For more than a little while, the trade has been to sell US dollars and buy US stocks. On Friday, the story was rather different, as buyers of Dow stocks, in particular, defied the dictum of the carry trade, buying stocks while the US Dollar was rising against other currencies. The questions on everybody's mind were, "Why?". Why now?", and "What about that Fed meeting next week?"
Answers for traders were not forthcoming, as they were bidding up Dow stocks to within 8 cents of its 52-week high at the close. That finish was meaningful, for a variety of reasons, not the least of which had to do with answers to the questions posed above.
Taking them one by one, here's a quick explanation:
Why? The reasons people buy stocks as they approach 52-week highs are as numerous as there are grains of sand on the beach, but in this case, it seemed to be with ulterior motive. Other possibilities include a massive short squeeze on Alcoa (AA), which was up a whopping 1.11, (8.22%). November retail sales came in better than expected (+1.3%) and the University of Michigan Consumer Sentiment reading was higher, at 73.4, following last month's 67.4. Naturally, that good news should have produced a stronger dollar. They did, but, remember the ulterior motive. Read on.
Why now? Stocks were bid up precisely to just below their closing 52-week high just in case technical analysts were peering in on the activities, and they surely were. Today was a planned day for such a rise because it had two significant elements going for it. First, it was Friday, meaning positions would be locked in until Monday, and, second, there is a Fed meeting next week in which it is widely expected that the FOMC will leave rates unchanged, but give more hints as to the exact date of the first, in what no doubt will be a series of, rate hikes. The other kicker is that some of that dubious Dubai debt is supposed to be repaid on Monday, and, if it isn't, chaos in financial markets could ensue.
What about that Fed meeting next week? As answered above, the FOMC will meet to discuss policy on Tuesday and Wednesday, the 15th and 16th, culminating in a policy decision and statement on Wednesday, right around 2:00 pm. That also coincides with options expiration on Friday, and if you think there aren't a boatload of players in that space, betting and hedging on the Fed decision, maybe you should go back to playing euchre with friends for nickels and dimes.
Obviously, there is a good deal of money riding on the events of next week, and the markers were laid down yesterday and today, but especially today, with the apparent end of the dollar carry trade. Don't buy into the argument that positions short the dollar and long stocks don't matter any more. That trade was very prevalent and has yet to be unwound. Today's rise on the Dow was a shot fired across the bows of many hedge funds who are trapped in losing positions. Fireworks should be expected right out of the gate on Monday.
Whoever was in control of today's trade on the Dow was using a great deal of leverage, meaning that today's move was very transient and temporary. Ask yourself if you'd be buying stocks at the end of the year, just as they're reaching new highs - highs, mind you, that have yet to be surpassed in any meaningful way since the end of October. Consider these data points for closes on the Dow, all 52-week highs:
November 17: 10,437.42
November 23: 10,450.95
November 25: 10,464.40
December 1: 10,471.58
Today's close was at 10,471,50 and there was no confirmation by the S&P or, even more importantly, the Dow Transportation Index. Ooops!
As a point of reference to illustrate just how difficult this area of resistance is proving to be, consider these recent closes on the S&P:
November 17: 1110.32
November 18: 1109.80
November 23: 1106.24
November 24: 1105.65
November 25: 1110.63
December 1: 1108.86
December 2: 1109.24
December 4: 1105.98
Today's close of 1106.41 is another meaningless near-top. Clearly, there's a distribution pattern taking place which is preventing stocks from breaking out to new highs.
By all accounts, it's just not going to happen. At least not any time soon. Take heed of the usefulness of the dollar carry or risk trade, and ignore the movements of today as just so much market noise. Buy low, sell high. What do you think the real tradrs are doing here?
And just in case you were wondering, the Dow finished higher for the week, with the NASDAQ and NYSE Composite lower. The S&P actually ended the week with a fractional gain, or, essentially flat.
