The pins and needles upon which traders have been treading these last six months finally began to prick and tingle at the soles of their feet and the soul of investing. With stocks recovering mildly from Wednesday's selloff on news that unemployment claims had dipped - for the third straight week - the 10:00 am announcement from the National Association of Realtors that existing home sales for August had fallen 2.7% in August sent shivers through the markets, turning early gains into day-long markets.
The damage done by the one small piece of news demonstrated just how fragile this rally has become. Adding to the pressure was a stronger dollar, which helped keep stocks down, but did more damage to commodities. Overall, the damage was limited though broad, the Dow Jones Industrials outperforming the rest of the market, a sign that investors may have made a run to more quality names.
Dow 9,707.44, -41.11 (0.42%)
Nasdaq 2,107.61, -23.81 (1.12%)
S&P 500 1,050.78, -10.09 (0.95%)
NYSE Composite 6,862.31, -102.38 (1.47%)
Stocks closed lower for the second straight session, with declining issues leading advancers by a wide margin, 4899-1554, or, better than 3-1. New highs and lows both retreated, though highs remained the leader, 229-38. Volume was strong.
NYSE Volume 6,546,583,500
Nasdaq Volume 2,646,965,000
Commodity prices were affected negatively by the strengthening dollar, which, to many ordinary folks, is just fine, as the price of oil for November delivery dropped significantly, down $3.08, to $65.89, a 2-month low. Gold dipped below the magic $1000 mark, losing $15.50, to $998.90. Silver didn't do any better, dropping 62 cents to $16.30.
What's interesting to note is the interplay between the dollar, commodities and stocks, as they have been coupled together for quite some time. As the dollar has weakened, both stocks and commodities have risen, but, especially in the oil trade, some decoupling of stocks from commodities may be beginning to take place.
In reality, the two should have little to do with each other, since they are both asset classes. Wall Street may be outsmarting itself at the moment, as the long-term rally still remains in place for stocks, while commodities are arguably overpriced in this somewhat deflationary environment.
Tomorrow, traders will seek insight from durable goods orders at 8:30 am, followed by the Michigan Consumer Sentiment survey at 9:55 and new home sales at 10:00 am.
There are significant cross-currents at work, though the markets maintained their upside bias with the Dow finishing just above 4700 and the S&P finding support at 1048.
Thursday, September 24, 2009
Wednesday, September 23, 2009
End of Rally or Start of Something Even Better?
Stocks took a 180 degree turn after the highly-anticipated announcement by the FOMC of the Federal Reserve, first blasting higher (the Dow pushing beyond 9900), but just as suddenly reversing course, heading straight down into the close to finish with the largest losses in nearly a month.
Alarmists will say that this is the beginning of a correction, which they said in May, June and July and again at the end of August, but they will still be wrong. The reasons are simple. First, the Fed announcement was probably their rosiest and most bullish since the financial crisis of a year ago. Second, they - the Fed - hasn't stopped pumping money into markets and reiterated that they would continue that posture. Third, the Fed kept interest rates essentially at zero, right where it's been for a year, and they're surely not backing off from that. Fourth, the timing of the sell-out (as opposed to a sell-off, I'll explain below) was extremely suspect and more than likely engineered by some very large players. Those would be the usual suspects from the failed banks and brokerages at Goldman Sachs, Morgan Stanley, JP Morgan Chase and Bank of America.
This kind of unexpected turn has gotten to be expected by market pros, and they're not going to be swayed into selling, though those who bought in anticipation of the market going higher on the Fed announcement (which it did, initially), may have a while before they get back to even. This was mostly planned, well-organized selling, something like the reverse of a short squeeze, with the big money taking theirs off the top. The rally, which is now more than six months old, remains intact and stocks will recover, probably in a very short time. There simply isn't any better place to put money to work. There's also plenty of support in the Dow 9400-9600 range. This was simply profit-taking and nothing more than that since the fundamentals of the market did not change.
