Talk about a lackluster session. Stocks traded in a tight range except for energy and material names, both victims of China’s economic woes. There was an interesting reversal from the last couple weeks of money seeking safety in blue chips. The Dow was slightly lower while the NASDAQ was higher. Still, 204 stocks closed at new 52-week highs on the New York Stock Exchange versus only 49 for NASDAQ.
Market breadth underscored the cautious nature of the market and session, but it was also a dilemma for investors. It’s great if you’re sitting in a blue-chip name hitting 52-week lows or all-time highs, but few investors want to chance those names. Interestingly, a few have become overbought just like most of the names in the utility space.
Breadth |
NYSE |
NASD |
New Highs |
204 |
49 |
New Lows |
25 |
55 |
Advancers |
45% |
51% |
Decliners |
52% |
45% |
This is why Disney’s (DIS) earnings are so important after the close. One of the best run companies in the world, the stock has reflected pressure from its ESPN unit, all but ignoring all other successes. Those successes were on full display over the weekend with “Captain America: Civil War” raking in $678 million worldwide, bringing the studio to $3.86 billion for the year and well ahead of last year’s pace.
By the same token trying to pick the bottom of NASDAQ, high-flyers is fraught with danger. It’s just one of those slippery moments in the market after a massive correct and subsequent rebound that has the overall market essentially flat for the year.
The Federal Reserve
Tuesday, we got the JOLTs report, which could put the Fed into play; although it would need a major surge in ‘quits,’ the report still will have a couple of hawks speaking this week about its chance to promote a rate hike.
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The Federal Reserve prints money from thin air and buys U.S. government bonds with the cash from Wall Street ‘dealers’ and charges interest. It’s without wonder that scam artists from Charles Ponzi to Bernard Madoff knew their audacious schemes would work – heck, the Federal Reserve and Social Security promises are vivid daily reminders of governmental flimflam. The dirty little secret is the Fed eventually hands over most of its cash to the U.S. Treasury Department, which is taking in big bucks.
I am not sure how long this game can be played; the more the general public learns and understands it, the more pressure it will be for some kind of entity or policy really designed to help Main Street instead of the central bank that currently serves two masters.
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