Stocks Continue Slide through Sixth Straight Session

Another day, another decline on US stock markets.

One should not be at all surprised by the development that stocks have found the path of least resistance to be lower. After all, they were goosed the past two years by almost $2 tillion in Federal Reserve subsidies and slippery dealings by the major banks.

Once again, stocks started out near their highs of the day, and, through a choppy session, ended in a massive sell-off into the close. The NASDAQ took the brunt of the beating, never making it out of negative territory the entire day. Again, this is unsurprising, as most of the momentum stocks which drove the two-year rally are indexed on the NASDAQ.

The bigger picture involves risk of all sorts, much of which is unquantifiable, such as the level of interest in, or general terms of, the bailout of Greece and whether or not the congressional clowns can come to some agreement on lifting the debt ceiling or not. Absent reliable information on either of those issues, and adding to the fact that there's scant economic data upon which to trade, stocks took another leg down in what is fast becoming a summer of discontent.

Perhaps the government agents and Wall Street wizards should be just happy to take their lumps in money, lest the American public come after them hammer and tong. They have destroyed not only the general economy of the nation, but have misused the public trust to a point at which there no longer is any.

The path to Dow 10,000 or S&P 1000 is likely going to be paved with the corpses of the major banks, still insolvent in many regards, especially Bank of America (BAC), which hit another tw-year low today, losing 0.11 to 10.54. Wells-Fargo (WFC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS) all took on water, though these stocks and the averages were all aided by a futile, though furious, late rally in the final fifteen minutes of trading.

Dow 12,048.48, -21.87 (0.18%)
NASDAQ 2,675.38, -26.18 (0.97%)
S&P 500 1,279.56, -5.38 (0.42%)
NYSE Composite 8,081.33, -50.34 (0.62%)

Despite the seemingly paltry losses, internals were crushed once again, and therein lies the problem with the markets. Almost everything is still overvalued and the reversal, by fear, extends to all equities. Declining issues hammered advancers, 4824-1767. On the NASDAQ, there were 22 new highs and 140 new lows, Over on the Big Board, 23 new highs, and 97 new lows, putting our totals at 45 new highs and 237 new lows, the fifth straight win for the lows, an expanding margin of difference and a sure sign the correction has further leg-stretching to do.

Volume perked up a bit from the previous two sessions, another indication that the selling pressure is intense and not about to abate.

NASDAQ Volume 2,038,875,125
NYSE Volume 4,442,987,500

Defying all logic, crude oil futures rose $1.65, to $100.74, as OPEC nations meet in Vienna, but came to no agreement on raising production quotas. It was another rough day from precious metals speculators, with gold down $6.90, to 1537.80, and silver off 17 cents, to $36.97.

Markets may get some relief from initial unemployment claims due out prior to the market open tomorrow, but counting on that is akin to betting the Cubs will make the playoffs. Not a sound bet.

Jobless Claims Jump, 1st Q GDP Anemic, Stocks Surge?

We've been officially in a financial twilight zone since about the middle of 2007. It was unofficial until the wheels of George W. Bush's second term as president began to fall off and the evils of crony capitalism began to appear. We all know what happened after that, but today's economic data and stock market reaction defies explanation of any rational kind except that the markets are completely out of whack, fed by the Fed's ZIRP and POMO.

Initial jobless claims printed this morning at 429,000, when the estimate was for 390,000. A miss of 39,000, especially when the economy is supposed to be improving, is pretty wide of the target and normally would cause a sell-off in stocks, since it signals trouble ahead. The last three reports on jobless claims all have come in over the "official" estimates, adding to the worry.

At the same time, the government released the first estimate of first quarter GDP, which has been revised downward over the past three months from 4 1/2% growth, to 3 1/2, to 3, and finally to 2%.

It didn't even make that. Estimated GDP for the first quarter was 1.8%, this on the heels of a 4th quarter 2010 final estimate of 3.1%. Blended, that puts annualized GDP at about 2.5%, which, in any sensible world, is under-achieving in a big way.

Normally, coming out of a recession, the economy grows at a 5% or higher clip for a few quarters and the Fed has to then apply the brakes by increasing the federal funds rate. However, in our current quagmire economy, we're not even hitting 3% annualized and interest rates are as low as they can be, effectively ZERO. This is truly distressing news, and anyone who thinks we're not headed right back into another recession (some believe the first one never actually ended), might be concerned or even downright perturbed.

Let's set the record straight. When a person's unemployment benefits run out - be they after 26 weeks, 60 weeks or the current standard for millions, 99 weeks, they no longer count in the BLS data, so the non-farms payroll report for April, which will be released a week from tomorrow, really does not count all the unemployed when they say the unemployment rate is 8.8% or whatever number they feel is appropriate.

Currently, REAL unemployment, measuring all the current UI recipients, plus those who have exhausted their benefits and are still without a job, is around 16-17%, maybe higher, and it's been at that level for the better part of three years.

Next, GDP growth has completely stalled out (the cynic in me wants to believe this is so we'll get a Republican president in 2012) and may turn negative, and that's will somewhere between $12 and $20 TRILLION in various forms of stimulus. Keep in mind, whenever a politician projects government budgets over any time frame longer than three years, that GDP growth is likely to be 3% or lower for the foreseeable future.

In other words, we are royally screwed and I'm not talking about tomorrow's wedding night of Prince William the Tragic.

The masters of the universe on Wall Street, however, apparently don't see any issues here, as they ramped up stocks after a slightly-declining opening 20 minutes.

Twilight Zone, folks. Rod Serling and the creepy music and all that.

Dow 12,763.31, +72.35 (0.57%)
NASDAQ 2,872.53, +2.65 (0.09%)
S&P 500 1,360.48, +4.82 (0.36%)
NYSE Composite 8,639.73, +30.45 (0.35%)

Gainers outnumbered losers, 3915-2644. 171 new highs and 28 new lows was the order of the day on the NASDAQ. Over on the NYSE, there were 355 new highs and 13 new lows. Volume, oh, why bother?

NASDAQ Volume 1,993,865,125.00
NYSE Volume 4,519,197,000

Crude oil futures were up on 10 cents today, closing at $112.86 on the NYMEX. As of %;40 PM EDT, spot gold was bid up $8.50, at $1535.80, another new record. Silver was up 48 cents, to $48.48, though it traded more than a dollar higher earlier in the day.

The $50 mark for silver may take some time to finally break through, but when it does, it will be an all-time high, and will likely tack on about another $6-8 in short order. Breaking through an all-time high, especially when the forces of central bankers and JP Morgan are shorting it with everything at their disposal will be a seminal event and likely signal the resumption of the gathering second great depression, of which we are already two-and-a-half years into.

When silver breaks loose, all manner of nastiness will be released onto the global economy. Markets are already strained to their limits, but when central banks and large money center banks see their currency finally debased and routed by "poor man's gold" (silver), market disruptions will become continuous events and price discovery mechanisms priced in Dollars, Euros or Yen will be completely lost, forever shattered.

The $50 mark on silver is coming, and soon, so best be prepared for all manner of craziness.

BTW: the Dollar Index fell to 73.118, and was as low as 72.87 today. The dollar index is quickly reaching for the lows of Spring 2008, around 71.58, and it's likely that level will be breached about the same time silver rockets ahead and gas prices in the US exceed $4.00 per gallon nationally. We're almost there!

Unemployment Up, Durable Orders Slip, But Markets Stable

Just in case anybody thinks that Bernanke's QE2 program isn't working perfectly (in other words, shoveling billions of dollars to the nation's largest banks), a quick recap of today's headlines and the resultant market moves should suffice to argue that US stock markets have permanently divorced themselves from reality.

Initial jobless claims came in at 454,000 in the most recent week. The market was looking for 400,000. Oops! The official reason for the rise from last week's reported 403,000, and the highest number since October was snow. OK, we're officially not buying that.

Durable orders for December declined by 2.5%. Analysts were expecting a gain of 1.5%. After all, Christmas falls in December, and everybody got a Lexus, right?

As tensions mount in Egypt in advance of tomorrow's largest protest to date - led by former IAEA chief Mohamed ElBaradei - the US State Department has advised president Hosni Mubarak to remain calm, though the days of the strongman leader seem to be numbered. In the aftermath of the Tunesian revolution, Algeria and Yemen, along with Egypt, appear to be on the brink of revolt.

Apparently, this spate of less-than-encouraging news was insufficient for equity investors to seek investments with less risk. Maybe they - or the computers controlling the trading - are standing pat, awaiting the first announcement of 4th quarter GDP tomorrow at 8:30 am. The official estimate is that the US economy grew at a 3.8% annualized rate, after the third quarter came in at 2.6%. Those hoping for a strong GDP number may wish to recall that residential real estate nearly ground to a halt in the 4th quarter, due to the fruadclosure scandal and that's not a big positive. The number ought to be interesting, just to see how far the government will go to convince everyone that the recovery is real and continuing, when the facts say the recession never actually ended and the only place in the country feeling particularly good about things in in lower Manhattan.

