5/8/13…and the rally continues…sans Nasdaq!

From the Friar’s Club Encyclopedia of Jokes: “Crime in New York is getting worse. I was there the other week. The Statue of Liberty had both hands up.” – Jay Leno

Bloomberg Quote of the Day: “I was gratified to be able to answer promptly. I said, ‘I don’t know.” – Mark Twain

Bloomberg Top Stories:

*Hedge Funds Rush to $108 Billion Debt Market Trading Where Wall Street Once Tread

*European Stocks Advance With Metals After Economic Reports as Kiwi Slips

*Currency Rally Drives New Zealand Kiwi Sale as Sweden Weighs Krona Stance

*Bank of America’s Traders Have Perfect Quarter as Morgan Stanley Stumbles

*Paulson’ Bid to Resurrect Reputation is Undermined by Gold Fix Gone Bad – Hah!

*Russia to Join U.S. in Promoting Political Solution on Syria’s Civil War

*Littoral Combat Ships See Delivery Delays of Up to a Year, U.S. Navy Says – bad!!!

Another day of rally as the stock market continues to ignore signs of a weakening, slow growth economy. Record highs on the Dow, and S&P and the Transports continue to beat everything as they advance like a house on fire. But where is the volume? Below average reported on total NYSE trades and especially on trades executed on the floor. Despite the rally, the VIX rose slightly – put protection is incredibly cheap, and Advance/Declines are modestly positive while Breadth on the Nasdaq was slightly negative. This is a rally without buyers but driven as all have been this year by algorithmic computer generated trades. Caution: they have no memory or lasting effect.

Dow Transports continue to lead – unusual when factory orders declined and shipments are not strong. It rose by 99 points or 1.6% vs 79 points 1.3% vs 125 points or 2.1% – that is up 6% since May 1st. Remember: trees don’t grow to the sky.

Sometime before this months options expiration on May 17th there will be a sharp pullback. How far? Dunno, but the lack of REAL buyers suggests it will. Don’t fight it though – yet!

The best, and only double digit performer yesterday (the best sectors were up 0.6%), was Dow Transports +1.3% following their also best 2.1% gain on Friday. It is now the best performer ytd at +18.7% followed by: Dow Utilities +15.2%!!!, Dow 30 +14.2%; S&P 500 +13.4%; Russell 2000 +13%; NDQ 100 +11.1%, Nasdaq Composite +10.7%. NYSE.

Yesterday, the Nasdaq 100 actually fell by 0.1% despite the broadbased rally. It lost 2.5 points but with 58/41 advancing…but….only two stocks (DTV/INTC) rose by 1 point or more and 2 was best, and five stocks lost from 1-3 points for a combined loss of 11 – make sense? Not to this writer!

So let’s see what else happened:

*Dow Transports +1.6% vs +1.3% vs +2.1% vs+1% vs -2.3%!!!; Russell 2000 +0.8% vs +0.6% vs +1.6% vs +1.7% vs -2.3%; Dow Utilities +0.9% vs -1.4% vs -0.3% vs -0.2% vs -1%! S&P 500 +0.5% vs +0.2% vs +1.1% vs +0.9% vs -0.9%; Nasdaq Composite +0.1%? vs +0.4% vs +1.1% vs +1.3% vs -0.9%, NDQ 100 -0.1%? vs +0.4% vs +1.1% vs +1.3% vs .-0.5%, Dow 30 +0.6% vs +1% vs +0.9% vs -0.9%.

*NYSE Volume rose slightly to a still weak 3.3B shares vs 3.05B vs 3.6B vs 3.5B vs 3.67B vs 2.88B shares (weakest in 16 sessions!!!). REAL NYSE Volume also rose to a still weak 636M shares vs 619M vs 716M vs 643M vs 697M vs 887M vs 599M shares (lowest since 4/8)….indicative of a total absence of retail! Recent highs were 975M (selloff) to 887M (rally). The average last week was a weak 720M shares vs 687M vs 859M vs 689M!!! The last options expiry came in at a solid but not great 914M shares. The 12-month average is just 731M 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 fifteen 800+M shares in 2013 – just 4 up, 11 down, but on trades of less than that 72 have been up and just 19 down…there have been 20 mixed sessions…hint: low volume rallies!!! Real buyers???