Dow 9,748.55, -81.32 (0.83%)
NASDAQ 2,131.42, -14.88 (0.69%)
S&P 500 1,060.87, -10.79 (1.01%)
NYSE Composite 6,964.69, -82.44 (1.17%)
Declining issues beat advancers, 4080-2388, but evidence of the rally remained in the new highs vs. new lows metric. There were 507 new highs on top of 68 new lows, a very wide margin in a trend that continues to suggest higher stock prices. Volume was solid, though much of that volume had to do with the upside achieved earlier in the day. All told, the sell-out was not impressive and unlikely to encourage those of a bearish inclination very much.
NYSE Volume 6,319,143,500
NASDAQ Volume 2,699,233,750
What may have been more significant was action in commodities and in the dollar index. Right after the Fed announcement, the dollar fell abruptly, but soon after reversed course and finished higher, just the opposite of what stocks did.
Oil was absolutely shattered on the day, finishing down $2.79, to $68.97. The metals did not align, though they were lower. Gold sold off by only $1.10, finishing at $1,014.40. Silver fell 21 cents, to $16.91.
What happens next depends completely upon market sentiment, which has been somewhat positive and isn't likely to change soon, unless Thursday's unemployment claims data - both initial and continuing - come in below expectations. The time has come for employment, even though it is a lagging indicator, to start doing something other than tread water. Ditto the real estate market. Existing home sales data is on tap for Thursday at 10:00 am.
If these numbers are poor or show only incremental improvement, stocks could take an even worse beating, though judging by the exquisite timing by the big money players, there's probably going to be a return to the rally in short order. Obviously, one day does not make a trend, and as unexpected and swift was this decline, coming out of nowhere and running a full 150+ points on the Dow in the final 90 minutes of trading, qualifies as a one off event, completely orchestrated by the crooks and swindlers who brought you 9/11, the financial collapse, the TARP and every other suspect financial event of the past 20 years.
Don't be swayed. Their own greed tells us that stocks will have to go much higher short term.
Alarmists will say that this is the beginning of a correction, which they said in May, June and July and again at the end of August, but they will still be wrong. The reasons are simple. First, the Fed announcement was probably their rosiest and most bullish since the financial crisis of a year ago. Second, they - the Fed - hasn't stopped pumping money into markets and reiterated that they would continue that posture. Third, the Fed kept interest rates essentially at zero, right where it's been for a year, and they're surely not backing off from that. Fourth, the timing of the sell-out (as opposed to a sell-off, I'll explain below) was extremely suspect and more than likely engineered by some very large players. Those would be the usual suspects from the failed banks and brokerages at Goldman Sachs, Morgan Stanley, JP Morgan Chase and Bank of America.
This kind of unexpected turn has gotten to be expected by market pros, and they're not going to be swayed into selling, though those who bought in anticipation of the market going higher on the Fed announcement (which it did, initially), may have a while before they get back to even. This was mostly planned, well-organized selling, something like the reverse of a short squeeze, with the big money taking theirs off the top. The rally, which is now more than six months old, remains intact and stocks will recover, probably in a very short time. There simply isn't any better place to put money to work. There's also plenty of support in the Dow 9400-9600 range. This was simply profit-taking and nothing more than that since the fundamentals of the market did not change.
Dow 9,748.55, -81.32 (0.83%)
NASDAQ 2,131.42, -14.88 (0.69%)
S&P 500 1,060.87, -10.79 (1.01%)
NYSE Composite 6,964.69, -82.44 (1.17%)
Declining issues beat advancers, 4080-2388, but evidence of the rally remained in the new highs vs. new lows metric. There were 507 new highs on top of 68 new lows, a very wide margin in a trend that continues to suggest higher stock prices. Volume was solid, though much of that volume had to do with the upside achieved earlier in the day. All told, the sell-out was not impressive and unlikely to encourage those of a bearish inclination very much.
NYSE Volume 6,319,143,500
NASDAQ Volume 2,699,233,750
What may have been more significant was action in commodities and in the dollar index. Right after the Fed announcement, the dollar fell abruptly, but soon after reversed course and finished higher, just the opposite of what stocks did.
Oil was absolutely shattered on the day, finishing down $2.79, to $68.97. The metals did not align, though they were lower. Gold sold off by only $1.10, finishing at $1,014.40. Silver fell 21 cents, to $16.91.
What happens next depends completely upon market sentiment, which has been somewhat positive and isn't likely to change soon, unless Thursday's unemployment claims data - both initial and continuing - come in below expectations. The time has come for employment, even though it is a lagging indicator, to start doing something other than tread water. Ditto the real estate market. Existing home sales data is on tap for Thursday at 10:00 am.
