6/14/13…send in the clowns, there have to be clowns

From the Friar’s Club Encyclopedia of Jokes: Definition of a Power Struggle: When your boss has the power and you have the struggle.” – unattributed

Bloomberg Quote of the Day: “I never learn anything talking. I only learn things when I ask questions.” – Lou Holt

Bloomberg Top Stories:

*Wholesale Prices in U.S. Climb More Than Economists Forecast on Fuel, Food

*Currency Rates Said to Face Global Regulation in Widening of Libor Review

*Bonds Rally With Yen as Stocks in  Europe Erase Gains Before U.S. Report

*Obama’s Lost AAA Brings Falling Yields-to-Deficits as More Downgrades Loom

*Chinese Debt Auction Fails for the First Time in 23 Months on Cash Squeeze

*Wealthy Americans Revisit Hilton Head as Rebound Benefits Vacation Homes

*Singapore Orders Banks to Set Aside $9.6 Billion for Rate-Rigging Attempts

*ABN Amro Group Ordered by Court to Pay Fired Energy Bankers $1.41 Billion

*Gold Bears Return With ETP Rout in an Unprecedented 17th Week – Electronic Trading Platforms thrashing the Gold ETF’s –  dysfunctional markets…nothing is safe!

*Obama-Merkel as Cool as Leaders Come Prove Last to Be Standing Since 2009 – but Obama is proving to not have the mettle of Merkel, right?

*U.S. Agencies Said to Swap Intelligence Data With Thousands of Companies – !!!

*Syrian Fighters to Get U.S. Backing as Assad’s Chemical-Arms Use Confirmed

*NSA Leak Inquiry to Explore Whether U.S. Contractor Snowden Had China Link

Ah, it was an ‘up’ day…up bigger than the prior ‘down’ day. Since June 4th we have had Six of these cycles…with a ‘barely changed’ one right in the middle: down, up, up, flat, down, down, up…anyone want to put that rhythm to music? In other words, all six have had moves of +/- 1% by three or more indices, and almost all have been with virtually every index moving by >1%! Volatility, that’s what TB is talking about! Since May 30th  the S&P VIX has closed between 15.14 and 18.59 with a range of 14.36 to 18.60 – the 40/50/200 day m/a’s are 14.37/14.26/14.98…so call it elevated! See yesterday’s commentary for stock and bond market performance over the past five years. Is this a casino you want to wander into? New 52 week highs rose slightly from 140 to 159 while new lows slipped to a very high 459 vs a super high 507 vs a high 363…market it telling you something but not in the daily index results which appear to be going sideways – and unable to get back to the record highs of May 22nd…and struggling with the 40/50 day m/a’s  Advance/Declines and Breadth were both solidly positive – finally! Volume remains about average on the NYSE while actual floor trades remain weak, ranging from 595M-756M this week with an average for the four days of just 683M shares: compare to last week’s 792M-880M with an average of 787M vs the 12 month of just 720M  Speculation remains key, driven by high frequency trades. What will Helicopter Ben say to Congress next week? He is the key to any sustainable market moves.

Best performer was NYSE Financials, +2%! Then Dow Transports +1.9%, the Dow was the weakest link, still up 1.2%. The Nasdaq 100 rose 1.3% vs -1%, or 37 points with just 10 members combining for half the gain, 95 up, just 5 down! It was led by AAPL +3.1 vs -1; ORCL +3 vs -2; INTC +2.1; while MSFT lost 2 vs -4.5 vs -1.4, the only one to lose more than 1 index point! Tech remains treacherous and blowing with the wind.

So let’s see what else happened:

* Dow 30 +1.2% vs -0.8% vs -0.8% vs -0.1% vs +1.4%! vs +0.5% vs -1.4%! vs -0.5% vs +0.9% vs -1.4%!!!; Dow Transports +1.9%! vs -0.7% vs -1% vs -0.3% vs +2.4%!!! vs +1% vs -1.9%! vs -0.5% vs flat vs -0.8% vs +0.2% vs -1.1%; Russell 2000 +1.8%! vs -0.9% vs -1.1% vs +0.5% vs +0.8% vs +1.2% vs -1.4%! vs -0.8% vs +0.7% vs -1% vs +0.6% vs -1%; Dow Utilities +1.5%! vs -0.9%! vs -0.7% vs -0.3% vs +0.8% vs +1.3% vs -0.9% vs -0.3% vs +0.1% vs -0.6% vs flat vs -1.5% vs -1.4% – now down 6.2% over the past 15 sessions, and since posting a near record high on 4/30, have plunged 11.1%!; S&P 500 +1.5% vs -0.8% vs -1% vs flat vs +1.3%! vs +0.9% vs -1.4% vs -0.6% vs +0.6% vs -1.4%; Nasdaq Composite +1.3% vs -1.1% vs -1.1% vs +0.1% vs +1.3% vs +0.7% vs -1.3% vs -0.6% vs +0.3% vs -1%; NDQ 100 +1.3% vs -1.1% vs -1% vs flat vs +1.4% vs +0.5% vs -1.2% vs -0.6% vs +0.3% vs -1%.

