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Market Matters A daily recap of all things financial Don Bravo Downtrend continues, but late buying again? - March 18, 2005
The legalized fleecing continued apace today on Wall Street as all major indices slumped to multi-month lows intraday, before recovering significantly after 3:15.
The late-day rise will likely be attributed to options expiration, otherwise known as price-rigging. One wonders just who is buying all of this stock, as the past two weeks have proven conclusively that stocks can and will lose value, as they always have.
If ever there was a market that called for one to step back and wait, this is it.
The Nasdaq briefly touched below 2000, the first time since November 2, 2004, so it has nearly completed a 50% retracement from the July 2004 lows. It closed at 2,007.79, down 8.63, percentage-wise, more than any other major index. The tech-dominated index lost 34 points for the week.
The NYSE Composite was lower by more than 40 points at 3:00, but rallied to finish down only 7, and 53 on the week.
Once again, breadth revealed a different, more convincing story, as the A/D line was nearly 2-1 for the Bears on both indices, and new lows pushed ahead of new highs, 104 to 58, today marking the sixth time in the last seven sessions for such an occurrance on the Nasdaq. The gap was the largest thus far since the market turn last week. Volume on the Nasdaq held a margin of more than 2-1 in favor of declining issues.
Bonds moved slightly lower, but the action was mostly insignificant and lacked direction.
Taking a Time Out - March 17, 2005
After the battering the equity markets have been taking recently, today's lack of news and subsequent lack of action in either direction came as a welcome relief to traders.
Despite the choppy trade - due mostly to an up and down day for oil and the coming triple witching options expirations tomorrow - the indices managed to eke out minor gains. The Nasdaq closed up 0.67, while the NYSE Composite managed a respectable 19.84 gain. The S&P 500 added 2.14.
Gainers outnumbered losers on the Big Board, 1908 to 1371, and were virtually even on the NAZ. The New High - New Low measure, however, continued to fall in favor of the downside. There were 88 new lows on the Nasdaq and only 48 new highs. The lows led on the Comp as well, 79-61. Volume was moderate on both exchanges.
Not widely reported was the Federal Reserve Bank of Philadelphia's general economic index for March fell to 11.4, from 23.9 last month, the lowest since July 2003.
Also escaping the notice of many traders was the extraordinarily weak open. Generally speaking, the averages have been higher in the first half hour lately, but today was the first time in a while they were actually down at 10:00. This little turn of tactics belies the overall weakness represented in the markets, as does the rise in bond prices, which put in another strong performance, dropping yields to last week's levels, except for the notes, which remained under pressure.
The spread on treasuries flattened a little more today, pressuring short term borrowers.
With only import and export prices on tap for reporting tomorrow, there's little to move the markets in any direction. While the Nasdaq may be stuck in a range between 2008 and 2025, the NYSE still may have some corrective movement left in it.
To end the week with a bang, Wall Street would need some very encouraging news, either from the oil pits or on the political front, and there just doesn't seem to be any forthcoming.
Day of Reckoning - March 16, 2005
The bullet point headlines:
General Motors (GM) predicts 1st quarter loss of $1.50/share
With that news all in play prior to the open, the major indices all opened to the downside and stayed there, except for the Nasdaq, which spent 20 minutes, just after 10:00 am, in the green. It was all downhill, all day for stocks.
The Dow actually led the way, dropping 112 points. The Nasdaq was lower by 19, the NYSE composite shed 45 and the S&P 500 limped home minus 9.68.
The Nasdaq is now down more than 7%, or 160 points, for the year. The Comp is only 14 points ahead of its close on New Year Eve 2004.
Selling was once-again broad-based, with volume to the downside by a 3-1 margin on the NYSE Composite and nearly 4-1 on the NAZ.
The Composite joined the Nasdaq today in the new high - new low paradigm, with 64 lows and 49 highs. The Nasdaq was more of a spectacle, as 91 lows compared to 38 highs.
Volume was fairly heavy with nearly 2 billion shares going on the NAZ and 1.65 billion on the Big Board.
There was a short-lived and barely meaningful rally in bonds, as yields pushed lower on the spate of news. Oil peaked to new all-time levels at $56.46/bbl. The dollar lost another penny to the Euro and is off a third over the past two years.
Tomorrow's economic calendar features Initial Claims at 8:30, Leading Indicators at 10 am and the Philadelphia Fed at noon. The market is already expecting a lower reading on the last measure.
By all accounts, today was just more of the same, as Wall Street sheds profits and faces reality. There is a very unsure feeling all around and the economic news has not been particularly pleasant of late.