If these numbers are poor or show only incremental improvement, stocks could take an even worse beating, though judging by the exquisite timing by the big money players, there's probably going to be a return to the rally in short order. Obviously, one day does not make a trend, and as unexpected and swift was this decline, coming out of nowhere and running a full 150+ points on the Dow in the final 90 minutes of trading, qualifies as a one off event, completely orchestrated by the crooks and swindlers who brought you 9/11, the financial collapse, the TARP and every other suspect financial event of the past 20 years.
Don't be swayed. Their own greed tells us that stocks will have to go much higher short term.
Tuesday, September 22, 2009
Up and Down
Over the past two days, the markets have been practically at a standstill, with trading ensconced in a fairly tight range. After closing down 41 points on Monday, the Dow rose 51 on Tuesday, for a net gain of 10 points. This kind of range-bound gyration is probably due to a number of factors, one being that the market has been on somewhat of a tear and has cooled off for some profit taking, and also the usual waiting game prior to the Fed rate announcement (due Wednesday at 2:15 pm).
While the Fed is poised to do nothing once again, it's probable that they'll spice up the language somewhat, the accompanying press release stating that there are incipient signs of recovery in various parts of the country, though jobs and real estate prices are still acting as a drag on the economy.
Since none of that is anything new, traders will be - more and more every day - looking at stocks from a valuation standpoint, seeking companies that are well-managed, stable, and with solid cash-debt positions. There's also something of a speculative movement ongoing as well in this trader's market. With so many small firms trading at very low prices, investors have been nibbling and gnawing at stocks mostly priced under $20 per share. There are loads of them, some good, others not, but that's a matter for which markets are built.
The orderliness of the current rally has been something marvelous. Creeping upwards little by little nearly every day, this 6 1/2-month-old boom has not gotten overextended, and still appears reasonably priced considering current conditions. Any good news from the real estate world or job creation front should send it soaring off like a Roman candle.
Dow 9,829.87, +51.01 (0.52%)
NASDAQ 2,146.30, +8.26 (0.39%)
S&P 500 1,071.66, +7.00 (0.66%)
NYSE Composite 7,047.13, +78.54 (1.13%)
Advancing issues finished smartly ahead of decliners on Tuesday, 4259-2214. New highs outpaced new lows, 458-60, continuing a nearly 3-month-old trend that now appears unbreakable. Volume was moderate, tending toward high.
NYSE Volume 5,923,928,000
NASDAQ Volume 2,504,479,500
Commodities were mostly higher on a weaker US dollar. Oil rose $1.84, to $71.55, though it remains stuck in a price range between $65 and $75. Gold bounded higher by $10.60, to $1,015.50. Silver bounced back 24 cents, to $17.12.
While the Fed is poised to do nothing once again, it's probable that they'll spice up the language somewhat, the accompanying press release stating that there are incipient signs of recovery in various parts of the country, though jobs and real estate prices are still acting as a drag on the economy.
Since none of that is anything new, traders will be - more and more every day - looking at stocks from a valuation standpoint, seeking companies that are well-managed, stable, and with solid cash-debt positions. There's also something of a speculative movement ongoing as well in this trader's market. With so many small firms trading at very low prices, investors have been nibbling and gnawing at stocks mostly priced under $20 per share. There are loads of them, some good, others not, but that's a matter for which markets are built.
The orderliness of the current rally has been something marvelous. Creeping upwards little by little nearly every day, this 6 1/2-month-old boom has not gotten overextended, and still appears reasonably priced considering current conditions. Any good news from the real estate world or job creation front should send it soaring off like a Roman candle.
Dow 9,829.87, +51.01 (0.52%)
NASDAQ 2,146.30, +8.26 (0.39%)
S&P 500 1,071.66, +7.00 (0.66%)
NYSE Composite 7,047.13, +78.54 (1.13%)
Advancing issues finished smartly ahead of decliners on Tuesday, 4259-2214. New highs outpaced new lows, 458-60, continuing a nearly 3-month-old trend that now appears unbreakable. Volume was moderate, tending toward high.
