Stocks ramped higher at the opening of the first trading session of 2018, continuing a trend that carried equity investments to major gains in 2017.
At the same time, gold and silver continued their impressive three-week-old rally. Silver has been the out-performer of the pair, rising from a low of 15.67 per ounce on December 13 to 17.15 as of the close of trading in New York on Tuesday. Gold crested above the sticky $1300 level, finishing the day at 1317.10. It also bottomed out on December 13, dropping below 1240.90 on that date.
While there's certainly nothing unusual about stock gains, the rally in precious metals is raising some eyebrows and prompting talk of future Fed rate hikes and incipient inflation, which has been a false flag for eight years running.
On Wednesday, investors may get some indication of the Fed's intentions. Minutes from the December meeting - at which the Fed raised the federal funds rate for the third time in 2017 - are to be released during the session. Of particular interest is the discussion over rate increases and any dissenting opinion.
The Fed has made it clear that they intend to continue raising rates this year, with four increases of 25 basis points the proposed path. At the same time, the Fed will continue to unwind its bloated balance sheet, shedding billions of dollars worth of treasury bonds and mortgage-backed securities (MBS) and increasing the rate of disposal as the year commences. By October, the Fed is supposed to be dumping as many as $60 billion worth of notes, bills and bonds.
The combination of a general tax cut for consumers, a large tax cut for corporations, rising rates, bond dumping, and an improving economy suggests a formula for inflation, which is generally understood to be good for gold and silver, though the rise in precious metal prices may have more to do with currency debasement than a knee-jerk response to the economic climate.
At the Close, Tuesday, January 2, 2018:
Dow: 24,824.01, +104.79 (+0.42%)
NASDAQ: 7,006.90, +103.51 (+1.50%)
S&P 500 2,695.81, +22.20 (+0.83%)
NYSE Composite: 12,902.72, +93.88 (+0.7329%)
Wednesday, January 3, 2018
Friday, December 29, 2017
Stocks Sink to End Year as Santa Claus Rally is Kidnapped by Grinch; Gold, Silver Push Higher
As trading drew to a close for 2017, a banner year for stocks was blemished buy a final bout of selling which rendered three of the four major averages lower for the week.
Only the NYSE Composite managed to eek out a gain for the shortened, four-day week, but even that was marginal, up less than a tenth of a percent. The NASDAQ was the most serious casualty, losing nearly one percent for the week. The Dow suffered its worst one-day loss since November 15.
Much of the selling came in the final hour of the session, suggesting that it was largely programmatic, a rebalancing of select funds for end-of-quarter or end-of-year purposes.
For the S&P and the Dow, the day's decline was the fifth in the past eight, though the S&P still managed to close out the week - and the year - just 21 points away from its all-time high.
Whether or not this late-month selloff continues into January 2018 is questionable, given that markets are still buoyant and money, by and large, is still on the cheap side. Thus, it would not be out of the question to see stocks gallop out of the gate on January 2nd.
Perhaps more compelling than watching stocks do an imitation of drying paint the past two weeks was the activity in precious metals, as gold and silver each took off as the year drew to a close. After being beaten down the first part of December, both metals rallied sharply down the stretch.
Silver hit a triple-bottom, six-month low of 15.67 per ounce on December 13, only to rebound to end the year at a respectable 17.01 on Friday. Gold, which was beaten down to 1240.90 (also December 13), hitting a five-month bottom, advanced smartly through the final two weeks, ending the year at 1302.50. Silver's eight percent rally and the five percent move in gold were the best two-week showings for the metals since July.
Some of the rally in metals was undoubtably due to the demise of the dollar, which closed out the year at 92.30, close to its September 8 low-point of the year, 91.35. It traded as low as 91.10 on the day but strengthened into the close.
If there's any meaning to be drawn from the past two weeks of trading, it could be that a sudden whiff of caution may have taken markets by surprise after the Republicans in congress and President Trump managed to push through a tax reform bill right after the Fed raised rates for the third time this year. After all, with Fed on a path of rising interest rates and the federal deficit poised to explode higher in the latter half of 2018, there may finally be a good, factual reason to bail out of stocks.
