11/15/13…what are the ‘options’?…what’s the ‘Yellen’ about?

Today’s Quote from the Friars Club Encyclopedia of Jokes: “I had a terrible education. I attended a school for emotionally disturbed teachers.” – Woody Allen…that explains it!

Bloomberg Quote of the Day: “Sublimity is the echo of a noble mind.” – Longinus – I hear ya…wait…then how do you get your point across???

TB’s Quote of the Day: “All life is directed by one command and one command only-SURVIVE. – L. Ron Hubbard, not a fan but interesting ‘fellow’ who founded Scientology – I am reading GOING CLEAR by Lawrence Wright, an expose on the ‘religion’ – faux though it is! I have followed it for years since reporting on it at D&B in 1968 – not good! TB

OPTIONS EXPIRE TODAY!

 Bloomberg Top Stories:

*China Boosts Private Investment While Easing One-Child Rule to Aid Economy – hah!

*Emerging Markets Lead Stocks Higher on China Policy as Treasuries Decline – yawn!

*Yellen Sees Chance Fed Could Reduce Rate It pays Banks on Excess Reserves– to zero?

*Pershing Reports Stakes in Freddie-Fannie, Seen Settling Management Talks  – after trading from $0.18 cents to $1.75 (briefly on rumors it would again pay dividend), over the past five years, both spiked to $5.44 in May, returned to <$2, now back to $3!?!

*Four Biggest Euro Economies Criticized Over Budget Plans as Recovery Fades – !!!

*Wall Street Banks No Longer Seen Too Big to Fail by Moody’s as Ratings Cut – Wow!

*Berkshire has $3.7 Billion Exxon Stake in Biggest Stock Purchase Since IBM (2011) – the later didn’t turn out so well – peaked in March at $216, now $182 and under water!!! Explains XOM run-up to $93.25 and tested FIVE times…is Warren done?

*Jos A. Bank Ends $2.3B Men’s Wearhouse Takeover as Deadline Passes – is Bank a legitimate business or money laundering scheme: buy 1 get 2 free? Just askin’

*Spain Hotel Free-for-All Pits Apollo Against Blackstone on Tourism Rebound

*Obamacare Deductibles 26% higher Next Year Make Low-Cost Policies a Gamble

*Democrats Facing Election in 2014 Not Mollified by Obama Health Care Law Fixes

*China Leaders Vow to End System of Punishment as Labor Camps Without Trial – oh?

*Cities Raise Alarm Over Costly EPA Surprise Rule on Lead in Fire-Hydrants – afraid kids will drink from them? Hey, EPA…they are there to put out fires!!! Sheesh!!!

Thursday’s Market Summary:

TB loves options expiry…round and round she goes, where she stops nobody knows. Yesterday was an interesting pre-expiry day. All indices were up EXCEPT the Russell 2000 small cap,

which all rose by more than 1% on Wednesday? The winner was Dow Utilities!!! +0.9%? Dow Transports rose +0.3% but have been up for FOUR straight sessions for a combined: 2.1%! While the Dow and S&P 500 were both up about 0.5%, the two Nasdaq indices rose just 0.2% and 0.3% respectively.

Note that volume however shrunk from a below average 3.35B shares to a WEAK 3.13B shares…yep, another rally on low volume. This was especially true with REAL NYSE Volume which slipped to 633M shares vs 678M shares vs 652M from 538M shares – lowest since August 5th !  So far the average for this week has been just 630M shares! A nice setup for today’s expiry, no?

Advance/Declines and Breadth were positive – especially Breadth! New 52 week highs rose to 331 vs 226 vs 254 vs 253 vs 206 vs 228, while new lows rose to 102 vs 93 vs 64 (never short a thin market) vs 103 vs 109 vs 85. VIX declined, closing at 12.52 -.30, only the 5th close below 13 since 10/18. Tomorrow’s options expiration could be exciting – stocks were weak until the afternoon, surging into the close. TB’s portfolios showed losses in income stocks which all came back in the afternoon…fundamentals? Hardly!

Bonds rallied by about ½ point from 10’s out the curve, including long TIPS. They were up more than a quarter over night but only the 30 yr remains positive since weekly jobless claims declined slightly. Gold closed lower again but on a narrow inside session, at the weakest since JULY 10th, but above Tuesday’s low of $1260.50, at $1268.40 -$2.80 and now off $40 in FIVE sessions! Crude also closed slightly lower at $93.88 -.16 also on an inside session. Tuesday’s session low was $92.86 – lowest since June 24th!. Gas here $2.87 yesterday!

