Just before noon on Friday, the Dow had lost over 100 points, with the NASDAQ and S&P following the trend lower. What the markets were reacting to was not immediately clear, though this session happened to be the finale for the 1st quarter, so there were certainly plenty of brokers and hedge funds clearing the decks.
Just as the decline was beginning to become serious, though, the trend abruptly reversed and all indices began climbing higher. By 2:30, the bulk of the activity was complete and all gauges had advanced to near break even. At the end of the day, the casual observer would conclude, by just grazing the closing figures, that it was a calm and orderly day on Wall Street. It was actually far from ordinary or calm.
Dow 12,354.35 +5.60; NASDAQ 2,421.64 +3.76; S&P 500 1,420.86 -1.67; NYSE Composite 9,261.82 -17.26
The broad indices - the S&P and NYSE Comp. - took the brunt of the blows, ending slightly lower, but the underpinnings of the market remain weak and confused. Investors are torn between conflicting economic reports, mostly positive, though with an inflationary undertone cutting into the euphoria.
When all was said and done, the day ended in no decision, mired between the recent highs and lows, apparently satisfied to wait until corporate earnings begin flowing next week. There are varying degrees of hope and trepidation in most camps, which augurs for a volatile earnings season this quarter.
Oil remained tame for at least one day, settling at $65.87, ensuring at least that the rapacious prices at the pump will continue for some time. The high price of crude - and gasoline - continues to damper enthusiasm in the U.S. economy.
Silver and gold both made small advances, but remain stuck in no-man's land, just like the U.S. equity markets.
Saturday, March 31, 2007
Thursday, March 29, 2007
Soft Bounce For Stocks As Oil Jumps Again
After significant selling over the past two sessions, the Dow, NASDAQ, S&P 500 and NYSE all posted modest gains on Thursday. Volume was again moderate, but better than what it has been. Once again, the NASDAQ caught the short straw, making up less than a single point. It's interesting to note that NASDAQ stocks, of which many are young tech companies and thus, somewhat speculative, are the laggards here. Apparently, market movers want more stability than risk. We are still in a risk-averse, tepid market. Gains are going to be difficult to come by.
Dow 12,348.75 +48.39; NASDAQ 2,417.88 +0.78; S&P 500 1,422.53 +5.30; NYSE Composite 9,279.08 +60.55
Advancing issues held sway over decliners by about a 3-2 margin, and there were 237 new highs to 97 new lows, roughly in line with the past few days. As always, a sharp eye is out on the new highs-lows ratio. Nothing remains steady for very long, so when this begins to turn, we'll all be aware that something big is happening.
At the moment, market sentiment is still nervously negative. Upward momentum is far from evident and there hasn't been follow-through on many of the up days.
Today's rise was nothing short of more market pumping by institutions, who still naively believe that mammoth profits for Big Oil must be good for them. It's difficult to wrap one's mind around this kind of clubby thinking, but it exists - today is yet another example as the price of crude leapt ahead $1.95 to close at $66.03 on the NY Merc. Shameful.
Stocks should have taken another wallop, but the manipulators were in early and kept indices in the green all day long. As pointed out yesterday, Big Oil is the bane of the American consumer, and sky high gas prices will send the fragile economy into a death spiral if not contained soon.
To dispel the myth that all commodities move in unison and that markets are not rigged, gold and silver both sold off today, though the hit on gold was larger, drooping $5.30 per ounce to $667.60. Silver lost only 12 cents to fix at 13.34. Both of the shiny metals are still rangebound and nowhere near breakout or breakdown.
Hard to believe tomorrow is Friday and the end of the trading week. The tally for up days vs. down since the beginning of the correction is now close to even at 14 down, 13 up. Regardless of that tight race, the Dow, even after today's gains, is down nearly 450 points over the past 6 weeks. Those number don't lie.
