4/9/14…revenge of the high-frequency nerds?

Quote of the Day from the Friars Club Encyclopedia of Jokes: “It’s better to keep one’s mouth shut and be thought a fool than to open it and resolve all doubt.” – Abraham Lincoln

Bloomberg Quote of the Day: “Do not take life too seriously. You will never get out of it alive.” – Elbert Hubbard (a distant relative). Reminds TB of an old German saying (translated): “If you drink you die, if you don’t drink you die, so why not die drinking.” Hiccup!

Bloomberg Top Stories:

*Stocks in U.S. Climb With Emerging Markets While Treasuries, Gold Decline – but FADING!

*Toyota Recalls More Than 6 Million Vehicles Globally Including Camry, RAV4 – panicking?

*High-Frequency Trader Malyshev Weights Accepting Outside Investors in Fund  – a bit late?

*Draghi’s Hunt for QE Assets Leaves Officials to Scour Barren Market of ABS

*Brazil’s March Inflation Accelerated More Than All Economists Had Forecast

*Lew Urges China to Show Commitment to Pursue Market-Set Rate for Currency

*Nationstar Sees More Deals as Regulators Investigate Servicing of Mortgages

*Alcoa Sees Almost Decade-Long Aluminum Surplus Ending After Smelter Cuts

*Skyline Planner Sees London Ghost Towns of Empty Luxury Homes Hurting City – !!!

*Medicare Millionaires Totaling Almost 4,000 Seen in First Data in 33 Years

*Australian Ship Reacquires Electronic Signals in Search for Missing Plane

*Stabbings at Pittsburgh Area School Leave Several Hurt; Suspect Arrested

*Putin Lacking Beachhead for Eastern Ukraine Push Sets Stage for Stalemete

*CVS Pays $20 Million Settlement for Stuff It Didn’t Disclose

 

Tuesday’s Market Summary:

Are we seeing ‘revenge of the nerds’ – which is what the high-freak programmers are…some even dysfunctional but they do their masters bidding who couldn’t program this if their lives depended on it and who pay just 23% – up from 15% on their sick “carried interest’ which converts ordinary income (for you and TB) to cap gains thus avoiding Social Security, Medicare, higer taxes while widening the wealth gap from Main St. Total NYSE Volume was steady at a well above average 3.7B shares vs 3.77B vs 3.6B vs 3.03B shares. True, it was an ‘up’ day but not in comparison to the prior two days big losses. How about this: while the rest of the indices rose from 0.1% Dow (S&P +0.4%), Transports were FLAT, the two Nasdaqs up 0.8% and the Russell 2000 +0.7%, DOW UTILITIES ROSE 1.7%!!! Not a good sign…NYSE Financials were up just 0.2% with Brokers +0.6% vs -2.1%).

Of course the market dove after a brief foray to the upside and went out at the session lows. Is this the ‘revenge of the nerds’? – the high-freaks showing us who owns the market? Don’t know but portfolios I manage were UP most of the day, then down then back to even and then closed down – not market down but down! REAL NYSE Volume (if there is a such thing!), also surged rose to a well above average 836M shares (highest in a week) vs 781M vs a very weak 661M vs 653M vs 724M (12 mo. ave!) vs 847M vs 639M.

Brokers up slightly yesterday +0.6% vs -2.1%!!! while KBW Banks were flat vs -1.6% and Nasdaq Banks +0.1% vs -0.7%. BofA again most active and according to Flash Boys THE most heavily traded stock and a favorite of the high-freaks: +0.3% vs -1.9%! vs -2.5%! vs -0.5% vs -0.5% to $16.43 +.05.

Advance/Declines were somewhat positive but…the NYSE was +2.1x vs -2.1x vs -1.9x vs -1.5x vs +1.4x vs +2.5x, Nasdaq +1.9x vs -3.2x vs -4.9x! vs -2.3x vs +1.3x vs +3.1x and -7.3x!!!! Breadth was similar: NYSE +2.2x vs -4.4x!!! vs -1.9x vs -1.5x; Nasdaq+2.2x vs -3.1x vs -7.3x!!! Advancers bested advancers by just 2.1 vs -3.4:1 vs -6:1 on the Composite and by +3:1 vs -4:1 vs -97:4 on the 100!!! Not good when the Nasdaq’s are underperforming as they have all year!