Dow 10,471.50, +65.67 (0.63%)
NASDAQ 2,190.31, -0.55 (0.03%)
S&P 500 1,106.41, +4.06 (0.37%)
NYSE Composite 7,125.12, +20.62 (0.29%)
Advancers outnumbered decliners, 4043-2402, though you would have hardly guessed it looking just at the tape. Dow stocks were 21 up with 9 down. The two biggest movers to the upside were Alcoa (AA) and Bank of America (BAC), two dubious leaders, to be sure. New highs beat new lows, 348-60. Besides the days before and after Thanksgiving, NASDAQ volume was the lowest since September 4, a date that also preceded a holiday - Labor Day. NYSE volume was about average.
NYSE Volume 4,408,781,000
NASDAQ Volume 1,762,412,125
More evidence of some deviousness at play came from the commodities pits, where oil sold off for the 8th straight day, losing 89 cents, to $69.65. Meanwhile, major oil company Dow stocks, Chevron (CVX) and ExxonMobil (XOM) both traded higher throughout the session and finished with small gains, though gains nonetheless.
Gold, one of the main catalysts behind dollar strength, traded down again, off $6.60, to $1,119.60. Silver followed suit, losing 10 cents, to $17.09.
One should be well advised going into next week to not read very much into this week's action. Since stocks are at their highs, you've likely missed the move if you were not participating. If you were in, this could be a great time to take a little off the top or close positions should that be your preference. There's been plenty of play in March Index options against the Dow and S&P in particular. Large positions have been placed well out of the money, and while they may be there for protection, the possibility of a sharp correction, which has not yet occurred since the March lows, is growing. Eventually, there is going to be a 10-20% or larger downturn, though the timing of such an event is uncertain.
All good traders, like Boy Scouts, should be prepared.
Showing posts with label Exxon-Mobil. Show all posts
Showing posts with label Exxon-Mobil. Show all posts
Friday, December 11, 2009
Tuesday, October 27, 2009
Mixed Messages
Stocks began the day and finished it in mixed fashion, as the Dow was the only major index to close above the break-even line. Especially hard-hit was the NASDAQ, which suffered from a very downbeat report from Baidu.com (BIDU), China's version of Google, when the company reported third quarter earnings, but guided investors of a revenue shortfall upcoming due to a change in advertising placements. The stock opened down 77 points, but recovered to close only 49 points in the red. Still, the stock took an 11% hit by the end of the trading session.
The Dow was helped along by three components: ExxonMobil (XOM), Chevron (CVX) and IBM (IBM), which accounted for almost all of the smallish upside. The two oil majors were helped by a positive 3rd quarter from British Petroleum (BP), while IBM announced a $5 billion increase to its stock buy-back program.
Dow 9,882.17, +14.21 (0.14%)
NASDAQ 2,116.09, -25.76 (1.20%)
S&P 500 1,063.41, -3.54 (0.33%)
NYSE Composite 6,932.04, -28.05 (0.40%)
The session was overall a weak one, as declining issues beat gainers by a wide margin, 4263-2205. What is of particular interest is the small margin of new highs over new lows (123-71), the worst performance for new highs since that particular metric rolled over back in May. The easy comparisons to last year's stock prices, especially off the monstrous 7-month+ rally, would normally presume a large number of new highs, which was evidenced during the summer and early fall, but the recent pullback has changed the outlook considerably.
Volume on the day was in line with the overall trend of the past two to three weeks.
NYSE Volume 6,203,113,500
NASDAQ Volume 2,405,401,500
Commodities, like stocks, were tied somewhat to the stronger dollar, as gold fell $7.40, to $1,035.40, silver dropped 56 cents, to $16.54, but oil bucked the general trend, gaining 87 cents, to $79.55, though the $80 mark continues to appear to be a led on price. Demand is simply not high enough to support a price over $80, much less in the $70s. Additionally, supply is robust, with nary a shortage anywhere in the world. Price of energy commodities will continue to be pressured by warmer-then-normal weather in the Northern Hemisphere, which is predicted through December.
Investors, through their trading stratagems, are offering a very good insight into how earnings results are being played. With most of the big names already having reported, unless companies are beating both earnings and revenue projections, they are being bid up prior to the release of their reports and quickly sold off. This has all the earmarks that would accompany a market top, and the indices are generally 3% below the heights reached last week.
