Bloomberg Top Stories:


 *EU Sets Stricter Fiscal Limits in Bowing to Some ECB Requests, Draft Shows – but if they couldn’t meet the old ones how can they meet the new ones? Just asking…

*Stocks in Europe Drop From Five-Month High as Euro Slips; S&P Futures Fall

*GE Falls as Weaker Growth in Europe Weighs on Sales, Finance Revenue Drops

*Greek Creditors Struggle for Third Day to Reach Agreement on Bond Losses

*Banks Move Choose to Spurn State Bailouts to Meet EU Capital Requirements

*Novartis Multiple Sclerosis Drug Reviewed by EU After 11 Patients’ Deaths

*Technology’s Stalwarts Exceed Analysts’ Estimates While Google Disappoints

*Sales of Existing U.S. Homes Probably Rose to Highest Level Since 1987

*Bond Spreads Show Crisis May Return After ECB Program Expires – oh joy!

*Copper Bears Retreating as Prices Rebound the Most Since 1987

*German Automakers Miss U.S. Fuel Goals as Toyota Excels

*Credit Suisse Toxic Bonuses Trounce Stock to Rival Gold With 75% Returns

*U.S. Holds Military Talks With Israel on Iran as EU Readies Asset Freeze

*Romney Tough Talk on China May Fall Flat in Trade-Friendly South Carolina

*Snow Hits Chicago Today as Winter Storm Is Projected for New York Tomorrow     


Volume rose to an average 4.43B shares from 4.07B on another strong session except Utilities which were off 1% and unchanged Wednesday. Today is options expiry! NYSE stocks executed on the Big Board rose slightly to 806M shares from 798M shares, still about 200 million short of the twelve month average – if this is real, why the lack of solid buyers…especially in January? 44 of the last 47 sessions have been less than 1B! Advance/Declines were positive: +1.9:1 vs +3.9:1 vs +1.5:1 vs -1.9:1 vs +1.7:1 on NYSE and +1.4:1 vs +3.3:1 vs+3.3:1 vs +1.2:1 vs -2.1:1 on Nasdaq. Breadth was similar: +2.2x vs +6.9x vs +1.1x vs -3.2x vs +1.4x on NYSE and +1.8x vs +4.5x vs +1.4x vs -1.8x vs +2.1x on Nasdaq. New 52 week highs surged to 287 from 225 while new lows dipped to 33 vs 35. The ratio is now about 9x positive. The S&P VIX declined again to 19.87 -1.02, the lowest reading since 7/25…just when the selloff began!!!

Here are the results of the past five sessions: Dow +0.4% vs +0.8% vs +0.5% vs -0.4% vs +0.2%; Transports +1.6% vs +1% vs -0.1% vs -0.6% vs +0.3%; Dow Utilities DOWN 1% vs flat vs +0.2% vs -0.1% vs flat; S&P 500 +0.5% vs +1.1% vs +0.4% vs -0.5% vs +0.2%; Nasdaq Composite +0.7% vs +1.5x vs +0.6% vs -0.5% vs +0.5%; Nasdaq 100 +0.7% vs +1.4% vs +0.9% vs -0.4% vs +0.4%; Russell 2000 +0.4% vs +1.8% vs +0.2% vs -0.8% vs +0.4%; NYSE Financials +1.7% vs +1.6% vs +0.1% vs -0.8% vs +0.6%. NYSE Leaders:  BAC +2.4% vs +4.9% vs -2.1% vs -2.7% vs -1.2% vs +3.6% vs +5.7%!!! vs 1.5% vs -2.1% vs +8.6%; C +1% vs +2.9% vs -8.3%!!! vs -2.7% vs +1.1% vs +4.2%; GE +0..7% vs +1.5% vs -0.7%; MS +5.4%.


European equity markets weaker, Asia stronger: FTSE -0.1% vs +0.6% vs -0.1% vs +0.9% vs -0.3%; CAC40 -0.5% vs +1.7% vs -0.2% vs +1.6% vs +0.8%; DAX -0.3% vs +0.8% vs +0.2% vs +1.9% vs +0.1%; Nikkei +1.5% vs +1% vs +1% vs +1.1% vs +1.4%; Hang Seng +0.8% vs +1.3% vs +0.3% vs +3.2%!!! vs +0.6%; Korean KOSPI +1.8% vs +1.2% vs flat vs +1.8% vs +0.6%; Indian Sensex +0.6% vs +1.2% vs -0.1% vs +1.7% vs +0.7% vs -0.9%. U.S. Futures modestly weaker: DOW -19; SPX -4 ; NDQ -1. Bonds weaker: 10’s just below 3%, 30’s back above 3%. 10 yr 1.99% -3/32. RECORD low 9/23 of 1.6855%; 30 yr 3.05% -3/16; Long TIP 0.73% -1/8; 0.57% at high. The 5 yr TIP yields MINUS 1.04%; 10 yr -0.05% from -0.17%! 3 mo. Libor 0.56%, and 0.79%, steady. Bills 0.03% 1 month; 0.04% 3 months, 6 months 0.07%. Reverse Repo 0.24%

