Stocks Take Another Beating; Dow Off 185, NASDAQ in Correction

All the issues and problems facing the US and global economies are coming home to roost in a perfect storm of excessive debt, fiscal intransigence, monetary experimentation, overpriced equities, general distrust of leadership, lack of growth, geopolitical tension and poor earnings prospects for corporations.

The selloff today was a continuation of what's been occurring since before the election, but has accelerated dramatically since. Wall Street is quite unhappy with prospects that President Obama will not budge from his position to eliminate the Bush tax cuts on the wealthiest two percent of Americans, as emphatically spelled out in an early afternoon press conference.

The president was cool, calm and collected, fielding questions on a variety of topics, but, even though he mentioned compromise frequently, he did not waver in his commitment to tax the wealthy at more than their current rates, including gains on investments, particularly - Wall Street fears - regular income and dividends.

Taking their cue from the president's message, stocks, which opened briefly higher, but quickly fell deep into the red, made new lows nearing the end of his remarks and continued lower into the close, the Dow suffering a 185-point loss and the NASDAQ reaching levels 10% below their recent highs, crashing into correction territory.

With all of the major indices, including even the Russell 2000 of mostly small cap stocks, continuing their descent below their respective 200-day moving averages, bottoms were sought out, though none could be found.

The massive run-up which began in March of 2009 is being unwound, with most of the blame being laid upon the politicians in Washington, DC, though there are more than a few more scapegoats, notably the greed and feed crowd that started the entire mess - the irresponsible banking community and their masters of control, the Federal Reserve.

With the dual policies of ZIRP and massive monetization, the Fed enabled much of Wall Street's excess and continues to do so even today. The neo-Keynesian policies of Ben Bernanke and his predecessor, Alan Greenspan, has spawned a debt bubble deflation crisis that they cannot - as much as they try - spend their way out of.

Most individual investors have been fleeing the market or have already taken their seats on the sidelines, so the damage being done to stocks is going to impact the middle and upper classes the most, with 401k, investment and pension plans taking the brunt of the declines.

In particular, Dow stocks, seen by many as representing the core of American industrialism, have lost more than 1100 points since their highs in early October, erasing most of the gains made throughout the year.

While Washington politicians dither over negotiations to avoid massive tax increases and huge budget cuts (which some say are needed), investors are worried that whatever solution they arrive at will be too little, too late and more of a can-kicking exercise than real reform.

With the holidays fast approaching, Americans are not in a mood for more business as usual from either Wall Street or Washington, and the anger is growing, even on Main Street, where small businesses continue to suffer or skirt taxation completely.

The next few days and weeks could easily turn into a crisis more severe than that of 2008, since none of the improprieties produced by that financial peer into the abyss have yet to be resolved, and now there are fewer measures the Fed or the Treasury can employ to keep the economy afloat.

If anyone thought that the crisis in America was over - to say nothing of the even worse conditions in Europe - they should pay close attention to what happens over the next sixty to ninety days, because they will surely be replete with wild market swings, irony and recriminations from all sides against each other.

Surviving into and beyond 2013 will be a major test of not only the American spirit but of Americans' willingness to accept leadership. President Obama's election to a second term was probably the correct choice, but he alone cannot fix the mess others created.

After today, the bankers and the wizard genii of Wall Street should be running for cover they should have sought out years ago.

Today was a truly dark day, though, from the looks of things, there are many more to come.

Grow some crops if you can, stay close to home and loved ones, and remember our motto: FREE HOUSES FOR EVERYONE!

Dow 12,570.95, -185.23 (1.45%)
NASDAQ 2,846.81, -37.08 (1.29%)
S&P 500 1,355.49, -19.04 (1.39%)
NYSE Composite 7,903.42, -119.81 (1.49%)
NASDAQ Volume 2,103,531,000
NYSE Volume 4,062,878,250
Combined NYSE & NASDAQ Advance - Decline: 822-4741
Combined NYSE & NASDAQ New highs - New lows: 39-333 (WoW!)
WTI crude oil: 86.32, +0.94
Gold: 1,730.10, +5.30
Silver: 32.88, +0.393

Slipping Over the Fiscal Cliff? Stocks Dumped at End of Day

Today's late day action isn't what has been the norm for this artificially-pumped-up market for the last three-and-a-half years. Normally, at the end of the session, the markets stage a "miracle" rally out of the blue, then send futures soaring into the next day's trading.

Today was a little bit different and investors better get used to it or get out, go short or just suffer losses.