The NYSE still needs to shed another 130 points to complete merely a 33% retracement of the November to February rally. The Nasdaq meanwhile has completed a 50% pullback in a similar time frame and may be at a point of some support, though the continual battering of tech stocks would indicate otherwise.
With meaningful earnings reports still a month off, this market looks like more of the same for some time to come.
It's 3:15. Do you know where your money is? - March 15, 2005
With stocks under pressure nearly all day, the major indices slumped once again, with most of the serious action occurring late in the trading session. After flirting with lows between 2 and 3 pm, the markets finally succumbed to the selling pressure at 3:15 and sold off broadly into the close.
On a percentage basis, the Nasdaq continued to lead the parade down, dropping another 16 points to close at 2034.98, its worst finish in nearly a month.
The NYSE Composite closed off 43.48, at 7310.41, leaving the broad index a mere 21 points to the positive for the year.
The S&P 500 closed below the psychological threshold of 1200, drooping 9.08 to 1197.75. The S&P is now in the losing camp - down 1% - for 2005.
The hyperinflated Dow Jones Industrial Average, by any measure overvalued by at least 10-15%, sunk 59 points to close at its lowest level since February 8.
The advance decline line was 2-1 in favor of the bears on the NYSE and close to that on the Nasdaq as well. The Nasdaq's 3-day streak of more new lows than new highs was snapped, with new highs narrowly getting the edge, 79-73. Volume also put the declines in perspective. Up volume on the Big Board was a mere 26%, with 72% on the downside - a 3 to 1 margin. The same measure was less severe on the Nasdaq, 31% up to 62% down.
The headline numbers were brought about by continued pressure in the lending pits, as bond issues sunk once again, raising yields across the board. The 10-year bond closed at 4.54% on persistent inflation worries, higher oil prices and so-so retail sales figures, which were released prior to the open.
Comments by Fed chief, Alan Greenspan, did little to ameliorate the situation, as the chairman urged Congress to act soon on Social Security reform and also stated that persistent budget deficits could have deleterious effects to the long term health of the US economy. Few knowledgeable economists were surprised.
Traders in the equity pits may have been squaring positions to be out of the way for tomorrow's opening. Five key indicators are due out, including building permits, new home construction, current account, industrial production and capacity utilization. All of these reports will be out prior to 9:30, with bond traders focused on the latter two, while the stock jockeys will be primarily concerned with the housing starts figures.
Today's setback continued trends begun last week. The Nasdaq has lost ground in five of the last six sessions and may be overdue for a bounce sometime before the end of the week, especially with options expirations on Friday. That does not preclude a mammoth sell off tomorrow, with the volume of economic data coming into play.
On the political front, the President has just about given up on getting Social Security legislation containing private accounts provisions before the Congress. Democrats have stonewalled on the private accounts issue and public acceptance of the idea is marginal at best. Most people over the age of 45 don't agree with the idea one bit.
Without the prospect of Social Security being tied to the stock or bond markets, any proponent in support of that legislation now has little to no reason to hold up stocks. The broad selling which was confirmed officially by the market at 1:30 pm last Wednesday should continue for the foreseeable future. The downtrend is just underway and is beginning to show signs of extending further.
Dull Trading Day; Markets Reverse Course on Biotech News- March 14, 2005
Monday was a particularly quiet day on Wall Street and probably a welcome relief for the floor traders after last week's bombardment by the bears.
The Nasdaq posted a modest 9.44 gain, and the NYSE Composite was up 23.46. All of the gains were earned in the last hour of trading. The markets had hit intra-day lows at 2:30, then suddenly reverse course and, with the help of some breakthrough news by Genentech and some last minute tape-painting, closed on the upside.
Genentech revealed that their key cancer drug helped extend the lives of lung cancer patients. (Story)
The Nasdaq extended it's streak of new lows outnumbering new highs to three straight trading sessions, 83 to 54. Volume was decidedly to the upside, though the A/D line was relatively flat, with the advancers besting the declining issues by about 5% overall.
The market seemed to be in a holding pattern much of the day before breaking to the downside just after 1:00 pm.
Investors will have more to chew on tomorrow - when retail sales results are announced (8:30, prior to the open) - and on Wednesday, when the 4th Quarter Current Account and February Building Permits and Housing Starts figures come out.
Gold was lower, oil higher and bond prices were modestly higher (lower yields). The benchmark 10-year bond closed at 4.50%, but the yield curve flattened once again as 3 and 6-month notes inched higher.
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