5/15/13…let’s have a tea party!

From the Friar’s Club Encyclopedia of Jokes: “When a man brings his wife flowers for not reason, there’s a reason.” – Molly McGee

Bloomberg Quote of the Day: “Failure is not fatal, but failure to change might be.” – John Wooden  

Bloomberg Top Stories:

*Industrial Production in U.S. Declines by Most in Eight Months on Cutbacks – stocks rally again? Hmmm…let’ see how today goes. -0.5% vs a revised +0.3% in March

*New York Area Manufacturing Unexpectedly Contracted in May on Fewer Orders – !!!

*Congress Focuses Inquiries on IRS Delay in Disclosing Tea Party Scrutiny

*IRS Sent Same Letter to Democratic Groups That Fueled Tea Party Row– politics!!!

Stocks staged a strong rally yesterday – once again at the expense of bonds. Dow Transports were best (+1.9%), followed by the Russell 2000 small cap +1.3%. But records were set in the Dow, S&P 500 and the Nasdaq indices had ‘rally’ highs (neither near the levels of the dotcom boom. Meanwhile, NYSE Volume rose from 2.86B shares – taking out 4/29’s 2.88B shares for worst of year – to 3.43B shares, almost average. REAL trades on the floor also rose to a sub-par 700M shares vs 594M shares, lowest since April 8! Thus the ‘selloff’ was manageable and not conclusive but Friday is options expiration so who knows?

But the rally does appear to be running out of steam in a wave of mixed economic reports and slow job growth and worse: a lack of earnings! Recall: Friday is options expiration!

So let’s see what else happened:

*Dow Transports +1.9%! vs -0.5% vs -1.1% vs +0.2% vs +1.6% vs +1.3% vs +2.1%; Russell 2000 +1.3%! vs -0.1% vs -0.4% vs +0.1% vs +0.8% vs +0.6% vs +1.6%; Dow Utilities +0.5% vs -0.6% vs -1.5% vs -1.2% vs +0.9% vs -1.4%; S&P 500 +1% vs flat vs -0.4% vs +0.4% vs +0.5%; Nasdaq Composite +0.9% vs +01% vs -0.1% vs +0.5% vs +0.1%, NDQ 100 +0.5% vs flat vs -0.2% vs +0.5% vs -0.1% vs +0.4%, Dow 30 +0.8% vs -0.2% vs -0.2% vs +0.3% vs +0.6% vs +1%.

*NYSE Volume rose to an average 3.43B shares vs 2.86B (low for the year) vs 3.49B shares vs 3.55B vs 3.3B vs 3.05B. REAL NYSE Volume also rose but to a below average 700M shares vs 594M (lowest since 4/8) vs 670M vs 727M (highest since 4/30) vs 636M vs 619M – again, where’s 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 727M 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 74 have been up and just 21 down…there have been 20 mixed sessions…hint: low volume rallies!!! Real buyers???

  1. new 52 week highs had ranged from 121-722, They set a new high of 793!!! vs 462 vs 613 vs 769 vs 722 vs 499 (recent range 100-793). New lows were steady at 38 vs 39 vs 37 vs 45 vs 36 vs 32 (recent range 29-237).
  2. Advance/Declines were positive: +2.1x vs -1.5x vs -1.8x vs +1.9x vs +2.9 (recent range -7.1x to +4.4x) on NYSE and +2.3x vs -1.2x vs -1.5x vs +1.4x vs +1.7x (recent -3.5x to +3x). Breadth was similar: +3.3x vs -1.4x vs -1.9x vs +2.3x vs +2.5x (recent -10.5x to +6.4x!!!) on NYSE and +2.4x vs +1.2x vs -1.1x vs +1.8x vs -1.1x (recent -12.8x to +6.2x)  
  3. NYSE Financials rose 0.9% vs 0.3% vs -0.8% vs + 0.6% vs  +0.6%. BofA rose 2.8% to $13.34 +.36, now just three $13 plus days since 4/11/11!
  4. Volatility (S&P VIX) rose modestly ignoring the rally most likely due to Friday’s options expiration!The range since 4/12 11.99 (multi year low) to 18.20, and it is below the 40/50 day (13.37/13.61) and the 200 day (15.05)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

European equities mixed, Asia better: UK flat vs +0.2% vs +0.5% vs -0.1% vs +0.2%; France –0.1% vs flat vs +1% vs -0.9% vs +0.8%; Germany -0.1% vs +0.3% vs +0.7% vs -0.2% vs +0.6%; Japan +2.3%! vs -0.2% vs +2.9%! vs -0.7% vs +0.7% vs +3.6%!; Hang Seng +0.5% vs -0.3% vs +0.5% vs -0.1% vs +0.9%; Korea +0.1% vs +1% vs -1.8% vs +1.2% vs +0.1%; India +2.5%!!! vs +0.2% vs +0.7% vs -0.3% vs +0.5% vs +1.1%. U.S. stock futures little changed in another very narrow trading range session: DOW -12; SPX -3; NDQ -3.50.

Bonds opened better and advanced throughout the morning then tanked from the highs and closes weaker but are trying again overnight – the 30 yr is still ABOVE 3%…one heck of an ‘E’ ticket ride!!!!: 10 yr Treasury 1.94% +1/4 (recent range 2.06% to 1.63%!!!), and the 30 yr’s 3.26% to 2.82%!!!, now 3.16% +9/16. The long TIP is 0.73% +1/8 – still performing miserably since setting a new (record?) low of 0.36% on 4/5. It took out the recent high yield of 0.69% on 5/13 with a 0.74% yesterday! Libor update: 0.274% 3 mos., 0.421% 6 mos. – both dropping aqain! Foreign bond yields mixed. Greece still plunging!!! Germany 1.37% -1; UK 1.90% -1; France 1.93% -2, Italy 4.04% +3; Spain 4.37% +5; Portugal 5.36% -2; Greece 8.52% -56!!! Vs 9.12%!!! -35!!! vs 9.44% vs 9.43% vs 9.44% vs 9.53% (recent range now 8.52%!!!-12.57%!). Japan 0.85% -1.  

Gold closed lower for a third day at $1424.50 -$9.90 with an intraday low of $1419.70. Last Friday’s high of $1487.20 was highest since 4/12. 4/16’s intraday low of $1321.50 – was lowest since Sept. ’10. Resistance remains way above at the 40 day/50 day: $1497-1515 – still falling! Overnight it is weak again at $1411.30 -$13.20 with a session low of $1404.60. Crude also closed lower at $94.21 -.96, five days after posting a new rally high of $97.17, nearing a 12 month high! It is well above Sup/Res at the 40 day ($93.37), 50 day ($93.16) and 200 day ($92.15). Overnight it is $93.01 -$1.20 with a session low of $92.92.  4/18’s low of $85.61 was lowest since 12/11! The range is $85.61-$97.80 since June 29, 2012!!!!

 

Some random thoughts:

It is hard to imagine the strength of stocks and the accompanying weakness in bonds since Bernanke spoke to the Fed last week. Conclusion: stocks will continue to rally – until they don’t. P/E’s aren’t excessive unless the strong earnings aren’t sustainable!

Have a great day!

TB

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