7/23/13…our strength lies in the middle class…kill it!

From The Friars Club Encyclopedia of Jokes: “Hear about the Scotsman who quit golf and then took it up again twelve years later? He found his ball!

Bloomberg Quotes of the Day: “Research is what I am doing when I don’t know what I am doing.” – Wernher von Braun

Bloomberg Top Stories:

*RBS Proving Inferior at Less Than Break-Even Valuation Discredits Osborne

*Stocks Rise With S&P 500 Futures on China Outlook as Metals, Bonds Decline – yawn!

*Fed Seen Tapering Bond Purchases Starting in September in Economist Survey –uh huh

*BRIC Bust Seen in Emerging Market Discontent as Global Growth Decelerates

*Cisco Agrees to Purchase Sourcefire for $76 a Share in a $2.7 Billion Deal

*DuPont Weighs Sale of Unit Making Teflon in Shift From Cyclical Products

*Vodafone Says It Would Consider Offer for Its Stake in Verizon Wireless – ask why!

*Bad Real-Estate Deals Haunt Detroit’s Pensions Amid $18 Billion Bankruptcy

*Egypt Clashes Kill Nine People After Islamist Calls for U.S. Embassy Siege –Benghazi?

*Obama Campaigns to Return Focus on Economic Agenda by Leaving Washington

*Royal Couple Thanks Hospital Staff in London After Birth of Heir to Thrown

*Kenya Sees No End in Its Battle Against Al-Qaeda-Inspired Somali Miltants  

Back to back unimpressive trading session…unusual for the day after an options expiry. Volume plunged to a weak 2.77B shares vs 3.28B shares vs an average 3.44B, as did the real trades on the NYSE which dropped to 584 from a strong but not great 872M shares – highest since July 8 (prior expiry on 6/21 produced a huge 2.01B shares, a 12-month high). Last weeks average was a weak 680M shares and MTD is now just 681M, well below even the anemic 12-month average of 720M shares. It was…well…a nothing day – that’s two in a row but who’s counting?…with the Dow flat for a rare 2nd day, while the S&P 500 rose just 0.2% while the Nasdaq Composite rose 0.4% but vs -0.7%, and the Nasdaq 100/Russell 2000 rose a mere 0.3%. Dow Transports were the only loser, -0.1% vs +0.1%?  Let’s analyze the NDQ 100 and compare to Friday: it gained 10 vs -33 with 2:1 advancing – barely vs +1.1:1. But look at the leaders: FOUR stocks combined for the total gain vs six stocks on Friday, MSFT the big loser Friday at -30!!! (-3.2 Thursday) was the leader but for a mere 4.6 points followed by (GOOG +3.3 vs +3.3; QCOM +1.1; AAPL +1.1 vs -5.6), while there were two losers vs four: YHOO -1.2; EBAY -1.5; INTC -1.2 vs -1. Here were the rest from Friday: AMGN +3.1; GILD +2.6; BIIB +1.5; CELG +1.1, ISRG -1.2. There is NO leadership here…rotation!

Once again the VIX dropped by 2% to 12.29 or 11% in two sessions, lowest since 5/17 and, at least to TB, makes market not only very rich but even more vulnerable…especially when we are in the summer doldrums…you decide. A/D’s and Breadth were modestly positive…but new 52 week lows ROSE along with new highs.

…here’s the book:

* Dow 30 -0.1% vs flat vs +0.5% vs +0.1% vs -0.2%; Dow Transports flat vs +0.1% vs +1.7%!!! vs +0.8% vs -0.7%; Russell 2000 +0.3% vs flat vs +0.7% vs +0.4% vs -0.4%; Dow Utilities +0.2% vs +0.1% vs +0.9%! vs -0.2% vs -0.5% vs +1.6%!!!; S&P 500 +0.2 % vs +0.2% vs +0.5% vs +0.3% vs -0.4%; Nasdaq Composite +0.4% vs -0.7% vs flat vs +0.3% vs -0.3%; NDQ 100 +0.3% vs -1.1%!!! vs 0.2% vs +0.3% vs -0.1%.

*NYSE Volume PLUNGED to 2.77B shares (3rd weakest of 2013), from a slightly below average 3.28B shares vs 3.44B vs 3.15B vs 3.05B vs 2.6B (1.96B is the lowest of 2013). REAL NYSE Volume also plunged to a very weak 584M shares vs 872M vs 664M shares vs 666M (Hex?) vs 617M vs 562M (lowest since 7/3). The 12-month average is 722M shares! The average since 6/30 is just 681M shares, ranging from 482M to 906M, 482M being the 2013 low! There have been just SEVEN 1B+ share sessions! There have been 28 800M+ shares in 2013: 10 up, 17 down, and one mixed, but on trades of less than that 90 have been up and 32 down…there have been 27 mixed sessions.

*New 52 week highs have ranged from 33-864. They rose sharply Monday – on weak volume??? to 630 vs 494 vs 690 vs 448 vs 456 from 687. New lows barely also rose to a moderate 103 vs 37 vs 27 –new low – vs 30 vs 37 vs 40 vs 32 vs 29.  

