Washington Gets Back to Work (Kinda); Stocks Slump Despite (Kinda) Positive Data

Tuesday began with a flurry of good news.

First, over in Bizzarro-world(aka Europe), EU ministers were glad-handing and slapping each other's backs for another successful bailout of Greece (really, is this the third, fourth or fifth? Who's counting?), then, at 8:30 am ET, durable goods orders came in better than expected.

At 9:00 am ET, the September Case-Shiller Housing Index showed another in a series of positive gains for housing. Better yet, consumer confidence hit a four-and-a-half-year high, reported at 10:00 am ET.

So, why were the markets in such a sour mood, why did they end lower, and why were they not even lower than where they finished?

Ah, grasshopper, so many questions...

First, that somewhat refreshing zero print on durables was, in fact, pretty ugly, once one ventured to peek under the hood. As Zero Hedge reports, a continued collapse in durable goods new orders virtually guarantees that we're already in a recession, fiscal cliff or not (more on that canard later).

The Case-Shiller data, which showed the average price of a home purchase up by 3.6% nationally, has to be faded a little, only because housing is not stocks, and, even though home-buying is a relevant statistic, it matters little in the broader scheme of things, especially when the banks are keeping massive numbers of homes off the market in what's known as "foreclosure stuffing." Those in the know, really, really do know.

As far as the consumer confidence number, well, anybody who allows themselves to be branded a consumer for purposes of a survey can't be all that bright, after all.

In the case of the nth installment of the Greek bailout, there were scant details, the IMF hasn't signed off on it yet, the "deal" has to be approved by each member (17) country, so, the Euro sold off, anathema to US markets.

And then, about 2:30 pm ET, US lawmakers (that's a joke, son) emerged from talks over the fiscal cliff (that's not a pun, son) and did what everyone thought they'd do, since their track record is so plain and clear on this point: point fingers at the other side for not playing fairly.

Senate majority leader Harry Reid: "...little progress with Republicans..."

Senate minority leader Mitch McConnell: "...some difficulty turning off the campaign..."

Is it any surprise to anybody that working out a deal in DC was going to be a difficult, if not impossible, issue? After all, this whole "fiscal cliff" miasma started more than a year ago when the two sides failed to reach conciliatory postures on increasing the debt limit, and that puny increase of roughly $1.2 trillion is about to run out.

So, with no deal even remotely being discussed, the Titans of Wall Street started selling in earnest and continued selling into the close. They will probably still be selling when the opening bell rings on Wednesday and maybe even beyond that, because depending on Washington politicians to reach a concord on any matter of even insignificant importance is like getting cats and frogs to behave well together. It's just not going to happen.

Further, indispensable reading from the Wall Street Journal comes in the form of an editorial by Chris Cox and Bill Archer - respectively, former chairman of the House Republican Policy Committee and the Securities and Exchange Commission and former chairman of the House Ways & Means Committee - explaining why the fiscal cliff of $600 billion is merely a puff of smoke compared to the conflagration that is the real unfunded liabilities of Medicare and Social Security, refreshingly written in language even a protesting Wal-Mart worker could comprehend.

The saga continues to unfold tomorrow. Oh, by the way, so many people did their holiday shopping on Thanksgiving, Black Friday, Small Business Saturday and online on Cyber Monday this year, and, considering that since Turkey Day was so early this year that there's an extra week in the holiday shopping season, retail sales are going to be very slow for the one, two, three, four next weeks, until the last Saturday before Christmas (the 25th is a Tuesday), so, Happy Holidays! Free houses, Greek bailouts, durable goods and fiscal cliff-diving for everyone... including consumers!

Dow 12,878.13, -89.24 (0.69%)
Nasdaq 2,967.79, -8.99 (0.30%)
S&P 500 1,398.94, -7.35 (0.52%)
10-Yr Bond 1.65% -0.02
NYSE Volume 3,294,930,000
Nasdaq Volume 1,762,521,750
Combined NYSE & NASDAQ Advance - Decline: 2462-3041
Combined NYSE & NASDAQ New highs - New lows: 154-40
WTI crude oil: 87.18, -0.56
Gold: 1,742.30, -7.30
Silver: 33.98, -0.156

Early Case of Holiday Blahs for Equities

Trading was sluggish and mostly to the downside in the morning session - likely on quick profit-taking from the Black Friday rally - but capital was re-allocated in the afternoon, as stocks rallied into the close.

