6/24/13…please let the quarter end…unless markets (all!) can RALLY!!!

Bloomberg Quote of the Day: “Weakness of Attitude Becomes Weakness of Character.” – Albert Einstein

Labor market trends are slowly improving despite last week’s increase in jobless claims. Manufacturing activity expanded as indicated by the Empire State and Philadelphia Fed regional surveys. On the ISM weighted basis, however, they were mixed. Industrial Production was unchanged in May while sentiment dropped in early June. Retail sales rose, suggesting modest growth in consumption in Q2. Business inventories, leading indicators, housing starts and existing home sales also rose.  Inflation remains subdued.

This week’s economic calendar is packed with important indicators. The highlight of the week will be the May Personal Income (Thursday).

We will also get the June Dallas Fed Manufacturing Survey (Monday), May Durable Goods Orders, April Case-Shiller Home Prices, June Consumer Confidence, May New Home Sales and June Richmond Fed Manufacturing Survey (Tuesday), GDP – Q1 3rd  Estimate (Wednesday), and June ISM Chicago Survey and June Consumer Sentiment Final (Friday).  Courtesy of Economics Advisory Service

Friday is also end of the quarter!!!

Bloomberg Top Stories:

*Stocks Drop With U.S. Futures as China Enters Bear Market; Bonds Decline – there is no place to hide…cash??? No return and dollar is an iffy proposition at best, right?

*Fed Committed to Monetary Strategy Course Even with Departure of Bernanke

*World’s Biggest Pension Fund Doubts Bank of Japan Can Achieve 2% Inflation – that would be their own Government Pension Investment Fund…not a vote of confidence!

*China Money Rates Tumble for Second Day as PBOC Easing Targets Cash Crunch…not so for LIBOR!!!

*Supreme Court Weights Voting Rights Laws From Racism Still Seen Smoldering

TB is out of the office for two days and all hell breaks loose…stocks, bonds, commodities, all slammed…especially TIPS and GOLD!!! Hey, look at Friday’s NYSE Volume 4.84B shares…and a miserable performance…only to be trumped by Friday’s 5.5B share day  – and it was options expiry…but think about that: over 10 BILLION shares in two days…all REAL investors – BULL!!! How about the NYSE floor volume? 2.009B shares on Friday – highest since 8/8/11…and eclipsing Thursday’s 1.067B shares…highest since May 31! Wait…we have more:

Since May 30th, the S&P VIX had 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 14.84/14.82/15.01 It closed on Friday at 18.90 DOWN 1.59 after Thursday’s 20.49 – highest since 12/28/12…the range? 20.49-21.32!!! Put protection is now prohibitive! Hope you had trailing stops but didn’t get caught in the plunge. Friday’s range was 18.25-20.93 so no relief there!

Look at new 52 week highs 98 vs 65 vs 257 vs 345 vs 264 vs 170 vs 159 vs 140, but even more amazing, new lows dipped to 438 but from an incredible 550 vs 143 vs 104 vs 62 vs 72 vs 459 vs 507 vs 363.

All indices have huge negative months…have given up at least half their quarter to date returns and about a third of year to day returns…and with a week left to Quarter end!!!

Now let’s examine the last five sessions closely:

* Dow 30 +0.3% vs -2.3%-1.4% vs +0.9% vs +0.7%; Dow Transports -0.5% vs -2.2%!!! vs -1.2% vs +1% vs -0.2%; Russell 2000 +0.3% vs -2.6%!!! vs -1.4%! vs +1.2%!; Dow Utilities UP 1.3%!!! vs -2%! vs -2.3%!!! vs +0.6% vs +0.5%; S&P 500 +0.3% vs -2.5%!!! vs -1.4%! vs +0.8% vs +0.8% vs; Nasdaq Composite -0.2% vs -2.3%!!! vs -1.1%! vs +0.9% vs +0.8% vs -0.6% vs +1.3% vs -1.1% vs -1.1%; NDQ 100 -0.4% vs -2.3% vs -1.2%! vs +0.8% vs +0.9%.

*NYSE Volume EXPLODED to 5.51B shares vs 4.84B shares vs 3.54B vs 3.1B vs 3.08B from a very weak 2.91B shares (2nd lowest of 2013, 2.75B is the 2013 low). REAL NYSE Volume also surged to 2.009B shares vs 1.067B shares vs 760M shares (highest since 6/6), from an average 646M shares vs 679M (595M is lowest since 5/24). The 12-month average is still just 722M shares. The range since 2/11 is 558M to 2.009B eclipsing the 1.825B on 3/15’s options expiry. There have now been just SIX 1B+ share sessions! There have now been 22 800M+ shares in 2013 – 7 up, 15 down, but on trades of less than that 82 have been up and 31 down…there have been 22 mixed sessions.

*New 52 week highs had ranged from 74-864. They rose slightly to a weak 98 on Friday from and incredibly low 65 vs 257 vs 345 vs 264. New lows slipped a tad to a still HUGE 438 vs 550 vs 143 vs 104 vs 62!!!. Recent range was 49-507.

