6/6/13…D-Day…did you sell in May? If not, go away!

From the Friar’s Club Encyclopedia of Jokes: “I always try to avoid clichés like the plague.”

Bloomberg Quote of the Day: “Live as if you were to die tomorrow. Learn as if you were to live forever.” – Mahatma Gandhi

Bloomberg Top Stories:

*ECB Urgency Fades a President Draghi Savors Euro-Region Confidence Boost

*Euro Climbs to Four-Week High Before ECB Decision as S&P 500 Futures Gain

*Bank of England Maintains Stimulus as King Prepares to Hand Over to Carney

*Cohen Defiant Is Said to Vow Keeping SAC Open as Clients Withdraw Billions

*Volatility Suppressed From Stocks to Bonds Showing Market Panic Contained

*German Factory Orders Fall More Than Forecast as Economy Struggles to Grow

*Bank of Japan Said to Split on Measures to Quell Bond Market’s Volatility

*Dimon Predicts Increased Volatility as Central Banks Weigh Rate Increases

*Natural-Gas Price Break With Oil May Spur Motor-Fuel Use – or not…

*Costco Cheapskate CEO’s Shabby Digs Keep Workers satisfied at $21 an Hour

*Ninety Cents Buys Factory Safety on $22 Wal-Mart Jeans Made in Bangladesh

*NSA Collecting Millions of Verizon Records on U.S. Order, Guardian Reports

*Syria Hails Capture of Al-Qusair as Foreshadowing Total Defeat for Rebels   

Remember when ‘perma-bear’ TB said it might be a good thing to ‘sell in May’? Bet you laughed…but while not claiming victory nor a prophecy, TB bets some of you are wishing you had at least sold into the rally. As of yesterday all off the gains since May 3rd have been eradicated. Furthermore the tone of the market, lack of enthusiasm, rapid increase in volatility (S&P VIX has risen from 12.45 to 17.50 just since 5/17!), and more failures by high frequency traders to stabilize declines…they don’t even try…make this market treacherous. Don’t believe TB but at least listen to Marc Faber, Bridgewater’s Ray Dalio, or Jeremy Grantham (made the correct call in 1999 and lost 25% of his accounts as the markets continued to accelerate…until they didn’t!). Regardless of those who use those cute definitions of ‘cheap’ such as historical p/e’s which of course are not overvalued in a time of record…but flattening or worse earnings, but using the ten-year historical averages favored by Robert Schiller are anything but cheap! One hiccup and even the perceived cheap becomes rich! Look before you leap…don’t you at least wish you had bought some ‘cheap’ puts back in mid-May? Nah…needless worry that will cut into our enormous profits, right?  Volume was steady at average levels while A/D’s and Breadth were decidedly negative…especially the latter!

Worst performer was Dow Transports, -1.9%, followed by NYSE Financials -1.8%! Everything else, except Dow Utilities, -0.9%, was off well over 1%. The Nasdaq 100 fell 1.2% but that doesn’t tell the story: there were 10 stocks that lost more than one point led by AAPL -3.4, Gild -2.9, and INTC -2.8. Together they were half of the 36 point loss with decliners beating gainers by 9:1. This has been a tough year for tech and very volatile.

So let’s see what else happened:

* Dow 30 -1.4%! (-217, close near low at 14,960, 1st close below 15k since 5/6), vs -0.5% vs +0.9% vs -1.4%!!! (range 276 points, loss 208!!!)  vs +0.1% vs -0.7%; Dow Transports -1.9%! vs -0.5% vs flat vs -0.8% vs +0.2% vs -1.1%; Russell 2000 -1.4%! vs -0.8% vs +0.7% vs -1% vs +0.6% vs -1%; Dow Utilities -0.9% vs -0.3% vs +0.1% vs -0.6% vs flat vs -1.5%!!! vs -1.4%!!! – down 7.9% over the past 9 sessions, and since posting a near record high on 4/30, have plunged 11.5%!!!; S&P 500 -1.4%! vs -0.6% vs +0.6% vs -1.4%! +0.4% vs -0.7%; Nasdaq Composite -1.3%! vs -0.6% vs +0.3% vs -1% vs +0.7% vs -0.6%; NDQ 100 -1.2%! vs -0.6% vs +0.3% vs -1%! vs +0.6% vs -0.6%.

*NYSE Volume was steady at a slightly above average 3.62B shares vs 3.6B vs 3.94B vs 3.91B vs 3.47B vs 3.56B vs 3.43B vs 2.75B (2013 low).  REAL NYSE Volume slipped to a still above average 740M shares vs 787M vs 880M vs 1.35B (highest since 3/15 and 2nd highest of the year!) vs 711 shares vs 722M vs 734M vs 587M. The 12-month average is just 721M 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. Last Friday was only the fourth day this year to register over 1B shares! There have now been just 19 800M+ shares in 2013 – 6 up, 13 down, but on trades of less than that 78 have been up and 27 down…there have been 21 mixed sessions.

*New 52 week highs had ranged from 100-864. They plunged to 74!!! vs 235 vs 234 vs 221 vs 300 vs 175 vs 517 vs 138!!! vs 811. New lows declined to 125 vs 182 vs 325 vs 290 vs 108 vs 191 vs 79 vs 49 (recent range now 29-290).

