PPI Moderates, Stocks Rise On Hope, Noise

With today's gains, the Dow Jones Industrial Average has nearly doubled - in one day - all of its monthly gains from the previous six trading days.

Hardly a notable event, it overshadowed two days (5/3 and 5/8) in which the general averages barely budged at all.

In a market that is supposed to be highly volatile, what are flat sessions doing in there? They are showing something which many may have missed: the volatility from February and March certainly waned in April and is is petering out in May, with the VIX standing at a 16-handle presently.

This being a highly fluid situation, and one in which there remains the narrative of "recovery" or "expansion" getting people to sell their stocks isn't going to be an easy deal, thus, the zig-zag patterning of the past six weeks may maintain for a few weeks or months more before there's a true selloff.

About two weeks ago, Money Daily was of the opinion that the next rally (the one we're currently experiencing) should be good for 1000 points on the Dow. We're not even half way there, so more upside, complete with unicorns and rainbows are to be expected in the near term.

Once the Dow gets beyond 25,000, gains may become more difficult to rationalize. The market will no longer be oversold and approaching the January 26 high (26,616.71) will have traders on their toes and the early departures feeling a little bit queasy, though, being early is not the same as being wrong.

Whether or not the machinations of the algorithms and AI computers will undo 100+ years of Dow theory remains to be seen.

BTW: Oil is going out of sight, again. That is not a good sign for a buoyant, expansive economy, but rather one that is tightening up and about to relapse into melancholy and the doldrums of stagflation.

For now, most of what's moving stocks is noise, and it is not very loud.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06
5/9/18	24,542.54	+182.33	+379.39

At the Close, Wednesday, May 9, 2018:
Dow Jones Industrial Average: 24,542.54, +182.33 (+0.75%)
NASDAQ: 7,339.91, +73.00 (+1.00%)
S&P 500: 2,697.79, +25.87 (+0.97%)
NYSE Composite: 12,632.53, +112.29 (+0.90%)

Indecisive Market Flatlines On Slow News Day

Even with President Trump officially pulling out of the multi-nation Iran deal, stocks found no reason to go anywhere but sideways.

The Dow fell 146 points to the downside directly following the president's announcements, but a furious late-session rally brought it to a positive close.

Closing the book on the Obama administration's failed agreement with Iran, Trump plans to re-impose sanctions on Iran while working toward a more complete and lasting solution. while some panicky sellers showed their weak hands, short-covering picked up the pieces and left the markets just about where they started.

Outside of venal day-traders with some well-honed timing skills, nobody makes much on days like this, with volume hitting extremely low levels.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17
5/8/18	24,360.21	+2.89	+197.06

At the Close, Tuesday, May 8, 2018:
Dow Jones Industrial Average: 24,360.21, +2.89 (+0.01%)
NASDAQ: 7,266.90, +1.69 (+0.02%)
S&P 500 2,671.92, -0.71 (-0.03%)
NYSE Composite: 12,520.25, +0.50 (0.00%)

Peaks, Valleys and Trading Ranges: Stocks Stuck In Trader's Paradise

Another day, another volatile session with a 216-point trading range on the Dow has investors concerned, but traders - those commission-or-volume-based entities that make markets - ebullient.

The range of trade on the day was nothing of concern to anybody, since the levels are far from the extremes. Those extremes on the Dow, since February 8 include a February 26 high of 25,709 and a March 23 low of 23,533 and are dignified on charts as significant peaks and valleys. With the Dow closing somewhere betwixt and between is indicative of a market that simply cannot make up its own mind, since there are roughly equal parts sellers and buyers, but barely any conviction on either side.

Stocks will continue to trade in this 2100-point range until there is some decisive catalyst to lead them either higher or lower. Presently, there is nothing to encourage the bulls nor the bears that a breakout or breakdown is about to occur. What happens during these volatile but rangebound periods are fairly discernable patterns of behavior, most notably stocks bouncing higher off the 200-day moving averages of the various major indices, or correcting lower off the 50-day moving averages.

Stocks being tied to computers and the computers run by algorithms, programmatic trading is ensured.

There isn't much to be said or inferred from this sideways pattern, except that the range continues to be on the low side, with all-time highs from January 26 (26,616.71) becoming a smaller and smaller object in the rear view mirror of the stock market race car.

Nothing is likely to change this pattern until either the peak or valley is breached, though the odds are good that the valley breach will be the eventual winner, leading to a more vicious, faster-paced downturn.

That's not to say that the Dow could not add significantly from its current level. It's a distinct possibility, but one that would probably fail as the index approaches that February 26 peak.

Throw away all the fundamentals, dismiss all the geopolitical news, ignore all data and just focus on the chart. Sometimes - and now is one of those times - it is really that simple.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36
5/7/18	24,357.32	+94.81	+194.17

At the Close, Monday, May 7, 2018:
Dow Jones Industrial Average: 24,357.32, +94.81 (+0.39%)
NASDAQ: 7,265.21, +55.60 (+0.77%)
S&P 500: 2,672.63, +9.21 (+0.35%)
NYSE Composite: 12,519.75, +26.40 (+0.21%)

Index Divergence Not A Pretty Sight; Higher Dollar, Oil, Gas Prices To Kill Economy

Friday's across the board gains in stocks managed to get the Dow into positive territory for the month, but paradoxically, not the week, which included the last day of April, a 148-point decline.

