DJIA

open 10,059.90

close 9,985.81 down 74.25

day high 10,104.71

day low 9,968.10

today's volume 176,328,492

3mo avg. daily volume 204,575,824

DJTA

open 4,092.33

close 4,093.50 up 1.68

day high 4,169.00

day low 4,085.18

today's volume 14,552,747

3mo avg. daily volume 19,278,971

Numbers for 8.25.2010

DJIA

open10,040.15

close 10,060.06 up 19.61

day high 10,097.40

day low 9,937.98

today's volume 183,889,305

3mo avg. daily volume 205,979,714

DJTA

open 4,082.34

close 4,091.82 up 9.31

day high 4,109.32

day low 4,010.52

today's volume 19,171,835

3mo avg. daily volume 19,379,656

DJIA

open 10,173.05

close 10,040.45 down 133.96

day high 10,173.05

day low 9,991.18

today's volume 223,680,140

3mo avg. daily volume 209,558,701

DJTA

open4,159.04

close 4,082.51 down 78.28

day high 4,159.04

day low 4,027.21

today's volume 20,229,252

3mo avg. daily volume 19,762,126

Market woke up a bit today.  Volume I mean, and especially on the TRAN's as I'm regularly noticing a below-average trend for the past few weeks.  The INDU's did break below the psychological 10,000 mark today, but closes are what matter, and it did regroup towards the end of the day... of course nothing to write home about though as the close took us down another 130 pts.


I remain very bearish.  I find myself turning on CNN or MSNBC more often during the secondary movements than the primary ones.  During the bull of the last year and a half, corrective declines were written off as just that, corrective declines.  During the (arguable) bear we are beginning now and over the past 3 months every corrective rise is hailed with the start of "a resumption of the bull market," and since I don't bother checking on days that coincide with the primary trend, I would assume they are beating the same drum they were previously... which begs the question, "is anyone in the market a realist?"  It seems most are either eternally bullish, or eternally bearish... that's why I like Dow's Theory, let's get realistic here and let the markets speak for themselves.


One thing we are discovering is what I will call the "mega-trend."  I take no credit for coining any phrase as anything said has probably been said before... and in most instances, better... but Dow Theory helps navigate through the primary and occasionally the secondary trends, which tend to last from 1 to 3 years for the primary, and 1 to 3 months for the secondary.  However, what about what appears a mega-trend which seems to be forming since our high in 2007?  Now should our next decline in the INDU's, what the bobble-heads on TV are calling a "double-dip recession" (which I will say, again, that term is the dumbest and most non-confirmed term I've heard in market theory, and is simply an arrogant and over optimistic way to assume that if we have another tumble, that it will be the last one) bring us down to our ultimate bottom in the Dow, followed by a long term recovery, then arguably we are still following the same patterns.  But the mega-trend concept is interesting to me, because bear markets are not supposed to last this long, bulls are.  So perhaps the increase in velocity of information-trade today with computers and GPS and bar-code tracking and cell phones and the like has increased the concept of the markets ability to discount information and over-stimulated the markets into lengthening the time it takes for markets to make the moves they need, because now instead of most people knowing something already... every body does.


Perhaps this is too much though on a Tuesday afternoon... but the times they ARE a changin.'  I don't think even Ole' Richard Russell would disagree with that.


Have a good night.  Normally after a 4.6% decline in a month, I would (gut instinct ONLY) assume a short term rally for a day or two... but with the markets dipping below 10,000 and no bailout money in sight, perhaps Wall Street will "take it's proverbial ball and go home."  I've said it before, watch for the Dow to break below 9,700 and all Hell may break loose.  Bernanke to the rescue??

DJIA

open 10,215.51

close 10,174.41 down 39.21

day high 10,304.70

day low 10,170.29

today's volume 172,969,277

3mo avg. daily volume 210,169,176

DJTA

open 4,210.68

close 4,160.79 down 48.49

day high 4,264.92

day low 4,158.84

today's volume 12,915,435

3mo avg. daily volume 19,762,126
.

Despite early bumps, markets closed down, but only marginally, and on very low volume.  Perhaps this will get the attention of the bears tomorrow.  Hopefully tomorrow I want to take the time to discuss FOMC and inflation vs. deflation.

