As has been the case for many weeks (as noted in Friday's posting), stocks could simply not find any meaningful reasons to move to higher ground, even in the wake of a big move by Apple after a federal jury awarded Apple $1 billion in its patent infringement case over rival Samsung.
Apple stock hit an all-time high of 680.87 in early trading, but drifted lower throughout the session.
Veteran tape-watchers (we're fairly certain there are a few left out there) must have dozed off from another in a seemingly-endless stream of low-volume, noiseless, motion-defying trading. All but the first and last hours saw any significant action. The trading range on the Dow amounted to less than 80 points from top to bottom, with stocks selling off in the final hour and closing near the lows of the session.
Of the major averages, only the NASDAQ finished in positive territory, though it was green by only three points. The Dow was the biggest percentage loser, off 0.25% on the day.
Otherwise, there was little to no interest in equities on first day of the final unofficial week of summer, prior to the three-day Labor Day holiday.
Traders may be asleep at the switch and/or holding positions until after the holiday and Ben Bernanke's speech to the assembled central bankers and key economists at Jackson Hole on Friday.
Many on Wall Street are expecting Bernanke to signal another round of quantitative easing (QE), as he did in his 2010 speech, though skeptics of that theory abound, citing politics (the elections are nearly just two months away) and the muddled and murky economic picture as reasons the chairman of the world's largest central bank will not offer specificity in his remarks.
Additionally, ECB president Mario Draghi will present at the symposium, though his record for signaling specific policy actions are spotty at best. Draghi, as well as most European politicians, seems always to be long on rhetoric and short on delivery of specifics.
Outside of some M&A activity and Apple's move higher, the week began with a dolorous thud and will likely end that way unless Bernanke can be convinced that the time for the Fed to act - once again - is now. The high degree of uncertainty and doubt in the markets and general economy will likely keep a lid on what have to be viewed as excessively overpriced stocks and accompanying indices.
Dow 13,124.67, -33.30 (0.25%)
NASDAQ 3,073.19, +3.40 (0.11%)
S&P 500 1,410.44, -0.69 (0.05%)
NYSE Composite 8,033.93, -13.94 (0.17%)
NASDAQ Volume 1,363,789,875
NYSE Volume 2,439,756,500
Combined NYSE & NASDAQ Advance - Decline: 2676-2833
Combined NYSE & NASDAQ New highs - New lows: 162-45
WTI crude oil: 95.47, -0.68
Gold: 1,675.60, +2.70
Silver: 31.05, +0.43
Monday, August 27, 2012
Friday, August 24, 2012
Stocks End Week with Gains (as usual); Do Weekly Options Drive the Markets?
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
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
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
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