Dow 11,989.83, +4.39 (0.04%)
NASDAQ 2,755.28, +15.78 (0.58%)
S&P 500 1,299.54, +2.91 (0.22%)
NYSE Composite 8,207.06, +13.42 (0.16%)

Major indices were all marginally higher on the day, though the psychological barriers at Dow 12,000 and S&P 1300 remained difficult to breach. Both indices briefly advanced into the beyond, but generally flatlined below those levels for the bulk of the session. Internals suggest an unconvinced market sentiment, with 3454 stocks advancing and 2964 declining.

There were 159 new highs and 14 new lows on the NASDAQ, while on the NYSE new highs led new lows, 252-9. Volume was slight, as usual.

NASDAQ Volume 2,033,972,000
NYSE Volume 4,773,436,000

Commodities were mostly beaten down, as NYMEX crude dipped another $1.69, continuing the recent trend, to $85.64. Gold also remained under pressure, dropping another $14.60, to $1,318.40, back to October, 2010 levels. Silver dropped 10 cents, to $27.03, well off the December highs of $31.

The disconnect between the markets and reality is palpable. The wheels came off a long time ago, but the sputtering US economy has yet to be reflected by the Fed-fueled stock markets. Something's got to give, and when it does, it should be big.

After hours, Amazon (AMZN) released 4th quarter earnings and investors were not amused, sending the stock down to 166.74 a loss of 17.71 (-9.60%) at 5:00 pm EDT.

No POMO, No Follow-through, BTFD

For the uninitiated, BTFD is an acronym for Buy The F---ing Dip, as relates to stocks in the Bernanke free-money era in which we are currently ensconced. Today's dip, though not great, may be yet another buying opportunity for the momentum-chasers still convinced that buying stocks presents the best profit potential with limits to the downside.

One can hardly argue with the reasoning of the Mo-mo crowd over the past 4 1/2 months, as stocks have been on a tear since Labor day, 2010, and are up whopping amounts from their March 9, 2009 lows. Since it's still smartest to buy low and sell high, any decline, no matter how tiny, represents another chance to cash in on short-term trades, especially those of long duration, which today means a day or longer.

What may have riled markets today were a raft of displeasing data, beginning with a ramp up in initial unemployment claims, reported at 445,000 for the week, as opposed to the "expected" 415,000 and prior week of 410,000. Those figures are seasonally adjusted, with non-seasonally adjusted coming in some 230,000 higher, thus laying sufficient ground that the BLS figures are mostly for show and have not been trustworthy since the early days of the Bush administration.

While the mainstream media continues to drone on about the nascent recovery of the US economy, more than just casual observers are noting that said recovery has never much existed on Main Street and the various stimuli applied to the economy have benefited most Wall Street bankers and politicians who favor the status quo over real action or reform.

On top of the sorry-looking unemployment claims numbers came a PPI that was not very surprising, up 1.1% in December, with the core, which excludes food and energy, up a mere 0.2%, again unsurprising since just about anyone who drives or eats - and that would include just about everybody - has seen rocketing prices at the pump and the checkout counters in supermarkets. Food and fuel prices are accelerating far faster than the economy is growing, which is the express intent of Ben Bernanke's QE efforts, so we are now seeing the first signs of runaway inflation, with surely more to follow.

Stocks took a nose dive at the open, recovered, fell again and then raced higher into the close on short-covering by deft day-traders, which is just about everyone these days. Buy and hold and the former principles of investing have long ago been thrown unceremoniously out the window along with transparency and fair markets. The pre-planned hike by the Fed and Wall Street is working according to plan, and that plan is to squeeze every last dollar out of the middle class until they are on the verge of bankruptcy, starvation or revolt, or a combination of all three.

It is widely assumed that once the middle class is put under such dire conditions, the Fed will ease off the monetary gas pedal and all will return to the normalcy of peace, prosperity, milk, honey, wine and roses. This is assuming much, including that the bankers and other .01% of the population that benefits from the deprivation of the middle class will be sated and allow prices to lower and people to eat, breathe and drive freely without undue economic or political restraint. That is a rather large and unwieldy assumption and the Fed is asking for major trouble should they not know when to apply the brakes, which, if we are to take the nearly 100 years of Fed history as a guide, will not occur as planned, sending the economy careening into a wall of higher prices, stagnant wages, permanent high unemployment and lowered standards of living. Of course, this is all well and good, if you are a globalist, which our leaders in congress, the White House, on wall Street and at the Fed most certainly are.

Dow 11,731.90, -23.54 (0.20%)
NASDAQ 2,735.29, -2.04 (0.07%)
S&P 500 1,283.76, -2.20 (0.17%)
NYSE Composite 8,119.43, -3.55 (0.04%)

As one would expect, declining issues led the charge over advancers, 3530-2909. There were 208 new highs and 10 new lows on the NASDAQ; on the NYSE, 246 new highs to 108 new lows was something out of the ordinary, with the new lows ramping up to levels not seen this year. Volume remained stagnant at low levels as usual.

NASDAQ Volume 1,960,601,750
NYSE Volume 4,822,930,000

Commodities trended lower, except in the agriculture space, where all grains were higher. Crude oil for February delivery shed 46 cents on the NYMEX, to $91.40, still at elevated levels despite storms slowing the rate of travel for the past three weeks. Gold took a major hit, down $14.00 late in the day, to $1374.00. Silver also was bombarded by selling, losing 91 cents, to $28.74. The metals, not conforming to a massive drop in the dollar index - off 0.85, to 79.20, are telling us nothing about current conditions except that the markets simply aren't making much sense right now. Stocks normally would have been up on such a large (>1.0%) move, though the effects of the unemployment condition and inflation gauge may have ameliorated such effect.

Global populations are in for a double-kick of inflation, with energy and food prices leading the way. If this is somehow good for global growth - a starving, immobile mass of humanity - it is beyond the scope of most economic experts. It is only in this new age of never-ending money supply inflation that the world now turns, for better or for worse, 'til death, taxes or $4/gallon gasoline do we part.

Sideways Into Friday on December Jobs Data

Since the big gap-up run-up at the open on Monday, stocks have gone essentially sideways, as yet indeterminate as to the direction of the new year, with a new congress, but, unfortunately, the old guard still running the show down at Wall and Broad. Since the big new year's burst Monday morning, the Dow has traded in a very narrow 100-point range.

The show, duller than normal, is exhibiting the kind of trade flow that unsure markets normally do, up one minute, down the next, awaiting the next data flow, pivot point, news or rumor. That pivot or data point could come as early as tomorrow, and probably was delivered a little in advance, today, when, after being loudly trumpeted as the strongest holiday shopping season since 2007, retail sales for December missed analyst expectations.

This kind of "actual" numbers reporting should have been expected, considering the happy-faced lunatics which masquerade as journalists on the major cable and network news shows. They were fed a large baloney sandwich by wall Street in December, and, after gnawing through every last crumb, puked up the residuals to the moronic American consumer. On the news, the markets, instead of a quick reversal, merely glossed over and continued to trade along choppily.

Maybe it will take unbelievably horrible news to finally end the fraudulent rally that has consumed every last remnant of market confidence over the past four months. Then again, tomorrow's December jobs number may have been the plan to tank stocks and retail paper profits all along. We'll know by 8:30 am tomorrow. Until then, we can only wheeze, curse and vomit at the charade trading stocks has become.

Dow 11,697.31, -25.58 (0.22%)
NASDAQ 2,709.89, +7.69 (0.28%)
S&P 500 1,273.85, -2.71 (0.21%)
NYSE Composite 8,000.90, -39.14 (0.49%)

Declining stocks held sway over advancers, 3878-2615. NASDAQ new highs: 189; new lows: 9; NYSE new highs: 199; new lows: 6. Volume was moderate.

NASDAQ Volume 2,118,538,500.00
NYSE Volume 5,440,849,500

Oil for February delivery fell another $1.81, to $88.38. Gold dipped $2.00, to $1,371.70. Silver lost 7 cents, to $29.13.

Unemployment data for the most recent week showed an increase of initial claims, to 409,000, after a revised figure of 391,000 in the previous week. If there were post-holiday layoffs, which there always are, they will be reflected next week. Tomorrow's non-farm payroll report, as dubious as the numbers always appear to be, may, nonetheless, be a market mover.

Data Ignored as Stocks Take a Rare Step Back

Another exceedingly dull session marked the penultimate trading day of the year, but, unlike the tree previous days, all indices finished in the red, showing marginal losses.

Initial unemployment claims came in at a seasonally-adjusted rate of 388,000, beating expectations (418,000), but the data set is marred by the non-seasonally-adjusted number, which came in at a whopping 521,834. Obviously, the BLS is doing a bang-up job at keeping the truth about the employment condition in America almost out of view.

