Markets fall as quarter ends

     Well, we are getting no window dressing at the end of the quarter unfortunately.  In fact it seems people are selling their winners rather than buying them at the end of this quarter!  All the stocks that have performed the best in this quarter have been getting whacked.  It is the high growth or "beta" names that have performed particularly badly in the past couple of days.

     Green Mountain Coffee Roasters(GMCR) is down about 15% in two days after rising about 20% in the quarter.  Apple one of my favorite's of course is down about 5% in a few days after rising more than 20% to a record high of 422 during the quarter.  Internet darling Baidu.com(BIDU) is getting taken to the woodshed as well after rising 10% during the quarter.  It has gotten smacked down to the tune of 30% in little more than a week.  Remember when I mentioned the window dressing trade yesterday?  This is like the anti window dressing trade. 

     Markets opened lower today as economic gloom pervaded the markets.  There was no significant news to cause us to open lower, only perhaps anticipation of bad economic data to come later in the day.  We opened lower by over 100 points on the DJIA.  We have recovered some of the losses in the first hour of trading as economic data has come in pretty good.

Economic Data

     The University of Michigan Consumer Confidence Survey came in better than economist had expected as consumer's mood perked up due to lower gas prices and a moderation in the stock market's decline.  Consumers were still worried about jobs and the economy but they were not as worried as last month.

"The data indicate that consumers have shifted from anticipating deeper declines to the growing belief that the economy will stagnate at its currently depressed level," said survey director Richard Curtin.

     The Chicago PMI or purchasing managers index was out as well which is an important reading on manufacturing activity in the Midwest.  This metric came in much better than economist had expected which contributed to a rise in stock prices in the early going.  The reading improved to 60.4 in August.  Economists had forecasted a drop to 54.5.  Any reading above 50 indicates economic expansion.

    This is a very positive number and I'm surprised markets haven't reacted strongly to this news.  Sure we've added a few points to indexes but we are still in negative territory.  A 60 print for the PMI is very bullish.

Market Recap
     Well, that was an ugly finish to an ugly quarter.  The SNP 500 dropped almost 14% for one of the worst quarters since 2008. I was looking at the reasons for today's selloff even in the face of a good PMI number and it turns out that incomes dropped for August.  It's been 2 years since incomes fell month over month and this is a horrible sign for the economy.  Worker's are getting less share of the pie and that will translate to weaker consumer spending and confidence.

     Stocks across the board were sold today and in the final 15 minutes of trading especially.  XLE was down almost 3% putting me down about 2 pct on my trade.  I am not optimistic about October as many stock market crashes have happened in the past during this month.  September is traditionally a horrible month and October is too and I expect it will be again this time.  My thesis is that we will break to new lows in the coming months as it looks like the US economy is sliding into a recession.  After making new lows in October, we get a relief rally into the end of the year. 

     

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Markets rally on German vote

     Markets were rallying early Thursday morning as the German bundestag approved new powers for the European Financial Stability Fund.

     From Reuters...    

"The Bundestag (lower house) overwhelmingly approved new powers for the 440-billion-euro EFSF fund to make precautionary loans, help recapitalize banks and buy distressed countries' bonds in the secondary market."

      The markets welcomed this news as a sign of greater European solidarity as fears of German non participation in the bailout receded.  The Frankfurt DAX which had fallen almost 35% from the highs has been rallying strongly recently as German chancellor Angela Merkel has reiterated that the EU would not let Greece default and would keep the EU together.

     Other good news in the markets today was US 2nd quarter GDP was revised upwards to 1.3% from a previous 1% print.  This was on the back of better consumer spending and exports than previously thought. 

     Initial jobless claims also came in better than expected alleviating fears that the United States was sliding back into a recession.  Initial jobless claims came in at a seasonally adjusted 391,000 which was much lower than the 420,000 that economists had forecast.  Initial jobless claims measures the amount of new people filing for unemployment benefits in the past week.

     Markets are strong across the board this morning with the Dow up 200 points as of 7:23 AM PST.  The SNP 500 and NASDAQ are also solidly in the green up 1.4% and .67% respectively.  European stocks are up as well with the German DAX and Paris CAC up over 1%.  Across South America, the Brazilian Bovespa was up 1.3% and the Mexican IPC Index was up over 2%.

Market Recap
     Well, today had to be a frustrating day if you are a bull or a bear!  Markets opened up strongly and then sold off all day going from 250 pts up to 50 pts down on the DJIA only to rally in the final half hour to end up 143 pts higher.

      The interesting thing about today's market was the complete obliteration of some of the best performing momentum stocks today.  AAPL, BIDU, GMCR, AMZN, FOSL, RL all were clobbered today.  BIDU was down over 9% today on no news that I can see.  AAPL was down 1.6%.  All these had done well this year and with end of the quarter window dressing, I would have thought they would be going up on a good day like today.  It seems fund managers may be dumping the stocks they have profits in and scooping up perceived bargains like bank stocks.  Bank stocks were up across the board today with BAC and C up over 3% today.