Despite the best efforts of a deeply-divided congress, fiscal policy is anything but disciplined. Meanwhile, the Federal Reserve is committed to massive bond dumping onto a market which can scarce absorb it.
2018 may indeed be one best described as a collision course of correcting bad monetary policy with tightening and loose fiscal policy. One cannot have the best of all things.
At the Close, Friday, December 29, 2017:
Dow: 24,719.22, -118.29 (-0.48%)
NASDAQ: 6,903.39, -46.77 (-0.67%)
S&P 500: 2,673.61, -13.93 (-0.52%)
NYSE Composite: 12,831.78, -21.31 (-0.17%)
For the Week:
Dow: -34.84 (-0.14%)
NASDAQ: -56.57 (-0.81%)
S&P 500: -9.73 (-0.36%)
NYSE Composite: +11.38 (+0.09%)
Only the NYSE Composite managed to eek out a gain for the shortened, four-day week, but even that was marginal, up less than a tenth of a percent. The NASDAQ was the most serious casualty, losing nearly one percent for the week. The Dow suffered its worst one-day loss since November 15.
Much of the selling came in the final hour of the session, suggesting that it was largely programmatic, a rebalancing of select funds for end-of-quarter or end-of-year purposes.For the S&P and the Dow, the day's decline was the fifth in the past eight, though the S&P still managed to close out the week - and the year - just 21 points away from its all-time high.
Whether or not this late-month selloff continues into January 2018 is questionable, given that markets are still buoyant and money, by and large, is still on the cheap side. Thus, it would not be out of the question to see stocks gallop out of the gate on January 2nd.
Perhaps more compelling than watching stocks do an imitation of drying paint the past two weeks was the activity in precious metals, as gold and silver each took off as the year drew to a close. After being beaten down the first part of December, both metals rallied sharply down the stretch.
Silver hit a triple-bottom, six-month low of 15.67 per ounce on December 13, only to rebound to end the year at a respectable 17.01 on Friday. Gold, which was beaten down to 1240.90 (also December 13), hitting a five-month bottom, advanced smartly through the final two weeks, ending the year at 1302.50. Silver's eight percent rally and the five percent move in gold were the best two-week showings for the metals since July.
Some of the rally in metals was undoubtably due to the demise of the dollar, which closed out the year at 92.30, close to its September 8 low-point of the year, 91.35. It traded as low as 91.10 on the day but strengthened into the close.
If there's any meaning to be drawn from the past two weeks of trading, it could be that a sudden whiff of caution may have taken markets by surprise after the Republicans in congress and President Trump managed to push through a tax reform bill right after the Fed raised rates for the third time this year. After all, with Fed on a path of rising interest rates and the federal deficit poised to explode higher in the latter half of 2018, there may finally be a good, factual reason to bail out of stocks.
Despite the best efforts of a deeply-divided congress, fiscal policy is anything but disciplined. Meanwhile, the Federal Reserve is committed to massive bond dumping onto a market which can scarce absorb it.
2018 may indeed be one best described as a collision course of correcting bad monetary policy with tightening and loose fiscal policy. One cannot have the best of all things.
At the Close, Friday, December 29, 2017:
Dow: 24,719.22, -118.29 (-0.48%)
NASDAQ: 6,903.39, -46.77 (-0.67%)
S&P 500: 2,673.61, -13.93 (-0.52%)
NYSE Composite: 12,831.78, -21.31 (-0.17%)
For the Week:
Dow: -34.84 (-0.14%)
NASDAQ: -56.57 (-0.81%)
S&P 500: -9.73 (-0.36%)
NYSE Composite: +11.38 (+0.09%)
Thursday, December 28, 2017
Dull Market...
As much of the Western Northern Hemisphere falls into a deep freeze (if you think it's cold in the US, try Canada... brrr), stocks seem to be following the trend, frozen into a stuttering somnambulism over the past six trading days.
To get an idea of just how sluggish the market has become, consider the overall range on the Dow since Monday, December 18 - six trading days - has been a mere 155 points. It's been even more severe on the S&P, where, over the same span, the average change has been roughly 3 1/2 points.