Elsewhere, Chicago PMI surged To 68.6 on expectations Of 62.5, the highest since July 1988, another badly skewed statistic from the government's statistical fantasy factory.

If one were to believe these two reports (are you getting the idea that we don't?), the take-away would be that very few people were laid off following the holiday shopping season and our manufacturing base is vibrant and growing. The truth of the situation is that jobs are being shed as quickly as number-crunchers can adjust their bottom lines on excessively hyped same-store sales figures and the PMI is being fueled largely by cost inflation.

So, with one more dreary day ahead in the lowest volume week in ten years, traders, pundits, analysts and economists can hardly wait to put 2010, the year of the little lie, finally to rest. Without a doubt, 2011 will be better known as the year of the bigger lie.

Dow 11,569.71, -15.67 (0.14%)
NASDAQ 2,662.98, -3.95 (0.15%)
S&P 500 1,257.88, -1.90 (0.15%)
NYSE Composite 7,951.91, -9.57 (0.12%)

Declining issues edge advancers, 3282-3152, while NASDAQ cheered 152 new highs and jeered 17 new lows. The pattern was the same for the NYSE, with 149 new highs and just 8 new lows.

NASDAQ Volume 1,036,465,812.50
NYSE Volume 2,292,664,000

Crude oil finally took off some of the froth, dipping $1.28, to finish just below the $90 mark, at $89.84. Gold eased $7.60, to $1404.40, while silver also slowed, down 13 cents, to $30.47.

POMO + QE2 = Stocks to the Moon, Silver Soaring

One of the side effects of Ben Bernanke's $800 billion gambit - and there are many - is to send stocks directly upward, while also giving silver and gold somewhat of a boost.

A day after the announcement of $600 billion in QE2, plus another $150-200 billion more in re-allocated MBS, the Fed hit the trifecta with a 4$.5 billion POMO today and sent stocks to the their best levels since the crash of 2008.

Yes, siree! We're back on easy street thanks to Uncle Benji debasing the currency. Now all you people worried about your pension funds and 401Ks can rest easy, Uncle Ben's got ya covered.

Another side affect of QE is runaway inflation, but let's not talk about that now. Let's talk about that when gas is $4.25 a gallon, because that's where this is evidently headed. And word has it that if this round of stimulus via magic money creation isn't enough, don't worry, Ben can just conjure up some more. Isn't capitalism nice, easy, fun?

Oh, and you people who have saved diligently and are now in fixed income securities, bonds, and money markets, well, you're screwed. You'll still have money; it just won't be worth much, and, as an added bonus, it will buy even less in years ahead. Happy Retirement!

To the uninitiated, typical, dumb-ass American, they'll just see that the Dow was up AGAIN! and their stocks are doing well, so all is good in America. We've got a whole slew of newly-minted Republicans in the House of Representatives all set to slash taxes (for corporations), cut spending (on social programs) and usher in a new era of prosperity for the good old USA.

The problem with this scenario is that it's just all bunk. We're headed down the path of the Weimar Republic or, more recently, Zimbabwe, places where inflation was so out of control that restaurants asked patrons to pay in advance because by the time they'd finish their meal, it would cost more. The currency became essentially worthless in a matter of days and weeks.

Don't worry, though, we're just getting started. The fun part of hyper-inflation won't come until the dollar index hits something like 45. It's still above 75, or at least it was this afternoon. That could have changed.

Dow 11,434.84, +219.71 (1.96%)
NASDAQ 2,577.34, +37.07 (1.46%)
S&P 500 1,221.06, +23.10 (1.93%)
NYSE Composite 7,782.43, +174.02 (2.29%)

Gainers decimated losers on the day, 5265-1295. The new highs, new lows numbers were simply amazing: 1343 new highs; perhaps more amazing were the 112 new lows. From where did those come?

Volume was exceptional, for once, though considering that the Fed has only begun to pump nearly a trillion dollars into the stock market, we could see volume spikes which dwarf this in weeks and months to come. Today was a day to just pick some stocks you like and throw a bunch of money at them. They're almost guaranteed to go up. Even Bank of America (BAC) was up nearly 5%, despite the news that they may be on the hook for over $120 Billion in mortgage put-backs. In other words, the bank will be munching on those loans for years to come and, in fact, their exposure is probably more on the order of double or triple that.

NASDAQ Volume 2,533,570,750.00
NYSE Volume 6,609,444,500

The good news is that gold and silver went off like rockets today as well, because the really smart money (which gold and silver are) is into this space in expectation of enormous inflation and destruction of the dollar and other currencies. Gold was up $44.10, hitting a new all-time record high of $1392.90. Silver, in percentage terms, did even better, gaining $1.53, to $26.37, as JP Morgan and HSBC face criminal and class action lawsuits related to shorting and manipulating the silver market. Ouchie for them; great for anyone who loves silver.

It's a wild world out there; every man, woman and child for themselves.

Just a note in the wind. Keep an eye on House of Representative member Ron Paul, and his newly-elected Senator son, Rand. I'm promoting a Paul-Paul ticket for president and VP in 2012. A father-son team in the White House. Looks like a natural to me.

Oh, and never mind that unemployment claims were up 20,000 this week, to 457,000. That number will grow ever larger, likely to surpass 500,000 in December or by late January at the latest, while the stock market soars. Hey, who needs employees when you've got the Fed's printing presses on your side.

Tomorrow's non-farm payroll report for October should be a non-event, as will most fabricated economic data from now on. with money creation out the wazoo, there's no sense in measuring anything except the thickness of your bankroll.

Yippie! We're all going to be rich!

An Up and Down Thursday with Lady Gaga and the Fed

Now that the US stock markets are inexorably intertwined with Fed POMOs and repurchases, and, in turn, to movements in the US dollar, investors are more likely to see moves such as today's rather than stocks moving on fundamentals, news, or economic data.

In the absence of a POMO today, the whizzing HFT computers got the markets off to a bang-up start, only to be headed off by the Federal Reserve's #1.5 billion reverse repo, which actually takes liquidity out of the market. Thus, with less free money on hand, stocks slumped midday, though managed to stage a final hour rally to close positive, again. The major indices registered marginal gains, except for the NYSE Composite, the broadest measure.

Stocks simply cannot go down. That much is clear. How high the HFT computers and the Fed, via their Primary Dealers (PMs) will take it is the big unknown. Eventually, while Americans move from 99 weeks of unemployment benefits into the underworld of welfare recipients and food stamps, the stock market - permanently unhinged from reality and the US economy - may challenge the all-time highs. We expect REAL unemployment to be registering at about 25% (it's already 22% and rising), though the Bureau of Labor Statistics (BLS) will have it pegged at something around 9.7%, as they discard discouraged workers and anybody who was on a payroll for more than one hour in a given week.

In that regard, the weekly new unemployment claims were "down" to 452,000 this week, from last week's 475,000, which was revised from the reported 462,000. Not to worry, this week's figures will be revised upward next week, so they can show "improvement" again. The BLS has upwardly revised the number every week save one for the past six months. No, really, it's true!

US investors and their computers which run them also overlooked the extreme austerity measures undertaken by the British parliament and the ongoing strikes in France which have pretty much shut the country down.

Conditions in France are so bad that Lady Gaga cancelled all her upcoming appearances. Now, that's shocking and maybe will awaken the MTV generation that all is not well with the world.

Not making headlines today, but surely taking the heat from traders, was Bank of America (BAC), which hit another 52-week low, closing down 39 cents at 11.36. The widely =-circulating rumor is that BofA is being used as a fall guy for much of the toxic mortgage paper that investors wish to shed and be compensated for. Bank of America, with headquarters in Charlotte, NC, is not part of the Wall Street cartel, thus, it may be under preparation to be jettisoned from the land of publicly-traded companies.

For many mortgage and bank account holders, this could not happen to a better (worse) bank.

Dow 11,146.57, +38.60 (0.35%)
NASDAQ 2,459.67, +2.28 (0.09%)
S&P 500 1,180.26, +2.09 (0.18%)
NYSE Composite 7,515.67, -8.14 (0.11%)

despite the valiant efforts in the final hour, declining issues beat advancers, 3591-2799. New highs beat new lows, 522-74. Volume remained mostly moribund.

NASDAQ Volume 2,145,050,000
NYSE Volume 5,269,549,000

Commodities got smacked down again, with oil losing $1.98, to $80.56 on the first day of the December contract, a particularly bearish sentiment being expressed. Gold dropped another $18.60, to $1,325.60, while silver fell 73 cents, to $23.14, a tempting price, though one's enthusiasm for the precious metals must be tempered at this point. Commodities may be reacting more to the conditions in France, the rest of Europe and in England, as a global depression may be taking fuller shape and would negatively impact all asset classes, and primarily, commodities, as demand would be severely crimped for all production on every level.

