6/25/13…never swim in a black pool…could be sharks in it!

From The Friars Club Encyclopedia of Jokes: “If exercise is so good for you, why do athletes have to retire by age thirty-five?” – unattributed

Bloomberg Quote of the Day: “Our attitude towards others determines their attitude towards us.” – Earl Nightingale

Bloomberg Top Stories:

*Orders for U.S. Durable Goods in May Rose More Than Forecast – but June?

*Stocks Rebound as Commodities Advance on U.S. Durable Goods, Housing Data

*China’s Central Bank Commits to Ensuring Stability in Money Market Rates

*Housing Prices in U.S. Rise the Most in Seven Years in Case-Shiller Index – yes but, that will unleash a wave of foreclosures and selling by trapped owners…oy vey!

*Global Regulators Study Ways to Repair or Replace Benchmarks After Libor – zzzzz

*Global Central Bankers Led by Fed Say Tighter Monetary Policy Long way off-heed!!!

*China Backlash Threatens Cisco Sales After Snowden Revelations on Security

*Obama Seeks New Emissions Limits to Revive Climate Plan Before Keystone
*U.S. Officials Probe Whether Snowden Acted Alone or Received Foreign Help

*Working Poor Lose Obamacare as States Led by Texas Resist Medicaid – Thanks GOP!

There is liquidity in the market…but only to the upside while high frequency and ‘black pool’ trades show that it is ‘illusory’ in other words it is their until we need it…then poof!

Where is the SEC…the Fed…Congress…dunno but as some wise person said YOU are driving the family sedan at the Indy 500…sadly that is so true.

Yesterday’s volume for NYSE listed stocks declined to an above average 4.7B shares but the average of the past three days remains way above average at 5B shares and for the past four days, 4.64B shares  – all of it on BIG DOWN VOLUME!!! Floor traded volume averaged 1.35B shares – contrast to the 12-month average of 719M shares.

Bonds and commodities also weak but the hemorrhaging at least stopped after the bounce from the session lows yesterday…but for how long? Quarter end?

All equity indices have huge negative months (3-5%)…have given up more than half their quarter to date returns and more than a third of year to day returns…and with a week left to Quarter end!!! Damn…should have sold in May…everything. Cash is king!

Here you go…read ‘em and weep:

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

*NYSE Volume declined but to an above average 4.7B shares vs  5.51B shares vs 4.84B vs 3.54B vs 3.1B vs 3.08B vs 2.91B (2nd lowest of 2013, 2.75B is the 2013 low). REAL NYSE Volume also declined but to a well above average 968M shares vs 2.01B vs 1.07B shares vs760M shares (highest since 6/6), vs 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 2.01B eclipsing the 1.825B on 3/15’s options expiry. There have been just SIX 1B+ share sessions! There have now been 23 800M+ shares in 2013 – 7 up, 16 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 have ranged from 65-864. They declined to 76 vs 98 vs 65 vs 257 vs 345. New lows surged again to al HUGE 715!!! vs 438 vs 550 vs 143 vs 104 vs 62!!!. Recent range was 49-715.

  1. Advance/Declines were very negative  – especially on NYSE!!!: -6.5x! vs 1:1 vs -17.5x!!! vs -5.6x! (recent range -17.5x to +4.4x) on NYSE and -3.3x!!! vs +1.5x vs -2.6x vs +2.3x vs +1.8x (recent -3.5x to +3x). Breadth also negative especially NYSE: -10x!!! vs -1.1x vs -18.6x!!! vs -11x!!! vs +3.8x!(recent -18.6x vs -11x!!! to +6.4x!!!) on NYSE and -2.6x vs -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 plunged by 1.4% vs +0.1% vs -2.7% vs -1.6% vs 0.7%; Brokers -1% vs +0.2% vs-1.9% vs -0.9% vs +1% vs +2%; KBW Banks -1.6%! vs +0.3% vs -1% vs -0.9% vs +0.8%; Nasdaq Banks -0.4% vs +0.9%! vs -0.5% vs -0.8% vs +1%. BofA 2nd most active: -3.1%!!! vs -1.6% vs -2.3% vs -0.6% vs +.7%….closed BELOW $13 for a 3rd day at $12.30 -.30! Last time below $13 was on 5/9 with a high of $13.83 on 5/30! It is down 7.5% over the last four sessions….look at the others: JPM -5.9%! vs -4%; C -9.2%!!! vs -6.3!!!; USB flat vs +0.6%!; WFC -2.5% vs +0.7%; GS -7.1%!!! vs -6%!; MS -2% vs -1%; UBS -1.5% vs -6.4%! A bloodbath!!!!   
  3. Volatility (S&P VIX) rose sharply again to 20.11 +1.21 with a session high of 21.91 highest since 12/31/12!!! The range since 4/12 is now 11.99 (multi year low) to 21.92, way the 40/50 day (14.84/14.82) and the 200 day (15.01)…ytd the range is 11.05 (3/14) to 21.92 (6/24) – 12 mo. ave 15.39!

