SUMMARY:
- Three day bounce ahead of a three day weekend shows stocks are still alive and kicking though still solidly in the trading range.
- Dollar hits an interim top and rolls, dovetailing with the reasons for the bond rise.
- Spending and Income lackluster but Michigan sentiment jumps.
- Pending home sales tank but that is hardly news.
- G8 Economic Summit leaders issue their solemn vows. Grand words. Meaningless words.
- Indices look as if a pullback in the range is ahead, but light volume next week can be a stock’s friend
(more…)
Let’s see here; thanks to the boys and their computer toys, the stock market is currently tied (inversely) to the dollar, which, is tied (again inversely) to the Euro. And the Euro, of course, appears to be tied to the outlook for the European debt mess. So, like it not; we’re all currency traders at the present time – well, except for the 50-1 leverage generally associated with Forex, that is.
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The markets sent mixed messages on Thursday, leaving the traders not already on their way to the beach left to scratch their heads. Cutting to the chase, stocks advanced for a second straight session while bond yields fell on the weaker-than expected economic data. Normally, such divergent action might not be a problem or even worth noting. However, with the yield on the 10-year diving to its lowest level of the year, investors may be wondering which market they should put their faith in.
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SUMMARY:
- More weak economic data but stocks respond with an intraday reversal.
- Leaders post solid moves though SP500, NASDAQ face key tests at the 50 day EMA
- Bond market is screaming that economic trouble is coming. Long-term economic trouble.
- GDP second look is as weak, indeed internally weaker, than the first iteration.
- Jobless claims bounce right back up. Hardly the ‘reversal’ trumpeted last week
- So there are no more jobs to lose? Just as Heinz: it is making huge profits but is cutting 1,000 jobs to fight rising costs.
- Three-day weekend likely to slow the Friday action but with leaders on the move there could still be some buys.
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Stocks spent much of Wednesday’s session doing a lot of nothing. After opening lower on the back of renewed concerns about Greece (btw, does anybody else wish that Greece would just default already and get it over with?) and a fairly ugly Durable Goods report, the indices looked like they were breaking down on a chart-basis. But right about the time things were starting to get nasty, the Euro rallied, the dollar fell, and as you might be able to surmise, stocks bounced.
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SUMMARY:
- Buyers show they are not dead yet, but expect more volatility. They are back in the trading range, after all.
- Earnings show costs eating into profits.
- Durable goods orders miss the mark. Why not? Just about everything else is.
- GS, JPM lower GDP estimates, but GDP, as with many government reports, is not an accurate read of economic health. The TRUTH about the export economy.
- Some excellent moves by well-positioned leaders as end of month window dressing starts.
- Likely to still be bumpy as the indices trade inside their ranges.
(more…)
SUMMARY:
- Early session ‘Hope’ bounce faces reality, gives up the goods.
- EU problems fade as German GDP holds steady, ‘reassuring’ investors.
- After cutting its outlook on oil, GS raises it, basically upgrading all commodities.
- New home sales rise for second month.
- Richmond Fed joins other regions in the manufacturing slowdown.
- Buy on the dips, even with the Goldman assist, loses on the session, and it is likely to lose in the near term.
(more…)
Tuesday’s headlines from the popular press all seemed to highlight the Dow’s third straight daily decline. Such an event has only happened a few times so far this year, so it wasn’t surprising to see the loss, modest as it was, in the headlines. As for the reasons behind the drop, some news sources cited ongoing concerns about Europe while others talked about the economic data and/or worries about economic growth here at home. And while all of the above may be true, we’re thinking that there might be more to the story.
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SUMMARY:
- Old yet ever-present European issues rise again, sending world markets lower.
- China, EU manufacturing weakness piles on US 2011 decline, adding to the day’s angst.
- Struggle to hold the pattern for a new breakout attempt fails as US indices fall back into their trading ranges.
- Some solid leaders demonstrate their strength, at least compared to the market, holding support and/or recovering off early selling.
- Good action now looks like holding the trading range and trying to set up a new breakout.
