Summary
Was 2/22/05 a trading session that when we look back on it will mark a day that lives in stock-market infamy? Too early to tell, but it certainly is not too early keep close track of the 22nd and the period coming after it. Also, another example of why Tout Radio is bad for your brain!
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Stocks
* Korea really did not mean what it said on Monday about diversifying away from the dollar, because ostensibly, Korea said something different yesterday. So, for the time being, the problem of too many dollars and not enough foreign central banks disappears.
* Consumer prices are "better than expected," at least at the Bureau of Labor Statistics. For the time being, therefore, inflation goes poof!
* There is no way April crude should be selling at $51.42 per barrel, although as of Tuesday's close, that is where it was selling. Not a problem, though, just knock it back to a more reasonable $51.17 in yesterday's trading, and happy days are here again!
These cogent developments helped lead the stock market to better times yesterday. For the day, my seven-measure tracking group registered respective average and median gains of 0.5%. (This compared with average and median declines of 1.5% and 1.6% on Tuesday.) Rises yesterday ran in a range of 0.6% for the DJIA and S&P 500, to 0.2% of the NASDAQ 100.
So, all this means that Tuesday's gut-wrenching sell-off was not a foreshock warning of more bad things to come?
It's a little too early to reach that bullish conclusion. What I think that Tuesday did show is that the markets are a good deal more vulnerable than is generally believed, despite the bravado incessantly evident on Tout TV and in the he other venues comprising the regular propaganda loop,
For a little fun and diversion, I've come up with a different way of keeping track of what Tuesday did -- or did not -- mean. The table below breaks out the seven components in my tracking group, using Tuesday's point declines as a base. We will simply keep track of the cumulative results for a while, until Tuesday is expunged from the numbers, or until it becomes apparent that Tuesday was a watershed development of sorts.
My view is that the election "relief rally" interrupted (emphasis here on "interrupted") a major distribution top that was in progress. It is now time to see if the distribution is reasserting itself as a primary force. I believe it is, and if so, a day like Tuesday would be an apt way to advance the reconfiguration process.
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KEEPING TRACK OF 2/22/05 (Respective Point Changes
on That Date, Plus Cumulative Results Going Forward)
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Wilsh. NYSE NAS. S&P Russ. Value
Date 5000 DJIA Comp. 100 500 2000 Line
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2005
02/22 -176.9 -174.0 -76.3 -21.3 -17.4 -12.2 -6.4
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02/23 60.6 62.6 32.1 3.0 6.6 2.6 1.4
Cum. -116.3 -111.4 -44.2 -18.3 -10.8 -9.6 -5.0
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More from the Dangerous, Illogical World of Tout Radio
I usually take Tout TV to task. Today, it is Tout Radio's turn.
During yesterday's bullish bacchanal over January's super inflation numbers, one of Tout Radio's genuine luminaries was close to orgasmic levels in reporting how the CPI results again showed that companies have no pricing power. He went so far as to juxtapose the CPI with last week's not so pretty numbers on producer prices as proof that while there may be higher levels of inflation, they simply are not getting through to consumers.
Even if this is exactly what these highly manipulated numbers of increasingly lousy quality are portraying, how about just a little time in airing the not-so-bullish consequences of the phenomenon?
To wit: Not long after yesterday's bullish CPI rant, Tout Radio interviewed an analyst representing stocks as cheap. He invoked specifically the strong growth he and others continue to forecast for second-half 2005 earnings. Do you think that maybe, just maybe, someone would ask this fellow about how much the corporate sector is now eating from margin squeeze, if it has no pricing power?
It was not to be!
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