4/26/13…just a few of TB’s favorite things (not!)

From the Friar’s Club Encylopedia of Jokes: “The trouble with the average American family is it has too much month left over at the end of the money.” – Bill Vaughan

Bloomberg Quote of the Day: “If you want a place in the sun, you’ve got to put up with a few blisters.” – Abigail Van Buren, aka Dear Abby

U.S. Q! GDP (preliminary) just released and showed the economy grew at 2.5% vs a weak 0.4% in Q4 BUT consensus was for a 3% gain so trading could be interesting.

Spending grew at at 3.2% annual rated with Equipment and Software +3% BUT Government Spending plunged 4.1% (Defense -11.5%!!!) thanks to the sequester. Wouldn’t you feel better if the clowns in D.C. knew the risk they placed on the economy?

The Core PCE Price Index rose 1.2% vs 1% in Q4. Real Disposable Income FELL 5.3%!!! and the Savings rate dropped to 2.6% from 4.7% in Q4.

Bonds rallying on the report while stock futures are putting in new session lows: DOW -52; -5.80; NDQ -10.25…can you smell the excitement in the air…or something else?

Bonds at session highs with 10’s at 1.67% +5/16; 30’s 2.87% +3/4; Long TIP 0.41% +5/8. Gold a little higher, Crude off just slightly. Dollar is a tad weaker too.


Bloomberg Top Stories:

*Stocks Fall Before U.S. Economy Report While Yen Strengthens; Oil Declines

*U.S. Economy Probably Accelerated in First Quarter on Increased Spending…or not.

*Britain’s Banks Said to Be Rattled by Regulator’s Silence on Capital Needs

*Nomura Profit Triples to Seven-Year High on Jump in Investment Bank Fees

*Commerzbank Bonus Appeal Fails as Dresdner Bankers Win Again in U.K. Court

*CBOE Preaches to Las Vegas Choir as Malfunction Crashes Options Exchange – 3 hrs! and *VIX Traders Left With No Place Else to Go During CBOE’s Shutdown – explains why fix had a broad range but closed up just .01!

*Cypriot Bailout’s Tax on Accounts didn’t Prompt Euro-Area Deposit Flight – oh???

*Gold Traders Most Bullish in Month as Bullion Demand Quickens – Rogers says $1300!

*Apple ITunes Likened to Record Store With Market Share Lowest Since 2006

*Senate Passes Last-Ditch Bill to End U.S. Air-Traffic Controller Furloughs

*Immigration Law Hangs on Closing Rough Frontier From Nogales to Rio Grande   

When is enough…enough??? Yesterday was a modest up day…this time on higher volume – about average – but it was no super rally. The best performer was the Russell 2000, +0.7% followed by the Nasdaq composite +0.6%, then NDQ 100 and NYSE Financials, +0.5% (with KBW Banks +0.5% vs +1.2%). Awaiting 1st look at Q1 GDP!

So let’s see what else happened lately:

*Dow Transports +0.1% vs 0.6% vs +0.3% vs +1.5% vs -0.3%; Russell 2000 +0.5% vs +0.5% vs +1.1% vs +1.2% vs -0.6%; Dow Utilities +0.1% vs +0.4% vs flat vs +1.4% vs +0.3%; S&P 500 +0.4% vs flat vs +0.5% vs +0.9% vs -0.7%. Nasdaq  Composite +0.6% vs flat, NDQ 100 +0.5% vs flat,NYSE Financials +0.5% vs +0.7%.

*Volume, A/D’s and Breadth were modestly positive for second day due to the computer ‘glitch’ on the CBOE so while it had an early range of 13.13-13.87, the three hour break in trading left it up just .01 at 13.62. It remains between the 40 and 50 day moving averages…awaiting a cue.

*NYSE Volume rose again to an above average 3.86B shares vs 3.55B vs 2.97B shares – weakest in 11 sessions vs a 4B shares average last week. REAL NYSE Volume also rose to 746M shares vs 706M shares vs a WEAK 620M following SIX 700M+ share days ranging from 975M last Monday (worst selloff) to 743M Tuesday (rally). Friday’s options expiry coming in at a solid but not great 914M shares. The average for the week was 859M shares – compare to the average this week of just 689M shares, vs the 12-month average of 735M shares. The range since 2/11 is 558M to 1.825B on 3/15’s options expiry and a near 12 month high, second only to 12/21’s 1.88B shares. Note that 3/15’s (options expiry) was the only day since 2/28 to register over 1B shares! There have been just fourteen 800+M shares in 2013 – just THREE up, 11 down and on trades of less than that 69 were up and just 18 down…there have been 18 mixed sessions…do you see why volume matters???