DJIA

open 10,270.98

close 10,213.62 down 57.59

day high 10,270.98

day low 10,147.24

today's volume 251,147,169

3mo avg. daily volume 213,138,578

DJTA

open 4,216.26

close 4,209.28 down 7.54

day high 4,216.26

day low 4,137.80

today's volume 15,628,274

3mo avg. daily volume 20,185,952

 

 Increasing volume on down days, decreasing volume on up days (at least as far as the INDU's are concerned).  The TRAN's still refuse to cooperate with a bear consensus... of course they wouldn't agree with the bull either.  Will Mr. Dow be right, that the Rails (now the Transportations) MUST ALWAYS confirm?  Or is this one of those outliers... or perhaps if we just shut our mouths and wait it out, it'll all be clear... unfortunately the final suggested there is always true, it's just not always lucrative to try to invest in an event that has already happened.

The Average P/E on the TRAN's is 23.1 and the INDU's are slightly better at 15.5.  I don't care if Dow proves right or not this particular time, those are not enticing.

Have a nice weekend.  Oh, and Gold wont fall yet either... silly stubborn metal... I love that now people say it's too expensive.  It will be much more expensive than it is now when those people decide it's cheap.  Funny how emotional markets can be, perhaps that's why investing it really can be easier than most people make it out to be.

DJIA

open 10,411.15

close 10,271.21 down 144.33

day high 10,411.15

day low 10,216.19

today's volume 227,741,208

3mo avg. daily volume 215,243,458

DJTA

open4,316.48

close 4,216.82 down 103.23

day high 4,316.48

day low 4,166.60

today's volume 18,153,990

3mo avg. daily volume 20,406,126

 

Although volume is nothing to write home about, it has trended back above it's 3 month average, and that is consistent.  The down days are more popular than the up days and that continues to suggest that something is looming to feast on the bulls.  Although the daily market gambles would probably suggest a rebound tomorrow, and possibly higher than our decline was today, it really doesn't matter.

Gold is an enigma.  Where is our correction?  Will it wait for the $1,300's.  It doesn't matter I'm still a buyer, and if it corrected from here, I'd just buy more.

All for today, I've said enough this week already.

DJIA

open 10,398.59

close 10,415.54 up 9.69

day high10,472.30

day low10,330.02

today's volume 168,376,116

3mo avg. daily volume 216,795,599

DJTA

open 4,299.23

close 4,320.05 up 19.81

day high 4,350.12

day low 4,259.56

today's volume 10,612,874

3mo avg. daily volume 20,674,149

A lot of opening noise, but the closes are what matter, and the market closed "bored" today.  Random though, I have been noticing that often on the less exciting days the TRAN's show more movement, particularly on the upside, than the INDU's.  I haven't ever read that anything to that nature matters, but interesting that it "feels" a little repetitive.  

I rambled long enough yesterday, so I'll save my time.  Volume was slightly on the advance side, about 56%... oh, and gold is up, again.

DJIA

open 10,297.63

close 10,405.85 up 103.84

day high 10,480.44

day low 10,297.47

today's volume 191,339,173

3mo avg. daily volume 217,669,169

DJTA

open 4,210.12

close 4,300.24 up 94.92

day high 4,337.68

day low 4,210.12

today's volume 13,369,696

3mo avg. daily volume 20,819,503

Rebound days are fun.  Although most of the movement up occured at open, the market had trailed higher through the day but sold in the later hours back close to what the open push was.  Today was about a 72% up day.  I was asked today by a client when the bottom of the markets were back in March of last year, and what figures we touched.  I couldn't remember, so I went back to the trusty charts.  Two websites I love, for anyone out there whose interested are stockcharts.com and bigcharts.com.  Bigcharts has some nice interactive availabilities (although I prefer the look of stockcharts), so although I looked this up for one reason, I'm struck by two other things.  Below the INDU over the last decade.  What always catched my eye is volume, noting the dramatic increases in volume on the down swing through the end of '08 and beginning of '09.  The second thing I notice is what appears to be a massive head-and-shoulders pattern forming the right shoulder at this time.  Russell made mention of this in his daily yesterday.

For whatever reason,  it seems volume over the past 10 years has build a base around the levels we have now.  Somewhere in the 200 to 250 million a day range, however, there are the spikes, and a pretty lengthy spike between the end of '08 and beginning of '09 during the massive drop.  There were also preceding dips in volume right before the fall.  I added the MACD and RSI, as I mentioned a few weeks ago with RSI, it's an interesting indicator that I'm starting to feel get's far too much emphasis placed on it.  If I showed you simply the RSI for the 10 year INDU's, I doubt the average, or even above-average investor could pick their buy and sell points effectively.

