8/15/13…blame it on the boss of no one

From The Friars Club Encyclopedia of Jokes: “No one really listens to anyone else, and if you try it for a while, you will see why.” – Mignon McLaughlin

Bloomberg Quote of the Day: “The only real failure in life is not to be true to the best one knows.” – Buddha

Bloomberg Top Stories:

*Wal-Mart Lowers Full-Year Forecast as Second-Quarter Sales Trail Estimates

*Stocks Drop With Bonds on Egypt Violence as Oil Leads Commodities Higher

*JPMorgan Said to Expect Fines in London While Probe as Ex-Traders Charged

*Former JPMorgan Traders Urged by U.S. to Surrender Over Whale Case Charges

*God Bull John Paulson Reduces SPDR Stake by Half After Bear Market Roars

*Jobless in Europe Send 50 Resumes a Week as Recovery Means Little – like in the U.S.!

*Real 10% Overvalued After World’s Biggest Tumble Signals Sell – like BRICS! Sorry!

*Bundesbank Concerned About Payment Jams as Euro Standards Decline Looms

*Record NYSE Margin Debt May Mean Little for Bull Market – really? Like 1999!!!

*No-Cost Tryout Entice U.S. Businesses to Hire Long-Term Unemployed – hmmm…

*European Banks Shaping Up Five Years After Lehman as ECB Oversight Looms – you can pin that one on Henry Paulsen for failing to bailout Lehman, where his brother was!

*Army Tightens Grip in Egypt as Curfew Clears Streets After Hundreds Killed

*Egypt’s Crackdown Defying U.S. Pressure Shows Limits of American Influence

*Rubio Immigration Push Leaves Republicans Looking Elsewhere for 2016 Race-Stupid!

One more day until options expiry…the first chance to restore sanity to the markets but it remains doubtful. Yesterday’s failure in stocks and bonds to move higher shows the weakness. Despite low volume, margin borrowing is at record highs! This is clearly reminiscent of 1999, but there were no headwinds then. Bonds have now broken down six times when Bernanke first commented on tapering in early May…this is a very bad sign. Add to this the total lack of liquidity and volatility has been unpredictable The VIX which had declined below 13 the prior two sessions rose back above meaning positions have been squared ahead of expiry. All indices were down from 0.4% to 0.8% (Dow Transports the leader at -0.8% vs -0.7%…Dow theorists must be flummoxed!

The Nasdaq 100 lost 12 points vs +15 points with 4:1 declining! Just FOUR members lost more than one point for a total of -7 vs 27!!! The only gainer of more than a point was Apple (APPL +7.5 vs +18.5!?! vs +10.8!!! vs -5.5 vs -3.3). Is Apple, which produced most of the gains for the S&P500, returning to its status as the S&P savior as it was in 2011 and most of 2012 until it peaked, or is this a headfake from a very weak level? Time will tell!

Advance/Declines and Breadth were both negative but still going nowhere. New 52 week Highs rose to declined to 229 vs 282 while New Lows rose yet again to 312 vs 262 vs 104. The VIX, broke the two days of decline and closed above 13  – does this means positions are squared for options expiry?

…here’s the book:

* Dow 30 -0.7% vs +0.2% vs flat vs -0.5% vs +0.2%; Dow Transports -0.8% vs -0.7% vs +0.2% vs -0.6% vs +0.8%; Russell 2000 -0.4% vs -0.2% vs +0.5% vs -0.1% vs +0.5%; Dow Utilities -0.8% vs -0.5% vs -0.7% vs -0.5% vs +0.3%; S&P 500 -0.5% vs +0.3% vs -0.1% vs -0.4% vs +0.4%; Nasdaq Composite -0.4% vs +0.4% vs +0.3% vs -0.3% vs +0.4%; NDQ 100 -0.4% vs +0.5% vs +0.2% vs -0.4% vs +0.4%.

*NYSE Volume barely budged and remains weak 2.88B shares vs 3.02B vs 2.78B vs 2.94B vs 3.25B(2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume however dropped to a very weak 588M shares vs 619M vs 586M vs 637M vs 686m (482M on 7/3 in a shortened trading session is the low). The 12-month average is 714M shares. The range since 6/28’s 1.75B share day excluding the three sessions above 800M is 482M-798M shares. The average since 6/28 is just 665M shares, ranging from 482M to 906M. There have been just SEVEN 1B+ share sessions! There have been 30 800M+ shares in 2013: 12 up, 17 down, and one mixed, but on trades of less than that 93 have been up and 40 down …the down days are beginning to steadily increase! There have been 32 mixed sessions.

*New 52 week highs have ranged from 33-864. They plunged to 229 vs 282 vs 223 vs 261 vs 293 vs 161. New lows surged again to 313!!! vs 262! vs 104 vs 152 vs 140 – 27 is the recent low. 

