10/4/11…just as TB ‘didn’t’ say!

TB’s Quote of the Day: “A thought not expressed is a waste of time.” TB, and…

“A rolling stone gains momentum.” Alfred E. Neuman in MAD Magazine, and…

“10/4”, Broderick Crawford in the early television series Highway Patrol

Volume rose to 5.9B shares in a devastating session that had two cycles into the black before caving during the day as the selling gained momentum. This was way up from Friday’s 4.56B shares on a deadly last day of the quarter, and the highest of the entire selloff. NYSE stocks while trades executed on the Big Board rose to 1.4B from 1.32B shares – highest since 9/22. It crossed 800M two full hours before the close…lately this happens in the last 15 minutes or less, and 1MM 15 minutes prior to the close, leaving 400M in the final 15 minutes…huge, and a massive wave of selling to new lows! Advance/Declines were ugly again: -10:1 vs -3.9:1 on NYSE and also -10:1 vs -3.4:1 on Nasdaq. Breadth was putrid: -30x vs -16x on NYSE and -10x vs -9.2x on Nasdaq! New 52 week highs were weaker at 23 vs 34, while new lows tripled 1595 vs 572, obliterating the high a week ago Thursday of 1499!!! This level has only been seen a few times…think 1987 and 2008 – the ratio is now -65:1! The VIX surged to 45.45 +2.49, closing just off the session high and is the second highest since the selloff began. 48 was the selloff high, not seen since 5/21/10: 48.20! It may well be tested…today?

Here are the results: Dow -2.4% vs -2.2%; Transports -3.6% vs -3.5%; S&P 500 -2.9% vs -2.5%; Nasdaq Composite -2.9% vs -2.6%; 100 -2.5% vs -2.7%; Russell 2000 -5.4%! vs -2.8%%; NYSE Financials 4.4%! vs -3.6%. Only the two Nasdaq indices are up for the past twelve months and thy gave away a big chunk of what they had. The most troubling though are financials and especially the Russell 2000 small cap!!!

Global stocks are being hammered for a FIFTH straight session with a couple of exceptions which are still net down: FTSE -3.4%! vs -1.7% vs -1.3% vs -0.7% vs -0.2%; CAC 40 -3.2% vs -2.3% vs -1.8% vs -0.1% vs +0.1%; DAX -4.1%! vs -2.8% vs -2.5% vs -0.4% vs +0.1%; Nikkei -1.1% vs -1.8% vs flat vs +1% vs +0.1%; Hang Seng -3.4%! vs -4.4%!!! vs -2.3% vs closed vs -0.7%; Korean KOSPI -3.6% vs closed vs flat vs +2.7%!!! vs -0.7%; Indian Sensex -1.8% vs -1.8% vs -1.5% vs +1.5% vs -0.5%. Will this quarter be even uglier than the last one? U.S. futures following suit: DOW -172; SPX -12; NDQ -20. Bonds a little better after Yesterday’s rally on stock weakness. Currently 10 yr is 1.74% +3/16 after a RECORD low 9/23 of 1.6855%; 30 yr just set a new low yield of 2.71% +1/4,taking out the low of 2.748% on 9/23. Long TIP 0.80% +1/2!

Gold held above $1600 for a second day and significantly added to its bounce($1657.70 +$25.40!), but is off overnight, following 9/23’s low of $1534, lowest since 7/6!), $1688.20 -9.50. Last Monday’s low was nearly to the 200 day, $1527.20, now critical support. We negated the spike to $1923.70, a buying climax on 9/6, but could make another run for the roses. Crude tanked again yesterday closing at $77.61 -$1.59, lowest since 9/29/10 and overnight we are down again to lowest since 9/23/10! It is now $75.08 -$2.53, o/n low 75!!!

…had a chance to be a star today but in the interests of being more optimistic (see what TB got for that effort!), he decided not to say that given the overnight futures we were surely in for a down day. For all of the second thirty minutes of the session that looked like a wise decision. Then we dropped sharply retesting the earlier lows and bounced back from their to a much lower positive, then down and downer for the rest of the session except for three brief, futile attempts to save the day. Then they threw in the towel in the final fifteen minutes on 400 million shares…apparently all sellers (joke), and closed at the lows of the day – the lowest close of the selloff from July 21. The VIX surged to the second highest level of the selloff and closed just off the high at 45.45, and given the overnight markets we could see a test of the 48 high…hopefully not, but…

The most troubling thing wasn’t the closest watched indices which fell from 2.4% (Dow) to 3.6% (Transports) but the Russell 2000 small cap, -5.4%!!! for honors, which is what you watch for an economic recovery…now nil. The Russell 2000 is now off 24% ytd and 10.2% for the last 12 months! The pummeled NYSE Financials were off 4.4%, making them -27.7% ytd and 24% for the last 12 months! Perhaps nobody doesn’t like Sara Lee but nobody likes BofA which fell another 9.6% yesterday and is now off 18.5% for the past FOUR sessions alone! From the high of $15.31 on January 14th it is off 64%! It hasn’t even traded above $10 since August 1st!

Then there is Eastman Kodak, one of the original Dow stocks and a nifty fifty member. It raded to 54 cents on Friday – it traded at $94.75 on 2/21/97, closed at $30 at end of 2001 and dove below $20 at beginning of 2008 – even before the crash…buy and hold investors beware!

So to sum up, yes TB wishes he had said it was going to be an ugly start that might be a precursor to a blowout end of year, but that is what he gets for trying to be a cockeyed optimist! Still, it was the right thing to do because as sold off as we are, despite the country’s and global problems, it is not the companies that are in trouble…it is those not at the top who work for them who are! …along with those who are out of work. Those piles of cash are awesome. Just beware of companies with defined benefit plans…like G.E. and other manufacturers because they are in a world of hurt on unfunded liabilities as are state and local governments and that is not factored into their budgets!

. . .  – – –  . . .    . . .  – – –  . . .

Believe it or not TB is sad for the Tea Party…well not the ‘group’ itself as it isn’t a party of any kind and it certainly shouldn’t be considered as its predecessor was of Boston fame. It was born of a CNBC bond geek (Rick Santelli), shooting off his mouth about not wanting to pay for someone else’s mortgage, and then funded – not founded by the infamous Koch brothers, who give libertarianism a bad name. Well, they were finally caught selling goods from their scofflaw company (safety and environmental), to Iran…yep, terrorist Iran. These men, two of the wealthiest in the country, have done everything they can to enrich themselves at public expense including using the Tea Party to advance their cause…and look what they did in Wisconsin. Don’t take TB’s word on this…check it out. It isn’t that hard. These men make TB sick! If only they could be deported and their assets seized by the government what a dent that might make in the deficit.

Last night TB watched part two of Ken Burns’ excellent Prohibition documentary. Wow, what was learned (and not learned when we try to pass constitutional amendments to balance the budget and more absurd things). Did you know that there was a contest to come up with a word for those who ignored the law and went to speakeasy’s etc.? The winner was ‘scofflaw’ and how appropriate. If people take a law as absurd and see police and politicians enriching themselves from it they will not respect it. Instead, crooks got rich, politicians got rich, and the people got drunk.

Also during that time were dance contests…last couple standing. Do you see a similarity to Dancing with the Stars? Not the same way but as a diversion, like the other reality shows (which exist because they are cheap to produce). They shoot horses…don’t they?

Have a good one!

TB

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