The chart below is a shorter look at the industrials.  The green lines indication the last decline, the blue for our most recent rise.  According to Dow Theory, we're looking for one of two scenarios.  

Here are the two theories laid out... The first would be a break out to the upside above 10,700, which could arguably signal a resumption of the bull market that was arguably halted during April through July correction.  For this to be true we would need to see highs follow trend lines and push towards the 11,000 mark and ultimately beat the April highs, perhaps around the 11,300 mark.

The second theory would indicate a resuption of the bear market which, in this scenario did begin in April of this year.  This would require the INDU to remain below the 10,700 range and inevitably close at or below 9,600.  Should this happen, assume the wheels fall off the market.  


As is the nature of life, both theories have arguments both for and against, however one will prove true.  The TRAN's must confirm.  All the while, I think the value in gold and the USD tell the story.  Gold continues to build higher and higher bases and even seems to be forming a pennant pattern here in the high 1,100's and low 1,200's.  This could signal an upside for gold.  As opposed to previous market moves, gold has been acting independently of ANY other markets, and has stepped out as an independent "finger" in the hand of investing.  

Traditionally, investors could rely on 4 places to put money, USD, Euro, US Markets, European Markets... of late, add two more to the list, Gold Bullion and Asian Markets.  The capitalist in me loves seeing more options on the table.  

DJIA

open 10,303.07

close 10,302.01 down 1.14

day high10,333.12

day low10,209.53

today's volume 146,035,201

3mo avg. daily volume 218,873,545

DJTA

open 4,201.25

close 4,205.32 up 3.51

day high4,227.20

day low 4,158.51

today's volume 11,527,965

3mo avg. daily volume 20,979,898

 

No movement on the closes, no volume, no interest.  Market's waiting for something.  Industrials did open down almost 100 points today, but it regained quickly, so not really of mention.

DJIA

open 10,361.58

close 10,319.95 down 58.88

day high 10,361.65

day low 10,268.71

today's volume 220,831,964

3mo avg. daily volume 220,227,895

DJTA

open 4,254.65

close 4,236.96 down 25.28

day high 4,256.27

day low 4,176.03

today's volume 14,916,421

3mo avg. daily volume 21,291,658

Increasing volume of trades in a decreasing market is of interest to me.  Another up day for volume on the Industrials, although the transports seem bored.  Until the numbers confirm each other, perhaps it's just wishful thinking on my part.  Random note, Jim Cramer on Mad Money today came out and said he doesn't see an extension to the recover we've been in into the future due to unemployment and few other factors and even went so far as to make a hint towards at the end of his show.  He finished the thought by saying he prefers CD's, but it's gutsy for him to even mention the "evil" yellow metal that has so much power and authority to wreak havoc on an unsuspecting and improperly valued market.  Kudos to you Cramer, now when it does spike you can go back and talk about how you heavily encouraged your viewers to consider the metal.  

DJIA

open 10,631.82

close 10,378.83 down 265.42

day high 10,631.90

day low10,367.33

today's volume 216,390,518

3mo avg. daily volume 219,867,588

DJTA

open 4,449.17

close 4,262.24 down 189.89

day high 4,449.17

day low4,240.14

today's volume 16,618,604

3mo avg. daily volume 21,386,961

The last two days volume has approached something a little more "average."  The markets had gotten so bored it's nice to see some interest, however childish it may be.  I equate today to a spoiled child holding his breath until mom gives him his candy.  Not getting the QE that was hoped for the market responded by telling the fed just how scary deflation seems and that if  the fed is not going to run the presses then Wall Street isn't going to play along.  Deflation has the potential to shift drastically and quickly to an inflation or hyper-inflation, we're just not there yet.

I am surprised by gold holding at $1,200 (or just below).  I traditionally would have assumed a market move like today would have some effect, but nothing-doing.  Perhaps the stand-alone store of value has become stand-alone once more.  The USD  index jumped up almost 2 today, it was certainly due, trading at the low end of it's 200-dma for a while now, but it is still lagging compared to the Euro.  There may be an excellent exit point from the dollar into the Euro coming, but I'm no currency trader, so I'd have to spend some time picking my targets... if I were so inclined. 

