If you want higher equity prices, there's one sure way to get there: Cut the price of oil. While you're at it, take a bite out of the precious metals as well.
That's what happened today as the Dow popped another 19.07, setting another record close at 12,786.64. The price of crude had much to do with the Dow's rise, as news from the corporate landscape was none too cheery. Besides the proposed merger of the two paid satellite radio providers - Sirius and XM (both going broke) - Home Depot had a rough quarter and Wal-Mart missed sales numbers for the 4th quarter of 2006.
That's Ugly, with a capital UGH.
Leave it to the oil barons to come to the rescue of the pinstripers on Wall Street by dropping the price of a barrel of crude as low as 57.35 during the day, before closing at 58.07. That little dip was enough good news to set off a little buying of overinflated stocks. At the same time, gold and silver took broadsides and remain rangebound.
While the Dow managed only a .15% gain, the other indices did better. the Nasdaq added 16.73 and finally closed above 2,500, finishing at 2,513.04, while the S&P 500 gained 4.14 to 1459.68.
Nasdaq's feat was far more impressive than that of the Dow's, breaking through a number that hasn't been seen around these parts in 6 years. It's a very positive sign for techs and the economy as a whole, plus, the emotional value is not to be understated. While the bull market rages into uncharted territory, the markets are signaling an even bigger burst higher is ahead.
As for the market "cheering" the proposed Sirius and XM merger as the Wall Street Journal is reporting on their radio broadcasts, both services have hit the wall and are soon to be hemorrhaging money, so the merger is a way out. The regulatory hurdles are high for this one, however, as merging the only two national satellite radio broadcasters would be the definition of a monopoly. It shouldn't happen and probably won't unless antitrust rules are no longer valid.
Tuesday, February 20, 2007
Friday, February 16, 2007
Markets Rally Late, Dow Sets Another New High
US indices spent most of Friday trading in the negative, but the Dow got just enough of late activity to boost it to another closing high - the third in a row.
DJIA: 12,767.57 Up 2.56; Nasdaq: 2,496.31 Down 0.79; S&P 500 1,455.54 Down 1.27.
On a day that was altogether lethargic, the averages managed to just barely hold their own. News from the housing market was the only notable piece, with a 14.1% decline in January housing the headline.
Despite what some experts may be saying, the long, slow decline in housing starts, median prices and overall prices and the antecedent rise in mortgage delinquencies is only gathering momentum. Housing prices over the last 10 years had grown out of the reach of most Americans and a readjustment is necessary. There's going to be much more pain down the road to suburbia in coming months and years, with massive failure of a lender or two the culmination.
An environment wherein a two-earner family with a gross income of $90,000 thinks seriously about trading up to a $500,000 home simply cannot sustain itself. Sooner or later, prices cool, speculators back out, deals are undersubscribed and the whole thing goes bust. That's exactly what's occurring in South Florida especially and elsewhere to a lesser extent. Markets in Las Vegas, parts of California and the Northeast corridor have already been cooling down for the last six months to a year. The trend will spread, the herd will thin and all of a sudden - over a period of 2-3 years - you've got a buyer's market. That's where we're headed.
A bust in the housing market isn't going to affect the investor class much, however, unless people begin cashing in 401k's to make the mortgage payments. A more likely occurrence is that municipalities will face the untidy prospect of seeing tax revenues truncated under the auspices of the highly-popular-but-fiscally-unsupportable market value assessments. It's a nightmare for tax districts large and small, and it's coming fast.
Another good week for stocks ends with this cheery note: crude oil rose $1.40 on Friday to close at $59.39. $60/bbl. still looks like a short term top. Pitchers and catchers reported for Spring training this week. Spring is just around the corner.
DJIA: 12,767.57 Up 2.56; Nasdaq: 2,496.31 Down 0.79; S&P 500 1,455.54 Down 1.27.
On a day that was altogether lethargic, the averages managed to just barely hold their own. News from the housing market was the only notable piece, with a 14.1% decline in January housing the headline.
Despite what some experts may be saying, the long, slow decline in housing starts, median prices and overall prices and the antecedent rise in mortgage delinquencies is only gathering momentum. Housing prices over the last 10 years had grown out of the reach of most Americans and a readjustment is necessary. There's going to be much more pain down the road to suburbia in coming months and years, with massive failure of a lender or two the culmination.
