Dow Fails to Hold 14,000; Markets in Blah State

Market has a serious case of the blahs; Dow fails to hold 14,000. Expect it to hover below that level for another few weeks.

Sequestration is coming, but, until the politicians get serious about budget negotiations, the markets will reflect a similar attitude, as nothing special is expected.

Negotiations should have begun already, as the deadline is March 1, but, being as this congress is apt to procrastinate at every opportunity, don't expect anything substantive until the very end.

Meanwhile, it's tough to get excited about anything in this environment. Shorting or buying puts - other than for cheap protection - is out of the question, and the upside seems severely crimped.

Dow 13,982.91, -35.79 (0.26%)
Nasdaq 3,196.88, +10.39 (0.33%)
S&P 500 1,520.33, +0.90 (0.06%)
NYSE Composite 8,955.60, -2.00 (0.02%)
NYSE Volume 3,606,101,750
Nasdaq Volume 1,819,338,250
Combined NYSE & NASDAQ Advance - Decline: 3714-2716
Combined NYSE & NASDAQ New highs - New lows: 538-29
WTI crude oil: 97.01, -0.50
Gold: 1,645.10, -4.50
Silver: 30.87, -0.15

Print, Baby, Print; Dow Over 14,000 Again

The Dow topped the 14,000 mark for the first time since February 1, setting a closing high that was the best in more than five years.

Thank you, Mr. Bernanke.

There's no substitute for rampant liquidity in a market climate such as this one. Uncertainty continues to abound, the economies of the developed nations are in the proverbial toilet, circling the bowl either in recession (Europe), complete deflationary stagnation (Japan), or barely chugging along at under 2% GDP (USA).

Of late, the Japanese have embarked on "unlimited" quantitative easing (printing money with nothing at all backing it), though the US continues as king of the hill, with the world's largest sovereign economy, the Fed buying up all the rancid mortgage paper and monetizing the federal debt to the tune of $85 billion a month (a touch over $1 trillion per year, annualized).

Europe seems to be getting the message that it's finally time to play no-holds-barred currency war, though the socialists on the continent seem fairly sanguine about continuing their efforts to bail out banks and sovereigns one-by-one, a little at a time, rather than using the bazooka approach favored by Mr. Bernanke.

Sooner or later, the Europeans will devalue by printing, mostly because the high level of the Euro is crimping Germany's exports, and, if Germany's economy suffers, one can probably bet on the good people of Deutschland not being very supportive of the Euro and/or wanting more in return from their Euro-brethren to the south, who, like the American welfare caste, produce nothing, but get much in return.

So the US and other major countries will continue to print, print, print their feckless paper fiat, a time-honored practice that has never ended well, ever. In the meantime, however (and that meantime could stretch out to 2016, 2017, or beyond), one cannot fault stock investors in their search for yield. The past four years in stocks has been nothing but Fat City Easy Street to the xxxxxth degree. During the period from March 9, 2009 until the present, it's been nothing but straight up for stocks, to a point at which the general market is now sporting a 14 multiple, even though many companies are not growing earnings one whit, others making their numbers through cost-cutting and downsizing.

Global finance is in an unsustainable state, but, as long as the printing presses continue to churn out crisp currency, nobody seems to care.

There are signs that it's getting a bit wearisome. Oil is heading over $100 a barrel for WTI crude, despite a glut on the market, especially in the US. Food prices have moderated lately, but they're higher overall than a year, two, three years ago and will only rise from here.

It's a great market for speculators, especially those wearing blinders. Giddy-up!

Dow 14,018.70, +47.46 (0.34%)
NASDAQ 3,186.49, -5.51 (0.17%)
S&P 500 1,519.43, +2.42 (0.16%)
NYSE Composite 8,955.92, +36.90 (0.41%)
NASDAQ Volume 1,719,904,375
NYSE Volume 3,424,131,000
Combined NYSE & NASDAQ Advance - Decline: 4076-2361
Combined NYSE & NASDAQ New highs - New lows: 450-31
WTI crude oil: 97.51, +0.48
Gold: 1,649.60, +0.50
Silver: 31.02, +0.109

No Algo Meat Means No Volume

Since roughly 85% of all market activity is handled via computer algorithm-based trading, there's good reason to suspect that market volume, such as today's - fast on the heels of Friday, which was the lowest volume day of the year (until today) - is going to become the norm, especially if much of the market news is either mundane or bad.

That's because the algos heartily chomp on good market news, profit being (in the words of perma-bull Larry Kudlow) the "mother's milk of the economy," and aren't programmed effectively (some surely are) to quantify downside momentum.

Nobody really wants to see stocks go down, so the quants (programmers) are all really in the bull camp when it comes to writing algos that work.

Did any of these Wall Street whiz kids ever think that skimming the market for pennies with their HFT algos was a bad idea? That it might scare people away from the market and that it might result in a market - in a time when media is controlled and highly contrived - with no liquidity that could go bidless?

Somebody should have looked at the downside of HFT and algo-based trading, because we're getting dangerously close to a market in which nobody wants to participate.

Other than today being the lowest volume session of 2013 (don't worry, there's another 10 1/2 months left to get it even lower), there was nothing of particular interest, except that European finance ministers opened a two-day session in which they will concoct new, more efficient methods of kicking the debt can down their particular road to perdition.

Editor's Note: On Sunday, CBS 60 Minutes aired a piece on the trust, cartel, or monopoly otherwise known as the credit reporting agencies - Equifax, TransUnion and Experian.

Anybody who's ever dealt with these firms - and who hasn't - will find the information in this report somewhat on the tame side, though still worth viewing.