Fear of the US going over the fiscal cliff and sending the economy into a tailspin recession would be an unabashed disaster, but that seems to be more on the mind of traders than anything else these days. The problem is that the issues facing the US government aren't going away soon and aren't likely to be solved by a president who's done little in four years and a congress that's done nothing good for the American public for the past 12.

So, after taking on a 67-point loss on the Dow in early trading, stocks regained their momentum (what little there was), based largely on results from Home Depot (HD) which beat third quarter estimates and was traded up to a 12-year high on the day. As has been the pattern recently, however, the rally which took the Dow up 83 points was quickly sold off, and, in the final hour of trading, stocks took the beating they so richly deserved in the morning.

If not for the bogus midday rally (which, remarkably, was a pan-Atlantic event, taking all European stock indices up sharply at the closes of their sessions), the Dow may well have suffered a 100+ loss, but the day-trading crowd that controls all buying and selling with their wickedly fast HFT computer algos couldn't have that, so, the small loss is what got cooked into the day.

With no economic news and very few significant companies reporting third quarter earnings, the markets are stuck with waiting on the government for solutions, and, from what we've seen here and in Europe and Japan, that can be a long and painful wait.

The action continues tomorrow, with just two days left before options expiration on Friday. This current round hasn't been pretty nor profitable for many.

It was the fifth straight day in which new lows topped new highs (and by a widening margin) and the same for the A-D line being negative. all of the major indices are trading below their 200-day moving averages, with no relief in sight.

Dow 12,756.18, -58.90 (0.46%)
NASDAQ 2,883.89, -20.37 (0.70%)
S&P 500 1,374.53, -5.50 (0.40%)
NYSE Composite 8,023.23, -30.83 (0.38%)
NASDAQ Volume 1,814,780,250
NYSE Volume 3,427,123,250
Combined NYSE & NASDAQ Advance - Decline: 1773-3741
Combined NYSE & NASDAQ New highs - New lows: 56-249
WTI crude oil: 85.38, -0.19
Gold: 1,724.80, -6.10
Silver: 32.49, 0.035

Tug-of-War Continues on Wall Street as Stock Stay Flat

Is this the new, post-election normal, or, is there just so much uncertainty in the markets that half the crowd is buying while the other half is selling?

One thing is for certain: stocks have gone nowhere - eventually settling roughly where they started - for the second session in a row. This kind of directionless pattern leaves everybody shaking their collective heads, and, on a day like today - in which bond markets were closed in observance of Veteran's Day - it's assumed that nobody made much money, including the brokerages, because volume was so low.

Currently, there is a dearth of news and the markets seem to be waiting for some kind of resolutions in Washington over the issue of the "fiscal cliff," but if Wall Street waits until the politicians do a deal, it could be a long wait indeed.

With no catalyst to the upside and stocks sitting pretty much under resistance (the Dow and NASDAQ under their 200-day moving averages, S&P sitting right on its), there's a good probability that another leg downward could be forced by some outside event - a black swan, so to speak - though nobody has any idea where or what such an event would look like.

What is a little bit odd about the trading over the past two days is that it's so close to options expiry on Friday. One would normally be expecting a ramp-up, and, that could come on Tuesday or Wednesday, regardless of what anyone thinks, hopes or believes. Wall Street is still run on the dual emotions of greed and fear, and if there's no fear (the vix was well down today), greed will overtake it and move stoks higher. Traders have to trade, and they'd rather be advising clients to get in now, off the recent move lower, than be selling on their own or their clients' behalves.

The odd trading pattern that was evident on all the major exchanges saw the averages up for the first half hour, slide slowly to the lows of the day just after 11:00 am, bottom, and then race to highs of the day in a straight line between 12:15 and 1:15 pm.

That was all she wrote, however, as stocks took a stair-step pattern back to the break even line, making the day look like a day-trader's nightmare, which it may well have been.

There was virtually nothing notable to report in either Europe or the US, though Japan's economy shrank by 3.5% in the third quarter, further evidence of the global slowdown. On the other side of the ledger, China announced strong exports, but their data has been proven time and again to be often more fiction than fact.

China may well have increased exports recently, but to whom, and why? Global demand has been flat to declining, so maybe China has rediscovered McDonald's secret sauce to fuel its success.

None of that mattered a whit in the US or Europe, which was also lackluster.

Tomorrow may be different, but, it may be more of the same. That's just the environment we have.

A couple of indications may be worthwhile in the advance-decline line, which was marginally negative, and the fat that new lows outpaced new highs for the fourth day in a row, something of a trend developing, maybe.

