Having - i some small ways - dispelled the concept that reaching for fantastic numbers such as Dow 20,000 is somehow productive, traders today took no heed of... well, anything, and pushed the DJIA close to the historic, albeit meaningless, mark.
That was early in the day. Shortly after the noon hour, the Dow had given up nearly all of the gains (all 160+ points) and was close to UNCH for the day. At the same time, the big run-up in WTI crude - to its highest level in 18 months (July 2015) - quickly was eviscerated, sending crude back below the break-even point for the day and into the red, where it closed on the NYMEX (53.49, -1.17).
However, the trading was not over on the stock exchanges and market participants seemed determined to open 2017 on a positive note, which they did, the major averages closing about 25% off their high points of the day.
Gains were well distributed, with nine of ten sectors positive, led by basic materials and energy. The only loser was utilities, though the loss was mild (-0.07%).
None of this one-day-one-off momentum-fest should be cause for alarm nor excitement. It's a new year, loaded with new ideas and fresh money and that money needs to go to work. While there are still impediments and potholes on the road to a brighter economic future and higher stock prices, none of that appeared to be of any consequence today.
Tomorrow may be another story with the very good possibility that the Dow will pierce the golden 20,000 mark and go well beyond. On the other hand, the evidence from the final two weeks of 2016 was robust in telling that the Trump rally from election day forward had run out of steam, so sideways could be the order of the day.
Money Daily was correct in predicting that Dow 20,000 would not be achieved in 2016. The second hypothesis was that it wouldn't reach that number until June of this year. Our third and most bombastic call was to say that Dow 20,000 may not be hit until 2023. Note the word MAY. We did not say the Dow would NOT reach 20,000 by that time, only that it MAY NOT. Big difference, but the call is based on a nascent understanding that everything in finance-land is not as rosy as the fake news media might have all of us believe.
The concept is very deep and rooted in a theory that the bulk of stock gains since the GFC of 2008 were achieved only though the means of depreciating and nearly decapitating currencies around the world. If money is cheaper today than it was yesterday, assets will accordingly be priced appropriately higher. Of course, should this free-money regime persist (we think it won't) then Dow 20,000 is not only achievable in the short run, Dow 30,000 would be in the kluge lights in short order, as would Apple at 250, and sirloin steaks at $24 a pound. In other words, inflation, then hyperinflation - such as is the case in Venezuela today - would make pricing irrelevant. Survival on $100,000 a year would be challenging and nobody is looking forward to that kind of nightmare scenario.
So, we see the gains of the last eight years as chimeras, and fading. And, if they fade, they will continue to fade until they are almost all gone. Not that a major, dramatic, collapse in prices would be a panacea for a better world, but only one which could be called closer to rational.
That's the view.
At the Close: 1.3.17:
Dow: 19,881.76, +119.16 (0.60%)
NASDAQ: 5,429.08, +45.97 (0.85%)
S&P 500: 2,257.83, +19.00 (0.85%)
NYSE Composite: 11,154.35, +97.46 (0.88%)
Tuesday, January 3, 2017
Saturday, December 31, 2016
2016 Ends On Sour Tone As Stocks Sell Into Year-End Close
At the Close: 12/30/2016:
Dow: 19,762.60, -57.18 (-0.29%)
NASDAQ: 5,383.12, -48.97 (-0.90%)
S&P 500: 2,238.83, -10.43 (-0.46%)
NYSE Composite: 11,056.90, -17.43 (-0.16%)
Over the final three weeks of 2016, the financial community focused on not buying Christmas presents or planning a New Year's gala event, but boosting stocks to a point at which they could be sold for a tidy, late-year profit, and they did so by ramping up the Dow Jones Industrial Average to stratospheric levels before dumping the blue chip shares into the laps of terminally brain-dead bag holders, i.e., pension funds.
This maneuver was rather artfully crafted, with the financial media cheerleading the ascent to the magical "Dow 20,000" level, which, as most readers will note, is anything but magic. The figure is plainly something upon which ordinary people (pension fund managers) could focus their extremely short spans of attention. 20,000 points on the Dow can be compared to other nostalgic remnants of history, like 300 million Americans, 60 home runs, or five percent unemployment.
These are just numbers, and, while numbers themselves don't lie, when placed in a variety of contexts, the narratives blur the lines between fact and fantasy. To say that a certain level of unemployment is "maximum", or that another number is an historic record (and thus something to which others can aspire) reinforces the perceived value of such a figure. It does not change the fact that the number itself is innocuous, lonesome, and static.