The entire credit reporting scheme operated by these three firms, at the behest of the banks, credit card and finance companies, is a violation of every American's fifth amendment right to due process. A class action should be filed through the ACLU and the Justice Department (good luck with that) to shut this system down. It is horribly flawed, turning everybody into a number. Shades of biblical Apocalypse, indeed.


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Dow 13,971.24, -21.73 (0.16%)
NASDAQ 3,192.00, -1.87 (0.06%)
S&P 500 1,517.01, -0.92 (0.06%)
NYSE Composite 8,919.02, -16.22 (0.18%)
NASDAQ Volume 1,551,395,750
NYSE Volume 2,830,052,000
Combined NYSE & NASDAQ Advance - Decline: 2925-3479
Combined NYSE & NASDAQ New highs - New lows: 332-31
WTI crude oil: 97.03, +1.31
Gold: 1,649.10, -17.80
Silver: 30.91, -0.531

Dow Posts First Losing Week of Year

Despite opening and remaining on the upside for the entire session, the Dow Jones Industrial Average still posted its first losing week of 2013, though the losses are quite insignificant.

At the close today, the Dow was down 17 points from the previous Friday, the NASDAQ gained 14 points and the S&P picked up four-and-a-half points, both of the latter on Friday having made up for marginal losses earlier in the week.

Generally speaking, Friday was a fairly dull session in what turned out to be an overall dull week. The one piece of economic data that was positive was the US trade deficit falling to -$38.5B, the lowest in nearly three years.

The fact that stocks have held up so well through the first month of the new year and beyond is rather remarkable, considering the winds of trouble still swirling about. However, there may be reason to take a pause - or profits - as markets seem to have stalled at multi-year highs.

With the Dow and, especially, the S&P nearing all-time highs, a triple-top breakdown could be imminent. Additionally, Sunday marks Chinese New Year with the Year of the Snake designated according to the Chinese astrological calendar. Snake years are usually turbulent. 1941 (Pearl Harbor) and 2001 (September 11) were both Years of the Snake.

Finally, in the video below, Peter Eliades explains how we are on the cusp of a major turning point according to his 9244-day cycle, from his work at Stockmarket Cycles.

Dow 13,992.97, +48.92(0.35%)
NASDAQ 3,193.87, +28.74(0.91%)
S&P 500 1,517.93, +8.54(0.57%)
NYSE Composite 8,930.49, +36.74(0.41%)
NASDAQ Volume 1,776,898,880
NYSE Volume 3,008,696,500
Combined NYSE & NASDAQ Advance - Decline: 4251-2137
Combined NYSE & NASDAQ New highs - New lows: 474-20
WTI crude oil: 95.72, -0.11
Gold: 1,666.90, -4.40
Silver: 31.44, +0.038

Stocks Drift Lower on Unemployment, Productivity Figures

It appears that the stock market may well be topped out for the short term, though the background of $85 billion in additional monthly stimulus will almost certainly help contain any declines to mere "noise" other than a true correction or change in market sentiment.

About the only thing that could alter the relentless, upward direction of stocks would be war, a series of natural disasters or an alien space invasion, and of those three, war would be the most likely. The suspected antagonists would be China vs. Japan, Israel vs. Iran or an expansion of US efforts in Northern Africa. Even in such a scenario, so intent is the Federal Reserve on its path to devaluing the currency in the name of progress or some nebulous, idealized vision of "growth at all costs," one would tend to believe their efforts at keeping stocks high and interest rates low would only redouble.

So it is that the major indices have come nearly all the way back to previous highs in the nearly five years since the epic crash of 2008-09 without the participation of many individual investors. The reasons contributing to such widespread investor shyness are manifold, highlighted by fear of high frequency trading, flash crashes, suspected manipulation, or the plain and simple conclusion that the stock market is riding on a bubble of Fed largesse which is eventually unsustainable.

It's unfortunate that so many have fled from the market in the midst of one of its most stridently bullish eras, but doubts and fears can linger for generations, and, beyond the market there is widespread distrust of other institutions which place themselves above the common man and often, the law.

While the United States, and, to a large part, Europe, struggles through this long winter of discontent, millions have made adjustments to their lifestyles, opting for more sustainable personal economies as opposed to the heavy-handed debt-as-money regime that seemed to have creaked and cracked in the '08-09 economic downturn. Many such individuals will never return to the market and among those that do, they will be cautious to a fault and ready to flee at the first signs of trouble.

Even though economists and stock-pushers continue the mantra of "recovery,' for most, the results of five years of heavy stimulus has produced perceptibly limited results, keeping the skeptics unconvinced.

Today's action was possibly (who knows for sure?) a reaction to economic data released this morning that say initial unemployment claims nearly steady at 366,000 and a dip in productivity for the fourth quarter of 2012 of two percent, pushing unit labor costs to an inflation-inducing 4.5% gain over the same period.

It is just those kinds of choppy data sets and unintended consequences that serve to amplify fears from main Street to Wall Street. the level of uncertainty about everything from price discovery to government machinations over the budgetary process continuing to put a ceiling on true progress toward a resoration of normalcy.

Dow 13,944.05, -42.47 (0.30%)
NASDAQ 3,165.13, -3.35 (0.11%)
S&P 500 1,509.39, -2.73 (0.18%)
NYSE Composite 8,892.85, 41.38 (0.46%)
NASDAQ Volume 1,916,361,875
NYSE Volume 3,865,233,750
Combined NYSE & NASDAQ Advance - Decline: 2441-3979
Combined NYSE & NASDAQ New highs - New lows: 357-26
WTI crude oil: 95.83, -0.79
Gold: 1,671.30, -7.50
Silver: 31.40, -0.474