9/19/13…the morning after the night before

Mea culpa for missing yesterday…computer problems. Have included market summary in light of Fed action. TB

Today’s Quote from the Friars Club Encyclopedia of Jokes: “When a man opens the door of his car for his wife, you can be sure of one thing: either the car is new or the wife is.” – unattributed

Bloomberg Quote of the Day: “We live, not as we wish to, but as we can.” – Menander

Bloomberg Top Stories:

*First-Time Jobless Claims in U.S. Increased Less Than Expected Last Week

*Stocks Jump to Five-Year High as Bnods Rally With Metals on Fed Surprise

*JPMorgan to Pay Regulators $920 Million to Settle London Whale Probe – lack of oversight admitted…will there be prosecutions…doubtful since they own the government. Ah…Jamie Dimon, wunderkind!!! Make more CEO’s billionaires!!! Oh, and just out…JPM has received a Wells notice from regulators…awww.

Bernanke Resets Fed’s Policy by Doing Nothing as Markets Soar in Response – that, folks sums it up in a nutshell. Do nothing and markets rally…what fools we are!!!

*Yellen Candidacy Gains With Schumer Backing as Officials Test Support – what a joke!

*Women Waiting Tables Provide Most of Female Employment Surge in U.S. – yes and the tips are very good these days so don’t discount this…but all in all…

*Prosperity Outside Reach of Most Americans as Census Shows uneven Recovery!!!

*Assad Pledges Quick Moves to Eliminate Syria’s Chemical Weapons Arsenal – what will he do? Dump it in the sewers???

*Tax Avoidance gives States most Income-Levy Growth Since Recession’s Start – shifting income to 2012 from 2013 to avoid higher tax rates…especially Califiornia…caution!!!

This summary of Wednesday didn’t go out. In light of the Fed reaction yesterday it is of interest:

Stocks closed higher on another low volume day yesterday. Gold was weak and broke $1300 overnight while Crude fell to $105.32

Told you this week could be volatile…by the numbers: bonds rallied early Monday only to fall and close weaker – but only the long bond and long TIPS while the 10 yr managed to close up 1/4??? Crude trashed closing at $105.42, lowest close since 8/22 with a low of $104.94, completely eradicating the rally. Stocks led up by Russell 2000 +1% followed by the two Nasdaq indices +0.8% and 0.7% respectively. Dow Utilities +0.5% but Transports up just 0.1%. NDQ 100 was up 22 points with Apple adding 4.2 – but subtracted 12.3 yesterday; FB +4 vs -2.8 – is there a trend there? Not to TB!  Advance/Declines and Breadth were both positive. Volume plunged again and remains extremely weak. New 52-week highs slipped again while new lows rose slightly but remain weak. Lastly, Volatility on the rise as we approach options expiry!

Yesterday was an amazing…once in a lifetime???…session. TB has never seen anything like it! Immediately after the Fed release, BONDS rallied sharply…GOLD and CRUDE rallied sharply, and bringing up the rear but still impressive…STOCKS??? Oh yeah…there was one weak area: the dollar!!! Euro rose from $1.334 to $1.3569! IT is only slightly below that now. Sterling also rallied from $1.5958 to $1.6163 and is $1.61 now. Volume rose to a strong but not super high 3.96B shares while REAL NYSE volume rose to 820M shares from a weak 577M. Advance/Declines and Breadth were STRONG…especially on NYSE!!! Also new 52 week highs rose to 587 beating the recent range high of 579 while new lows were unchanged at a normal 56.

Now…what does it all mean…a lot!!!…or a little…but the fear is definitely out of the market(s) while it remains to be determined how much of the across-the-board rally was real and how much was major short-covering. You could not pick a better day to do with tomorrow’s options expiration looming…and a quadruple one at that. Don’t chase this market however as the overnight markets in both Bonds AND Stocks show. Gold however is soaring (?)…never did understand the degree of selloff, as is Crude. Hmmm.