  1. Advance/Declines were slight at the end of Friday’s volatile options expirty but intraday…ouch…but look at THURSDAY!!!! – especially on NYSE!!!: 1:1? vs -17.5x!!! vs -5.6x! (recent range now -17.5x vs -7.1x to +4.4x) on NYSE and +1.5x? vs -2.6x vs +2.3x vs +1.8x vs -2.5x (recent -3.5x to +3x). Breadth was similar: -1.1x vs -18.6x vs -11x!!! vs +3.8x! vs +2.6x(recent now -18.6x from -11x!!! to +6.4x!!!) on NYSE and -1.1x vs -11x vs -2.2x vs +3.1x vs +2.6x vs -2.3x (recent -12.8x to +6.2x)  
  2. NYSE Financials rose by 0.1% BUT only after plunging 2.7% vs -1.6% vs 0.7% vs +0.9%; Brokers +0.2% vs-1.9% vs -0.9% vs +1% vs +2%; KBW Banks +0.3% vs -1% vs -0.9% vs +0.8% vs +0.8%; Nasdaq Banks +0.9%! vs -0.5% vs -0.8% vs +1% vs +0.5%. BofA most active last two sessions again and look what happened: -1.6% vs -2.3% vs -0.6% vs +.7% vs +1.1%….closed BELOW $13 for a second day at $12.69-.20 taking out a double bottom at $12.97 which was critical support! It is down 4.4% over the last three sessions….look at the others: JPM -4%; C -6.3!!!; USB UP 0.6%!; WFC  UP 0.7%; GS -6%!; MS -5.4%!; UBS -6.4%! CAUTION…FINANCIALS ARE BEEING POUNDED on the open with BAC now $12.35, -2.7% and others WEAK too! Beware of quarter end!!! A lot of trapped LONGS in here!!!   
  3. Volatility (S&P VIX) is blasting off and despite closing at 18.90 Friday down from Thursday’s huge 20.49 it is back to 21.27 +2.37 with a session high of 21.52 highest since 12/28/12!!! The range since 4/12 is now 11.99 (multi year low) to 21.52 a new 12 month high, way the 40/50 day (14.84/14.82) and the 200 day (15.01)…ytd the range WAS 19.28 (2/25!) to 11.05 (3/14) – 12 mo. ave 16.10!

 

Global equities SLAMMED again; UK -1.3%; France -1.9%!!!; Germany -1.2%; Japan -1.3%; Hang Seng 2.2%!!!; Korea -1.3%; India -1.2%…OUCH!!! U.S. stock blasted yet again…Armageddon…and this is off the session lows: DOW -142!!!; SPX -16.60!!!; NDQ -22.75!!! Should make for an interesting day…week…quarter???

Bonds and stock moving in sync overnight…how special! TIPS are obliterated overnight and since peaking on April 5th the long TIP has lost 39 points!!!! OR 27%!!! 10 yr Treasury 2.61% -11/16 (recent range now 2.62% to 1.63%!!!), and the 30 yr range is now  3.60%!!! to 2.82%, currently 3.60% -7/16. The long TIP remains is now above 1.5%! Currently 1.53% -1-11/16! – 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 1.53%! Libor update: 0.235% 3 mos., 0.425% 6 mos –sharp increase of more than 0.005% in THREE sessions and less than 0.05% from the March 10 record lows!!! Foreign bond yields also crushed since Weds majors up 30bp’s; weak +60 or more!!!: Germany 1.82% +9; UK 2.54% +14; France 2.45% +14, Italy 4.71% +10; Spain 5.02% +9; Portugal 6.62% +29; Greece 11.24% +30 from 9.84% last Wednesday!!! Recent range: 7.94% to 12.57%.   

Gold was destroyed on Thursday plunging $87.70 to close at $1285.80, then a piddling gain of $5.50 on Friday and now down $12.30 overnight with a low of $1268.90 – lowest since June 30th, 2010!!! Support? Resistance? You pick ‘em!!! Look at the 40 day/50 day: $1413-1418…and the 200 day – $1608!!! Crude lost over $3.60 since Wednesday closing Friday at $93.69 -$1.71, five days after a strong finish, +$1.01 with an intraday high of $99.01 – highest high and close since 9/17/12! It remains well above the 40/50 day …12 days after putting in an intraday low of $91.26 – lowest since 5/2! It is only pennies above the 200 day ($92.30), making it CRITICAL support. Resistance is now at the 50/40 day (93.98-95.08 – crossed and rising!). Overnight it is $93.42 -.27 with a low of $92.67, entirely wiping out the rally from June 4th.  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:

Something is dreadfully wrong…globally…and it had better sort itself out soon. Overnight markets suggest yet another rout for STOCKS, BONDS, and COMMODITIES! The market is not safe for children or other living things.

The Fed has failed us…the SEC has failed us…and most definitely Congress has failed us. Since taking his ‘victory lab’ in January, Obama has failed to show any chance of a legacy…will it be the end of the two party system? Seems like that is about all that is left.

Don’t be too harsh on him though…look who he has to work with. Still, he allows his handpicked Attorney General, Eric Holder to remain…he who loves to brag about those record civil suit recoveries…not from the perps but from the poor shareholders. Wake up Obama and get a real man…or woman there…and I don’t mean one like Janet Reno!!!

After three weeks of planning and carrying out memorial services for my late uncle, Elvon M. Darusmont who passed away on June 1st at the age of 93, it is time to get back to work…blasting our incompetent elected officials who either choose not to act in the people’s interest or are incapable of doing so as they try to please their obscenely rich benefactors…you know who you are…and in what industries…hmmm, would financial services be one of them? You betcha! Go to the head of the class.

All the best,

TB

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