In the markets today, the Dow sat 25 points lower than Friday’s close, 13,553. Nasdaq minus 23 points, 3,157, and the S&P lost 4 points, lowering to 1,455.
Oddly enough, Monday downturns are nothing new:
“Monday is the only day the stock market is more likely to fall than to rise,” The Associated Press reported last month. “The Dow Jones industrial average has been down 10 of the past 11 Mondays. And the two worst days in market history are both known as Black Monday.
“There’s no single reason why Mondays are so blue,” AP goes on. “Then again, there’s no single reason the market rises or falls on any given day, driven as it is by the whims of traders placing millions of individual buy and sell orders.
“Some anecdotal evidence comes to mind: Companies are prone to release bad news on Friday nights, when fewer people are paying attention. Monday is the first day investors can react.
“And when companies collapse, they often do it late Sunday or early Monday, after spending a last weekend trying to stay afloat. See Wachovia, Bear Stearns and, most famously, Lehman Bros. investment bank, on Sept. 15, 2008.”
Likewise, gold lost $12.40 of its gains last week, grabbing a chair at 1,756.60. Silver plopped down 56 cents, now resting around $34.08.
Oil keeps the low it attained last week after the mystery plunge on Monday and the downward hangover thereafter. It now sits at $91.25.
“I have said before that I think the oil bull market is on its last legs,” Chris Mayer offers up, our guess hearing someone say “oil.”
“In this,” Mr. Mayer goes on, “I’m just playing the odds. History and economics dictate what those odds look like.
“For example, we know stock markets don’t trade for 30 times earnings — as the US stock market did in 2000 — for long. That was a figure far above the long-term average for stocks. And stocks subsequently crashed,” Chris points out.
“We know housing prices can’t sustain a price of 32 times the cost to rent them — as they did when housing prices peaked in 2006. That was again far above the long-term average of just 20 times. Housing prices later crashed.
“Similarly, we can conclude that the current oil price — which is currently 230% above its long-term inflation-adjusted price — won’t last either.
“The current bull market began in 1998. The average oil price in 1998 was just $11 per barrel. So the current bull market is 14 years old. And the US oil price is nearly nine times what it was in 1998,” Chris concludes. “It’s been a great run.”
Addison Wigginfor The Daily Reckoning
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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