  1. Advance/Declines were VERY negative: -4.3x!!! vs -1.7x vs -1.2x vs -5.5x! vs +1.3x vs -3.8x!!! vs +1.4x vs -1.2% vs -1.4x vs -3.5x! (recent range -7.1x to +4.4x) on NYSE and -3.4x! vs -2.1x vs +1.4x vs -2.6x! vs +2x vs -2.3x vs +2.4x vs +1.1% vs +1.1x vs -2.9x! vs +1.2x vs -3.3x! (recent -3.5x to +3x). Breadth was even worse: -4.3x!!! vs -2.2x vs +1.3x vs -6.8x!!! vs +2x vs -1.7x vs +1.8x vs -1.5x (recent -10.5x to +6.4x!!!) on NYSE and -4.9x!!! vs -2x vs +1.2x vs -3.8x!!! vs +3.5x vs -1.6x vs +2.5x (recent -12.8x to +6.2x)  
  2. NYSE Financials fell by 1.8%!!! vs 0.4% vs +0.3% vs -1.7%!!! vs + 0.8%. BofA fell for a 4th day by 2%!!! vs -0.7% vs -0.8% vs -1.1%! vs +3.3%??? vs +1.5%??? to $13.09 -26…18th day above $13 since 4/11/11. Brokers -2.3%! vs flat vs -0.9% vs -1.4%; KBW Banks -1.4%! vs -1% vs flat vs -1.7%; Nasdaq Banks -1.2%! vs -0.7% vs +0.6% vs -1.2%.
  3. Volatility (S&P VIX) exploded to the upside to 17.50 +1.23 – highest since 4/18!!! (12th day above 13 since May 2). Intraday the high was 17.84! The range since 4/12 is 11.99 (multi year low) to 18.20, and it is now well above the 40/50 day (13.88/13.78) and the 200 day (14.91)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

Global equities mixed; UK +0.2% vs -1.4%! vs +0.7% vs -0.4% vs -0.9%!; France +0.5% vs -1.2%! vs +0.5% vs +0.2% vs -0.7%; Germany +0.4% vs -1.1%! vs +0.5% vs +0.2% vs -0.6%; Japan DOWN 0.9% vs DOWN 3.8%!!! vs UP 2.1% vs DOWN 3.7%!!! vs UP 1.4% vs DOWN 5.2%!!!; Hang Seng -1.1%! vs -1% vs -0.5% vs -0.4% vs -0.3% vs -1.6%!!!; Korea -1.5%!!! vs -1.3% vs flat vs -0.6% vs +0.1%; India -0.3% vs +0.1% vs -0.3% vs -0.8% vs -2.3%!!! U.S. stock futures slightly higher in another extremely narrow trading range  –  caution!: DOW +49; SPX +7.40; NDQ +9.75.

Bonds are better overnight but still remain weak: 10 yr Treasury 2.09% -1/32 (recent range now 2.17% to 1.63%!!!), and the 30 yr’s 3.33% to 2.82%!!!, now 3.25% flat. The long TIP continues to be hammered but off the new high of 1.00% set Monday!!! Currently 0.97% -1/32- still the weakest link since a new (record?) low of 0.36% on 4/5. Since the Bernanke announcement on the 7th the high yield has gone from 0.82% set on 5/22 to 1.00%! Libor update: 0.274% 3 mos., 0.410%!!! 6 mos. Foreign bond yields mixed but little changed: Germany 1.50% -1; UK 2.01% -1; France 2.07% +2, Italy 4.14% +1; Spain 4.43% +1; Portugal 5.79% +8; Greece 9.00% -7 vs 9.05% vs 8.83% vs 9.11% vs 9.20%!!! vs 8.80% vs 8.54% vs 8.39% vs 8.63% vs 8.54% vs 7.98% vs 7.97% vs 7.94% vs 7.96% vs 8.47% – it has now broken down from the rally! Recent range 7.94% to 12.57%. Japan 0.82% -3.  

Gold closed barely up yesterday in an incredible 3rd straight ‘inside day’ (with a 4th straight overnight…incredibly narrow!) closing below $1400 for a 2nd day at $1398.80 +$1.30??? Last Thursday’s intraday high was $1417.70, highest since 5/15, despite Tuesday’s negative key reversal.  It has been down 12 of the last 18 sessions following 5/20’s intraday low of $1338, lowest since 4/18. 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 at the 40 day/50 day: $1427-1458 – still falling rapidly! Overnight it is $1402.80 +$4.30 – $5 range??? Crude rose slightly to close at $93.74 +43, just above the 40/50 day…two days after putting in an intraday low of $91.26 – lowest since 5/2! It remains above the 200 day with just one day below since 5/1, making it support at $92.28. It is between the 40/50 day (93.23-93.63), six days after a high of $95.92 – highest since 5/22!  The rally high is $97.11 set 5/20, nearing a 12 month high! Overnight $94.34 +.60. 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:

See comments in market summary…says it all.

Have a great day!

TB

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