today’s tape

The market did nothing more than recover the sudden losses that were generated during the last 10 minutes of Wednesday’s trading.  So any excitement should be mindful of this fact.

But the market is beginning to expose some new themes (for lack of a better word).  For instance, the energy stocks exploded today despite oil and natural gas getting pounded.  Look at how HK performed and then understand that natural gas lost 7%.  Gold was also dropped 2%, but most miners performed well.  These stocks have been mirroring the actual commodities for month – which have done nothing but fall from the sky.  So one must take notice that HK is up 55%(!) in 10 days while natural gas is down 9%.

Also, we are seeing technology names starting to distinguish themselves.  Up until very recently, RIMM and APPL have traded in sequence.  During 2007, these stocks virtually pulled the NASDAQ higher by themselves.  When the companies released their earnings reports over the summer each stock was soon punished.  But over the last 10 days these stocks have been moving in opposite directions:  APPL is up 12.5%; RIMM is down 17.5%.  AAPL is showing that some stocks are fighting to work higher.

The problem with today’s rally is the poor performance of the financials.  GS was down 6% and the XLF, unlike the rest of the market, finished below its opening.  Additionally, we are now seeing the insurance names like HIG and PRU starting to crater.  I am still weary of this market because we still haven’t seen the financials rally.

today’s tape

The FED cut rates, as expected, by 50 basis points.  After the usual volatility that follows every FOMC meeting, the market began to rally higher with the DOW gaining about 250 at it’s apex.

But don’t you know this is a bear market?  Look at the final 10 minutes of trading on the DOW.  We gave up 300 points in an instant.  You can’t fight the long term trend of this market.

today’s tape

When forced with the decision breaking the intraday lows from a few weeks, which would likely initiate more programmed selling, or finally rallying, the major indices were able surge higher head of tomorrow’s FED meeting.  Just as we have seen panic push equities down at extreme rates, today we saw saw panic drive the market higher.  Here, though, the panic is spurred by missing what could be the next great bull run.  Stocks have been beaten for so long that investors may now be willing to through money at anything that resembles a change in market sentiment.

But you can’t change the fact that the trend of the market is down, and the economy is still in a tailspin that will likely get worse.  Also, in case you have forgotten, the DOW just had a 900 point rally on the 13th of his month.  The DOW then lost 1,500 points over the next 10 sessions.

Don’t be fooled by one day’s gains.  We’ll now more after tomorrow’s FED meeting and Friday’s GDP number.

today’s tape

The major inidces are still floating lower at the end of every session despite multiple 200 to 300 point intraday rallies.  We are extremely close to breaking the lows from October 12.  And if these levels break, another wave of selling will commence.

Onto a specific specific sector: healthcare.  Last week we saw CVH get punished after reporting earnings.  Today it was HUM.  WLP and UNH are continuing to rollover, as well.  This group may reach new lows soon.

today’s tape

Friday’s trading could have been worse.  It could have been much, much worse.  US futures reached limit down status after wipe outs in the Asian and European markets.  I’m sure some were expecting similar declines when the cash market opened, which could have lowered the DOW 1,000 points with ease.  But we avoided a truly disastrous session as the few remaining bulls are making a final stand to prevent the major indices from breaking the October 10 intraday lows.

Believe it or not, we aren’t far from the 2002 lows that marked the end of the last recession.  But as I have said many times, the current economy is in much worse shape that 2002, and many stocks are not reflecting this reality.

Next week, earnings will remain in focus as will next week’s FOMC meeting.  Many are speculating the FED will cut rates once again.  (We know how will this has worked so far.)  The Dollar has been crushing the Euro since August.  This has helped lower the price of both oil and gold.  If rates are lowered further, we may see some reversals in commodities.

Specifically, the price of gold would benefit the most, as would the gold miners.  GG, GOLD and AEM earned 15 to 20% off of their opening lows on Friday.  There was also some heavy short term call buying in GG and AUY.  Gold may finally start to become the safe haven many have been anticipating.

