Day-Traders' Delight: Dow Wows With 940-Point Round Trip Thursday Turnaround

With the Dow down more than 340 points Thursday, it appeared that the Money Daily post prior to the market open - Stocks Looking For Reasons To Rally; None To Be Found - was proving to be prophetic.

All of the major indices were bleeding out, led lower by the NASDAQ, which has been the usual suspect over the past two weeks.

It was just after 11:00 am ET that things began to change. From that point, the Dow rallied from 32,071.41 to 32,672.69, taking a little off the top into the close for a nearly 200-point gain. The entire round trip, from the prior close, to the bottom, then to the top, encompassed 940 points, one of the better single-day turnarounds in market history. Certainly, this was one that left many investors scratching their heads because there really wasn't a good reason for stocks to rally other than that they were momentarily oversold.

Just like clockwork, when the S&P 500 broke below its 50-day moving average, the rally commenced. Obviously, some algo-triggering takes place at these important inflection points and Thursday was no exception. The fact that stocks kept rallying over the ensuing five hours into the close suggests that this was more than the ordinary dip-buying and surely nothing that could have been accomplished at the retail level, stimulus checks or otherwise.

It was the usual combination of buying the most-shorted issues, carrying on with favorites and overall bullishness that keeps Wall Street a casino flush with insider winners, all of which leads one to wonder whether this was a one-day wonder or a lasting reversal.

As with everything else in the bizarro-land the 21st century has become, we won't know until after the fact, making trading stocks, holding stocks, shorting stocks or even thinking about stocks an exercise not just in futility, but possibly exposing a masochistic side to the investing life. For years, passive investing has been the go-to methodology for making gains. General indices just go relentlessly higher over time. Pullbacks are brief and shallow. Life is good for people who allow others to manage their money even though it is not supposed to be that way.

For the hard-core trader, life is difficult standing aside the buy-and-holders who aren't responsible for their gains or losses. The trader needs purpose. Ike a shark which dies if it doesn't constantly hunt and eat, the trader must buy and sell in order to survive, which is exactly why they've become nearly extinct. Today's trading is mostly computerized, employing advanced strategies and algorithms to minimize risk. While profits are not always maximized for the passive investor, the losses are few and far between, keeping the universe of hedge funds, retirement accounts, and general wealth funds and their managers all propped up and spending weekends on their yachts.

It's a cozy club at the top because they’re beneficial to the market as a whole. You don't have to do a thing, they say. Just leave it to the masters of the universe and all will be well.

From the looks of things from Thursday, they've got the bull by the horns and appear to be in complete control.

Yawn. Baseball's regular season begins next week. Even with its slow pace, the American pastime might prove a little more exciting than the usual offerings from lower Manhattan.

At the Close, Thursday, March 25, 2021:
Dow: 32,619.48, +199.42 (+0.62%)
NASDAQ: 12,977.68, +15.79 (+0.12%)
S&P 500: 3,909.52, +20.38 (+0.52%)
NYSE: 15,410.37, +133.81 (+0.88%)

Stocks Looking For Reasons To Rally; None To Be Found

This has not been a very good week for stocks, but it's nothing a few days of rallies can't fix. Through Wednesday, the Dow Industrials are off 203 points, the NASDAQ has shed 253 points, has spent the past two days trading below its 50-day moving average and is once again approaching correction territory.

Another rough session will send the NAZ into the red for the year (12,888.28) and it doesn't even have to be that bad. A little more than -0.5% would do it.

While the NASDAQ appears to be a troubling index highlighted by weakness in tech stocks, the rest of the market isn't nearly as ugly. The aforementioned Dow Jone Industrial Average marked a new all-tine high just last week (33,015.37, 3/17), though it has suffered losses four of the past five sessions. Wednesday's late-day collapse knocked off a 365-point gain intraday, a turnaround that portends ill for the remainder of the week.

The Dow is still sporting healthy gains for the year, up more than 1700 points (30,606.48, 12/31/20) or roughly five percent.

A mixed bag for the S&P 500, which, like the Dow, has been down four of the past five days. On March 17, it got to within 17 points of 4,000 before closing slightly off the highs of the day, at 3,974.12. It's lost 50 points since Monday and is clinging to a gain of less than four percent for 2021 (3,756.07, 12/31/20).

