2/14 late with closes

Quote of the Day from the Friars Club Encyclopedia of Jokes: “People who say money can’t buy happiness just don’t know where to shop.” – Tom Shivers

Next week’s economic calendar is fairly light. The highlight of the week will be the January PPI (Wednesday) and January CPI (Thursday). We will also get February Empire State Manufacturing (Tuesday), January Housing Starts (Wednesday), February Philadelphia Fed Survey, January Leading Indicators (Thursday) and January Existing Home Sales (Friday). In addition, the Federal Reserve will release the minutes to the January 28th–29th FOMC Meeting on Wednesday. Courtesy of Economic Advisory Service.

Friday’s Market Summary:

Aren’t we running out of reasons to rally yet? Mindboggling…as if the market doesn’t have a fear in the world. Well, good luck. Here are two big red flags: 1) Volume. NYSE Volume slumped to 3.09B shares and been below 3.7B (slightly above average for FIVE straight days), and third lowest of 2014: Jan. 2, 3.06B, Jan. 3, 2.76B!!! Real NYSE Volume was just 622M, lowest in a week with an average of just 639M shares and nothing near 700M – 12 mo. ave. is 724M; since 12/23 682M. 2) Volatility (VIX) closed at 13.57 -.57 with a range of 13.44-14.22. Below this is an area indicative of excessive call buying…losing confidence. Add to the weak volume throughout the rally and it is problematic and options expiration is next Friday. Goodbye and good luck.

Dow +0.8% thanks to double digit gains in index points by XOM/UNH/MMM/V/IBM and PG! Only losers were VZ -5.1; and T/GS -2.2! Note this: the two Nasdaqs and the Russell 2000 were up just 0.1% (with rounding!) as were NYSE Financials – Brokers were actually negative 0.5%! Dow Utilities +0.6% followed by the S&P 500 +0.5%. Weird huh?…check out the table below and see how weird it gets!

Advance/Declines and Breadth were positive but the NASDAQ numbers were barely so..

Here is the scoreboard (note 3mo and 12 mo updated thru Friday):

Index

February

YTD

3 mos.

12 mos.

Returns

Mo. to date

2/14/14

2/14/14

2/14/14

Dow 30

+2.9%

-2.6%

+1.8%

+15.6%

Transports

+0.2%

-1.3%

+2.0%

+22.9%

Dow Utilities

+2.6%!

+5.9%!!!

+3.1%

+10.3%!

S&P 500

+3.1%

-0.5%

+2.7%

+20.9%

NASDAQ Comp

+3.4%

+1.6%

+6.8%

+32.7%

NDQ 100

+4.0%

+2.0%

+7.3%

+32.2%

Russell 2k

+1.6%

-1.2%

+3.2%

+24.4%

NYSE Fin

+2.8%

-1.6%

+0.8%

+14.0%

 KBW Banks

+2.2%

-0.6%

+4.1%

+24.1%

 NDQ Banks

+1.1%

-3.2%

+1.7%

+24.8%

Dow Utilities continue to be the best performer ytd despite some positives creeping in for the month. What will this look like in two weeks when TB returns?

Detailed analysis:

Dow 30 +0.8% vs +0.4% vs -0.2% vs +1.2% vs +0.1%; Dow Transports +0.3% vs +0.1% vs +1.2% vs -1.1%!!! vs +0.8%; Russell 2000 +0.1%? vs +1.4%! vs +0.3% vs +0.9% vs +0.2%; Dow Utilities +0.6% vs +1.1%!!! vs -0.2% vs +1%!!! vs +0.6%; S&P 500 +0.5% vs +0.6% vs – vs +1.1% vs +0.2%; Nasdaq Composite +0.1%vs +0.9% vs +0.2% vs +1% vs +0.5%; NDQ 100 +0.1% vs +0.9% vs +0.2% vs +1.1% vs +0.6%.

NYSE Financials +0.1% vs +0.4% vs +0.3% vs +1.1% vs —. BofA most active: -0.3% vs — vs -0.8% vs +1% vs -0.7%. Closed $16.70 -.05. The high print was $17.42 on 1/15/14 – highest since 5/10/10!!! Brokers -0.5% vs +1.1%! vs +0.3% vs +1% vs +0.3%; KBW Banks +0.5% vs +0.2% vs -0.2% vs +0.9% vs +0.1%; Nasdaq Banks +0.6% vs +0.5% vs -0.1% vs +1.2%! vs +0.1%.

 *NYSE Volume slumped to the third lowest of 2013 at 3.09B behind Jan. 2, 3.06B, Jan. 3, 2.76B!!! Where are the 4B+ days of January??? The record high (?) is the 4.97B shares of 12/20/13 and Q3 end of quarter while 11/29’s 1.59B was weakest of 2013). REAL NYSE Volume also slumped to another well below average 622M vs 639M  vs 640M vs 710M vs 654M vs 763M vs 743M vs 755M vs 837M vs 922M vs 952M (highest since 12/20).  It has been above 700M just fourteen times since 12/20! The 12-month low is 272M on 12/24. The average since 12/20 is just 686M shares. The 12 month is 724M shares. Last year there were just TEN 1B+ share sessions! There have been 45 800M+ shares since 12/31/12: 19 up, 23 down, three mixed.