  1. Advance/Declines were slightly positive : +1.3x vs 1:1 vs +2.1x! vs +1.9x! vs -1.8x! vs +1.6x (recent range -17.5x to +4.4x) on NYSE and +1.5x vs -1.1x vs +1.6x vs +1.5x vs -1.2x vs +1.9x (recent -3.5x to +3x). Breadth was slightly better: +1.8x vs -1.1x vs +2.3x! vs 2x! vs -1.6x vs +1.8x (recent -18.6x!!! to +6.9x!!!) on NYSE and +1.8x vs -1.6x vs +1.3x vs +1.8x vs -1.3x vs +1.7x (recent -12.8x to +6.2x)  
  2. NYSE Financials took the honors on a day of boring trading rising 0.7% vs +0.1% vs +1.3%! vs 0.5% vs -0.3% vs +0.5% vs +0.3% vs +1.5%. BofA was most active again: +1.2% vs -0.1% vs +3.1%!?! vs +2.8%!?! vs +0.4% vs +0.7% vs +1.9%???. It closed at $14.92 +.17 with a new five year high of $14.99! Brokers flat vs flat vs +1.3% vs +0.2% vs -1.2%!; KBW Banks +1%? Vs +0.3% vs +1.7% vs +0.6% vs -0.8%; Nasdaq Banks +0.9% vs +0.3% vs +1.4% vs +0.4% vs -0.5%. No other financials were market movers…boring!!!  
  3. Volatility (S&P VIX) declined for a second day to 12.29 -.25, -12% in two sessions? And closing at the session low!?! – Friday was a positive key reversal??? On another unremarkable session?  It peaked at 20.49, plunged to 18.90 on June options expiry then closed at 20.11 on 6/24 and has been down since – a decline of 33%! 6/24’s session high of 21.91 was highest since 12/31/12 (22.72)!!! The range since April ‘12 is 11.05 (multi year low o n 3/14/13) to 21.9, It is well below the 40/50 day (15.93/15.33) and the 200 day (15.02)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)! You might want to entertain puts here…or stop orders with limits…TB’s just sayin’…and repeating…

European stocks better…due to the new prince of England??? Hong Kong en fuego! UK +0.3% vs -0.3% vs -0.2% vs flat vs flat; France +0.3% vs +0.1% vs -0.3% vs +0.3% vs -0.6%; Germany +0.3% vs -0.1% vs -0.2% vs +0.2% vs -0.3%; Japan +0.8% vs +0.5% vs -1.5%!!! vs +0.1% vs +0.6%; Hang Seng +2.33%??? vs +0.3% vs flat vs +0.2% vs flat vs +0.1%; Korea +1.3%??? vs +0.5% vs -0.2% vs +1.1%! vs -0.5%; India +0.7% vs +0.1% vs +0.1% vs +0.5% vs -0.9%. U.S. equity futures higher but in yet another extremely narrow trading range: DOW +43; SPX +2.90; NDQ +7.25.

Bonds closed a little better – except  the long TIP, which was strong for a 3rd day? Weaker overnight: 10 yr Treasury 2.51% -9/32 (recent range 2.74% to 1.63%!!!), and the 30 yr range of 2.82% to 3.71%, currently 3.58% -1/2. The long TIP is 1.26% -5/8 – still the weakest link since the (record?) low of 0.36% on 4/5. Recent high 1.53%! Libor update: 0.266% 3 mos, 0.397% 6 mos. Both remain near the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields modestly higher ex-Greece…again?!?: Germany 1.56% +4; UK 2.31% +6; France 2.20% +2, Italy 4.33% 62; Spain 4.62% +3; Portugal 6.25% +5; Greece 9.81% -5 vs 9.95% +17 vs 9.86% vs -13 vs 9.93% vs 10.07% vs 10.02% -16!!! vs 10.27% -19!!! vs 10.33% -25!!! vs 10.69% vs 10.85% +28!!! vs 10.52% vs 10.54% +40!!! vs 10.85% -37!!! vs 11.22%. Recent range: 8.04% to 12.57%.  Japan 0.78% -3! Note daily changes on Greece!!!

Gold closed near the session highs on a HUGE rally at $1337.30 +$43.30 – three days following a NEGATIVE key reversal and negating it. The session high was $1340.50 – highest since 6/20! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and now critical support. $1300 is again psychological support, along with  the 40 day/50 day: $1323/1338 – both still falling, but still it is way below, the 200 day – $1568!!! Overnight it is weaker at $1329.10 -$8.20. Crude closed WEAK at $106.99 -$1.11 – with a session low of $106.43! It remains well above the 40/50 day m/a’s (98.79/98.08) – both climbing sharply now, while the 200 day ($93.15), also rising, is distant support. First support is $104.21-36 – a triple bottom from 7/10-7/12. 4/18’s low of $85.61 was lowest since 12/11! It is slightly higher overnight at $108.40 +.35 on a narrow inside session. The range is $85.61-$109.32 since March 1, 2012.

Some random thoughts:

We are a nation of sheep. I sent out my sample letter condemning the Congress on Friday and then my blast at the banks and regulators yesterday over the aluminum hoarding scandal, to friends along with this blog. Four responses total! They were also angry with the government…but why isn’t everyone? It’s your and your offspring’s future that is at stake. So just play mushroom (kept in the dark and fed nothing but crap) if you like, but you will have no one to blame but yourself.

Once again TB not only thinks free market capitalism is bunk but that if you remove credit there would be virtually no middle class…and that folks, is what has made America great because it provides upward mobility…or it used to anyway. Would you rather have 100 million middle classers or 50 billionaires all battling for number one along with their enormous ego’s? Which do you think would do more to grow the economy?

Ah but the Tea Party is their pawn…middle class wannabe’s who are stoking the flames. Don’t be angry at them…pity them for they know not what they do. They don’t even know what the Boston Tea Party was all about…and it sure wasn’t about taxes! Read Nathaniel Philbrick’s great history – a historian with an ability to draw in the reader and that is so rare – Bunker Hill, a City, a Siege, a Revolution. Then folks, you will know what it was all about, not the drivel created by Rick Santelli on CNBC which began the revolution (sic).

Have a terrific day…who knows what the future brings…

TB

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