Global equities recovering ex-Japan/Korea; UK +1.1% vs -1.3%; France +1.4% vs -1.9%!!!; Germany +1.6% vs -1.2%; Japan -0.7% vs -1.3%; Hang Seng +0.2% vs -2.2%!!!; Korea -1% vs -1.3%; India +0.5% vs -1.2%. U.S. stock futures higher o/n but for the Dow it is not even a ‘dead cat bounce’: DOW +79; SPX +10.50; NDQ +20.50

Bonds were pummeled again yesterday but then recovered late in the session…especially the beaten up TIPS…since peaking on April 5th the long TIP has lost 39 points!!!! OR 27%!!! 10 yr Treasury 2.55% -1/8 (recent range 2.62% to 1.63%!!!), and the 30 yr range is 3.60%!!! to 2.82%, currently 3.57% -3/8. The long TIP remains is back below 1.5%! Currently 1.42% -5/32! – 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: 0.276% 3 mos., 0.423% 6 mos, still close to the Jan. 2010 record lows (0.382% on BOTH!!!). Foreign bond yields mixed, volatile and trying to stablize: Germany 1.79% -2; UK 2.49% -4; France 2.43% -2, Italy 4.86% +3; Spain 5.06% -3; Portugal 6.75% +8; Greece 11.14% -7 from 9.84% last Wednesday!!! Recent range: 7.94% to 12.57%.   

Gold closed sharply lower again despite an ‘inside day’ closing at $1281.80 -$10.20 with a low of $1268.90 – lowest since June 30th, 2010!!! Support? Resistance? You pick ‘em!!! Look at the 40 day/50 day: $1401-1403…both plunging, and the 200 day – $1614!!! Crude regained half of Friday’s loss closing at $95.18 +1.49 on a day with a lower high and lower low. The range this month is $91.26-$99.01 – highest since 9/17/12! It remains well above the 40/50 day. It is only pennies above the 40/50 day (95.13/95.42 – both rising), while the 200 day ($92.30), remains CRITICAL support. Overnight it is $95.74 +.56 with a low of $94.59.  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:

I can safely say that while this decline isn’t the worst TB has seen his 41 years (1987 and 2008 hold that honor), it is clearly THE most volatile he has ever seen. Liquidity simply vaporizes when you need it: trailing stop/limits may have been protected you from the plunges but if they did you are now trapped and those gains may have turned to losses. Volatility has been so high for the past three sessions that buying a ‘put’ is prohibitive! What a way to get whipsawed! Last time we saw the VIX this high, actually a bit higher, was at yearend…for the record the volatility plunged again on January 2nd which is what this trader expects…but maybe not.

The Fed is culpable here and in an interview with the President of the Minneapolis Fed (not a voting member), he was highly critical of the FOMC for not making it clear that they were in no way going to stop QE3 OR raise interest rates. Still, this would not have been such a problem if the market was not dominated by SPECULATORS…wait…wasn’t the ’29 crash due to margin buyers and so big that the NYSE specialists couldn’t absorb the impact of the margin calls? You bet it was!

Meanwhile the SEC is sitting with it thumb up its…uh…derriere…and just beginning to question ‘black pools’ with no concern, at least publicly, for high frequency trading. Guess they feel at least it isn’t programs…but hey, guys…and gals…IT IS THE SAME!

Hope you all successfully navigate this week….then take of the next…and perhaps the next…it will be the summer doldrums so market will move in the direction that the high freaks want it too…gosh remember when it was in the direction that caused the most people the most pain? …well it still could be…if it continues to plunge we will wish we sold and if it rallies we will have taken losses…it is a Hobson’s Choice…in other words, the choice is not ours!

All the best,




  1. Yarnman said

    TB–In case I missed a decimal or two, yesterday’s decline/advance was a “90/10” DOWN day, which you have taught me is sometimes an important signal. Playing golf yesterday with a friend with whom I have never discussed investments, I discovered that he sold one-third of his stock portfolio four weeks ago, beating me by two weeks. We both felt so proud of ourselves that we shot pars on the next hole! “Sell in May, and go away” is looking good. Maybe “Sell in June, before the swoon” looks good so far, too! Many thanks, TB –Yarnman

    • traderbill said

      Hey, Yarnman…good to hear from you! I was out of town at a memorial service for my uncle and it was no fun to watch BOTH stocks and bonds tank.
      VIX volatility however fell yesterday after peaking on Monday at an incredibly high 21.91! Thanks to Bloomberg I looked back and the last time it was that high was on and it PLUNGED on Jan2 – actually gapped down on the open from 22.72 to 15.24!!! and closed at 14.68! That ‘could’ happen after the first but if so it will be muted due to the Fourth holiday and the summer doldrums.
      I still do not like stocks, except income producing…mortgage REITS which have been pounded here along with ‘payment services providers like FIS, GBDC, etc. Also, Build America bond ETF’s – taxable muni’s like BAB and BBN. (note: I own all of these – just so you know.)
      So….I think it is time to look hard at bonds…especially after the Q1 GDP downward revision…and ask yourself why stocks are up at all??? Only answer is because the Fed will concentrate on reflating…Gold however is now off $44 on the day! I think there is a major possibility of a double dip…or worse!
      Congrats on getting out! You waited it out and then when you saw it starting to breakdown bailed – a sensible approach! He may have done better but you caught it before the breakdown starting 6/19.
      Where do you live? Would like to meet you some day.

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