Showing posts with label Dow. Show all posts
Showing posts with label Dow. Show all posts
Monday, June 1, 2009
Changes in Dow Index
General Motors, which filed for Chapter 11 bankruptcy protection on Monday morning, and Citigroup will be removed from the Dow Jones Industrial Average. Cisco Systems will replace GM in the 30-company stock average, and Travelers Co. will replace Citi. The changes are effective June 8.
Thursday, February 26, 2009
Stock Market Update 2/26/09
16:25 ET Dow -80.05 at 7270.89, Nasdaq -16.40 at 1425.43, S&P -8.24 at 764.90 :
[BRIEFING.COM] A rally in financial stocks helped the broader market overcome a fit of early weakness, but the advance proved unsustainable as stocks finished the session more than 1% lower.
Stocks spent the majority of the session trading in the red as traders opted to take profits from Tuesday's 4% advance. The selling effort came amid a lack of positive headlines and continued uncertainty in the financial system, which failed to improve after President Obama gave his first speech before a joint meeting of Congress.
The need for additional capital amid such uncertainty led both Lincoln National (LNC 11.21, -1.83) and Allstate (ALL 17.57, -1.07) to cut their quarterly dividends. Meanwhile, an article in The Wall Street Journal seemed to suggest Wells Fargo (WFC 13.40, +0.35) should cut its dividend to help improve the bank's capital ratios.
The Fed and Treasury released key details of its bank stress-test plan. Officials will assess potential losses at banks and estimated resources to absorb those losses.
Capital provided under the plan will come in the form of preferred stock that is convertible into common equity at a 10% discount to the price prevailing prior to Feb. 9. Securities under the plan will carry a 9% dividend yield and will be convertible at the issuer's option.
The plan essentially backstops financial institutions, though the banks receiving capital will be required to submit monthly reports on their lending and will be subject to restrictions on paying quarterly common stock dividends, repurchasing shares, and pursuing cash acquisitions.
Financial stocks gave ground in the wake of the announcement, but eventually rallied to a 3.8% gain. Financials finished the session with a 0.5% loss as sellers pushed back, but that was still better than the 6.5% loss that financials traded with at their session lows.
Nine of the 10 sectors finished lower. Telecom (+1.0%) was the only sector in the S&P 500 to finish with a gain.
There was only a trickle of earnings announcements ahead of the opening bell, none of which received much attention from the broader market. Still, trading volume was above-average as nearly 1.8 billion shares traded hands on the NYSE.
The only item on the economic calendar was a bleak January existing homes sales report. Sales fell more than expected to their lowest level since 1997. Many of the sales were distressed, contributing to a near 15% year-over-year drop in the median home price. Inventory supply increased slightly to 9.6 months.
..Nasdaq 100 -0.9%. ..S&P Midcap 400 -1.4%. ..Russell 2000 -2.7%. ..NYSE Adv/Dec 1208/1878. ..NASDAQ Adv/Dec 799/1863.
[BRIEFING.COM] A rally in financial stocks helped the broader market overcome a fit of early weakness, but the advance proved unsustainable as stocks finished the session more than 1% lower.
Stocks spent the majority of the session trading in the red as traders opted to take profits from Tuesday's 4% advance. The selling effort came amid a lack of positive headlines and continued uncertainty in the financial system, which failed to improve after President Obama gave his first speech before a joint meeting of Congress.
The need for additional capital amid such uncertainty led both Lincoln National (LNC 11.21, -1.83) and Allstate (ALL 17.57, -1.07) to cut their quarterly dividends. Meanwhile, an article in The Wall Street Journal seemed to suggest Wells Fargo (WFC 13.40, +0.35) should cut its dividend to help improve the bank's capital ratios.
The Fed and Treasury released key details of its bank stress-test plan. Officials will assess potential losses at banks and estimated resources to absorb those losses.
Capital provided under the plan will come in the form of preferred stock that is convertible into common equity at a 10% discount to the price prevailing prior to Feb. 9. Securities under the plan will carry a 9% dividend yield and will be convertible at the issuer's option.