Dow 12,815.16, -0.23 (0.00%)
NASDAQ 2,904.26, -0.61 (0.02%)
S&P 500 1,380.00, +0.15(0.01%)
NYSE Composite 8,059.68, +6.11(0.08%)
NASDAQ Volume 1,351,375,130
NYSE Volume 2,503,732,250
Combined NYSE & NASDAQ Advance - Decline: 2343-2901
Combined NYSE & NASDAQ New highs - New lows: 89-174
WTI crude oil: 85.57, -0.50
Gold: 1,727.70, -3.20
Silver: 32.38, -0.147

Wall Street Peers Over Fiscal Cliff, Likes the View, Maybe

Only in the Wall Street casino can such madness prevail.

When the S&P 500 index closes almost exactly on its 200-day moving average on a day in which it was down, then up sharply, then down, then up again and finally closing almost where it started, one has a sense of the level of manipulation designed to produce the maximum level of uncertainty.

It's working.

The day started with stocks down sharply, but slowly advancing in anticipation of Rep. John Boehner's brief news conference shortly after 11:00 am ET, during which it sold off slightly before rising - after his very abrupt departure - to what would turn out to be the highs of the day, up 78 points on the Dow, just before President Obama made prepared remarks at 1:07 pm. During and just after the president's appearance, the Dow lost all of its gains and fell briefly into negative territory, a move of 103 points in just under an hour.

Stocks spent the rest of the afternoon folling along the line of unchange, with a couple of sharp rises just to keep things interesting.

Naturally, the final hour turned into a circus microcosm of the day, with the Dow up, down, up, down and eventually closing with a gain of four points.

So much for resolution.

The dueling parties in Washington preened and postured for the cameras and microphones while the wise guys in New York pushed buy and sell buttons with just enough pressure to keep markets in suspended animation for the full session, miraculously ending with gains of less than 10 points on all exchanges (four or less excluding the NASDAQ).

It was politico-socio-psycho-econo theater at its best.

There's surely more to come from the recently-re-anointed crowd in Washington and the usual suspects in New York as we end our way through the final seven weeks of 2012.

While the news and financial networks scramble and flail about trying to explain the undesirable effects of falling over the "fiscal cliff," though Wall Streeters seem perfectly at ease tip-toeing along the precipice. One gets the distinct feeling that the deal has already been struck and the rest is just for show.

How to trade it? Well, one can take the virtuous route and ignore it all, or play along with the pros and prepare to be beaten by their wickedly swift HFT algos which scan and skim every trade.

Bottom line is that there is no actual bottom line, so long as Ben Bernanke sits quietly in the background, his finger poised to punch up another couple hundred billion dollars as needed, along with his counterpart, Mario Draghi, in Europe.

Did somebody mention Europe? That place where equally nothing matters? Yes, they're still out there, kicking their own can further down the road to perdition.

With the elections in the US over and done with, it's back to business as usual, wherein neither the politicians nor the bankers can lose.

For all you poker fans, the market did leave a couple of "tells." Gold and silver notched nice gains again, and, for the third day in a row, new lows slaughtered new highs, 231-76.

That's a pretty fat slice of salami laying out there, Wall Street. Some of us actually notice... and our appetite is good.

Dow 12,815.39, +4.07(0.03%)
NASDAQ 2,904.87, +9.29(0.32%)
S&P 500 1,379.85, +2.34(0.17%)
NYSE Composite 8,053.56, +2.74(0.03%)
NASDAQ Volume 1,802,865,630
NYSE Volume 3,572,545.750
Combined NYSE & NASDAQ Advance - Decline: 2707-2778
Combined NYSE & NASDAQ New highs - New lows: 76-231
WTI crude oil: 86.07, +0.98
Gold: 1,730.90, +4.90
Silver: 32.60, +0.359

Stocks Get Whacked Again; Dow Down 100+; Support on Major Indices Breached

Make no doubt about it, there's real fear on Wall Street.

For the second day in a row, stocks spent the day wallowing in negative territory, amid fears of the fiscal cliff - higher taxes, imposed budget cuts, more - the souring condition of the European Union, notably Greece and, yes, Germany, post-election hand wringing, and generally overpriced stocks in a market that is supposed to be buoyed by unlimited bond purchases by the Federal Reserve.

Word to the Street: It's not working.

Stock market participants who were brave enough to bid stocks up at the open (aka, suckers) were immediately punished for thinking that after the worst down day in a year on the Dow, stocks were ready to rebound, as all the major averages got a brief boost at the open but fell back into the red shortly after the first half hour of trading.

