Terrific Turnaround Thursday Presages Friday's Key Jobs Report

Whipsawing the markets today in the US were a variety of cross-currents that send stocks screaming into the red in the morning and elevating to new heights in the afternoon.

Most important of all was probably the US$/Yen carry trade, in which the dollar, weakening over the past few days against the Yen took a very large hit just prior to the noon hour in New York, sending the pair below 97 (it had been as high as 105 recently), shaking investors and proponents of Abenomics, the massive stimulative package that has the imprimatur of Japan's Prime Minister, Shinzo Abe.

The Nikkei had closed modestly lower, keeping intact the downside move that has been in place the past few weeks, but the slide in the dollar was against more than just the Yen. The Euro was especially strong, after comments from ECB head Mario Draghi buoyed European markets. On the dollar dive, stocks also took it on the chin, with the Dow losing 117 points at the bottom of the day's trading range.

Also weighing on the markets were the week-long riots and demonstrations in Turkey, a key player in world markets and something of a hinge between the Middle East and the European Union. Turkey also borders Syria, as dangerous a place as there is in the world today, and tensions in Turkey could signal more widespread discontent of the citizenry from Ireland to Ethiopia, to say nothing of its value as a NATO ally and buffer against Russia, with whom we are still at war in a protracted, proxy kind of way.

Earlier in the morning, figures on initial and continuing unemployment were released, and though they were moderately improved, investors were looking past them, toward tomorrow's non-farms payroll release by the BLS.

That number is supposed to come in at around 165,000 new jobs created in the month of May, and speculators are placing bets on both sides of the coin. If the number comes in below 140,000, it will be viewed as a weak labor market, meaning that the Federal Reserve cannot - or at least should not - begin tapering its massive bond purchases. Any number over 190,000 would register as a strengthening of the employment market, meaning that the Fed could begin considering tapering as soon as their June meeting in less than two weeks (June 18-19).

Thus, a stronger US economy (unlikely) would be bad for stocks, and a weak employment picture would be good. Such is the strained logic permeating Wall Street in these strange days.

From top to bottom, the range on the Dow was nearly 200 points, but even with the rise - set off when the S&P and Dow Industrials almost simultaneously pierced their respective 50-day moving averages - the rally (or was is just a dead cat bounce) failed to erase half the losses from Wednesday's melt-down.

Sentiment appears to be changing slightly, however, as more and more speculators become aware of the inept nature of the Fed and central banks everywhere, unable to stem the tide of deflation and a sluggish global economy.

Tomorrow's jobs reports may be important to some, though it is more than likely to be a non-event, with a wide berth given to gauge the response of the Federal Reserve. Besides, it's going into a weekend and none of those Wall Street hotshots want to head to the Hamptons in a bad mood.

Of course, there's more at stake than just jobs and the economy and whether stocks should be the primary asset in one's portfolio. Bonds, buffeted about by the changing paradigm of currency devaluation and rapidly escalating trade wars have firmed up somewhat, with the ten-year closing just above a two percent yield.

On Tuesday, the EU imposed stiff tariffs on Chinese solar panels, and yesterday, the Chinese retaliated by suggesting levies on imports of French, Italian and Spanish wines, hitting the Europeans where it hurts.

With the late-day rally, the advance-decline line was positive and new lows - new highs were nearly even. Much of today's rally was likely built off of short-covering, as shorts remain gun-shy, stung by the continued beatings they've taken over the past four years, though that condition appears prime to undergo some significant change.

The wheels are beginning to come off, as Fed policies are being seen as largely ineffective and a massive waste of money, while world events should continue to heat up in coming weeks and months. Volatility could not be subdued forever and the risk that the bull market is over continues a distinct possibility.

Volume in equities was strong. Gold and silver had solid showings, especially gold, which breached the key $1400 mark to the upside.

Dow 15,040.62, +80.03 (0.53%)
NASDAQ 3,424.05, +22.58 (0.66%)
S&P 500 1,622.56, +13.66 (0.85%)
NYSE Compos... 9,260.47, +82.05 (0.89%)
NASDAQ Volume 1,732,547,125
NYSE Volume 4,008,892,500
Combined NYSE & NASDAQ Advance - Decline: 4676-1833
Combined NYSE & NASDAQ New highs - New lows: 89=87
WTI crude oil: 94.76, +1.02
Gold: 1,415.80, +17.30
Silver: 22.71, +0.235

Stocks Clipped; Maybe Bad News isn't So Good After All

This was a bit of a shakeout. There was no late rally to save the day, nor was there - oddly enough - any talk of tapering by Fed officials.

No, today was just one of those days that the market had a good look in the mirror and didn't like what it was seeing. Smart money is already out of the equity markets, but the dumb money will probably be looking to buy the dip, as has been the modus operandi for the past four-years.