A 5-8% dip from here would be no surprise, especially with some severe headwinds approaching in terms of 3rd quarter GDP (Thursday), though first September Durable Goods orders before the bell tomorrow, which yesterday I incorrectly said would be reported today (hanks to Yahoo Finance).
The Dow was helped along by three components: ExxonMobil (XOM), Chevron (CVX) and IBM (IBM), which accounted for almost all of the smallish upside. The two oil majors were helped by a positive 3rd quarter from British Petroleum (BP), while IBM announced a $5 billion increase to its stock buy-back program.
Dow 9,882.17, +14.21 (0.14%)
NASDAQ 2,116.09, -25.76 (1.20%)
S&P 500 1,063.41, -3.54 (0.33%)
NYSE Composite 6,932.04, -28.05 (0.40%)
The session was overall a weak one, as declining issues beat gainers by a wide margin, 4263-2205. What is of particular interest is the small margin of new highs over new lows (123-71), the worst performance for new highs since that particular metric rolled over back in May. The easy comparisons to last year's stock prices, especially off the monstrous 7-month+ rally, would normally presume a large number of new highs, which was evidenced during the summer and early fall, but the recent pullback has changed the outlook considerably.
Volume on the day was in line with the overall trend of the past two to three weeks.
NYSE Volume 6,203,113,500
NASDAQ Volume 2,405,401,500
Commodities, like stocks, were tied somewhat to the stronger dollar, as gold fell $7.40, to $1,035.40, silver dropped 56 cents, to $16.54, but oil bucked the general trend, gaining 87 cents, to $79.55, though the $80 mark continues to appear to be a led on price. Demand is simply not high enough to support a price over $80, much less in the $70s. Additionally, supply is robust, with nary a shortage anywhere in the world. Price of energy commodities will continue to be pressured by warmer-then-normal weather in the Northern Hemisphere, which is predicted through December.
Investors, through their trading stratagems, are offering a very good insight into how earnings results are being played. With most of the big names already having reported, unless companies are beating both earnings and revenue projections, they are being bid up prior to the release of their reports and quickly sold off. This has all the earmarks that would accompany a market top, and the indices are generally 3% below the heights reached last week.
A 5-8% dip from here would be no surprise, especially with some severe headwinds approaching in terms of 3rd quarter GDP (Thursday), though first September Durable Goods orders before the bell tomorrow, which yesterday I incorrectly said would be reported today (hanks to Yahoo Finance).
Friday, May 22, 2009
Stocks Stall, Silver and Gold Gain
Friday's session was one of the slowest of the year, as investors and traders mostly went through the motions of squaring positions and getting out of town ahead of the long Memorial Day holiday weekend.
Only the NYSE Composite was higher on the final day of the week, with the other major indices falling apart late in the day. Stocks traded on the positive side of the ledger for most of the day, but only with marginal gains. Volume was the lowest in at least five months.
Dow 8,277.32, -14.81 (0.18%)
NASDAQ 1,692.01, -3.24 (0.19%)
S&P 500 887.00, -1.33 (0.15%)
NYSE Composite 5,789.62, +9.08 (0.16%)
It was a near-dead heat in the A-D line, with advancing issues edging decliners, 3195-3159. New lows again held sway over new lows, 55-42. While the relatively strong number of new highs is encouraging to the bulls, the bears can rest well in the knowledge that the bear market is still firmly in place, as the high-low indicator has yet to roll over and probably won't. The question remains: how long will it take stocks to retest the March 9 lows? Bets are down that it could be as long as six months as the market struggles to find any good news on which to rebuild a rally. The chances for further upside through the summer are nil.
NYSE Volume 1,058,107,000
NASDAQ Volume 1,628,006,000
The volume recorded today indicates just how controlled and manipulated the markets are currently. Many of the big players went to the sidelines, plotting their exit strategies as we head into the long, sluggish summer months.
Meanwhile, commodities were hopping. Oil, still overpriced, rose 62 cents to $61.67. The price of crude has risen only because the major oil companies need to stick it to unsuspecting consumers. Obviously, the Obama administration and the clueless congress has no interest in making life easier for the average consumer of gasoline, or they would be railing against the world's greatest cartel, led by Royal Dutch Shell, ExxonMobil, Chevron, British Petroleum and Conoco-Phillips. The so-called "five sisters" have a stranglehold on world supply and can manipulate the price, via futures, any time they please. The annual excuse that "Americans drive more in the summer" is their rationale for the current boost.