Dow 12,348.75 +48.39; NASDAQ 2,417.88 +0.78; S&P 500 1,422.53 +5.30; NYSE Composite 9,279.08 +60.55
Advancing issues held sway over decliners by about a 3-2 margin, and there were 237 new highs to 97 new lows, roughly in line with the past few days. As always, a sharp eye is out on the new highs-lows ratio. Nothing remains steady for very long, so when this begins to turn, we'll all be aware that something big is happening.
At the moment, market sentiment is still nervously negative. Upward momentum is far from evident and there hasn't been follow-through on many of the up days.
Today's rise was nothing short of more market pumping by institutions, who still naively believe that mammoth profits for Big Oil must be good for them. It's difficult to wrap one's mind around this kind of clubby thinking, but it exists - today is yet another example as the price of crude leapt ahead $1.95 to close at $66.03 on the NY Merc. Shameful.
Stocks should have taken another wallop, but the manipulators were in early and kept indices in the green all day long. As pointed out yesterday, Big Oil is the bane of the American consumer, and sky high gas prices will send the fragile economy into a death spiral if not contained soon.
To dispel the myth that all commodities move in unison and that markets are not rigged, gold and silver both sold off today, though the hit on gold was larger, drooping $5.30 per ounce to $667.60. Silver lost only 12 cents to fix at 13.34. Both of the shiny metals are still rangebound and nowhere near breakout or breakdown.
Hard to believe tomorrow is Friday and the end of the trading week. The tally for up days vs. down since the beginning of the correction is now close to even at 14 down, 13 up. Regardless of that tight race, the Dow, even after today's gains, is down nearly 450 points over the past 6 weeks. Those number don't lie.
Wednesday, March 28, 2007
Well-greased Skids
If the price of oil goes up much more, the Dow and other US equity indices will readily slide down that slippery slope. The traders know this, investors know this, even the oil executives know this is true and that's the #1 reason the price of oil isn't going to go through the roof.
Oil executives are not fools. They realize that in a slowing economy, they can't be out there greasing the skids with higher fuel costs (well, not too high, anyway), because there's a breaking point and we're getting pretty close to it. The big oil companies charge higher than market prices because they can. Congress and our lax regulatory agencies allow them to effectively rig prices so as to effectively maximize profits. They are not, however, the only corporations with skin in the game. After a while, some of their corporate brethren might want a piece of the greed gravy train as well. If the oil companies siphon off all of the disposable income in the economy, there's little to nothing left for the Wal-Marts, Citigroups and Microsofts of the world because the Exxon-Mobils are taking more then their fair share.
Big oil has been getting fat at the public trough for a long time, but they've really beefed up recently. And they've done so at considerable expense to everyday consumers, governmental bodies and other corporations. It's time for the oil companies to make a little less money and act a little more like responsible corporate citizens for a change (I know, it's very wishful thinking.).
The handwriting is on the wall, and has been for some time. The US economy would be in much better shape if people were spending 20% less for fuel (and not just gas, but home heating oil and natural gas, too) than they are now. The oil companies in the US are an effective monopoly or cartel and Congress should have taken action long ago to curtail their illegal price-fixing operations. Big oil can profess all they like that the refineries aren't operating at full capacity or that they have no control over the price of oil. Unfortunately for them, nobody's buying that argument any more, but it's going to take a pretty big scare on Wall Street for them to mend their ways, and that scare has begun.
Today's trading was more of what we've become accustomed to over the past six weeks: sluggish and lower, pessimism abounding, plenty of rational reasons. The elephant in the room still remains big oil. They're a drag, both in real terms and euphemistically. High fuel prices are getting old and stocks are taking a beating on it. Wealth is not very evenly distributed and there's little new money coming into the markets. Big oil is sucking the life out of the economy.
Whether the oil execs are smart enough, visionary enough, to understand how they'll be damaged in an outright recession remains to be seen. Keep an eye peeled on oil prices, which shot up another $1.15 to $64.08 today. That's now about $6-8 per barrel higher than the economy can handle. Forget about a crash in housing prices. That's a fait accompli. $3.00 per gallon gas will just be more fuel on the fire and will, without a doubt, drag the nation into a recession. While it may already be too late, some relief at the pump would be more than just welcome, it may be necessary.