It was mentioned here yesterday that this appeared to be an opportune time to go to cash or go short. That call could not have been more prescient as stocks fell out of bed and continued to roll on the floor, writhing in pain the rest of the session, having the worst two days since mid-April, which, considering where the market has traversed since then, could be only the beginning of a long, deep decline.

Marketeers will blame today's selloff on poor ADP numbers and maybe the ISM Services index, both coming in with disappointing reports, but data has been trending poorly for the past two months (some say four years) and the market is just now beginning to wake up to the reality of the depression being felt across the country and around the world. Business activity has slowed in almost every sector or has not grown at any kind of solid, sustained pace for most of the past six months, all the while equities were going through the roof.

If this is the beginning of a serious correction or the end of the bull and the beginning of a bear market, today and yesterday's action was just a warm-up.

Wall Street may be blind to poor economic data for a long time, but when the selling starts and there's real money to be lost, the traders all act like herd animals, rushing for the quickest way out.

Even though volume was not magnificent, the declines speak for themselves. The Dow Jones Industrials took a 1 1/2 percent hit today and are now three percent from the top, made on May 28.

The A-D line continues to deteriorate, with today's coming in a 4-1 for the losers; new lows exceeded new highs for the first time in months. Keep an eye on that metric for more clues to where this is going.

A June swoon or a hungry bear?

Dow 14,960.59, -216.95 (1.43%)
NASDAQ 3,401.48, -43.78 (1.27%)
S&P 500 1,608.90, -22.48 (1.38%)
NYSE Composite 9,189.21, -130.88 (1.40%)
NASDAQ Volume 1,728,689,625
NYSE Volume 3,620,423,750
Combined NYSE & NASDAQ Advance - Decline: 1369-5151
Combined NYSE & NASDAQ New highs - New lows: 69-108
WTI crude oil: 93.74, +0.43
Gold: 1,398.50, +1.30
Silver: 22.47, +0.063

Dow Ends Absurd Tuesday Streak; Stocks Breaking Down

The Dow Jones Industrials ended a string of 20 consecutive gains on Tuesday, with a blood-red beating on this day. The streak of ending positive for 20 consecutive Tuesdays was probably due - more than anything else - to POMO dates, but the concept is that the market is becoming like fantasy baseball, where stats on every conceivable construct are trotted out, such as a player's propensity to steal a base during a day game with his team ahead after three straight wins against a left-handed pitcher with a non-Latino playing right field.

That comparison may be a touch on the deep side, but the pint is that market statistics are useless in the past unless they offer some meaningful insight into the future and Tuesday gains do not pass the smell test.

There is nothing good about this market. Now would - in some people's opinions - be a good time to go short or go to cash.

Of course, since many readers of this blog are already in cash, that would mean going short is at an optimal point.

If one would like the comfort of shorting an entire index, the S&P is a good bet, for individual stocks, there are many from which to choose, but the most enticing are social media companies with extreme valuations, such as Facebook. Zynga was a disaster waiting to happen, and it did, though its low share price (threes and change) seriously precluded any dowside participation. Yahoo (YHOO) also appears ripe for a substantial revaluation to the downside. Industrials also seem to be at risk, but the market has yet to price in any effects of a global slowdown.

At the bottom of everything is currencies, and they remain the key element in the ongoing destruction of all fiat currency not backed by tangible assets. There is a severe collateral crisis combined with grand theft at the pinnacle of government worldwide, a now-vicious devaluation regime and capital velocity fast approaching zero.

Blackrock and Nuveen funds were prominent among new 52-week lows.

Any kind of growth reported by any government anywhere has to be suspect and viewed with a maximum of skepticism.

Despite cutting lossed roughly in half by the close, there was nothing to like about the overall action in equity markets. What began as a bit of slippage a few weeks ago is quickly turning into a correction, most of which will be predicated upon the numbers released by ADT (tomorrow) and the BLS non-farm payroll report, Friday.

15,000 on the Dow and 1600 on the S&P are major psychological levels which should not be overlooked.

Dow 15,177.54, -76.49 (0.50%)
NASDAQ 3,445.26, -20.11 (0.58%)
S&P 500 1,631.38, -9.04 (0.55%)
NYSE Compos 9,320.08, -37.01 (0.40%)
NASDAQ Volume 1,767,142,375
NYSE Volume 4,025,642,750
Combined NYSE & NASDAQ Advance - Decline: 2263-4193
Combined NYSE & NASDAQ New highs - New lows: 228-145
WTI crude oil: 93.31 -0.14
Gold: 1,397.20, -14.70
Silver: 22.41, -0.312

Good News Is OK, but, Bad News is Awesome, Baby!

When the ISM Index posted a May reading of 49 today - showing contraction - there wasn't much reaction in the markets.

That release came at the same time - 10:00 am EDT - as the Construction Spending data, up 0.4%, though on expectations of a gain of 1.1%. For the general economy, neither data point would, could or should be considered good signs.

