Stocks Reverse Early Losses, Close Near All-Time Highs

Does it really matter why?

The Dow was down 116 points in early trading (9:45 am ET) after the monthly report on personal income and spending showed a modest (.02%) increase in spending but a 3.6% decline in income, the worst such loss in 20 years.

Futures markets had been pointing to a lower open to the first day of March, and the data exacerbated the condition.

However, stocks began to grind higher, eventually staying positive after turning into the green at noon. The remainder of the session was fairly undramatic, with traders speculating on just when the new all-time highs would be breached.

It's inevitable, no matter how bad the news is.

Meanwhile, the top clowns in Washington - Obama, Boehner, McConnell, Reid and Pelosi (the Fumbling Five) agreed to disagree about the sequester and allowed the cuts to happen, the president taking to the podium to announce the foolishness just before the lunch hour.

The it was off to the golf course for a quick round and afterward, martinis with the "in" crowd.

Ugh. Really, it's that bad.

On the bright side, the number of new 52-week lows has been slowly but steadily rising. Nothing close to parity yet, but it is a trend worth watching. One could make a case that the Dow and S&P might make new all-time highs just in time for a market reversal. After all, the current bull market is entering its 49th week with only one correction of more than 10% (August 2001), and as bulls go, this one's getting a bit long on the hoof.

Additionally, oil finished at its lowest price of the year, hovering just above $90 per barrel. Now, if that trend continues and translates into lower fuel prices, this sequestration idea might just turn out to be OK after all.

At the end of the week, a colleague pointed out this well-researched article which points up the real US debt. And you thought it was just $16.6 trillion.

Dow 14,089.66, +35.17 (0.25%)
NASDAQ 3,169.74, +9.55 (0.30%)
S&P 500 1,518.20, +3.52 (0.23%)
NYSE Composite 8,874.19, +5.48 (0.06%)
NASDAQ Volume 1,869,785,125
NYSE Volume 4,125,383,750
Combined NYSE & NASDAQ Advance - Decline: 3447-2852
Combined NYSE & NASDAQ New highs - New lows: 250-78
WTI crude oil: 90.68, -1.37
Gold: 1,572.30, -5.80
Silver: 28.49, +0.058

Dow Comes Close to All-Time High, Turns Back

Stocks keep grinding higher, but the all-time high on the Dow Industrials - 14,164.53, set October 7, 2007 - continues to be an elusive target, maybe attainable, but hardly one which anybody believes will hold for long.

The general consensus over the past four weeks or so has been that the market was in need of a pullback, to re-test support, before moving to higher levels.

Today's midday action seemed promising, especially when the Dow shot up more than thirty points in a matter of minutes, breaking out of a dull, smallish range and eventually getting to within just 16 points of the record.

Headwinds were blowing from Washington and elsewhere, however, and the Dow, S&P, NYSE Composite and NASDAQ all lost steam in the final ninety minutes, leaving all in the red on the day, the fade from record territory a disheartening sign to traders.

In the nation's capitol, the Senate failed to approve a measure that would have staved off the sequestration cuts scheduled to kick in at midnight tonight which might have been just enough negativity to keep the markets honest - for a change. Prior to the open, there was disappointment in the second estimate of 4th quarter 2012 GDP, which improved from -0.1 to +0.1, though the restatement was hardly enough to inspire any kind of confidence. Stocks limped through the morning session without much in the way of direction.

A number of stocks also kept the market in check. Following Wednesday's close, JC Penny (JCP) posted another in a series of horrifying quarterly reports, falling nearly 17% on Thursday. The much-ballyhooed turnaround by Apple wunderkind Ron Johnson has failed to materialize, the CEO admitting that he had made mistakes along the way, surely the understatement of the day, though he should be lauded for his honesty, albeit a bit late.

Wal-Mart (WMT), the nation and the world's largest retailer, continues to show signs of struggling, hovering around 70/share as Bloomberg released a story based on minutes from an officers' meeting that said the giant is having trouble keeping stores' shelves stocked with merchandise.