*NYSE Volume rose slightly to an average 3.41B shares vs 3.21B vs 3.41B vs 2.95B (2nd lowest of 2013!) vs 3.37B vs 3.48B vs 3.62B 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 rose to an above average 756M shares vs 692M vs 689M vs  595M (lowest since 5/24) vs 729M vs 800M vs 740M 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 723M 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. May 31st was only the fourth day this year to register over 1B shares! There have now been just 20 800M+ shares in 2013 – 7 up, 13 down, but on trades of less than that 80 have been up and 29 down…there have been 22 mixed sessions.

*New 52 week highs have ranged from 74-864. They rose slightly to 159 vs 140 vs 141 vs 278 vs 227 vs 103 vs 74!!! vs 235 vs 234 vs 221 vs 300 vs 175 vs 517 vs 138!!! vs 811. New lows fell but remain very elevated at 459 vs 507!!! (a new rally high) vs 363!!! vs 143 vs 50 vs 95 vs 125 vs 182 vs 325 vs 290 vs 108 vs 191 vs 79 vs 49 (recent range 29-507).

  1. Advance/Declines were solidly positive: +5.6x! vs-4.2x! vs -6.4x! vs -1.2x vs +2.2x vs –3.6x vs  -4.3x!!! vs -1.7x vs -1.2x vs -5.5x! vs +1.3x vs -3.8x!!! (recent range -7.1x to +4.4x) on NYSE and +3.2x! vs -2.3x vs -2.8x vs +1.8x vs +1.9x vs +2.4x vs -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 better: +6.9x!!! vs -3.8x vs -4.4x! vs -1.1x vs +2.7x vs +5.3x! vs -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 +3.9x! vs -3.2x vs -3.6x! +1.3x vs +2.6x vs +2.6x vs -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 rose by 2%!!! vs -1% vs -1.6% vs flat vs +1.3% vs +1.1% vs 1.8%!!! vs -0.4% vs +0.3% vs -1.7%!!! Brokers +2.2%! vs -0.8% vs -1.6%; KBW Banks +1.4% vs -1.1% vs -1.7%; Nasdaq Banks +1.3% vs -0.8% vs -1.1%. BofA rose for the first time in four sessions by 1.2% vs -1% vs -1.4% vs 0.6% vs +1.4% vs +0.8% vs -2%!!! vs -0.7% vs -0.8% vs -1.1%! vs +3.3%??? vs +1.5%??? to $13.21 +.15 BUT intraday low was $12.97 again creating a ‘double bottom’…2nd time it has traded BELOW $13 since 4/11/11. only other financial mover. But: JPM +1.8% vs -0.6% vs -1.6%; C -1% vs -3.8%! vs +2.1%; WFC +1.7% vs -1% vs -1.4%; USB +0.2% vs flat vs -0.5%; GS +2.4%!!! vs -0.9% vs -2.5%! MS -0.8%? vs -2%! vs -3.9%!!!; UBS +2.9%!!! vs -1.8% vs -2% – the sector remains near their rally highs but: DOWN 1.92% over the past five years…annualized!!!
  3. Volatility (S&P VIX) fell more than offsetting Wednesday’s rise but remains elevated. The high was 5/12 at 18.60, not seen since 2/25, and it closed at 16.41 -2.18! with a range of 16.37-18.38 (18th day above 13 since May 2). The range since 4/12 is now 11.99 (multi year low) to 18.60, and it remains  above the 40/50 day (14.25/14.10) and the 200 day (14.96)…ytd the range is 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

