8/16/13…gold or stocks…or???

From The Friars Club Encyclopedia of Jokes: “Money really isn’t everything. If it was, what would we buy with it?” – Tom Wilson

Bloomberg Quote of the Day: “The best way to predict the future is to create it.” – Peter Drucker

Bloomberg Top Stories:

*Housing Starts in U.S. Increase Amid a Rebound in Multifamily Properties

*Productivity in U.S. Rises More Than Economists Forecast as Output Grows +0.9% but vs a 1.7% decline in the prior three months. NOTE: labor costs down 4.2% Q2, -4.3% Q1

*Metals Climb as U.S. Housing Starts Rise While S&P 500 Futures Advance

*SAC Investors Said to Push for Early Capital Return as Cohen Remains Firm – suckers!

*Chinese Stocks Roiled as Trading Error Sparks Biggest Swings in Four Years–like here!

*Yuan’s Stability Offers Scope to Expand Chinese Trading Band

*Irish Gathering Defies ‘Shakedown’ Label From Usual Suspects Amid Gloom

*Eurobonds at 50 Threatened by EU Tax as Market Expands While Banks Retreat

*Egyptians Pour Into Streets to Protest the Killingshad a hug of Mursi Supporters

*Obama Denouncing Egypt Bloodshed Has Incentives to Keep U.S. Aid Flowing

*Indian Submariners Burned Beyond Recognition as Three Bodies Recovered – sad

Finally! Volume picked up to 3.42B shares…nearly normal vs a week 2.88B shares. Now the bad news: it was a DOWN session and you do not want to see increasing volume in a decline…it confirms it! Real NYSE Volume also increased to an ‘average’ 716M shares from a weak 588M shares (average since 6/30 is just 670M shares!). BUT options expire today…so who knows…nothing will be clear until the close…and maybe not even then!

The Nasdaq 100 lost 53 points vs -12 with 19:1 declining! No member gained even ONE index point while at least TEN lost more than one point (CSCO -8.9; MSFT -4.2; GOOG -2.5; INTC -2.4; AMZN -2…you get the picture BROAD!!!), for a total of 30!!! Apple wasn’t a mover but boy was it volatile. While other stocks were down it rose to $502.40, then plunged to $489.08 before settling at $497.91.Look at the prior five days of index point changes: +7.5 vs +18.5!?! vs +10.8!!! vs -5.5 vs -3.3). This for the stock that produced most of the gains for the S&P500 in 2011 and most of 2012 until it peaked!!!

Advance/Declines and Breadth were both VERY weak. New 52 week Highs disintegrated to 62 vs 229 while New Lows rose nearly doubled to 510 vs 312 vs 262 vs 104. The VIX, rebounded sharply closing well above 14 at 14.58 +1.54 – huge!!! almost at the session high of 14.85 with a low of 13.91. It is now above the 40 day (14.44) and close to the 200 day (14.72) and 50 day (14.88)…heed!!!

…here’s the book:

* Dow 30 -1.5%!!! vs -0.7% vs +0.2% vs flat vs -0.5%; Dow Transports -1% vs -0.8% vs -0.7% vs +0.2% vs -0.6%; Russell 2000 -1.5% vs -0.4% vs -0.2% vs +0.5% vs -0.1%; Dow Utilities -1.3%vs -0.8% vs -0.5% vs -0.7% vs -0.5%; S&P 500 -1.4% vs -0.5% vs +0.3% vs -0.1% vs -0.4%; Nasdaq Composite -1.7% vs -0.4% vs +0.4% vs +0.3% vs -0.3%; NDQ 100 -1.7% vs -0.4% vs +0.5% vs +0.2% vs -0.4%.

*NYSE Volume rose sharply to a near average 3.42B shares from a weak 2.88B vs 3.02B vs 2.78B vs 2.94B (2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume also rose to an average 716M vs 588M vs 619M vs 586M vs 637M (482M on 7/3 in a shortened trading session is the low). The 12-month average is 715M 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 670M 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 41 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 again to a weak 62!!! vs 229 vs 282 vs 223 vs 261. New lows surged again to 510!!! vs 313!!! vs 262 vs 104 vs 152 – 27 is the recent low.

