6/7/12…a ‘2.4’ day and money talks

From Keep Calm and Carry On: “The greatest mistake a man can ever make is to be afraid of making one.” – Elbert Hubbard…a distant relative. TB


“A life spent making mistakes is not only more honourable but more useful than a life spent doing nothing” – George Bernard Shaw…especially true if you are a CEO or a Wall Streeter! TB


Bloomberg Quote of the Day: “We live and learn, but not the wiser grow.” – John Pomfret.


Bloomberg Top Stories:

*China Lowers Interest Rates for First Time Since 2008 to Counter Slowdown – makes you wonder what the rally yesterday was all about…it was about NOTHING! TB

*Stocks Rally for Third Day as China Cuts Interest Rates – a prescription, not a cure! TB

*Spain Tempers Concern on Financing Deficit as Bond Auction Exceeds Target – get real!

*Greece Should Leave Euro to Fix Economy With Own Currency, Feldstein Says – a genius?

*Japan Confronts Flight to Quality With Bruatl Yen Echoing Strength of 1995

*King Holds BOE Stimulus Program as Inflation Risks Outweighs Growth Concern – egads!

*Geithner Voices Concern With Bernanke About EU Banks in Katainen Meeting – concern???

*Chesapeake Built Shopping Centers as Drilling Cash Crunch Worsened – hello???

*Volume at Record High in U.S. Versus Stock Trading Amid Slowdown – options that is!!!

*Peso Slump Signals Lehman Crisis-Like Currency Intervention – more trouble!

*My Self-Esteem a Mess Is Refrain in Spain for Moe Than 4 Million Jobless – at least we don’t have that problem here…we don’t care about self-esteem…let them suffer!


Since May 21’s 286 point gain (2.4%) the Dow has now had THREE positive closes, the first a miniscule 34 point gain on 5/24 and the second, a 135 point gain on 5/29 which took it to a 12611 high in a pyrrhic victory that hardly made a dent in the decline since May Day’s 13338 intraday high, and yesterday’s ‘suspect’ 2.4% gain on EVERY MAJOR INDEX! Still back to back gains, especially in the summer doldrums with quarter end rapidly approaching could lead to a solid ‘bounce’ until perhaps options expiry a week from Friday, or the T+3 date when hedgies exits leveraged positions, ore even June 30th itself…which TB doubts, but more and more talk of a QE3 (and not another ship!) could do the trick…but just how much lower can interest rates go to make a difference? In bonds, the bet is already in…think about that.. At the close the Dow is now off 6% vs 9.3% from the May Day recovery high with a GAIN of 1.6% ytd and also a gain of 2.9% vs -0.41% for the past 12 months. But yesterday’s gain only eliminated THREE days of losses! Not even a dent! Better go back to those ‘trailing stops’ and keep adjusting them up…just in case of course…OF COURSE!!!


NYSE stock volume bounced back from the lowest since May 25th in a session that saw no retreats…read: an absence of SELLERS! 4.1B shares vs 3.37B shares vs 3.96B shares. Friday’s HUGE 4.6B, highest since March 12 will probably not be seen for the rest of the summer. NYSE stocks executed without the aid of the ETN market (where the high freq geeks play) had volume of 864M vs 712M shares vs 824M shares, still well below the average since 3/1 of 816M shares. 23 of the last 43 sessions have been less than 800M shares!!! Since 2/29 there have now been just TEN ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B while average has fallen to 823M and just ten have been above 900M – 955M is 12 month average. Since 11/1 there have been just eleven 1B share days…only seven in 2012! Since 2/6 there have been SIX sessions less than 700M shares. 132 of the last 148 sessions have been less than the 12 month average! Advance/Declines were STRONG: +7.1x vs +2.8x vs -1.4x vs -5.9x on NYSE and +4.7x vs +1.9x vs -1.1x vs -5.3x on Nasdaq. Breadth even stronger: +11.8x!!! vs +4x vs -1.9x vs -12.3x!!! on NYSE and +12.4x!!! vs +2.5x vs  +1.2s vs -23.9x!!! on Nasdaq. Note though that they did not exceed those of the downdraft! New 52 week highs nearly doubled to 106 vs 61 vs 44 – the low was 34 (high was 420 on 3/26), while new lows plunged again to 44 vs 128 vs 383!!! The ratio is positive again for only the second time this quarter at +2.5x vs -2x vs -8.7x!!! The S&P VIX, which closed Tuesday below the 200 day moving average of 25.04 then closed at 24.68 dove again closing at 22.18 -2.52! a 10% decline and just above the 40/50 day at 20! Can it take it out? Perhaps…