Outside of gold stocks, I don’t see other sectors moving higher.  I still don’t believe we’ve come to terms with how bad the world economy regressing.  I’m also surprised we aren’t hearing more about hedge-funds blowing up or facing redemptions.  There is still more bad news to come, which likely push the market down even further.

today’s tape

Another erratic day for the market.  Multiple hundred point swings from deep in the red to high in the green are becoming increasingly common.  We remain in the current trading range until we breakout on large volume.  And that’s the key; volume is deteriorating.  The SPY and QQQQ traded their fewest amount of shares in over a month.  And fewer traders will continue to sway this market rather violently.

One other point to bring up today.  If you can, find a 2 week comparison chart of the USO (crude oil) and the XLE (energy ETF).  The USO is down 13% in the 10 previous sessions, but the XLE is actually UP 10% during this time.  This caught my eye today.

Now…you may recall crude oil ran high from the beginning of June until mid July.   But the XLE actually lost about 8% from June to mid July.  This signified the top for crude.  Could we be seeing the same trade in reverse?  Are the energy stocks acting as a leading indicator again, predicting another reversal in crude oil prices?  We will probably find out very soon.

today’s tape

My prior post recounting Monday’s rally relayed my skepticism about the rise in equities.

Today’s move in the commodity sectors (the largest of the day) was largely a manufactured rally from the expectation for OPEC to cut production.  Any move in the commodity sectors is suspect at the current levels.

Just two days hence, the commodity names have been bruised again.  Oil lost $3 yesterday and fell another 7% today.  The oil, coal, natural gas and other commodity sectors dropped 10% on average today.  The market has appears less fixated with the credit crisis at this point and is more concerned with the recessing global economy.  Poor earnings results and economic data are crushing this market.  There is simply no reason to buy stocks.

today’s tape

Most of the market avoided negative territory Monday and the major indices were able to advance their early session gains throughout the day and into the close.  Without any terrible news from the weekend, the bulls were able to claim today’s session as an easy win.  But any real excitement generated from this market is still foolhardy.

Today’s move in the commodity sectors (the largest of the day) was largely a manufactured rally from the expectation for OPEC to cut production.  Any move in the commodity sectors is suspect at the current levels.  The groups are so oversold that some type of rally is inevitable.  But the long term trend cannot be denied.  Stocks like XOM are now regularly moving 10% (in both directions) without any rhyme or reason.  Don’t be snookered into buying here.

And if today’s rally was so great; if the market is truly ready to move higher, why was C up less than 2%?  Why are MS and MER both still trading under $20.  These stocks have once again flat-lined after the latest manufactured government produced rally.  And when the latest intervention by the FED, of Treasury or SEC dissipates, these stocks begin to fall again.

today’s tape

The market ends the week with still more volatility as a the DOW swung higher by 500 points off the opening lows, but gave back 80% of those gains in the final 2 hours of trading.  For those that thought a fresh season of earnings would restore some order to this market, they were quite mistaken.

We’ve seen companies like PEP get crushed after missing.  JNJ and GOOG gapped higher after their reports, but the stocks then began to drift lower.  Earnings do not matter, and the market is completely beholden to panic (both by the longs and now the shorts) as hedge funds are increasingly facing liquidations and margin calls to exit positions.

I don’t see how this market can rally higher.  In my view, the best bulls can hope for is the major indices to remain in their current trading range.  (Sound strange?)  We are already seeing a series of lower highs and higher lows being established by the market.  The one month cart shows the S&P 500 being squeezed by this occurrence.  The index, though at times it has traded well above the 1,000 level and well below the 900 level, the end of day closing prices have been between these two points for nearly two weeks.  Eventually we will break out of this rage.  And I highly suspect the S&P 500 will soon be trading near 800, the lows of the last recession.

today’s tape

The economic data remains terrible (did you see today’s data release?), but stocks were able to rally strong into the close after trading 3% down this morning.  The reversal was even more impressive considering the 700 plus points that were lost on the DOW yesterday.  With today’s recovery it appears the major indices will avoid testing the lows from last week.

Interestingly, the financials were not apart of today’s rally.  C and MER released earnings – each posted new multi-billion dollar losses.  The energy, mining and technology sectors were the main beneficiaries of Thursday’s ascent.  Stocks like AAPL, XOM and RIO had large reversals and may be able to build some momentum for the coming trading days.

The sentiment from my prior post remains.  I believe the major indices will become range bound (again, the range will be quite large).  But now that we now the banking system will remain intact, the extreme losses of last week may now be off the table.  But that doesn’t mean you should become bullish.