6/22/12…hold her steady

From Keep Calm and Carry On: “Wealth – any income that is at least one hundred dollars more than the income of one’s wife’s sister’s husband. – H. L. Mencken

“Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” – Mr. Micawber, David Copperfield

Bloomberg Top Stories:

*German Business Confidence Drops to Two-Year Low on Euro Crisis – as did investors

*Stocks Decline With Commodities on German Confidence; U.S. Futures Advance

*Credit Suisse to Morgan Stanleu Cut by Moody’s in Move Decried as Too Late

*Obama Search for Swing Voters With Romney Proving Difficult in Latest Poll  

The market makes such fools of us all…in the past week is there anyone who has not been burned? Still, one has to stick to their gut feeling…very difficult at the end of a quarter, especially a weak one like this has been. But what does it really matter when the markets are driven by traders who measure their positions in seconds or less?

Volume rose slightly to nearly 4B shares (3.98B) in an extremely weak session that eradicated the gains of the past five sessions. June 1st’s 4.6B was highest since March 16th.  NYSE stocks executed without the aid of the ETN market surged to 866M vs  751M shares…finally above the average since 3/1 of 822M shares. 31 of the last 55 sessions have been less than 800M shares!!! Since 2/29 there have been just 13 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 4.65B and just 11 have been above 900M – 947M is 12 month average. Since 11/1 there have been just 12, 1B share days…eight in 2012! Since 2/6 there have been SEVEN sessions less than 700M shares. 142 of the last 159 sessions have been less than the 12 month average!

Advance/Declines were highly negative: -4.3x vs -1.1x vs +5.1x vs +1.4x on NYSE and -3.8x vs -1.3x vs +3.2x vs +1.1x on Nasdaq. Breadth was horrible: -13.7x!!! vs +1.1x vs +5.2x vs -1.1x on NYSE and -5.7x vs +1.5x vs +5.7x vs +2x on Nasdaq.. New 52 week highs plunged to 113 vs 197 (high was 420 on 3/26), while new lows more than doubled to 96 vs 43. The ratio remains positive – barely – at +1.2x vs +4.5x vs +6.7x +2x vs +1.5x vs -1.4x vs -1.7x vs -1.6x! The S&P VIX exploded from 17.18 to 20.25 +3.01 or 17.6% but is still a little below the 40/50 day at 20.75. Next week will be interesting at least.

Here are the results of last 5 sessions: Dow -2%! vs -0.1% vs +0.8% vs -0.2% vs +0.9%; Transports -2% vs -0.4% vs +1.1% vs +2%!!! vs +0.7%; Dow Utilities -1.2% vs -1.2% vs -0.2% vs +0.2% vs +0.5%; S&P 500 -2.2%! vs -0.2% vs +1% vs +0.1% vs +1%; Nasdaq Composite -2.4% vs flat vs +1.2% vs +0.8% vs +1.3%; Nasdaq 100 -2.5% vs +0.1% vs +1.1% vs +0.8% vs +1.2%; Russell 2000 -2.4% vs -0.3% vs +1.8% vs +0.2% vs +1.2%; NYSE Financials -2.5% vs +0.4% vs +1.9% vs -0.6% vs +1.4% (KBW Banks -2.3% vs +0.3% vs +2% vs -0.5% vs +1.5%; Nasdaq Banks -1.9% vs +0.1% vs +1.5% vs -0.5% vs +1.1%); NYSE Financial Leaders: BAC -3.6%! vs +0.1% vs +4.5% vs -1.8% vs +2.9%; GE -1.9% vs +0.5% vs +1.3% vs +1.4%; JPM -2.3% vs +2.9% vs +2.2% vs -1.2% vs +1.1%; C -3.6% vs +1% vs +3.5% vs -2.7% vs +1.4%; Not leaders, but… WFC -1.4% vs -0.5% vs +1.5% vs flat vs +1.3%; USB -1.5% vs -0.1% vs +0.8% vs -0.2% vs +1.8%. NOTE BofA on Tuesday broke out of the range of $7.92 to $6.72 since 5/21, closing at $8.11, closed yesterday back at $7.82. New range: $8.22-$6.72…false breakout!

Global stocks weak following German Business Confidence: FTSE -0.8% vs -0.3% vs +0.4% vs +1%; CAC 40 -0.5% vs +0.1% vs -0.2% vs +0.5%; DAX -0.8% vs +0.3% vs +0.1% vs +0.6%; Nikkei -0.3% vs +0.8% vs +1.1% vs -0.8% vs +1.8%; Hang Seng -1.4% vs -1.3% vs +0.5% vs -0.1% vs +1%; Korean KOSPI -2.2%!!! vs -0.8% vs +0.7% vs flat vs +1.8%; Indian Sensex -0.4% vs +0.8% vs +0.2% vs .+0.9% vs -1.3%. U.S. stock futures higher…for now: DOW +44; SPX +4.20; NDQ +5.25.

Bonds are slightly weaker after yesterday’s late rally, TIPS remain weak. 10 yr 1.63% -1/8 – record low 6/1 of 1.442%!; 30 yr 2.69% flat; Long TIP 0.51% -1/4 Record low yield of 0.347% on 6/1. The 5 yr TIP yields -1.16%; 10 yr -0.49%. Bills 0.04% 1 month; 0.08% 3 months; 0.14% 6 months. Reverse Repo 0.24%. 3 mo. Libor 0.46%, and 0.73% – 1 bp lower! European problem sovereign 10 years, Germany-benchmark: 1.54% +1 bp’s; Italy 5.75% +3; Spain 6.43% +10; Greece 25.95% +16; Portugal 9.05% -60!!!; Ireland 6.85% +1 .  

So much for the rally in Gold  which after taking out $1600 and then resistance at $1608-17 closed at $1565.50.80 -$50.30!!!, almost at the intraday low of $1564.80, lowest since June 8th! The hit is $224 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 is $1604, the 40 day and $1614, the 50 day, then $1680, the 200 day. It is now $1569.60 +$4.10 with a low of $1560! 5/2’s o/n low of $1526.70 was lowest since 12/29! Crude has broken down yet again verifying the NEGATIVE key reversal on Monday with a low of $77.93 – lowest since 10/5/11 and closing $78.20 -$3.60. It has been below $85 since June 1! We also took out 6/12’s cycle low of $81.07 with a $7.93 print!  RES at the 40 day (91.19), and the 50 day (93.60), then the 200 DAY (96.25), – 40/50 still plunging. 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 remains at $74.95, the 10/4/11 low!!! It is now $78.52 +.32 – low $77.56!!!

As if the market wasn’t doing badly enough yesterday, Moody’s cut the ratings on 15 global banks – 4 by one level; 10 by two levels and one by three levels. This was long expected but casts more fear in the market. But the rally never had any real legs, the product of options expiry and high frequency trading. Next week is the last in the quarter and it could be very ugly in the latter half of the week.

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

…not much in the mood to write today…after all, our ship is rudderless, taking on water,  and the damage control gang is on a coffee break…hope they don’t sit and gab too long or we will be under water.

Hope you have a fun weekend!

TB

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