Naming retailers as culprits for ending the recent uptick in stocks on Tuesday probably doesn't quite hit the mark, even though stock futures continued to slide after April retail sales data was produced at 8:30 am EDT, prior to the market opening.
Overall, retail sales improved by 0.3% over the month, matching lowered expectations after a surprise gain of 0.8% in March. Whether traders were somewhat disappointed in the number is a matter of some speculation, better left with a question mark than a definitive answer.
What did likely spook the markets was the abrupt rise in bond yields, as the 10-year-note zapped higher to yield 3.07% during the day, a number not seen since 2011. The 2-year yield saw 2.60%, its highest level since 2008.
These are concerning numbers to stock hawkers because they are considered fairly risk free methods of making money, whereas stocks - even those offering dividends - imply risk, as stock prices rise and fall.
With the February's recent turn in markets still fresh in the mind, there are more than a few traders taking money off the equity table and moving it toward the relative safety of bonds. Besides, after eight days of gains, the market was pretty well priced out, so profit-taking commenced. The herd being what it is, the selling turned into a small stampede.
Another concern is the continued high price of crude oil. WTI crude held steady at 71.17 in New York, though pockets of $3.00+ per gallon regular gas began to appear across the filling stations of America. The national average stands at $2.87/gallon, which is beginning to squeeze middle class budgets, especially those with long commutes and larger, less-fuel-economiic vehicles.
Unless bond yields and the price of gas come down quickly, today's 197-point decline could turn worse in coming days and weeks.
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
5/10/18
24,739.53
+196.99
+576.38
5/11/18
24,831.17
+91.64
+668.02
5/14/18
24,899.41
+68.24
+736.26
5/15/18
24,706.41
-193.00
+543.26
At the Close, Tuesday, May 15, 2018:
Dow Jones Industrial Average: 24,706.41, -193.00 (-0.78%)
NASDAQ: 7,351.63, -59.69 (-0.81%)
S&P 500: 2,711.45, -18.68 (-0.68%)
NYSE Composite: 12,704.56, -67.47 (-0.53%)
Stocks started the week on a strong note, only to see the rally fade as the session wore on, leaving the indices with marginal gains, led by the Dow Industrials with a 0.27% rise, the eighth straight trading day in which the Dow has recorded a positive close.
Higher by 163 points in the 11:00 am hour, Dow stocks gave back nearly 100 points, or roughly two-fifths of their value by the end of the day.
With most major companies having already reported first quarter earnings, this may turn into a rather dull week, though Tuesday's trifecta of economic data releases - NY Fed Manufacturing, Retail Sales, and Durable Goods - may provide suitable trading fodder.
On Wednesday, Macy's (M) reports prior to the market open, while Cisco Systems (CSCO) reports after the close.
Thursday may be the most impactful session, as retailers Wal-Mart (WMT), Nordstrom (JWN), and JC Penney (JCP) each report before the opening bell.
Thus far, nearly at the halfway point of the month, "sell in May" has not been the preferred trading regimen. Rather, a family strong counter-rally has been tearing along, leaving the Dow at its best level in nearly two months.
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
5/10/18
24,739.53
+196.99
+576.38
5/11/18
24,831.17
+91.64
+668.02
5/14/18
24,899.41
+68.24
+736.26
At the Close, Monday, May 14, 2018:
Dow Jones Industrial Average: 24,899.41, +68.24 (+0.27%)
NASDAQ: 7,411.32, +8.43 (+0.11%)
S&P 500: 2,730.13, +2.41 (+0.09%)
NYSE Composite: 12,772.04, +10.22 (+0.08%)
Finishing out the week with a lackluster session that had the Dw up nearly another 100 points, the rally that began on May 26 - and which Money Daily then predicted would run 1000 points - is, as of Friday, good for a cool 747 points, rising, with a few bumps and grinds along the way, from 24,083.83 (April 25 close), to the current closing price of 24,831.17.
Unlike the NASDAQ (which finished lower on Friday), the S&P (which has seen two down days in the past seven), and the NYSE Composite (up six straight days) the Dow has risen each of the past seven sessions, although two of those sessions - the first and the fourth, which respectively saw gains of just five, and two points - have not been considered very inspirational nor insightful.
Still, stocks continue to ramp higher. They'll keep doing this until the herd of traders, lemming-like, will turn away for a few days or decide that they'd rather hold onto art or comic books or Beanie Babies or baseball cards, vintage cars, or oil futures while their favored pieces of dingy, junky corporate paper wither away over a longer period of time and get revalued at more appropriate prices.