Trading volumes were brisk and stocks continued to gyrate lower, finally ending with a rush to finish at the lows of the day right at the closing bell, hardly an encouraging sign for those who believe this recent pull-back was nothing but blues for Mr. Romney's loss in the presidential sweepstakes.

All of the major indices closed below their 200-day moving averages, the first time this has happened since the end of May, beginning of June, when investors were worried that the Fed would not extend its easing measures (they did, of course).

In the current environment, traders are more or less on their own. Many funds have closed their books for the year and are taking on losses as sharp-nosed hedge fund managers skewer the slow-footed and long-term types with shorting and controlled demolitions of individual stocks and groups. High beta stocks, which posted the greatest gains over the past 10 months, are being hammered relentlessly as profit-taking has become more akin to skinning tomatoes, a slippery job at best and a troublesome trade at worst.

There are scant buyers, though the "semi-invisible" hand of the Plunge Protection Team (PPT) may actually be keeping stocks from falling directly into the East River or beyond.

Foreign markets have been hard hit as well, with almost all Asian, European and Latin American markets feeling the pinch the past two days.

In Europe, the truly laughable situation that the ECB finds itself in is truly one for he history books, as Greece steps closer to civil war after voting once again for austerity measures and another round of cash from the monetary authorities in Brussels and Germany. Thing are relatively quiet in the other Southern European detor nations, though Spanish bond yields are beginning to rise, frightening everybody from Angela Merkel - who wants more time (sorry, honey, you've had enough) - to Mario Draghi, who has expressed openly that the lone bright spot in the EU - Germany - is beginning to lose its luster.

Thankfully for most traders, tomorrow is Friday, making the end of what will likely go down as one of the worst weeks of the year, with the Dow down more than 400 points thus far, and the issues presented to the market anything but resolved.

It's been said many times that the market hates uncertainty, and that's all they've got in front of them presently. Worse yet, the underlying conditions set by global central bankers are proving more destructive and costly than anyone could possibly have imagined (except for a few select bloggers and out-of-the-mainstream market watchers). The favored positions of bailing out banks, major companies and sovereign nations with increased easing of monetary policy and near-zero interest rates has created an environment with no escape hatch.

The hands of the central bankers are tied, and with them, all appendages of the trading community. If there was ever a time to book profits (what's left of them), it's now, or rather, it was Tuesday. Since the massive ramp job in anticipation of a Romney victory, stocks have been beaten and battered to a point at which the Dow now sports a gain of less than 600 points on the year, roughly a five percent move from the close of 12217.56 on December 30, 2011.

The NASDAQ being the hardest-hit in the recent downtrend, had the most to give up and is still holding onto a gain of nearly 300 points, having begun the year off the close at 2605.15 at the end of last year. Starting the year at 1257, the S&P 500 is still holding onto a 120-point gain, just less than 10% higher on the year, which, in normal times, would be considered excellent, but those gains seem to be eroding faster than the confidence that the Democrats and Republicans in Washington can find an ultimate solution (they can't; they're broke themselves).

New highs have been subsumed by new lows, 91-185, the second straight day in which the lows have registered a win. It, however, this is just the beginning of a correction of seven to fifteen percent, there's further to fall, something many on wall Street don't want to think about until maybe Monday, when all hell may break loose.

There's still one more day to get through this week and all pretense has been removed. There's a general fear about being in the market at all presently and the last man standing is not the preferred position, nor is the act of catching a falling knife, currently the only places left on the market floor.

From a chartists' perspective, the move lower was nearly overdue, but the timing could not have been more predictable after the major indices made new highs in early October, fall back, and failed to achieve those same levels later in the month, at which point began the eventual fall-out. The bull market which began in March of 2009 is now getting a little long in the tooth, at 44 months, and it could be all she wrote as third quarter results were messy to horrifying and Wall Street's dirty little secret - that stocks are not growing their earnings - is beginning to get out.

Tomorrow could see a bit of a snap-back, dead cat bounce, but all indications are that more pain is ahead and that period could extend through the remainder of 2012 and into next year.

There were winners, ominous ones at that: gold and silver.

Dow 12,811.32, -121.41 (0.94%)
NASDAQ 2,895.58, -41.71 (1.42%)
S&P 500 1,377.51, -17.02 (1.22%)
NYSE Composite 8,050.83, -87.98 (1.08%)
NASDAQ Volume 1,876,133,130
NYSE Volume 3,759,670,250
Combined NYSE & NASDAQ Advance - Decline: 1462-4062
Combined NYSE & NASDAQ New highs - New lows: 185-91
WTI crude oil: 85.09, +0.65
Gold: 1,726.00, +12.00
Silver: 32.24, +0.579