Considering the damage done in the main by the corrupt, illicit actions of US financial institutions over the past two decades, global depression 2.0 seems the most likely outcome, something predicted here at least two years ago. Check our archives from 2006 and 2007 if you need any proof.

The banksters who roam Wall Street as free men (and maybe a few rogue women) have delivered to the world the ultimate crap sandwich, complete with a rotten apple in a fetid, torn paper bag. With US politicians more intent on re-election than actually handling problems, nothing gets done and nothing will, if the media pundits have their way.

Predicting a Republican "Tea Party" triumph, taking control of the House and maybe the Senate, the most likely outcome - with a Democrat in the White House - would be gridlock, with an assortment of charges, counter-charges, investigations and accusations being thrown by both parties at each other. This may be the most desirous of conditions for the American public, who might, after a while, simply give up on government policy and demand the wholesale dissolution of the federal government.

In the event of widespread public rage, after the rioting, ranting and raving, the states may then be able to stand up individually and reject federal controls which have destroyed the union. There will be periods of fear and bloodshed, but, in the end, removing the shackles of government may be the best and possibly, only solution.

One would hope that it would not come to such extremes, but the vast pantheon of history is replete with uprisings, revolts and revolutions. It's all part of what keeps the world spinning and a necessary needed cure to tyranny and control.

Summer Rally Lifts Stocks for Third Straight Session

Just a week ago, stocks appeared to have lost much of their appeal, as US economic data and problems in Europe prompted fears of a "double dip" (another recession) or slow growth for the United states and much of the developed world.

Apparently, not everybody got the memo, as this first week of the third quarter has traders snapping up stocks by the truckload. The major indices recorded their third straight day of gains, following seven sessions in negative territory. While concrete proof of better economic conditions have yet to be affirmed or even ascertained, traders have felt the need to dive headlong into stocks at a crucial juncture.

For chartists, one of many significant patterns developing right now is what's been termed the "death cross," wherein the 50-day moving average falls below the 200-day moving average. The last time this particular pattern occurred was at the very end of 2007, when (using the Dow Jones Industrials as a guide) the Dow failed to surpass the October, 2007 high of 14,164. Through the end of December, 2007, the Dow was trading in the low to mid-13,000s, but by the end of January the index had fallen to the low 12,000s range. Even though by June, the index had made its way back to 13,000, the 50-day MA remained below the 200-day, there was not enough commitment in the market to reverse the trend, and the subsequent crash in Autumn of 2008 finally dashed all of the bullish camp's hopes.

What is notable about the "death cross" is that it is not an insignificant event. As the market is normally an efficient discounting mechanism, the crossover of the two major moving averages correctly forecasts deteriorating economic conditions, though sharp rallies, bringing the averages back above the 50-day, and sometimes touching the 200-day, normally end in failure.

The key area of resistance at this juncture is two-fold, and that dichotomy bodes ill for the bulls. The first level is at the 200-day moving average, roughly at 10,300. A break above that level would be a boost for optimism, though the second level, at 11,200 - the height of the most recent rally and also the level at which the market broke down severely in 2008 - is more important. Failure to exceed the previous high can mean only one thing: stocks are overvalued and moving lower.

This entire panacea will likely take place over a lengthy time span of six to eight months before it is finally resolved, though there seems to be little doubt - from a technical point of view - that the bears will eventually feast upon overpriced securities, likely by November and almost surely by january 2011.

Not to put too much of a pessimistic tone on the delightful little three-day rally, but it's well-known that the averages never move in straight lines, sentiment can turn on a dime and there's no discernible difference between economic conditions today and those which prevailed for the prior eight weeks. Housing, unemployment and financial fears - not confined to just europen banks, but to US banks and the entire global financial system - will continue to pressure those on the long side of trades.

Chartists usually get it right, and while there are surely no guarantees, recent economic data suggests at least a slowdown in GDP growth from the first and second quarters of this year to the third and fourth. While individual names may report stellar earnings, the underlying data is signaling a tough time to grow profits and revenues.

Despite the glowing headline numbers, today's trade was a disaster in a number of ways. First, the galloping gain of the morning were nearly completely vaporized by noontime, and, second, most of the day's gains (80 points on the Dow) were achieved in the final hour. There's a good deal of buying going on, but there's surely no dearth of selling, either. The rub is that institutions may very well have been unloading stocks midday, forcing another bout of short-covering at the tail end of the session. It was a very sloppy-looking chart.

Dow 10,138.99, +120.71 (1.20%)
NASDAQ 2,175.40, +15.93 (0.74%)
S&P 500 1,070.25, +9.98 (0.94%)
NYSE Composite 6,755.81, +70.03 (1.05%)

Advancers dominated declining issues, 4658-1738 (nearly 3:1), and new highs surpassed new lows, 145-84, breaking a streak of seven straight days of wins for new lows. Volume was below par.

NASDAQ Volume 1,958,669,750
NYSE Volume 5,208,361,000

Oil gained again, now eraing most of the declines from the prior two weeks, higher by $1.37, to $75.44. It's doubtful that oil can or will break out of this $70-80 range any time soon, unless there's a serious disruption in production or demand falls off a cliff - unlikely during the busy summer months.

Metals were little changed, with gold dipping $2.80, to $1,195.80, and silver losing 13 cents, down to $17.85.

The most relevant stat for the day came prior to the open, when initial unemployment claims were estimated at 454,000, down from the previous week's total of 475,000. A good many analysts saw this as a positive, though the reality of the situation must be viewed in a larger, longer context. Using a simple round figure of 450,000 initial claims a week, that would extrapolate to over 23 million claims in a year, or a turnover of roughly 30 percent of the total workforce.

With jobs scarce, that kind of turnover is simply not supportable from available data, insinuating that the weekly claims numbers are very faulty and probably disguising an even-worse employment condition than many believe exists. The government's own non-farm payroll actually put unemployment at 9.5% in June, down from 9.8% in May, even though the number of jobs created was a negative. Clearly, the response was that the workforce had shrunk, as many longer-term unemployed entered the ranks of "discouraged," and thus, not counted.

It's a complete fallacy to believe that employment is in anything but a disastrous state of affairs and that the official numbers are masking the truth. The real unemployment rate, or U-6, which captures underemployed workers and those completely discouraged and without benefits, at 16.6%, another government statistic probably undervalued by 5-10%.

Of course, the employment condition is only part of the story, but a large part, as it also impacts retail sales and housing in major ways. Anyone who believes we're out of the woods just because the stock market rallies for a few days might just ask a few of their unemployed neighbors how they feel about things.

Late Rally Lifts Stocks; Volume Pathetic

There were any number of good reasons for stocks to take a breather on Thursday, but, a vicious late-day rally sent all of the indices into positive territory, a place none of them had been since the opening minutes of trading. The Dow itself gained 84 points in the final 35 minutes, after having been down all day. The major indices closed right at their highs of the day.

While the markets have been buoyant of late, pressures continue to build as measures of the strength of the US economy increasingly show that any recovery is going to a slow, bumpy and uneven process. More and more economists are lowering forecasts for the remainder of 2010 and trimming projections for 2011 in the face of increased taxation and regulation on a wide swath of industries.

New unemployment claims totaled 472,000, well above consensus estimates of 450,000 and an increase of 12,000 from the prior week, confirming that labor markets remain soft.

Another deflationary signal was flashed by the May Consumer Price Index (CPI), which declined 0.2% month-over-month while core prices improved 0.1% month-over-month.

There's also a very basic measurement known as valuation, something most stocks are now testing the upper ranges of. With earnings season still three to four weeks in the distance, the Wall Street insider swindlers are making as much of a quick buck before reports begin to flow from the board rooms to the street.

One can be relatively assured that stocks will begin another leg to the downside no later than Tuesday of next week, barring any unforeseen, spectacularly-positive events.

Stock investing is quickly becoming more a process of timing and luck than fundamental analysis. Traders are in and out of stocks with blinding speed as compared to the old buy-and-hold days, which now seem just a quaint memory of a time when financial markets were heavily regulated, and wealth accumulation was a slow and relatively safe process.

Today's traders face more challenges than at any time in memory. Between insider knowledge, pre-and-post-market maneuvers and the advent of push-button trading via computer or cell phone, investors have to be quick on their feet and use tight stops just to stay even.

Thinking along these lines, it may be time for pension fund managers to reassess their strategies and convert more assets out of stocks - at least US and European ones - and into more stable investments as these traders are unable to move the huge blocks they hold with any kind of price assurances.

Dow 10,434.17, +24.71 (0.24%)
NASDAQ 2,307.16, +1.23 (0.05%)
S&P 500 1,116.03, +1.42 (0.13%)
NYSE Composite 6,982.02, +5.94 (0.09%)

Advancing issues narrowly beat back decliners, 3220-3183; new highs continued their recent string of wins over new lows, 141-60, but volume on the day was absolutely pathetic - the lowest in well over a month's time - especially considering that Friday is an options expiration quadruple-witching day. Normally, volume is very high leading into these events, so something is not right about this entire set-up.