On the NYSE Composite, five straight losses have it resting just above the 50-day moving average.It too made a record closing high on the 17th (15,731.15), and is up 5.17% on the year (14,524.80, 12/31/20), the best of all the major indices. The Composite is down 286 points so far this week.

It would be presumptive to suggest that all the main averages should go negative for the year, though that prospect is rearing its ugly head this morning. Just prior to the release of two key data points (final 4Q GDP and weekly unemployment claims), futures took a severe turn to the downside, wiping out modest overnight gains.

Oddly enough, both releases were somewhat positive, as GDP came in at 4.3%, revised 0.2% higher than last month's estimate, and just 684,000 people filed initial unemployment claims, a post-pandemic low. The total number of individuals claiming some form of unemployment relief rose, however, back above 19 million, a discouraging sign for the "recovery" boosters.

Stocks aren't the only things falling off the wagon this week. Gold, silver, and cryptocurrencies have all been driven down. Bitcoin fell to $50,305.00 just moments ago. Silver is bid at 24.54, and is down for 2021, as is gold, though it is holding up well at $1731 per ounce.

The opening bell is just minutes away. Futures are indicating a slow start to Thursday's session.

(Post 3003)

At the Close, Wednesday, March 23, 2021:
Dow: 32,420.06, -3.09 (-0.01%)
NASDAQ: 12,961.89, -265.81 (-2.01%)
S&P 500: 3,889.14, -21.38 (-0.55%)
NYSE: 15,276.56, -69.96 (-0.46%)

Stocks Knocked; Techs Under Pressure; Oil Skid Continues; New Home Sales Drop 18 Percent

Even as longer duration bond yields fell, there wasn't much to wrap a trade around Tuesday sending the major averages slipping into the red across the board.

Yields on the 10-year note and 30-year bond were 1.63% and 2.34%, respectively, each down 11 basis points over the two sessions from Friday’s close.

After stocks vacillated across the unchanged line with slim gains through most of the morning, non-committal waves of selling began to appear in the afternoon, accelerating into the close.

For the Dow Jones Industrials and S&P 500, it was the third losing session in the last four. The NYSE Composite Index fell for a fourth straight day while the NASDAQ was a loser for the second time in the last four, trading in a resistance range just below its 50-day moving average, a level its found hard to shake free from for the past month after falling off from all-time highs.

Part of the problem for stocks is the uncertainty of economic recovery in the developed European nations and the United States. While America seeks to rebound with states reopening to business as usual, Germany, France, Italy, and the UK continue to be beset by a third wave of the neve-ending virus that has battered economies for the past year. Travel restrictions, mask mandates, and all manner of social distancing disorder have become the norm in the the four biggest European economies.

Such discomfiture sent oil futures to six-week lows, well off the 11-month highs made two weeks ago. WTI crude oil closed at $57.76 a barrel, down $3.69 from Monday's finish at $61.55 a punishing five percent decline, an indication that if economic recovery is going to occur at all, it will be in fits and starts, with many surprises and setbacks along the way.

As cliche as it sounds, markets are not appreciative of uncertainty, the displeasure becoming manifest in recent days, even as stimulus checks are rolling out in the USA with estimates of as much as 20% of the individual $1400 booty earmarked for stock trading.

That retail buyers would end up eventual bag-holders would not be surprising given that stocks have been highly-valued for months, if not years. A wash out correction led by tech stocks which have already been hard hit could be days or weeks away.

More optimistic analysts predict equities to continue rising as economic data indicates an improving condition, but positive data has been scant of late. Monday's Existing Home Sales for February from the National Association of Realtors showed a 6.6% monthly decline, although home prices remained at astronomical levels, rising to a record of $313,000 for the median-priced home, 15.8% higher from one year ago.

At best, recent data drops have been a mixed blessing. Tuesday's new home sales 2:00 pm ET release was the likely culprit for the stock selloff, as it showed a decline of 18.2% in February. Taking the worst of it were Midwest builders, where sales were off a whopping 37.5% month-over-month, the data skewed by unusually harsh weather conditions.