Somehow, there just seems a certain disconnect between the US economy and the US stock markets. Obviously one does not equate directly to the other, but with unemployment around eight percent, an enormous federal deficit, gridlock in Washington and an all-time high in food stamp recipients there seems to be no good reason for stocks to be at all-time highs except for no other reason than the liquidity-driven rally fomented by the Federal Reserve since 2009.

Stocks may or may not reach new highs in short order, though from the looks of things on the ground, it's certainly not cause for celebration by the masses and surely does not seem a sustainable condition.

Any trader worth his or her chops should probably be shoveling in physical silver and gold by the bucketfuls, as both are hovering near five-month lows.

Dow 14,054.49, -20.88 (0.15%)
NASDAQ 3,160.19, -2.07 (0.07%)
S&P 500 1,514.68, -1.31 (0.09%)
NYSE Composite 8,868.72, -6.61 (0.07%)
NASDAQ Volume 1,909,055,500
NYSE Volume 3,801,066,000
Combined NYSE & NASDAQ Advance - Decline: 3204-3212
Combined NYSE & NASDAQ New highs - New lows: 308-46
WTI crude oil: 92.05, -0.71
Gold: 1,578.10, -17.60
Silver: 28.40, -0.548

Forget the Sequester; Bernanke Has All the Cards (and all the money)

Nothing like a couple of days in the woods - away from the Sturm und Drang of the neo-rational markets and shrieking media pundits - to offer a bit of perspective on not only the economic realities of the day, but the human condition in general.

What appeared to be the inevitable swoon the naysayers have been long-hoping-for on Monday, with markets taking their most violent downturn of the year, was quickly overruled on Tuesday and absolutely trumped and superseded with the third-best gain (on the Dow, at least) of the year on Wednesday.

Not that there wasn't a good share of associated nonsense and rationale for each of the directional market moves, but, in the end, it was a wash and a win for the erudite chairman of the Federal Reserve, Mr. Ben Bernanke, who availed himself of the opportunity to alternately receive and give both praise and chiseled criticism to both chambers of Congress in his annual Henry Hawkins testimony and the adjoining question and answer periods. We rest assured that the Chairman is content that not only are his policies of ZIRP and QEternity the correct ones for the US and global economies (because as goes the US, so goes the world at this juncture), but also that he has convinced most members of congress that they are working. Besides, there's nothing the congress nor the president nor any other person or assemblages can do about said policies, right, wrong or otherwise.

He is, for all intents and purposes, master of the financial universe. So be it.

Noting the chairman's unadulterated power to influence and control the economics of the world, skeptics still advertise their discontent, brining up the untidy details of the unwinding of his easy money regime, but this argument is a chimera, a cloak for ineptitude, a misunderstanding, a falsity, an impotent attempt to fleece power from the unbridled king of money, because the chairman and his cronies at the Fed are not at all concerned with unwinding anything. Their policies will remain in effect until the next chairman and governors are appointed/elected, and then such unwinding - if there ever is one at all - will be their problem.

For the rest of us, who do not enjoy the luxuries of appointments or elections, but rather suffer the daily slings, swings and arrows of outrageous fortune (or misfortune), a plan is a necessity, though those offered by the shysters and criminals populating the financial services industry might not always be in our own self-interest, if only because they contain the notion of conceit that markets are always optimized and correct, risk is always contained and humans always make rational decisions.

History will prove all three of those basic financial tenets absolute falsehoods. That is why we have booms and busts, successes and failures, joy and tears. Existence is not guaranteed and a fruitful existence is only attainable at some others' expense, such is the basis of capitalism.

So, a note, as the congress and the president sit upon their fattened hands awaiting the monster of their own creation - sequestration - which commences on March 1st, but in reality is more a boogie-man-in-the-closet apparition than an actual threat to the economy, especially on a local, individual, human level. It's something on the order of a two percent cut in the discretionary budget - domestic programs (not welfare, Social Security Medicare or Medicaid) and defense spending - thrown against the background of a baseline budgeting process which automatically increases the spending on these programs by three to ten percent in the upcoming continuing resolution process (which has displaced the budget process for five years now) due to commence by mid-March. In effect, the sequester is a non-sequitur - it is utterly meaningless.

