8/9/12…dead reckoning

From Keep Calm and Carry On: “Luxury: the lust for comfort, that stealthy thing that enters the house as a guest, and then becomes a host, and then a master.” Kahlil Gilbran

Perhaps the best explanation of why we merely have an ‘apparent’ middle class, no? TB


Bloomberg Quote of the Day: “Do not accustom yourself to use big words for little matters.” – Samuel Johnson

Bloomberg Top Stories:

*Griffin’s Overtures to Save Knight Were Hampered by Distrust on Both Sides – ah, loyalty among thieves…one more sign of decay in our financial system! TB

*BNP Fund Freeze Shrinking Inventories Five Years After Credit Stood Still

*Goldman Sachs Says SEC Closes Subprime Mortgage Probe Without Legal Action – this is a far cry from being cleared…just not enough to try on, right?

*Euro Weakens on Economy Outlook as Stocks Fluctuate Amid China Speculation – !!!

*Standard Chartered CEO Sands Sees No Grounds for Revoking Banking License – you will love this: they didn’t punish anyone else so it would be ‘disproportionate.’ Get real!

*Gilts as Haven Defy Weak Economy Shrinking Faster Than Spain – and that’s a lot!

*U.K. Second Quarter Trade Gap Widens to Record as Exports Decline

*Iraq’s Oil Production Exceeds 3 Million Barrels for First Time Since 2002     

A missed day following three days of rally (increasingly weaker), following four straight ‘down’ day following two straight ‘up’ days. How long can it continue? Until the flash traders say it can’t. Volume declined moderately to 3.21B vs 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 plunged again establishing an even lower low since 7/10: 637M vs 728M vs 647M vs 754M vs 826B vs 1.03M – there is NO retail!  Just 7 of the last 27 sessions have surpassed 800M shares. The average for 2012 is just 809M shares and since 6/29 just 747M shares, levels not seen since week ended 12/30/11! 54 of the last 88 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 – 909M 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 18 sessions less than 700M shares. 169 of the last 191 sessions have been less than the 12 mo ave (88%)!

Advance/Declines were MIXED and weak at +1.1x vs +1.8x vs +1.7x vs +4.7x! vs -1.7x on NYSE and MINUS 1.3x vs +1.8x vs +1.6x vs +3.4x! vs -1.4x on Nasdaq. Breadth was a little better: +1.7x vs +2.4x vs +2x vs +7.1x vs -4x on NYSE and +1.6x vs +3.9x vs +3.3x vs +4.7x vs -2x on Nasdaq. New 52 week highs fell by a third to 219 vs 304 (7/3’s 504 is the high), while new lows were stable at 55 vs 54 from a recent high of 229! The ratio fell slightly to +4x vs +5.6x vs +5.4x vs +3.9x vs -1.2x, The S&P VIX surprisingly declined slightly to 15.32 -.67 – on a mixed 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!

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

European stocks weaker again, Asia up, sans India.  FTSE -0.2% vs -0.4% vs flat vs +0.3% vs +1.5%; CAC 40 -0.4% vs -0.7% vs +0.9% vs +0.7% vs +2.7%; DAX -0.3% vs -0.5% vs +0.6% vs +0.7% vs +2.3%;Nikkei -0.8% vs +0.9% vs +0.9% vs +2% vs -1.1%; Hang Seng +1.1% vs +0.4% vs +1.7% vs -0.1% vs -0.7%; Korean KOSPI +2%! vs +0.9% vs +0.1% vs +2% vs -1.1%;Indian Sensex -0.2% vs flat vs +1.1% vs +1.3% vs -0.2%. U.S. stock futures slightly weaker and off highs: DOW -10; SPX -3; NDQ +0.50.

Bonds still plunging but up slightly this morning: 10 yr 1.67% +1/8 – record low of 1.40%; 30 yr 2.75% +1/8. Long TIP 0.39% +3/8. 0.28% is record low!The 5 yr TIP yields -1.25%; 10 yr -0.64%Bills 0.09% 1 month; 0.11% 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%. European problem sovereign 10 years, Germany-benchmark 1.40% vs 1.40%; Italy 5.80% vs 5.91%; Spain 6.82% vs 6.84%; Greece 23.29% vs 23.39%; Portugal 9.59% vs 9.58%; Ireland 5.90% vs 5.77%. Crazy!

Gold holding above $1600 but still without conviction closing at 1616.00 +$3.20. 7/12’s intraday low of $1547.60 was lowest since June 1. The hit is $154 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 $1602, then $1664, the 200 day. 5/2’s Monday’s o/n low of $1526.70 was lowest since 12/29! Currently $1613.50 -$2.50. Crude lackluster after testing resistance following Friday’s HUGE rally of 4.9%! Intraday high was 94.72, highest since 5/15, yet it closed at $93.35 -.32. SUP at the 40 day (86.57), and the 50 day (86.07), both rising! RES at the 200 day (96.65). First SUP is $89.17, the 11/1/11 low, RES/SUP $92.52-54, the lows of 12/16.

Advance/declines getting weaker and were MIXED while breadth remains slightly  positive. The best indicator is VOLUME which plunged again and remains very weak – especially on the retail infested real NYSE of just 637M vs 728M shares following 647M, and a new low since July 10! The Dow and S&P were barely positive for a second day, +0.1% vs +0.2% while Dow Transports were worst performer, off 0.3%. Attesting to the high freak trading is this: for a THIRD straight session, both Nasdaq indices and the Russell 2000 ALL fell by 0.1-0.2% vs all rising by 0.9% and vs all up 0.7%! WEIRD!

Financials seem to be trading soft again…except the faux banks (GS/MS) which have been rising, although at a lesser rate of rise, for the past four sessions…what is up?

This from WSJ a few minutes ago:

Knight Capital Group was holding about $7 billion of stocks at one point on 
Wednesday last week—a far bigger figure than previously known—as a result of 
errant trades that forced it to seek emergency funding.
Knight's traders worked frantically Aug. 1 to sell shares while trying to 
minimize losses due to a software problem, ultimately paring the total position 
to about $4.6 billion by the end of the trading day.

NEXT: going down?

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

…that is when all your instruments fail you and you have to trust your senses. If you think TB has become a cynic, his response is: would it be prudent to be otherwise? Not when the market regulation is impotent, banks are busy ripping off their customers and each other (BIG BANKS that is! You know, the ones WE bailed out), stocks trade wildly for no good reason due to some twenty-somethings algorithm blowing up.

Then there are the politicians…the ‘gaffers’ to use the new ‘in’ term. Take a grain of truth then distort it to you benefit and to make the other guy look like a fool or worse.

TB is willing to bet, and this is not a political statement, that IF the GOP gets a majority of both houses and the presidency, we will be in a recession – a real one – within six months if not sooner as they enact their spending cuts without tax increases and slow economic growth. TB would stick with Obama for four years for the sake of TWO candidates to choose from rather than have Romney possibly for eight…think about it.

TB is a bit tired also of the haranguing on Obama for slow economic growth and lack of jobs. This they say is indicative of uncertainty in the business sector…particularly small business ($5MM and less). Meanwhile, businesses blame it on the real culprit: Europe! Would you be out hiring or building out plant and equipment when you already have huge excess capacity? Also, as reported yesterday, they are hurting for skilled labor but won’t pay for it…further hurting economic growth.

Is this a great country or what?

Have a great day!



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