All of these shifting winds have Wall Street in a tight spot, making for tough trading while calling for deeper analysis. For now, until there is more directional clarity, it appears the economy is still operating at close to stall speed and stocks should respond as they have been for the past month, sideways to slightly down. Desire for more positive news is growing, though it has not yet reached the desperation stage.

Thursday's final estimate of 2020 fourth quarter and year-end US GDP should be the capper for the week. Expectations are for the quarterly figure to come in at 4.1%, in line with the second estimate from February.

(Post 3002)

At the Close, Tuesday, March 23, 2021:
Dow: 32,423.15, -308.05 (-0.94%)
NASDAQ: 13,227.70, -149.84 (-1.12%)
S&P 500: 3,910.52, -30.07 (-0.76%)
NYSE: 15,346.53, -205.05 (-1.32%)

Key To Recovery Will Be Demographics, Especially Millennials and Generation Z

For years, it's been widely reported - thus assumed to be true - that 10,000 Baby Boomers retire every day, and, the numbers generally hold to that standard. That's an enormous number of people leaving work permanently, ostensibly their positions replaced by younger people with years to go before hitting the porch rocker and shuffleboard courts.

It's 3,650,000 people a year, so, logically, there should be plenty of job openings for those both after 1964, the official end of the Baby Boom generation (1946-64). But, is that enough? The generations following the Baby Boomers - Generation X: (1965 – 1980), Millennials: (1981 – 1996) and Generation Z: (1997 – 2012) - make up 62.28% of the population, though anyone in Generation Z born later than 2003 hasn't yet entered the workforce, many of them still in college.

Thus, Generation X and Millennials comprise nearly 42% of the adult population and workforce, roughly 138 million and they make up the bulk of the US labor force. Baby Boomers account for just 69 million, and, as of 2020, most of them haven't reached full retirement age (65-67). Those born in 1954 just turned 66 last year. There's 10 more years (1955-1964) of Baby Boomers still heading toward the glory years, still out there grinding away at 57, 60, or 62.

The math works out pretty well because it's not straight line calculus. Just because a Baby Boomer retires, does not mean that a Gen. Z college graduate will replace them. Jobs change over time. Many of the jobs Baby Boomers started out doing in their 20s aren't around any more. Factory jobs, for instance, have almost all gone to China or elsewhere. Telephony has morphed into cellular and the internet. And many of the jobs that remain now require a greater skill set, such as auto mechanics, the best of whom now must have a working understanding of computers n addition to basic car repair skills.

Over time, the labor market, despite many moving parts, is fairly static, and there are fewer Gen. Z individuals coming out of high schools and colleges than there are Baby Boomers retiring. From a demographic economic standpoint, there should be enough jobs available to support new entrants.

However, with 20 million people currently receiving unemployment benefits, the lockdowns from 2020 put a real kink in the link between generations and work. Workers aged 16-24 were hardest hit by work from home and lockdown regimens. That age group saw unemployment rise from 8.4% to 24.4% from Spring 2019 to Spring 2020, which is why there have been three rounds of stimulus checks and rent moratoriums. Those young folks, the least economically capable of navigating though tough times because they had little savings, have been left behind by what used to be the economic powerhouse of the United States. They don't have skills, or money, or jobs. Three strikes and you're out. Suicides among this age group have soared. Going forward, the outlook for unskilled youth is bleak.

Still, officials in Washington, DC, and media talkers still claim that recovery is right around the corner. Demographics and the rise of technlogy say otherwise.

A bright spot can be found in a darker place. In addition to roughly 10,000 Baby Boomers retiring every day, more than 5,000 of them die every day, or, about one every 17 seconds. While not such a cheery subject, Baby Boomer deaths of that magnitude is releasing a tidal wave of capital, much of it going straight into - you know where - the stock market. Millennials being the primary beneficiaries (children of Boomers), they're inheriting homes, collections, junk drawers, used cars, and retirement accounts often worth hundreds of thousands of dollars, if not millions, and there's more on the way. About 2/3rds of Boomers are still alive.

Without being too morbid, generational wealth being passed along is usually a positive development, and, while that's all well and good for Millennials, it doesn't help out the younger cohort in Generation Z, at least not directly.