The plan essentially backstops financial institutions, though the banks receiving capital will be required to submit monthly reports on their lending and will be subject to restrictions on paying quarterly common stock dividends, repurchasing shares, and pursuing cash acquisitions.
Financial stocks gave ground in the wake of the announcement, but eventually rallied to a 3.8% gain. Financials finished the session with a 0.5% loss as sellers pushed back, but that was still better than the 6.5% loss that financials traded with at their session lows.
Nine of the 10 sectors finished lower. Telecom (+1.0%) was the only sector in the S&P 500 to finish with a gain.
There was only a trickle of earnings announcements ahead of the opening bell, none of which received much attention from the broader market. Still, trading volume was above-average as nearly 1.8 billion shares traded hands on the NYSE.
The only item on the economic calendar was a bleak January existing homes sales report. Sales fell more than expected to their lowest level since 1997. Many of the sales were distressed, contributing to a near 15% year-over-year drop in the median home price. Inventory supply increased slightly to 9.6 months.
..Nasdaq 100 -0.9%. ..S&P Midcap 400 -1.4%. ..Russell 2000 -2.7%. ..NYSE Adv/Dec 1208/1878. ..NASDAQ Adv/Dec 799/1863.
Friday, February 20, 2009
Market Reflections 2/19/2009
Another 600,000 plus level in first-time weekly jobless claims together with another record level of continuing claims are raising talk of a 600,000 or more contraction in monthly payrolls. Employment data in the Philadelphia Fed's monthly report, like the Empire State report earlier this week, are strongly signaling deepening job losses and deepening contraction in the manufacturing sector.
Other data in the session included a surprise 0.4 percent gain in the index of leading economic indicators, a gain reflecting the massive monetary stimulus underway that most expect will help reverse the recession. And for the most part, the markets continue to show patience in anticipation that stimulus will in fact work.
But stocks once again closed at their lows, down 1.2 percent for the Dow industrials which is now below 7,500. The dollar edged back following its recent strength, giving back about 1 cent against the euro to tend at $1.2668. Money also moved out of Treasuries where the 10-year yield rose 10 basis points to 2.85 percent.
A rare draw in crude inventories gave a big lift to oil prices where the April WTI contract ended at just under $40 for a $3 gain on the day. Gold edged back a little, down $15 to $974 amid talk that selling by weak longs, that is first-time buyers who were attracted to gold's safe-haven value, could accelerate a down move.
Other data in the session included a surprise 0.4 percent gain in the index of leading economic indicators, a gain reflecting the massive monetary stimulus underway that most expect will help reverse the recession. And for the most part, the markets continue to show patience in anticipation that stimulus will in fact work.
But stocks once again closed at their lows, down 1.2 percent for the Dow industrials which is now below 7,500. The dollar edged back following its recent strength, giving back about 1 cent against the euro to tend at $1.2668. Money also moved out of Treasuries where the 10-year yield rose 10 basis points to 2.85 percent.
A rare draw in crude inventories gave a big lift to oil prices where the April WTI contract ended at just under $40 for a $3 gain on the day. Gold edged back a little, down $15 to $974 amid talk that selling by weak longs, that is first-time buyers who were attracted to gold's safe-haven value, could accelerate a down move.
Thursday, February 5, 2009
The U.S. economy is screwed
The Old Guys Say “Sell!”
What if I told you that the oldest technical indicator in the book – a system of signals established by the best-known name in the financial business – was telling you to sell blue-chip stocks immediately?
First, a little back-story. Okay, a good bit of back story, but bear with me and I promise to get to that sell signal (and what you can do about it) in the end.
Back in the days when beards, tails and top hats were de rigueur for gentleman in the financial biz, Charles Dow wrote a series of 255 editorials for his quaint new paper, The Wall Street Journal.
After his death, William P. Hamilton, Robert Rhea and E. George Schaefer took his various cogitations, stray comments and bits of sentiment, and hammered them into a cohesive “Theory of Everything.”
The Six Commandments
This eponymous trading system had six primary tenets:
1: The market has three movementsMajor trends last one or more years, secondary reactions retrace the major trend over some 10 to 90 days, and short swings oscillate within reactions over either hours or days, depending on whom you ask.
