10/30/10…crosscurrents

Bloomberg Quote of the Day: “Youth is the gift of nature, but age is a work of art.” – Garson Kanin…he knows of which he speaks…bet you he isn’t young! Youth is wasted on the young. TB

…more accurate would be whirlpools. A whirlpool is a rapidly rotating current of water,  a vortex, a magnetic, impelling force into which one may be pulled…sucked in. That about sums it up because just when you think it is safe to go back into the water, kapow!

TB was on a destroyer, at the helm traversing the San Bernardino Straits in the Phillipines and could see huge eddies…perhaps 500 yards across…and feel the pull on the ship against the helm…you have to stay on your toes or all of a sudden you are headed in the wrong direction. Sailors also know to swim clear of a sinking ship as it will suck you down with it. Investors however are oblivious to these phenomena of physics. Oh well.

Yesterday, the Dow closed down 12 points but was off 64 at the session low. This after being up 54 shortly after the open and then fading to midsession wherein it began its long climb back. But look: 19 stocks were up, 10 down, but the decliners were led by MMM which cost 40 index points on disappointing earnings and forecast! IBM and CAT followed suit giving up about 4 each. Contrast this to the advancers led by Disney with 4.5 points and the top TEN made up less than 30 points combined! The Russell 2000 had 2:1 declining, while the Nasdaq 100 closed up by 11:5, while the Composite had 1.5:1 declining, and the S&P 500 was barely positive by less than 1.1:1, as were Transports. That a day that opened with so much promise ended so weakly is telling.

Yesterday TB discussed the market metrics and it didn’t get any better yesterday. On Wednesday, despite the market being down all day we managed 176 new 52 week highs! The same situation occurred last Friday! How can you get that many new highs on a day that is down from the open thru the session??? Yesterday we were up for only the first hour or so yet we had 278 new highs…149 of them on the NYSE! Now let’s compare advance/declines and breadth

10/28       10/27

Advance/Declines

NYSE              +1.1:1            -1.9:1

Nasdaq                  -1.4:1           -1.6:1

AMEX                  1:1          -1.7:1

Breadth

NYSE              -1.1x            +1.1x

Nasdaq                  +1.1x            +2.0x

AMEX                -1.8x             -2.5x

Talk about inconsistencies…aka: lack of direction or whirlpools!!!

TB won’t bore you again with volume figures except to say that yesterday’s was 1.0B shares…the range for the entire week, coming off last Friday’s 773 million share day which was the 2nd lowest of 2010, is just 966 million to 1.02M shares…nearly 200 million below average! That narrow a range has not been seen since the week of 9/10 when we put in the low for the year of 756 million shares…not something to be proud of!

Let’s put this puppy to bed with one last observation: ridiculously low Libor rates are again declining and that means either there is scant loan demand or the banks are becoming more cautious…TB believes it is safe to say there IS loan demand. Is this a sign of a strong economy? Next week we get the FOMC meeting followed by payrolls on Friday…will 600k or more souls miraculously get jobs? Does the recent decline in Weekly Jobless Claims mean fewer layoffs or does it mean as it does with Continuing Claims that benefits are exhausted…or those being laid off already used up theirs? Does dollar weakness translate to increased exports or just higher import costs and commodities prices (the danger of being the reserve currency of choice)?

Note Merck’s earnings this morning….a DRUG company that beat estimates on LOWER revenues but thanks to ‘cost-cutting’ beat on earnings!!! Is this sustainable? Hell no!

. . . – – – . . . . . . – – – . . . (S.O.S.)

‘Red sky at night, sailor’s delight…red sky at morning, sailor’s take warning. TB just watched the most beautiful sunrise over St. Albans Bay on Lake Minnetonka, MN. It was BRIGHT red…heed!

Have a wonderful weekend but beware of ghosts, goblins and things that go bump in the night! Happy Halloween…eerie, huh? Pray for a November that is good to us…the elections most likely will not be!

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 29, 2010.

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