Tuesday, July 31, 2018

Stocks Fall

Stocks opened flat on Monday and losses accelerated throughout the session.

There was no apparent catalyst spurring the decline, so it can safely be assumed that any selling was prompted by valuation measures as the major indices remain close to all-time highs.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59
7/5/18 24,345.44 +181.92 +85.33
7/6/18 24,456.48 +99.74 +185.07
7/9/18 24,776.59 +320.11 +505.18
7/10/18 24,919.66 +143.07 +648.25
7/11/18 24,700.45 -219.21 +429.04
7/12/18 24,924.89 +224.44 +653.48
7/13/18 25,019.41 +94.52 +748.00
7/16/18 25,064.36 +44.95 +792.95
7/17/18 25,119.89 +55.53 +848.48
7/18/18 25,199.29 +79.40 +927.88
7/19/18 25,064.50 -134.79 +793.09
7/20/18 25,058.12 -6.38 +786.71
7/23/18 25,044.29 -13.83 +772.88
7/24/18 25,241.94 +197.65 +970.53
7/25/18 25,414.10 +172.16 +1142.69
7/26/18 25,527.07 +112.97 +1255.66
7/27/18 25,451.06 -76.01 +1179.65
7/30/18 25,306.83 -144.23 +1035.42

At the Close, Monday, July 30, 2018:
Dow Jones Industrial Average: 25,306.83, -144.23 (-0.57%)
NASDAQ: 7,630.00, -107.42 (-1.39%)
S&P 500: 2,802.60, -16.22 (-0.58%)
NYSE Composite: 12,903.43, -17.91 (-0.14%)

Monday, July 30, 2018

Weekend Wrap: Economy Improved, News Priced Into Stocks

Predictably, second quarter GDP in the US came in at 4.1% according to the government's first estimate.

Because the number was so widely bandied about and dissected prior to Friday's official release, it was also predictable that Wall Street was going to sell the news. That's exactly what happened in a broad selloff to close out the week, though the movement hardly resolves any of the directional disputes currently afflicting the various major indices.

As usual, the question on the street is still "buy or sell?" On Friday, with the NASDAQ and Dow in agreement for a change, the knee-jerk reaction would be to hit the proverbial sell button and head for safer ground. With bond yields improving (the 10-year note closed out the week at 2.96%) and the dollar strong, prudence may indeed prompt a trade into safety or retreat into cash.

President Trump touted the the growth in the economy as terrific, though Wall Street may be viewing the larger picture through a much different lens. Expansion by individual companies remains difficult and challenging, and stocks remain near record high levels.

After all the hoopla surrounding the robust GDP figures, the week of trading resolved nothing, other than skeptics' fears that the stock market is running on fumes.

Sideways with a slight tilt to the upside seems the dominant direction, for now. The market is extremely vulnerable to sudden shocks, which could come from a variety of sources, especially Europe or emerging markets (China). While US conditions may indeed be improving, the rest of the world may have to pay a price.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59
7/5/18 24,345.44 +181.92 +85.33
7/6/18 24,456.48 +99.74 +185.07
7/9/18 24,776.59 +320.11 +505.18
7/10/18 24,919.66 +143.07 +648.25
7/11/18 24,700.45 -219.21 +429.04
7/12/18 24,924.89 +224.44 +653.48
7/13/18 25,019.41 +94.52 +748.00
7/16/18 25,064.36 +44.95 +792.95
7/17/18 25,119.89 +55.53 +848.48
7/18/18 25,199.29 +79.40 +927.88
7/19/18 25,064.50 -134.79 +793.09
7/20/18 25,058.12 -6.38 +786.71
7/23/18 25,044.29 -13.83 +772.88
7/24/18 25,241.94 +197.65 +970.53
7/25/18 25,414.10 +172.16 +1142.69
7/26/18 25,527.07 +112.97 +1255.66
7/27/18 25,451.06 -76.01 +1179.65

At the Close, Friday, July 27, 2018:
Dow Jones Industrial Average: 25,451.06, -76.01 (-0.30%)
NASDAQ: 7,737.42, -114.77 (-1.46%)
S&P 500: 2,818.82, -18.62 (-0.66%)
NYSE Composite: 12,921.34, -32.05 (-0.25%)

For the Week:
Dow: +392.94 (+1.57%)
NASDAQ: -82.78 (-1.06%)
S&P 500: +16.99 (+0.61%)
NYSE Composite: +131.43 (+1.03%)

Friday, July 27, 2018

Stocks Split As Dow Gains, NASDAQ Falls On Facebook Flop

A day after President Trump worked out some concessions and a working trade framework with the EU, it was up, up and away for the Dow Industrials.