* Dow 30 +1% vs +0.2% vs +0.8% vs +0.5% vs -0.2%; Dow Transports +1.5% vs +0.1% vs +1.1% vs +0.5% vs -1.1%; Russell 2000 +1% vs +1% vs +0.2% vs +0.5% vs -0.6%; Dow Utilities +3%!!! vs +0.5% vs +0.1% vs +0.9% vs -0.3%; S&P 500 +1.2% vs +0.4% vs +0.6% vs +0.3% vs -0.3%; Nasdaq Composite +1% vs +0.8% vs -0.1% vs +0.2% vs -0.2%; NDQ 100 +1.3% vs +0.7% vs -0.3% vs +0.1% vs -0.1%.

*NYSE Volume rose sharply to an above average 3.96B shares from a weak 2.75B vs 3.06B vs 2.7B vs 3.06B (2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume also rose sharply to an above average 820M shares from a very weak 577M vs 627M vs 567M, lowest since 8/26, vs 642M (482M on 7/3 in a shortened trading session is the low). The 12-month average is 718M shares. The range since 6/28’s 1.75B share day, excluding the four sessions above 800M, is 482M-798M shares. The average since 6/28 is just 658M shares, ranging from 482M to 906M. There have been just SEVEN 1B+ share sessions! There have now been 32 800M+ shares in 2013: 13 up, 17 down, and two mixed.

*New 52 week highs have ranged from 33-864. They surged to 587 vs 310 vs 449 vs 191 vs 271. New lows were steady at 56 vs 59 vs 45 vs 87 vs 95: 587-27 is the new recent range.

  1. Advance/Declines were STRONG: +6x!!! vs +2x vs +2.1x vs +1.6x vs -2.1x; (recent range NOW -17.5x to +6x) on NYSE and +2.8x vs +2.1x vs +1.2x vs +1.5x vs -1.8x (recent -3.5x to +3.8x). Breadth was just as strong: +7.2x!!! vs +2.7x vs +2x vs +1.7x vs -2.2x vs +1.5x (recent NOW -18.6x!!! to +7.2x!!!) on NYSE and +3x vs 3.5x vs +1.1x vs +1.4x vs -2.2x (recent is -12.8x to +6.5x)  
  2. NYSE Financials rose 1.7%! vs +0.3% vs +1% vs +0.2% vs -0.6%. BofA most active +1.3% vs +0.1% vs +0.4% vs +0.2% vs -1.2%, closing at $14.74 +.19. It has struggled since hitting $15.03 a month ago – highest since Jan. 14 and major res. BUT Brokers -0.9%! vs +0.9% vs +0.9% vs +0.4% vs -0.9%; KBW Banks +0.2% vs +1% vs +0.2% vs +0.2% vs -0.6%; Nasdaq Banks -0.3% vs +0.2% vs +0.2% vs +0.3% vs -0.5%.  
  3. Volatility (S&P VIX) dove sharply breaking the 13.82 from last Thursday to close at 13.60 -.93 yesterday with a range of 14.68-13.23!!! 14 remains key. Two weeks ago it closed at 17.01 but a week prior it was at 13.98. The recent range is now 11.83-17.81. It peaked at 22.79 on 12/28/12. It is now below the 40 day (14.12), the 50 day (14.33) and the 50 day (14.24)…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks STRONG as they follow the U.S. rally on the Fed: UK +1.4%!!! vs  +0.1% vs -0.4% vs +0.8% vs -0.2%; France +0.9% vs +0.5% vs -0.2% vs +0.9% vs flat; Germany +1% vs +0.4% vs -0.2% vs +1.2%! vs +0.1%; Japan +1.8% vs +1.4% vs -0.7% vs closed vs +0.1%; Hang Seng +1.7% vs -0.3% vs +1.5%! vs -0.2% vs +0.1%; Korea still closed vs -0.4% vs +1% vs -0.5%; India +3.4%!!! vs +0.8% vs +0.3% vs +0.1% vs -0.3%. U.S. equity futures higher but still in a very narrow trading range – due to options expiry tomorrow??? DOW +27; SPX +4.90; NDQ +9.25.