Having control over vast swaths of money and capital, as do central bankers and their agents, allows considerable control over the flow. Stocks and commodities are easily controlled by such enormous hordes of cash and certificates; bonds and real estate less so. Thus it's no surprise that US stocks went into overdrive upon the election of Donald J. Trump as the 45th US president. This was after various implied warnings about a massive correction should the media star and real estate mogul win the election and was also on the heels of an enormous dumping in the futures market. Unwashed have limited insight, knowledge or memory of how large was the shift from futures to the US open on the day after the election and how well orchestrated was the late-stage rally from early November until just before Christmas.
From November 9 through December 13, the Dow added in excess of 1900 points (from 18,332.74 to 19,974.62), a gain of 1641 points, or, more than 8% in a period of less than seven weeks.
In other words, anybody who was right about Trump winning (not as out-of-the-question as the media had everybody believing) and wrong about the market outcome made a simple, inexcusable error of judgement. Those people trusted the same media narrative that was lying to them on both ends. As it turns out, Mr. Trump was a viable candidate capable of winning the election and the market was going to rally upon his victory, not drop into a sinkhole.
It was a great setup keyed by none other than everybody's favorite globalist central bankers and their agents at Goldman Sachs, the latter group eventually the recipient of more than just a few, token places inside the incoming Trump administration, but also the benefactor in a mammoth stock run which added significantly to the wealth of insiders at, or close to the center of the firm.
But Dow 20,000 was not to be. It was the cherry on top of the sundae meant for the little guy, but it was devoured by ravenous market forces otherwise known as naked short sellers, ostensibly, the large money crowd.
So, 2016 ends with a whimper rather than a shout. Delusional traders and hopeful investors will likely bear witness to more of the same chicanery in 2017. Nobody wants to admit that they're mere pawns on a global chessboard, therefore damming themselves behind a wall of self-doubt, misinformation, lies, and half-truths.
Happy New Year!
Week Ending 12/30/2016:
Dow: -171.21 (-0.86%)
NASDAQ: -79.57 (-1.46%)
S&P 500: -24.96 (-1.10%)
NYSE Composite: (-71.90, (-0.65%)
Dow: 19,762.60, -57.18 (-0.29%)
NASDAQ: 5,383.12, -48.97 (-0.90%)
S&P 500: 2,238.83, -10.43 (-0.46%)
NYSE Composite: 11,056.90, -17.43 (-0.16%)
Over the final three weeks of 2016, the financial community focused on not buying Christmas presents or planning a New Year's gala event, but boosting stocks to a point at which they could be sold for a tidy, late-year profit, and they did so by ramping up the Dow Jones Industrial Average to stratospheric levels before dumping the blue chip shares into the laps of terminally brain-dead bag holders, i.e., pension funds.
This maneuver was rather artfully crafted, with the financial media cheerleading the ascent to the magical "Dow 20,000" level, which, as most readers will note, is anything but magic. The figure is plainly something upon which ordinary people (pension fund managers) could focus their extremely short spans of attention. 20,000 points on the Dow can be compared to other nostalgic remnants of history, like 300 million Americans, 60 home runs, or five percent unemployment.
These are just numbers, and, while numbers themselves don't lie, when placed in a variety of contexts, the narratives blur the lines between fact and fantasy. To say that a certain level of unemployment is "maximum", or that another number is an historic record (and thus something to which others can aspire) reinforces the perceived value of such a figure. It does not change the fact that the number itself is innocuous, lonesome, and static.
Having control over vast swaths of money and capital, as do central bankers and their agents, allows considerable control over the flow. Stocks and commodities are easily controlled by such enormous hordes of cash and certificates; bonds and real estate less so. Thus it's no surprise that US stocks went into overdrive upon the election of Donald J. Trump as the 45th US president. This was after various implied warnings about a massive correction should the media star and real estate mogul win the election and was also on the heels of an enormous dumping in the futures market. Unwashed have limited insight, knowledge or memory of how large was the shift from futures to the US open on the day after the election and how well orchestrated was the late-stage rally from early November until just before Christmas.
From November 9 through December 13, the Dow added in excess of 1900 points (from 18,332.74 to 19,974.62), a gain of 1641 points, or, more than 8% in a period of less than seven weeks.
