponzi-like bailouts of the southern sovereigns grows louder with each proceeding day.
Despite market breadth being only moderately negative and new highs - new lows reading nearly off the charts positive, we'll await confirmation from these and/or other metrics before making an all-red bear call.
Adding to the market consternation on the day were the continued run-up in safe haven assets, gold and silver, both reliable indicators of general fear in the marketplace.
As for the ongoing rally in crude oil, that is more a function of the time of year, when market insiders annually push prices to their highest levels preceding the Labor Day holiday, just two weeks hence.
Dow 13,203.58, -68.06 (0.51%)
NASDAQ 3,067.26, -8.95 (0.29%)
S&P 500 1,413.17, -4.96 (0.35%)
NYSE Composite 8,082.68, -11.65 (0.14%)
NASDAQ Volume 1,574,080,875
NYSE Volume 3,249,264,250
Combined NYSE & NASDAQ Advance - Decline: 2408-3071
Combined NYSE & NASDAQ New highs - New lows: 264-32
WTI crude oil: 96.68, +0.71
Gold: 1,642.90, +19.90
Silver: 29.43, +0.83
Friday, August 17, 2012
Between Meaning and Nothingness
As it turns out, the mystery of Thursday's sudden ramp up in volume and price action wasn't such a mystery at all. A quick look at the calendar confirms that today was the third Friday of the month, the day of stock options expiration.
Mystery solved.
Rather than bore readers with an explanation of how stocks played Friday in the usual "dead summer" manner, we leave with a few ripened Beatles tunes.
Enjoy the weekend!
For anybody in particular:
Dow 13,275.20, +25.09 (0.19%)
NASDAQ 3,076.59, +14.20 (0.46%)
S&P 500 1,418.16, +2.65 (0.19%)
NYSE Composite 8,102.07, +12.07 (0.15%)
NASDAQ Volume 1,644,206,500
NYSE Volume 2,910,906,000
Combined NYSE & NASDAQ Advance - Decline: 3463-2003
Combined NYSE & NASDAQ New highs - New lows: 283-38
WTI crude oil: 96.01, +0.41
Gold: 1,619.40, +0.20
Silver: 28.00, -0.21
Mystery solved.
Rather than bore readers with an explanation of how stocks played Friday in the usual "dead summer" manner, we leave with a few ripened Beatles tunes.
Enjoy the weekend!
For anybody in particular:
Dow 13,275.20, +25.09 (0.19%)
NASDAQ 3,076.59, +14.20 (0.46%)
S&P 500 1,418.16, +2.65 (0.19%)
NYSE Composite 8,102.07, +12.07 (0.15%)
NASDAQ Volume 1,644,206,500
NYSE Volume 2,910,906,000
Combined NYSE & NASDAQ Advance - Decline: 3463-2003
Combined NYSE & NASDAQ New highs - New lows: 283-38
WTI crude oil: 96.01, +0.41
Gold: 1,619.40, +0.20
Silver: 28.00, -0.21
Thursday, August 16, 2012
Speculators Step Up to End Dull Trade with a Bang
Think zero interest rate policy and money for virtually free doesn't have its upside?
Ask fund and managed account managers what they think of this trading environment and they'll likely respond in unanimity that it's never been better. After eight straight days of lackluster, low-volume trading, the wheeler-dealers went to work in concerted fashion, driving all risk assets higher on Thursday.
When the biggest banks and their trading arms can borrow money at 25 basis points or less overnight, what happens is trading like today, shutting off the noise about a sputtering, topped out market with a quick, one-day ramp up on strong volume for a nice turn of profit for the week.
The particular catalyst could be anything, from Angela Merkel's comments today about floating more bailout money to save the Euro, to benign initial claims figures (op a mere 2,000 from the prior week, to 366,000), to July housing starts dropping to 746,000 annualized from 754,000 or the Philadephia Fed's manufacturing index gaining to -7.1 in August from July's horrific -12.1. Well, forget those last two as they don't quite fit the hopium narrative.
Indeed, if conditions on Wall Street get any better, the feds may just cancel the November election and proclaim President Obama the winner by default. After all, the campaign money flows from Wall Street and other major investors, multi-millionaires and billionaires to the candidates or their PACs, and Wall Street has been having a rousing good time the past three-and-a-half years. Why end the party now?
At some point, analysts are going to poke around the numbers a bit and find that stocks are extremely overvalued, priced for perfection, at levels unsustainable for the long run unless corporations severely fudge their books to show better-than-expected results (oh, that's never been done before, not in America).
It doesn't matter what analysts or the best chartists in the business conclude, however. Stocks will continue to go up as long as markets continue to be manipulated by the central planners scattered around the globe in investment houses, central banks and government ivory towers.
What's that? You don't believe the US markets are not manipulated? Maybe you need a little convincing from experts in the field.
Take J.S. Kim, for example, who posits that potential gold and silver investors are continually fed disinformation about a market manipulated by contrived futures and trading patterns in a false, paper market
Perhaps one could take advice from Chris Martenson's commentary, headlined "What to Do When Every Market Is Manipulated?"
For a more general understanding, one could comb through the 29,800,000 results for the search term "market manipulation," and see what kind of gems are unearthed.
The control, rigging or manipulation of markets in the United States has been going on in a large manner ever since Ronald Reagan created, by executive order, the President's Working Group on Financial Markets (otherwise known as the PPT, or Plunge Protection Team) after the massive market crash in the wake of "Black Monday," when the Dow Jones Industrials plummeted 508 points Oct. 19, 1987 and was called into action again when Long Term Capital Management (LTCM) nearly brought down the house of cards in 1998.