Concerns over resolution to US fiscal issues and Europe's finalizing yet another round of financing for Greece kept stocks in the red for almost the entire day, except for the NASDAQ, which was boosted largely on trades in Apple (AAPL), which was up more than three percent on the day.

There was little in the way of economic data or corporate news to move markets, as trading volumes were at low levels.

Simply put, there wasn't even a left-over turkey leg to Friday's rally as traders were quick to pul the sell lever with so many issues overhanging the markets.

The Dow, down as much as 109 points before noon, rallied to close near the best level of the day, which, of course, means nothing.

Things should get more interesting as news of talks between Republicans and Democrats on the "fiscal cliff" issue begin to circulate throughout the week.

Dow 12,967.37, -42.31 (0.33%)
Nasdaq 2,976.78, +9.93 (0.33%)
S&P 500 1,406.29, -2.86 (0.20%)
NYSE Composite 8,197.48, -28.02(0.34%)
NYSE Volume 2,833,759,250
Nasdaq Volume 1,559,037,750
Combined NYSE & NASDAQ Advance - Decline: 2636-2880
Combined NYSE & NASDAQ New highs - New lows: 124-40
WTI crude oil: 87.74, -0.54
Gold: 1,749.60, -1.80
Silver: 34.14, +0.021

Dumbest. Rally. Ever.

Will markets never learn?

Every year, on the half-day session that is Black Friday, stocks get a giddy bounce over the prospects of rabid holiday shopping frenzy and a warm, cozy, holiday feeling about consumer spending.

This year's half-day wonder was no exception. In fact, it was exceptional, as stocks soared at the open and added to outsize gains on extreme low volume. The gains were among the top five, point-wise, for the major averages this year, surging through overhead resistance, especially on the S&P 500, which broke above its 200-day moving averages. It was a sucker's rally to beat all suckers.

Priced into the advances were widespread, solid rumors that third quarter GDP would be revised upward from 2% to 2.8 or maybe even 3% next week.

These signs of exuberance may be tempered once the politicians get back into the mix. Republicans and Democrats are reportedly far apart on negotiations to solve fiscal cliff issues, with Republicans still demanding that Bush-era tax cuts on the rich remain in place, while Democrats wish to raise rates on earners over $250,000 per annum while keeping in place lower rates for the rest of American taxpayers.

Rest up and get some exercise to work off those additional pounds socked away on Thanksgiving. Everyone will be in need of extra energy to keep up with developments next week.

And just in case anybody thought the truce in the Middle East was one of lasting quality, Israelites and Palestinians barely took a break in killing each other. In response, silver tallied the biggest percentage gain of the day (2.23%) and gold rose by more than $23.00. So much for stability.

Black Friday Special: Free houses with zero down leases with no payments until the Fed raises interest rates, on new Cadillacs for everybody!

Dow 13,009.68, +172.79 (1.35%)
Nasdaq 2,966.85, +40.30 (1.38%)
S&P 500 1,409.15, +18.12 (1.30%)
NYSE Composite 8,220.31, 108.13(1.33%)
NYSE Volume 1,423,529,125
Nasdaq Volume 743,239,875
Combined NYSE & NASDAQ Advance - Decline: 4192-1058
Combined NYSE & NASDAQ New highs - New lows: 135-37
WTI crude oil: 88.00, +0.62
Gold: 1,752.10, +23.90
Silver: 34.10, +0.745

Stocks Get Pre-Holiday Bounce on Israel-Gaza Truce

Looking as hard as possible for positive news upon which to launch a rally, the Wall Street casino got what it wanted from US Secretary of State, Hillary Clinton, who brokered a truce in the ongoing warfare between the state of Israel and militants in the Gaza Strip.

Announced just after noon Eastern Time, the truce was to begin at 2:00 pm ET, or roughly 9:00 pm Tel Aviv time.

How long the truce will remain n force is anybody's guess. The conflict in the Palestinian area of the Middle East has been going on for as long as most of us can remember, so whatever is achieved will be short-term at best, just like almost everything else these days, a matter of how far down a given road one can kick a can.

Outside the news that Palestinians and Israelis won't be trying to kill each other overtly for a few days, there was little going on to make investors optimistic.

Hostess, which had been in bankruptcy and was the recent victim of an ill-advised strike by the baker's union, went through a day of mediation and returned to court, where the judge signed off on liquidation of the company that used to make Ho-Hos, Twinkies, Ding-Dongs and assorted junk foods that have contributed in no small way to the epidemic of diabetes in this country.

Probably, it's for the good of the country - and fata$$es worldwide - that the company goes under.