  1. Advance/Declines were very negative: –5.5x!!! vs 2.1x! vs -1.4x vs +1.1x vs -1.1x (recent range -17.5x to +4.4x) on NYSE and -4.3x!!! vs -1.4x vs 1:1 vs +1.3x vs -1.5x (recent -3.5x to +3x). Breadth was similar: -2.9x vs -1.4x vs -1.3x vs +1.1x vs 1:1 (recent -18.6x!!! to +6.9x!!!) on NYSE and 7.7x!!! vs -1.1x vs +1.1x vs +1.2x vs -1.2x (recent -12.8x to +6.2x)  
  2. NYSE Financials also plunged 1.3%! vs -0.1% vs +0.3% vs -0.4% vs flat. BofA was most active plunging 1.3% vs +0.7% vs +0.7% vs -0.3% vs -1.1%, closing at $14.34 -.26. It has been weak since hitting $15.03 16 days ago – highest since Jan. 14 and major res. Brokers -2% vs -0.3% vs +1.2% vs -0.2% vs +0.3%; KBW Banks -1.2% vs flat vs +0.3% vs -0.3% vs -0.4%; Nasdaq Banks -1.1% vs -0.2% vs flat vs +0.1%.   
  3. Volatility (S&P VIX) EXPLODED yesterday rising to 14.58 +1.54!!! with a range of 13.91-14.85!!! 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 back abvoe the 40 day (14.44), near the 200 day (14.72) and the 50 day (14.88)!!!…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

European stocks mixed, Asia weaker, INDIA SLAMMED: UK flat vs -1%! vs FLAT vs +0.4% vs -0.3%; France +0.1% vs -0.4% vs +0.3% vs +0.2% vs -0.2%; Germany -0.4% vs -0.7% vs +0.1% vs +0.7% vs -0.4% vs flat; Japan -0.8% vs -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 -0.1% vs flat vs closed vs +1.2% vs +2.1%!; Korea -0.2% vs closed vs +0.6% vs +1.5%! vs +0.2%; India DOWN 4%!!! vs closed vs +0.7% vs +1.5% vs +0.8%. U.S. equity markets were weak over night and opening lower in an extremely narrow trading range: DOW -23; SPX -0.20; NDQ -3.15.

Bonds closed lower yesterday unable to counter Tuesday’s drubbing while the long TIP is being destroyed! All are weaker overnight: 10 yr Treasury 2.78% -3/32 (recent range NOW 2.78% to 1.63%!!!), and the 30 yr range NOW 2.82% to 3.82%, currently 3.82% -5/32. The long TIP is 1.51% -3/16 The (record?) low of 0.36% was set on 4/5. Recent high 1.53%! Libor update: 0.264% 3 mos, 0.395% 6 mos, steady. Both remain near the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields mostgly lower: Germany 1.88% -1; UK 2.69% +1; France 2.38% -2, Italy 4.19% -5; Spain 4.33% -9!; Portugal 6.28% -4; Greece 9.50% +4 vs 9.45% 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% -1; 10.33% -25!; 10.85% +28!; 10.54% +40!!!; 10.85% -37!!!. Recent range: 8.04% to 12.57%. Japan 0.75% +1.

Gold closed sharply higher at $1360.90 +$27.50 with a session high of $1378.60 not only highest since 6/18 but eradicating the selloff since then! Last Wednesday’s session low was $1271.80 – lowest since 7/17! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and now critical support. $1300 is psychological support, and it is above both the 40 day $1290 and the 50 day $1309 – both still falling. The 200 day is a distant $1529!!! Overnight it is higher again at $1368.80 +7.90 with a session high of $1374.30!!! Crude closed slightly higher at $107.33 +.48. Support remains at the 40/50 day m/a’s (103.48/102.12), 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:

No point rehashing. Most important thing today will be the market close and bond reaction since options expire today. Watch close and volume very closely. It could be very treacherous here. Markets opened slightly weaker but are very indecisive. Best advice: stand well clear!!!

Note China had a flash crash overnight…the entire world is controlled by algorithms – apparently…hey, what if the CIA hacked their computers???…what if THEY have hacked ours. No wonder Gold is soaring again…still not out of the woods but it has eradicated all the losses since June 18th, no mean feat!

Now go and enjoy your weekend…if your stomach can handle it. We live in interesting but treacherous times for investors.

TB

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