That's the way Wall Street has always worked, and, despite all the howling from pundits, idiots and idiosyncratic voices one may value or disavow, it is the way it will always work.
Until it changes, the world is stuck with Wall Street and its various iterations in London, Berlin, Tokyo, Hong Kong, Shanghai and the various bourses of the civilized world, trading in debt and equity instruments of which the average investor knows little, expects much, and is happy to pump money into over vast swatches of time.
This kind of activity, viewed from an outside perspective, might seem odd. People make money from their various endeavors, only to pay bills, build up debt (mortgages, college funds, credit cards), and give the rest to some known or unknown entity to purchase partial shares of megalithic international corporations, giving said corporations vast amounts of money and power to invest, divest, spend, grow, or waste.
How much money is eventually a waste by corporations never enters the equation, though it's likely to be an enormous sum of money, which is probably why it's never mentioned.
For certain, some corporations do some good, but others are merely there for the taking, the tops of them skimmed by the ubermeisters of the investing world, the whales, the one-percenters, the government and probably some reckless speculators. The rest is left to the proletariat, the pensioners, the poor people.
A good question to ask a professional financial advisor is whether it would be wise to sell off a large portion of one's money in stocks and pay off all of one's debt, including the voracious eater of happiness, the 30-year mortgage. The stock answer is "no," followed by "no," and "oh, no."
Paying off one's mortgage would put banks out of business (it wouldn't really), and without banks, well, we wouldn't have, um, well... you see where this is going.
A long, long time ago, men and women owned land, raised their own crops, husbanded their own animals, taught their own children and bore whatever good or evil the earth, sun, and nature would bestow upon them. That was before the rise of the predator class of bankers, insurers, financiers, and governments. Now we outsource everything, starting with our own existence, the food we eat, to our children, which we send to schools where they are taught shoddily the ways of good citizenship and nothing about good survival and the difference between existence and prolonged suicide.
Your 401k or pension plan may give you comfort, but only indirectly. It's a promise to pay, over time. And promises are often broken. Just look at the divorce rate in developed countries or listen to a politician over a period longer than two years and you might detect that promises and words do not necessitate a brighter future.
Being bound to the whims and fantasies of corporate CEOs, government officials and generally, people whose wealth and power far exceeds your own may be some consolation that you have done well, but, in the end, all you really have is yourself and the land on which you stand, and some of you don't even own that.
Some things to think about, brought to you by music from the 60s.
Bear in mind: 26,616.71.
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
5/10/18
24,739.53
+196.99
+576.38
5/11/18
24,831.17
+91.64
+668.02
At the Close, Friday, May 11, 2018:
Dow Jones Industrial Average: 24,831.17, +91.64 (+0.37%)
NASDAQ: 7,402.88, -2.0913 (-0.03%)
S&P 500: 2,727.72, +4.65 (+0.17%)
NYSE Composite: 12,761.82, +30.18 (+0.24%)
For the Week:
Dow: +568.66 (+2.34%)
NASDAQ: +193.27 (+2.68%)
S&P 500: +64.30 (+2.41%)
NYSE Composite: +268.47 (+2.15%)
With a gain of nearly 200 points, the Dow Jones Industrial Average posted its sixth straight winning day, adding 875 points over that span.
Leading the charge higher were Apple (AAPL), which reached a new all-time high, at 190.04, and ExxonMobil (XOM), which gained 1.79 to close the session at 81.72. ExxonMobil's rise was attributed largely to the soaring price of oil. At 71.43 per barrel of WTI crude, oil is at its highest in four years, causing pain at the pump for commuters and drivers, but profits galore for energy companies.
While the immediate market euphoria may be tied somewhat to the rally in crude, it is likely to be short-lived if higher gasoline prices persist, as consumers will likely cut demand for other retail products, having to spend more to fill their tanks.
Another worrisome sign is the flattening treasury yield curve. The difference in yield spread between the five-year note and the 30-year bond fell to its lowest since 2007, a mere 29 basis points, with the five at 2.83 and the 30 at 3.12.
Flattening the curve, as at present, tightens banks' ability to lend at profit and is often a sign of a nearby recession. Should the curve invert - with fives' yield higher than 10's perhaps, it's an almost certain sign of recession, as all recessions over the past 50 years have been presaged by an inverted curve.
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
5/10/18
24,739.53
+196.99
+576.38
At the Close, Thursday, May 10, 2018:
Dow Jones Industrial Average: 24,739.53, +196.99 (+0.80%)
NASDAQ: 7,404.97, +65.07 (+0.89%)
S&P 500: 2,723.07, +25.28 (+0.94%)
NYSE Composite: 12,731.64, +99.15 (+0.78%)
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%)
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