4/1/14…Trader Bill turns bullish (quarterly returns)

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I’ve got everything I had twenty years ago – except now it’s all lower.” – Gypsy Rose Lee newbies: she was a famous stripper!

Bloomberg Quote of the Day: “Even the gods love jokes.” – Plato

Bloomberg Top Stories:

*Stocks Rise While Bonds Decline on Signs European Recovery Gathering Pace – please!!!

*Unemployment in Euro Region Holds at 11.9% With Germany, Italy Diverging – its about jobs!

*Ford March U.S. Vehicle Sales Gain of 3.3% bets Estimate for a 1% rise – Thank you, GM!!!

*FBI Investigates High-Frequency Traders for Abuse of Non-Public Information – Jail ‘em!!!

*Manhattan Apartment Sales Jump as buyer Competition Sends Prices to Record

*Polar Vortex Chilled U.S. Profits With Slowest Quarterly Growth Since 2012 – hello!!!  

*Greece Wins $11.4B Aid Approval From EU With Debt Repayment Looming – Bonds rally!!!

*Commodity Rally Defies Citgroup ‘Death Bells’ With Quarter’s Best Returns

*Turkey Bank Hazards Revealed With $4.5 Million Cash Filling CEO Shoe Boxes – !!!

*Balls Ascendency at Pimco Shows Gross’s Post El-Erian Search for Returns

*First Obamacare Signup Ends March as It Began With Crashes, New Challenges

*China Charges Ex-PLA Officer With Fraud as Military Graft Probe Heats Up

*Ebola Death Toll Reaches 80 in Guinea Amid Warning Disease is Spreading

*Medical Pot Emerges as N.Y. Battlefront With Cuomo Seeking Executive Order

 

Monday’s Market Summary:

Yesterday’s rally has turned TB bullish!!! April fool’s! Yesterday was quarterend: the volume came up to near normal (3.35B vs 3.5B average; and floor trades rose to 847M from 639M shares vs an average of 724M shares, but before you rush to buy, note that just before the bell the volume was just 548M shares…those trades were largely indexers who have to buy on the close!).

Looking inside, the biggest gainer was the Russell 2000 up 1.8%, closely followed by Dow Transports up 1.7%…next? Dow Utilities tied the Nasdaq Composite at up 1%, while the NDQ 100 was up just 0.7% – that is behind the Dow 30 and S&P 500 at +0.8%! NYSE Financials closed strong at +1.1% (brokers +2%; KBW Banks +1.2%, and Nasdaq Banks +1.6%). BofA was most active +1.3% – just 22 cents but to 17.20 following its first sub-$17 close in weeks.

Back to volume. The down rose 120 points in the first five minutes – on just 51 million shares! At the end of the first half hour the Dow hit its high at 16,181 up 155, then waffled the rest of the session finally winding up 134 points. That was not retail buying…none of it. How many managers buy on the last day of the quarter? Only those trying to pack their portfolios with the quarterly winners but at prices that tend to hurt performance later. The volume up to the close was weak – only surged on the close due to funds rebalancing and index fund buying…who else buys on the close?

Advance/Declines and Breadth were positive but on both the NYSE and Nasdaq just +3.1x to +3.8x…good but not spectacular. New 52 Week Highs doubled to 226 from a weak 110 and are now about average, while New Lows remained weak and fell to 38 from 56 – both were not surprising for a quarterend! Lastly, Volatility (VIX) dropped to 13.88 -.53 or 3.9% – below 14 for the first time in 17 session from a high close of 17.82 on 3/14 with an intraday high of 18.22. This could be quite a problem for bulls in three weeks – the next options expiration!

Here, for your purview, are the returns for Key

 

As of 3/31/14 March 1st Qtr 1 Yr 5 Yrs
Dow Industrials 0.8% -0.7% 12.9% 7.95%
Dow Transports 3.1% 2.4% 21.1% 9.81%
Dow Utilities 2.6% +8.5% 4.7% 6.11%
S&P 500 0.7% 1.3% 19.3% 8.30%
Nasdaq Composite -2.5% 0.5% 28.5% 12.00%
Nasdaq 100 -2.7% 0.1% 27.6% 13.58%
Russell 2000 0.5% 1.6% 20.0% 10.81%
NYSE Financials 1.3% 0.3% 16.1% 0.82%

Notes:

  1. Not highlighted due to their mediocrity were the Dow 30 and S&P 500, but the Dow actually had a negative quarter! Both were saved by the late rally last month
  2. Transports were the best sector – also save from being negative by the late rally
  3. Dow Utilities continue to be the favorite (except to die-hard bulls), True, the one year and 5 year performance isn’t impressive but certainly acceptable in today’s low interest rates
  4. The two Nasdaq’s in a word…sucked! If they are falling, doesn’t that bode poorly for what people think of the economy and outlook for sustainable growth?
  5. Russell 2000 small cap – another economic indicator and it is definitely losing momentum
  6. Finally look at the one year performance…not bad but compared to last year end every index is lower by double digits…30-60%…hard to believe but look: at year end:

Dow 12.9% from 29.5%

Transports 21.1% from 41.3%

S&P 19.3% from 32.3%

Nasdaq Composite 28.5% from 40.1%

Nasdaq 100 27.6% from 36.9%

Russell 2000 20.0% from 38.8%

NYSE Financials +16.1% from 27.3%

You have to compare the one year performance to see where we are heading, and five year is off 2% or more in every index. One month or one quarter do not a trend make…but a year? Part of this is due to losing a big gain quarter but those returns are highly unlikely to come back. Ever?

Time will tell…always does! Just don’t accept what your mutual fund or REIT managers tell you because you will be looking through the rear view mirror, and past performance is no…

TB thinks he will take a break here… a lot of information for one day, right?

 

Overnight Comments:

Bonds: closed off about a quarter after declining sharply on the stock market open. (10’s 2.72% vs 2.72%, 3/3 high 2.79%; 30’s 3.56% vs 3.55% from 3.73%). Overnight, falling again: 10 yr 2.75% -1/4; 30 yr 3.60% -11/16; TIP 1.31% -13/16. Recent ranges: 30 yr high was 3.97% on 12/31; the 10 yr recent high 3.03%! Long TIP recent high was 1.64% The (record?) low of 0.36% was set on 4/5/13.  Libor update: 0.228% 3 mos, 0.328% 6 mos. –  both new record lows, here are the ones replaced and both set in the last week: 3 mos  0.231% – new low!!! 6 mos 0.329%! NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and back to 0.07% -0.09%. Foreign bond yields slightly higher, ex-Greece and Portugal: Germany 1.57% +1; UK 2.75% +2 – recent high 3.03%! France 2.10% +2; Italy 3.29% -1; Spain 3.24% +2; Portugal 4.02% vs 3.97% +5; Greece 6.37%  -9! vs 6.48% vs 6.54% vs 6.75%! yet another new post-crisis low!!! Recent range now 6.37% to 12.57%. Japan: 0.61% -2.

Gold traded down to $1282.70, lowest since 2/10, then closed at $1283.40 -$10.60 and lowest close since 2/10! It has been in trouble since imploding last week, breaking all supports, yesterday was the fourth straight close below $1300 since 2/12!!! – off $101 in 11 sessions  following the reversal! On 3/17 it had a new recent high of $1392.60, highest high since 9/4/13 – that ended in an outside day and nearly a negative key reversal and has been down every day since!It had closed above the psychological $1300 every day since 2/12! …and above the 200 day since 2/14, which is now first resistance!!!. Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Psych level: $1300 res, with technical res at the 200 day, $1301, then the 50 day, $1306, and the 40 day, $1320!!! Overnight slightly better at $1285.00 +$1.20 with a new low of $1277.40 before flying back to $1288.40 – talk about volatile!

Crude closed slightly weaker two days after finally breaking above the 40/50 and 200 day m/a’s and hitting $102.24, highest since 3/10 and closed above par for a fourth straight day at $101.58 -.09, still +$2.37 in four days! It has been back above $100 for six days following a high of $100.82 that ended in an ‘outside’ day – 200 day is $100.45. On 3/10, it had a high of $102.82 then plunged below the 200 day! 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. First SUPPORT is now the 40 day ($100.59), then the 200 day ($100.48), with critical SUP at the 50 day $99.79. The recent range is $85.61-$112.24 since March 1, 2012. Overnight it traded down to $101.01 then came back to $101.25 -.33.

Overnight Equity Markets: 

European equity markets higher, Asia mixed: UK +1% vs +0.3% vs +0.1% vs -0.6% vs +0.4% vs +1.2%; France +1.1%! vs -0.1% vs +0.4% vs -0.3% vs +1%! vs +1.5%; Germany +0.7% vs +0.1% vs +0.9% vs -0.3% vs +1.3%!!! vs +1.6%; Japan -0.2% vs +0.9% vs +0.5% vs +1%! vs +0.4% vs -0.4% vs +1.8%!!! Hang Seng +1.3%!!! vs +0.4% vs +1.1%! vs -0.2% vs +0.7%; Korea +0.3% vs +2.3%!!! vs +0.2% vs +0.7% vs +1.2%!!!; India+0.3% vs +0.2% vs +0.6% vs +0.5% vs +0.2%. U.S. equity futures were higher in a very tight range (market opening higher): DOW +52 (range 38!); SPX +5.80 (8); NDQ +13 (20) – a new quarter and bad start on year!   

Have a great day!

TB

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