New 52 Week Highs rose slightly to 60 vs  56 vs 268 vs 273 vs 327 vs 306 vs 226 vs 110, while New Lows were halved to 56 vs 107 vs 71 vs 31 vs 18 – within 2 of their cycle low . Lastly, Volatility (VIX) declined modestly after climbing a three straight sessions but the high was 16.20 vs 16.01 – highest since 3/24, and closed at 14.85 -.70 and still slightly above the 40/200 day taken out Monday! This from a low of 12.60 – lowest since Jan. 22! Yellow flags turning orange and close to red!

Overnight Comments:

Bonds: continued their advance at the pace of a wounded snail. Four days after the 10’s took out the 3/3 high of 2.79%! (10’s 2.69% vs 2.268%, 3/3 high 2.80%; 30’s 3.54% vs 3.56% from 3.73%). Overnight the long end is slightly weaker again with the short end barely budging: 10 yr 2.70% -1/8; 30 yr 3.55% -3/16; TIP 1.27% -3/16. 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: 0.227% 3 mos!!! 0.326% 6 mos. –  both steady at their new record low for 6 mo: 3 mos  0.227%; 6 mos 0.326%! Looks like a lot of excess reserves piling into the Fed for that 0.25% rate!!! NOTE the Fed Funds rate has averaged 0.08% since 5/22/13 and is steady at 0.07% -0.09%. Foreign bond yields about even except Italy and Greece – now at another new post-crisis low!!! Germany 1.56% –; UK 2.68% –, – recent high 3.03%! France 2.06% +1; Italy 3.19% -3; Spain 3.19% -1; Portugal 3.89% –; Greece 5.94% -10 – from 5.04%. Range now 5.94% to 12.57%. Japan: 0.61% –.

Gold rallied to $1314.70, highest since 3/26 and closed at $1309.10 +$10.80 as it see-saws around $1300, just five days after trading down to $1277.40, lowest since 2/10. Back avbe the 200 day and close to the 50. It has been in trouble since imploding three weeks ago, breaking all supports. Last Friday was the 1st close above $1300 in eight sessions! – still off $63 in 17 sessions  following the reversal! On 3/17 it printed 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! Friday was the first close above the 200 day since 2/14, and is again first support. Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!!  Psych level: $1300 sup, with technical support just below at the 200 day, $1299, and first res just above at the 50 day, $1311, then the 40 day, $1325. Overnight slightly lower at $1305.80 -$3.80.

Crude surged to $102.71, highest since 3/10 before closing at $102.56 +$2.12!!! On April Fool’s Day it finally broke above the 40/50 and 200 day m/a’s, trading up to $102.24. Can it hold here? Last Wednesday’s session low was $98.86, lowest since 3/25! 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 the 40 day ($100.96), then the 200 day ($100.59), and finally the 50 day ($100.36). The recent range is $85.61-$112.24 since March 1, 2012. Overnight it traded up to $102.84 and is now $102.72 +.16 – crazy!

Global equity markets higher led by Hong Kong for a second day; Japan tanking for a THIRD day: UK +0.8% vs -0.8% vs -0.8% vs +0.4% vs -0.1%; France +0.4% vs -0.7% vs -0.8% vs +0.3% vs -0.3%; Germany +0.2% vs -0.7% vs -1.5%!!! vs +0.4% vs -0.2%; Japan -2.1%!!! vs -1.4%! vs -1.7%! vs -0.1% vs +0.8%; Hang Seng +1.1%! vs 1%! vs-0.6% vs -0.2% vs +0.2%; Korea +0.3% vs +0.2% vs +0.1% vs 0.3% vs -0.2%; India +1.6% vs closed vs-0.1% vs -0.7% vs -0.2%. U.S. equity futures slightly higher in a very narrow range: DOW +26 (range 33); SPX +1.40 (5!!!); NDQ +6.50 (12!!!!) – in Bridge, a ‘temporizing bid’

Spring in Minnesota…for a third day…off to the Twins/A’s game today! Should be nice!

Have a great day!

TB

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