(more…)
Let’s see here… We’ve just entered the “Sell in May and go away” season. The next earnings parade doesn’t start rolling for another month and a half. The next employment report isn’t due out for a couple weeks yet. The Fed is surely going to stop flooding the market with dollars at the end of next month. Just about everybody everywhere expects inflation to pick up. This same group is looking for the economy to slow a bit as the year progresses. With Europe struggling and the Euro possibly in trouble, the dollar could easily move higher (killing off any and all stock and commodity rallies in the process). And the Chinese, as well as many of their emerging market brethren are raising rates. Thus, the question becomes, what exactly do investors have to look forward to right now?
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Investors looking to stay in tune with the current environment must constantly be on the lookout for changes to the outlook for the economy, earnings growth, inflation, interest rates, etc. Cutting directly to the chase, recent economic data suggests that we may (the key word at this point in the game) be seeing a shift in the direction the winds are blowing.
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SUMMARY:
- Down end to a down week, but still in position to continue the rally. Just has to do it.
- Gold jumps off its 50 day EMA as the dollar bounces off its test.
- Retail starting to crack.
- More startling economic numbers.
- Trend remains in place, but after another week it is up to the buyers to prove they can maintain and extend it.
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SUMMARY:
- Stocks close higher after an up and down session, but the move already looks a bit winded.
- Jobless claims a bit better, but hardly ‘reverse’ the six-week climb higher.
- Existing home sales fall, leading indicators fall. Quarter 2 is worse than a pathetic Q1.
- It is up to the leaders to keep the rebound running though Friday may not provide much buying opportunity.
(more…)
Listening to the analysis of Thursday’s session proved interesting as the talking heads struggled to reconcile the idea that despite some crummy economic data, the major indices all wound up with green numbers at the end of the day. The bulls were quick to argue that this means the tone of the market has improved and that we can expect to see higher prices down the road. Our heroes in horns also suggested that the explosion of LinkedIn’s IPO meant that money wants to come into the market. On the other side of the aisle though, our furry friends in the bear camp could be heard starting most of their comments with “yea, but” as their analysis of the data left them less than upbeat about the market’s prospects going forward.
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SUMMARY:
- Wednesday builds upon Tuesday afternoon recovery with some nice price bounces but lagging volume.
- SPLS results show economy is not healthy.
- FOMC Minutes discuss at length how and when the Fed will tighten policy, but it is not going to do it in June.
- Waiting for the market to rally along with the dollar.
- Leaders bounce nicely, and any renewed breakout is up to them.
(more…)
Something happened yesterday afternoon that made me do a complete double-take. Could it be? Did my eyes deceive me? I knew I had been on that conference call for a while but did the Euro and the stock indices actually avoid trading tick-for-tick for a brief period? This, of course, prompted a question or thirteen such as, has the linkage weakened? Is the Euro/Dollar/Stock “trade” over? And can we now get back to the business of investing in stocks again?
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SUMMARY:
- Flagging economic and earnings data (and a weaker dollar) start stocks out lower, but when the dollar weakens, stocks recover.
- A credible recovery by the indices and some nice pullbacks to support by leaders put a different light on the market after Tuesday.
- Housing starts reek.
- Industrial Production, Capacity Utilization post disappointing fades.
- Earnings start to disappoint.
- UK inflation jaw dropping. Bank of Japan declares Japanese economy in severe stress.
- Looking to proven leaders in good position to make us some more money.
(more…)
I have a confession to make. While I spend an inordinate amount of time in front of a computer and three of my six screens are, at all times, filled with charts and blinking numbers, I’m really not a pure market technician. Yes, it is true that I would never even consider making a buying or selling decision without first checking a chart. But frankly, I like to keep it simple. And as such, the pure chartists out there may scoff at my methods as being relatively unsophisticated. (I admit to liking the old-school stuff such as trendlines, moving averages, support-resistance zones, volume relationships – you know; the stuff that doesn’t require a supercomputer to calculate.) (more…)
SUMMARY:
- No bounce following the Friday selling.
- SP500, DJ30 holding decently, but the growth indices are struggling as some key leaders roll.
- Dollar backs off some but commodities sell anyway.
- New York Manufacturing falls by nearly half.
- Upside in the position of having to prove it can prevail as NASDAQ, SOX settle in for more of a pullback.
(more…)
To be sure, the Euro/Dollar/Stock trade has dominated the action of late. And my guess is that you are likely growing tired of reading about the idea of big hedge funds and their computers moving the markets in response to every tick in the Euro. (I’m certainly growing tired of writing about the same old thing day after day!) So, while “the trade” certainly made its presence felt again on Monday, there may have been other issues weighing on the minds of investors. (more…)
SUMMARY:
- Different day, a different theme . . . yet again.