In other words, anybody who was right about Trump winning (not as out-of-the-question as the media had everybody believing) and wrong about the market outcome made a simple, inexcusable error of judgement. Those people trusted the same media narrative that was lying to them on both ends. As it turns out, Mr. Trump was a viable candidate capable of winning the election and the market was going to rally upon his victory, not drop into a sinkhole.
It was a great setup keyed by none other than everybody's favorite globalist central bankers and their agents at Goldman Sachs, the latter group eventually the recipient of more than just a few, token places inside the incoming Trump administration, but also the benefactor in a mammoth stock run which added significantly to the wealth of insiders at, or close to the center of the firm.
But Dow 20,000 was not to be. It was the cherry on top of the sundae meant for the little guy, but it was devoured by ravenous market forces otherwise known as naked short sellers, ostensibly, the large money crowd.
So, 2016 ends with a whimper rather than a shout. Delusional traders and hopeful investors will likely bear witness to more of the same chicanery in 2017. Nobody wants to admit that they're mere pawns on a global chessboard, therefore damming themselves behind a wall of self-doubt, misinformation, lies, and half-truths.
Happy New Year!
Week Ending 12/30/2016:
Dow: -171.21 (-0.86%)
NASDAQ: -79.57 (-1.46%)
S&P 500: -24.96 (-1.10%)
NYSE Composite: (-71.90, (-0.65%)
Thursday, December 29, 2016
Santa Claus Rally? Bah, Humbug; Dow Sheds 111 Points
After all the hoopla and expectations surrounding the magical "Dow 20,000" mark, it appears that some investors have made up their minds and are selling the rally, as any astute big hitter might.
While its fun to think that stocks will continue to reach ever higher and higher levels forever into the future - a reasonable strategy for those with a 20 or 30-year time horizon - it isn't exactly realistic to expect stocks that are already at historic levels to keep chasing higher.
The arguments in favor of a correction grow stronger with each passing month. The bearish position is bolstered by any number of factors, including:
Extreme valuations (stocks are trading well above the average P/E of 16)
Recent performance (prior to Wednesday's triple-digit decline, the Dow has gained nearly 2000 points (12%) since November 8)
Weak macro data including soft industrial production, capacity utilization, spotty data worldwide)
Strong dollar (normally bad for US exporters and thus, many US stocks)
Recent hike in the fed funds rate and the potential for continuing interest rate gains making bonds more attractive as an alternative to stocks
Zero to negative income growth for the majority of the population
Record stock buybacks reducing participation and making a mockery of EPS
Market timing vis-a-vis capital gains taxes (January is usually be a great time to book gains)
Chasing stocks at this juncture is a fool's errand, as it would amount to the inverse of the "buy low, sell high" adage that has guided even novice investors for eons.
There are more than a few out there reading the tea leaves for what they are rather than what they appear to be.
At the Close, Friday, December 28, 2016:
Dow: 19,833.68, -111.36 (-0.56%)
NASDAQ: 5,438.56, -48.89 (-0.89%)
S&P 500: 2,249.92, -18.96 (-0.84%)
NYSE Composite: 11,058.88, -87.52 (-0.79%)
While its fun to think that stocks will continue to reach ever higher and higher levels forever into the future - a reasonable strategy for those with a 20 or 30-year time horizon - it isn't exactly realistic to expect stocks that are already at historic levels to keep chasing higher.
The arguments in favor of a correction grow stronger with each passing month. The bearish position is bolstered by any number of factors, including:
Extreme valuations (stocks are trading well above the average P/E of 16)
Recent performance (prior to Wednesday's triple-digit decline, the Dow has gained nearly 2000 points (12%) since November 8)
Weak macro data including soft industrial production, capacity utilization, spotty data worldwide)
Strong dollar (normally bad for US exporters and thus, many US stocks)
Recent hike in the fed funds rate and the potential for continuing interest rate gains making bonds more attractive as an alternative to stocks
Zero to negative income growth for the majority of the population
Record stock buybacks reducing participation and making a mockery of EPS
Market timing vis-a-vis capital gains taxes (January is usually be a great time to book gains)
Chasing stocks at this juncture is a fool's errand, as it would amount to the inverse of the "buy low, sell high" adage that has guided even novice investors for eons.
There are more than a few out there reading the tea leaves for what they are rather than what they appear to be.