  1. Advance/Declines were negative again: -2.1x! vs -1.4x vs +1.1x vs -1.1x vs +1.9x (recent range -17.5x to +4.4x) on NYSE and -1.4x vs 1:1 vs +1.3x vs -1.5x vs +1.5x (recent -3.5x to +3x). Breadth was similar: -1.4x vs -1.3x vs +1.1x vs 1:1 vs +2.8x (recent -18.6x!!! to +6.9x!!!) on NYSE and -1.1x vs +1.1x vs +1.2x vs -1.2x vs +1.7x (recent -12.8x to +6.2x)  
  2. NYSE Financials remain anemic: -0.1% vs +0.3% vs -0.4% vs flat vs +0.6x. BofA was most active gaining 0.7% vs +0.7% vs -0.3% vs -1.1% vs +0.6%, closing at $14.61 +.10. It has been weak since hitting $15.03 15 days ago – highest since Jan. 14 and major res. Brokers -0.3% vs +1.2% vs -0.2% vs +0.3% vs -0.1%; KBW Banks flat vs +0.3% vs -0.3% vs -0.4% vs +0.3%; Nasdaq Banks -0.2% vs flat vs +0.1% vs -0.4% vs +0.4%.   
  3. Volatility (S&P VIX) REVERSED its decline yesterday rising to 13.06 +.75 with a range of 12.35-13.02 on an ‘inside’ session as options expiry looms! Note the recent low of 11.84, the recent range is 11.83-13.91 but with 7/31’s high being 14.14!!! VIX peaked at 20.49, plunged to 18.90 on June options expiry then closed at 20.11 on 6/24 and has been down below 14 since! 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 21.90. It is well below the 40/50 day (14.69/15.09) and the 200 day (14.80)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks weak for first time in three sessions on Egypt concerns: UK -1%! vs FLAT vs +0.4% vs -0.3% vs +0.3%; France -0.4% vs +0.3% vs +0.2% vs -0.2% vs -0.1%; Germany -0.7% vs +0.1% vs +0.7% vs -0.4% vs flat; Japan -2.1%!!! vs +1.3% vs +2.6%!!! vs -0.7% vs +0.1% vs -1.6%! vs -4%!!! vs +1%! vs -1.4%!!! vs +3.3%!!! vs +2.5%!!! vs -1.5%! vs +1.5%! vs -3.3%!!! vs -3%!!! vs -1.1%!;  Hang Seng flat? vs closed vs +1.2% vs +2.1%!!! vs +0.7%; Korea closed vs +0.6% vs +1.5%! vs +0.2% vs -0.2%; India closed vs +0.7% vs +1.5% vs +0.8% vs +0.7%. U.S. equity futures weaker in the ‘new normal’ narrow trading range: DOW -67; SPX -7.70; NDQ -18.25.

Bonds rose modestly after being slammed Tuesday – not so for the long TIP! All are weaker overnight: 10 yr Treasury 2.75% -5/16 (recent range 2.75% to 1.63%!!!), and the 30 yr range of 2.82% to 3.79%, currently 3.77% -3/8. The long TIP is 1.44% -1/2! The (record?) low of 0.36% was set on 4/5. Recent high 1.53%! Libor update: 0.263% 3 mos, 0.395% 6 mos, steady. Both remain near the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields sharply higher ex Portugal and Greece: Germany 1.87% +5!; UK 2.68% +5!; France 2.39% +5!Italy 4.22% +5!; Spain 4.42% +2; Portugal 6.28% -11!!!; Greece 9.45% -2 vs 9.46 vs 9.54% twice vs 9.49% vs 9.59%. Look at some of its recent big moves: 9.64% -18; 9.81% -10; 10.02% +19; 9.95% +17; 9.86% -13; 10.02% -16; 10.27% -19; 10.33% -25!; 10.85% +28!; 10.54% +40!!!; 10.85% -37!!!. Recent range: 8.04% to 12.57%. Japan 0.73% -1.

Gold closed higher and is again well above the critical $1300 at $1333.40 +$12.90. Monday’s high was $1338, highest since 7/22! Last Wednesday’s session low was $1271.80 – lowest since 7/17! 7/23’s session high was $1349.20 – 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, and it is above both the 40 day $1290 and the 50 day $1310 – both still falling. The 200 day is a distant $1531!!! Overnight it is higher at $1337.00 +3.60. Crude closed unchanged at $106.85 +.02. It remains safely above the 40/50 day m/a’s (103.26/101.86), both rising. The 200 day ($94.48) is distant support. Minor sup is $104.21-36 – a triple bottom from 7/10-7/12. 4/18’s low of $85.61 was lowest since 12/11! Major Res is the high of $108.93 on 7/19! The range is $85.61-$109.32 since March 1, 2012. It is higher overnight at $107.51 +.66.

Some random thoughts:

I can’t think of a worse scenario. The U.S. is trying to rein in Egypt’s military from killing the Muslims. They overthrew a Muslim who, after the first democratic election, usurped power, eradicated the Constitution, and turned all but Muslims into second class citizens. Something had to be done…but how do we look? We preach democracy but only in the form that helps us…as we did in Iraq and Iran. Not saying we are wrong but we will bear the consequences of this. Ain’t that a mess!

…and you wonder why global markets are being hit today? Meanwhile Treasuries continue to suffer and have now broken down again led by long TIPS!

Hope you escape unscathed!

TB

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