  1. new 52 week highs had ranged from 121-709, They ROSE again to 722 vs 499 vs 786 vs 411 vs 386 vs 486 vs 418 vs 267 vs  495 vs 400 vs 400 vs 237 vs 228 vs 106 vs 100. New lows inched up to 36 vs 32 vs 36 vs 50 vs 61 vs 42 vs 29 vs 40 vs 34 vs 48 vs 43 vs 96 vs 82 vs 159 vs 237 vs 120 vs 197.
  2. Advance/Declines were positive: +2.9x vs +1.5x vs +2.6x vs +3.1x vs -2.6x vs +2x vs +2.8x. (compare to +4x, +2.6x, -3.5x, +4.4x, -7.1x) on NYSE and +1.7x vs +1.5x vs +2.8x vs +3x vs -3.5x. Breadth was mixed: +2.5x vs +2.2x vs +3.7x vs +3.1x vs -4.5x!!! vs +1.6x (also compare +3.4x, 3.9x, -10.5x!!!, +6.4x, -7.2x) on NYSE and -1.1x! vs +1.5x vs +2.5x vs +2.9x vs -2.7x (compare +3x, -3x!, -5.2x, +6.2x, -12.8x.  
  3. NYSE Financials +0.6% vs +0.6% vs +0.9% vs +1% vs -1%!. BofA only ‘most active’ financial rose 0.1% to $12.89 +.01.
  4. Volatility (S&P VIX) ROSE slightly to 12.84 +.18, with a slightly wider range of  12.49-12.96, compare to Thurs/Friday’s 13.58-14.48. The range for the last three weeks is 12.06 (multi year low) to 18.20, and it is now back below the 40/50 day (13.49/13.85) and the 200 day (15.26)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.43!!!

Global equities rallying again: UK +0.2% vs +0.4% vs +0.9%! vs +0.7% vs -0.2%; France +0.8% vs +0.7% vs -0.2% vs +0.7% vs -0.3%; Germany +0.6% vs +0.9% vs flat vs +0.9% vs +0.4%; Japan +0.7% vs +3.6%!!! vs closed vs -0.8%! vs -0.8%; Hang Seng +0.9% vs +0.6% vs +1% vs +0.1% vs -0.3%; Korea +0.1% vs -0.4% vs -0.2% vs +0.4% vs -0.3% vs closed; India +0.5% vs +1.1% vs +0.5% vs -0.8% vs +1.2%. U.S. stock futures slightly higher in another narrow trading range: DOW +12; SPX +0.90; NDQ +3. Losing steam???

Bonds continue to be slaughtered in the wake of the stock market rally and again overnight – the 30 yr is back above 3%…one heck of an ‘E’ ticket ride!!!!: 10 yr Treasury 1.79% -1/8 (recent range 2.06% to 1.63%!!!), and the 30 yr’s 3.26% to 2.82%!!!, now 3.01% -3/8!!! The long TIP is now 0.59% -7/16 – performing miserably since setting a new (record?) low of 0.36% on 4/5. The recent high yield was 0.67% on 3/11! Libor update: 0.237% 3 mos., 0.428% vs 0.425%, 6 mos.!!! Foreign bond yields universally lower – ex-Spain: Germany 1.27% -2; UK 1.77% -2; France 1.82% -1, Italy 3.85% -1; Spain 4.10% +2; Portugal 5.43% -2; Greece 9.44%!!! -3 vs 9.53% vs 9.58% vs 9.68% vs 10.09%!!! vs 10.64% vs 10.81% vs 10.92% vs 11.18% vs 11.13% vs 11.05% vs 11.08 vs 11.22% (recent range now 9.53%!!!-12.57%!)..   

Gold closed sharply lower, leaving Friday’s high of $1487.20, highest since 4/12, out to dry and closed at $1448.80 -$19.20 with an intraday low of $1440.40!!! 4/16’s intraday low of $1321.50 – was lowest since Sept. ’10. Resistance remains way above at the 40 day/50 day: $1520-1533 – still falling! Overnight however, it is $1465.70 +$16.90 with a session high of $1469/50 Crude closed modestly lower at $95.62 -.54  a day after posting a new rally high of $97.17, nearing a 12 month high! It is well above Sup/Res at the 40 day ($92.98), 50 day ($92.69) and 200 day ($91.96), all starting to rise.. It is now $95.86 +.24.  4/18’s low of $85.61 was lowest since 12/11! The range is now $85.61-$97.80 since June 29, 2012!!!!

Some random thoughts:

Can stocks continue to rally even amid size of our slow growth economy inching lower and wages stagnating while jobs are more scarce (JOLTS), and consumer debt is devoid of credit card growth? I’m just asking…

TB

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