NYSE Volume 5,923,928,000
NASDAQ Volume 2,504,479,500
Commodities were mostly higher on a weaker US dollar. Oil rose $1.84, to $71.55, though it remains stuck in a price range between $65 and $75. Gold bounded higher by $10.60, to $1,015.50. Silver bounced back 24 cents, to $17.12.
Friday, September 18, 2009
Tight Range, High Volume
Today was moving day.
Traders moved in and out of positions, realigning their portfolios into what they believe to be the best stocks over the near term, that time frame likely being through December and the holiday season. That is why sector rotation was so evident today, as investors shed shares in basic materials, conglomerates, transportation and energy (the 4 sectors which closed in the red) and into consumer cyclical and non-cyclical stocks. Those two sectors were the biggest movers, up 0.71% and 1.11%, respectively, and another reason why volume was high, but the range in which stocks traded was very tight.
The Dow moved a total of 63 points from top to bottom, which would normally be suggesting a sluggish market, but the overall picture was more dynamic, as volumes exceeded the prior two days.
Dow 9,820.20, +36.28 (0.37%)
Nasdaq 2,132.86, +6.11 (0.29%)
S&P 500 1,068.30, +2.81 (0.26%)
NYSE Composite 7,016.92, +14.75 (0.21%)
The lack of breadth also contributed to the smallish gains. Advancers beat decliners narrowly, 3561-2887. New highs finished ahead of new lows, but not nearly with as much room between them as on Wednesday, 360-44. Notably, the number of new lows was cut in half from most of this week's daily count, an encouraging sign.
Readers will note a major change in how NYSE volume is expressed. Instead of using simple closed volume, from this day forward, we will display consolidated volume, which includes extraneous trading platforms unrecognized by straight Big Board volume calculations.
NYSE Volume 6,744,731,000
Nasdaq Volume 3,107,309,750
There was no economic news released by any government agency, though the Bureau of Labor Statistics did report that unemployment has reached levels above the national average (9.7%) in 14 states. The hardest hit was Michigan, at 15.4%, while the best place to keep a job is in North Dakota, which reported unemployment at 4.3%. We're unsure what people actually do in North Dakota, but apparently, nearly everybody is doing it.
While the mid-section of the country is hardly suffering at all, the far West - California, Nevada and Oregon, specifically - has been hit the worst, with unemployment above 12% in each of those states. Nearly every Southern state has reached or exceeded 10%, along with Ohio and Illinois.
Those figures did not matter much to Wall Street, which is becoming more and more focused on 3rd quarter earnings reports, which will begin flowing to the market within 3 weeks. Expectations, once again, are quite high that companies will show top-line growth as opposed to profits squeezed from cost-cutting and job elimination.
That lies ahead. For now, the rally lives on.
Traders moved in and out of positions, realigning their portfolios into what they believe to be the best stocks over the near term, that time frame likely being through December and the holiday season. That is why sector rotation was so evident today, as investors shed shares in basic materials, conglomerates, transportation and energy (the 4 sectors which closed in the red) and into consumer cyclical and non-cyclical stocks. Those two sectors were the biggest movers, up 0.71% and 1.11%, respectively, and another reason why volume was high, but the range in which stocks traded was very tight.
The Dow moved a total of 63 points from top to bottom, which would normally be suggesting a sluggish market, but the overall picture was more dynamic, as volumes exceeded the prior two days.
Dow 9,820.20, +36.28 (0.37%)
Nasdaq 2,132.86, +6.11 (0.29%)
S&P 500 1,068.30, +2.81 (0.26%)
NYSE Composite 7,016.92, +14.75 (0.21%)
The lack of breadth also contributed to the smallish gains. Advancers beat decliners narrowly, 3561-2887. New highs finished ahead of new lows, but not nearly with as much room between them as on Wednesday, 360-44. Notably, the number of new lows was cut in half from most of this week's daily count, an encouraging sign.
Readers will note a major change in how NYSE volume is expressed. Instead of using simple closed volume, from this day forward, we will display consolidated volume, which includes extraneous trading platforms unrecognized by straight Big Board volume calculations.