Bonds rallied SHARPLY yesterday post Fed…amazing but can it hold…was this a relief rally??? Short covering? Bond options also expire tomorrow!!! Overnight however they are slightly weaker except the long TIP. . 10 yr Treasury closed 2.69% vs 2.86%, now 2.70% -1/8 (recent range now 2.99% to 1.63%!!!), and the 30 yr range 2.67% to 3.90%, closed 3.75% vs 3.82% +1-1/2! The long TIP closed 1.42% vs 1.51% +2-1/8!!!, now 1.42% +1/16. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.250% 3 mos, 0.374 6 mos. Another new record low on 6 mos. 3.74% while 3 mo. is knocking at the Jan. 2010 record lows (0.245% and 0.382% respectively). Foreign bond yields sharply lower ex-Portugal: Germany 1.91% -9 vs 2.00%; UK 2.87% -13 vs 3.00%; France 2.41% -9 vs 2.50%; Italy 4.29% -10 vs 4.41%; Spain 4.33% -6 vs 4.40%; Portugal 7.05% –; Greece

9.79% -25 vs 10.13 Other recent BIG moves: 9.64% -18; 9.81% -10; 10.02% +19; 9.95% +17; 9.86% -13; 10.02% -16; vs 10.27%; 10.33% -25!; 10.85% +28!; 10.54% +40!!!; 10.85% -37!!!. Recent range: 8.04% to 12.57%. Japan 0.67% -3.

Gold opened lower yesterday falling to a weak $1291, first time below $1300 since 8/9 BUT made it back to even just before the Fed release then RALLIED to $1367.80 before closing at $1307.60? -$1.80? That was the ‘settled’ figure however due to magnitude of the move as I showed it at $1350+ and a positive Key Reversal (higher high, lower low and close above prior day’s high!).Doesn’t make sense but that is what was reported. Nevertheless, overnight it rallied to $1375.40 and is now $1367.70 +59.90 with a high of $1375.40!!! Monday’s high was $1336 – above the 50 day. Last Friday’s low $1304.60!!! 8/14’s session low was $1271.80 – lowest since 7/17! 6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 is again psychological support, while the 40 day ($1350) and the 50 day ($1338) are MAJOR SUPPORT. The 200 day is at $1488. Quite a change of events!!! Crude also rallied sharply on the Fed and broke a three day losing streak closing at 108.07 +$2.65!!! with a session high of $108.49 from $104.94, lowest since 9/3 and lowest close since 8/22! Just eight days ago it set a rally high and close of $110.70 and $110.53 respectively. It is now back above the 40/50 day m/a’s which are LOCKED at $106.69, both rising. The 200 day ($96.99) is distant support. 4/18’s low of $85.61 was lowest since 12/11! Major Res is the high the spike to $112.24 on 8/28. That move was immediately rejected! The range is $85.61-$112.24 since March 1, 2012. Overnight it is $108.56 +.49 with a high of $108.99!!!

Some random thoughts:

The Fed did it…and did it well…the question is what does it mean for the markets??? It speaks volumes when every area of investing…except the dollar…rallies on…well…no action by the Fed! Don’t forget they are being assisted by the do-nothing Congress which has caused the budget to shrink and not in a good way but it means they won’t have to buy up many U.S. treasury bonds which was a major concern of theirs. But they will continue to buy mortgages and classes that include those rallied the most yesterday…like mortgage REITS. Note also that while Dow Transports led the charge rising 1.5%, Dow Utilities rose by…get this…THREE PERCENT!!! Nothing else was anywhere close

A huge piece of bad news for financials overnight…but good for investors…JPM has settled the London Whale scandal by paying $900 million in fines…AND has received a Wells Notice which may have pushed them into doing so. Still admire Jamie Dimon?

Play it as it lies today…and cautiously!

TB

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