Brett Steenbarger submits: Stocks did indeed close near their lows, trending lower through most of the session. By day's end, we had expanded the number of stocks making new 20-day lows across the NYSE, NASDAQ, and ASE to over 2700 -- remarkable given yesterday's solid bounce. I took a look at what has happened historically after we've had three consecutive days of 20-day lows exceeding 2000. Going back to late 2002, which is how long I've kept these data, we find only 39 instances of such weakness. The next trading day, the S&P 500 Index (SPY) has averaged a gain of about 1% (24 up, 15 down). I find no significant upside or downside edge after such a relief bounce.Complete Story »
Tom Lindmark submits: An interesting development this evening. The FDIC seized nine banks which are all a part of a holding company in Oak Park, Ill. Here is a link to the WSJ article on the demise of these institutions as well as a link to the FDIC website.Complete Story »
It is well known that for quite some time now the Dow has vacillated between approximately 9500 and 10,000, waiting I think for a more definitive read on the economy and where we are going. On Thursday, October 29, the Dow had a significant rally, not surprising with the 3.5% GDP growth rate announced then. However, as market participants thought about the growth rate and how much of it was due to the federal government’s thumb on the scale in the form of the transient effects of the cash for clunkers program, the tax credit for first time home buyers, and the stimulus program, they realized that real unadulterated growth was probably more on the order of 1%, with no prospect near-term for truly improved employment figures. The next day, on Friday, October 30, the Dow tanked for almost 250 points, largely, I suspect, at the hands of traders. More broadly viewed, that drop might be one of two things: gaining wiggle room to rise again without sailing too far beyond 10,000, or recognition that this market is too bloated and a correction should start now. My take is we will continue to dance within the 500-or-so-point band, at least for a while, waiting for yet more news, good or bad. The market believes the new data are too little to act on. And I say that, realizing that from my point of view it is much easier for me to make money in the market, without becoming a day trader, if the market trends one way or the other longer term. Complete Story »
The U.S. economy expanded at a 3.5% annual pace in the third quarter, as massive government stimulus helped drag the economy out of the longest and deepest recession since the 1930s. I've broken down the GDP drivers by its sub-components.The 3.5 percent GDP growth rate in the July-to-September quarter represented the first positive growth, after four straight quarters of declines.Complete Story »
Vitamin Shoppe (VSI), a leading retailer of health and wellness products, completed its much anticipated IPO this week, raising $155 million by offering 9.1 million shares at $17 each, above the expected $14.00 to $16.00 range. The NYSE stock was up 5.6% on its first day of trading on Wednesday and has since remained positive with its current price at $17.57. Addus Home Care (ADUS), in comparison, was down 15% on its first day of trading, although it has since climbed 8% to its current price of $9.15. The company, which provides home-based personal care, skilled nursing, and rehabilitative therapies, raised $54 million by offering 5.4 million shares on the NASDAQ at $10.00, below its proposed $11.00 to $13.00 range. AEI (AEI), an international company that owns, operates, and develops energy infrastructure, was also scheduled to go public this week but postponed the IPO yesterday after slashingthe deal size by 65% earlier in the day.Complete Story »
Hard Assets Investor submits: By Brad ZiglerReal-time Monetary Inflation (last 12 months): 4.2%This week,gold and oil cycled lower. Gold essentially ran out of buyers, while the oil market is still working off overhanging supply. These developments, among other factors, backed off inflationary pressures.Complete Story »
Economic Disconnect submits: I admit to be as negative on the FED/Treasury/FDIC as is possible, but I think they deserve it. Well, even a stopped clock is right twice a day, and it appears we have the makings of a good policy move in the works! Check it out:Is Fed Abandoning Bailout Of Commercial Real EstateIn what could have been the biggest piece of news today, yet making little headway into the media, the Fed announced that it is adopting a policy statement supporting "prudent commercial real estate loan workouts." And even though in traditional Fed fashion, the statement says a lot but is even more vague, some of the implications from a more nuanced read have very serious adverse implications for commercial real estate.........If the Fed is unwilling to recreate QE for CRE, in the same way that it continues to bail out residential exposure, then look for a major double dip in the economy. The only wild card is why the Fed is letting this happen, although if the political backlash against just QE 1 is any indication, then it likely would not have been able to pass additional liquidity measures regardless.Complete Story »
Hickey and Walters (Bespoke) submit: What an ugly day. Today marked the 142nd time since 1900 that the Dow went down at least 2% on a Friday (when the following Monday was not a holiday). On the following Monday, the Dow has averaged a decline of 0.31%, with positive returns 49% of the time. Since the bear market that started in October 2007, this has happened 6 other times (see table at right). On the following Monday, the Dow has gone down 4 out of 6 times for an average decline of 0.73%. The last two times we've had a >2% decline on Friday, the following Monday has lost 2.42% and 2.63%. Let's hope Monday's trade is a little better than that!Complete Story »
John Lounsbury submits:There has been a lot of outrage about the the AIG bailout, but one particular aspect has been somewhat below the radar. Enter Matt Taibbi. Matt's latest expose at True/Slant (here) discusses the case of Stephen Friedman. The former chairman of the board of directors of the New York Fed bought more than 50,000 shares of Goldman Sachs (GS) stock following the takeover of AIG. In May, Friedman resigned from the NY Fed Board after it was disclosed by the Wall Street Journal that he had bought the stock.Let's see, that's more than $2,500,000 capital gains as of October 2009. It has been more than a year, so Friedman is eligible for long term capitalgains status, and Uncle Sam only gets 15%. After state income taxes, Friedman could net close to $2 million.Complete Story »
