5/20/13…so much for options!

Bloomberg Quote of the Day: “Character is power.” – Booker T. Washington…ah but it is so trumped by money! TB

This week’s economic calendar is fairly light. We will get April Existing Home Sales (Wednesday), April New Home Sales (Thursday) and April Durable Goods Order (Friday). Courtesy of Economic Advisory Service.

Bloomberg Top Stories:

*Yahoo Will Buy Tumblr fro $1.1 Billion in Biggest Deal Yet for CEO Mayer

*Yen Strengthens as Silver Drops While Stocks, U.S. Futures Little Changed

*Gross to Buffett Omens Disregarded as U.S. Sales of Corporate Bonds Soar – !!!

*JPMorgan Investors Led by Chairmen-CEOs to Decide If Dimon Keeps Two Roles

*GE Capital to Pay Parent $6.5 Billion in Dividends as Immelt Shrinks Unit

*Dell Says It Can’t Evaluate Icahn Buyout Proposal Without More Information

*Real Rebound Seen as Brazil Commits to Reducing Inflation

*Health Checkups at $2,500 Lure Busy Executives to Scans Some Doctors Doubt

*North Korea Fires Six Missiles in Three Days in Snub to Global Sanctions

*Assad Forces Recapture Key City of Al-Qusair, State-Run SANA Says

I didn’t see that coming. Quite an options expiry…up initially on closing out positions (natch), then down then a climb all afternoon into new record highs and closes near the highs on both the Dow and S&P500…as well as the Nasdaq 100 which closed AT the new high. Advance/Declines and Breadth were both positive – not hugely so but very adequate. Volume was an ‘average’ 3.44B shares vs 3.47B but ‘real’ trades on the floor of the NYSE hit 848M, highest since April 30th. Still, the volume for the week was a weak 714M shares vs the 12 month average of 724M shares – also historically weak! Intraday 130M shares traded in the first half hour, then a normal climb until the final 15 minutes. During that timeframe another 130M shares traded – with 190M on the close! In other words that accounted for 450M shares (53%)…hardly indicative of retail buying!

Who knows but the string of weak economic data, accompanied by weak earnings at WalMart…aren’t earnings what determine whether the p/e multiple is too high or too low, caused stocks to turn down, then up them down and close just off the lows. Nevermind though, we had another record high on the Dow and the S&P 500  was just bdlow its highs – lovely! NYSE Volume slipped  to 3.47B shares vs 3.66B but remains near normal. Average is the ‘new normal.’ But if it turns on you and that could happen this week, where will the support be? Could we see another ‘flash crash’? Today is options expiry in a market that is dominated by high frequency traders – not institutional buyers…their only role in this has been to be paralyzed against selling to avoid being left behind (note that even the selloffs of late are minor and not on large volume…that could change – quickly! Again Dow Transports fell (-0.8% vs +0.8% vs +1.9%), but worst was Dow Utilities -0.9% vs +0.7%, while the Dow fell 0.3% and S&P 0.5%…Russell 2000 small cap was -0.3% vs  +0.3% vs +1.3%. The two Nasdaq indices were down 0.1-0.2%. Look at this on the NDQ 100: Wednesday’s leader GOOG shed 2.8 while APPL; which lost 12 on Wednesday gained back 4.5 index points. Average. Today is options expiry and the VIX rose .26 to 13.07, its third, albeit slight increase in a row. All indices were up about 1% with Dow Transports +1.3% and the Dow lagging at up 0.8%…again, smells of professional index type trading…you decide.

So let’s see what else happened:

*Dow Transports +1.3% vs -0.8% vs +0.8% vs +1.9% vs -0.5%; Russell 2000 +1.1% vs -0.3% vs +0.3% vs +1.3%! vs -0.1%; Dow Utilities +0.9% vs -0.9% vs +0.7% vs +0.5% vs -0.6%; S&P 500 +1% vs -0.5% vs +0.5% vs +1% vs flat; Nasdaq Composite +1% vs -0.2% vs +0.3% vs +0.9% vs +0.1%, NDQ 100 +1% vs -0.3% vs +0.2% vs +0.5% vs flat, Dow 30 +0.8% vs -0.3% vs +0.4% vs +0.8% vs -0.2%.