Looking ahead, there's a half-day session on Friday, following the Thanksgiving holiday, which usually results in an eventually meaningless Black Friday rally as millions of misguided Americans crowd stores, malls and shopping centers to buy worthless trinkets and electronic gadgets for friends and relatives.

Too bad Christmas will never get here, as the world is scheduled to end on December 22, according to the Incas, or Aztecs, or somebody.

Well, nobody likes a Scrooge at this time of year, so...

Free iPads and Houses for Everybody! And free Twinkies, too!

Happy Thanksgiving. Stay hungry, my friends.

Dow 12,836.89, +48.38 (0.38%)
Nasdaq 2,926.55, +9.87 (0.34%)
S&P 500 1,391.03, +3.22 (0.23%)
NYSE Composite 8,112.20, +25.78 (0.32%)
NYSE Volume 2,647,812,000
Nasdaq Volume 1,406,020,500
Combined NYSE & NASDAQ Advance - Decline: 3577-1856
Combined NYSE & NASDAQ New highs - New lows: 108-71
WTI crude oil: 87.38, +0.63
Gold: 1,728.20, +4.60
Silver: 33.35, +0.42

Amid Flurry of News and Rumor, Stocks End Flat

It's not official until Thursday, but we're pretty much in the holiday season, which means a few things:
1. Trading volumes should be low;
2. Volatility will not manifest (unless there's a war or no deal on the fiscal cliff);
3. A lot of people will be booking profits, i.e., selling;
4. Nobody will take anything with any enormous level of seriousness; people will be more concerned with shopping, eating and visiting relatives and friends.

While those are broad considerations, they more than likely point to a sideways-moving market for the next few weeks. Not to say that there won't be money to be made - there always is - but adroitness and nimble movements will be the key to staying just slightly ahead of the curve.

There's a very good possibility that although the general indices will remain somewhat range-bound, the actual swings could be large from lows to highs. Considering that the Dow is coming off an 1100 point decline, there's room on the upside as well as ample opportunity for the congress and president to blow the whole deal on the fiscal cliff - in fact, the likelihood of them posturing, fuming, arguing and delaying the deal until the last possible moment is paramount.

So, the advice for the remainder of 2012 is as follows: play along, keep tight stops, but look for opportunities as they present themselves. We're going nowhere but sideways to down, with the probability of an upside move of say, 500 Dow points, about zero, while the probability of a huge move in the opposite direction is about 30=40%.

During the recent pullback, every rally was sold into, and every sell-off was partially exacerbated by a little bit of panic - not over losing money, but losing what profits one had already achieved. There were two major downdrafts over the past month: the first, mid-to-late October, and the second, larger move, right after the election and lasting until yesterday.

Anyone paying attention will note that the Dow and the BASDAQ are both still mired below their 200-day moving averages, while the S&P continues to flirt with the up-and-downside of its own 200-day MA. These are difficult positions to maintain, and, in the case of all of the major indices, there is nearly unlimited potential to slide, as no solid support is evident. Today's scary mid-afternoon plunge was fought off by some spirited insider buying. If there's any clue to the action, it's that those heavily-invested in this market are not fully out, nor are they fully exposed. There's still too much on the table needing to be resolved.

Just as yesterday's rally was a one-off event, so too today's nothing finish after a number of major events, including a possible truce in the Israel-Hamas conflict (not gonna happen), Hewlett-Packard (HPQ) writing down nine billion of an $11 billion investment and claiming fraud; the biggest insider trading scheme ever being exposed and set to be prosecuted. That was almost enough to tip the averages over the edge, but, for whatever reasons and whatever positions they are defending, the big money inside Wall Street was not about to let it happen. Not certainly just before a holiday and the start of the retail buying spree.

It's going to get more interesting, but not until next week. In the meantime, everybody's on pins and needles, not the kind of seat one would prefer for a Thanksgiving dinner.

Dow 12,788.51, -7.45 (0.06%)
Nasdaq 2,916.68, +0.61 (0.02%)
S&P 500 1,387.81, +0.92 (0.07%)
NYSE Composite 8,086.41, +6.12(0.08%)
NYSE Volume 3,182,159,250
Nasdaq Volume 1,585,562,750
Combined NYSE & NASDAQ Advance - Decline: 2870-2606
Combined NYSE & NASDAQ New highs - New lows: 108-88
WTI crude oil: 86.75, -2.53
Gold: 1,723.60, -10.80
Silver: 32.93, -0.259