Wednesday Outlook: Propping Up Markets

July 14, 2009



It’s hard to understand markets emotionally sometimes. When volume is low, it’s easy to push things around for those who can. I don’t see any vast conspiracy as some have suggested I do, just the facts. Whether the financial media has the guts to call things like they are or not is another story. The AP headline today read: “Goldman Sachs’ $2.7B profit shows the firm’s prowess.” Good Grief! You have to hand it to Da Boyz, they know how to bedazzle Main Street. Anyone with a HAL 9000, their bad debts taken off their books, billions in public money to trade and most of their competitors (Bear Stearns and Lehman Bros.) eliminated should do just dandy. “Prowess”? My okole!

Retail sales were “better than expected,” they tell us, and below is a portion of the news release; but, you should read between the lines. If gasoline prices are higher then so too is that major component of retail sales. Duh! As for car sales, they’re being dumped onto the markets.

“Outside of gasoline and motor vehicles, sales were mixed but mostly down. Notably, building materials & garden equipment fell 0.9 percent. Consumers are eating at home more as food services & drinking places also declined 0.9 percent. General merchandise slipped 0.4 percent. On the positive side, gains were led by electronics & appliance stores and by sporting goods, hobby, book & music stores, both gaining 0.9 percent.

Overall retail sales on a year-ago basis in June were down 9.0 percent, improving from down 9.8 percent in May. Excluding motor vehicles, the year-on-year rate slipped to down 7.9 percent from down 7.6 percent.”

Nevertheless, markets were sold early and then rebounded as conditions today are easily propped. After the close, Intel (INTC) reported earnings that beat lowered estimates and stocks are taking off in extended trading.

Volume was light once again while breadth was quite positive and that’s reflected in the advancing McClellan Oscillator displayed below.

click to enlarge





The McClellan Summation Index is recouping, and like last month, the descent is reversing.

























































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