Gold closed slightly lower but still above the 200 day ($1639). It has been above $1600 for 7 straight sessions. It closed at $1654.50 -$5.40. The high was $1670, highest since 12/13 and it is now $1649.20 -$5.30. The record high is $1923.70, a buying climax on 9/6. RES is $1673, the 50 day, support $1651, the 40 day m/a, all rolling over. Crude closed little changed at $100.39 -.20. It is now $99.62 -.77. RES is again $100, support the 40 day (99.31) and the 50 day (99.10), major support.


…today is options expiry…the first of 2012…could be an interesting day. Was the rally inspired by this? How come income stocks and bonds are suffering? Is growth back? Hard to discern that from the data which is at best indicative of modest growth, certainly not enough to get one all fired up about growth stocks…but then retail investors haven’t been players fro at least the last two months, which encompasses the decline in stocks, following that sharp rally from the Oct.4 lows and allowed us to have a strong quarter and offset the losses of August for the most part.


Note though that the Dow Industrials closed at 12623, yesterday, highest since7/26…just before that major selloff occurred. That leaves as MAJOR resistance a double top (12753 and 12751) from 7/7 and 7/21, and just above that the 2011 high at 12876 from May 2! The S&P 500 encounters similar so watch 1350. Meanwhile, the Nasdaq 100 which hit a new 12 month high yesterday of 2445 and closed at 2441, after gapping up on the open, is in its own world. Is growth back? Can it continue? You decide.


Everyone is all aflutter about bank stocks again…even though they have problems meeting the Basel II capital requirements and the prices of the most active ones, BofA and Citi, are so low that they can easily be manipulated…which is where they are thanks to those high frequency traders who love a cheap stock that is highly liquid. But with the lone exception of Wells Fargo, they have a series of lower highs and are just nearing them…yesterday JPMorgan closed just off the 200 day moving average, something that hasn’t occurred since July 21, just when the selloff began.

All that glitters…


Speaking of which, gold has had a nice rally and is now bound between the 40/50/200 day moving averages…can it keep going? Is the Euro crisis, particularly Greece, really over?


Then of course there is crude…oscillating around $100 despite huge inventories…apparently due to Iran but economic growth? Please!  Speaking of oscillating, how about the 10 and 30 year treasuries around 2% and 3% respectively? Just when you think it is safe…


Let’s see how stocks close after today’s options expiration.


. . .   – – –  . . . note that the same old SOS applies…perhaps more so!

Wow! What is happening to the GOP? Final Iowa count gives it to Santorum, by less than they had Romney…did that affect New Hampshire’s vote? Perry pulled out and threw his support to Gingrich, who once again is back to scandals…saying he had permission from his second wife to have an affair which she vehemently denied…and don’t forget his blast at Clinton while he was having an affair with his own intern, Callista…forget moral character…doesn’t count, ask Newt.


James Kwak of The Baseline Scenario has a piece out this morning:

The Times has a story out today: Surprise, all the Republican candidates’ tax plans increase the national deficit! The numbers (reduction in 2015 tax revenues, from the Tax Policy Center):

  • Romney: $600 billion
  • Gingrich: $1.3 trillion
  • (Late lamented) Perry: $1.0 trillion
  • Santorum: $1.3 trillion

I guess that makes Romney the “fiscally responsible” choice, at least among the Republicans. But President Obama’s tax proposals would only reduce 2015 tax revenues by $222 billion. (That’s $385 billion in Table S-4 less $163 billion in Table S-3.)

So let me get this straight…the GOP is hell-bent on reducing the budget DEFICIT, but without offsetting increases of any kind to revenues…and apparently all of their plans will reduce the burden on the wealthy even more while letting the rest of us suffer. Is that right? Is that what ‘fiscal conservative’ means? You decide, TB already has…B.S. is B.S.

Enjoy your weekend, but try to think past the soundbites, will ya?



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