NYSE Volume 4,973,262,000.00
NASDAQ Volume 1,654,591,250.00

Oil slipped 88 cents, to $76.79, but the precious metals showed strength, which only amplifies the discordance in equities. Gold gained $18.20, to $1,247.50. Silver added 34 cents, to $18.77.

Gold and stocks have generally been trading in opposite directions, though in recent months, that relationship has faded. Eventually, the two will collide, though, with the value of the Dow equal to anywhere from one to four ounces of gold. Currently, the ratio stands at 8.36 ounces to one unit of the Dow. Within 18 months, expect two things to occur: Gold will reach $1.500 per ounce and the Dow will smash through to the downside of 6000. It's almost an inevitability. Here's a little story about how to trade the gold and the Dow over the very long term, by Gary North, a guy who knows a thing or two about stocks and gold.

Tony Hayward, BP CEO, was grilled and pilloried on Capitol Hill this afternoon, as he should be. The remains of the Deepwater Horizon continue to spew thousands of barrels of crude into the Gulf of Mexico, the situation growing worse every day. Correcting our story from yesterday, it's being reported that BP will not pay dividends for the remainder of the year, not just the upcoming quarter. That's three quarters of British pensioners going without their dividend checks, but, as is the case with stocks, that risk was always there. While some may call the BP situation a "Black Swan" event, they've literally created any number of black pelicans and other specie of the region and should not survive as a going concern.

Amidst Confusion, NASDAQ Gains; Jobs Data Looms

There are more than just a few trades riding on the release of tomorrow's BLS non farm payroll report for May. Estimates for the number of jobs created in the US economy during the month run the gamut from 250,000 to 600,000, the latter number suggested as a best guess by the intrepid mind of Jan Hatzius at Goldman Sachs, who has a history of being generally close, often far off, but almost always too optimistic.

The Hatzius estimate is anecdotally cute, in that he calls for private sector job growth of just 150,000, with the rest of the number comprised of temporary census hires.

A couple of hints as to how strong the job growth was during the month came from a few sources. On Wednesday, both President Obama and Vice President Biden hinted strongly in separate speeches that the figures would be substantial, but on Thursday, two real pieces of economic data, the ADP private sector report [PDF] and the weekly report of new and continuing unemployment claims, suggested something of the opposite.

The ADP report, which is generally reliable to be as accurate or even moreso than the overly-massaged government figures, pegged private sector job growth for May at a fairly tepid 55,000. Initial unemployment claims came in at 453,000, still stubbornly high, with continuing claims at 4.67 million, a staggering figure and suggestive that job creation simply isn't occurring in the private sector, or at least that permanent jobs are not being created.

Meanwhile, pesky problems such as the European debt crisis, the Gulf of Mexico oil slick, and China canceling a planned trip to the country by US Secretary of Defense Robert Gates, dogged investors throughout the session.

Stocks zig-zagged all over the map, with internals reflecting the rocky trading. The Dow was up 65 points early, down 75 points by midday, and rallied off the lows into the close for a fairly flat trade. The NASDAQ demonstrated leadership in energy and tech shares, the index positive throughout the session.

The NASDAQ is also the only one of the majors to show positive returns for the year.

Dow 10,255.28, +5.74 (0.06%)
NASDAQ 2,303.03, +21.96 (0.96%)
S&P 500 1,102.83, +4.45 (0.41%)
NYSE Composite 6,860.43, +20.82 (0.30%)

By the end of the session, advancers held a solid advantage over declining issues, 5015-2447, and new highs took back the edge over new lows, 154-70. Volume was light once again, as many traders have stepped away in advance of the non farm payroll report.

NYSE Volume 5,404,948,000.00
NASDAQ Volume 2,063,167,375.00

Commodities were mixed. Crude oil for July delivery gained $1.75, to $74.61, on a government report that showed a decrease in supply. The oddity of the oil market is its apparent one-way bias. During the winter, when the same weekly report as today's continually showed excess supply, the price advanced regardless. With supply down, it's logical for prices to rise, though the opposite should be true on oversupply, but it isn't.

Gold fell sharply, down one percent, or $12.30, to $1,208.30. Silver also lost ground, giving up 38 cents, to settle at $17.92.

As is usually the case the first week of any month, too much emphasis is being placed on the jobs data, especially considering that the numbers coming from government are often wildly off-the-mark and subject to massive revisions in future months.

After Wednesday's huge run-up and the flatness of Thursday's trade, it appears that a robust number has already been priced in, and traders could be in for a rout. The alternative, under consideration that the jobs numbers come in solid or surprisingly better than expected, is for investors and momentum players to swing sentiment to wildly optimistic and end the week with another mammoth gain.

Either scenario could emerge, though this may prove to be the economy's last stand before more realistic data confirms or denies the existence of any kind of recovery. From what's been shown thus far, the billions and trillions of dollars thrown into stimulus and for the sake of saving numerous financial institutions has produced at best a weak rebound.

Unemployment, Retail Offer Mixed Picture

Stocks opened the day to the downside, nervous about the persistently high level of unemployment claims. Initial claim came in this morning at 460,000, about 25,000 more than had been expected. They've been in that mid-400,000 range for months and don't seem to be changing much. Continuing claims were down by 131,000, which somewhat tempered the pessimism.

Once stocks began trading, however, everybody became a buyer in what turned into a day-long rally, ending on the upside for all of the major indices. Retail sales figures for March were generally superior, though they did happen to include the week prior to Easter, which fell in April last year, skewing comparisons for same-store sales throughout the industry.

Again, they proved good enough to entice investors to buy, or at least not run screaming from them. Most of the economic data of late has been mixed, except for housing and unemployment, which remain seminally ugly.

Dow 10,927.07, +29.55 (0.27%)
NASDAQ 2,436.81, +5.65 (0.23%)
S&P 500 1,186.43, +3.99 (0.34%)
NYSE Composite 7,565.33, +19.15 (0.25%)

Advancers took back the edge from decliners, 3396-3016. New highs are beginning to come back to earth, only 398 of them today, as opposed to 27 new lows. Volume was better than normal, though still below 2003-07 levels.

NYSE Volume 5,246,828,500
NASDAQ Volume 2,342,815,500

Oil trended lower for the second straight day, losing 49 cents, to $85.39. Gold dipped 10 cents, to $1,152.20 and silver fell 7 cents, to $18.12. The day in commodities lacked clear direction.

More attention was being paid to Tiger Woods' return to golf at the Masters than the prices of stocks today. Between that distraction and generally nice weather, it's surprising anybody even shows up to trade on the Street these days.

No Change Must Be Good

Nothing much of importance happened today, giving market participants yet another opportunity to do what they've been doing for nine of the last twelve sessions: bid stocks higher.

There must be something quite enticing about owning stocks nowadays because there seems to be no shortage of buyers. Whatever the reasons, stocks continue to add to gains, day after day after day. It's becoming something of a bore.

Suppose the congress went home for a month, two months, six months, or just simply hung around and enacted no new legislation. Suppose the Fed kept short term interest rates permanently at zero. Suppose government debt was paid for with more government debt and that banks could continue to keep poisoned, rotten assets off their balance sheets.

Add in real unemployment at about 16%, 15% of all homeowners either behind on mortgage payments or already in foreclosure.

We'd have exactly the conditions we have today, though how all of that relates to being positive for stocks or the more general economy is a quizzer.

As for that final piece of the puzzle, the 15% of the "better off" homeowners in America falling behind, that info comes via the Mortgage Bankers Association, a group which should know the reality of homeownership, in this Washington Post article from February 20, 2010. Maybe you missed it.

The key passages are these:

"About 9.47 percent of all borrowers were delinquent on mortgages during the fourth quarter, according to a survey. The number is down slightly from the previous quarter, the highest on record, but was the second-highest level ever seen. An additional 4.58 percent of homeowners were somewhere in the foreclosure process.

This means that about 15 percent, or 7.9 million mortgages, were in trouble during the quarter, according to the industry group. It is the highest level recorded by the survey, which has been conducted since 1972, and up from 11 percent, or 6.4 million loans, during the corresponding period in 2008."

That is simply not encouraging.

As for unemployment, the weekly initial claims data was released early today, showing another 462,000 people filed new claims in the most recent reporting period. There were also more than 4,500,000 people still collecting unemployment benefits and congress just approved another extension. There are people out there who have been receiving benefits since March, 2008. Maybe you know some of them.

The 9.7% unemployment rate the government likes to tout is a neat fabrication which doesn't include "discouraged" workers or those who have taken lower-paying part-time jobs. As claimed earlier, real unemployment is about 16% of the available labor pool. It's much higher for specific groups, such as teens and minorities.