Thus, three of the major indices took it on the collective chins, with only the NASDAQ allowing for gains on a weekly basis. This kind of divergence - often seen in bear markets - is just another signal to astute investors that all is not well in the land of unicorns and lollipops otherwise known as Wall Street.

There's a significant amount of panic on display if one know where to look for it, one the best locations being the dollar index, which has been staging a rather relentless rally since mid-April, rising from 89.42 to 92.89, which may not seem like much on the surface, but in real terms, it's a huge matter to international trade. Companies not nimble enough to adjust to sudden currency movements may be caught flat-footed, on the wrong sides of trades, with losses in capital amounting to staggering sums if not accordingly hedged.

A rising dollar does rather damaging things to trading partners and to the US itself. Most obvious is that a strong dollar makes imports cheaper, dampens commodity prices should cause oil prices to decline, but, since the United States has become the world's largest producer of crude, perversely, oil is rising in tandem with the dollar (by Monday morning it had crested above $70/barrel), a condition which is going to cause some considerable pain to Americans who use more distilled products (gasoline) than any other nation.

If there's anything that will put a lid on economic expansion, it's high fuel prices, and the current level, if it remains so, primarily threatens the budgets of small businesses and individuals, acting as an up-front tax on production and consumption.

Practically every recession in modern history has been tied to the price of oil and/or gas. The current runaway price surge, if not contained and reversed, is likely to send the economy into a vicious tailspin. Since consumer credit is at an all-time high, the average driver cannot afford to spend more on fuel, be it to power an automobile, heat a home, or run a small business.

Once again, nefarious forces are at work, spiking the dollar and the price of crude simultaneously, when there is oil sloshing around everywhere and dollars returning to their US home thanks to congress and the president's tax reforms.

Those dollars, upon return, are being used by corporations for more stock buybacks, boosting - temporarily - stock prices, and are not reaching the consumption level, keeping inflation somewhat in check. The good news is that consumer goods will not skyrocket in price, though getting to the stores (what few of them remain) to buy such will cost more and more.

Greed will go where greed wants, and it always seems to manifest itself most profoundly in the price of a gallon of gas. Thank Larry Kudlow for this windfall for the Exxons and Chevrons of the world as his "king dollar" theory will be tested on the world stage.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00
5/4/18	24,262.51	+332.36	+99.36

At the Close, Friday, May 4, 2018:
Dow Jones Industrial Average: 24,262.51, +332.36 (+1.39%)
NASDAQ: 7,209.62, +121.47 (+1.71%)
S&P 500: 2,663.42, +33.69 (+1.28%)
NYSE Composite: 12,493.35, +100.84 (+0.81%)

For the Week:
Dow: -48.68 (-0.20%)
NASDAQ: +89.92 (+1.26%)
S&P 500: -6.49 (-0.24%)
NYSE Composite: -100.68 (-0.80%)

When The Bottom Falls Out The Media Might Tell You

Most people who are invested in stocks via an employer-supplied pension plan of 401k don't watch the stock market very closely. Many of them don't even know the stocks in which their fund has invested their money.

Thus, most of these people - which is a rather large segment of the market as a whole, and a very important one - will never know that the Dow Industrials were down nearly 400 points on Thursday, or that the NASDAQ and S&P had similar, scary declines.

Rather, some of these people will note that the Dow gained five points and the other indices were down very little at the end of the day. They will get this information from the nightly network news, which is such an overrated form of communication, largely composed of liars telling lies, that it ought to be banned.

When the bottom finally does fall out of the market, as it nearly did in February, these same idiot non-savants on the television will bleat out doom and gloom and warn that all is not well because our precious corporations are today not worth what we thought they were yesterday, or the day before that.

These people, these casual observers of market mechanics, have only themselves to blame for not taking better care of their money. What kind of country is this that fosters the belief that men in suits from downtown Manhattan are better stewards of our wealth than the people who made the money in the first place?

There's an answer to that somewhat rhetorical question, and it is simply this: a gullible, trusting country, full of good-hearted people who routinely get taken to the cleaners by investment advisors, bankers, and their loving government. And then the press lies to them about it.

It's too bad, because there was once a time these advisors, bankers, and people from government could be trusted to do the right thing. There was a time when the press was free and honest.

Those days are long gone.

Look out below.

Dow Jones Industrial Average May Scorecard:

Date	Close	Gain/Loss	Cum. G/L
5/1/18	24,099.05	-64.10	-64.10
5/2/18	23,924.98	-174.07	-238.17
5/3/18	23,930.15	+5.17	-233.00

At the Close, Thursday, May 3, 2018:
Dow Jones Industrial Average: 23,930.15, +5.17 (+0.02%)
NASDAQ: 7,088.15, -12.75 (-0.18%)
S&P 500: 2,629.73, -5.94 (-0.23%)
NYSE Composite: 12,392.50, -25.56 (-0.21%)