As for real investors, concerned with protecting wealth, the precious metals have been on a tear of late. On Friday, gold shot up another $7.70, to $958.90, within hailing distance of the magic $1000 mark. Once that level is breached, it's off to the races. Gold could find itself above $1200 by year's end. Silver is also gaining on a nearly daily basis. It was up another 25 cents on Friday, reaching $14.70 per ounce. Silver's gains have actually outpaced - on a percentage basis - those of gold over the past few weeks as the correction in the gold-silver ratio ensues. When gold reaches $1200, silver will be at or above $22 per ounce.
As mentioned here on numerous occasions, silver may prove to be the trade of 2009-2012. Some are already predicting its price at upwards of $60 before the bull run is over. That's basically a four-bagger from here, so it's not too late to get in on the bonanza. It is recommended to buy physical silver, in coins or bars, as it may become useful as a medium of exchange for those of us not able to afford the pricier yellow stuff. The lid has come off the precious metals trade and there's much more demand than supply right now. As conditions worsen, that demand will only increase.
Buy gold or silver and put it away in a safe place. The metals are investments which will not easily decline in value and have intrinsic worth, unlike stocks and bonds. There's no risk of default on actual, physical metal, as opposed to paper, and that includes currency. In the final crushing defeat of the fiat currencies, holders of gold and silver will be winners and holders of the greatest wealth.
Ponder that, and remember our veterans this Memorial Day weekend.
Only the NYSE Composite was higher on the final day of the week, with the other major indices falling apart late in the day. Stocks traded on the positive side of the ledger for most of the day, but only with marginal gains. Volume was the lowest in at least five months.
Dow 8,277.32, -14.81 (0.18%)
NASDAQ 1,692.01, -3.24 (0.19%)
S&P 500 887.00, -1.33 (0.15%)
NYSE Composite 5,789.62, +9.08 (0.16%)
It was a near-dead heat in the A-D line, with advancing issues edging decliners, 3195-3159. New lows again held sway over new lows, 55-42. While the relatively strong number of new highs is encouraging to the bulls, the bears can rest well in the knowledge that the bear market is still firmly in place, as the high-low indicator has yet to roll over and probably won't. The question remains: how long will it take stocks to retest the March 9 lows? Bets are down that it could be as long as six months as the market struggles to find any good news on which to rebuild a rally. The chances for further upside through the summer are nil.
NYSE Volume 1,058,107,000
NASDAQ Volume 1,628,006,000
The volume recorded today indicates just how controlled and manipulated the markets are currently. Many of the big players went to the sidelines, plotting their exit strategies as we head into the long, sluggish summer months.
Meanwhile, commodities were hopping. Oil, still overpriced, rose 62 cents to $61.67. The price of crude has risen only because the major oil companies need to stick it to unsuspecting consumers. Obviously, the Obama administration and the clueless congress has no interest in making life easier for the average consumer of gasoline, or they would be railing against the world's greatest cartel, led by Royal Dutch Shell, ExxonMobil, Chevron, British Petroleum and Conoco-Phillips. The so-called "five sisters" have a stranglehold on world supply and can manipulate the price, via futures, any time they please. The annual excuse that "Americans drive more in the summer" is their rationale for the current boost.
As for real investors, concerned with protecting wealth, the precious metals have been on a tear of late. On Friday, gold shot up another $7.70, to $958.90, within hailing distance of the magic $1000 mark. Once that level is breached, it's off to the races. Gold could find itself above $1200 by year's end. Silver is also gaining on a nearly daily basis. It was up another 25 cents on Friday, reaching $14.70 per ounce. Silver's gains have actually outpaced - on a percentage basis - those of gold over the past few weeks as the correction in the gold-silver ratio ensues. When gold reaches $1200, silver will be at or above $22 per ounce.