At the same time, a dour mood ensconced the NASDAQ, as Facebook led a strong decline.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59
7/5/18 24,345.44 +181.92 +85.33
7/6/18 24,456.48 +99.74 +185.07
7/9/18 24,776.59 +320.11 +505.18
7/10/18 24,919.66 +143.07 +648.25
7/11/18 24,700.45 -219.21 +429.04
7/12/18 24,924.89 +224.44 +653.48
7/13/18 25,019.41 +94.52 +748.00
7/16/18 25,064.36 +44.95 +792.95
7/17/18 25,119.89 +55.53 +848.48
7/18/18 25,199.29 +79.40 +927.88
7/19/18 25,064.50 -134.79 +793.09
7/20/18 25,058.12 -6.38 +786.71
7/23/18 25,044.29 -13.83 +772.88
7/24/18 25,241.94 +197.65 +970.53
7/25/18 25,414.10 +172.16 +1142.69
7/26/18 25,527.07 +112.97 +1255.66

At the Close, Thursday, July 26, 2018:
Dow Jones Industrial Average: 25,527.07, +112.97 (+0.44%)
NASDAQ: 7,852.18, -80.05 (-1.01%)
S&P 500: 2,837.44, -8.63 (-0.30%)
NYSE Composite: 12,953.39, +19.76 (+0.15%)

Thursday, July 26, 2018

Which Way Is Up? Markets Careen As Trump Makes Deal With EU, Facebook Falls From Grace

It's too early to call it a trend, but the Dow broke out of the trading range in which it had been ensconced for over four months after President Trump met with European Commission president Claude Junker and announced a breakthrough on trade and tariff negotiations between the European Union and the United States, forestalling what many feared would become a trade war.

The Dow, which had been lumbering below the unchanged line most of the session, broke above it shortly after 3:00 pm EDT, and then rocketed higher, gaining over 150 points in the final half hour of trading.

The other indices responded in similar manner, though after hours, Facebook (FB) took a severe lashing, losing 24% at one point, after its second quarter earnings failed to meet expectations. Facebook's fall sent NASDAQ futures into a 1.5% nosedive, though they're recovering prior to Thursday's opening bell.

What is most important to note about these developments is the movement in the Dow. According to Dow Theory, the index entered bear market conditions on April 9, when the Dow Jones Transportation Index confirmed the Industrial Average's February-March double-dip off January highs. Besides the reliability of Dow Theory in gauging market movement and primary trends, stocks have not readily behaved as they would in an ordinary bear market, with both the NASDAQ and S&P recovering to make all-time highs, the most recent, just Wednesday, as the NASDAQ set a new, high-water mark at the close.

The current episode of market mania is being driven by forces both unforeseen and unseen, most of it emanating from Washington, D.C., where, on one hand, President Trump's audacious approach to governance and world politics has thus far returned positive results, including Wednesday's breakthrough with the EC.

Thus, the number that bears watching continues to be the January 23 all-time closing high on the Dow of 26,616.71. While the index has broken above what was considerable resistance, it still has a wall of worry - and about 1200 points - to climb before the existence of bearish conditions can be eliminated.

On the other side of the coin, Facebook's woes may only be the beginning for the tech sector, the NASDAQ and the market as a whole. Next up on the chopping block appears to be Tesla (TSLA), whose CEO, Elon Musk, has been raising concerns about the company as a whole by his strange and possibly bi-polar behavior. Tesla is under considerable pressure to produce positive results after months of scrutiny over its cars exploding, production questions, quality concerns and the general mental well-being of its founder and CEO.

Tech stocks have largely been the driver behind the rise of the NASDAQ, whereas President Trump has been generally holding down the Dow. Now those two elements appear to be working in reverse, and the result could be a shock to both the upside on the Dow and the downside on the NASDAQ.

It's hard to imagine the two indices diverging for very long, but the future is unknowable. With Trump "winning" on many fronts, he still faces a massive horde of opposition in Washington, not only from Democrats and the so-called "deep state," but from members of his own party as well.

Add the Fed's unwinding of its balance sheet and relentless quarter-by-quarter raising of interest rates and you have an imperfect storm through which stock and bond speculators and investors must navigate.