Somehow, all of this makes stocks good investments. Sorry, but some of us disagree. Anybody buying stocks with real money these days is simply gambling, and much of what's out there appear to be bad bets.

Dow 10,611.84, +44.51 (0.42%)
NASDAQ 2,368.46, +9.51 (0.40%)
S&P 500 1,150.24, +4.63 (0.40%)
NYSE Composite 7,353.21, +25.54 (0.35%)

Advancers beat down decliners, 3690-2702. New highs beat new lows, 563-51. That gap will begin to slowly decline. By August or September, possibly sooner, new lows should retake the advantage. Volume continued at a trickle. Goldman Sachs alone is probably responsible for 30% off all the trading volume on the exchanges, possibly as much as 45%.

NYSE Volume 5,093,085,000
NASDAQ Volume 2,093,398,875

Commodity prices moderated. Oil only gained 16 cents, but is priced now at $82.25 per barrel. Gold was absolutely flat, at $1108.10. Silver gained 15 cents, to $17.17.

There will be a reckoning for the current rallying folly. And it really is foolishness of a high degree. Stocks are close to recent highs, so when were we supposed to buy stocks? When they were high? We all know the answer to that question.

Friday will bring some economic data. Retail sales for February, along with the Michigan Sentiment survey for March and January business inventories will cumulatively tell us that nothing is going on in one way or another.

Stocks will rise again.

Stocks Continue Taking It on the Chin

Today's market - no, check that, the past two weeks - have been similar to watching an overmatched heavyweight slogging through the late rounds of a fight. The stumbling, grasping hulk is doing everything he can to stay on his feet, but his opponent, peppering him with body shots and head blows, is wearing him down, and eventually, that's where he's going: down to the mat for a long rest.

After a stirring speech by President Obama in the State of the Union Wednesday night, there were ample amounts of optimism, though not enough to lift stocks off the break even mark at the open. Jobless claims once again disappointed, and durable goods orders, which were expected to grow by as much as 2% in December, came in at a feeble 0.3%, giving even more credence to the thinking that the nascent recovery is giving way to larger pressures.

The deflationary cycle will not relent. Consumers aren't spending, which means companies won't hire, which will eventually be reflected in slower sales, weaker earnings and potentially even more job losses. Unemployment continues to be the weight on the economy, though housing isn't far behind.

Just an anecdotal reference from my vantage point bears reflection on where housing prices are headed. Three months ago, here in an upstate New York suburb, I searched the local multiple listing service site for homes under $90,000, and found four. Now, this is a relatively modest area, which wasn't damaged by the ups and downs of the housing boom and subsequent bust. Prices remained fairly stable throughout the years from 2003-2009. However, when I checked the same reference with the same parameters, my search showed 49 properties under $90,000, a 10-fold increase since late October, with the lowest price coming in at $36,500.

I was absolutely stunned to see so many properties around me at such low prices. In many cases, the property taxes would exceed the monthly mortgage payment on a 30-year fixed rate loan at 5.5%. I can only imagine the number of bank-owned properties that are being kept off the market (the so-called "shadow inventory") and the heartache and pain many of my neighbors are suffering.

With real estate in such a dreadful condition, if the stock market takes an extended dive - which it appears to be doing - many more families are going to be hurt, especially those with kids in college or nearing retirement. Their two great stores of value - their home and their retirement savings - are both losing value simultaneously, an unsustainable condition.

America sits on the precipice of a grand collapse and there aren't many people offering solutions, especially in Washington, where the fight is mostly political. It's almost comical to watch the daily panorama of posturing from a detached position; who in their right mind would want to be in a political position of power at this juncture? Maybe politicians are all just closet masochists, waiting to be flogged by an angry populace.

Wall Street seems to have noticed. Over the last seven sessions, the Dow has dropped 605 points, or nearly 5%. If the downdraft turns into a full-blown correction - a likely scenario - another 8-15% could be shaved off in short order, bringing the Dow not only back below the 10,000 mark, but even below 9000, a place where fear and panic both reside. It just doesn't look very pretty right now.

Dow 10,120.46, -115.70 (1.13%)
NASDAQ 2,179.00, -42.41 (1.91%)
S&P 500 1,084.53, -12.97 (1.18%)
NYSE Composite 6,956.99, -78.62 (1.12%)

Declining issues easily outdistanced gainers, 4690-1826. New highs remained modestly ahead of new lows, 131-79. Volume was strong.

NYSE Volume 6,385,494,500
NASDAQ Volume 2,906,497,750

Commodities were steady, after a few weeks of declines. Oil gained 11 cents, to $73.75; gold lost $1.20, to $1,084.50; silver finished at 16.21, down 23 cents on the day.

Friday offers the first government estimate on 4th quarter GDP, at 8:30 am, prior the the opening bell. experts are looking for gains of 4.7% to 6.8% over last year. The projects may appear overly optimistic, and may well be, but, then again, the final quarter of 2008 was one of the worst in years. Some improvement is surely there in the economy, the larger question is whether it will last.

Stocks Slip for Second Straight Session

US stock indices finished in the red for the second straight day as another spate of so-so economic news crossed the new wires. It wasn't so much the initial jobless claims figures that shook things up - they were improved over the previous week at 550,000, but the continuing claims were higher, at 6.31 million, due to extensions in unemployment benefits keeping more workers on the government dime for longer than the usual 39 weeks.

With money coming in and no prospects for gainful employment on the horizon, many of those already furloughed are living check to check, those being furnished by government agencies. As long as no new jobs are being created, America will continue to devolve from a nation of entrepreneurs into a de facto welfare state, with government picking up the tab for everything from rent to food to health care to spending money. The hard side of that reality is for the businessman or woman who will face ever higher taxes and costs related to doing business with a sub-prime clientele.

The path of the nation doesn't have to be as stark, though the current crop of clowns in congress certainly seem to be pushing in that direction. Gone is the resolve to work hard, the commitment to family values and self-reliance. They are being rapidly replaced with the mantra of "good-for-the-whole" socialism, with all of its incentives for sloth, laziness, avarice and assorted vices. The malaise which began with a real estate bubble promoted by George W. Bush's "ownership society" - truly the most false and baseless political creed of recent memory - has proceeded along a perceptible, predictable and inescapable path to homelessness and destitution across a wide swath of the country.

Some areas are doing better than others, obviously, but the hardest hit are those which have suffered the double-whammy of rampant unemployment on top of foreclosures, such as Detroit, most of southern Florida, Las Vegas and many parts of exurbia Southern California. The deep South, never a bellwether for enterprise, is still largely backwards, the Northeast and West Coast are still culturally significant and maintaining a facade of social manners, though the biggest states - New York and California - are overburdened by huge government apparatus and absurdly high rates of taxation. The Midwest continues to hold pockets of civility, though many of the larger cities are reeling from the economic downturn.

While most to these realities are overlooked by the financial media and Wall Street's "everybody's an investor" mentality, the general welfare of the bulk of the lower and middle class populations is not of great concern so long as government largely continues to foot the bills. All of this works for smart companies who ignore the larger picture, have cut labor and other costs and continue to profit and take market share. The largess of the government these past five months has been like manna from heaven for many keen companies. They'll keep making money without regard to its source.

That's why the past two days haven't been very dramatic. Investor types know that their recent gains could eventually sour, but current government policies, like cash for clunkers, are greasing the wheels with billions of borrowed dollars. And those polices are going to stay in place and have other, similar, social-programming policies piled atop them. Business could care less, as long as the money continues to roll in.

Dow 9,256.26, -24.71 (0.27%)
NASDAQ 1,973.16, -19.89 (1.00%)
S&P 500 997.08, -5.64 (0.56%)
NYSE Composite 6,517.67, -40.52 (0.62%)

Declining issues grabbed the edge over advancers once again, today by a wider margin, 4185-2223, but new highs were better than new lows, 169-63. Volume continued to run at a less-leisurely pace than in previous weeks for the second straight day.

NYSE Volume 1,389,338,000
NASDAQ Volume 2,447,769,000

Commodity prices stagnated, with oil off 3 cents, to $71.94, gold down $3.40, to $962.90 and silver off 12 cents, at $14.65.

The real troubling news came from the retail sector, which has been taken out to pasture and summarily slaughtered over the past 12 months, as company after company reported dismal same-store sales in comparison to a year ago. Those retail figures are likely to remain bad until they can be matched up against already bad numbers, and that won't begin until November or December at the earliest. While retail wonks are concerned about back-to-school sales (somewhat of a non sequitur - how much beyond a few new items of clothing, notebooks, pens and gadgets do students really need?), the more serious concern is the holiday season, now less than five months out. After a dismal Christmas season for many retailers, the concern is that consumers will still be buying at less-than-robust levels. That may already be a given and currently being priced into many retail stocks, though the consumer tech area could really be hit hardest of all through the fall and winter.

