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Market Rallies, But Again Lacks Gusto

Daily Rap 12-12-2018

The stock market bolted higher out of the blocks and it took all of about two hours for the Nasdaq to gain 2%, while the Dow and S&P tacked on about 1.5%. Once again, the proximate cause seemed to be related to optimism on the China trade front.

After the initial upside flurry, the market traded sideways for a while before the indices began to slip, and by day's end the gains were back to around the 0.5% to 1% level, depending on the index.

Away from stocks, green paper was weaker, as was fixed income, oil fell 1%, while the metals were higher, led by silver, which gained 1.25% versus just a couple of bucks for gold. The miners were very firm for the most part.

A Little Might Go a Long Way To state the obvious, next week's FOMC meeting...more

Last year's posts for Ask Fleck

Q: The "big deal" reversal in today's "market" was just one more attempt to "appease" the talking head idiots on CNBS. They really get worked up when the "market" closes off the lows - as if that actually matters. What is important is whether or not the perceived "reversal" was anything more than a simple manipulation of "The Dow" or some other "headline index". Looking at the "internals" behind todays 500 point "reversal" we can observe something more closely related to a closing 300 point decline. The imbalance between supply and demand was heavily in favor of "supply", while both issues and volume A/D behavior remained highly negative. I have mentioned several times that big intra day reversals from selloffs that fail to regain a positive condition by the end of the trading session, merely drains away buying power that becomes exhausted and therefore, is absent the next day to contain another sharp decline. However, the "internals" are accumulating enough distortion to set up some kind of a bounce before year end. We have quickly moved from an extreme "overbought" a couple weeks ago to an emerging "oversold" being put in place that might tempt nimble "players" to gin up a rally. However, I think there has been enough selling pressure to convince even the most fanatical bulls that sustained up side action is history. The machines have also been learning some new skills also, like selling rallies instead of buying dips. The big thing now (for me, at least) is the ever present belief that no matter what, somehow the Fed will prevent any nasty stuff from "messing-up-the-game". The herd seems to think the "market" has talked Powell out of any 2019 rate hikes and/or the Fed will start Q/E 4 any time now. Or "our leaders" are much too smart to "allow" the global economy to collapse. Of course, that's exactly what we ALWAYS hear just before a cyclical contraction. It's almost as if "they" never learn. (by the way, they never do!)

Fleck: Thank you, and to summarize from Mr. Skin, they will get some bounces but the market is in trouble (my emphasis in bold).
(posted: 12/11/2018)

Q: More good news for Intel - largest server customer moving to its own microprocessors. Should help those mythical supply issues going forward.

Amazon’s Homegrown Chips Threaten Silicon Valley Giant Intel

Fleck: Yeah, I think they are going to be in a world of hurt in 2019.
(posted: 12/11/2018)

Q: Fleck,
Have you examined PVG's exploration and resource drilling update? It is the only news that I have seen that has come out on PVG but I didn't see anything surprising in it. However, the stock has been fairly weak recently.
I find this entire sector more erratic than ever (I've been investing in it since the mid-70s). I've adopted a philosophy of investing only a prescribed amount in the resource sector and selecting a few names that I believe in and picking these up when, for whatever reason they are selling at a discount. And then I wait. I don't really have a good mechanism for eliminating mistakes in this type of market.

Fleck: I just answered that question, please see the other post. (It may have been yesterday, so try the search or dropdown menu).
(posted: 12/11/2018)

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