2: Market trends have three phasesAccumulation (when insiders are buying a into a good deal), public participation (when every Tom, Dick and Harry gets involved), and distribution (when the wise guys sell off their shares for profit).
3: The stock market discounts all news Also known as “the efficient market theory,” there are three flaws to this idea of a level playing field. The first presumes that all companies are completely transparent and all information is universally available. The second presumes that this information is universally understandable. The third is that investors will always act in their own best interest.
(Now things get interesting: While the first tenet is technical in nature, relating to the time it takes for the market to uptake ideas, and the oscillating reactions to that uptake, the second two are really philosophical, relating to our presumed intelligence and sanity. But with item 4, Dow et al. resume contemplating empirical data.)
4: Stock market averages must confirm each other Back in Chuck Dow’s time, our buying population had spread from coast to coast. Industrial centers were cropping up all over the darn place, and raw materials were even further astray.
It was all well and good to set up a saddler in St. Louis. If you want to make money, you have to be able to get cowhide at a decent price from Montana and then profitably ship your saddles to riders in Philadelphia.
So the gist of this rule is that an increase in manufacturing isn’t a trend until it is confirmed by an increase in shipping. The same holds true in inverse: It ain’t a genuine bite-you-where-it-hurts bear market until the steam ships stay in port and the railroads stop rolling.
5: Trends are confirmed by volumeThis one’s easy: Trends aren’t hiccoughs, twitches or momentary indigestion. They require the full force and faith of millions of investors putting their money where it matters.
6: Trends exist until definitive signals prove that they have ended Finally, Dow lived in an era where science was remaking the world. Because he trusted the tangible over the ephemeral, he tried to link the concept of physical momentum to the psychology of crowd behavior. To wit: “A market in motion tends to remain in motion.”
So What Happens Now?
Let’s set rules 2 and 3 aside for a moment.
They are, as I said, more philosophy than science, and depend on a certain level of rationality and honesty that is in short supply these days.
I think that we can all agree that the requirements of rules 1 and 5 for a genuine bear trend have been satisfied beyond a shadow of doubt.
The question at hand is: “What happens now?”
Will Washington suddenly uncover some unfound well of competence, and drag our collective behinds back from the brink? Or are we about to tip into another yearlong round of bloody sell offs?
Bad News and Worse
I could point out the worst GDP reading in a quarter century (except I think I already have several times over the past few weeks). I could read you chapter and verse on current unemployment (7.2% according to the government, already cresting 12% according to some more “inclusive” calculations).
I could quote no less a luminary than British Prime Minister Gordon Brown, who confessed in the House of Commons that we are truly mired in a great depression akin to the 1930s. (The apparatchiks at #10 Downing Street are desperately trying to retract the statement, but I’m afraid that this particular cat is out of the bag, through the door, and out of sight down the street already.)
Or I could simply go back to Charles Dow’s tenet 4: “The Transports must confirm the Industrials.”
The Facts of the Matter
If you look at the Dow Jones Industrial Average for the past few days, you can’t help but see the fact that last Monday’s low of 7867.37 beat the previous low of 7909.03 set on Jan. 23.
If you look to the Dow Transports’ chart you can see consecutive lower lows of 2926.66 on Jan. 27 and 2865.58 on Feb. 2.
The Only Sane Solution
The trend is already in place.
The counter-reaction is ending.
The next leg down has been signaled and confirmed.
The only protective tactic that makes any sense is to buy puts against both the Industrials and Transports
What if I told you that the oldest technical indicator in the book – a system of signals established by the best-known name in the financial business – was telling you to sell blue-chip stocks immediately?
First, a little back-story. Okay, a good bit of back story, but bear with me and I promise to get to that sell signal (and what you can do about it) in the end.
Back in the days when beards, tails and top hats were de rigueur for gentleman in the financial biz, Charles Dow wrote a series of 255 editorials for his quaint new paper, The Wall Street Journal.