Rough seas ahead, for certain, but in which direction? With so much on the deck and cross-currents blowing in every direction, trading should become volatile and choppy until November, when the midterm elections will likely determine the ultimate direction of not just the stock market but of the US and global economy as well.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59
7/5/18 24,345.44 +181.92 +85.33
7/6/18 24,456.48 +99.74 +185.07
7/9/18 24,776.59 +320.11 +505.18
7/10/18 24,919.66 +143.07 +648.25
7/11/18 24,700.45 -219.21 +429.04
7/12/18 24,924.89 +224.44 +653.48
7/13/18 25,019.41 +94.52 +748.00
7/16/18 25,064.36 +44.95 +792.95
7/17/18 25,119.89 +55.53 +848.48
7/18/18 25,199.29 +79.40 +927.88
7/19/18 25,064.50 -134.79 +793.09
7/20/18 25,058.12 -6.38 +786.71
7/23/18 25,044.29 -13.83 +772.88
7/24/18 25,241.94 +197.65 +970.53
7/25/18 25,414.10 +172.16 +1142.69

At the Close, Wednesday, July 25, 2018:
Dow Jones Industrial Average: 25,414.10, +172.16 (+0.68%)
NASDAQ: 7,932.24, +91.47 (+1.17%)
S&P 500: 2,846.07, +25.67 (+0.91%)
NYSE Composite: 12,933.63, +86.14 (+0.67%)

Tuesday, July 24, 2018

Stubborn Dow Remains Range-Bound; NASDAQ Dips

Since March 9, the Dow has traded in a fairly tight range - considering the time elapsed (nearly six months) - of just more than 1400 points, or less than six percent of total market value.

Recently, it has been trading near the upper end of this range, but has repeatedly failed to surpass the previous interim high and is still another 1400-1500 points away from January's all-time high of 26,616.71.

The range, 23,924.98 - 25,335.74, has been wide enough to offer hope to both bulls and bears, though neither a breakout nor a breakdown has occurred, with much of the betting money on the latter. Current and prior sentiment sees a second half slowdown, with the Trump tax cuts already measured in, inflation becoming more of an issue, and the tariff tug-fo-war on the world stage only in the early stages.

Thus, seasoned investors are wary of sudden impulse moves such as today's and also have an eye toward the political spectrum, midterm elections and what now appears to be a runaway federal budget-busting deficit for the current fiscal year. These are the factors contributing to the skeptical view, while the more subdued bull case rests largely on the employment picture. Americans are well-employed at present, even though labor force participation remains near record lows.

Inside the demographics of the United States, there exists a virtuous cycle, in which retiring baby boomers give up jobs to millennials and Generation Xers, while spending their retirement incomes without a care. There's plenty of money to go around, though, with a country as large and diverse as the US, it's difficult to pigeonhole any particular stocks that should benefit the greatest.

Consumer staples are and have been the safest bets along with energy, tech, and basic materials, but the gains have been paltry outside the smoking tech sector. A diversified portfolio is probably the best insurance against a market rout, but being in the right stocks can prove tricky, if not altogether impossible to attain anything better than the average index fund.

On the day, the Dow and NASDAQ diverged, a sign that everything is not in sync, and that issues remain unresolved, though that is a normal case and not anything about which to be overly pessimistic.

With crosswinds at the crossroads of prosperity and desperation, there's more than ample rationale for either argument.

This remains a sit-tight-and-hold-cash condition.

Dow Jones Industrial Average July Scorecard:

Date Close Gain/Loss Cum. G/L
7/2/18 24,307.18 +35.77 +35.77
7/3/18 24,174.82 -132.36 -96.59
7/5/18 24,345.44 +181.92 +85.33
7/6/18 24,456.48 +99.74 +185.07
7/9/18 24,776.59 +320.11 +505.18
7/10/18 24,919.66 +143.07 +648.25
7/11/18 24,700.45 -219.21 +429.04
7/12/18 24,924.89 +224.44 +653.48
7/13/18 25,019.41 +94.52 +748.00
7/16/18 25,064.36 +44.95 +792.95
7/17/18 25,119.89 +55.53 +848.48
7/18/18 25,199.29 +79.40 +927.88
7/19/18 25,064.50 -134.79 +793.09
7/20/18 25,058.12 -6.38 +786.71
7/23/18 25,044.29 -13.83 +772.88
7/24/18 25,241.94 +197.65 +970.53

At the Close, Tuesday, July 24, 2018:
Dow Jones Industrial Average: 25,241.94, +197.65 (+0.79%)
NASDAQ: 7,840.77, -1.10 (-0.01%)
S&P 500: 2,820.40, +13.42 (+0.48%)
NYSE Composite: 12,847.49, +53.44 (+0.42%)