Crude Oil

A Big Signal Turns Green

Although the bears will likely grumble about the lack of momentum during yesterday’s session, the bulls were pleased to see the three-day slide in stock prices come to an end. But cutting to the chase, if there was anything that should be taken away from Thursday’s action it was that the market remains dependent on the economic data.
A month or so ago, the concept of things looking less bad was considered a good thing. However, nowadays, “sucking less” just doesn’t cut it as stock prices have begun to discount the eventual recover in the economy. No, these days the bulls need to see signs of actual improvement in order to be able to keep the ball moving up the field. And the bottom line is we saw some of this yesterday.

While even the bulls will admit that yesterday’s action was less than robust ...

Knowing What to Watch

The positive thing about yesterday’s shellacking was that it cemented the idea that it is indeed the economic data that now holds the key to the future of the stock market. And it is also good news that the market’s reception to future data should actually make sense for a change. For example, positive data showing a potential upturn in the economy will be greeted with buy orders while any reports suggesting that the economy might be languishing will likely lead traders to hit the sell button early and often.
For those that may have been dismayed by yesterday’s selling in response to the weaker-than expected retail sales numbers, you should take heart in the knowledge that this is the way the game works during the bottoming phase of the economy. While it would be great if the long decline in the data was followed by ...

Don’t Fight the Tape?

When I got started in the business of the stock market back in the early 1980’s, the first two Wall Street-isms I learned were “Don’t fight the Fed” and “Don’t fight the Tape.” The idea behind each of these beloved clichés is that it rarely, if ever, pays to argue with Ms. Market or the folks that control the purse strings.

Perhaps the other big message to be taken out of these two phrases is that when dealing with the stock market, the words ‘could,’ ‘should,’ and ‘would’ should be removed from your vocabulary. You see, as an investor your primary job is to keep your portfolios in line with what the market IS doing instead of what you or someone else thinks it ought to be doing.

In fact, the reason I began penning my morning missive was to make sure that I kept myself ...

Don’t Fight the Fed!

I know that we've mentioned this a time or three over the past decade, but one of the oldest clichés on Wall Street is "Don’t fight the Fed." The thinking is that if the FOMC is in the process of either deflating or reflating the economy, it is best to get out of their way because, in short, these guys control the money supply. This phrase may be appropriate again right now because after yesterday’s Fed meeting, it is clear that Mr. Bernanke & Co. are on the warpath and won’t rest until mortgage rates fall, lending picks up, and the economy improves.

The bears have argued that the downward spiral in the economy is unlikely to be halted any time soon because after the Fed cut rates to 0%, they ran out of ammunition. However, Mr. Ben Bernanke is proving that he may indeed be ...

Probably Not What You Think

Stocks initially fell yesterday on disappointment over the Chinese effectively saying, “Another stimulus? We’re growing at 8% per year – we don’t need another stimulus.” But from there, the move down may not have been simply more of the same… i.e. more concerns about the banks, GM’s viability (did anybody really think they’d avoid bankruptcy?), Obama’s plans for health care, or worries about this morning’s numbers on job losses. No, a big reason for yesterday’s decline probably had more to do with rumors of fund blowups than anything else.

The talking heads on TV spent much of the day yammering on yesterday about the administration’s programs, the lack of confidence, and the “bargains of a lifetime” that are out there right now in some big name stocks (which is probably true unless, of course, they go lower first). And one of my colleagues even joined ...