     I got stopped out of AAPL today with a 4% loss.  It was a poor trade all around and I seem to have lost my mojo with AAPL for now and I will stay away from trading it for awhile.  I have almost given up all the gains I had for the year with the last few poor trades.  My XLE trade is working well for now (fingers crossed) although it did not look so good earlier in the day.  Today's close was quite powerful and I look for a continuation of the strength into tomorrow.  We should be able to get some follow through. 

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Do we get some window dressing?

     At the end of every quarter on wall street there exists a phenomenon called "window dressing".  This is where portfolio managers and traders buy up stocks  that have done well in the quarter and sell the ones that have done bad to make their portfolio's look better to their investors.  Generally this is a time when stocks rise as money is put to work to make the quarter look better than it really was.  If you look at the end of the last quarter in June, you can see a good example of it.  Stocks really rose at the end of June.

     We are coming to another end of quarter and after last weeks drubbing, markets are looking for any reason to rally.  As such, stocks are once again up today nearly 100 points on the DJIA in the early going and the SNP and NASDAQ are up as well.   We gave back 150 pts of gain on the DJIA yesterday and today we may get it all back!  The headlines will say we are up on "European hopes" but we know better...it's because of window dressing!

     After flying yesterday, European stocks have settled down a bit mostly in the red by modest amounts.  London was down almost 1%, Frankfurt was up with a marginal gain and Paris was down by .4%.  Gold remains near yesterday's closing price and seems to be stabilizing and silver is down a small amount.  Oil is down almost 1%.  The euro is rallying once again up a third of a percent.

     Across South America, the Brazilian Bovespa is up over 1% and the Argentina Merval is not open but was up 2% yesterday.  Asian shares were mixed with Tokyo up and Hong Kong down.

Gold bounces back

     Gold  was higher today a huge selloff cause prices to drop 350 dollars from the peak.  At one point in overnight Sunday, gold was at 1530 dollars but was near 1650 in recent trading up 4% from yesterday's closing price.  Silver also recovered up 9% after an even sharper 30% decline over the past week or so.

     Markets were higher once again this morning on hopes that European policymakers were finally getting a plan in place to fix the European debt crisis.

     "This comes after a European official said that a detailed plan to leverage money in the EFSF was in the works and that the it would use a portion of the money from the fund to shore up European bank capital, while another portion would be used as seed money for a European Investment Bank," said a CNBC article.  

     The DJIA opened up 150 points and quickly rose to 250 points higher in early trading.  Bank and energy stocks were leading the way with BAC up 3% and XLE up 4%.

     European shares rocketed higher with the FTSE up 3% and the DAX up 4.5%.  Asian shares rebounded as well with Hang Seng and Nikkei both registering large gains.  Across South America, the Brazilian Bovespa was up 900 pts.

Market Recap
     Wow, that was a pretty bad finish if you are a bull today.  We were up as much as 300 points on the DJIA but gave over half of it back in the last hour of trading finishing up about 150.  I'm not sure what caused the 200 point selloff at the end of the day but it might be because of fighting between countries about who's going to eat the cost of the bailout.  Governments want bondholders to eat a bigger portion of the cost. 

     From the Financial Times...

     A split has opened in the eurozone over the terms of Greece’s second €109bn bail-out with as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.

     The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July.

      While hardliners in Germany and the Netherlands are leading the calls for more losses to be imposed on the private sector, France and the European Central Bank are fiercely resisting any such move. They fear re-opening the bond deal could spark renewed selling of shares in European banks, which have significant holdings of Greek and other peripheral eurozone debt."

     Needless to say, this is a bad sign for tomorrow.  I purchased some AAPL stock amid the euphoria early on and am quickly in the hole 1.5%.  AAPL had been outperforming the market recently but has lagged the last 2 days on the news that they are ordering parts for less ipads than expected.  This has led people to believe their sales are not as good as forecast which has put pressure on the stock.   It looks like this trade is not going to work out for me but I have a stop loss on the stock so it won't hurt me too much unless we get a huge gap down tomorrow which is possible. 

     This market is completely news driven right now which makes it hard to trade, for me anyways.  If I get stopped out of this AAPL trade, I will probably sit on my hands for awhile until a trend emerges.  I will keep adding to core holdings on big dips as well.


    


     If you are into trading, please check out my friend's blog.  It's called the Chartographer's Map Room.  This guy really knows his stuff.  Thanks.

      

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Gold and silver in liquidation mode

     Gold and silver were in total liquidation mode on Monday morning as European and Asian traders are looking to raise cash anywhere they can.  Gold continued it's decline from the past 3 days as the dollar strengthened versus major currencies.  Gold was down 3.5% while silver was down a whopping 12.4% to 26 and change after earlier dropping as much as 17%!