  1. new 52 week highs have ranged from 121-709, but were sharply higher again at 495 vs 400 vs  400 vs 237 vs 228 vs 106 vs 100. New lows fell to 34 vs 48 vs 43 vs 96 vs 82 vs 159 vs 237 vs 120 vs 197.
  2. Advance/Declines were positive again but…: +1.8x vs +1.9x vs +4x vs +1.4x vs +2.6x vs -1.2x vs -3.5x vs +4.4x vs -7.1x on NYSE and +1.7x vs +1.3x vs +3.4x 0.7% vs +1.5% vs +0.3% vs +1.3% vs  -0.8% vs -1.8%! BofA only ‘most active’ financial +2% to close at $12.31 +.24 vs +3% vs +0.5% to 11.72 vs -1.2x on Nasdaq.
  3. NYSE Financials rose 12 month average volume is 157M shares with a high of 463M shares on 12/5/12 – in other words it is about 5% of total average +1.8% vs -2.2% vs +1.1x vs +2.2x vs -1.6x vs -4.2x vs +3.5x vs -8.1x on Nasdaq. Breadth was similar: +2.2x vs +2.1x vs +3.9x vs +1.6x vs +2.3x vs -1.3x vs -10.5x!!! vs +6.4x vs -7.2x vs -2.2x on NYSE and +1.8x vs +1.5x vs +3x vs +2.5x vs +2.3x vs -3x! vs -5.2x vs +6.2x vs -12.8x!!! vs -1.4x . Note that BofA closed at 12.45 +.14 or +1.1% vs +2% for the 3rd straight day back above $12. The high volume ytd of 336M shares on 1/9 and was 9% of total volume!!!
  4. Volatility (S&P VIX) barely rose to 13.62 +.01, two days after plunging to 13.48 -.91 – just .02 above the low, with a high of 14.87 on the stock plunge and close was lowest since 4/12 – does this seem sensible…nearing time to put those limit/stop orders in again??? The range last week was 12.06 (multi year low) to 18.20, and it is now back below the 40/50 day (13.71/13.81) and the 200 day at 15.40…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.43!!!

A note on the markets…computer hacking is becoming more common and thanks to the bulk of the volume being high frequency trades there is no liquidity when things crash. For this reason, Kathleen Pender, writing in the SF Chron, warned against stop loss orders as you could get filled way down and unlike the high freak traders may have no recourse to your broker. As I have frequently recommended them please note two things: first, only use a stop limit, i.e. $13/$12.90. That way if we get hit like Wednesday’s 2 minute freefall before the circuit breakers were able to stop the carnage, it is unlikely you will get ‘taken out’ but if you do could quite possibly buy back in cheaper. Also note that if you are trading a ‘taxable’ account you could realize capital gains or losses so keep that in mind when you set your stop/limits. Still, with volatility this low and conflicting economic data they are a sensible alternative and take less knowledge than options.

But what about the string of hacking/flooding companies with emails and effectively shutting them down…not fun if you are trying to trade. Consider: a couple of weeks ago (during tax season), both Visa and American Express were flooded and it took several days to get the programs back up so clients could look at their accounts. Then there was Wednesday’s ‘flash crash’ caused by a Tweet that the White House had been seized and that Obama had been shot (SEC investigating all large trades to see if some hedge fund ot other interested party was the culprit. Later that day Schwab was hit with emails again, effectively shutting them down for a few hours. Yesterday, a computer ‘glitch’ was reported at the CBOE (where the VIX is also traded), and that took over three hours to fix. One has to wonder is this is all coordinated but regardless, it shows just how vulnerable our markets and companies are, and that means your money is too!

