Stocks finished the week with outsize gains on a virtually dead news day, which makes one turn to head-scratching and contemplation over not only the general direction of the market, but why stocks perform better on Fridays as opposed to, say, Mondays, which, of late have been among the worst days on a week-by-week basis.
It might have something to do with the advent of weekly options contracts - a relatively new market development - in which "bets" are placed on the direction of everything from stocks, to EFTs, to entire indices.
Since Wall Street is such a crooked, rigged casino type of operation, the club of insiders which invent such derivatives cooked up weekly options - which expire every Friday - as yet another way to skin the hapless rubes who aren't content with the usual durations of one, two, three, four months or longer.
Weekly options are nothing but pure, unadulterated gambling on direction, just about the same as betting red or black at a roulette wheel, but, a peek at direction on Mondays (when positions are initiated) and Fridays (when they are closed) over the past ten weeks reveals an unsettling pattern.
Using the Dow Jones Industrials as our test case, beginning with the 18th of June (a Monday) and continuing the series through today, the tally is remarkably consistent:
Mondays: 1 Up; 9 Down
Fridays: 8 Up; 2 Down
Amazing! Isn't it? If one can count on Mondays and Fridays being the only significant market moving days, trading - especially in options contracts - becomes almost a predetermined routine, something that could be gamed by a relatively simple algorithm.
Oops! Did we let the cat out of the bag? Since algos, via HFTs perform between 75 and 90% of all trading in the markets, could it be that the Goldman Sachs and Merrill Lynch's of the world are doing exactly that from the comfort of their prop desks? One can only imagine the traders, feet propped up neatly on their desks every Monday morning, programming in massive sell orders on various stocks while simultaneously sending the algos out to buy calls on the very same equities.
If that's the case, these traders are probably spending most of the midweek out on the golf course or the yacht or partying with their rich buddies in the Hamptons or other secret enclaves of the privileged class. Why work, when you have concocted such a simple trading regimen that only needs your attention twice a week? Even better, these prop jockeys are probably initiating positions and closing out trades with commands from their cell phones while sipping mai tais by the pool or at the beach.
Life just can't get any better, can it?
The worst part about this story is not how the rich enjoy their lives without working, but the idea that there's likely a kernel of truth to it.
Almost as good as farming, where the common wisdom is that farmers plant in the spring, harvest and sell in the fall and vacation all winter, these prop traders are just taking loafing to an all new level of expertise and functionality.
Life is so easy! BTW: Silver closed at a 3 1/2 month high today. Thank you, Blythe Masters and JP Morgan.
In keeping with our ongoing, sporadic tradition of musical thematic revivalism, perhaps the Rolling Stones' You Can't Always Get What You Want, from their 1969 album Let It Bleed is appropriate.
Have a great weekend and remember to be selling on Monday.
This is the original cut from Keith, Mick and the boys. It doesn't get any better.
Dow 13,157.97, +100.51 (0.77%)
NASDAQ 3,069.79, +16.39 (0.54%)
S&P 500 1,411.13, +9.05 (0.65%)
NYSE Composite 8,047.48, +36.04 (0.45%)
NASDAQ Volume 1,326,204,750
NYSE Volume 2,581,308,750
Combined NYSE & NASDAQ Advance - Decline: 3459-1968
Combined NYSE & NASDAQ New highs - New lows: 113-48
WTI crude oil: 96.15, -0.12
Gold: 1,672.90, +0.10
Silver: 30.62, +0.17
Friday, August 24, 2012
Thursday, August 23, 2012
Stocks Fall Across the Board as Fed Stimulus Hopes Fade
This is a seriously perverse stock market.
One of the primary reasons stocks took a beating today was that many in the investment community are awakening to the idea that the Federal Reserve isn't going to do another round of QE before the elections because, get this, the economy isn't "bad enough."
That's right, because the economy is just limping along and not falling off a cliff into recession, the Fed is reluctant to enact any bold policy actions, thus putting the proverbial lid on stocks. Besides, with the all-important presidential election upcoming in a little more than two months, the Fed doesn't want to do anything to improve the economy, being that they are so, so, apolitical.
At least that's the story they're trying to sell.
The truth is that the last two rounds of QE were massive money-dumping busts which enriched only the well-connected and already wealthy. Those dwelling in the middle and lower classes of society are still awaiting the over-hyped "trickle down," another canard dreamt up by political and economic hacks who believe to have bamboozled the entire global population in service to their wealthy masters.
It's twisted logic at its very finest, the kind of thinking that only sleazy politicians and interest parasitic bankers could command.
Next, they'll be telling us that raw chicken is fine to eat or that eight percent unemployment is "natural."