Dow 12,300.36 -96.93; NASDAQ 2,417.10 -20.33; S&P 500 1,417.23 -12.38; NYSE Composite 9,218.54 -70.25
After Monday's negligible trade, Tuesday and Wednesday have cost the Dow and the other indices anywhere from 1 to 1.5% for the week. After rocketing up 370 points last week, the Dow's given back more than half, 180 points, this week, but still 225 points ahead of the March 13 low point of 12,075.96. There's little doubt that number will be tested again, and soon. First quarter earnings are due to make their way to the street in a week's time, and the trickle down could easily turn into a deluge. Corporate profits have been solid, maybe too good, because companies have some tough numbers to exceed from a year ago. Many will not make the grade.
Wednesday's market internals were nearly a carbon copy of Tuesday's. declining issues were ahead of advancing ones nearly 2-1, with 207 new highs versus 91 new lows. Pessimism is spreading, however, as down volume was 3 times up volume. Traders are getting very picky and that's not generally a sign of a healthy market. The remainder of the week could turn out to be very discouraging indeed.
Today's economic events - a 2.5% rise in durable goods orders and a slackening of crude inventories were just enough to keep buyers on the sidelines. Tomorrow, the government finalizes 4Q '06 GDP, and the tepid pace of 2.2%, if confirmed, will only serve to dampen attitudes. Initial claims may have some effect, but only if it's very much a negative. Friday's miasma of reports, from Personal Income to the Chicago Purchase Manager's Index, may just tip the markets over the edge.
Of course, much more of the now non-stop nonsense emanating from our nation's capitol may prove to be the unseen straw that breaks the camels back. We have a dysfunctional executive branch being hounded by an impatient Congress, all of it heading for a nasty cataclysm. There are a lot of angry, bitter, upset people out there who are certainly not in any kind of mood for any more distasteful news. The American people are fed up and the discontent is growing.
Be prepared for some very unsettling days and weeks ahead.
Oil executives are not fools. They realize that in a slowing economy, they can't be out there greasing the skids with higher fuel costs (well, not too high, anyway), because there's a breaking point and we're getting pretty close to it. The big oil companies charge higher than market prices because they can. Congress and our lax regulatory agencies allow them to effectively rig prices so as to effectively maximize profits. They are not, however, the only corporations with skin in the game. After a while, some of their corporate brethren might want a piece of the greed gravy train as well. If the oil companies siphon off all of the disposable income in the economy, there's little to nothing left for the Wal-Marts, Citigroups and Microsofts of the world because the Exxon-Mobils are taking more then their fair share.
Big oil has been getting fat at the public trough for a long time, but they've really beefed up recently. And they've done so at considerable expense to everyday consumers, governmental bodies and other corporations. It's time for the oil companies to make a little less money and act a little more like responsible corporate citizens for a change (I know, it's very wishful thinking.).
The handwriting is on the wall, and has been for some time. The US economy would be in much better shape if people were spending 20% less for fuel (and not just gas, but home heating oil and natural gas, too) than they are now. The oil companies in the US are an effective monopoly or cartel and Congress should have taken action long ago to curtail their illegal price-fixing operations. Big oil can profess all they like that the refineries aren't operating at full capacity or that they have no control over the price of oil. Unfortunately for them, nobody's buying that argument any more, but it's going to take a pretty big scare on Wall Street for them to mend their ways, and that scare has begun.
Today's trading was more of what we've become accustomed to over the past six weeks: sluggish and lower, pessimism abounding, plenty of rational reasons. The elephant in the room still remains big oil. They're a drag, both in real terms and euphemistically. High fuel prices are getting old and stocks are taking a beating on it. Wealth is not very evenly distributed and there's little new money coming into the markets. Big oil is sucking the life out of the economy.