After his death, William P. Hamilton, Robert Rhea and E. George Schaefer took his various cogitations, stray comments and bits of sentiment, and hammered them into a cohesive “Theory of Everything.”
The Six Commandments
This eponymous trading system had six primary tenets:
1: The market has three movementsMajor trends last one or more years, secondary reactions retrace the major trend over some 10 to 90 days, and short swings oscillate within reactions over either hours or days, depending on whom you ask.
2: Market trends have three phasesAccumulation (when insiders are buying a into a good deal), public participation (when every Tom, Dick and Harry gets involved), and distribution (when the wise guys sell off their shares for profit).
3: The stock market discounts all news Also known as “the efficient market theory,” there are three flaws to this idea of a level playing field. The first presumes that all companies are completely transparent and all information is universally available. The second presumes that this information is universally understandable. The third is that investors will always act in their own best interest.
(Now things get interesting: While the first tenet is technical in nature, relating to the time it takes for the market to uptake ideas, and the oscillating reactions to that uptake, the second two are really philosophical, relating to our presumed intelligence and sanity. But with item 4, Dow et al. resume contemplating empirical data.)
4: Stock market averages must confirm each other Back in Chuck Dow’s time, our buying population had spread from coast to coast. Industrial centers were cropping up all over the darn place, and raw materials were even further astray.
It was all well and good to set up a saddler in St. Louis. If you want to make money, you have to be able to get cowhide at a decent price from Montana and then profitably ship your saddles to riders in Philadelphia.
So the gist of this rule is that an increase in manufacturing isn’t a trend until it is confirmed by an increase in shipping. The same holds true in inverse: It ain’t a genuine bite-you-where-it-hurts bear market until the steam ships stay in port and the railroads stop rolling.
5: Trends are confirmed by volumeThis one’s easy: Trends aren’t hiccoughs, twitches or momentary indigestion. They require the full force and faith of millions of investors putting their money where it matters.
6: Trends exist until definitive signals prove that they have ended Finally, Dow lived in an era where science was remaking the world. Because he trusted the tangible over the ephemeral, he tried to link the concept of physical momentum to the psychology of crowd behavior. To wit: “A market in motion tends to remain in motion.”
So What Happens Now?
Let’s set rules 2 and 3 aside for a moment.
They are, as I said, more philosophy than science, and depend on a certain level of rationality and honesty that is in short supply these days.
I think that we can all agree that the requirements of rules 1 and 5 for a genuine bear trend have been satisfied beyond a shadow of doubt.
The question at hand is: “What happens now?”
Will Washington suddenly uncover some unfound well of competence, and drag our collective behinds back from the brink? Or are we about to tip into another yearlong round of bloody sell offs?
Bad News and Worse
I could point out the worst GDP reading in a quarter century (except I think I already have several times over the past few weeks). I could read you chapter and verse on current unemployment (7.2% according to the government, already cresting 12% according to some more “inclusive” calculations).
I could quote no less a luminary than British Prime Minister Gordon Brown, who confessed in the House of Commons that we are truly mired in a great depression akin to the 1930s. (The apparatchiks at #10 Downing Street are desperately trying to retract the statement, but I’m afraid that this particular cat is out of the bag, through the door, and out of sight down the street already.)
Or I could simply go back to Charles Dow’s tenet 4: “The Transports must confirm the Industrials.”
The Facts of the Matter
If you look at the Dow Jones Industrial Average for the past few days, you can’t help but see the fact that last Monday’s low of 7867.37 beat the previous low of 7909.03 set on Jan. 23.
If you look to the Dow Transports’ chart you can see consecutive lower lows of 2926.66 on Jan. 27 and 2865.58 on Feb. 2.
The Only Sane Solution
The trend is already in place.
The counter-reaction is ending.
The next leg down has been signaled and confirmed.
The only protective tactic that makes any sense is to buy puts against both the Industrials and Transports
Friday, January 30, 2009
Market Reflections 1/30/2009
Fourth-quarter GDP, at -3.8 percent. proved weak but far from "staggeringly" weak like the White House warned just yesterday. The Chicago purchasers' report and the Reuters/University of Michigan consumer sentiment report point to continued but non-accelerating contraction so far in the first quarter. Optimism that the government will create a "bad bank" to absorb troubled bank assets, optimism that has helped the stock market over the past week, was deflated by a CNBC report that warns the plan, to be unveiled next week, lacks both details and means of funding.