The hope is that America will, as it has done in the past, find a way through this rough economic patch. The unemployed youth of today will become the leaders of tomorrow. The Silent Generation and the Greatest Generation, spawned by the Great Depression, built post-war America. Generation Z's opportunity is to help Millennials rebuild an aging infrastructure and lead development and advancement of new technologies. The challenge is to do so largely by disregarding the dictates and wrong-footed realities of the elected people, many of the leaders well into their 70s and 80s.

Youth must look beyond the finger-pointing cancel culture, the distractions, the anger and hate brewed up by the mainstream media and start shaping a better 21st century, already one-fifth wasted. It's not too late for younger people to rise up and take the reins.

Sensing that the aging oligarchs in government won’t relinquish control without a fight, there’s a strong likelihood that the economy will suffer some stresses along the way, making for what appears to be a tumultuous decade that’s just begun.

(Post #3001)

At the Close, Monday, March 22, 2021:
Dow: 32,731.20, +103.23 (+0.32%)
NASDAQ: 13,377.54, +162.31 (+1.23%)
S&P 500: 3,940.59, +27.49 (+0.70%)
NYSE: 15,551.58, -10.68 (-0.07%)

WEEKEND WRAP: Inflation Pressures Continue Mounting In Bonds, Base Metals, Despite Official Fed Muttering

Despite an overall down week, stocks remained buoyant as declines across major indices were uniformly less than one percent, with the Dow the best, losing just under 0.50% and the NYSE dropping by just under one percent.

Stocks started the week upbeat, but ended with two straight sessions on the downside, save for the NASDAQ, which was the only major to manage a gain on Friday. This lackluster performance was likely the result of competing factions of rising long-term interest rates, the ongoing tech wreck, and anticipation of millions of $1400 checks being slowly doled out to Americans earning less than $75k per year, some of which (10-15% overall, or roughly $50 billion) is expected to be invested in equities.

While the bump from retail investors has yet to materialize, Mr. Market seems to be indicating that this could be a near-term top, as retail always comes in late, often too late, after stocks had legged up. If stocks sink a bit through April, it would be a normal happening for consume bag-holders.

Rising yields on 10-year notes and 30-year bonds are a screaming signal for at least a slowdown if not an outright correction. By almost any calculation, stocks are overvalued, though that sentiment is partially obscured by ongoing Federal Reserve QE and those juicy stimulus checks and added unemployment benefits being rolled out.

While the higher yields might not exactly be in competition with dividend yields on stocks, they're close enough to have people paying attention, plus, if they're treasuries, they're considered almost risk-free, and, smart bond buyers can have them at a discount, making them quite attractive to high-income individuals and funds. The flow hasn't reversed just yet, but the effect of high yields at the long end of the curve is beginning to become a worry for markets.

Yield on the 10-year note rose 10 basis points, from 1.64% to 1.74% over the week, while the 30-year rose five basis points, from 2.40% to 2.45%, both of which are the highest in more than a year. The last time rates were at these levels was roughly from June of 2019 through mid-January 2020, during which stocks gained, though we all know what happened in February 2020, when the pandemic struck and stocks sank.

It appears that current interest rates won't likely be enough to cause a stampede out of equities, though levels with the 10-year over 2.5 percent and the 30 above 3.0% might. With Fed talking down inflation every chance they get, it's almost a certainty that interest rates will continue rising and stocks will flounder over the medium term. Spring and Summer may turn out to fall into the "sell in May and stay away" category and by fall, the inflationary overhang of relentless QE and government overreach in terms of largesse, deficit, and stimulus (congress is already discussing the next round) will be unmistakable.

A shift from risk assets to fixed income to cash and then to parts unknown is an emerging pattern, though, like all things financial, is not yet obvious to most and won't occur in a straight line pattern. There will be bumps, grinds, euphoria and despair aplenty along the way. From a purely irrational, unattached perspective, stocks would seem to be unable to reproduce this year the outsized gains from March 2020 through the present. Using year-end figures, there doesn't seem to be a discernible pattern for gains or losses in stocks overall. WIth the NASDAQ an outlier, the main indices are up five to six percent overall year-to-date. Even the NASDAQ is holding onto a slim gain just over two percent, having closed out 2020 at 12,888.