The lack of volatility has been a constant throughout the year, though it has been expressed even moreso in the past week, owing to the time of year and exhaustion of traders, many of whom are likely far away from their desks, taking time off to what out the final market days of the year.
Happy Holidays.
At the Close, Wednesday, December 27, 2017:
Dow: 24,774.30, +28.09 (+0.11%)
NASDAQ: 6,939.34, +3.09 (+0.04%)
S&P 500: 2,682.62, +2.12 (+0.08%)
NYSE Composite: 12,821.98, +13.08 (+0.10%)
To get an idea of just how sluggish the market has become, consider the overall range on the Dow since Monday, December 18 - six trading days - has been a mere 155 points. It's been even more severe on the S&P, where, over the same span, the average change has been roughly 3 1/2 points.
The lack of volatility has been a constant throughout the year, though it has been expressed even moreso in the past week, owing to the time of year and exhaustion of traders, many of whom are likely far away from their desks, taking time off to what out the final market days of the year.
Happy Holidays.
At the Close, Wednesday, December 27, 2017:
Dow: 24,774.30, +28.09 (+0.11%)
NASDAQ: 6,939.34, +3.09 (+0.04%)
S&P 500: 2,682.62, +2.12 (+0.08%)
NYSE Composite: 12,821.98, +13.08 (+0.10%)
Wednesday, December 27, 2017
Stocks Still on Pause as Year Winds Down
The Dow Industrials, NASDAQ, and the S&P 500 each closed lower for the fourth time in the past five sessions.
In normal times, this kind of market action would be characterized as "distribution," a code-word for institutional selling, and maybe that's exactly what it is. As the Fed and other central banks have flooded markets with liquidity, the past nine years have been anything but normal, however, so these past few days could be better explained as "turning off the computers" as stocks have reached an exhaustion level.
It's also the week between Christmas and New Year, a time for friends, family, and a generally-accepted laid-back attitude toward work. Anybody who has worked for a living knows the value of down time, and that's probably what this little pause is all about. There's no need to delve further into the ether, trying to discern a pattern or conjure up an explanation. That would be just the kind of imaginative speculation that leads to bad investment decisions.
While the market has yet to make any meaningful moves to the downside, this little spat of sluggishness is probably nothing more than the result of non-chalance than anything else.
When stocks take a deep dive of more than two percent over a number of sessions, or technical levels are violated, only then may more analysis be deemed advisable. For now, it's better to have a hot toddy or two, relax with friends and family and let the markets sort themselves out over the final three days of trading, reeling from what was previously a torrid pace.
At the Close, Tuesday, December 26, 2017:
Dow: 24,746.21, -7.85 (-0.03%)
NASDAQ: 6,936.25, -23.71 (-0.34%)
S&P 500: 2,680.50, -2.84 (-0.11%)
NYSE Composite: 12,808.90, +11.46 (+0.09%)
In normal times, this kind of market action would be characterized as "distribution," a code-word for institutional selling, and maybe that's exactly what it is. As the Fed and other central banks have flooded markets with liquidity, the past nine years have been anything but normal, however, so these past few days could be better explained as "turning off the computers" as stocks have reached an exhaustion level.
It's also the week between Christmas and New Year, a time for friends, family, and a generally-accepted laid-back attitude toward work. Anybody who has worked for a living knows the value of down time, and that's probably what this little pause is all about. There's no need to delve further into the ether, trying to discern a pattern or conjure up an explanation. That would be just the kind of imaginative speculation that leads to bad investment decisions.
While the market has yet to make any meaningful moves to the downside, this little spat of sluggishness is probably nothing more than the result of non-chalance than anything else.
When stocks take a deep dive of more than two percent over a number of sessions, or technical levels are violated, only then may more analysis be deemed advisable. For now, it's better to have a hot toddy or two, relax with friends and family and let the markets sort themselves out over the final three days of trading, reeling from what was previously a torrid pace.