An environment wherein a two-earner family with a gross income of $90,000 thinks seriously about trading up to a $500,000 home simply cannot sustain itself. Sooner or later, prices cool, speculators back out, deals are undersubscribed and the whole thing goes bust. That's exactly what's occurring in South Florida especially and elsewhere to a lesser extent. Markets in Las Vegas, parts of California and the Northeast corridor have already been cooling down for the last six months to a year. The trend will spread, the herd will thin and all of a sudden - over a period of 2-3 years - you've got a buyer's market. That's where we're headed.
A bust in the housing market isn't going to affect the investor class much, however, unless people begin cashing in 401k's to make the mortgage payments. A more likely occurrence is that municipalities will face the untidy prospect of seeing tax revenues truncated under the auspices of the highly-popular-but-fiscally-unsupportable market value assessments. It's a nightmare for tax districts large and small, and it's coming fast.
Another good week for stocks ends with this cheery note: crude oil rose $1.40 on Friday to close at $59.39. $60/bbl. still looks like a short term top. Pitchers and catchers reported for Spring training this week. Spring is just around the corner.
Thursday, February 15, 2007
Dow Rockets 100+ in 2 days; Nasdaq Flirts with 2500
After gaining 87 points on Wednesday and reaching another all-time high, the Dow Jones Industrial Average tacked on 23 more Thursday to close at 12, 765.01. Fueled by positive comments from Fed Chairman Ben Bernanke, stabilizing oil prices and benign economic news, investors poured into blue chips, techs and small caps, extending the bull run begun in October 2002.
The Nasdaq flirted with 2,500 once again on Thursday, closing on the upside by 8.72 at 2,497.10. The junior exchange has not closed above 2,500 in six years and the number it is approaching is an important psychological level.
The National Association of Realtors announced today that overall home prices fell 2.7% in the 4th quarter - a record - while median home prices lost 3.4%. Vacation markets in Florida, Sarasota-Bradenton-Venice and Palm Bay-Melbourne-Titusville, were especially hard hit.
Life may be rosy on Wall Street but not everyone is sharing the joy.
The Nasdaq flirted with 2,500 once again on Thursday, closing on the upside by 8.72 at 2,497.10. The junior exchange has not closed above 2,500 in six years and the number it is approaching is an important psychological level.
The National Association of Realtors announced today that overall home prices fell 2.7% in the 4th quarter - a record - while median home prices lost 3.4%. Vacation markets in Florida, Sarasota-Bradenton-Venice and Palm Bay-Melbourne-Titusville, were especially hard hit.
Life may be rosy on Wall Street but not everyone is sharing the joy.
Tuesday, February 13, 2007
Alcoa Rumors Propels Dow 102 Higher
There are days that bring one to wonder where investors get their ideas and then there are days like this.
Amid speculation that a pair of Australian mining companies - BHP Billiton Ltd. and Rio Tinto PLC - each plan to offer as much as $40 billion to purchase American aluminum giant Alcoa (AA), the Dow Jones Industrials leapt out of the gate at the opening bell and never looked back.
The story, attributed to the London Times, citing unnamed sources, set the Dow ablaze in New York.
By the end of the day (after the market closed), the Washington Post was reporting that "few analysts believed the U.S. aluminum giant was about to be gobbled up."
My theory: These kinds of things are dreamt up and ginned up by sharpies inside the brokerages to make a quick killing in an overnight options trade and have little, if any, basis in reality. They're especially attractive during slow news periods.
Alcoa closed just a shade under 33 on Monday, but opened above 35 on Tuesday, peaking at 36.05 within the first hour of trading. It ended at the day at 35. February options expire on Friday.
While there's nothing ostensibly illegal about planting a story (though it's a thin line), it does create an uneven playing field for those in the know. Getting Alcoa to move 2 points on the open is no mean feat. The stock has ranged between 23 and 38 for nearly the past 4 years. It's not one of the more volatile stocks in the game. In fact, it's rather a dull trading vehicle.
The moral of this particular story is that market manipulation comes in all shapes and sizes. And, while no one is immune, a fraud can usually be spotted relatively easily.
If traders are this desperate to make a buck, we could be witness to the final snorts of this 52-month long bull market. Only the most hopeful would count on a continuation of this surge through the rest of the week.
Others will view today with a healthy dose of skepticism.
