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Here's the Size of the Scam the Fed and U.S. Companies Are Pulling on Us

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

DJIA news

Stocks have been on a tear. After looking weak in February, they've soared close to 13% in a matter of weeks.

So why does it all feel like a magic trick? Why isn't the market rally giving investors any solid feelings? Why is everyone so nervous?

I'll tell you what's going on, who's responsible, and what you need to do now. Let's get started...

Why This Rally Reminds Me of 2008

By , Capital Wave Strategist, Money Morning • @WallStreet_II -

It seemed for a minute that reality would bring some semblance of market-pricing to U.S. and global markets, because it's much needed.

But then central banks stepped in... again. I knew they would.

No, I'm not surprised that, all around the world, central banks continue to manipulate market-moving pawns across a chess board. And by pawns I don't mean economies, I mean equity market prices for banks, bank debt, and sovereign debt.

What is surprising is how blatant central bankers are becoming about the manipulation.

Under these conditions, the market - let's call it the "Extend and Pretend Market" - has some big opportunities and some pitfalls for investors.

So let's have a look at what's in store...

How To Make Sense of a Pathological Rally

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

market rally

Stocks rallied for the fifth consecutive week, erasing the losses suffered by the Dow Jones Industrial Average and S&P 500 to start the year. Fears of recession have receded and investors are now fretting that they may miss out on the next big thing if they don't dive back into the markets.

They should be careful what they wish for.

While it may be gratifying that the market didn't fall completely out of bed in the first quarter, there is still ample reason to believe that we are in a bear market and that recent gains are going to reverse sooner rather than later. One reason stocks rallied last week was that the Federal Reserve once again refused to take an opportunity, when market conditions were relatively stable, to raise interest rates. That leaves only investors to worry about when it might actually decide to do its job.

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This One Number Makes Me Think the Market Rally Is Over

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

bull bear

Nobody expected the type of market rally we saw in October.

So it's no surprise you're wondering, as we sit here in the first week of November, whether Santa Claus came early or whether the market will keep "melting up" through the end of the year. And I bet you're not the only one.

Here's the number I'm looking at...

Stay Away from This Irrational Indulgence

By , Global Credit Strategist, Money Morning • @MichaelELewitt -

How to Profit

When I see the market rally mindlessly - as it did on Friday, after the jobs report pushed the jobless rate down to 5.4%- I ask myself a set of questions like the following.

Do investors really think it's going to matter if the Fed raises interest rates by a quarter of a point in September instead of June? Do they really think it's normal that €3 trillion of European debt is yielding less than zero? The Swiss National Bank (Switzerland's Federal Reserve) owns $100 billion of stocks...Is that considered normal?

I can't be any more direct than this - sometimes the plane hits the ground before people have a chance to parachute to safety. Investors trying to ride this market to the bitter end are going to find the end is bitter, indeed...

Will the U.S. Stock Market Rally if the GOP Wins the Senate?

By , Associate Editor, Money Morning • @DavidGZeiler -

U.S. stock market

With a critical mid-term election looming Nov. 4, many investors want to know what impact the results could have on the U.S. stock market.

Money Morning Chief Investment Strategist Keith Fitz-Gerald thinks a Republican sweep of the House and Senate would probably deliver a modest U.S stock rally. In an appearance on FOX Business' "Varney & Co." show, he also warned that the GOP faces a fresh challenge that could threaten its victory.

In this video, Fitz-Gerald talks about that challenge and offers some key advice on how to deal with a rocky U.S. stock market.

Stock Market Today Reacts to China and Gold

By , Contributing Writer, Money Morning -

Disappointing news that China's economic growth slowed in the first quarter sent the stock market today (Monday) reeling.

Just before noon, the Dow Jones Industrial Average dropped 0.61% to 14,773.75. The Standard and Poor's 500 Index slumped 0.75% to 1,576.87. The Nasdaq fell 0.80% to 3,268.45. Oil slipped 3.44% to $88 a barrel.

And the biggest loser of the day, gold plunged as much as 6.3%, hitting a low of $1,384.60.