- Buyer and Seller conflict continues to the end of the week. What does it tell us?
- CPI shows the core is rising but still tame. Sure wish I could eat and drive in the core.
- The irony of rising Michigan Sentiment
- European style growth versus US style growth.
- Don’t bet a lot against the trend, but don’t bet everything on it.
(more…)
Monday morning and welcome back to the game. Until two weeks ago, the markets were fairly easy to understand. With Bernanke and Co. pledging to keep buying bonds until the end of June and also to maintain ZIRP (zero interest rate policy) for as long as there is any threat at all of deflation, traders knew exactly what to do. So, with the switch on the Risk Trade flipped to the “on” position, traders shorted the dollar and bought stocks and commodities. (more…)
SUMMARY:
- Buyers strike back, keeping the rubber match on but also the uptrend in place.
- The theme changes again: Little good news to drive stocks on Thursday, but turns in the dollar and commodities bounces equities back up.
- China still trying to slow its economy even as its stock market struggles. How Greenspan.
- PPI clearly on the rise as retail sales show the impact of gasoline prices.
- Bernanke warns of using debt ceiling as a ‘bargaining chip.’Â Isn’t that what he is doing along with his pal the Treasury Secretary?
- The rebound Thursday demonstrates one clear point: the buyers and sellers are fighting at these highs.
(more…)
As a young quarterback in high school, one of the first rules of play calling I was taught (in those days, the QB wound up calling a lot of the plays as there weren’t headsets in our helmets and the hand signals from the bench would inevitably get fouled up – we are talking about high school boys here!) was to run the same play over and over again until the defense proved they could stop it. And in short, traders appear to be implementing this approach right now. After all, if it ain’t broke, don’t fix it, right? (more…)
If you were at all mystified as to the driver(s) behind Wednesday’s dance to the downside in the stock and commodity markets, I’m going to suggest that you may not be paying enough attention to your “Daily State of the Market” reports. (more…)
SUMMARY:
- Commodities prices surge back up with nature’s assist, but stocks don’t care as the indices solidify their breakouts.
- Gasoline surges, recovers its losses, as Mississippi River floods threaten refineries, closes the river to barge traffic.
- Import prices continue their rise as the dollar continues its weakness.
- Rubber match is advantage buyers as more stocks look ready to move higher. If technology would move . . .
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Tuesday’s stock market session was easy to like. In short, the fact that the indices advanced smartly across the board without any “high-profile directional drivers,” the strong breadth numbers (2400 advancing issues vs. just 614 declines), and an increase in volume from the prior session all add up to what traders like to call “good action.” (more…)
SUMMARY:
- Just about everything bounces back on Monday: stocks, oil, gold, bonds, commodities, but not the dollar.
- SP500, NASDAQ retake the February high, manage to hold it on the close, but volume is rather pathetic.
- Shocking new housing market statistics once again prove that governments cannot prop up markets once the market collapses.
- Rubber match week continues as indices bounced as they should have but the volume is disconcerting.
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As someone who spends a fair amount of time behind the keyboard, I often get a kick out of some of the explanations offered up by the “experts” on days like Monday. When asked about the action, some folks feel they have to create a lavish explanation. For example, instead of simply telling the reporter, “Not much to report, Bob… The dollar reversed lower, so, as has been the case lately, traders pushed stocks higher,” there are those that like to make it complicated. (more…)
There is little doubt that the bulls remain largely in control of the ball game – after all, it was just five short days ago that all the major indices were movin’ on up to new highs for the current bull cycle. However, given the duration of the current bull run, the action last week suggests that our heroes in horns may be suffering from a lack of conviction at the present time. (more…)
SUMMARY:
- Jobs defy other indications, beat expectations, spark a new rally, but again the market finds it hard to hold.
- Slowest economic recovery outside the Great Depression shows jobs improvement, but with jobless claims surging, can it last.
- Gold rebounds but oil and other commodities continue their struggle.
- NASDAQ and SP500 move again above the February high but cannot seal the deal. Still in good shape, but have to prove they want to move higher.
