Market Commentary

Volatility has been much higher than normal.  For example, the S&P 500 index rose or fell by more than 2% on five of the nine trading days so far this month.  There were only six such days during the last 4½-year bull run.

Yet, for all that violent flip-flopping and massive gaps in both directions, the stock market ended last week essentially flat.

We are back near the lows for the year.  Bears had a great opportunity to plunge through important psychological levels. Everything turned red for the ride down; and then the market reversed again. Part of me wonders whether short-sellers didn't press their luck because they "fear" another Sunday bail-out (in some form or fashion).

The big news this week was about the fall of Lehman.  Here is a simple chart showing what happened to their stock this year.

As I write this, it looks like Lehman is filing for bankruptcy and that Merrill Lynch is getting sold to Bank of America.  Futures are down.

However, a big, quick, move down – here – might be the best thing to hope for if you are bull.

Here are a few of the posts I found interesting this week:

• U.S. Gives Banks Urgent Warning to Solve Crisis (NYTimes, WSJ, Clusterstock)
• Bank of America Buys Merrill Lynch (NYTimes, WSJ)
• Locusts: Shorts Moving On to AIG and Others? (Seeking Alpha, Naked Capitalism, NYTimes)
• Federal Reserve announces additional support for the markets (Federal Reserve)
• Is the latest bailout working?  Someone thinks so (Bronte Capital)
• Russian Market Down 50% Because of War and Falling Oil Prices (NYTimes)

And, a little bit extra:

• Sweet Dreams in Hard Times Add to Lottery Sales (NYTimes)
• Niederhoffer's Ten Principles of Cricket and Market Power (Daily Speculations)
• Wisconsin man eats 23,000 Big Macs since 1972 (Chicago Tribune)
• Lehman Replaces Palin as Wikipedia Plaything (Infectious Greed 1 and 2)
• McCain leading Obama in prediction markets and polls (Kudlow, RealClearPolitics)
• Retailers Using Software to Increase Sales and "motivate" employees (WSJ)
• Has the large Hadron Collider destroyed the world yet? (Click)
• Biologists on the verge of creating a new form of "life" (Wired)

Sometimes a picture is worth a thousand words.  This chart shows how the NASDAQ fared last week.

The chart doesn't need fancy indicators or words to tell the market's story: it went down.

Last week I said a move down, here, wouldn't surprise me.  We got more than I expected, because it was unrelenting.  After a big gap-up to start the trading week, it was straight down from there.

Now for the S&P 500 Index. 

This chart shows the monthly displaced moving average
channel for the S&P 500 index. It typically acts as support or resistance to the markets longer trend.  Notice how the attempted rally in August moved the
index closer to the channel; but the market wiped-out that
effort in just a few days of trading. 

What about the Dow Jones industrial average?  Which economic anxieties were the catalysts as the Dow plummeted 344.65 points on Thursday ?  Was it that initial unemployment claims were near a 5-year high, the weak retail sales report, or fear of a global slow-down?

There is probably a little more work to be done on the downside, setting-up a decent bounce.  Again, historical patterns show a year-end rally typically starts in late September or early October. And the 4-year Presidential cycle pattern also favors a year-end rally.

Here are a few of the posts I found interesting this week:

• U.S. Near Deal To Save Freddie and Fannie (WSJ, Washington Post)
• Another Bank Fails: 11th this year, as Regulators shut Silver State (WSJ, FDIC)
• Swing-Trading the Sell-Off (TradingMarkets via Forbes)
• Who's afraid of Sovereign Wealth Funds? (Minyanville)
• James Surowiecki on "That Uncertain Feeling" affecting the herd of investors (New Yorker)
• Unemployment hits 6.1% and a closer look doesn't make it prettier (Dash of Insight, Portfolio)
• Bank of Canada Offers a Downbeat Outlook while holding rates steady (NYTimes)
• Did governments work together to save the Dollar? (Clusterstock)
• BMW sales up 2% last month, year-over-year (Bloomberg)
• Doug Kass says this is what market bottoms look like (Street.com)
• Trader Mike says we're not oversold yet (Trader Mike)
• McCain speech seen by record number of viewers (Bloomberg)
• Apple's iPhone making gains in business users (WSJ)
• Yahoo Below $19: Microsoft's $31 Offer is Looking Pretty Good Right Now (Silicon Alley Investor)

