Calm Before the Storm

Does this stock market action feel a bit eerie to you, or is it just I? For the week the VXO swooned 14%, ending at the ridiculously low level of 12.34. Stock indices lost just fractionally, while precious metals traded flat. AAPL just managed to hang on above the $700 per share threshold. Is this consolidation or a ceiling? I continue to expect a significant correction from these levels very soon. Time will tell. My sense remains to stick with cash, but I’m getting close to adding PRPFX, which performed very nicely through Bernanke’s former QE manipulations. I’m holding off for a better price as nearly all assets look expensive at these levels.

Monday, markets in Japan were closed, but stocks in the rest of Asia declined slightly. Stocks in Europe dropped 0.4%. U.S. stocks lost 0.6% on low volume as AAPL knocked on the door of $700 per share and oil fell 3% on high inventory numbers. Lackluster trading marked Tuesday market action, starting with Asia down 0.4%, followed by Europe down 0.2%, and U.S. down 0.2% on low volume. VXO plummeted nearly 5% to close at 13.31. AAPL closed above $700.

Wednesday, the big news came from the decision for more QE from the Bank of Japan to the tune of Y10 trillion. As mentioned last week, these actions have reached the “last bullet” phase, as each successive announcement has an ever-diminishing effect on a grossly overpriced market. Predictably, stocks in Asia rallied on the news to close up 0.7% on low volume. Stocks in Europe gained about 0.4% and in the U.S. less than 0.2%, also on low volume. The price of oil plummeted 5% as Saudi Arabia attempted to talk the price down. Finally, from the frothy stock department, Facebook gained 6.5% to close at 23.60, while IBM closed at the unsustainable price of 206.43.

On Thursday Asia again led the morning news with more disappointing reports regarding the Chinese economy. Stocks there closed down 1.1%. Negative PMI reports also in Europe moved European stocks lower, but they recovered to close nearly flat. U.S. stocks lost about 0.3% on low volume. While AAPL closed just below $700 per share, VXO dipped to an abysmal 12.92.

Like cockroaches emerging through cracks in the floor, six Federal Reserve officials gave speeches Thursday. Obviously, they need to obfuscate their latest bailout of cartel banks by further polluting the Federal Reserve’s balance sheet with toxic MBS’s (taxpayers ultimately responsible), giving cartel banks newly created dollar credits in return and thereby foisting inflation upon the public. Friday, stocks in Asia corrected somewhat from the previous day’s loss, to close up 0.7%. Stocks in Europe rose 0.4% on hope. In the U.S. stocks traded flat while VXO plummeted another 4.5% on stepped-up stock market volume, likely related to quadruple witching (options of many sorts expiring).