It took a while for investors speculators to figure it out, but, essentially, bad news for the general economy is really great news for stocks, because it suggests that the Federal Reserve, under the guidance of the spectacularly inept Ben Bernanke, will continue to goose stocks by supplying enormous amounts of stimulus via their bond-buying program without pausing, tapering or even considering slowing down at all.

When San Francisco Fed President John Williams said that tapering of the bond buying program could occur as early as this summer, he was shortly thereafter countered by Atlanta President James Lockhart who said the FOMC backs the stimulative measures.

After 2:00 pm EDT, the computers had it all figured out and sent stocks to the highs of the day into the close.

As long as the cheap (nearly free) money keeps flowing, the banks love it and will keep bidding up stocks to the sky and maybe beyond. One would tend to believe that in the event of a nuclear holocaust or the earth being hit by a giant-sized meteor, wiping out 90% of the global population, stocks would stage a rally that would make 16,000 on the Dow look like a spec in the rear-view mirror.

That's the twisted view that permeates the granite canyons of Wall Street, with no end in sight. For the bankers and their stock-trading units, the computer algos and the big bonuses, the Fed is the gift that just keeps on giving, depriving savers of any reasonable options and the worse the economy goes, the more money will be pumped into the global stock market Ponzi.

Too bad that gold and silver out-performed all of the major indices today, by a bunch. Besides that, the number of advancing issues just barely beat the decliners, and the new highs-new lows reading finally succumbed to the pressure and went negative for the first time in quite a while, a signal that should spook investors (how it affects computers is not well-known).

Whatever the case, it's all good, or bad, or, um, oh, forget it.

Dow 15,254.03, +138.46 (0.92%)
NASDAQ 3,465.37, +9.46 (0.27%)
S&P 500 1,640.42, +9.68 (0.59%)
NYSE Composite 9,356.14, +53.87 (0.58%)
NASDAQ Volume 1,965,356,375
NYSE Volume 4,495,515,000
Combined NYSE & NASDAQ Advance - Decline: 3409-3093
Combined NYSE & NASDAQ New highs - New lows: 189-262
WTI crude oil: 93.45, +1.48
Gold: 1,411.90, +18.90
Silver: 22.72, +0.478

Where's the Money? Sellers Swamp Market Late on Last Day of May

The only major index that finished up on the last day in May was the Nikkei, but, that index closed the month in negative territory - not by much - but that was a result the "unlimited" QE by the BOJ was supposed to make impossible.

Impossibility. It's a word tossed around until the impossible become possible, then probable, then actually happens. The Titanic sank. Buster Douglas beat Mike Tyson. Secretariat lost (I was there, at the whitney Stakes at Saratoga in 1973). Sometimes, the Yankees don't make the playoffs, let alone win the world series.

As impossible as it may seem for the Dow Industrials to reverse course in the final 2 1/2 weeks of May and lose all the momentum supplied by $85 billion a month in bond purchases by the Fed, it happened. Unlimited money printing, when al is said and done, may not be the panacea for free market capitalism. In fact, it may be just the opposite, and Mr. Market may finally have seen enough, though we probably won't know, at the earliest, until Friday of next week, when the June employment data is released in the BIS non-farm payroll figures.

If this is the beginning of the end for failed central bank policy-making, that may take longer to discern.

In any case, stocks meandered in the early going on Friday, before settling into selling mode at 2:00 pm EDT, and really accelerating in the final hour of trade. There doesn't need to be a reason, just a sentiment, which could be a reality: that the general world economy is slow at best, receding, at worst.

It could be technical, since the US indices were making new all-time highs on just about a daily basis until just about a week ago.

The culprit could be bonds, as the 10-year's spike to 2.18 intra-day had some investors and speculators re-examining the stocks versus bonds paradigm.

Or it could be Ben Bernanke, whose exit strategy from the relentless easy money will be to retire from the chairmanship of the Federal Reserve. We wish him... well, we're not going there.

In any case, stocks sold off to give the Dow and S&P back-to-back losing weeks for the first time this year, with possibly more to come. Volume on the day was quite robust, the A-D line was better than 4:1 losers over winners, and, no, the number of new 52-week lows did not exceed the new highs, but it was close.

To finish off what could be a watershed week, here's Dan Hicks and His Hot Licks performing part of today's title, "Where's the Money" from the 1972 album of the same name:


Dow 15,115.57, -208.96 (1.36%)
NASDAQ 3,455.91, -35.38 (1.01%)
S&P 500 1,630.74, -23.67 (1.43%)
NYSE Composite 9,302.27, -157.79 (1.67%)
NASDAQ Volume 1,879,071,500
NYSE Volume 4,366,197,000
Combined NYSE & NASDAQ Advance - Decline: 1358-5007
Combined NYSE & NASDAQ New highs - New lows: 215-182
WTI crude oil: 91.97, -1.64
Gold: 1,392.60, -18.90
Silver: 22.24, -0.447