*New 52 week highs have ranged from 33-864. They rose slightly to 304 vs 295 vs 243 vs 206 vs 142 vs 132 vs 92 vs 53. Contrast to 440 and 498 last month. 53 is the recent low, which had been 201 during the rally days! Recent high is a super-strong 890!!! New lows plunged to a very weak 25 vs 43 vs 42 vs 35 vs 32! vs 48 vs 72 vs 162 vs 120 vs 216 vs 135 vs 70. Recent high is 353; low 20!!!  

Advance/Declines were positive but only ‘good’ on the NYSE: +2x vs +2.9x vs +1.3x vs +3.5x vs +1.4x (recent range -17.5x to +6x) on NYSE and +1.1x? vs +2.7x vs +1.2x vs +2.3x vs +1.5x (recent low -6.1x!!! to +3.8x). Breadth was similar: +1.8x vs +3.1x vs +1.02x vs +4.7x! vs -1.1x (recent -18.6x!!! to +7.2x!!!) on NYSE and +1.4x vs +1.7x vs +1.6x vs +2.6x vs +2.4x (recent -12.8x to +6.5x).  

Volatility (S&P VIX) declined again and remains well BELOW the m/a’s suggesting an overbought market, closing at 13.57 -57 Range was 13.44-14.22. Options expiry not until the 21st – looks like a setup! It ‘gapped down’ last Friday from 17.09-16.31…that is the ‘hole’ to watch! Contrast to 1/31’s high of 21.48 highest since 6/24/13! Look at the 40/50 day (14.65/14.68) and the 200 day, 14.59. 12/26’s 11.69 was lowest since 3/15/13!!! The recent range is 11.83-21.48!!! It peaked at 22.79 on 12/28/12…the range since 12/31/12 is 11.05 (3/14) to 21.92 (6/24)!

Bonds closed slightly weaker. Still drifting above the mid-Oct. levels, when the storm hit. 30 yr 3.70% -1/8 – the high was 3.97% on 12/31; the 10 yr 2.74% -3/32, recent high 3.03%! Long TIP 1.42% -5/16. The (record?) low of 0.36% was set on 4/5. The recent high yield: 1.64%! Libor update: 0.236% 3 mos, 0.329% 6 mos. – Another new record LOW for 6 mos! 0.329%, 3 mos just above its 0.234%!!!). NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and is steady at 0.06-0.09%!!! Foreign bond yields mixed for a second day, problem credits recovering: Germany 1.66% +1; UK 2.79% +1 – recent high 3.03%!; France 2.28% +1; Italy 3.69% -2; Spain 3.58% -3; Portugal 4.92% -6; Greece 7.47% -4 vs 7.55% +19!!! – just a day after setting a new low of 7.23%! Recent range 7.23% to 12.57%. Japan: 0.59% –.

Gold closed higher for a FIFTH day for a combined gain of $56 AND closed again above the psychological $1300 and first resistance at the 200 day ($1312). The high was $1321.50 – not seen since 11/7 and closed at $1318.60 +$18.50. Last Thursday’s session low was $1237.50, lowest since 1/23! A week ago Tuesday’s intraday high was $1294.40, highest since 11/14/13!!! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Recent high is $1375.40 back on 9/19. Psych levels: $1200 sup and now $1300 support, with critical support at the 40 day ($1244) and the 50 day ($1243) – locked! The 200 day is $1312 and now major resistance!

Crude closed little changed at $100.30 -.05 on an ‘inside’ session, but held ‘par’ – for a third day above $100 for first time since 12/27/13! This after setting a new high of $101.38 – highest since 10/18. 1/14’s low was worst since 5/2/13: $91.24! 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. Distant support is at the 40 day m/a (96.91), and the 50 day m/a ($97.06). FIRST SUPPORT at the 200 day ($96.83) – Wednesday’s low was $99.40 and quickly rejected! 4/18’s low of $85.61 was lowest since 12/11! The recent range is $85.61-$112.24 since March 1, 2012.

Friday’s overseas equity markets:

Global equity markets higher ex-Japan: UK +0.1% vs -1%! vs +0.2% vs +0.8% vs +0.1%; France +0.5% vs -0.6% vs +0.7% vs +0.7% vs +0.3%; Germany +0.6% vs -0.6% vs +1.1%! vs +1.5%!!! vs –; Japan -1.5%! vs -1.8%! vs +0.6% vs closed for two days; Hang Seng +0.6% vs -0.5% vs +1.5%! vs +1.8%! vs closed; Korea +0.7% vs -0.5% vs +0.2% vs +0.5% vs –; India +0.9% vs -1.3%! vs +0.4% vs +0.1% vs -0.2%.

 

Some random thoughts:

Hope the next two weeks are good to you!

TB

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