10/28/10…autopsy?

(50,000 hits since 11/07…finally! Thank you kind readers, even those who are not so kind. TB)

…autopsy?… topsy or turvy…we need Quincy! There was a very funny comedian who did a great routine on those lines imitating How-word Co-sell calling the World Series, which, Texas fans saw an incredible rout by the Gi-Ants against the best hitting team in major baseball that was in danger of depleting the entire pitching staffs of both teams. Despite an 11-4 lead in the top of the 9th there were two changes by the Giants as the bases were loaded with one out and the agony of defeat had a grandslam come up with some follow thru from the silent bats…at one time the Park Rangers allowed FOUR unanswered runs! …but TB digresses…time for an autopsy of this weeks markets with particular emphasis on yesterday: it was a down day most of the session:  stocks, bonds, commodities (including gold and oil!), with dollar up almost imperceptibly into the double-top created last week! Let’s see…what else was up??? VOLATILITY!!!

Both VIX (S&P 500) and VXN (Nasdaq 100) volatility rose above the trading ranges of 10-11 to 10-25 which was created on the plunge thru the 200 day from October 5th to a high level of complacency…hard to imagine being complacent in this environment but with the prospects of a visit from QE2 (not the ship!) as early as next week, and some minor improvement…bridge players would call it nothing more than a ‘temporizing bid’…in home sales (who cares that Case-Schiller prices continued to fall or that we still have a major foreclosure crisis on our hands that threatens to sap bank capital even as they continue to deplete loan loss reserves as all’s swell that ends swell as the immortal bard might have been tempted to rename it were he alive today), and “doubtful” goods orders which surprised to the upside – surprise! surprise! as Jim Nabors would say – which was caused by a few wealthy people and some bored CEO’s ‘re-fleeting’ so as not to be zipping around in a ‘dated’ and tiring plane…perhaps like one billionaire having them painted with pinstripes?

If trickle down works, that means that while those private aircraft companies won’t be hiring they also won’t be laying off…just yet…and that means those people will retire their own personal autos and buy a new car…is there a Ford in your future? …oops…that was last quarter! Bet Laffer and Kudlow are convinced this means Rosie Scenario is just around the corner!

Regarding QE2, Bloomie reports today that the Fed is going around asking bond dealers how much QE would be a good thing…read: how much debt can we issue without blowing up the dollar…or more accurately sinking it OR how much can we YOU put you down for? Whatever happened to a strong dollar which hasn’t been uttered inside the beltway in decades…no sir…weak is good because companies will sell more products that they made…or more accurately were made for them abroad in China and Injia…are you brushing up on your Mandarin? Gung ho fat boy! …well if you say it fast it almost sounds like Happy New Year! …and that means jobs…hiring…yes! MORE outsourcing, that’s the ticket.

But what about those millions of out of work Americans? “Not our problem” say CEO’s, CFO’s. private equity geeks…we are out for quick, short-term gains…let our successors or those who take us out of our speculative ventures worry about it…just like the Koch brothers care about global warming or polluting the planet!

Sorry, back to the market…the Dow came back from down 150 – and just 20 points from the psychological 11k support to close down just 43 while the two Nasdaq indices closed GREEN…not so the Russell 2000 small cap…where the only green was envy…small caps for those of you who don’t know indicate whether there is growth.

Also, don’t you think it interesting that the blue chips suffered the most only being pulled back just before the close? TB does…and it isn’t pretty! Meanwhile, bonds are inundated with supply and fears of how much more is to come…gold and crude? They go as the dollar goes or more accurately in the opposite direction…so it was that the yellow metal was down yesterday and up today (+$9.70 vs -$16.00) while crude is up 28 cents vs down 61, both bad ratios!

Speaking of ratios, how’s this: in a market that was DOWN the entire session, there were 176 new 52 week highs on the three exchanges!…but new lows finally rose to 56. We have seen this phenomenon at least twice in the last week! How can you have that many new highs when the market is down all day? Beats TB! Thank you flash traders and those of you who want to short it but not by the hair on their chinny chin chins! Moving right along, look at Advance/Declines: NYSE -1.9:1; Nasdaq -1.6:1; AMEX -1.7:1. Now check this out: BREADTH -1.8x on NYSE and -2.5x!!! on AMEX BUT +2x on Nasdaq!

TB should add that NYSE Volume since 10/20 is just 987 million shares with Friday’s 773 million being the second highest year-to-date. You have to go back to 10/18 to find an above average day (1.27B) and that only boosts the average volume to 1.02B shares (the prior 1.2 billion share plus day was 10/15 (1.42B shares, highest of this quarter and only fourth 1.2B plus day). No money is being made here…no direction formed!

We truly are in the silly season and if you can figure it out then perhaps it is you who should be off to the funny farm! It does not compute!

Back to bonds…with 7 year note now yielding 2%+ 10 year 2.70%, and 30 year 4%+, couldn’t bonds soon rally on QE2 failure? You betcha, Red Ryder! Next week?

. . . - - - . . . . . . - - - . . . (S.O.S.)

Once again, TB is at the epicenter as Minnesota saw a record low barometer reading Tuesday of 26.75 inches (96.9 millibars) which is normally associated with a force five hurricane. Not only that but the speed of the drop was unprecedented as TB found out thinking his barometer was kaput! Not so. But TB had not only seen this before but worse: November 1965 in a massive typhoon on a destroyer in a task group headed back from WestPac…it was awesome! 90 foot waves…ship taking 80 plus degree rolls, alternating between the bow of the ship and stern being out of the water…when the later happens the sound is deafening as the engineers try to slow the shafts so they don’t destroy the bearings (the lowest barometer reading ever recorded was in January 1945 – Halsey’s Typhoon that sunk nearly a dozen warships and cost hundreds of lives…also the fastest plunge). This is what you see in a hurricane (same as a typhoon only less deadly and in western hemisphere), until you get to the ‘eye’ when it shoots up like an elevator! People were commenting here that boiling water was taking longer an cooking along with it…that is because it is the same as in Denver.

G’day, mates, and once again “illegitime non carborundum” or don’t let them get you down!

TB

Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries...as he sees it...and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Copyright TBD Capital LLC, October 28, 2010.

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