If indicators are a friend of the investor, perhaps the price of oil was showing the way this week as WTI crude took a nosedive this week. After reaching what appears to be a double top ($66.09 on 3/5; $66.02 on 3/11), the price of a barrel fell below $60 briefly on Thursday before rallying Friday to close out the week at $61.42. While the United States seems hell-bent on reopening schools, businesses and the economy, Europe is struggling with a third wave of COVID, and that seems to be putting some pressure on demand, along with warming Northern Hemisphere temperatures following what was, in total, a relatively ordinary winter, outside of Texas, of course.

Slack demand and oversupply usually equates to lower prices, so, at a time in which oil was rocketing higher (up from the high $30s to low $40s in November and December to over $60 in just four months), some pullback was to be expected. The price ran ahead of projections for both economic recovery and return to normal patterns, which is happening at a snail's pace.

Cryptocurrencies spent the week hitting the pause button after Bitcoin nearly topped $62,000 last Saturday. It spent the week grinding lower, currently pricing at $56,000-$58,000. While this price level may be disappointing to some true believers, it's still good for an 800% gain from a year ago, so nobody is as yet pulling their hair out.

For the Week:
Dow: -150.67 (-0.46%)
NASDAQ: -104.63 (-0.79%)
S&P 500: -30.24 (-0.77%)
NYSE: -152.95 (-0.97%)

Precious metals had a productive, if uninspiring, week, with gold rising from $1726.85 to $1,749.60, while silver took it on the chin, dropping from $26.60 per ounce to $26.39. Silver seems to be stuck in a range between $25 and $27, with seemingly no escape from the clutches of the LBMA and futures trading, which has managed to meep a lid on prices despite widespread reporting of shortages and shipping delays from online dealers.

An interesting story is still developing out of Perth Mint, which recently ran out of finished silver products for sale at retail. The reddit crowd over at r/wallstreetsilver wants to believe that its efforts are having some effect on global inventories, and, undeniably, to an extent, they are, but Perth Mint answered its critics in a blog post on Wednesday, March 17.

While claiming there was in fact no physical shortage of the metal, and that Perth Mint was focusing on producing one ounce Aussie Kangaroos, there are, in fact, no 2020 or 2021 Kangaroos available for sale. The seemingly conflicting information has prompted a lively debate. In the grand scheme of things, silver is still significantly undervalued and finished products continue to fly off shelves at super premium prices, when even available.

Here are the most recent sale prices for common one ounce gold and silver items for immediate delivery on eBay (numismatics excluded, shipping - often free - included.

Item: Low / High / Average / Median
1 oz silver coin: 35.50 / 44.00 / 40.92 / 41.25
1 oz silver bar: 36.78 / 49.99 / 42.38 / 42.86
1 oz gold coin: 1,881.52 / 2,021.63 / 1,951.39 / 1,949.14
1 oz gold bar: 1,829.95 / 2,050.73 / 1,873.96 / 1,854.20

What's demonstrated by the gold and silver prices for immediate delivery is that extraordinarily-high premiums still command the market, though silver slipped somewhat over the course of the week, with the Single Ounce Silver Market Price Benchmark (SOSMPB) falling to $41.85. The auction and individual ounce market remains red-hot, however, with silver premiums upwards of 60% over spot. Gold, due to its higher average and median values, still carries premiums over 13% for common coins, and about 10% over spot for bars and rounds.

While the precious metals wholesale market remains moribund and the retail market in tight supply, there's no mistaking the real rally in base commodities. Zinc, Tin, Nickel, Copper, Lumber, and Aluminum have all risen steadily - if not spectacularly - over the pst year, yet another indication that inflation is well entrenched, despite what government and Federal Reserve mouthpieces have to say.

When Money Daily recommended canned goods on Friday, not only will the contents of such purchasing now act as a future inflation hedge, the packaging may turn out to be one of the best investments of the decade.

That's a WRAP for this 3000th posting of Money Daily.

At the Close, Friday, March 19, 2021:
Dow: 32,627.97, -234.33 (-0.71%)
NASDAQ: 13,215.24, +99.07 (+0.76%)
S&P 500: 3,913.10, -2.36 (-0.06%)
NYSE: 15,562.26, -26.81 (-0.17%)