Market's identity crisis marches on
Wall Street's apparent strength is still just as illusory as it was this time last year. And we know how that movie ended. Think 'Jekyll and Hyde' rather than 'Hoosiers.'
For years, Amazon.com (AMZN) always rallied after release of the company's quarterly results, regardless of what those results were. After starting out with its usual upside performance following release of results for last year's fourth quarter, however, the stock quickly gave up those gains, and more, before moving sideways. Thus, I was curious to see what it would do when the company announced its first-quarter earnings on April 25.
I had a feeling that the stock might be a canary in the coal mine for the stock market at large. It was just a guess on my part, and a pretty tenuous one; but to my way of thinking, Amazon essentially has no fundamentals, since there has been no way to handicap what might make the stock go up or down.
Amazon discovers gravity
In fact, the stock did decline on April 26, to the tune of 6%, and looks to me like it may have "failed." In addition, given the proximity of the all-time high for the Standard & Poor's 500 Index ($INX), I thought perhaps a failure in Amazon might be an indicator of one for the S&P and the Dow Jones Industrial Average ($INDU). (The Nasdaq Composite Index ($COMPX), though, doesn't look the same.)
Again, this is a pretty thin reed, but when it comes to trading (guessing), you have to have a bit of imagination. I am, therefore, watching the stock market a little closer than usual for a chance to make a little money on the short side. But I will have a very tight leash, as bad news has not really worked as a catalyst for equities to decline.
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For example, I was briefly short some equipment stocks a couple of weeks ago because I expected Intel (INTC) to cut its capital-expenditures forecast. It did, and I had a small victory, but that was because I was quick to cover those positions.
Meanwhile, KLA-Tencor (KLAC) last week had to reduce its guidance for the second quarter (as a consequence, no doubt, of Intel's reduced capital expenditures) and shares declined 8% or so when it reported. However, two of its competitors, Lam Research (LRCX) and Applied Materials (AMAT), both ignored the news.
I can see how we could potentially be experiencing a failing rally in the stock market, which might be a big deal. But trying to make money on the short side is still nearly impossible (though obviously if we do see a failed rally, that would soon change).
Earnings season and macro data have been anemic at the margin, but rather than disappoint the bulls, all they have done, for the most part, is assume that the Fed won't be stopping any of its money printing on the early side, as many had been predicting. And yes, this is the exact movie we have seen for three years in a row. But none of those things seem to be a factor.
The only substitute is sanity
If there has been one constant in the money-printing binges we have seen since the mid-1990s, it is that when stocks mindlessly climb higher -- whether it be 1998-2000 or 2004-2007 -- nothing else seems to matter.
This is particularly maddening if you concluded, as I have, that you weren't sure money printing would create activity in the gross domestic product (and thus chose not to want to own stocks) but were certain we would see money printing (and chose to own gold.)
Gold has an amazingly powerful set of fundamentals, but that has not mattered for a couple of years. Meanwhile, the stock market fundamentals are awful, but that has not mattered either. That will change; we just don't know when.
On that subject, I was recently sent a quotation from Paul Singer at Elliott Management that was so perfect I thought I would share it here:
"The world is on a seemingly one-way trip to monetary debasement as the catchall economic policy, and there is only one store of value and medium of exchange that has stood the test of time as 'real money': gold. We expect this dynamic to assert itself in a large way at some point. In the meantime, it is quite frustrating to watch the price of gold fall as the conditions that should cause it to appreciate seem more and more prevalent.
"Gold may not exactly be a 'safe haven' in the sense of an asset whose value is precisely known and stable. But it surely is an asset that, in a particular set of circumstances, becomes a unique and irreplaceable 'must-have.' In those circumstances (loss of confidence in governments and paper money), there are no substitutes, and the price of gold may reflect that characteristic at some point."
King World News
In my latest interview with Eric King, I go into detail on the gold and silver markets, as well as mining stocks. Interested readers can listen here.
At the time of publication, Bill Fleckenstein owned gold.
"end of the world as we know it;" scenario will still be what the medium of exchange
will be....Dollars, Euros, Yen, Wampum or ??? Somehow, I cant envision paying your
barber with $20 Libertys and expecting him to be able to make change....
The elites and banking cartel are drawing in the potato heads that see numbers go up buy in the illusion it's getting better(not) so your capital is drawn away to the coffers of the elite. There will be some tears from crash we'll probably see Cyprus style raiding of pension funds and bank accounts to cover bank losses' and pension bailout fund(it's insolvent) lets' not leave out capital controls. You can only withdraw so much of your money at a time. Many reading this will be in the street or casualty of mass riots. That will happen when all pension money stops disability payments stop welfare/social services stop. Shadow Government Statistics Analysis Behind and Beyond Government Economic Reporting at is worth looking at. This summer and fall will be filled w/uncertainties'
One China is holding a financial summit including BRICS w/could be official announcement of dropping USD as world reserve currency. There storing vast reserves of gold w/BRICS you might say their heading for the exit. We're cooked.
"On the night of Sept. 11, as the Obama administration scrambled to respond to the Benghazi terror attacks, then-Secretary of State Hillary Clinton and a key aide effectively tried to cut the department's own counterterrorism bureau out of the chain of reporting and decision-making, according to a "whistle-blower" witness from that bureau who will soon testify to the charge before Congress, Fox News has learned." ---from Fox News
Looks to me like this bitch is toast. If it turns out she was responsible for the death of four Americans by cutting off military support... (just to prop up Obama's campaign?!?!) , there should be criminal proceedings.
(Note: msn won't report about this so I decided to bring it up here....)
History repeats itself and I believe we are at a historic crossroads. Gold became an asset in the 70's. One must consider that those merits have never been questioned by anyone. As for myself I purchased a large amount of gold in September of last year and I believe this was a wise decision as history will soon repeat itself.
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ABOUT BILL FLECKENSTEIN
This column is a synopsis of Bill Fleckenstein's daily column on his website, FleckensteinCapital.com, which he's been writing on the Internet since 1996. Click here to find Fleckenstein's most recent articles.
[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.
The final week of August represented one of the quietest stretches for the stock market so far this year. The first four sessions of the week produced the ... More
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As the devil-may-care bravado of Wall Street marches on, history warns that -- in the end -- there will be the devil to pay.
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