If I were a betting man...
 
With increasing volume on the declines and no new highs being made, one can assume the continuation of the slow drudge downward.  I still don't know if we'll see any major spikes down in potential investments outside of a liquid cash position, or preferably physical precious metals.  I'd bet on a measured increase in the dollar coming with no great FOMC announcements from yesterday in the short run with a play into the Euro before the bottom drops out.  The bottom will drop out of this eventually, I just hope it is further down the road that it would otherwise look right now... below is the Industrials chart where I'm seeing similar movements over the past three years which I've circled.  Noticing both price changes and volume changes.  If this is Dow Theory, than we are still waiting for a few key indicators, but Dow Theory is not the god of the markets, only one of many tools.  Other tools worth having in your kit include understanding of GDP, lending rates, employment figures, and a little common sense.

Debunk Group-Think

Keynesian thinking at it's best.  The following article "CLICK HERE"  appeared on msnbc.com yesterday.  Although I wouldn't usually waste your time, I do check in with Bloomberg, CNBC, MSNBC, etc from time to time, and MSNBC does a great comparison between previous quarter and current FOMC announcements... the above attachment is NOT that article.  Instead, this is something I stumbled across and is what the media is feeding the masses today.  Written by John Schoen, it's amazing how little someone actually has to know about economic theory today to get to have an opinion that both paid for and wide-spread, and for anyone who understands the two arguments today representing economic theory, it's worth taking a look at.  I guess I bring this article up because it frustrates me.  Although I am neither a scientist nor a theologian, this reminds me of the creation vs. evolution debate.  Churches tell you "that's just the way it is" and school tells you "that's just the way it is."  

 I won't take too much time run through the whole article and point out his regurgitation's of concepts he probably is incapable of defining.  I must first point out at least one point he conflicts himself on ... he points out that economic growth has slowed, yet he says that companies are having a hard time getting loans "despite healthy profits..."  In this article, Schoen tells you that the reason we are having so many problems right now and the economy has faded in it's recovery is because banks and people are "saving" when they should be spending or lending.  Therefore the only solution is for the Fed to dump more money into the system.  No mention what-so-ever about why the savings today are taking place... the average person and certainly the average bank (I know the numbers, I get through Weiss' ratings service, every quarter now run by theStreet.com) is not increasing liquid net worth, they are trying to replace lost net worth.  See a chart of the DJIA over the past 10 years and tell me we have had any semblance of actual "growth."  Tell me there's someone out there why has had the "buy and hold" mentality over the past 15 years and is happy about the value of their 401(k). 

My favorite paragraph in the article is the last one, although it is stupid, it gives you the understanding of what the author has been told is the ultimate authority... the policy makers... Keynesian economic theory at it's best.  "Two things happen when you get into a deflationary trap.  One is policy becomes totally inneffective.  Second, the politics of deflation are really hard.  No one agrees on what to do, because there is no optimal policy solution."  Frankly, that sounds like two benefits to me, not too negatives... neither of these things are what the true dangers of a deflationary depression are, but that would take an understanding of what deflation actually is, which the author clearly does not have, but instead is just regurgitating what he has been told is bad.  I'll bet you the author considers running for politics some day, as he's clearly pandering to what he reveres. 
 

I urge you to debunk the group-think.  Do your research, make your OWN decisions, ask lots of questions, and trust the Financial Advisors and Consultants who build portfolios that are flexible in asset class and grow with you over time, regardless of which market is the right market to be in, as opposed to the brokers who peddle the same asset regardless of the world around them.

Numbers for 8.10.2010

DJIA

open 10,696.63

close 10,644.25 down 54.50

day high 10,700.71

day low 10,551.62

today's volume 203,489,953

3mo avg. daily volume 219,867,588

DJTA

open 4,514.23

close 4,452.13 down 64.22

day high 4,514.23

day low 4,411.50

today's volume 14,033,461

3mo avg. daily volume 21,386,961

 

Comparing to the last few days, the only thing of note is, of course volume.  As I'm writing this Wednesday morning, the Dow is down over 200 points.  Holding it's breath till it get's it's way, taking it's ball and going home, the markets didn't get the free money they had been planning on yesterday.  FOMC also plans on holding rates ridiculously low for an undetermined time into the future.