And, a little bit extra:

• Technology That Out-thinks Us: A Partner or a Master? (NYTimes)
• Numerati: How math models improve productivity and management (BusinessWeek)
• Lines and Bubbles and Bars, Oh My! New Ways to Sift and Visualize Data  (NYTimes)
• Microsoft has been granted a patent on 'Page Up' and 'Page Down' keystrokes (ZDNet)
• Invisibility Cloak becoming a reality; the challenge is seeing out of it (New Scientist, More)
• Facebook's hottest games (Forbes)
• Hulu Getting NBC Shows Before TV Does (Silicon Alley Investor)
• ESPN and Electronic Arts Innovating Play-By-Play Commentary (NYTimes)
• Google developed its own web browser called Chrome (CNet, WSJ)
• Andy Kessler's take on what Google is really doing with Chrome (Andy Kessler)
• Is the first Jerry Seinfeld ad for Microsoft funny?  You decide (NextWeb)
• Download Limits: Is "all-you-can-eat" Internet a thing of the past? (ABC)

Sometimes a picture is worth a thousand words.  This chart shows how the NASDAQ fared last week.

The chart doesn't need fancy indicators or words to tell the market's story: it went down.

Last week I said a move down, here, wouldn't surprise me.  We got more than I expected, because it was unrelenting.  After a big gap-up to start the trading week, it was straight down from there.

Now for the S&P 500 Index. 

This chart shows the monthly displaced moving average
channel for the S&P 500 index. It typically acts as support or resistance to the markets longer trend.  Notice how the attempted rally in August moved the
index closer to the channel; but the market wiped-out that
effort in just a few days of trading. 

What about the Dow Jones industrial average?  Which economic anxieties were the catalysts as the Dow plummeted 344.65 points on Thursday ?  Was it that initial unemployment claims were near a 5-year high, the weak retail sales report, or fear of a global slow-down?

There is probably a little more work to be done on the downside, setting-up a decent bounce.  Again, historical patterns show a year-end rally typically starts in late September or early October. And the 4-year Presidential cycle pattern also favors a year-end rally.

Here are a few of the posts I found interesting this week:

• U.S. Near Deal To Save Freddie and Fannie (WSJ, Washington Post)
• Another Bank Fails: 11th this year, as Regulators shut Silver State (WSJ, FDIC)
• Swing-Trading the Sell-Off (TradingMarkets via Forbes)
• Who's afraid of Sovereign Wealth Funds? (Minyanville)
• James Surowiecki on "That Uncertain Feeling" affecting the herd of investors (New Yorker)
• Unemployment hits 6.1% and a closer look doesn't make it prettier (Dash of Insight, Portfolio)
• Bank of Canada Offers a Downbeat Outlook while holding rates steady (NYTimes)
• Did governments work together to save the Dollar? (Clusterstock)
• BMW sales up 2% last month, year-over-year (Bloomberg)
• Doug Kass says this is what market bottoms look like (Street.com)
• Trader Mike says we're not oversold yet (Trader Mike)
• McCain speech seen by record number of viewers (Bloomberg)
• Apple's iPhone making gains in business users (WSJ)
• Yahoo Below $19: Microsoft's $31 Offer is Looking Pretty Good Right Now (Silicon Alley Investor)

And, a little bit extra:

• Technology That Out-thinks Us: A Partner or a Master? (NYTimes)
• Numerati: How math models improve productivity and management (BusinessWeek)
• Lines and Bubbles and Bars, Oh My! New Ways to Sift and Visualize Data  (NYTimes)
• Microsoft has been granted a patent on 'Page Up' and 'Page Down' keystrokes (ZDNet)
• Invisibility Cloak becoming a reality; the challenge is seeing out of it (New Scientist, More)
• Facebook's hottest games (Forbes)
• Hulu Getting NBC Shows Before TV Does (Silicon Alley Investor)
• ESPN and Electronic Arts Innovating Play-By-Play Commentary (NYTimes)
• Google developed its own web browser called Chrome (CNet, WSJ)
• Andy Kessler's take on what Google is really doing with Chrome (Andy Kessler)
• Is the first Jerry Seinfeld ad for Microsoft funny?  You decide (NextWeb)
• Download Limits: Is "all-you-can-eat" Internet a thing of the past? (ABC)