Whether the oil execs are smart enough, visionary enough, to understand how they'll be damaged in an outright recession remains to be seen. Keep an eye peeled on oil prices, which shot up another $1.15 to $64.08 today. That's now about $6-8 per barrel higher than the economy can handle. Forget about a crash in housing prices. That's a fait accompli. $3.00 per gallon gas will just be more fuel on the fire and will, without a doubt, drag the nation into a recession. While it may already be too late, some relief at the pump would be more than just welcome, it may be necessary.
Dow 12,300.36 -96.93; NASDAQ 2,417.10 -20.33; S&P 500 1,417.23 -12.38; NYSE Composite 9,218.54 -70.25
After Monday's negligible trade, Tuesday and Wednesday have cost the Dow and the other indices anywhere from 1 to 1.5% for the week. After rocketing up 370 points last week, the Dow's given back more than half, 180 points, this week, but still 225 points ahead of the March 13 low point of 12,075.96. There's little doubt that number will be tested again, and soon. First quarter earnings are due to make their way to the street in a week's time, and the trickle down could easily turn into a deluge. Corporate profits have been solid, maybe too good, because companies have some tough numbers to exceed from a year ago. Many will not make the grade.
Wednesday's market internals were nearly a carbon copy of Tuesday's. declining issues were ahead of advancing ones nearly 2-1, with 207 new highs versus 91 new lows. Pessimism is spreading, however, as down volume was 3 times up volume. Traders are getting very picky and that's not generally a sign of a healthy market. The remainder of the week could turn out to be very discouraging indeed.
Today's economic events - a 2.5% rise in durable goods orders and a slackening of crude inventories were just enough to keep buyers on the sidelines. Tomorrow, the government finalizes 4Q '06 GDP, and the tepid pace of 2.2%, if confirmed, will only serve to dampen attitudes. Initial claims may have some effect, but only if it's very much a negative. Friday's miasma of reports, from Personal Income to the Chicago Purchase Manager's Index, may just tip the markets over the edge.
Of course, much more of the now non-stop nonsense emanating from our nation's capitol may prove to be the unseen straw that breaks the camels back. We have a dysfunctional executive branch being hounded by an impatient Congress, all of it heading for a nasty cataclysm. There are a lot of angry, bitter, upset people out there who are certainly not in any kind of mood for any more distasteful news. The American people are fed up and the discontent is growing.
Be prepared for some very unsettling days and weeks ahead.
A Little Dose of Reality
As opposed to yesterday's PPT-inspired afternoon rally, the US equity markets today reflected something closer to the reality of the functional economy. Once again, the NASDAQ took the brunt of the blows, but the blue chips of the Dow weren't far behind on a percentage basis.
Dow 12,397.29 -71.78; NASDAQ 2,437.43 -18.20; S&P 500 1,429.61 -7.89; NYSE Composite 9,288.79 -52.57
Declining issues overwhelmed advancers by a more than 2-1 margin and the new highs were kept to a 4-session low of 221, while only 78 issues hit new lows. The markets are still mired in a trench between recent high and low marks, awaiting some kind of economic or political news to break out one way or another.
While only the bulliest of the bulls believe that another new top can be put on this market, the bears still seem to be in semi-hibernation. Neither the China chain-reaction nor the sub-prime blow-out seemed to be enough to ignite increased downside pressure. Volume has been particularly tame on days the indices have risen, so there's at least some indication that the perma-bull mentality has been partially put to rest in some quarters.
In an interesting note on market forces, the consumer confidence reading today from the Conference Board (107.2, down a full 4 points from February's 111.2) seemed to be the main driver. That a soft indicator that market movers should be out in front of makes one wonder who's really in charge on Wall Street and whether the traders actually know what they're doing.
Don't answer that until after earnings season is well underway (April 20th should do) and the market has moved past either February's highs or March's lows.