After 9/11/2001, the PPT, as it became known, has been on keen alert to any signs of a meltdown in markets, but not even the heft and might of the underhanded, underground operatives of the government could deflect the market forces pushing against them in the fall of 2008.
Since then, the manipulation in equity markets has become almost overt, with the Fed guiding the way by the light of quantitative easing (QE) and ZIRP.
While here at Money Daily we deride the pimping and pumping of markets by insider forces, there comes a time when one must admit that investing in risk assets such as stocks and commodities over the past three years has never been easier. All one needs to do is hold a basket of stocks or index contracts long enough and they're sure to rise. It's become a permanent feature of US markets that they cannot fall for long and there is no end in sight to the manipulation.
It's just that easy for the rich to get richer and the rest of us to remain in a stupefied trance-like state of amazement and contentment.
Dow 13,250.11, +85.33 (0.65%)
NASDAQ 3,062.39, +31.46 (1.04%)
S&P 500 1,415.51, +9.98 (0.71%)
NYSE Composite 8,089.82, +60.81 (0.76%)
NASDAQ Volume 1,901,789,500
NYSE Volume 2,898,041,250
Combined NYSE & NASDAQ Advance - Decline: 3862-1572
Combined NYSE & NASDAQ New highs - New lows: 230-30
WTI crude oil: 95.60, +1.27
Gold: 1,619.20, +12.60
Silver: 28.21, +0.40
Ask fund and managed account managers what they think of this trading environment and they'll likely respond in unanimity that it's never been better. After eight straight days of lackluster, low-volume trading, the wheeler-dealers went to work in concerted fashion, driving all risk assets higher on Thursday.
When the biggest banks and their trading arms can borrow money at 25 basis points or less overnight, what happens is trading like today, shutting off the noise about a sputtering, topped out market with a quick, one-day ramp up on strong volume for a nice turn of profit for the week.
The particular catalyst could be anything, from Angela Merkel's comments today about floating more bailout money to save the Euro, to benign initial claims figures (op a mere 2,000 from the prior week, to 366,000), to July housing starts dropping to 746,000 annualized from 754,000 or the Philadephia Fed's manufacturing index gaining to -7.1 in August from July's horrific -12.1. Well, forget those last two as they don't quite fit the hopium narrative.
Indeed, if conditions on Wall Street get any better, the feds may just cancel the November election and proclaim President Obama the winner by default. After all, the campaign money flows from Wall Street and other major investors, multi-millionaires and billionaires to the candidates or their PACs, and Wall Street has been having a rousing good time the past three-and-a-half years. Why end the party now?
At some point, analysts are going to poke around the numbers a bit and find that stocks are extremely overvalued, priced for perfection, at levels unsustainable for the long run unless corporations severely fudge their books to show better-than-expected results (oh, that's never been done before, not in America).
It doesn't matter what analysts or the best chartists in the business conclude, however. Stocks will continue to go up as long as markets continue to be manipulated by the central planners scattered around the globe in investment houses, central banks and government ivory towers.
What's that? You don't believe the US markets are not manipulated? Maybe you need a little convincing from experts in the field.
Take J.S. Kim, for example, who posits that potential gold and silver investors are continually fed disinformation about a market manipulated by contrived futures and trading patterns in a false, paper market
Perhaps one could take advice from Chris Martenson's commentary, headlined "What to Do When Every Market Is Manipulated?"
For a more general understanding, one could comb through the 29,800,000 results for the search term "market manipulation," and see what kind of gems are unearthed.
The control, rigging or manipulation of markets in the United States has been going on in a large manner ever since Ronald Reagan created, by executive order, the President's Working Group on Financial Markets (otherwise known as the PPT, or Plunge Protection Team) after the massive market crash in the wake of "Black Monday," when the Dow Jones Industrials plummeted 508 points Oct. 19, 1987 and was called into action again when Long Term Capital Management (LTCM) nearly brought down the house of cards in 1998.
After 9/11/2001, the PPT, as it became known, has been on keen alert to any signs of a meltdown in markets, but not even the heft and might of the underhanded, underground operatives of the government could deflect the market forces pushing against them in the fall of 2008.
Since then, the manipulation in equity markets has become almost overt, with the Fed guiding the way by the light of quantitative easing (QE) and ZIRP.
While here at Money Daily we deride the pimping and pumping of markets by insider forces, there comes a time when one must admit that investing in risk assets such as stocks and commodities over the past three years has never been easier. All one needs to do is hold a basket of stocks or index contracts long enough and they're sure to rise. It's become a permanent feature of US markets that they cannot fall for long and there is no end in sight to the manipulation.
It's just that easy for the rich to get richer and the rest of us to remain in a stupefied trance-like state of amazement and contentment.
Dow 13,250.11, +85.33 (0.65%)
NASDAQ 3,062.39, +31.46 (1.04%)
S&P 500 1,415.51, +9.98 (0.71%)
NYSE Composite 8,089.82, +60.81 (0.76%)
NASDAQ Volume 1,901,789,500
NYSE Volume 2,898,041,250
Combined NYSE & NASDAQ Advance - Decline: 3862-1572
Combined NYSE & NASDAQ New highs - New lows: 230-30
WTI crude oil: 95.60, +1.27
Gold: 1,619.20, +12.60
Silver: 28.21, +0.40
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