2/24/12…a nice little rally

Bloomberg Top Stories:


*Banks Likely to Tap ECB for $629 Billion Cash in Boost for Bonds – 30 yr up ½ o/n

*Stocks Rise as Oil Gains After Economic Reports Signal Recovery; Yen Drops

*Europe Faces Firewall Pressure as G-20 Debates IMF Crisis Role in Mexico

*Buffett Warts Revealed as Billionaire Investor Prepares His Annual Letter

*Volcker Punishes Smallest Junk Borrowers in Liquidity Trap – that’s the way it goes, folks!

*Lampert Gains $160 Million Acquiring Sears Shares From Fund Client Ziffs – the rich get…

*Morgan Stanley Adds Mexico Fixed-Income Group, Regional Head Harland Says – arriva!!!

*Bank of America Squeezes Mortgage Pipeline to Fannie as Dispute Escalates (this will mean fewer mortgages because BofA doesn’t want to keep them on balance sheet OR have liability!)

*China Luxury Surge Pits L’Oreal Against Chiang Kai-Shek Decendant – gung hay fat choy!

*BP’s Fate in Oil Spill Case Rests With Judge Who Sued on Behalf of Sailors – hmmmm

*Copper Traders Most Bullish in Two Months as Hedge Funds Buy

*Natural Gas Puts Rise to Most-Expensive Level Since ’09 Amid Glut – where is energy policy???

*Stripe Speeds Merchants’ Online Payments With Backing From PayPal Founders

*Mentor of Central Bankers Fischer rues Complacency as Economy Accelerates – here we go!

*Santorum’s Deepened Faith After Child’s Death Now at Fore of Primary Race – it’s Satan!

*Romney Tax Cut Proposal Relies on Rapid Growth Paired With Missing Details – flawed Logic!

*Californians Prefer Extra Burden on Millionaires to Brown’s Tax Proposal – it’s happening!


Volume rose slightly to 3.76B shares from the recent 3.6B shares since last weeks roughly 4B shares that culminated with Monday’s 4.06B share day. Stocks Rallied modestly but are going nowhere…although the bias is clearly to the upside. NYSE stocks executed on the Big Board rose slightly to 763M shares from a weak 729M shares…about 300 million below average and lowest since Feb. 6th. Since 11/1 there have been just six 1B share days…only one in 2012! 71 of the last 77 sessions have now been less than 1B! Advance/Declines were positive following two negative sessons: +2.4x vs -1.3x vs 1:1 on NYSE and +2.6x vs -2x vs -1.6x on Nasdaq. Breadth was similar: +2.4x v -2.2x vs 1x on NYSE and +2.5x vs -3x vs -1.6x on Nasdaq. New 52 week highs surged back to 253 from 167 while new lows were 27 vs 24. Watch the new highs! The ratio, which had been as high as 24x positive, is back to 9x times. The S&P VIX declined to 16.50 -1.39!!!, the lowest since 7/8/11…complacency??? You bet!  

Here are the results of the past three sessions: Dow +0.4% vs -0.2% vs +0.1%; Transports +0.7% vs -0.7% vs -1.5%; Dow Utilities -0.4% vs flat vs -0.1%; S&P 500 +0.4% vs -0.3% vs +0.1%; Nasdaq Composite +0.8% vs -0.5% vs +0.2%; Nasdaq 100 +0.6% vs -0.5% vs +0.2%; Russell 2000 +1.6%! vs -0.8% vs +0.2%; NYSE Financials +0.9% vs -1.1% vs -0.1%. NYSE Leaders: BAC +0.9% vs -3% vs +1.1%; F 2%; GE +0.5% vs -0.1% vs +0.7%. BAC has been among the most active stocks virtually every day (usually number one) since last August!!!


