1/24/14…Cramer v. Cramer…AND TB!!!

Quote of the Day from the Friars Club Encyclopedia of Jokes: “Football is not a contact sport. It’s a collision sport. Dancing is a good example of a contact sport.” – Duffy Dougherty, and…

“If a man watches three football games in a row, he should be declared legally dead.” – Erma Bombeck…or it can apply to one Superbowl which runs as long as three games!

Bloomberg Quote of the Day: “Life Shrinks or expands according to one’s courage.” – Anais Nin

Bloomberg Top Stories:

*Stocks Decline as Drop in Emerging-Market Equities Sends Bonds, Yen Higher – !!!

*Argentina Eases Limits on Dollar Buying Slumps Most in 12 Years – they want $!!!

*Cameron Defends Carney as Bank of England Prepares Forward-Guidance Update

*Turkey Lira Slumps With Rand as Emerging-Market Currency Contagion Spreads

*Credit Suisse Follows UBS to Pay Bonuses That Can Be Wiped Out – Clawbacks!!!

*Aussie Drops Below 87 U.S. Cents for First Time Since 2010 on China Mines

*Bristol-Myers Profit Beats Analysts’ Estimates as Drug Sales Increase 6%

*Fidelity’s Johnson to Choose From Veterans in Replacing Departing O’Hanley

*Putin’s Sochi Olympics to Boost Ruble at Five-Year Low; Market Reversal – ???

*Inequality Seen Undermining Growth Has Davos Elite Channeling Protestors

*Texas Junk-Bond Broker Fights for Firm Against Board’s ‘Piggy Bank’ Claims

*Egyptian Blasts Kill Five People Before Third Mubarak Uprising Anniversary

*Privacy Board’s Report Fuels Congressional Debate Over NSA Surveillance

*South Korea Agrees to North’s Bid to Resume Reunions of War-Torn Families – sad

*California Lawmakers Poised for Vote on U.S. Ban on Plastic Shopping Bags – Ha!

*Look Out Below in Stock Market, the Follow-Thru Edition: Barry Rithotz – do tell!   

Thursday’s Market Summary:

(Market is being slammed again…and even Dow Transports are being crushed!!! Heed!)

Note that yesterday morning the stock market open mixed and little changed – except the Dow which quickly went to down 60…oh and Dow Transports which rallied all session!

TB contends there has never been a week (albeit holiday shortened, like this one), where the Dow had a mind of its own and yesterday imparted its mind on the others indices…except the aforementioned Transports which took ‘honors’ by gaining 0.3%! There no other ‘winners’ with the Dow the goat falling 1.1% (176 points…at the low down 213 points!), and the S&P 500 and Russell 2000 not far behind at -0.9%! The two Nasdaqs were off 0.5-0.6%, and the lowly Dow Utilities had just a 0.2% loss! Income producers and bonds were the winners…along with GOLD!!! You had also better be concerned with the pounding as NYSE Financials not only plunged 1.4% but each sector was trashed: Brokers -1.4%; KBW Banks -1.6%, and even NDQ Banks -1.2%!!!

To recap since Friday: TB isn’t sure but it may have never happened before: the Dow moving in the opposite direction of the rest of the market! The winner was Dow Transports +1.1%! while the only other loser than the Dow was Dow Utilities -0.1%. This on a day when there were 440 new highs! Taken higher Friday on credit card companies – on an options expiration (forgot to mention this), it gained 42 points, 0.3%, while ALL other indices declined by roughly 0.5%. What pulled it up? Well, despite its breadth being 2.3:1 NEGATIVE, Visa +66.7; AXP +20.5…meanwhile the ‘real’ industrials which sunk the S&P declined: NKE -9; MCD -7.3, and JPM -5.7 (why they put banks in an industrial index is beyond comprehension…except to try to keep up with the S&P 500). Then on Tuesday it FELL 0.3% – cancelling out Friday’s gains and the only loser among the majors! On Wednesday it fell 0.3% again, with -2:1 breadth…led by IBM -40!!!, CAT/PG -6.1, DD/XOM/JPM/MMM/WMT//MRK all losing at least THREE points!!!,  while BA added 17.3, followed by UTX/DIS/V +7.  Yessterday, the losers which ran 3:1 ran the gamut: V -28 (vs +66.7 last Friday???); BA -19.7; GS -19; CVX -13; AXP -12.6; MMM -11.4; JNJ -10.1; TRV -10!…the list goes on but there were a few good stocks but not much and not very big: VZ +3.4; IBM +3.1; T +3; MCD +2.8; MRK +1.6…that’s it for more than a point…outgunned pointwise by the losers!