Still, a plan one must have for the Ben Bernanke era, so make one, and make sure it includes not buying a new car unless you are willing and able to pay for it in cash or can get 0% interest for the life of the loan (hey, the banks get that rate, why not you?) which should be no longer than five years. Your plan should also include the paying down or clipping up (or maybe both) of all your credit cards except one for dire emergencies, unless you have $10,000 or more in cash safely hidden away in your back yard or sock drawer (though a safe would seem a more prudent place).

Those are the starting points, but check to see if you are playing more than 1/3 of your net income (after taxes) on housing. If you are, move. Downsize. There are plenty of deals available at excellent prices, even though the housing market in many places has yet to bottom.

And here's something that bugs the heck out of some people: It doesn't matter if you make $20,000, $200,000 or $2,000,000 a year. Spending four to five dollars on a cup of coffee is stupid. Stop it. Put Starbucks out of business. And stop all the other dumb, extravagant, ludicrous things like lottery tickets, day spas, dining out and "entertainment." Well, you don't have to stop them altogether, just be sensible about your spending. A very wise man (my father, RIP) once said, "it's not how much you make, but how much you spend." That kind of depression-era advice can go a long way these days (since we're in another depression but don't really know it. Shhh... the banks are faking it).

Remember at all times that financial news - even news on specific stocks - is marco-news, and, thus, will have little effect on your own personal condition.

Save. Don't invest. Save 5-10% of your gross income and put it into cash or physical gold or silver or tangible assets which will hold their value no matter what (a tough find).

Grow yourself some herbs, fruits or vegetables. Seriously. There's nothing like the taste of something you've nurtured from seed or seedling or sapling to a ripened delicacy. And, it's relatively easy. Nature does most of the work. Wall Street has nothing that compares to the return you get from a handful of seeds, sunshine and rain. Beyond that, you will be the envy of your neighbors, who aren't nearly as smart or thrifty or nature-loving as you. There's something to be said for that.

All hail the great Bernanke! Amen.

Dow 14,075.37, +175.24 (1.26%)
NASDAQ 3,162.26, +32.61 (1.04%)
S&P 500 1,515.99, +19.05 (1.27%)
NYSE Composite 8,875.33, +109.15 (1.25%)
NASDAQ Volume 1,726,024,500
NYSE Volume 3,911,747,250
Combined NYSE & NASDAQ Advance - Decline: 4528-1799
Combined NYSE & NASDAQ New highs - New lows: 252-38
WTI crude oil: 92.76, +0.13
Gold: 1,595.70, -19.80
Silver: 28.94, -0.317

Market Message: Buy the Dip

Lemmings that they are, the traders and their algo-infested computer programs did what all good followers do, they followed the lead set down by the futures market prior to the open and bought stocks all day long, erasing a good portion - more than half - of the losses incurred over the past two sessions.

It being Friday and options expiration, all the boys and girls will be out having champagne and lobster in lower Manhattan tonight.

Today's results do not imply that all's right with the market, though an amazing disparity can be seen on days in which program trading is the norm as opposed to humans actually taking a hand in making bets, as was the case on Wednesday.

The fears inspired by the release of January's minutes were quickly dispelled this morning on CNBC's Squawk Box, as Fed governor James Bullard plainly stated that the Fed was not going to change policy any time soon, as though anyone in their right mind would have believed otherwise.

So, Wall Street is saved and Main Street will continue to muddle through, making the best of customers with SNAP cards and the proceeds from trips to the Coinstar machines.

Silver and gold closed out the week still at bargain-basement prices.

Dow 14,000.57, +119.95 (0.86%)
NASDAQ 3,161.82, +30.33 (0.97%)
S&P 500 1,515.60, +13.18 (0.88%)
NYSE Composite 8,887.40, +77.11 (0.88%)
NASDAQ Volume 1,540,804,625
NYSE Volume 3,463,590,000
Combined NYSE & NASDAQ Advance - Decline: 4713-1718
Combined NYSE & NASDAQ New highs - New lows: 191-42
WTI crude oil: 93.00, +0.16
Gold: 1,572.80, -5.80
Silver: 28.46, -0.239

Stocks Trashed Again on Brace of Poor Economic Data

Possibly more than anything else, the horrific -12.5 print by the Philadelphia Fed was responsible for the added declines on Thursday, following Wednesday's setback after the FOMC minutes from january were announced.