At the Close, Friday, December 28, 2016:
Dow: 19,833.68, -111.36 (-0.56%)
NASDAQ: 5,438.56, -48.89 (-0.89%)
S&P 500: 2,249.92, -18.96 (-0.84%)
NYSE Composite: 11,058.88, -87.52 (-0.79%)
Saturday, December 24, 2016
Nine Days And Counting: Dow Fails To Surpass 20,000; Luck Matters
Nine trading days have come and gone since the Dow surpassed the 19,900 mark with expectations that Dow 20,000 would soon be a number we'd be looking at in collected rear view mirrors. It was also the day before the FOMC of the Fed issued their well-telegraphed, monumental 25 basis point increase to the federal funds rate (AKA, the Go F Yourself rate for savers), a marketing stroke of genius by the self-appointed rulers of all marketplaces, everywhere, forever.
Well, what happened?
In technical terms, the Fed put the kibosh on stocks. 20,000 didn't happen, just like other sure things this year, such as Hillary Clinton winning the election to become America's 45th president (love that one, just can't give it up).
Other things didn't happen over the past nine trading days (plus one weekend) that were not nearly as important. Donald Trump didn't resign before taking the oath of office (sorry to the serially constipated never-Trumpers like Bill Kristol), nobody killed any special lions or panda bears, and no enormous meteors struck the earth ending the human species (really happy about that last one).
But, a few days ago (Wednesday, Dec. 21), Fearless Rick made possibly the most outrageous prediction of his inglorious career as writer, journalist, blogger and general miscreant. He touted his belief that the Dow would not break the 20,000 mark this year or at least until June, 2017. He mused that the Dow "may" not hit 20,000 until 2023.
Here's his exact quote:
So far he's right. But there's still five trading days left in 2016, so plenty of people are rooting against him, including some fat guy in a weird red suit promising some absurd thing known as a Santa Claus Rally. Good luck with that. Far fewer are betting against him, however, as the market in general, and the Dow in particular, seems to have peaked.
There's still plenty of time for him to be wrong. There's the six months until June, and the seven years until 2023. But, since one and seven are Fearless Rick's lucky numbers, he may eventually to be more lucky than good.
We shall see. In case one missed all the non-action of Friday's market churning, it went something like this: Down, slightly, sleepwalking though midday, rabid short-covering into the closing last ten minutes, boosting all the major indices into positive territory. We have all seen this play before. Yawn, and Merry Christmas.
At the Close, Friday, December 23, 2016:
Dow: 19,933.81, +14.93 (0.07%)
NASDAQ: 5,462.69, +15.27 (0.28%)
S&P 500: 2,263.79, +2.83 (0.13%)
NYSE Composite: 11,128.80, +14.66 (0.13%)
For the week:
Dow: +90.40 (+0.46%)
NASDAQ: +25.53 (+0.47%)
S&P 500: +5.72 (+0.25%)
NYSE Composite: +3.58 (+0.03%)
Well, what happened?
In technical terms, the Fed put the kibosh on stocks. 20,000 didn't happen, just like other sure things this year, such as Hillary Clinton winning the election to become America's 45th president (love that one, just can't give it up).
Other things didn't happen over the past nine trading days (plus one weekend) that were not nearly as important. Donald Trump didn't resign before taking the oath of office (sorry to the serially constipated never-Trumpers like Bill Kristol), nobody killed any special lions or panda bears, and no enormous meteors struck the earth ending the human species (really happy about that last one).
But, a few days ago (Wednesday, Dec. 21), Fearless Rick made possibly the most outrageous prediction of his inglorious career as writer, journalist, blogger and general miscreant. He touted his belief that the Dow would not break the 20,000 mark this year or at least until June, 2017. He mused that the Dow "may" not hit 20,000 until 2023.
Here's his exact quote:
The Dow isn't going to make it to 20,000 this year, and it won't make it by June of next year. In fact, it may not hit 20,000 until 2023. Book it.
So far he's right. But there's still five trading days left in 2016, so plenty of people are rooting against him, including some fat guy in a weird red suit promising some absurd thing known as a Santa Claus Rally. Good luck with that. Far fewer are betting against him, however, as the market in general, and the Dow in particular, seems to have peaked.
There's still plenty of time for him to be wrong. There's the six months until June, and the seven years until 2023. But, since one and seven are Fearless Rick's lucky numbers, he may eventually to be more lucky than good.