Company news was headed by strong profits from oil giants Chevron and Exxon Mobil, the latter posting a record $45.2 billion profit in 2008. Oil companies are yet to show the effects of the collapse in oil prices. Despite the collapse in oil prices, refinery workers are threatening to go on strike over the weekend, news that added support, but only moderate support, to oil and gasoline prices. Oil ended little changed at $41.60.
Money moved out of risk and into safety during the session. The Dow industrials fell 1.8 percent while the dollar gained nearly 2 cents against the euro to end at $1.2794. Yields in the Treasury market moved slightly higher.
A big gainer on the day was gold which rose 2.2 percent to $929.90. But more important than the gain was a jump in open interest indicating that hot money, that is hedge funds, are back in gold.
Company news was headed by strong profits from oil giants Chevron and Exxon Mobil, the latter posting a record $45.2 billion profit in 2008. Oil companies are yet to show the effects of the collapse in oil prices. Despite the collapse in oil prices, refinery workers are threatening to go on strike over the weekend, news that added support, but only moderate support, to oil and gasoline prices. Oil ended little changed at $41.60.
Money moved out of risk and into safety during the session. The Dow industrials fell 1.8 percent while the dollar gained nearly 2 cents against the euro to end at $1.2794. Yields in the Treasury market moved slightly higher.
A big gainer on the day was gold which rose 2.2 percent to $929.90. But more important than the gain was a jump in open interest indicating that hot money, that is hedge funds, are back in gold.
Monday, January 26, 2009
Stock market Seasonal tendency
We are approaching the end of the Seasonally weak first three weeks of January.
True to its weak seasonal tendency the various stock and bond markets in the USA are enduring a substantial decline.
There is a tendency, historically, for these markets to rally upwards for the three and a half weeks following January 27th or so. That coincides with the end of the current earnings season.
So, perhaps we are in for a respite from the unrelenting bad news starting on Wednesday. I surely hope so.
True to its weak seasonal tendency the various stock and bond markets in the USA are enduring a substantial decline.
There is a tendency, historically, for these markets to rally upwards for the three and a half weeks following January 27th or so. That coincides with the end of the current earnings season.
So, perhaps we are in for a respite from the unrelenting bad news starting on Wednesday. I surely hope so.
Friday, January 23, 2009
Market Reflections 1/22/2009
Stocks fell Thursday after Microsoft missed estimates and announced a massive layoff. The Dow industrials dipped below 8,000 briefly but did end off lows at 8,122 for a 1.3 percent decline on the day. Shares of Microsoft fell 12% to $17.11. Earnings after the close were mixed with Google beating estimates mildly but Advanced Micro Devices missing estimates badly and warning of a continuing steep decline in sales.
Economic data were dismal as usual including major declines in housing starts and permits, results that aren't pointing to any recovery in the housing sector or the banking sector for that matter. Weekly jobless claims showed significant increases that point to another month of major payroll contraction. But the most talked about economic data was GDP out of China which showed the greatest slowing since 2001. The day's data had little effect on the dollar which ended at $1.3002 against the euro.
Inventory data on petroleum products showed another week of major builds, builds indicating contraction in demand and which weighed on oil prices. Oil for March delivery fell more than $1 to end at $42.89. Gold firmed slightly to $858.
Economic data were dismal as usual including major declines in housing starts and permits, results that aren't pointing to any recovery in the housing sector or the banking sector for that matter. Weekly jobless claims showed significant increases that point to another month of major payroll contraction. But the most talked about economic data was GDP out of China which showed the greatest slowing since 2001. The day's data had little effect on the dollar which ended at $1.3002 against the euro.
Inventory data on petroleum products showed another week of major builds, builds indicating contraction in demand and which weighed on oil prices. Oil for March delivery fell more than $1 to end at $42.89. Gold firmed slightly to $858.
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