Here are the results of last SIX sessions: Dow +2.4% vs +0.2% vs -0.1% vs -2.2%! vs -0.2% vs -1.3%; Transports +3% vs +0.4% vs -1.3%!!! vs -3.2%!!! vs +0.9% vs-2.1%!; Dow Utilities +1.3% vs +0.4% vs +0.3% vs -0.8% vs +0.4% vs -0.8%; S&P 500 +2.3% vs +0.6% vs flat vs -2.5%!!! vs -0.2% vs -1.4%; Nasdaq Composite +2.4% vs +0.7% vs +0.5% vs -2.8%!!! vs -0.4% vs -1.2%; Nasdaq 100 +2.4% vs +0.4% vs +0.8% vs -2.6% vs -0.5% vs -0.8%; Russell 2000 +2.6% vs +1.2%! vs flat vs -3.2%!!! vs -0.1% vs -2%!; NYSE Financials +3% vs +1.5% vs -0.3% vs -3.1%!!! vs +0.6% vs -2.3%!!! (KBW Banks +3%! vs +1.5% vs -2.9% vs -4.9%!!! vs n/a vs -2.5%!!!; Nasdaq Banks +1.8% vs +0.3% vs -0.8% vs -3.8%!!! vs n/a vs -1.9%!!!); NYSE Financial Leaders: BAC +7.6%!!! vs +3% vs -2%! vs -4.5%!!! vs +2.1% vs -3.1% vs +4.1%; F +3.7%; JPM +3.4% vs +3.2% vs -2.9% vs -3.7% vs +0.6% vs -2%! Not leaders but…Citi +5.3%! vs +3.7% vs -2.2% vs -4.2% vs +0.2% vs -3.8%!!!; WFC +1.5% vs +1.5% vs -0.5% vs +1.1% vs -5.9%!!! USB, which was compared to JPM yesterday – positively – rose 1.6% vs +1.4% – this stock has been beaten up but dividend yield is low at just 1.9%.  


Global stocks rallying strong for a second straight session, although questionable: FTSE +1.6% vs +1.4% vs closed x 2; CAC 40 +1.2% vs +2% vs +0.8% vs +0.8%; DAX +1.5% vs +1.7% vs +0.7% vs -0.6%; Nikkei +1.2% vs +1.8% vs +1% vs -1.7%!; Hang Seng +0.9% vs +1.4% vs +0.4% vs -2%!!!; Korean KOSPI +2.6% vs closed vs +1.1% vs -2.8%!!!; Indian Sensex +1.2% vs +2.7%!!! vs +0.2% vs +0.2%  U.S. stock futures rallying further: DOW +73; SPX +10.80; NDQ +18…no risk till next week?

Bonds little changed after fading yesterday on the stock rally: 10 yr 1.660% -1/16 – record low 6/1 of 1.442%!; 30 yr 2.75% -3/16; Long TIP 0.47% -5/16. A new record low yield of 0.347% last Friday. The 5 yr TIP yields -1.02%; 10 yr -0.52%. Bills 0.04% 1 month; 0.08% 3 months; 0.13%. Reverse Repo 0.26%. 3 mo. Libor 0.47%, and 0.74% – steady. European problem sovereign 10 years, Germany-benchmark: 1.36% +3bp’s; Italy 5.64% flat; Spain 6.08% -15; Greece 27.48%!!! +15; Portugal 10.95% -15; Ireland 7.10% -2.  