Dragging stocks down was a report that China's economy grew at 7.7% in Q1, weaker than the 8% growth economists were expecting, and down from Q4's 7.9%. This rattled global markets, as fears spread that there would be continued lower demand for Chinese goods and services.

"The international situation continues to concern people, both in regard to Europe and China," John Carey, a fund manager for Pioneer Investment Management Inc., told Bloomberg News. "People are watching for some signs of improvement in both areas. Otherwise we're just in the early stages of earnings season, so people will have one eye on what's going on outside the U.S. and another close eye on what's happening with regard to earnings."

More than 75 members of the S&P 500 are scheduled to report earnings this week. Here are some to watch, along with the biggest headline makers in the stock market today.

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Stock Market: Q1 Was One for the Record Books, So What's Next?

By , Contributing Writer, Money Morning -

The U.S. stock market logged an impressive first quarter.

Shrugging off budget cuts, tax hikes, and more Eurozone misery, U.S. stocks climbed to record territory on several occasions.

On March 5, the Dow broke through its record close of 14,165, previously hit Oct. 9, 2007. Meanwhile, the S&P has been flirting with its 1,565 record high for weeks.

The most recent milestones came Thursday when the Dow Jones Industrial Average closed at yet another record, and the Standard & Poor's 500 Index finally closed above its all-time high.

Thursday closed out Q1 with the Dow adding 52.38 points, or 0.36%, to close at 14,578.54. The S&P tacked on 6.34, or 0.41%, to close at 1,569.19.

Here's a look at the quarter's biggest gains and losses, as well as what investors should do now as we head into April.

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Dow Hits Record High – What Does That Say About the U.S. Economy?

By , Money Morning -

Equity market cheerleaders got very excited about the Dow Jones Industrial Average hitting a new record high yesterday (Tuesday).

The Dow closed at 14,253.77, topping its previous record close of 14,164.53 on Oct. 9, 2007.

While it is nice to see a sign that equities are improving following the devastating shock of the financial crisis of 2008, today's Dow Jones Industrial Average is not the same index as it was in 2007.

In fact, if we look back at when the Dow Jones Industrial Average last exceeded 14,000, we'll see that the Dow seems to have less of a connection now to what is really happening in the economy than it did in 2007.

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As Volatility Hits New Lows, It Could Be Time to Sell

By , Chief Investment Strategist, Money Map Report • @kfgtotalwealth -

Since January 1st, the average daily price volatility of stocks has fallen more than 60%. It's the biggest straight-line drop in 82 years.
A lot of investors are rejoicing. After all, stocks have risen an average of 17% a year when volatility is this low, Bloomberg reports.

[rwc_chart_single name="VIX"]

There is, however, a dark side. Periods of abnormally low volatility are a warning bell. Namely, they tend to precede powerful reversals that can wipe out investors, as was the case in 2000 and early 2008, and at other key turning points in the past 100 years.
So today let's talk about what low volatility means for you - both in terms of upside and how to protect yourself in a downslide.
If nothing else, <a href="https://moneymorning.com/2013/02/22/as-volatility-hits-new-lows-it-could-be-time-to-sell/"you've got to see this chart...

Is the Obama Stock Market Rally the Real Deal?

By , Money Morning -

At first glance, there can be no doubt that U.S. President Barack Obama has been good for the stock market.

The Standard & Poor's 500 Index has rallied by nearly 700 points - just shy of 86% - since the president's first Inauguration on Jan. 20, 2009.

This is the best stock market performance for a presidential first term since World War II, even beating the 79.2% rally during President Bill Clinton's first term in the White House, from January 1993 to January 1997.

In fact, the only time stocks rallied more during a presidential first term was during Franklin Roosevelt's first term from March 4, 1933, to Jan. 20, 1937, when the Dow Jones Industrial Average rose 245% off of Depression-era lows.

In a very broad sense, the condition of the stock market at the start of President Obama's first term in 2009 can be compared to the stock market in 1933. In both cases, stock prices had collapsed and were trading at generational lows when both presidents took office. In both cases, share prices rallied substantially off of the bottom as economic conditions improved.

But all this really proves is that the first leg of any rally is usually the strongest and most profitable.