NYSE Volume finally broke the pattern taking out last Friday’s ‘options expiry’ 3.75B highest since 12/20 and replacing it with 3.98B shares…HUGE and a bad omen on a DOWN session!!! Real NYSE Volume also surged to a strong 771M shares from a well below average 629M vs 753M vs 893M (first time over 800M since 12/20! Remember besides being options expiry it was a DOWN DAY!  

The Nasdaq 100 lost 17 points vs +10 vs +26.5 vs -20 vs +1.5 vs +29 vs +68 points!!! vs -52 points!!! Breadth was negative by 7:2!!! vs +2:1 vs +1.2:1 vs -1.5:1 vs -1.4:1 vs +7:3 vs +9:1 vs -7:1!  Just TWO members gained more than one index point, while six lost more than a point! BIDU -2.8; AMZN -1.8 vs -1 vs +3 vs +1.6; FB -1.6 vs -1.7 vs +3.7 vs -1.5; CSCO -1.6; CMCSA -1.3; GOOG -1.2; APPL +3.2 vs +3.4 vs +8.5 vs -11 vs -2.5 vs +8.8!!! vs +8.5!; NFLX +2.9.

Dow 30 -1.1!% vs -0.3% vs -0.3% vs +0.3% vs -0.4%; Dow Transports +0.3% vs +1.4%! vs +0.6% vs -0.4% vs -0.6%; Russell 2000 -0.9% vs +0.5% vs +0.6% vs -0.4% vs +0.2%; Dow Utilities –0.2% vs +0.1% vs +1.1%!!! vs flat vs +0.7%; S&P 500 -0.9% vs +0.1% vs +0.3% vs -0.4% vs -0.1%; Nasdaq Composite -0.6% vs +0.4% vs +0.7% vs -0.5% vs +0.1%; NDQ 100 -0.5% vs +0.3% vs -0.6% vs vs +0.8%.

*NYSE Volume rose sharply to 3.98B shares eclipsing last Friday’s options expiry 3.75B shares. In the meantime it ran 3.37B vs 3.75B vs 3.65B. 2014 low is 2.76B. The record high (?) is the 4.97B shares of 12/20/13 and Q3 end of quarter while 11/29’s 1.59B is weakest of 2013). REAL NYSE Volume also surged to 771M shares, not as high as Friday’s 893M (highest and first time above 800M since 12/20), but both were major DOWN SESSIONS. In between 629M vs 753M. Now above 700M just six times since 12/20! The 12-month low is 272M on 12/24. The average since 12/20 is up to a still weak 630M shares, but rising, with a new high of 893M! The 12 month is 720M shares. Last year there were just TEN 1B+ share sessions! There have been 40 800M+ shares since 12/31/12: 18 up, 20 down, three mixed.

*New 52 week highs have ranged from 33-864. They were halved to 211 vs 440 vs 498 vs 373 vs 419 vs 515 vs 281. Recent low is 201! Recent high is a super-strong 890!!! New lows up 50% to 62 vs 46 vs 37 vs 40 vs 42 vs 37 vs 36 vs 50. Recent high is 353; low 20!!!  

