5/23/13…ain’t that a @#$%&

From the Friar’s Club Encyclopedia of Jokes: “The best things in life are free. And the cheesiest things in life are free with a paid subscription to Sports Illustrated.”

Bloomberg Quote of the Day: “What it lies in our power to do, it lies in our power not to do.” – Aristotle…Onassis???

Bloomberg Top Stories:

*Stocks Dive With Japan Sinking on China Slowdown as Metals Drop, Yen Gains

*First-Time Jobless Claims in U.S. Decreased More Than Estimated Last Week – yawn

*China Manufacturing Unexpectedly Shrinks With Li Reluctant to Add Stimulus – !!!

*Wall Street Seeks Changes to Some Dodd-Frank Rules in Global Trade Talks – they are going to do it yet again…money talks…and stupid greedy politicos listen. SICK!!!

*Home Supply Limited by 22 Million U.S. Owners Seen Lacking Equity to Sell – !!!

*Chicago Killings Cost $2.5 Billion as Homicide Rate Dwarfs New York City’s

*Cameron Calls Terror Killing in London ‘Betrayal of Islam’ as Probe Widens

*Assad Set to Stay in Power as Chance of Swift end to Syria Civil War Fades

*Trains Bump Along in U.S. With Maintenance Needs Outrunning Ability to Pay

*Overdue Student Loans Reach Record as Jobs Stay Scarce for U.S. Graduates – !!!

An incredible whipsaw the ended in a violent ‘key reversal’ (higher high, lower low, close BELOW the prior day’s low!). The day started out STRONG with the Dow climbing 154 points for a strong new record high…THEN, ten minutes before the release of the FOMC statement a sharp downtick…culminating in the Dow falling 122 points (-0.5%) – that is a 276 point swing in one session!!! That is 9 points more than the April 15th selloff – but that one was a continuous drop while this had a modest loss of 80 points – but once again the selloff was on HIGH volume…beware of a lack of liquidity caused by nervous high freak traders! Ditto for the S&P 500 which lost 13 points on a 30 point swing. The Composite wiped out SIX days of gains, the 100 had a 69 point range and lost 27 – going back over a year there were three 60+ swings but this was the largest! since Worst, however were Dow Transports which lost 103 points (1.6%!) in a 270 point swing   the Russell 2000 small cap lost 16 points in a 31 point range (it is the best barometer of the economy and had been very strong. Advance/Declines and Breadth were both very weak! Volume rose to a high 4.32B shares vs 3.49B vs 3.27B vs 3.44B, while ‘real’ trades on the floor of the NYSE rose to 855M, highest since April 30th.  Will we have a sharp drop on a lack of liquidity…could well be! We need a correction – at best! The SEC has allowed the creation of a monster and it is in control of the markets.

So let’s see what else happened:

* Dow 30 -0.5%!?! vs +0.3% vs -0.1% vs +0.8%; Dow Transports -1.6%!!! vs +0.1% vs -0.1% vs +1.3% vs -0.8% vs +0.8% vs +1.9%; Russell 2000 -1.7%!!! vs +0.1% vs +0.2% vs +1.1% vs -0.3% vs +0.3% vs +1.3%; Dow Utilities -1.6%!!! vs +0.2% vs -0.6% vs +0.9% vs -0.9%; S&P 500 -0.8% vs +0.2% vs -0.4% vs +1% vs -0.5%; Nasdaq Composite -1.1%!!! vs +0.2% vs -0.1% vs +1% vs -0.2%; NDQ 100 -0.9%!!! vs +0.2% vs -0.1% vs +1% vs -0.3%,

*NYSE Volume blasted to a well above average 4.32B shares vs 3.49B vs 3.27B vs 3.44B vs 3.47B vs 3.66B vs 3.43B vs 2.86B (low for the year). REAL NYSE Volume also rose sharply to a high 855M shares vs 685M vs 683M vs 848M, highest since 4/30, vs 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 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 now been just 17 800M+ shares in 2013 – just 5 up, 12 down, but on trades of less than that 76 have been up and just 23 down…there have been 20 mixed sessions.

*new 52 week highs have ranged from 100-864. They rose yesterday (due to the early rally) to 763 vs 649 vs 811 vs 726 vs 640 vs 864 vs 793. New lows rose modestly to 41 vs 31 vs 63 vs 67 vs 95 vs 66 vs 38 vs 39 (recent range 29-237).