At the Close, Tuesday, December 26, 2017:
Dow: 24,746.21, -7.85 (-0.03%)
NASDAQ: 6,936.25, -23.71 (-0.34%)
S&P 500: 2,680.50, -2.84 (-0.11%)
NYSE Composite: 12,808.90, +11.46 (+0.09%)
Tuesday, December 26, 2017
Stocks Slide Into Christmas Break, But Finish Higher for the Week
Heading into the final week of 2017, stocks have been terrific performers for there year-to-date, with the major averages all having made multiple new highs throughout the annum.
With the exception of the Composite index, all the majors held the same pattern over the week leading up to Christmas, up sharply on Monday, followed by declines three of the next four days, Thursday being the odd up day. For the NYSE Composite, Wednesday was a gainer, while the other three fell.
Because of the outsize gains on Monday, all finished the week in the green, with the Composite leading the way, percentage-wise.
Though stocks have been superstars not only for the current year, but for the past nine years running, since the wicked days of the Great Financial Crisis (GFC) back in 2008-09, the past four days have been something of a disappointment, especially since the congress managed to push through a milestone tax reform bill and keep the government functioning for another month with a last-minute continuing resolution on Friday.
What may not be obvious to casual observers is just how stretched valuation have become. Year to date, the NASDAQ is up a whopping 28%, the Dow 23%, S&P 500 19%, and the NYSE Composite the laggard, up a mere 15%, a number which would be stellar most of the time.
Will stocks continue to climb in 2018. It's difficult to take a stand against stocks, but a small January pullback would not be out of the ordinary.
Anybody who sold this market short is likely eating cat food and living in a cardboard box, so it's doubtful any analyst will take a negative view heading into 2018. Someday, all of the smart guys on Wall Street are going to be wrong, but guessing what day that will be is a task for gamblers, not investors.
At the Close, Friday, December 22, 2017:
Dow: 24,754.06, -28.23 (-0.11%)
NASDAQ: 6,959.96, -5.40 (-0.08%)
S&P 500: 2,683.34, -1.23 (-0.05%)
NYSE Composite: 12,797.44, -2.77 (-0.02%)
For the Week:
Dow: +102.32 (+0.42%)
NASDAQ: +23.38 (+0.34%)
S&P 500: +7.53 (+0.28%)
NYSE Composite: +97.76 (+0.77%)
With the exception of the Composite index, all the majors held the same pattern over the week leading up to Christmas, up sharply on Monday, followed by declines three of the next four days, Thursday being the odd up day. For the NYSE Composite, Wednesday was a gainer, while the other three fell.
Because of the outsize gains on Monday, all finished the week in the green, with the Composite leading the way, percentage-wise.
Though stocks have been superstars not only for the current year, but for the past nine years running, since the wicked days of the Great Financial Crisis (GFC) back in 2008-09, the past four days have been something of a disappointment, especially since the congress managed to push through a milestone tax reform bill and keep the government functioning for another month with a last-minute continuing resolution on Friday.
What may not be obvious to casual observers is just how stretched valuation have become. Year to date, the NASDAQ is up a whopping 28%, the Dow 23%, S&P 500 19%, and the NYSE Composite the laggard, up a mere 15%, a number which would be stellar most of the time.
Will stocks continue to climb in 2018. It's difficult to take a stand against stocks, but a small January pullback would not be out of the ordinary.
Anybody who sold this market short is likely eating cat food and living in a cardboard box, so it's doubtful any analyst will take a negative view heading into 2018. Someday, all of the smart guys on Wall Street are going to be wrong, but guessing what day that will be is a task for gamblers, not investors.
At the Close, Friday, December 22, 2017:
Dow: 24,754.06, -28.23 (-0.11%)
NASDAQ: 6,959.96, -5.40 (-0.08%)
S&P 500: 2,683.34, -1.23 (-0.05%)
NYSE Composite: 12,797.44, -2.77 (-0.02%)
For the Week:
Dow: +102.32 (+0.42%)
NASDAQ: +23.38 (+0.34%)
S&P 500: +7.53 (+0.28%)
NYSE Composite: +97.76 (+0.77%)
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