Advance/Declineswere negative: -2x vs +1.8x vs +1.9x vs -1.4x vs +1.4x (recent range -17.5x to +6x) on NYSE and -2.2x vs +1.4x vs +1.6x vs -1.4x vs +1.0x (recent -4x!!! to +3.8x). Breadth was worse: -3.2x vs +1.4x vs +1.4x vs -1.9x vs -1.2x (recent -18.6x!!! to +7.2x!!!) on NYSE and -2.3x vs +1.7x vs +1.7x vs -1.7x vs -1.2x (recent -12.8xto +6.5x). 

NYSE Financials -1.4%!!! vs +0.1% vs +0.1% vs -0.2% vs -0.6%. BofA back to most active -1.7%!!! vs +0.8% vs flat vs -0.5% vs -0.4%. Closed $16.86 -.29. It CLOSED THE GAP up from $16.77-$17.15 on 1/15 which produced a high print of $17.42 – highest since 5/10/10!!!Brokers -1.4%!!! vs +0.3% vs +0.9% vs -0.5% vs –; KBW Banks -1.6%!!! vs +0.4% vs +1.1% vs -0.3% vs -0.9%; Nasdaq Banks -1.2%!!! vs +0.6% vs +1.8% vs +0.3% vs -0.8%.

Volatility (S&P VIX) SURGED to 14.66 before closing at 13.86 +1.43, a 7.4% increase!!! This after falling to 11.81 last a week ago. 8/15’s close of 12.28 was near its lowest close and low since 8/5/13! From 13.31 with a high of 13.65 to 12.29 -.99 with a low of 11.96! It is back above the 40/50 day (13.59/13.43) while the 200 day is 14.37. 12/26’s 11.69 was lowest since 3/15/13!!! Recent high on 1/2 was 16.67! The recent range is 11.83-21.01!!! It peaked at 22.79 on 12/28/12…ytd the range is 11.05 (3/14) to 21.92 (6/24)!

Bonds rallied sharply carrying all income producers with them taking yields down to lowest since 11/1 on the long bond and TIP, and 11/29 on the 10 yr while the curve was flattening. Rally continues overnight: 30 yr 3.66%! +3/8 – high 3.97% on 12/31; the 10 yr 2.74%!!! +5/16, recent high 3.03%! Long TIP 1.36% +1/16. The (record?) low of 0.36% was set on 4/5. The recent high yield: 1.64%! Libor update: 0.235% 3 mos,0.334%!!! 6 mos. BOTH just above NEW record lows 0.234%!!! and 0.334% respectively!). NOTE that the Fed Funds rate has averaged 0.08% since 5/22/13 and is currently 0.06%,…while the Fed is paying 0.25% to the banks on their excess reserves!!! No wonder they won’t make loans! Would you??? Foreign bond yields sharply lower, except problem countries which are reversing…flight to quality? Sort of: Germany 1.66% -5; UK 2.77% -4 – recent high 3.03%!; France 2.37% -5; Italy 3.90% +4; Spain 3.76% +1; Portugal 5.23%!!! +17; Greece 8.31%!!! +27!!! Recent range 7.51%-12.57%. Japan: 0.62%!!! -3. Yen rallying for a second straight day at 102.36 -1.99 – inflicting severe pain!!! Recent range 103.59-105.44 last week, low since 10/1/08!!!

Gold staged a major rally to $1267.10, highest since 11/20!!! before settling at $1262.50 +$23.80!!! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Recent high is $1375.40 back on 9/19. Psych levels: $1200 sup; $1300 res, with major major support now at the 40 day ($1233) and the 50 day ($1240). The 200 day is $1326 and major res. Overnight it is higher again at $1266.50 +$4.00, high $1273.20!

Crude closed higher at $97.32 +.59. The high was $97.84, highest since 1/2/14. 1/14’s low was worst since 5/2/13: $91.24! Note 12/27 was first time above $100 since 10/21! The record high of $114.83 was on 5/2/11, the low since on 10/4/11 is $74.95: $93.60 is the midpoint!!! Recent rally high and close are $110.70 and $110.53 respectively. It is now well above the 40/50 day m/a’s which are now major sup: 50 day m/a ($95.54!!!), 40 day (95.94!), crossed!!! and the 200 day ($98.86!!!) –  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, it is in a narrow range at $97.37 +.05, but with a high of $97.80 – wake me when it takes out the 200 day!