We shall see. In case one missed all the non-action of Friday's market churning, it went something like this: Down, slightly, sleepwalking though midday, rabid short-covering into the closing last ten minutes, boosting all the major indices into positive territory. We have all seen this play before. Yawn, and Merry Christmas.
At the Close, Friday, December 23, 2016:
Dow: 19,933.81, +14.93 (0.07%)
NASDAQ: 5,462.69, +15.27 (0.28%)
S&P 500: 2,263.79, +2.83 (0.13%)
NYSE Composite: 11,128.80, +14.66 (0.13%)
For the week:
Dow: +90.40 (+0.46%)
NASDAQ: +25.53 (+0.47%)
S&P 500: +5.72 (+0.25%)
NYSE Composite: +3.58 (+0.03%)
Thursday, December 22, 2016
Dow Misses Another Opportunity To Surpass 20,000; Rally May Not Have Legs
Now that the flirtation with 20,000 on the Dow is waning, perhaps the market and its participants will return to some semblance of regular trading as opposed to the mad year-end dash for cash following the election.
While financial pundits are still calling the recent burst higher the "Trump Rally," it probably has little or no relevance to the election of the real estate magnate as the 45th president of the United States. What it has to do with is window dressing for fund managers, loading up on hot stocks to adorn their year-end portfolio prospectuses.
Less realistic is the opportunity for the rally to continue, especially after the major league run-up and two straight days of losses on the main indices. Though not large, today's declines were in a very slight range, but interestingly, stocks fell behind the unchanged line at the open and stayed there throughout the session, indicative of a tired market, though perhaps Friday will provide some news and another boost for the Dow 20,000 hat crowd.
Even that possibility seems remote, as the quad witching expiry was last week and the closeout to this week will be more reminiscent of a dash out the door than a frenzied trading day. It is, after all, just one day prior to Christmas Eve, and, despite rumors to the contrary, even Wall Street traders are human.
There's also scant data coming forward and just about everything but kitchen sink futures have been priced in for the final week of 2016. Anybody seeking profits at this juncture has truly missed that boat.
So, Friday is going to be dull and the cries of "Dow 20,000" are not to be heard around these parts for a while. Taking a little off the top going into the new year isn't exactly a bad idea, and it seems to be catching on with more than a few.
There still is time for the annual Santa Claus rally, traditionally the final week of the year, but the Trump rally may have grounded old St. Nick. We'll find out next week.
At the Close 12/22/16:
Dow: 19,918.88, -23.08 (-0.12%)
NASDAQ: 5,447.42, -24.01 (-0.44%)
S&P 500: 2,260.96, -4.22 (-0.19%)
NYSE Composite: 11,113.04, -29.52 (-0.26%)
While financial pundits are still calling the recent burst higher the "Trump Rally," it probably has little or no relevance to the election of the real estate magnate as the 45th president of the United States. What it has to do with is window dressing for fund managers, loading up on hot stocks to adorn their year-end portfolio prospectuses.
Less realistic is the opportunity for the rally to continue, especially after the major league run-up and two straight days of losses on the main indices. Though not large, today's declines were in a very slight range, but interestingly, stocks fell behind the unchanged line at the open and stayed there throughout the session, indicative of a tired market, though perhaps Friday will provide some news and another boost for the Dow 20,000 hat crowd.
Even that possibility seems remote, as the quad witching expiry was last week and the closeout to this week will be more reminiscent of a dash out the door than a frenzied trading day. It is, after all, just one day prior to Christmas Eve, and, despite rumors to the contrary, even Wall Street traders are human.
There's also scant data coming forward and just about everything but kitchen sink futures have been priced in for the final week of 2016. Anybody seeking profits at this juncture has truly missed that boat.
So, Friday is going to be dull and the cries of "Dow 20,000" are not to be heard around these parts for a while. Taking a little off the top going into the new year isn't exactly a bad idea, and it seems to be catching on with more than a few.
There still is time for the annual Santa Claus rally, traditionally the final week of the year, but the Trump rally may have grounded old St. Nick. We'll find out next week.
At the Close 12/22/16:
Dow: 19,918.88, -23.08 (-0.12%)
NASDAQ: 5,447.42, -24.01 (-0.44%)
S&P 500: 2,260.96, -4.22 (-0.19%)
NYSE Composite: 11,113.04, -29.52 (-0.26%)
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