As mentioned here on numerous occasions, silver may prove to be the trade of 2009-2012. Some are already predicting its price at upwards of $60 before the bull run is over. That's basically a four-bagger from here, so it's not too late to get in on the bonanza. It is recommended to buy physical silver, in coins or bars, as it may become useful as a medium of exchange for those of us not able to afford the pricier yellow stuff. The lid has come off the precious metals trade and there's much more demand than supply right now. As conditions worsen, that demand will only increase.
Buy gold or silver and put it away in a safe place. The metals are investments which will not easily decline in value and have intrinsic worth, unlike stocks and bonds. There's no risk of default on actual, physical metal, as opposed to paper, and that includes currency. In the final crushing defeat of the fiat currencies, holders of gold and silver will be winners and holders of the greatest wealth.
Ponder that, and remember our veterans this Memorial Day weekend.
Label:
British Petroeum,
Exxon-Mobil,
gold,
silver
Thursday, February 01, 2007
Another Record for the Dow; Exxon, WebEx in the news
Industrial Average Closes at New High of 12,672.96
The US economy seems to be running on high octane. And most of it is coming from Exxon-Mobil. As the Dow Jones Industrials closed at yet another record high, oil giant Exxon-Mobil reported annual profits of $39.5 billion for 2006, the most ever for a US corporation.
For the 4th quarter, the company said it earned $10.2 billion, or $1.76 per share, a slight decrease from year-earlier figures of $10.7 billion and $1.71 a share. Even so, 2006 was a very, very good year to have oil anywhere - in your car, in a portfolio, on your hands, in your blood. Exxon's massive profits translate into more than $75,000 per minute over the course of 2006. They have a good thing going there.
The price of crude, meanwhile, has been dropping and eased off a bit today after a couple days of gains. Futures contracts for March delivery closed at $57.30/bbl. (down .84) on the NY Mercantile Exchange.
Elsewhere, the big tech story was WebEx Communications, the multi-layered internet collaboration service company which returned profits of 42 cents per share - 4 cents beyond estimates - reported after the close on Wednesday.
Additionally, WebEx (WEBX, company home page) laid out guidance for the 1st quarter and the full year in excess of analyst predictions. Shares gapped more than 3 points higher at the open, at 40.55, from a previous close of 37.08 and continued to climb throughout the day. At the close, the stock posted a gain of more than 21%, at 45.03. The company's main product line includes solutions for collaboration, web meetings and teleconferencing via the internet.
The other major indices took their cues from the Dow. The NASDAQ added 4.45, while the S&P 500 ticked another 7.68 points higher. Following a favorable January, February is off to a refreshingly solid start.
The US economy seems to be running on high octane. And most of it is coming from Exxon-Mobil. As the Dow Jones Industrials closed at yet another record high, oil giant Exxon-Mobil reported annual profits of $39.5 billion for 2006, the most ever for a US corporation.
For the 4th quarter, the company said it earned $10.2 billion, or $1.76 per share, a slight decrease from year-earlier figures of $10.7 billion and $1.71 a share. Even so, 2006 was a very, very good year to have oil anywhere - in your car, in a portfolio, on your hands, in your blood. Exxon's massive profits translate into more than $75,000 per minute over the course of 2006. They have a good thing going there.
The price of crude, meanwhile, has been dropping and eased off a bit today after a couple days of gains. Futures contracts for March delivery closed at $57.30/bbl. (down .84) on the NY Mercantile Exchange.
Elsewhere, the big tech story was WebEx Communications, the multi-layered internet collaboration service company which returned profits of 42 cents per share - 4 cents beyond estimates - reported after the close on Wednesday.
Additionally, WebEx (WEBX, company home page) laid out guidance for the 1st quarter and the full year in excess of analyst predictions. Shares gapped more than 3 points higher at the open, at 40.55, from a previous close of 37.08 and continued to climb throughout the day. At the close, the stock posted a gain of more than 21%, at 45.03. The company's main product line includes solutions for collaboration, web meetings and teleconferencing via the internet.
The other major indices took their cues from the Dow. The NASDAQ added 4.45, while the S&P 500 ticked another 7.68 points higher. Following a favorable January, February is off to a refreshingly solid start.
Label:
Dow record,
Exxon-Mobil,
WebEx
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