The Nasdaq 100 rose just 0.3% vs +1.2% vs +0.1% vs -0.1% vs +1.4%, with just 2:1 advancing! Compare to +9:1, +1.5:1, +1.1:1, +9:1, and -13:1…warning signals? Eight members gained more than a point and while three lost a point – all were ‘the usual suspects: APPL +6 vs +0.1% vs +0.1% vs -1.1 vs +6.6 vs -6.7 vs -3.9 vs -0.9 vs +5.4; AMZN +4.5 vs +2.7 vs -2 vs +1.7 vs +2.8 vs -5.2 vs -1.2; QCOM +1.8 vs +2.3; BIDU +1.5; MDLZ +1.4 vs +1.4; AMGN +1.3; REGN +1; CSCO -1.2 vs +1.2 vs +1.3; INTC -1; MSFT -1 vs +6 vs -1.8 vs -1.3 vs +1.9 vs -4.7 vs +11.3!!! vs +5.2 vs +1.2; vs +1.2.

Twitter (TWTR) surprised with a nice rally to close at $44.69 +$2.14 but still below the first day close of $44.90…is that a set up for today? Hmmmm.

Dow 30 +0.4% vs +0.5% vs -0.2% vs +0.1% vs +1.1% vs -1%; Dow Transports +0.3% vs +0.6% vs +0.7% vs +0.5% vs +1.1% vs -1.4%; Russell 2000 DOWN 0.1% vs +1% vs flat vs +0.1% vs +1.9% vs -1.8%; Dow Utilities +0.9%! vs +0.2% vs -0.8% vs -0.1% vs -0.2% vs -0.9% vs +1.3%; S&P 500 +0.5% vs +0.8% vs -0.2% vs +0.1% vs +1.3% vs -1.3% ; Nasdaq Composite +0.2% vs +1.2% vs flat for 2 days vs +1.6% vs -1.9%; NDQ 100 +0.3% vs +1.2% vs +0.1% vs -0.1% vs +1.4% vs -1.9%…hmmm.

*NYSE Volume fell back to a weak 3.13B  shares from a below average 3.35B vs 3.12B vs 2.53B shares vs 3.82B vs 4.14B. The record high (?) is 4.82B shares on Q3 end of quarter while 2.52B is 4th weakest of 20131.96B is the low). REAL NYSE Volume also slumped to a well below average 633M shares vs 678M vs 652M vs 538M, lowest since August 5th vs 820M vs a super-strong 910M vs 704M, lowest since 10/14 (2.06B shares on the Sept. expiry was 3rd highest ever: 6/30/06 3.38B; 7/12/02 2.29B while 482M on 7/3 on a shortened trading session is the 2013 low). The 12-month average is 724M shares. The average since 6/28’s 1.75B share day, is just 700M shares, ranging from 482M to 2.025B shares on 9/20. There have been just EIGHT 1B+ share sessions! There have been 37 800M+ shares in 2013: 16 up, 19 down, and two mixed.

*New 52 week highs have ranged from 33-864. They surged again to 445 vs 331 vs 226 vs 254 vs 253 vs 206. Recent high is a super-strong 890!!! New lows fell sharply to 74 vs 102 vs 93 vs 64 vs 103 vs 109 vs 85…a setup for today’s expiry???  

  1. Advance/Declines were mixed? +1.9x vs +2.2x vs -1.7x vs +1.1x vs +1.3x vs -3.5x (recent range -17.5x to +6x) on NYSE and -1.1x vs +2.3x vs -1.2x vs 1:1 vs +3x vs -3.4x  (recent -4x!!! to +3.8x). Breadth was the same: +2.4x vs +4.3x vs -1.5x vs +1.3x vs +2.7 vs -6.4x!!! (recent -18.6x!!! to +7.2x!!!) on NYSE and -1.1x vs +5.5x vs +1.2x vs +1.2x vs +3.8x vs -4.7x!!! (recent -12.8x to +6.5x).  
  2. NYSE Financials rose by 0.6% vs +0.8% vs -0.7% vs +0.1% vs –1.3%. BofA most active rising another 1.1% vs 2.2%???, closing at $14.79 +.05, highest close since August 5th? It has struggled since hitting $15.03 on 8/1 – highest since Jan. 14 and major res. Brokers -0.5% vs +1.3% vs -0.2% vs +0.8% vs -1.9% vs +1.2%; KBW Banks +0.6% vs +0.9% vs -1.1% vs -0.2% vs -1.1% vs +0.3%; Nasdaq Banks +0.3% vs +0.9% vs -0.7% vs -0.9% vs -0.9%.
  3. Volatility (S&P VIX) declined yet again closing at 12.33 -.14, with a range of just 12.28-12.52…setting up for Friday? Only the 6th day below 13 since 8/13! Note in August it surged back on the expiry! The recent range is 11.83-21.01!!! Since March 11th the average has been just 14.47…way below the five year average of 23.32~~~ and the 40/50/200 day: 14.63/14.58/14.33!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Global stocks higher for a 2nd day after being weak for two days; India closed following the first strong day after weakness for eight sessions!!! UK +0.5% vs +0.4% vs -1.4% vs -0.4% vs +0.3%; France +0.3% vs +0.7% vs -0.6% vs -0.3% vs +0.5% vs -1.5%!!! vs +1.2%! Germany +0.3% vs 0.7% vs -0.6% vs -0.3% vs +0.2% vs -0.8% vs +1.3%!; Japan +2%! vs +2.2%!!! vs -0.2% vs +2.3%!!! vs +1.3% vs -1%; Hang Seng +1.7% vs +0.8% vs +1.4% vs -0.6% vs -0.7%; Korea +1.9% vs +0.2% vs -1.6% vs +0.9% vs -0.4% vs -1%; India closed vs -0.4% vs -1% vs -0.9% vs -0.8% vs -0.4% vs -0.4% vs -1.3%! U.S. stock futures rallying but remember expiry in – you guessed it – another very narrow trading range: DOW +28; SPX +3.50; NDQ +4.50 – just a 5 point trading range…yesterday it was just 11!?!

