8/8/12…don’t bank on it!

From Keep Calm and Carry On: “He is like some sherry-crazed dowager who has lost the family silver at roulette, and who now decides to double up by betting the house as well.” – Boris Johnson on Gordon Brown

 

Bloomberg Quote of the Day: “You only live once – but if you work it right, once is enough.” Joe. E. Lewis

Bloomberg Top Stories:

*Standard Chartered Deal in N.Y. Probe Said to Require Up to $700 Million

*HP Boosts Profit Forecast, Says It Will take $8 Billion Impairment Charge – oops!

*Stocks in U.S. Fall on Fisher Remarks That Stimulus May Hurt Central Banks

*Merkel Ally Says Weidmann Opposition Won’t Sway German Support of ECB Plan

*Productivity in U.S. Increases More Than Estimated as Employers Curb Costs

*McDonald’s July Store Sales Trail Estimates as Rivals Poach U.S. Customers

*Hedge Fund Battle Over Rising Madoff Claims Spotlights Contract Dispute

*Egypt Aircraft Strike Militants in North Sinai as Government Vows Revenge

*Obama Leads Romney in Virginia, Wisconsin, Trails in Colorado, Poll Shows

A third day of rally (although weak), following four straight ‘down’ day following two straight ‘up’ days. How long can it continue? Until the flash traders say it can’t. Volume rose moderately to 3.64B vs 3.01B shares vs 3.75B vs  4.12B shares vs 4.34B! Hint: that is not what you want to see happen! The range since 7/29’s QE surge of 4.56B (above average) remains 2.06B-4.28B shares. NYSE stocks executed without the aid of the ETN market barely rose and remain weak: 728M vs 647M (lowest since 7/10) vs 754M vs 826B vs 1.03M – still a total absence of retail!  Just 7 of the last 26 sessions have surpassed 800M shares. The average for 2012 is just 812M shares and since 6/29 just 754M shares, levels not seen since week ended 12/30/11! 53 of the last 87 sessions have been less than 800M shares. Since 2/29 there have been just 19 ‘average’ days (mostly down!), including 3/16’s high for 2012 of 1.65B (4.85B including ETNs) and just 17 have been above 900M – 925M is the 12 month average. Since 11/1 there have been just 16, 1B share days…12 in 2012! Since 2/6 there have now been 17 sessions less than 700M shares. 168 of the last 190 sessions have been less than the 12 mo ave (88%)!

Advance/Declines were positive and stable at +1.8x vs +1.7x vs +4.7x! vs -1.7x vs -1.7x on NYSE and +1.8x vs +1.6x vs +3.4x! vs -1.4x vs -2.9x on Nasdaq. Breadth was similar: +2.4x vs +2x vs +7.1x!!! vs -4x!! vs -2x on NYSE and +3.9x vs +3.3x vs +4.7x! vs -2x vs -2x on Nasdaq. New 52 week highs were stable at 304 vs 305 (7/3’s 504 is the high), as were new lows at 54 vs 56 from a recent high of 229! The ratio rose slightly to +5.6x vs +5.4x vs +3.9x vs -1.2x! vs +2.1x, The S&P VIX rose again slighlty to 15.99 +.04 vs 15.95…but the point is it rose on an up day! 7/15’s 20.47 was highest since June 15th. A week earlier it closed at 15.45, lowest since 3/26 – the low for this year!  The rally is still running on fumes!

Here are the results of last 5 sessions: Dow +0.2 vs +0.2% vs +1.7% vs -0.7% vs -0.3%; Transports +0.2% vs -0.1% vs +2.1% vs -0.1% vs -2%;Dow Utilities DOWN 0.1% vs flat vs +1.1% vs -0.7% vs -0.7%; S&P 500 +0.5% vs +0.2% vs +1.9% vs -0.7% vs -0.3%; Nasdaq Composite +0.9% vs +0.7% vs +2% vs -0.4% vs -0.7%; Nasdaq 100 +0.9% vs +0.7% vs +1.9% vs -0.4% vs +0.3%; Russell 2000 +0.9% vs +0.7% vs +2.6% vs -0.3% vs -2%; NYSE Financials +0.6% vs +0.2% vs +2.7% vs -1.1% vs -0.4% (KBW Banks +0.8% vs +0.1% vs +3.1% vs -1.3% vs -0.5%; Nasdaq Banks +0.7% vs -0.2% vs +2.8% vs -0.5% vs -1.3%). NYSE Financial Leaders: BAC +0.4% vs +2.8% vs +3.5% vs –0.6% vs -1.6%. Not leaders, but… C +1% vs +4.2% vs -2.2% vs -1.3% vs flat; JPM +2% vs +0.6% vs +2.6% vs -2.3% vs flat; WFC -0.1% vs -1% vs +3% vs -1.7% vs +0.2%; USB +0.2% vs -1.4% vs +1.8% vs -1.3% vs -0.5%; GS +1.2% vs +1% vs +3.2% vs -2.3% vs -0.8%; MS +2.5% vs +2.6% vs +5.8% vs -3.6% vs -1.1%; UBS +1.7% vs +1.2% vs +5% vs -2.2% vs -1%.