In effect, the politicos and central bankers are out of bullets. All they can do now is pile up more debt on what's already outstanding until the whole edifice of corruption and funny money collapses upon itself.
Of course, the rich will be hurt the least, if at all. The middle class will take it standing up, lying down or whichever way the government-controlled media spoon-feeds it to the unsuspecting masses.
Not to worry. When stocks continue their slide into and through Labor Day and Americans wake up one morning and find that they are actually European, or worse, when it comes to national monetary and fiscal policy, we'll all make do with less, because the last twenty years, we'll be told, were a mirage of our own making for spending too much, wanting too much and not paying attention.
At least there's a tiny nugget of truth there. Americans haven't been paying attention for so long, the government is now responsible for nearly half of GDP when one adds in transfer payments (welfare, social security, state and federal pensions, etc.) and the once proud American economy is a shadow of its former self, controlled largely by a handful of corporations which pay little to no tax.
That's OK. The economy isn't "bad enough," right?
Meanwhile, the advance-decline continues bleeding negative and new highs, new lows compress further, advancing toward equilibrium.
Gold and silver were off like rockets. This is rotation from risk assets to hard assets, and it's gathering momentum.
Dow 13,057.46, -115.30 (0.88%)
Nasdaq 3,053.40, -20.27 (0.66%)
S&P 500 1,402.08, -11.41 (0.81%)
NYSE Composite 8,011.44, -62.79 (0.78%)
NYSE Volume 3,019,112,000
Nasdaq Volume 1,392,715,500
Combined NYSE & NASDAQ Advance - Decline: 1743-3759
Combined NYSE & NASDAQ New highs - New lows: 82-47
WTI crude oil: 96.27, -0.99
Gold: 1,672.80, +32.30
Silver: 30.46, +0.90
One of the primary reasons stocks took a beating today was that many in the investment community are awakening to the idea that the Federal Reserve isn't going to do another round of QE before the elections because, get this, the economy isn't "bad enough."
That's right, because the economy is just limping along and not falling off a cliff into recession, the Fed is reluctant to enact any bold policy actions, thus putting the proverbial lid on stocks. Besides, with the all-important presidential election upcoming in a little more than two months, the Fed doesn't want to do anything to improve the economy, being that they are so, so, apolitical.
At least that's the story they're trying to sell.
The truth is that the last two rounds of QE were massive money-dumping busts which enriched only the well-connected and already wealthy. Those dwelling in the middle and lower classes of society are still awaiting the over-hyped "trickle down," another canard dreamt up by political and economic hacks who believe to have bamboozled the entire global population in service to their wealthy masters.
It's twisted logic at its very finest, the kind of thinking that only sleazy politicians and interest parasitic bankers could command.
Next, they'll be telling us that raw chicken is fine to eat or that eight percent unemployment is "natural."
In effect, the politicos and central bankers are out of bullets. All they can do now is pile up more debt on what's already outstanding until the whole edifice of corruption and funny money collapses upon itself.
Of course, the rich will be hurt the least, if at all. The middle class will take it standing up, lying down or whichever way the government-controlled media spoon-feeds it to the unsuspecting masses.
Not to worry. When stocks continue their slide into and through Labor Day and Americans wake up one morning and find that they are actually European, or worse, when it comes to national monetary and fiscal policy, we'll all make do with less, because the last twenty years, we'll be told, were a mirage of our own making for spending too much, wanting too much and not paying attention.
At least there's a tiny nugget of truth there. Americans haven't been paying attention for so long, the government is now responsible for nearly half of GDP when one adds in transfer payments (welfare, social security, state and federal pensions, etc.) and the once proud American economy is a shadow of its former self, controlled largely by a handful of corporations which pay little to no tax.
That's OK. The economy isn't "bad enough," right?
Meanwhile, the advance-decline continues bleeding negative and new highs, new lows compress further, advancing toward equilibrium.
Gold and silver were off like rockets. This is rotation from risk assets to hard assets, and it's gathering momentum.
Dow 13,057.46, -115.30 (0.88%)
Nasdaq 3,053.40, -20.27 (0.66%)
S&P 500 1,402.08, -11.41 (0.81%)
NYSE Composite 8,011.44, -62.79 (0.78%)
NYSE Volume 3,019,112,000
Nasdaq Volume 1,392,715,500
Combined NYSE & NASDAQ Advance - Decline: 1743-3759
Combined NYSE & NASDAQ New highs - New lows: 82-47
WTI crude oil: 96.27, -0.99
Gold: 1,672.80, +32.30
Silver: 30.46, +0.90
Bonds, Stocks Trend Lower As Correction May Be Forming, Gathering Momentum
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
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
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
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