Global equity markets higher except UK and India: FTSE -0.1% vs +0.3%; CAC40 +0.4% vs +0.2%; DAX +0.5% vs -0.4%; Nikkei +0.5% vs +0.4%; Hang Seng +0.1% vs -0.8%; Korean KOSPI +0.6% vs -1%; Indian Sensex DOWN 0.8% vs -0.4%. Stocks opening slightly higher: DOW +24; SPX +3.35; NDQ +9.75. Bonds rallying too: 10’s back below 2% but 30’s still well above 3%: 10 yr 1.99% +3/32. RECORD low 9/23 of 1.6855%; 30 yr 3.12% +7/16; Long TIP 0.72% -1/4; 0.57% at high. The 5 yr TIP yields MINUS 1.43%!!!; 10 yr -0.32%. Bills 0.06% 1 month; 0.09% 3 months, 6 months 0.13%….slowly climbing. Reverse Repo 0.20% up from 0.12%. 3 mo. Libor 0.49%, and 0.75%, stable.
Gold closed strong again at $1786.30 +$15.00 with an intraday high just above $1789, highest since 11/16! It is well above the 200 day ($1667), and has been above $1600 since Jan. 3. It is now $1776.10 -10.20. The record high is $1923.70, a buying climax on 9/6. Sup is $1690, the 40 day, further support $1673, the 50 day m/a, both rising fast now. Res is $1800, the 11/14 high! Crude strong too on Iran fears, closing at $107.83 +$1.59! It is now $108.41 +.58, with support at the 40 day (100.65), the 50 day (99.98), and major support at $94.47, the 200 day, all rising. Think about this: domestic oil production is at an all-time high and imports at an eight year low…are we being had? What about nat gas???


…but it is for real or just Memorex? TB thinks the latter but do not get in its way as REAL investors are likely holding lots of cash and not about to sell unless bad news becomes rife. There is plenty of that too with the GOP hopefuls screaming wildly at one another as they push Obama into a second term…sheer stupidity! Greece remains at the fore along with the Euro as Portugal and Spain are also in jeopardy…sounds like a good reason to rally to TB…or not!


An estimated 70% of volume is due to high frequency flash trading…is that a market? On Tuesday, TB looked at the Financial Times and saw a front page article on the Euro crisis. On the front of the second session was an article – with picture – of hedge fund operator David Einhorn, who was one of the beneficiaries of the MBS meltdown, and who was just fined 7.2 million pounds for insider trading. Below that was an article on insider trading at Olympus. Don’t you get it? The U.S., once the holder of the title as best regulated markets is now in the same camp with the rest of the world…bet that makes you more confident.


A top Bloomberg story this morning quotes Stanley Fischer, the well-informed head of the Israeli central bank that other central bankers listen to. Fischer cites ‘complacenty’ in the markets and you would do well to heed him…if not, don’t come crying to TB when it all comes crashing down.


Want more? Look at this from Barry Ritholtz, another respected investor from his website:


“If the past is prologue (and that cannot be relied upon), we could see a scenario something like this (NoteWild ass guessing to follow).  Markets kiss 13,000, pullback and consolidate.  But they are not overbought sufficiently for anything more serious than a modest retracement, and so they continue higher for several months, until the % of stocks over 200 day MA is near 90% (they are at 75% today). That takes us somewhere between March and June. The next sell off begins, lopping 25% or so off of the SPX. The Federal Reserve waits until after the November election to introduce QE3, and the cycle starts anew.”


“Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.”


Now that is confidence in your beliefs…Barry, TB loves you man, keep up the good…honest…work. At least you think on your own instead of those who told us “it’s different this time” – only it wasn’t! Readers: you decide…TB already has!


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

How can religion be at the fore in a country founded on religious principles but where the founding fathers saw the need for separation of church and state? TB is shaking his head.


Now Rick Santorum says after the death of a child he asked God what he should do and lo and behold God told him to run for president. He gets TB’s sympathy vote but not his real vote!


Meanwhile in Minnesota, the GOP-led Senate has passed a law that would extend the right to protect yourself in your home to anywhere you feel threatened. Yep, that is the right to use any force, including a gun to protect yourself IF you feel endangered anyway. They tried this earlier and TB thought it had died due to opposition from law enforcement…but it’s back. Now it goes to the GOP-led House and then to the Dem Gov. who will likely veto it but in politics you never know.


What is feeling endangered…is it walking down the street at night and seeing two black men approaching (as has happened in New York)? Is it hearing a noise in your garage when you left the door open and shooting someone about to steal your motorcycle?…but it was just a neighbor’s son who was curious? Pass the law if you like GOP, but remember you are way more likely to die of cancer or being killed in an auto accident than being killed in your own home, although you only hear stories about people killed in their own home painted vividly so you are in fear for your life. Worse, kill them and you will still have to prove to a jury that you really were in danger…and that could be a rude awakening. Meanwhile, law officials warn this will only increase the number of shootings. Hey…TB got a letter from an irate reader…perhaps he should shoot him?


Have a wonderful weekend! 




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