Bonds rallied by ¼ to 5/8 from 10’s to 30’s with the long TIP up the most after being destroyed on Friday! Overnight, not surprisingly, weaker…bond options expire too! 10 yr Treasury 2.71% -3/16 (recent range 1.63% to2.99%), and the30 yr range 2.67% to 3.90%, 3.80% -5/16. The long TIP is 1.50% -3/8. The (record?) low of 0.36% was set on 4/5. Recent high yield: 1.63%! Libor update: 0.238% 3 mos,0.351% 6 mos. (another record low!). Foreign bond yields slightly higher across the board: Germany 1.72% +2; UK 2.77% +1; France 2.19% +2; Italy 4.09% +3; Spain 4.07% +2; Portugal 5.89% +5; Greece 8.27% +2. Recent range: 7.71% – 12.57%. Japan 0.62% +3!

Gold traded to a four day high of $1293.80 before closing at $1286.30 +$17.90!!! just two days after trading at the lowest level since 10/15, $1260. and well below $1300 following a week ago’s NEGATIVE key reversal (higher high, lower low, close below prior days low) putting in a high that day of $1326, between the 30/50 day. The recent low is $1251 on 10/15 – lowest since 7/10. Recent high was $1375.40 on 9/19.  6/27’s intraday low was $1179.40 – lowest since at least 2011 and critical support. $1300 remains psychological support with major res now at the 40 day ($1314) and the 50 day ($1320), both dropping again. Major resistance at $1375, the 9/19 high. The 200 day is at $1411. Overnight it is $1284.80 -$1.50.

Crude put in another new low of $92.51, lowest since 6/4, before recovering to close at $93.76 -.12. It has shown no sign of strength since 9/18’s surge to $108.49. 9/19’s session high was $108.99! Recent rally high and close are $110.70 and $110.53 respectively. It is way below the 40/50 day m/a’s ($99.43/101.11), both dropping again, and major resistance! The 200 day ($98.62) is also major resistance. 4/18’s low of $85.61 was lowest since 12/11! The recent range is $85.61-$112.24 since March 1, 2012. Overnight is little changed at $94.10 +.34.

Some random thoughts:

Our Congress has failed us, our President (largely due to the aforementioned and the failure of the Senate a la the filibuster to approve his nominations…Yellen in the hot seat again today but representing herself well as expected), the SEC has failed us, ‘Justice’ has become a joke, levying fines (paid by shareholders AND with the exception of the latest JPMorgan/Chase/Dimon debacle), and without admitting guilt…where are the prosecutions? The world is waiting to know (from A Letter to Garcia, by Elbert Hubbard, a distant relative). When is someone going to stand up for the American people.

All the extremists can say is that it is ‘entitlements’ which includes social security to them. True, it galls TB to see abuse of the system and we should be taking action against those who abuse the system…it must be a contributor to the three decades low participation rate and studies that show those who have dropped out have no intention of ever getting a job. If you want proof of this all you have to do is watch some of the court shows on the tube…perhaps as many as one in four are collecting some form of compensation from the people…and their testimony uncovers their fraud! Add to this the commercials that sponsor them…mostly from attorneys who want to handle your disability or bankruptcy claims (how do you collect from a poor person who has to file for bankruptcy? Seems ‘iffy’ to TB).

Ah, but where the line used to be ‘throw the bums out’, it is now ‘remove all entitlements’ which to them includes, education, medical treatment, etc. As for the ‘bums’, they are doing quite well thank you with their ‘gifts’ from the wealthy and the lobbies…and if they are thrown out, most have filed to become…lobbyists! …and the beat goes on…and on…

Lastly, Obama bowing to complaints could hit those insurers who scammed everyone into low price policies knowing they wouldn’t qualify, thus being able to cancel them and force people to pay more while damning the law. Now, they have to keep the policies available for another year AND more importantly, explain the differences in coverage. This is a wise choice…or was it a Hobson’s choice? Seems like the latter to TB!

Have a great weekend!

TB

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