As the S&P 500 is at a five-year high and is zeroing in on the 1,500 level for the third time in its history, one has to wonder if the Obama Rally is sustainable or are we just reverting to the mean?

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Stock Market Today Battles the Apple Effect

By , Contributing Writer, Money Morning -

The stock market today was proof that one bad apple doesn't spoil the whole bunch.

The Dow was up 55 points by 3:15, the S&P 500 up 1 - but the Nasdaq did slump 20 points, dragged down by Apple Inc. (Nasdaq: AAPL).

Thursday's advance came on the heels of the Dow's 67-point rise Wednesday which was stoked by a vote in the House of Representatives to suspend the U.S. debt ceiling through May 19.

Also propelling gains Wednesday were strong results from tech heavyweights Google INc. (Nasdaq: GOOG), which beat estimates and spiked $38.63 points higher, and International Business Machines Corp. (NYSE: IBM), which rallied 4.4% after posting better-than-expected numbers.

To date, some 75% of the 134 companies in the S&P 500 Index that have reported results have handily beat expectations.

"People are just trying to digest all the earnings reports from the various companies. As long as the economy seems to get better the stock market will do well," Giri Cherukuri, portfolio manager who helps manage $3 billion at Oakbrook Investments LLC in Lisle, Illinois, told Bloomberg.

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Stock Market Today: How Earnings Are Shaping the Week

By , Contributing Writer, Money Morning -

Following gains to multi-year highs last week, the stock market today took a breather, after being closed Monday in observance of Martin Luther King Jr. Day. In early afternoon trading, the Dow Jones Industrial Average tacked on 37 points. The benchmark hit its highest close since December 2007 last week. Meanwhile, the Standard & Poor's […]

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Stock Market Today: Rally Over Already?

By , Contributing Writer, Money Morning -

The stock market today (Thursday) so far has failed to continue yesterday's rally that delivered the Dow Jones Industrial Average's biggest one-day gain since Dec. 20, 2011.

After Washington announced a fiscal cliff deal Tuesday, investors raced into stocks and other risk-on trades, relieved that the country wasn't going to tumble over the dreaded fiscal cliff.

"You've just removed a huge worry from the market," Jonathan Samson, chief investment officer at Samson Capital Advisors told The New York Times.

In response, the Dow finished the first trading day of 2013 up 308. 41 points, or 2.35%. The gains also propelled the benchmark index to its highest close since Sept. 14, 2012. Volume was heavy with more than 4.5 million shares changing hands on the Big Board.

The Standard & Poor's 500 Index added 36.23 points, or 2.54%, and the tech heavy Nasdaq tacked on 92.75 or 3.07%.

Gold gained $13 to close at $1,688.80; silver added 78 cents to $31.01, and oil gushed higher by $1.30 to finish the day at $93.12.

But by 10 a.m. today, the Dow had slipped more than 30 points, or 0.23%.

Some Wall Street analysts were quick to warn that the fiscal cliff euphoria will die out by next week, and that yesterday's rise was nothing more than a short-term relief rally.

"Considering there are so many headwinds facing the economy, including the debt ceiling negotiation in 60 days, the smart money knows the bullish sentiment will be short-lived. The lesson for investors here is 'buyer beware,'" Todd Schoenberger, managing partner at LandColt Capital wrote in an email to FOX Business Network.



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Here's When to Expect an Operation Twist Market Rally

By , Money Morning -

After the U.S. Federal Reserve announced yesterday (Wednesday) that the central bank would extend Operation Twist, the markets dipped then climbed back to finish basically flat for the day.

Today all three major indexes are down nearly 2% or more. The Dow Jones sunk more than 250 points, or 1.96% to 12,573.57. The S&P 500 fell 2.23% to 1,325.51.

So when will the fun begin, if ever, following this new dose of stimulus?

That's what Money Morning Executive Editor William Patalon III wanted to find out.

In his Private Briefing newsletter yesterday, he asked Money Morning Chief Investment Strategist Keith Fitz-Gerald what investors should expect following this latest Fed move.

Bill wanted to know three things about the second round of Operation Twist:


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