July 31st, 2012
in Gary's blogging
Closing Market Commentary For 07-31-2012
Market closed on a down note after mostly moving sideways all day. Volume was anemic except for the last few minutes when it rose to high and red. As of now there are no rumors to contribute to the after market falloff except for nervous investors profit selling prior to the FMOC meeting. The DOW fell right to the point where Draghi first announced his not-so-brilliant bond scheme on Thursday last week. So after 2 wasted days on low volume where no one really wanted to be in the first place, we are back where we started – go figure.
Almost every day I ruminate over volume levels or the lack of it. I verbalize repeatably about the 'mattress money investors' who ran for the safety of the bedroom in 2009 having been beaten soundly around the neck and shoulders. We continually hear that 70% of the market participation is from the High Frequency Traders and their algo computers and it is no wonder the 'baby-boomers' have pulled out of this Bernanke market casino. So who is left and what is the SEC doing about it? This following article is an interesting read in what I would rather call a Ponzi Scheme. Yes the markets are rigged and nothing but a glorified Ponzi scheme at best. Almost impossible to trade with any hope of a profit. At most any position greater than 30% of your available cash seems foolhardy.
I wonder if the 'new' politicians in Washington will have the 'stones' to start with auditing the FED and remove the remaining Keynesian policy makers at least? My profits the past 3 years have been not been good as previous ones and I don't see them improving as the Global Economy sinks further down. Even the Gold market is manipulated by the Feds.
Every day the Fed's control of all capital markets becomes greater and greater, and every day ordinary investors, and even habitual gamblers, realize they have had enough with participating in a rigged casino, in which the now completely meaningless and irrelevant level of the S&P or the DAX or Nikkei or the 10 Year bond is nothing but a policy tool in the global devaluation race to the inflationary bottom.
And while we have shown the week after week of relentless equity outflows as aging baby boomers call it quits and instead opt for return of capital (than on), the full impact of this boycott on Bernanke's usurpation of capital markets, in which a simple WSJ scribe can move the market more than the deteriorating fundamentals of the world's biggest company-cum-gizmo maker is best seen in trading volumes.”
Which as Securities Technology shows, are now down 19% in the first half of 2012. Of course, if one were to exclude the robotic presence in stock trading, which is anywhere between 50 and 70%, it would be a miracle to find any human beings still trading with each other.
As we mull over last weeks stratospheric rise, Rick puts the unwarranted phenomena into perspective. Hopium and Delusionol was freely handed out by Draghi last week and the sheeples bought it hook line and sinker.
As usual, the stock market was vexatiously out of step with reality last week, soaring on word that the ECB plans to do “whatever it takes” to preserve the euro and the political union that it binds.
For U.S. investors, especially those who believe in hope and change (and, presumably, the Easter Bunny), there was also the invaluable news that the U.S. economy is once again verging on recession – a development which is widely believed to portend yet more Fed easing.
Completing the delusional vision that good times are soon to return nonetheless . . .
The DOW at 4 pm is at 13008.68 down 64.33 or -0.49%.
The 500 is at 1379.32 down 5.98 or -0.43%.
The $RUT is at 786.94 down 4.64 or -0.59%.
SPY is at 137.87 down 0.81 or -0.58%.
The trend is neutral and the current bias is negative.
The 500 at the close.
The DOW at the close.
WTI oil is at 87.47 trading between 90.30 and 87.30 and the bias is negative.
Brent crude is at 104.13 trading between 104.09 and 106 and the bias is negative.
Gold is mixed today at 1614.11 trading between 1610 and 1627 with a neutral bias.
Dr. Copper has been steady at 3.41 up from 3.42.
Earlier the USD climbed from 82.72 to 82.94 fell again to 82.58 and recovered to 82.72.
By Ed Easterling
“Secular bull markets are great parties. Investors arrive from secular bears really wanting to take the edge off. As the bull proceeds, above-average returns become intoxicating. By the time it is over, the past decade or two has delivered bountiful returns.
In contrast, secular bears seem like hangovers. They are awakenings that strip away the intoxication, leaving a sobering need for an understanding of what has happened.
If history is a guide, the inflation rate will at some point trend away from the present price stability. The result will be a significant declining trend in P/E. If this occurs over a few years, the market losses will be dramatic.”
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Written by Gary