The market was expecting a reading of 1.5 from the Philly Fed in its survey of business conditions, which, in and of itself, is a bit of an embarrassment, but were greeted with an even lower number for February after january came in at a disappointing -5.8. Obviously, there's little to no catalyst for improvement in the region, and the same is pretty much true in other Fed outposts, though the Philadelphia survey gets more attention, it representing a solid hub of business activity.

Beyond the sorry report, other economic data was less-than-encouraging. First-time unemployment claims ticked up 20,000, from a revised 342K last week, to 362K in the latest reporting period, dashing - for the time being - any hope of a rebound in employment.

This is a fickle, almost psychotic market. On the one hand, traders get worried that the Fed will take away the punch bowl of unlimited QE and low interest rates, but, on the other, they are equally concerned that the general economy is again approaching stall speed, as it did last year and in 2011 in the early months.

Whatever the market is feeling these past two days, it is mostly confusion and consternation. The major averages took some serious dips into the red today before a wicked, final-hour, short-covering rally brought them close to unchanged on the day, eventually failing in the final half hour of trading.

One can hardly blame the shorts for pulling a quick trigger on their positions this afternoon. Attempting to short this market and counter the Fed's relentless money creation machine has been a losing trade for the better part of four years and its a testament to the resolve of the non-believers to hold true even on a two-day reversal.

US markets were not the only ones being handed their hats on Thursday. European markets were shattered even worse after a key reading on services and manufacturing fell from 48.6 in January to 47.3 in February, well short of expectations, where the consensus was 49. It may be finally dawning on european investors that various bond schemes by the ECB and austerity measures in various countries aren't producing the desired effects and may even be contributing to continued weakness in the Eurozone.

Taken together, the Eurozone and the US are beginning to look like a pair of gussied-up party girls after a long night on the town. The makeup is fading and cracking and the hangover is setting in with a passion.

Even though two days of trading does not constitute a trend of any sort, the past two have been the worst in succession for US stocks this year and there may not be much of a respite with sequestration issues and a budget battle looming between the opposing parties in the nation's capitol, and those are two fights the American public is hardly keen on, as congress and the president have both shown an unwavering reluctance to handle pressing business like adults, preferring to play the blame game and seek short-term, band-aid types of approaches.

How the markets play out over the next few weeks and months will go a long way toward determining the mood on Wall Street and Main Street, and the mood - despite the best intentions by business - is beginning to show signs that patience is growing exceedingly thin.

Elsewhere, gold got a bit of a dead-cat-bounce after a month of steady declines, giving back those gains during the open session, though silver remains mired at multi-month lows. The metal prices may move even lower, in union with stocks, although one would be hard-pressed to find an actual physical holder of either willing to part with any or all of his or her holdings. Suppression by central banks and other operators has been well-documented, and the more they push down, the more dire conditions for a sharp response become.

Crude oil also has been taken a beating as speculators are having their lunch eaten. Overabundant supplies of WTI crude and slack demand is causing a serious disruption in the trading, which has been nothing but straight up since December. Oil and gas at the pump are about to get a whole lot cheaper.

It's getting a little bit interesting out there after the champagne rally of the first seven weeks of the year. The A-D line has been in reversal for two straight days and today's new highs - new lows reading was nearly at parity, a condition foreign to these markets since last November.

Dow 13,880.62, -46.92 (0.34%)
NASDAQ 3,131.49, -32.92 (1.04%)
S&P 500 1,502.42, -9.53 (0.63%)
NYSE Composite 8,816.74, -66.88 (0.75%)
NASDAQ Volume 2,007,395,000
NYSE Volume 4,414,224,500
Combined NYSE & NASDAQ Advance - Decline: 1942-4569
Combined NYSE & NASDAQ New highs - New lows: 104-78
WTI crude oil: 92.84, -2.38
Gold: 1,578.60, +0.60
Silver: 28.70, +0.077