Maybe the real answer lies not so far from the self-service pump at any of the thousands of gas stations in the US, or in the millions of utility bill envelopes on the tail end of a brutally cold winter. No wonder consumers are feeling a little less warm about their economic futures, as property taxes, auto fuel and home utilities continue to eat away at disposable income.
At least oil prices spent the day dithering about the future, gaining only 2 cents to end at $62.93, still a solid $5 higher than where it should be. Perhaps tomorrow's crude inventory reading will dispel any notions of gouging the US population into $3.00 a gallon gas any time soon. Consumers have had just about enough of high energy prices and markets and market makers may be about to wake up to that factoid.
Gold and silver barely budged. They're in a precarious position, much like stocks, with nowhere to go but lower.
Dow 12,397.29 -71.78; NASDAQ 2,437.43 -18.20; S&P 500 1,429.61 -7.89; NYSE Composite 9,288.79 -52.57
Declining issues overwhelmed advancers by a more than 2-1 margin and the new highs were kept to a 4-session low of 221, while only 78 issues hit new lows. The markets are still mired in a trench between recent high and low marks, awaiting some kind of economic or political news to break out one way or another.
While only the bulliest of the bulls believe that another new top can be put on this market, the bears still seem to be in semi-hibernation. Neither the China chain-reaction nor the sub-prime blow-out seemed to be enough to ignite increased downside pressure. Volume has been particularly tame on days the indices have risen, so there's at least some indication that the perma-bull mentality has been partially put to rest in some quarters.
In an interesting note on market forces, the consumer confidence reading today from the Conference Board (107.2, down a full 4 points from February's 111.2) seemed to be the main driver. That a soft indicator that market movers should be out in front of makes one wonder who's really in charge on Wall Street and whether the traders actually know what they're doing.
Don't answer that until after earnings season is well underway (April 20th should do) and the market has moved past either February's highs or March's lows.
Maybe the real answer lies not so far from the self-service pump at any of the thousands of gas stations in the US, or in the millions of utility bill envelopes on the tail end of a brutally cold winter. No wonder consumers are feeling a little less warm about their economic futures, as property taxes, auto fuel and home utilities continue to eat away at disposable income.
At least oil prices spent the day dithering about the future, gaining only 2 cents to end at $62.93, still a solid $5 higher than where it should be. Perhaps tomorrow's crude inventory reading will dispel any notions of gouging the US population into $3.00 a gallon gas any time soon. Consumers have had just about enough of high energy prices and markets and market makers may be about to wake up to that factoid.
Gold and silver barely budged. They're in a precarious position, much like stocks, with nowhere to go but lower.
Monday, March 26, 2007
Charades, Anyone?
How many times do we have to see this same pattern before we all become complete skeptics?
I pose that question in response to the unusual market movements today which saw all US Equity indices fall sharply at 10:00 am when the
Commerce Dept. reported new home sales fell 3.2% in February. The number of new homes sold in the month was the lowest since June 2000.
At the time, briefing.com (yeah, they're probably in on it) said this:
Yes, that's laughable, along with exhibiting very poor grammar skills. "Moderate drag" my behind.
With this quick drop-off (the Dow was down more than 114 points by 11:00 am) in mind, let's take a look at how the indices closed on Monday:
Dow 12,469.07 -11.94; NASDAQ 2,455.63 +6.70; S&P 500 1,437.50 +1.39; NYSE Composite 9,341.36 +2.96
Now, it doesn't take a genius to conclude that something, somewhere, somehow made the majority of traders feel more secure about buying stocks after noon. It's also not a reach - after the Plunge Protection Team, otherwise known as the President's Working Group on Financial Markets has been mentioned with some frequency of late - to believe there are nefarious forces at work, vainly attempting to keep struggling US stock markets afloat.
Manipulating stock markets is not new, nor is it impossible. There are people, corporations and governments which would think it virtuous to rescue the financial markets from imminent collapse. However, continual, systemic pumping of US markets to sustain a bull market that is already bordering on an absurd length of time (53 months), is quite another thing.