Global equities weak for first time in three sessions. Europe, for the 6th time in 14 sessions – lost momentum: UK -0.5% vs +0.1% vs +0.2% vs +1.2% vs +0.5%; France -0.8% vs +0.2% vs +0.7% vs +2.4%!!! vs +0.3%; Germany -0.4% vs +0.6% vs +0.5% vs +1.4% vs +0.7%; Japan -0.3% vs +0.6% vs +2.3%!!! vs -0.3% vs +1.9%!; Hang Seng UP 0.7% vs +1%! vs +1.7%!!! vs -1.1%!!! vs +0.1%; Korea -0.4% vs +0.8% vs +0.9% vs -0.4% vs +1%!; India -0.6% vs +1.2%! vs closed vs +0.1% vs +0.8%. U.S. stock futures weaker in lower end of another narrow trading session: DOW 27; SPX -4; NDQ -9.50, pre-GDP.

Bonds have closed little changed for three days but are strong overnight following weaker than expected Q1 GDP and remain at lower end of trading range of late: 10 yr Treasury 1.68% 5/16 (recent range now 2.06% to 1.68%), and the 30 yr’s 3.26% to 2.86%, 2.87% +5/8. The long TIP is now 0.42% +1/2 – after setting a new (record?) low of 0.36% on 4/5, before backing off to 0.52%! The recent high yield was 0.67% on 3/11! Libor update: 0.276% 3 mos., 0.430%!!! 6 mos. Foreign bond yields mixed: Germany 1.21% -3; UK 1.68% -5; France 1.74% -1, Italy 4.10% +6; Spain 4.27% +1; Portugal 5.77% +4; Greece 11.18% +2 vs 11.13% vs 11.05% vs 11.08 vs 11.22% (recent range 10.58%-12.57%!). Japan 0.58% +1.  

Gold closed strong at $1462.00 +$38.30!!! Intraday high was $1468.60! Last Tuesday’s intraday low of $1321.50 – was lowest since Sept. ’10. The loss over the two weeks is now back to $37. A week ago Monday’s $149 loss to a 52 week low of $1361.10 was disastrous. Resistance remains way above at the 40 day/50 day: $1543-1555 – still dropping! Overnight it is $1465.80 +$3.80 with an overnight high of $1484.80, highest since 4/12. Crude closed STRONG at $93.64 +$2.21 (nearly $5 in two days), with an intraday high of $93.87, above first resistance at the now converging 200 day ($91.74), 40 day ($92.39) and the 50 day ($92.83)!!! It has now erassed almost the entire loss since 4/5 Overnight it is $93.12 -.52. Last Tuesday’s session low of $86.20 was lowest since 12/13/12! The range is now $85.61-$97.80 since June 29, 2012!!!!


Some random thoughts:

TB is constantly amazed at the number of people who remain in a state of ennui and respond to his writing with ‘there’s nothing we can do about it.” Bullpuckey! There is a lot we can do so to get the ball rolling here are some ideas:

*End the sequestration…it is a fraud and makes the strongest country in the world look weak. Paul Ryan and his infinite austerity budgets is a perfect example. First, they and the Simpson-Bowles Commission, along with Pete Peterson and others, homed in on the work of Reinhart & Rogoff, that our debt to GDP is near a crisis point and we risk destroying ourselves. They ignore the fact that a combination of revenue increases and budget cuts is required to maintain balance. If you were low on money would you starve yourself to death to ‘fix’ your debt problem? Will revenues never increase? But R& R recently issued a ‘mea culpa’ in that they had studied 20 countries over the past 200 years and we were one of them, BUT of the 20, only ONE was the world’s reserve currency. That means every country has serious ‘skin in the game’ by holding our cash and bonds, especially China and Japan! That is one serious flaw and should bring on debate about the revenue/debt mix and the possible damage that a severe austerity budget be enacted! Are Ryan and the Tea Party willing to accept the consequences of being wrong? NO!!! Kick Grover Norquist in his fat ass!

*Change redistricting to have it governed by federal judges not the two parties to protect their own…i.e. throw the bums out! Do you really believe that the founding fathers wanted them to make a career there (then go to work for a lobbyist group?), and then collect a pension? Hell no!

Those are just a few of my favorite things…when the dog bites…etc. Submit your own and TB will publish them…with or without attribution!

All the best from ‘sunny’ Minnesota’ where the snow and ice are melting fast – 55% already this morning…that’s the good news, the bad is that flooding down the Mississippi and up in the North Country is imminent. Enjoy your weekend!



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