The Dow gained 102.30, the S&P added 10.89, but the Nasdaq lagged, gaining only 9.50, roughly half the gain, in percentage terms, of the other indices.
Oil changed course on Tuesday, gaining $1.25 to close at $59.06 though the price is largely being held aloft by continuing cold weather in the US Northeast. With Spring's warming just around the corner, and oil prices failing to overtop $60, the good news for drivers and homeowners is due shortly.
Amid speculation that a pair of Australian mining companies - BHP Billiton Ltd. and Rio Tinto PLC - each plan to offer as much as $40 billion to purchase American aluminum giant Alcoa (AA), the Dow Jones Industrials leapt out of the gate at the opening bell and never looked back.
The story, attributed to the London Times, citing unnamed sources, set the Dow ablaze in New York.
By the end of the day (after the market closed), the Washington Post was reporting that "few analysts believed the U.S. aluminum giant was about to be gobbled up."
My theory: These kinds of things are dreamt up and ginned up by sharpies inside the brokerages to make a quick killing in an overnight options trade and have little, if any, basis in reality. They're especially attractive during slow news periods.
Alcoa closed just a shade under 33 on Monday, but opened above 35 on Tuesday, peaking at 36.05 within the first hour of trading. It ended at the day at 35. February options expire on Friday.
While there's nothing ostensibly illegal about planting a story (though it's a thin line), it does create an uneven playing field for those in the know. Getting Alcoa to move 2 points on the open is no mean feat. The stock has ranged between 23 and 38 for nearly the past 4 years. It's not one of the more volatile stocks in the game. In fact, it's rather a dull trading vehicle.
The moral of this particular story is that market manipulation comes in all shapes and sizes. And, while no one is immune, a fraud can usually be spotted relatively easily.
If traders are this desperate to make a buck, we could be witness to the final snorts of this 52-month long bull market. Only the most hopeful would count on a continuation of this surge through the rest of the week.
Others will view today with a healthy dose of skepticism.
The Dow gained 102.30, the S&P added 10.89, but the Nasdaq lagged, gaining only 9.50, roughly half the gain, in percentage terms, of the other indices.
Oil changed course on Tuesday, gaining $1.25 to close at $59.06 though the price is largely being held aloft by continuing cold weather in the US Northeast. With Spring's warming just around the corner, and oil prices failing to overtop $60, the good news for drivers and homeowners is due shortly.
Monday, February 12, 2007
Stocks off again; Nasdaq loses bid for London Exchange
The downward trend begun late last week spilled over into Monday's market. Once again, there was nary a rationale for either buying or selling, stocks drifted gradually lower, ending down on the three major indices in sluggish trading.
The Dow lost 28.28, the NASDAQ -9.44, S&P 500 -4.69.
Most notable on the day was the Nasdaq failing to get shareholder approval for its hostile takeover of the London Stock Exchange. The on-again, off-again attempts have been jarring to investors and speculators on both sides of the Atlantic. Nasdaq owns a 28.75% stake in the LSE, which has been involved in takeover attempts by Deutsche Boerse, Paris-based exchange Euronext and Australian bank Macquarie over the past two years. Nasdaq will be unable to launch another hostile takeover for the next 12 months.
The LSE will look for protection by strengthening alliances with friendlier exchanges such as the Tokyo Stock Exchange while the Nasdaq investors decide whether to pursue the takeover further or sell off their interests.
Oil dropped to $57.81 at the close, partially retracing recent gains while the precious metals remained rangebound.
The Dow lost 28.28, the NASDAQ -9.44, S&P 500 -4.69.
Most notable on the day was the Nasdaq failing to get shareholder approval for its hostile takeover of the London Stock Exchange. The on-again, off-again attempts have been jarring to investors and speculators on both sides of the Atlantic. Nasdaq owns a 28.75% stake in the LSE, which has been involved in takeover attempts by Deutsche Boerse, Paris-based exchange Euronext and Australian bank Macquarie over the past two years. Nasdaq will be unable to launch another hostile takeover for the next 12 months.
The LSE will look for protection by strengthening alliances with friendlier exchanges such as the Tokyo Stock Exchange while the Nasdaq investors decide whether to pursue the takeover further or sell off their interests.
Oil dropped to $57.81 at the close, partially retracing recent gains while the precious metals remained rangebound.
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