NYSE Volume 6,744,731,000
Nasdaq Volume 3,107,309,750
There was no economic news released by any government agency, though the Bureau of Labor Statistics did report that unemployment has reached levels above the national average (9.7%) in 14 states. The hardest hit was Michigan, at 15.4%, while the best place to keep a job is in North Dakota, which reported unemployment at 4.3%. We're unsure what people actually do in North Dakota, but apparently, nearly everybody is doing it.
While the mid-section of the country is hardly suffering at all, the far West - California, Nevada and Oregon, specifically - has been hit the worst, with unemployment above 12% in each of those states. Nearly every Southern state has reached or exceeded 10%, along with Ohio and Illinois.
Those figures did not matter much to Wall Street, which is becoming more and more focused on 3rd quarter earnings reports, which will begin flowing to the market within 3 weeks. Expectations, once again, are quite high that companies will show top-line growth as opposed to profits squeezed from cost-cutting and job elimination.
That lies ahead. For now, the rally lives on.
Thursday, September 17, 2009
Profit Pause
Today was the day to take profits and/or jump onto the rally bandwagon. The major indices hugged the flatline most of the day, but early afternoon was the most opportune time to stake out a position. With most stocks down at that time - and there wasn't much time to do so - it was prime time for buyers, of whom there are plenty these days.
At some point, this market will turn back, but it wasn't today, and, as mentioned yesterday, is an event which is difficult, if not impossible, to predict.
Dow 9,783.92, -7.79 (0.08%)
NASDAQ 2,126.75, -6.40 (0.30%)
S&P 500 1,065.49, -3.27 (0.31%)
NYSE Composite 7,002.17, -35.97 (0.51%)
The downside close, however slight, ended a three-day winning streak for stocks, which have closed to the upside 8 of the previous 10 sessions. Decliners led advancing issues, 3492-2984, but new highs remained ahead of new lows by a widening margin, 517-95. Volume was once again strong.
NYSE Volume 1,512,904,000
NASDAQ Volume 2,641,632,000
Commodities also cooled off, with light crude for October delivery declining 4 cents, to $72.47. Gold gave back $6.70, to $1,013.50, while silver fell 17 cents to $17.27.
Initial jobless claims were lower for the most recent period, as were continuing claims. Building permits and new home starts showed a slight increase for August. The Philadelphia Fed reported an uptick in regional business activity index, to 14.1 in September, a substantial rise from the 4.2 figure recorded in August.
The market just shrugged off these positive developments as traders focused on rotating out of winners and losers, taking profits and planning their next moves.
With a day such as this setting the stage for Friday, markets could go any which way, though the impetus still rmains to the upside. It is understandable that the market pause like this before surging ahead to new ground as stocks have been on a strong tear for months. Booking profits at this juncture seems prudent, though there certainly appears to be more strong days just ahead.
At some point, this market will turn back, but it wasn't today, and, as mentioned yesterday, is an event which is difficult, if not impossible, to predict.
Dow 9,783.92, -7.79 (0.08%)
NASDAQ 2,126.75, -6.40 (0.30%)
S&P 500 1,065.49, -3.27 (0.31%)
NYSE Composite 7,002.17, -35.97 (0.51%)
The downside close, however slight, ended a three-day winning streak for stocks, which have closed to the upside 8 of the previous 10 sessions. Decliners led advancing issues, 3492-2984, but new highs remained ahead of new lows by a widening margin, 517-95. Volume was once again strong.
NYSE Volume 1,512,904,000
NASDAQ Volume 2,641,632,000
Commodities also cooled off, with light crude for October delivery declining 4 cents, to $72.47. Gold gave back $6.70, to $1,013.50, while silver fell 17 cents to $17.27.
Initial jobless claims were lower for the most recent period, as were continuing claims. Building permits and new home starts showed a slight increase for August. The Philadelphia Fed reported an uptick in regional business activity index, to 14.1 in September, a substantial rise from the 4.2 figure recorded in August.
The market just shrugged off these positive developments as traders focused on rotating out of winners and losers, taking profits and planning their next moves.
With a day such as this setting the stage for Friday, markets could go any which way, though the impetus still rmains to the upside. It is understandable that the market pause like this before surging ahead to new ground as stocks have been on a strong tear for months. Booking profits at this juncture seems prudent, though there certainly appears to be more strong days just ahead.
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