10/12/11…no follow-thru

Bloomberg Top Stories:

*Wall Street Sees ‘No Exit’ From Financial Decline as Bankers Fret Future
*Fed’s Twist Make Tax-Exempt Bonds Pay Off For the Wealthy
*U.S. Senate Blocks Osama’s $447 Billion Job Creation Plan in Partisan Vote
*Republican Candidates Stretch Truth in Debate Salvos on Jobs
*JP Morgan May Report 10% Profit Decline as Europe Saps Investment Banking

Volume rose slightly to 4.0B shares from 3.9B shares in listless trading.  NYSE stocks executed on the Big Board however declined slightly to 882 million shares from an already weak 888 million shares, lowest since July 26th! Advance/Declines were slightly positive: +1.2:1 vs. +10.4:1 vs +5.5:1 vs +2.7:1 on NYSE and +1.5:1 vs. +4.9:1 vs +3.3:1 vs +2.2:1 on Nasdaq. Breadth was similar: +1.6:1 vs +9.7x vs 16.3x vs +5.9x vs +5.7x vs -30x vs -16x on NYSE and +1.5:1 vs +7.6x vs. +7.9x vs +7.6x vs +8.7x vs -10x vs -9.2x on Nasdaq! New 52 week highs declined from a weak 40 to 30, while new lows dropped to 68 from 85. The point is though that the ratio is still negative at -2.3:1. The VIX continued to slip to 32.86 -.16 with the 40 day (36.64) 50 day (36.04) still res. Support is at 30. How did we attempt to rally yesterday after the RUSSELL 2000 VIX hit a 2-yr high as small caps are inciting fear among traders? Was the big rally Monday on the Russell short covering??? Financials weak again. THINK!

Here are the results: Dow -0.2% vs +3.0% vs +1.7% vs +1.2% vs +1.4% vs -2.4% vs -2.2%; Transports +0.2% vs +3.9% vs. +2.2% vs +2.7% vs +4.4%! vs -3.6% vs -3.5%; S&P 500 +0.1% vs +3.4% vs +1.8% vs +2.3% vs -2.9% vs -2.5%; both Nasdaq indices +0.7% vs +3.5% vs  +1.6% vs +2.5% vs +2.1% vs -2.5% vs -2.7%; Russell 2000 +0.6% vs +4.4%! vs +3.2%! vs +1.5% vs +6.5%!!! vs -5.4%!!! vs -2.8%%; NYSE Financials DOWN 0.3% vs +4.7% vs. +3.2%! vs +1.4% vs +3.1% vs -4.4%! vs -3.6%.

Stocks are rallying except Japan: FTSE +0.3% vs -0.7% vs +0.8% vs +2% vs +1.9% vs -3.4%! vs -1.7% vs -1.3% vs -0.7% vs -0.2%; CAC 40 +1.4%! vs -0.5% vs +0.9% vs +2.3% vs +2.9% vs -3.2% vs -2.3% vs -1.8% vs -0.1% vs +0.1%; DAX +1.2% vs -0.3% vs +.08% vs +1.5% vs +3.5% vs -4.1%! vs -2.8% vs -2.5% vs -0.4% vs +0.1%; Nikkei DOWN 0.4% vs +2% vs. +1% vs +1.7% vs -0.9% vs -1.1% vs -1.8% vs flat vs +1% vs +0.1%; Hang Seng +1.0% vs +2.4% vs. +3.1% vs +5.7%!!! vs closed -3.4%! vs -4.4%!!! vs -2.3% vs closed vs -0.7%; Korean KOSPI +0.8% vs +1.6% vs +2.9% vs +2.6% vs -2.3% vs -3.6% vs closed vs flat vs +2.7%!!! vs -0.7%; Indian Sensex +2.6%!!! vs -0.1% vs +2.8% vs closed vs -0.5% vs -1.8% vs -1.8% vs -1.5% vs +1.5% vs -0.5%. US futures plummeted on the bad Europe news but are coming back: DOW +109; SPA +12; NDA +28. Bonds getting crushed again. Currently 10 yr at 2.22% -5/8, after a RECORD low 9/23 of 1.6855%; 30 yr at 3.19% -1-7/8; Long TIP back above 1%! 1.06%% -2-1/16!!!

Gold sharply higher after closing $1661.05 -$9.80), following 9/23’s low of $1534, lowest since 7/6!), and is now $1691.60 -$31.50. A week ago Monday’s low was nearly to the 200 day, now $1536.60, now critical support. The record high is $1923.70, a buying climax on 9/6. Making a run at the highs! Crude rallied slightly yesterday to highest since 9/21, closing at $85.81  +.40 and is up again overnight to $86.20 +.39. Last Tuesday’s close was lowest since 9/23/10 as was low of $74.95!

…a second straight low volume day once again negating the rally, as did new highs and lows. What do we expect? Miracles? Remember too the Bloomberg article yesterday that noted third quarter profits were not only the lowest since Q4 2009 but the third consecutive decline. Remember how you get the p/e??? Apparently not!

That’s all for today as TB is vacationing…leaving Chicago for Door County, Wisconsin today….not sure when next missive will be.

All the best,

TB

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