Global equities slightly higher – Japan is strongest at +1.9% BUT a day after losing 6.4%!!!, India also rallying; UK +0.1% vs -0.8% vs +0.2% vs -1.7%! vs +0.5% vs +0.2% vs -1.4%!; France +0.2% vs -0.6% vs +0.5% vs -2%!!! vs +0.5% vs +0.5% vs -1.2%!; Germany +0.5% vs -1.4%!!! vs -0.1% vs -1.7% vs +1.2% vs +0.7% vs +0.4% vs -1.1%!; Japan +1.9%! vs -6.4%!!! vs -0.2% vs -1.5% vs +4.9% vs -0.2% vs -0.9% vs -3.8%!!! vs +2.1% vs -3.7%!!! vs +1.4% vs -5.2%!!!; Hang Seng +0.4% vs -2.2%!!! vs closed vs -1.2%! vs +0.2% vs -1.1%! vs -1% vs -0.5% vs -0.4% vs -0.3% vs -1.6%!!!; Korea +0.4% vs -1.4%! vs -0.6% vs -0.6% vs +0.5% -1.8%!!! vs -1.5%!!! vs -1.3%; India +1.9%! vs -1.1% vs -0.5% vs -1.5%! vs +0.1% vs -0.5% vs -0.3% vs +0.1% vs -0.3% vs -0.8% vs -2.3%!!! U.S. stock futures modestly lower and in a narrow trading range…no conviction: DOW -22; SPX -2.90; NDQ -2.75.

Bonds rallied yesterday finally but despite 10’s being up ¾ and 30’s up nearly a point, they remain depressed; and after being up earlier are now little changed and mixed overnight: 10 yr Treasury 2.14% +3/32 (recent range 2.25% to 1.63%!!!), and the 30 yr’s 3.37%!!! to 2.82%, now 3.32% -1/32. The long TIP rose more than 2 ponts yesterday but remains well above 1%! Currently 1.08% +5/8 – it has lost more than TWENTY points since May 2nd! – still the weakest link since a new (record?) low of 0.36% on 4/5, 12 mo. ave 0.65%!. Since the Bernanke announcement on May 7th the high yield has gone from 0.82% set on 5/22 to 1.22%! Libor update: 0.273% 3 mos., 0.411%! 6 mos. Foreign bond yields lower across the board, led by Portuga, but continue to be highly volatile!: Germany 1.52% -4; UK 2.10% -6; France 2.08% -4, Italy 4.26% -10; Spain 4.52% -8; Portugal 6.20% -20!!!; Greece 9.76% -10 vs 10% vs 9.94% vs 10.27%!!! vs 9.28% vs 9.00% 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% -the rally is over! Recent range 7.94% to 12.57%.   

Gold closed weak at $1377.80 -$14.20, in a parallel session, negating Wednesday’s gain. Tuesday’s session low was $1364.50, lowest since 5/23. It has closed above $1400 just one of the past 7 sessions! 5/30’s intraday high was $1417.70, highest since 5/15.  It has been down 14 of the last 24 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: $1416-1434 – stablilizing. Overnight it is slightly higher at $1384.50 +$6.50. Crude closed higher at $96.69 +.81, high $96.92 – highest high and close since 5/20 ($96.03), and remains well above the 40/50 day …7 days after putting in an intraday low of $91.26 – lowest since 5/2! It remains well above the 200 day ($92.27) with just one day below since 5/1, making it major support. First support at the 40/50 day (94.01-93.55 – now crossed!).  The rally high is $97.11 set 5/20, nearing a 12 month high! Overnight $97.26 +.57 with an intraday high of $97.50, highest since May 6th! 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:

(If you missed yesterdays’ commentary on stock and bond performance over the past five years, you might find it of interest…especially if you think the banks are a buy!

Bernanke caught between a rock and a hard place, not wanting to appear ‘dovish’ to his board, but risking panicking sellers…again…by talking about ending or even reducing the QE’s. Look how badly bonds have suffered since May 9th and the volatility in stocks caused by it as we rapidly approach the end of a quarter. Quarterly gains remain in the 4-5.5% range, except Dow Transports +1.4% and Dow Utilities DOWN 4.6%! But yesterday may have been a watershed event for both bonds and income producing stocks, finally. Time will tell…still, if you sold in May…

Ah, and Big Ben has to make his semi-annual trip up the Hill next week for two days of grilling by buffoons who only wish to preen themselves with their knowledge (sic). “Send in the clowns…there have to be clowns…don’t worry they’re here.” (thanks to Stephen Sondheim for that!)

Just get through the day and forget these god-forsaken markets.

TB

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