DJIA

open10,654.62

close 10,698.75 up 45.19

day high 10,719.94

day low10,649.40

today's volume 166,333,515

3mo avg. daily volume 222,525,999

DJTA

open 4,455.60

close 4,516.35 up 59.09

day high 4,524.78

day low4,455.60

today's volume 11,325,369

3mo avg. daily volume 21,742,848

DJIA

open 10,668.55

close 10,653.56 down 21.42

day high 10,668.70

day low 10,515.37

today's volume 154,872,023

3mo avg. daily volume 223,617,192

DJTA

open 4,489.29

close 4,457.26 down 34.37

day high 4,489.29

day low 4,398.39

today's volume 13,302,798

3mo avg. daily volume 22,126,238

DJIA

open 10,679.67

close 10,674.98 down 5.45

day high10,679.75

day low10,612.85

today's volume 139,607,108

3mo avg. daily volume 231,956,614

DJTA

open 4,506.25

close 4,491.63 down 15.57

day high 4,506.25

day low4,447.10

today's volume 12,873.267

3mo avg. daily volume 22,581,940

 

Apologies for missing numbers yesterday, although any missive would be as boring as the day before's, and frankly today for that matter.  Declines slightly higher than advances, but not enough to turn heads, and overall volume about as low as it could get.  The markets don't care.  Unemployment numbers out Friday, so we'll see if this lack in continued rise is the discounting of that information.  Where the USD is these days, it would make sense the markets are trying to rise against that too, however, perhaps Wall Street knows something about our unemployment figures that I will have to wait until tomorrow to find out.

This rise is the discounting of the expectations of coming QE2.  If we do not have a cash push next week, will the markets tank forcing the fed's hand?  We shall see, but it is food for thought.

On a personal note...

To pretty much any of you involved out there, I already know who I'm voting for... please stop calling me...

DJIA

open 10,673.92

close 10,636.38 down 38.00

day high 10,676.95

day low 10,600.96

today's volume 164,882,422

3mo avg. daily volume 233,903,971

DJTA

open 4,501.31

close 4,443.48 down 60.82

day high 4,501.31

day low 4,392.03

today's volume 14,052,019

3mo avg. daily volume 23,005,322

 

After yesterdays movements, I'm not surprised to see NO ONE in the markets today.  I am surprised to see the transports take such a dive comparatively to the industrials.  At one point today they were down just over 109 points, or 2.4% of the open.  Still not holding my breath here...

DJIA

open 10,468.82

close 10,674.38 up 208.44

day high 10,692.20

day low 10,468.59

today's volume 167,642,201

3mo avg. daily volume 234,069,632

DJTA

open 4,425.34

close 4,504.30 up 81.36

day high 4,505.97

day low4,425.34

today's volume 17,924.872

3mo avg. daily volume 23,077,711

Today's missive...

I love days like this... Days when someone, who doesn't understand the correlation between volume and pricing wonders why I still have a smug grin on my face.  I hope I'm a bigger man than to rub it in, but up days have half the volume as down days, and in today's case, it even had about half the volume of the 3 month average.  We've seen a few of these days.

If I were a betting man...

So who needs QE if the market continues to rise until elections?  Probably no one.  But there will be something, I'd bet on it.  I'm holding my long positions where they are, but a few things have been tempting me.

The two charts on the left show first, a pro-shares short fund on Lehman's 20+ year treasury, and below it, the US Dollar index.  What I find interesting is that as the dollar has been declining, the TBT has as well.  As we all know, the market has a remarkable way of discounting every piece of information available.  With the USD approaching it's 200dma and the shorts showing no interest whatsoever, on top of a Dow that HAS to stay up through elections, perhaps my QE predictions will prove incorrect... assuming RSI assumptions can defeat common sense predictions.

Volume still argues a decline in the Industrials which should require a bout of QE.  Perhaps short term QE causes a bump up in the USD as it may tinker with overnight rates and cause a short exodus into the wasteland that is the USD.  Hopefully, unlike Moses and his people, some from this generation will survive on more than just mana, and may end up in the promised land that is the bargain-basement liquidation-priced P/E and Q ratio's when no one else is interested.

I'm comfortable in my shorts and my gold positions, but if I were a betting man, I'd play a short term rise in the USD and then load the boat on the shorts coming into the winter.  As long as I have my working cash position, I don't care how long it would take as any good student of The Theory knows duration and extent are never known, just the trend.

I'm off to read Russell's daily, should be good things.  I'm curious to hear what he has to say about today.