Another week of big swings in thinly-traded markets.  There is a trading range in the S&P 500 where the bears defend the top (1295) and the bulls defend the bottom (1260). So far, no one is winning. Let's see which way things break; though a short-term move down here wouldn't surprise me.

Historical patterns show a year-end rally typically starts in late September or early October. The 4-year Presidential cycle pattern also favors a year-end rally.

Here are a few of the posts I found interesting this week:

• Lehman in urgent talks to secure a capital injection before earnings call (UK Telegraph)
• Worker Confidence sinks to levels of last recession (WSJ)
• Nightmare on Wall Street: Why the Credit Crisis has lasted so long? (Economist)
• Candidates on the Credit Crisis (Dash of Insight)
• Does history favor Democrats' economic plan? (NYTimes)
• Victor Niederhoffer on why the Markets continue to surprise him (Daily Speculations)
• A positive sign for markets: 64% of stocks above their 50-day averages (Bespoke)
• Is the "Bearish Crescendo" a contrarian sign of a market Bottom? (Shaeffers)
• Ten factors that contribute to Market Mood Swings (Seeking Alpha)
• To make a stock "pop" – Innovate (NYTimes)

And, a little bit extra:

• Great Photos from Beijing Olympics (Boston Globe, LA Times, Time, FT,The Star, S.I.)
• The Business of College Football is probably Bigger than you think (Forbes)
• Does it Matter that Internet Traffic is beginning to bypass the US? (NYTimes)
• Interesting comparison of housing market price declines in various cities (Bespoke)
• Obama's acceptance speech for Democratic Presidential Nomination (Politico, Many Eyes)
• Air-Ball: Game Ball Delivered by Parachute; Skydivers land in Wrong Stadium (Inquirer)
• Microsoft releases beta of a major new version of Internet Explorer (WSJ, Microsoft)

Another week of big swings in thinly-traded markets.  There is a trading range in the S&P 500 where the bears defend the top (1295) and the bulls defend the bottom (1260). So far, no one is winning. Let's see which way things break; though a short-term move down here wouldn't surprise me.

Historical patterns show a year-end rally typically starts in late September or early October. The 4-year Presidential cycle pattern also favors a year-end rally.

Here are a few of the posts I found interesting this week:

• Lehman in urgent talks to secure a capital injection before earnings call (UK Telegraph)
• Worker Confidence sinks to levels of last recession (WSJ)
• Nightmare on Wall Street: Why the Credit Crisis has lasted so long? (Economist)
• Candidates on the Credit Crisis (Dash of Insight)
• Does history favor Democrats' economic plan? (NYTimes)
• Victor Niederhoffer on why the Markets continue to surprise him (Daily Speculations)
• A positive sign for markets: 64% of stocks above their 50-day averages (Bespoke)
• Is the "Bearish Crescendo" a contrarian sign of a market Bottom? (Shaeffers)
• Ten factors that contribute to Market Mood Swings (Seeking Alpha)
• To make a stock "pop" – Innovate (NYTimes)

And, a little bit extra:

• Great Photos from Beijing Olympics (Boston Globe, LA Times, Time, FT,The Star, S.I.)
• The Business of College Football is probably Bigger than you think (Forbes)
• Does it Matter that Internet Traffic is beginning to bypass the US? (NYTimes)
• Interesting comparison of housing market price declines in various cities (Bespoke)
• Obama's acceptance speech for Democratic Presidential Nomination (Politico, Many Eyes)
• Air-Ball: Game Ball Delivered by Parachute; Skydivers land in Wrong Stadium (Inquirer)
• Microsoft releases beta of a major new version of Internet Explorer (WSJ, Microsoft)