European stocks weaker as is China, Japan and Korea better.  FTSE -0.4% vs flat vs +0.3% vs +1.5% vs +1.1%; CAC 40 -0.7% vs +0.9% vs +0.7% vs +2.7% vs +0.9%; DAX -0.5% vs +0.6% vs +0.7% vs +2.3% vs -0.1%;Nikkei +0.9% vs +0.9% vs +2% vs -1.1% vs +1.3%; Hang Seng +0.4% vs +1.7% vs -0.1% vs -0.7% vs +0.1%; Korean KOSPI +0.9% vs +0.1% vs +2% vs -1.1% vs -0.6%;Indian Sensex flat vs +1.1% vs +1.3% vs -0.2% vs -0.2%. U.S. stocks opening slightly weaker: DOW -13; SPX -3.70; NDQ -7.05.

Bonds continue to sag but up slightly this morning: 10 yr 1.61% +1/8 – record low of 1.40%; 30 yr 2.70% +7/16. Long TIP 0.34% +1/2. 0.28% is record low!The 5 yr TIP yields -1.27%!!!; 10 yr -0.67%Bills 0.08% 1 month; 0.10% 3 months; 0.14% 6 months. Reverse Repo 0.26%. 3 mo. Libor 0.44%!!!, and 6 mo. 0.72% – both trading below 0.45% and 0.73% and slipping further. European problem sovereign 10 years, Germany-benchmark 1.40% vs 1.48%; Italy 5.91% vs 5.86%; Spain 6.84% vs 6.61%; Greece 23.39% vs 23.75%; Portugal 9.58% vs 9.73%; Ireland 5.84% vs 5.86%. Crazy!

Gold holding above $1600 but still without conviction closing at 1612.80 -$3.40. 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $157 since 2/28! 2/28’s $1792.70 intraday high not seen since 11/16! The record high is $1923.70, a buying climax on 9/6. RES/SUP at $1600, the 40 day and $1601, then $1664, the 200 day. 5/2’s Monday’s o/n low of $1526.70 was lowest since 12/29! Currently $1616.60 +$3.80. Crude testing resistance following Friday’s HUGE rally of 4.9%! Intraday high was 94.42, highest since 5/15! It closed at $93.67 +$1.47. SUP at the 40 day (86.31), and the 50 day (85.96), both rising! RES at the 200 day (96.64). First SUP is $89.17, the 11/1/11 low, RES/SUP $92.52-54, the lows of 12/16.

Advance/declines and breadth remain positive but not overly so. The best indicator is VOLUME which rose modestly but remains very weak – especially on the retail infested real NYSE of just 728M shares following 647M, lowest since July 10! The Dow and S&P were barely positive, +0.2% while Dow Utilities were off 1.1%! Attesting to the high freak trading is this: for a second straight session, both Nasdaq indices and the Russell 2000 ALL rose 0.9% vs +0.7%!

Beware of yet another reversal…soon?

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

(late from Rotary so it will be short today)

…what kind of sick society would dare claim we have a banking system, let alone a financial system or transparent markets? Imagine the Libor scandal which started with Barclays – awaiting charges against more banks, money laundering by HSBC, and now Standard Chartered, JPMorgan rife with oversight problems as well as those management caused. NYSE financials rose yesterday, modestly, but led by the broker/banks (GS/MS/UBS), and gains by C and JPM, while the sound regionals slumped for a second day. In what world do we believe banks are a good buy? Certainly not for their skimpy dividend yields…tell them goodbye!…and clean up your act if you want our money!

Have a great day!

TB

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