Goldbugs beware as it is still fighting to get past $1600 which is critical support. Since breaking above on June 1, it has traded in a narrow range of $1610-1642 with the sessions lows between $1610 and $1614 – so now beware of a close below $1610, not the visible $1600! It closed above $1600 for a fourth straight session not seen since 5/9, at $1634.20.+$17.30. The hit is still $159 since 2/28!. 2/28’s $1792.70 intraday high was not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. Res/Sup is $1616, the 40 day and $1625, the 50 day, then $1692, the 200 day – slowly declining. It is now $1626.70 -$7.70. Last Wednesday’s o/n low of $1526.70 was lowest since 12/29! Crude remains weak, again closing little changed at a weak $85.02 +.33. On 4/26 it closed at $104.55…that is a 19% drop! RES at $96.45, the 200 DAY, the 40 day (96.74), and the 50 day (98.12) – stable. First res $89.17, the 11/1/11 low, then $92.52-54, the lows of 12/16-12/17, a prior double bottom, MAJOR sup at $74.95, the 10/4/11 low!!! It is now $86.30 +$1.28. Too ‘iffy’ to worry about…QE3 hopes keeping it from falling.


The Dow’s 287 point gain with all 30 stocks up…caution flag!…was led by IBM with 36 index points followed by CVX, CAT, UTX, XOM all adding 20 or more for a total of  125, 7 more added at least 10! This is the work of high frequency traders, not buyers, although they may have set it in action as they rebuild ahead of quarter end. If so, the question is: how much more do they have to do? Second question: how long will the hedgies hold their newly established positions given their weak performance?


Facebook, finally bounced since a rising tide lifts all boats…even those with some holes in them briefly, but not before putting in another new low of $25.52 and closed at 26.81 +.93 – but still below Monday’s weak close! The rally in bank stocks, led by BofA again at+7.6% is highly questionable finally rallied impressively but not compared to the size of the declines suffered.


When all of the major indices (Dow, S&P 500, both Nasdaq indices and Russell 2000 are all up between 2.3%+ and the Russell up 2.6%, that should ring a buzzer in your brain. That is what happens on the short-lived rallies lately. This is not to say short it but know that this is not indicative of a lasting rally. If it were real the two Nasdaq’s would have been the fliers. Proceed at your own peril.


Best guess of what happened yesterday was some big buyers at the open, then the high freaks took over but the volume pattern was the same as the prior four sessions: pop on the open then steady then crossing 500M shared about an hour before the close and add 100M or so in the final 15 minutes of trading…THAT IS NOT A MARKET!!!


. . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)   . . .   – – –  . . .  (SOS)


…perhaps America should be renamed the U.S. of M. ‘M’ standing for MONEY! After all THAT is what the Wisconsin recall was all about…will the presidential race be decided accordingly. Skillful blame of the labor unions confused voters so that those who initially supported the recall had doubts. The bucks for the defense came in from the Tea Party, Association of Republican Governors, the Koch brothers, and other conservative organizations. Ditto on the losing side from liberal groups. It became a referendum on unions as people began to ask: what am I really upset about?


What they should be upset about is how the billionaires of America are controlling this country…most of whom made it quick and dirty in the financial sector. You didn’t see Gates of Buffett in there, or others who amassed their wealth over decades of work. No, only the greedy – and there is no other word to describe them – Koch brothers who are opposed to spending on anything.


The amount spent on the election totaled $63.5B far outpacing the record spent in the last election of $37.4B. Most of that was for Walker and most came from out of state! Labor unions contributed $2B to PAC’s which had a total of $3.9B while $30.5B from PAC’s went to Walker. As TB said yesterday: in a recall just as in a war, there are no winners. In fact, we the people are losers! Is this how the presidency will be decided? If so, America is in serious decline and if the far right gets there way, those of you who see Obama leading us to socialism may find that the opposite can be worse…that would be fascism.


When the wealthiest people in this country only care about making more and ignore the plight of the rest of America…including the middle-class who still believe that there is a middle-class, only two things can happen: either we turn into an oligarchy which is not far from where we are, or the majority becomes so strong that they take over and destroy the status quo. Obama did not start this war…the facts on the wealth gap prove it. He only had the concern for it. Whether he handled it properly is another question.


It is for you to decide that under either man will be better off in four, eight, or even twenty years. Take time to reread the top story headlines above and that should provide a clue. Is it a good thing when China has to lower interest rates? You decide, and you had better think long and hard on where you stand on  this as our future depends on it.


Money may not buy happiness…but elections…?


Have a terrific day!




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