Looking ahead to Friday, market sentiment will largely be in response to the government's non-farm employment report for July, which is expected to show job losses in the neighborhood of 325-375, 000. The number, unless it is completely out of line with the usual government massage, should fall into that range, which should cheer investors. The actual anticipatory knee-knocking trepidation leading up the the big Friday number has been overdone. While nobody expects miracles, any improvement will be billed as a good sign of a slowly recovering economy, whether or not that is actually the case. Espeically on the heels of ADP's private sector jobs number of -371,000 for July, released just yesterday, the government figure is quickly becoming an anachronistic afterthought, month after tiresome month.

Stocks Hammered on Unemployment Data

Taking its queue from another back-sliding non-farms payroll report, stocks sold off right from the opening bell and finished with a loss rivaling the June 15 and June 22 losses of 28 and 22 points, respectively, the difference being that those prior losses occurred on Mondays, opening weeks, whereas this one ended a week, and was leading into a holiday weekend to boot, an ominous sign.

The data from the Bureau of Labor Statistics (BLS), released an hour prior to the market's opening bell, showed a worsening condition in the labor market, with a loss of 467,000 jobs for the month of June. Expectations were for many fewer job losses, in the range of 385,000. May job losses of were revised positively, to -322,000, from -345,000. The unemployment rate rose to 9.5%. True unemployment, including those whose unemployment insurance had expired without securing a new job, was estimated at 16.5%.

First time claims came in at 614,000 for the most recent week, another blow to the recovery crowd.

President Obama called the numbers, "sobering," while many others were calling the increased unemployment predictable and Obama's recovery plans ineffective. The administration is facing increased pressure to right the economy, as most average Americans are not seeing any improvement in their standards of living, better job prospects or assistance meeting mortgage and credit obligations.

Major indices fell for the third consecutive week, confirming beliefs that the market has made a short term negative turn. The Dow, NASDAQ and S&P all finished within support ranges - 8300, 1800 and 900, respectively.

Factory orders were up 1.2% in May after a revised gain of 0.5% in April, but the employment numbers overshadowed those marginally improved results.

Dow 8,284.21, -219.85 (2.59%)
NASDAQ 1,796.52, -49.20 (2.67%)
S&P 500 897.04, -26.29 (2.85%)
NYSE Composite 5,779.64, -174.37 (2.93%)

Losers beat gainers by a huge margin (5206-1155) and new lows overtook new highs, 59-29. Perhaps the most "sobering" figure was that of the day's volume of trade, which hit levels so low as to ring the liquidity alarm. Markets are so turgid and corrupted, that, in addition to the normal summer slowdown, trading volumes have hit multi-year lows. If US markets cannot be relied upon as providing some degree of flexibility and volatility, traders will seek out more pliant markets.

It is quite possible that the low volume levels are reflective of net outflows from US equities into other markets. This was the fear in Treasuries, though the poor liquidity scenario may have struck Wall Street instead. If that is the case, one could hardly blame an investor for seeking safer havens offering better returns. As the new high-new low indicator has been relevant throughout the market's decline, now volume is becoming more intriguing by the day.

NYSE Volume 626,027,000
NASDAQ Volume 1,955,272,000

Sentiment from the unemployment numbers spilled over into the commodity market, where crude oil stumbled badly, off $2.58, to $66.73. Gold slipped $10.30, to $931.00, with silver finishing lower by 35 cents, at $13.41.

Earnings reports will begin to fill the news hole next week. Judging by current data, some expectations may have to be lowered and the start date for recovery pushed back to a more realistic date, some time next year.

Enjoy the 4th, remembering that the holiday is all about FREEDOM.

Jobs Data Improving, But Stocks Fail to Gain

At the release of May's non-farm payroll data from the Labor Department, stock futures rose dramatically, as the government said 345,000 job losses occurred in May. Most analysts were looking for a loss of about 520,000, so the improvement was substantial and the futures trade spilled over into the open, with stocks sharply higher in the opening minutes.

Just about 10 minutes into the session, though, something odd happened. Stocks lost their momentum and before 10:00 am, all of the indices were trading in the red. For the remainder of the session, the various indices either stayed marginally positive (the Dow), hugged the flat line (NASDAQ and S&P) or remained in the red (NYSE Comp.).

By 2:00 pm, the bloom was off the rose, and the expected rally on "real" good economic news, instead of the media-spun variety, never materialized. Stocks generally slumped when they should have been soaring.

The mainstream and financial media will attempt to put some kind of cover story on how the numbers were "already discounted" or some other rubbish, but let's allow for some degree of inside baseball (manipulation) as the true explanation. If one examines the timeline between the March 9 bottom and today, it's fairly evident what has occurred. The banks, through their brokerage arms, which received government money through TARP and other lending facilities - B of A, Citi, Goldman, JP Morgan, et. al. - pumped the markets back to life, and, not satisfied with a reasonable rebound of 15-20%, extended gains to the 35-39% range, all of this based on media innuendo, fudged accounting and hopes pinned on stress test results.

Now, when there is actual positive news on unemployment, the banksters find themselves in a topped out position. Further gains would seem frothy, despite the good news, so they are nakedly doing what every chiseling, cheating, Ponzi player would: they are dumping stocks at inflated prices back to the rabble. The whole process has been very untidy and wholly opaque. Fewer words of truth have ever been spoken around Wall Street than during the past three months. Big money is bailing, taking profits and heading to the sidelines and the Hamptons while the rest of the market hammers out the details over the summer.

Investors had best pay close attention next week and especially the trading week of June 15-19, when June options expire. There are likely large put positions already staked out by the large money players. The markets remain remarkably overbought and poised for a move in one direction or the other. With 2nd quarter earnings season still more than a month off, the chances are good that some external event will precipitate a trundle to the downside.

Dow 8,763.13, +12.89 (0.15%)
NASDAQ 1,849.42, -0.60 (0.03%)
S&P 500 940.09, -2.37 (0.25%)
NYSE Composite 6,082.64, -28.12 (0.46%)

In deference to the flat headline numbers, declining issues far outpaced advancers, 3408-2908. New lows vs. new highs remains at a crossroads, with the new highs a narrow winner, 91-87. Volume was pathetic, so, once again, it's influence as an indicator is marginal.

NYSE Volume 1,261,973,000
NASDAQ Volume 2,333,721,000

Commodities spent the majority of the day in the red. Oil backed off 37 cents, to $68.44, though gold saw a much larger decline, down $19.70, to $962.60, backing far away from the magic $1000 level. Silver tracked along the same path, losing 51 cents, to $15.39 the ounce. Its difficult to get a handle on commodity trading with so much speculation going on, but there are small indications that the general deflationary environment is keeping a lid on prices, for now. How that plays out a year or two down the road is also very uncertain.

Stocks still showed another positive week, despite the sleepy results of Friday. Next week may very well show more liquidation in equity positions and consolidation, otherwise known as profit-taking. It bears watching,

Critical Turn for US Markets

Today marked a potentially critical turn for US equity markets, from a strict interpretation of a key indicator, that being the new highs - new lows measure.

On Monday and Tuesday, new highs surpassed new lows on the daily tally for the first time in six months. New lows have held the edge every day since September of 2007, save for five or six occasions. On those occasions in which new highs surpassed new lows during this period, once new lows took back the lead, stocks fell for a time until the new lows were 25-100 times the number of new highs, at which point a bottom was reached in the market.

Today, there were 50 new lows to 48 new highs, a technical win for the lows, indicating that a market turn is at hand. This is the strongest selling indicator that has been seen in the past three months. While it's obvious that stocks are severely overbought and have been for weeks, this sole indicator is all that's needed to predict the immediate future for stocks. They are ready to roll over and die. The extend of the carnage cannot be known, but within the next 3-6 trading days, there will be dramatic movement to the downside.

Market action today was somewhat hidden, though the real damage was done on the NYSE Composite, the largest index, and the one least prone to manipulation. While losses on the three majors were limited, the Composite was down 2.41%, nearly twice that of the S&P, three times the decline of the Dow and triple the NASDAQ on a percentage basis.

Dow 8,675.24, -65.63 (0.75%)
NASDAQ 1,825.92, -10.88 (0.59%)
S&P 500 931.76, -12.98 (1.37%)
NYSE Composite 6,033.90, -148.97 (2.41)

Declining issues far outpaced advancing ones, 4346-2059. That is a significant number, much moreso than the feeble tape-painting attempt on the Dow, which had been down as much as 140 points at 3:30 pm. Of course, the manipulators in the market made sure to limit the damage with a 75-point rally in the final half hour. It should be disregarded, as should every index, as they are absurdly valued at present. Consider that the Dow is still more than 2000 points higher than it was less than three months ago. The game is nearly up. Savvy investors will be locking in profits very soon as waves of selling are set to hit the market. Volume was on the low side, but still meaningless. The warmer weather and shakiness of the markets have removed many participants.