                                               Yikes!

     There is full blown panic in the commodities space as oil and copper were down big as well.  Oil was down 2.50 to 77.50 and copper was down 5.5%. 

      Well it looks to be another roller coaster day on Wall Street after a weekend of talks between central bankers and policymakers from around the world failed to produce any agreement on how to deal with the European debt crisis.

     "There was very little official detail on the talks however as speech after speech outlined how worried global policy makers were, without offering any clear signals on what the response will be to the debt crisis," said a CNBC article.

     There was talk of a shock and awe trillion dollar upgrade to the European Financial Stability Fund or EFSF but little consensus about implementation of such a plan.  Markets have been reacting negatively to all the confusion.

Some of my favorite songs of all time

     There's a lot of great new music blogs on blogger like Sub-Radar Mike's,  D4's and Lee Lee's and listening to the music out now it got me thinking about how I don't really keep up with music anymore.  I still love music and listen to it all the time but I guess I'm stuck in a past era like most people who get older.  Nowadays, I just listen to my old school rap on KDAY and various rock on JACK and it's good enough for me.

     When I was younger, I always had to be up on the latest jams.  I was a huge hip hop fan and when I was into it (1993-2005), it was a golden age for rap.  From the Wu-Tang Clan to Group Home to Mobb Deep, The Dawg Pound and Snoop and Dre, rap was great and I loved it all.  I got so into it I even started producing it myself!  My mom got me a Roland Groovebox for my birthday when I was 19 and it was on from there!  I started producing my own music along with a friend of mine and pretty soon we got a song on a demo by a rapper called Knoc-turn'al. We weren't that talented but my buddy was his brother in law so we got hooked up.  I even got a chance to meet Dr. Dre when Knoc-turn'al later started working with him.  I got a bunch of songs that we made back then that I soundclouded and I'll put them up in another post if you guys want.

     When I first started listening to hip hop, one of the first album's I bought was A Tribe Called Quest's Midnight Marauders.  I loved this CD so much especially this song...

Support is holding for now

     World markets are selling off once again today but strong support at 1120 is holding on the S&P 500.

     As you can see from this chart, the 112 level has been support for the last two months on SPY which is the ETF that represents the S&P 500.  Every time prices hit this level, buyers have come in and sent us back higher.  That is why it is called support.  I'm of the opinion that that we are finally going to break through 112 and head lower.   Generally when we break through support, more people start selling and we head dramatically lower.  If we can hold support here, we will probably head higher back to 1200.  We are in a trading range market for now as long as support holds.  If we break support, look out below!

Market Recap
    The big story today was gold which fell 100 dollars!  Gold has formed a double top formation and there could be more downside on the way.

   

    The reasons for gold's selloff is that hedge funds are selling their winners to raise cash.  Also, with the dollar strengthening gold's appeal as a currency hedge is lessened.

    There will probably be a buying opportunity coming up however so I am going to keep my eye on gold.  The Chartographer has a great post on gold here and basically called the top in gold.  I am real glad I sold my gold yesterday, I would not want to ride out this kind of move.

     Stocks finished today in the green with technology stocks showing strength.  The Dow was up 38 pts but the S&P 500 was up 7 and the NASDAQ was up 28.  Support at 1120 has held for now.  Overnight, SPY hit a low 110.85 but we bounced back smartly from there.  We could be heading back up the range, however, I don't know if there is strength enough for us to power to 1200 again.  But we could have a little rally from here to 1160-1170.  

     Foreign stocks did good today with European and Emergent Markets stocks doing well after getting obliterated yesterday.  I thought the selloff was way overdone on foreign stocks and so dipped my toe in yesterday and bought some EM's for my long term portfolio.  That is working out well so far as EM's are up about 2.5% today.  You can track Emergent Market's stocks with EEM.  My friend the Hasidic Plumber likes to track the Brazilian Bovespa and the Argentina Merval and you can track those with EWZ and ARGT or the Argentine Merval index if you like.

     I was away from the computer all morning so wasn't able to track the stock market and did not do anything with my portfolio.  I am definitely looking to get back into AAPL and start a position in MCD at this time.  I like stocks that have shown strength and AAPL and MCD are two of the strongest stocks in the market right now.  Cyclical stocks like CAT and energy stocks like XLE have really gotten bombed recently.  XLE is an energy index and CAT or Caterpillar is a good proxy for global growth.  These sectors are so weak it's best to stay away from them right now and stick with tech and consumer staples.  Utility stocks are also strong right now.

     Being at the bottom of the range, it would seem like a good time to get back in and set a stop at the recent lows.  I will probably do that on Monday, although I will be away from the computer that day as well. 

     

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!