Overnight markets:

Global equity tanking…huge losses: UK-0.9% vs -0.1% vs – vs +0.2%; France-1.5% vs – vs +0.3% vs 0.4% vs – l Germany -1.2% vs -0.2% vs +0.2% vs 0.6% vs +0.1%; Japan -1.9%! vs -0.8% vs +0.2% vs +1% vs -0.1%; Hang Seng -1.3% vs -1.5%!!! vs +0.2% vs +0.2% vs +0.5%; Korea -0.4% vs -1.2%! vs +0.3% vs +0.5% vs -0.7%; India-1.1%! vs +0.2% vs +0.4% vs +0.2% vs  -1%! U.S. stock futures were slammed overnight agin…and market is opening WEAK…makes you long for those boring narrow ranges no? DOW -112!!!;SPX -16; NDQ -31. Warning: GO HOME!

 

Some random thoughts:

…ah Jim Cramer…yesterday on CNBC he gave his picks of five (?) CEO’s you should go with…in between each they had a picture of a pair of dice…loaded??? Don’t recall all but to his credit he named two women…don’t remember all of the ‘winners’ but most no surprises: Pepsico, AIG, Ford, etc. CEO’s to ‘bet on’ (crapshooters?) but one stood out above the others…Buffalo Wild Wings (BWILD) CEO, Sally Smith (an unlikely name for a hunter/killer). He then went on to hype the stock so TB took a look: P/E 36.6x; est. P/E 35.8x! Trailing 12 mos. EPS $3.69, est. $3.76…now look PEG (P/E to growth rate): 1.89x!!! This for a stock with a Beta of 0.90 to the S&P 500. Jimbo, are you losing it or on the payroll. Do you know how many ‘imposters’ are entering the game? Did you see Barron’s last week predicting tough times for restaurants due to high p/e’s? But wait there’s more…from 12/31/12 to 10/24/13 it rose 66.3%…a huge run for a restaurant, and steadily…THEN it surged from 10/24 to 11/20/13…another 25.4%!!! For the year it more than DOUBLED: 102%!!! Impressive, but…from the high on 11/20/13 to present it is it has fallen 7.4%…a buying opportunity? Hardly, IMHO. Is Jimmy trying to get out? For the industry the average is a still extremely high 26x. What was BWILD’s ROE? 16.7%…pretty good…but which had the highest? DENNY’S!!! 5652%, no typo!

Then there was Netflix (NFLX), which there was much crowing about and which investor Carl Icahn was begging to ‘split’ – why? So more buyers come in and he can get richer…does this mean their ‘luck’ won’t continue? Total return is 163% over the past twelve months…it peaked on 12/20 and fell until 1/21, declining 12.5%, and has since surged 18.3% thru last nights close…yesterday, on CNBC, one analyst (holder?) called it a strong buy…but another, wiser to TB, said cash flow growth is just 5%…in fact $5 per customer??? Is that what you want to buy at a p/e of 163x and estimated 95.2x??? This isn’t investing…it is sheer madness!!! Oh, and the PEG? 2.15x with a beta of 1.32 in a highly competitive business which if their model is wrong will destroy investors!

Then a money manager came on ‘rejoicing’ the sell-off…said this is what we have been waiting for…first major decline since last August…MAJOR??? When every index was up over 20% last year??? Reversion to the mean??? He has to be kidding…down and downer before there is a REAL buying opportunity…as TB said: follow FINANCIALS!

Graham and Dodd…where the hell are you when we need you most???

Barry Ritholtz has a sequel to his warning on a stock market selloff on Bloomie today!

 “May you live in interesting times.” Who said that? It is actually a Chinese curse…check it out…and one translation is: It’s better to be a dog in a peaceful time than be a man in a chaotic period

Don’t know about that but may you have an interesting…and fun…weekend. How about this: temp here went from -15 last night to a hot and humid 22 degrees as we speak!

TB

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