NYSE Volume 1,323,971,000
NASDAQ Volume 2,320,685,000

Commodities may have telegraphed the next move in stocks. After weeks of rallying, nearly all commodities sold off on the day, indicating that speculators are scurrying for safer havens in bonds and money markets. The catalyst may have been the ADP Employment Change report, which showed a loss of 532,000 private sector jobs lost in May, and also revised April from a loss of 491,000 to a 545,000 job loss. With the official Labor Department Non-Farms Payroll report for May due out prior to the market open on Friday, there is every possibility that the report will show further deterioration in the US employment market, not "incremental improvement" as the media and government officials have been touting.

Oil dropped $2.43, to settle at $66.12. Gold dipped $18.80, falling to $965.60. Even silver, the strongest commodity over the past three weeks, fell 65 cents, to $15.31 per ounce. Almost every commodity, from energy-related to foodstuffs, fell hard on the day. The grip of deflation is unmistakable.

There's another tsunami dead ahead. Government efforts to revive the economy have been minimal at best, and potentially harmful, at worst. Investors are nervous and big money is heading for the hills. Despite the positive spin which the government and media have tried to put on the economic picture, the reality is that the US economy is not gong to recover any time soon.

Look for sideways-down movement over the coming weeks, peppered with a couple of major downside days, with the Dow registering 200-400 point losses. Once the selling begins, it will not be easily stopped. The banks and their TARP money are pulling out - they have to - before they are stuck with losing positions. Before that happens they will unload on retail investors.

Happy days? Not for bulls.

Stocks Gain, but Clouds Are Forming for Rally's End

In another lackluster session, stocks gained widely on Thursday amid mixed economic news. Prior to the market opening, newly-released unemployment figures showed new claims at 623,000, slightly below last week's revised 636,000, though continuing claims reached another record - 6.788 million - for the 17th straight week.

Data on new home sales for April from the Commerce Department offered little in the way of excitement in either direction, rising 0.3%, an annual pace of 352,000, still well below historical norms.

What really captured investor attention was the $26 billion auction of 7-year Treasury notes, which was better-received than anticipated. After bond prices had fallen precipitously over the past few weeks due to concern of oversupply of government debt, the 10-year note actually rose, dropping yields to more palatable levels... for now. There is still worry that the enormous amount of borrowing the US government will be engaged in over the coming 12-16 months will cause yields to rise, crowding out private investment and making bonds an attractive alternative to stocks.

As explained in yesterday's post, the result of higher interest rates would not only stunt any recovery efforts, but would also be largely inflationary. It's nearly a foregone conclusion that interest rates will rise and inflation will follow, the only unanswered questions are how high and when these events will occur and how severely they will affect the economy. For today, at least, the answers remain mysteries, though the sentiment appears positive. Expect more of this kind of choppy day-to-day activity in the markets for the time being.

Eventually, however, stocks are doomed in the near term, as p/e ratios on the S&P 500 have reached extreme highs and dividends have reached extreme low rates of return. It will take some time for the Wall St. sharpies to unload their recent purchases onto the unsuspecting public, but another round of market shock is surely in store for the average 401k investor.

Dow 8,403.80, +103.78 (1.25%)
NASDAQ 1,751.79, +20.71 (1.20%)
S&P 500 906.83, +13.77 (1.54%)
NYSE Composite 5,917.06, +93.50 (1.61%)

Advancing issues decisively took back control from decliners, 3988-2463, though new lows continued their domination over new highs, 66-47. Volume was only slightly better than the first two sessions of this shortened trading week, an insignificant reading for now.

NYSE Volume 1,368,613,000
NASDAQ Volume 2,237,013,000

In the commodities markets, oil continued its seemingly unstoppable ascent, gaining another $1.63, to a multi-month high of $65.08. with the price of oil rising as dramatically as it has over the past four-five months (more than $25 per barrel) the question of just how much strain it puts on the general economy has to be asked. Every additional dollar spent on gas for regular transportation is another dollar taken out of circulation in the consumer-led economy. Eventually, high gas prices will do more damage to any recovery - if one ever does occur - than high interest rates or bad tax policy. It's absurd to think that Americans can survive 9%-and-growing unemployment and high gas prices. Oddly enough, gas (and in a more general sense, all energy) prices are the sacred cow neither the administration nor the congress will address properly. Tighter control on energy prices would be a major step toward getting the economy out of recession and the lack of oversight is proof that the federal government is not really serious about future growth, only about their future electability.

As the government diddles along without any general direction, the precious metals have been staging another powerful rally since late March. Gold gained again, up $8.00, to $963.20, as was silver, up 30 cents, to $15.16. The rally in metals and higher bond yields are screaming that the equities rally has stalled and is about to roll over. Stocks cannot remain at these unrealistic levels much longer, especially with slower summer months dead ahead.

The Dangers of Fraudulent Behavior

Throughout most of the Thursday session, markets were substantially lower for no good reason other than that stocks are still overvalued and too risky right now for the majority of investors.

Right at 3:00 pm, however, it was as though Moses had parted the Red Sea and the enslaved people were freed. The Dow had just broken below 7700 for the first time since November 21, but it would not stay down long. (see image at right)

Like Rocky rising from the canvas, the Dow Jones Industrials staged somewhat of a "miracle" recovery, finishing at 7932.76, easily the best level of the day and a solid 240 points higher in just the last hour of trading.

Hallelujah! Reuters is giving credit to the Obama administration for the rally, citing his sketchy plans to help homeowners.

The real headline - instead of Reuters' tag: S&P and NASDAQ rise after mortgage plan news - should have been "stocks higher as day-trading Wall Street wheedlers cover their shorts."

My headline is probably closer to the truth. Hilary Kramer (left), a frequent guest on PBS "Nightly Business Report" said, during her appearance on the February 11 show, that her most profitable trades of late were short term buys, which she would be out of in less than "48 hours." If Wall Street professionals are day-trading (which is trading, not investing) then what does that say of US equity markets?

It says quite a bit, but clearly expresses an understanding that they are no place for actual long-term investments. Today points up what many people suspect. That Wall Street is becoming even more of an inside game than ever before. The bankers who testified to congress yesterday didn't reveal anything about what or how they were doing internally. Traders won't normally tell either, though one must respect Ms. Kramer's candid behavior on a national financial show.

In any case, we should all be used to substantial bear market rallies appearing out of nowhere for no reason. Today was such a case. In days ahead, expect the losses to resume because hitting 7700 and bouncing off it is not a retest of the November 20 lows - not even close.

It may take six months or six days, but those bottoms must be tested, and they will. No significant bottom has occurred in this market and for good reason: we haven't seen the worst of this recession yet.

Dow 7,932.76, -6.77 (0.09%)
NASDAQ 1,541.71, +11.21 (0.73%)
S&P 500 835.19, +1.45 (0.17%)
NYSE Composite 5,256.45, +3.77 (0.07%)

Faced with a market such as this, individual traders must use their own judgment. The smartest among us are out completely, having moved into the safety of money markets and, in my case, heavily into silver (Since silver broke through 13.50 yesterday, I am temporarily out, awaiting the next buying dip.).

If you must be in play, Kramer's advice is a gem of unusual clarity. In and out is the only way to play.

On the day, there were some interesting economic numbers released, including initial estimates of retail sales for January, which tallied a 1% increase over December, which, in itself, is somewhat of a shocker. In other words, people bought more after the holidays (January) than before or during them (December). Of course, the US Census Bureau's numbers are "adjusted for seasonal variation and holiday and trading-day differences, but not for price changes..."

Well, that's a mouthful upon which I won't bite. Never mind that "Total sales for the November 2008 through January 2009 period were down 9.5 percent (±0.5%) from the same period a year ago."

New unemployment claims were significantly higher, at 623,000, which alone could have accounted for the 200+ point drop on the Dow, that is, until manic buying took hold.

Our trusty internal indicators told a vastly different story. There were more declining issues than advancing, 3319-3050. New lows were 321, compared to just 19 new highs. Volume was quite high, especially on the NASDAQ, not unusual considering the overall volatility.

NYSE Volume 1,480,256,000
NASDAQ Volume 2,470,079,000

Commodities, less prone to manipulation and political head fakes acted more rationally. Oil fell $1.96, to $33.98, its lowest level since mid-December.

Gold's rapid rally stalled slightly, gaining $4.70, to $949.20, a gain much smaller than those of the past few days. Silver dipped a penny, to $3.51.

Congress was still diddling around with the banking fix and the stimulus package, though those two major pieces of legislation/regulation are quickly becoming back burner issues. Stocks are supposed to rise and fall on fundamentals, earnings, profit, not politics, though that is what currently seems to be moving markets. It's a condition which cannot last long before becoming a very unhealthy environment.