It's not like putting a temporary support - akin to Greenspan's famous 1% "emergency" federal funds rate - under the markets to assuage fears; it is more like extended tinkering with the wheels of commerce, which, after a while, look nothing like what they were originally. Piecemeal adjustments eventually lead to situations in which chain reactions cannot be averted, kind of like fixing various parts of an old clock. In the end, something's going to break that can't be fixed, taking down all of the other "little fixes" along the way.
In any case, whatever evil lurked below 12,350.00 on the Dow was negated by the movers of markets. In a real world, as opposed to our current bizzaro-war-on-terror-take-off-your-shoes-at-airports-world, the Dow would be hovering in the 10,800-11,500 range, and people would be really concerned about their investments. But, thanks to the PPT, no worries!
Besides, crude oil for May delivery is only 62.91 (+0.63 today). Gold and silver were also up and hey, Georgetown's in the Final Four. What's to worry? Be happy.
For more on the President's Working Group on Financial Markets, either Google that term or the term Plunge Protection Team or read this interesting article at the link below (fair warning: it's a PDF):
Move Over Adam Smith: The Visible Hand of Uncle Sam
How many times do we have to see this same pattern before we all become complete skeptics?
I pose that question in response to the unusual market movements today which saw all US Equity indices fall sharply at 10:00 am when the
Commerce Dept. reported new home sales fell 3.2% in February. The number of new homes sold in the month was the lowest since June 2000.
At the time, briefing.com (yeah, they're probably in on it) said this:
Even though the data do not mean that the housing market is crashing and will pull the overall economy into recession, the broader perspective shows that housing is still in a correction and will remain a moderate drag on real GDP for several more quarters.
Yes, that's laughable, along with exhibiting very poor grammar skills. "Moderate drag" my behind.
With this quick drop-off (the Dow was down more than 114 points by 11:00 am) in mind, let's take a look at how the indices closed on Monday:
Dow 12,469.07 -11.94; NASDAQ 2,455.63 +6.70; S&P 500 1,437.50 +1.39; NYSE Composite 9,341.36 +2.96
Now, it doesn't take a genius to conclude that something, somewhere, somehow made the majority of traders feel more secure about buying stocks after noon. It's also not a reach - after the Plunge Protection Team, otherwise known as the President's Working Group on Financial Markets has been mentioned with some frequency of late - to believe there are nefarious forces at work, vainly attempting to keep struggling US stock markets afloat.
Manipulating stock markets is not new, nor is it impossible. There are people, corporations and governments which would think it virtuous to rescue the financial markets from imminent collapse. However, continual, systemic pumping of US markets to sustain a bull market that is already bordering on an absurd length of time (53 months), is quite another thing.
It's not like putting a temporary support - akin to Greenspan's famous 1% "emergency" federal funds rate - under the markets to assuage fears; it is more like extended tinkering with the wheels of commerce, which, after a while, look nothing like what they were originally. Piecemeal adjustments eventually lead to situations in which chain reactions cannot be averted, kind of like fixing various parts of an old clock. In the end, something's going to break that can't be fixed, taking down all of the other "little fixes" along the way.
In any case, whatever evil lurked below 12,350.00 on the Dow was negated by the movers of markets. In a real world, as opposed to our current bizzaro-war-on-terror-take-off-your-shoes-at-airports-world, the Dow would be hovering in the 10,800-11,500 range, and people would be really concerned about their investments. But, thanks to the PPT, no worries!
Besides, crude oil for May delivery is only 62.91 (+0.63 today). Gold and silver were also up and hey, Georgetown's in the Final Four. What's to worry? Be happy.
For more on the President's Working Group on Financial Markets, either Google that term or the term Plunge Protection Team or read this interesting article at the link below (fair warning: it's a PDF):
Move Over Adam Smith: The Visible Hand of Uncle Sam
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