  1. Advance/Declines were VERY negative: -3.5x! vs +1.2x vs +1.3x vs +2.6x vs -1.5x (recent range -7.1x to +4.4x) on NYSE and -3.3x! vs +1.1x vs +1.2x vs +2.2x vs -1.3x (recent -3.5x to +3x). Breadth was similar: -3.2x! vs +1.1x vs +1.6x vs +4x! (recent -10.5x to +6.4x!!!) on NYSE and -3.3x! vs +1.6x vs +1.2x vs +2.9x! vs -1.1x (recent -12.8x to +6.2x)  
  2. NYSE Financials FELL 1.2%! vs +0.1% vs +1.3% vs -0.8% vs +0.7% vs +0.9%. BofA declined by 1% vs -0.4% to $13.30 -.44, still…9th day above $13 since 4/11/11 – all this month!
  3. Volatility (S&P VIX) rose but after hitting a high of 14.45 intraday closed at 13.82 +.45 (only 4th day above 13 since May 2). The range since 4/12 11.99 (multi year low) to 18.20, and it is back above the 40/50 day (13.37/13.61) with res at the 200 day (15.05)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

Global equities SLAMMED – Japan off 7.3%!!!: UK -1.7%! vs +0.2% vs +0.2% vs -0.1% vs +0.4%; France -2.4%!!! vs-0.3% vs -0.1% vs -0.2% vs +0.4%; Germany -2.5% vs -0.1% vs -0.2% vs +0.2% vs +0.3%; Japan -7.3%!!! vs +1.6%! vs +0.1% vs +1.5% vs +0.7% vs -0.4% vs +2.3%; Hang Seng -2.5%!!! vs -0.5% vs -0.5% vs +1.8% vs closed; Korea -1.2%! vs +0.6% vs -0.1% vs -0.2% vs closed; India -1.9%! vs -0.3% vs -0.6% vs -0.3% vs +0.2% vs +0.2% vs +2.5%!!!. U.S. stock futures also slammed and near session lows in a wide range session. DOW -128!; SPX -14.60!; NDQ -20.75! Ouch! This does not look promising!…unless you are short!

Bonds were also whipsawed yesterday, climbing along with the stock market (?), then reversing sharply on the FOMC statement and testing the recent high yields. Overnight rallying again (dead cat bounce?) on equity weakness: 10 yr Treasury 1.99% vs 2.03%  +13/32 (recent range 2.06% to 1.63%!!!), and the 30 yr’s 3.26% to 2.82%!!!, now 3.17% vs 3.22% +31/32. The long TIP is 0.79% vs 0.83%!!! +1-1/16 – still the weakest link since a new (record?) low of 0.36% on 4/5. Recent high yield WAS 0.76% set on 5/20! Libor update: 0.273% 3 mos., 0.417% 6 mos. Foreign bond yields sharply higher in submerging markets. Germany 1.41% -2; UK 1.87% -2; France 1.91% +-2, Italy 4.06% vs 3.92% +16!!!; Spain 4.29% vs 4.18% +13!!!; Portugal 5.32% vs 5.17% +16!!!; Greece 8.54% UP 59!!! vs 7.98% vs 7.97% vs 7.94% 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 0.85% -3.  

Gold closed lower again on an ‘outside’ session with an intraday high of $1413.10! and has been down 8 of the last 9 sessions following Monday’s intraday low of $1336.30, lowest since 4/18, at $1367.40 -$10.20. 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: $1467-1494 – falling again! Overnight it is higher at $1390.70 +$22.90, session high $1397.10. Crude closed SHARPLY lower at $94.28 -$1.88!, 11 days after posting a new rally high of $97.17, nearing a 12 month high! Still it closed well above Sup/Res at the 40 day ($93.57), 50 day ($93.56) and 200 day ($92.30). Overnight however, it is $92.45 -$1.88…why am I paying over $4 for gas??? It is near the session low of $92.32 – just 2 cents above the 200 day m/a!  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:

The SEC remains asleep at the switch on high frequency trading and we are going to pay for it…especially those of you who capitulated late in the rally. Could be one more in a string of  ‘sell in May and go away.’ We are sheep…manipulated by trading algorithms that are directional…when there is a change in direction and momentum, they are useless and we pay for their lack of providing liquidity in down markets. Perhaps specialists weren’t all that bad…at least they had to step up to the plate. Ah, but the wizards say that is a good thing…after all, the pain is over quicker…and we fools have such short memories…

Thought on what is wrong with America and how it could be fixed would fill volumes…still trying to work them out…perhaps tomorrow.

Have a great day!

TB

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