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SUMMARY:
- Market provides the selloff and reversal, starts to move back up, but the recovery gets turned on its head.Â
- Extremely volatile session as both buyers and sellers get news to ponder and fight it out all day. In the end the uncertainty was too great and the buyers abdicated to the sellers.
- Good news and bad news on the day, and given all the uncertainties, the bad news wins.
- Jobless claims surge to 474K, but the real driver was the ECB.
- Trichet turns less hawkish, does not raise rates. Dollar explodes higher, Gold and silver plunge, and oil breaks below $100/bbl.
- Why gold and silver are selling off. The dollar? No, the real culprit is margin requirements.
- Diving oil prices are not a bad thing as homebuilder and transportation stocks show, but the root causes can be a problem.
- Now it is up to jobs to turn the next page, and it just so happens there are many stocks in very good position to move. Will they get the catalyst?
(more…)
While today’s market is likely to begin being all about the Jobs report, it is important to recognize that the game right now is really all about the buck. So, if you are looking for the real driver of the market action, you can forget about the headlines for now and simply focus on the action in the dollar. (And for those currency-challenged sorts like me, the UUP provides a nice proxy for the action in the greenback versus a basket of currencies). (more…)
SUMMARY:
- Indices sell again but also rebound off the lows again as a rather orderly test continues.
- M&A gets even more interesting as AMAT takes VSEA.
- ADP private sector jobs survey misses the mark.
- ISM Service index declines sharply but remains at expansion levels.
- Worries about economic sustainability send commodities tumbling as Chinese stock market sells for tenth consecutive session.
- Selling continues with the small caps again taking the brunt, but some good rebounds off session lows show buyers have not completely lost their appetite.
(more…)
Up until yesterday, the bulls have been able to counter each and every advance by their pesky opponents with one very simple argument: The economy was improving at a pace that exceeded expectations and with the Fed “on the case,” there was no reason to expect that the economy would falter. And the fact that Mr. Bernanke has made it clear that ZIRP (zero interest rate policy) will continue for some time yet provided an impetus to continue to play the dollar-carry trade. As such, any and all bad news has been met with a “what me worry?” attitude. (more…)
SUMMARY:
- No more terrorists killed and little other good news to drive the market means another pullback as part of the rally test.
- Earnings take a negative turn, India raises rates, foreclosures climb. But, Factory Orders top expectations.
- Technology, small caps and growth in general leads to the downside.
- Still expecting just a pullback to consolidate the breakout, but buyers may not want to move ahead of the jobs report.
(more…)
Although the DJIA was able to put up a fractional gain on the day, a review of the rest of the major indices showed that stocks pulled back a bit Tuesday as the bulls may have finally encountered some resistance. While the action was fairly subdued and the indices did recover from their mid-day lows, it is important to note that the small- and mid-cap segments have been getting slammed this week. So, although the DJIA looks to be hanging tough, all may not be well under the surface. (more…)
SUMMARY:
- Bin Laden head shot adds some zest to the morning futures, but didn’t change the technical picture as the early moves evaporates and stocks start to flip.
- Market has all of the good news it can hold for now as more good news fuels but cannot sustain another upside move.
- ISM manufacturing report tops expectations for April but is nonetheless a bit weaker.
- Indices, stocks show near term reversal patterns, indicating the breakout test will start shortly.
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After having sprinted higher in a rather impressive fashion over the past eight days, there is little doubt that the market had become extended from a short-term perspective. And with lots of good news available to traders yesterday morning, it might have been easy to expect to see stocks power higher once again. But then again, the fact that the bears decided to use the news of Osama bin Laden’s death to try and get something going for their team wasn’t exactly a surprise either. (more…)
While perhaps not on the same magnitude as word that either of the Kennedy’s or MLK had been shot, or that man had actually set foot on the moon, the news that Osama bin Laden had been killed at the hands of the U.S. military will likely cause one to remember where they were when they got the news. I, for one, was just taking my seat on a Frontier Airlines flight which would soon be bound for San Diego, where NAAIM’s (National Association of Active Investment Managers) national meeting is being held. (more…)
SUMMARY:
- Nondescript session to end the month, but it was a golden month.
- Gold, already on a tear, explodes higher after Bernanke press conference while the dollar suffers its worst decline in 20 years.
- Personal income and spending decent as Michigan sentiment recovers.
- Chicago PMI sags, joining other lackluster recent data.
- New month, new money, more upside?
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