*NYSE Volume slipped to a still average 3.44B shares vs 3.47B vs 3.66B vs 3.43B vs 2.86B (low for the year). REAL NYSE Volume also rose sharply to 848M shares, highest since 4/30 from a below average 679M vs 738M vs 700M vs 594M (lowest since 4/8). Recent highs were 975M (selloff) to 887M (rally). The average last week was a weak 726M shares vs 720M vs 687M vs 859M vs 689M!!! The last options expiry came in at a solid but not great 914M shares higher than this one at 848M. The 12-month average is just 724M 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 sixteen 800+M shares in 2013 – just 5 up, 11 down, but on trades of less than that 75 have been up and just 22 down…there have been 20 mixed sessions.

*new 52 week highs have now ranged from 100-864. They climbed back to 726 vs 640 vs 864! vs 793 vs 462. New lows plunged back to 67 vs 95 vs 66 vs 38 vs 39 vs 37 (recent range 29-237).

  1. Advance/Declines were positive: +2.6x vs -1.5x vs +1.2x vs +2.1x vs -1.5x (recent range -7.1x to +4.4x) on NYSE and +2.2x vs -1.3x vs +1.3x vs +2.3x vs -1.2x (recent -3.5x to +3x). Breadth was even better: +4x! vs -2.3x vs +2x vs +3.3x vs -1.4x (recent -10.5x to +6.4x!!!) on NYSE and +2.9x! vs -1.1x vs +1.8x vs +2.4x vs +1.2x vs -1.1x (recent -12.8x to +6.2x)  
  2. NYSE Financials rose1.3% vs -0.8% vs +0.7% vs +0.9% vs 0.3%. BofA rose by 0.5% vs -0.7% vs +0.8% to $13.43 +.07, sixth day above $13 since 4/11/11!
  3. Volatility (S&P VIX) PLUNGED again after three modest rises to 12.45 -.62 (only one day above 13 since May  2). 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 little changed, Asia mixed: UK -0.1% vs +0.4% vs -0.1% vs flat vs +0.2%; France -0.2% vs +0.4% vs +0.4% vs –0.1% vs flat; Germany +0.2% vs +0.3% vs -0.1% vs -0.1% vs +0.3%; Japan +1.5% vs +0.7% vs -0.4% vs +2.3%! vs -0.2%; Hang Seng +1.85 vs closed vs +0.2% vs +0.5% vs -0.3%; Korea -0.2% vs closed vs +0.8% vs +0.1% vs +1%; India -0.3% vs +0.2% vs +0.2% vs +2.5%!!! vs +0.2%. U.S. stock futures were slightly weaker overnight in another very narrow trading range session. Stocks opening lower: DOW -21; SPX +6.40; NDQ -4; Comp -1.

Bonds were weaker Friday but rallying overnight…still VERY weak: 10 yr Treasury 1.93% +3/16 (recent range 2.06% to 1.63%!!!), and the 30 yr’s 3.26% to 2.82%!!!, now 3.14% +1/2. The long TIP is 0.73% +3/8 – still the weakest link since setting a new (record?) low of 0.36% on 4/5. Recent high yield is 0.74% set on 5/14! Libor update: 0.273% 3 mos., 0.418% 6 mos., inching lower! Foreign bond yields little changed except Portugal (higher) and Greece which is still plunging. Germany 1.33% +1; UK 1.87% -1; France 1.85% -1, Italy 3.87% -2; Spain 4.17% -1; Portugal 5.16% -1; Greece 7.94% -11!!! vs 7.96% vs 8.47% vs 8.52% vs 9.12% vs 9.44% vs 9.43% (recent range now 7.94%!!!-12.57%!). Japan 0.84% +5.  

Gold closed lower for a SIXTH day at $1364.70 -$22.20 with an intraday low of $1353.60, lowest since 4/17! 5/10’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: $1484-1507 – still falling! Overnight it is falling again at $1354.40 -$10.30 with a session low of $1336.30, lowest since 4/18!!! Crude closed higher at $96.02 +.86, 8 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 ($93.51), 50 day ($93.35) and 200 day ($92.26). Overnight it is $95.50 -.52.  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:

Running late, so insert your own comments today.

TB

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