Stock Market or Market System?

Today we saw unprecedented volatility occurring within a few minutes. The explanations coming out of news services leave me unsatisfied that there is anyone taking time to think before they publish something. I suppose there will be time for that later. Now however, there are some observations being made that make me wonder. The financial crisis in Greece is the easiest and most obvious topic area for initial focus. But there has actually been some signs of responsibility from the government of Greece in that they passed an austerity plan yesterday to show good faith to the world, that they will begin to spend less beginning now. Greeks are rioting in the streets on that but they are not investors who can move the markets. Is this an example of "buy the rumor, sell the news"?

There have also been reports of errors being made on trading systems. This news is going to take awhile to get facts on. Here is the beginning of a report, based on rumors, from CNBC, always fair and factual... LOL, In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses—all apparently due to a trader error.

So far, here are pieces of today's news, all from Bloomberg, that covers the bulk of what might have influenced markets today.

Moody's, Fitch, S&P All Still Suspects

Bill Gross reminds me that the corruption within our revered rating agencies is still in need of respect. They are flying under the radar now while Congress and their cohorts, the financial press, drag Goldman through the meanderings of progress. Here is the essence of the brief message from Mr Gross this month in his Investment Outlook. BTW, I do not endorse his statement that describes his staff at PIMCO. I believe this is knowledge a good bond manager has known for several years, and it is not unique to large firms.

"Still, as future bond issuers belly up to the bar with their rating agency seals of approval, it is incumbent on the buying public to treat those IDs with a healthy skepticism. Firms such as PIMCO with large credit staffs of their own can bypass, anticipate and front run all three, benefiting from their timidity and lack of common sense. 

BEA News: Personal Income and Outlays, March 2010

The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:  
Personal income increased $36.0 billion, or 0.3 percent, and disposable personal income (DPI) increased $32.3 billion, or 0.3 percent, in March, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $58.6 billion, or 0.6 percent.
The full text of the release on BEA's Web site can be found at http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm.

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U.S. Bureau of Economic Analysis · 1441 L Street NW · Washington DC 20230 · 202-606-9900

Market Data, Week Ending April 30, 2010

Market Index	2009 Close	4/30   Close	Week Change	YTD Change
Dow Industrials Avg	10428.05	11,008.61	-1.75%	5.57%
S&P 500	1115.1	1,186.69	-2.51%	6.03%
Fed Funds Rate	0.25%	0.25%	0%	0%
10 yr T-bond Yld	3.85%	3.65%	-0.16%	-0.20%
5 yr T-note Yld		2.42%	-0.17%
5 yr infl adj Note		0.39%	0.10%
Implied 5 yr Inflation %		2.03%	-0.27%
2 yr T-note Yld	1.14%	0.96%	-0.11%	-0.18%
2-10 Yr Slope	2.70%	2.69%	0.11%	-0.01%
90 day T-bill Yld		0.15%	0.00%
Gold ($/oz)	$1,096.95	$1,180.70	2.29%	7.63%
WTI Oil ($/brl)	$79.36	$86.15	1.51%	8.56%
Credit Spread		4/30   Close	Week Change
Inv Grade Credit Idx		4.75%	-0.10%
Low Grade Credit Idx		8.22%	-0.03%
Markit CDX Inv Grd Idx		89	0.00%
Markit CDX Mid Grd Idx		141	2.92%

Bull, Bear, Secular, Cyclical... Jibber Jabber

Technically speaking... Tim Wood is a market technician who focuses on identification of long-term trends, trying to identify when they will change direction. It seems like an art to me, but he approaches it using a science called Dow Theory. He writes about his observations of trends and does a good job of explaining how he comes to his conclusions. He continues to hold that the stock market began a long-term bear market after reaching the current market high water mark in October of 2007. More technicians say that the secular bear market began with the inflation-adjusted high water mark, reached in 2000. Tim Wood has a description of the length of time he would expect a secular bear market to last, following the peak reached in 2000. He concludes it was scheduled to reach it's low point in 2009, like we saw in March in 2009. That would end the secular bear market, unless you are Tim Wood. When the secular bear market trend begins is important as he explains.