8/20/14…rally, what rally? (market commentary only)

Quote of the Day from the Friars Club Encyclopedia of Jokes: “My grandfather’s a little forgetful. One day he took me aside and left me there.” – Ron Richards

Bloomberg Quote of the Day: “It takes a genius to whine appealingly.”–F.Scott Fitzgerald– he did!

Bloomberg Top Stories:

*Argentine Bonds Weaken on Plan to Pay Bondholders Locally to Sidestep U.S. – Hah!

*Target Lowers Its Earnings Forecast as Sales Slump, Canadian Losses Widen – bad news!

*Stocks in U.S. Fluctuate While Bonds Fall (slightly!), Dollar Strengthens Before Fed

*Carney Loses Interest-Rate Consensus as Two officials Vote for Increase – oops…

*Stiglitz Says Stalling Euro-Area Economy Reflects Dismal Failure of Policy

*Moody’s Downgrade of South Africa’s Banks Seen Raising Sovereign Risk

*Hertz Falls as Accounting Review Prompts Company to Withdraw 2014 Forecast- it ‘hurts’

*Deflation’s Return Threatens Linkers Record Breaking Rally in Canada!

*Chinese Millionaire Roils Property Brokers Over Shrinking Malibu Mansion – CB misstated size!

*Ferguson at Turning Point as Streets Return to ‘Relative’ Calm After Clashes

*Ukraine Forces Push Back Separatists in East as Diplomacy Efforts Escalate

*F-35 Software Testing by Pentagon Slowed by Restrictions After Engine Fire

*Bach Dreams Shattered by Gaza Recurring War Beseiges Palestinian Strip

Tuesday’s Market Summary:

What can you say about a rally there the best performer is Dow Utilities??? Here’s a start: they were up 1.2% more than double any other index…and if you take the three weakest together (Dow Transports +0.1%; Nasdaq Comp and Russell 2000 +0.4%), they still couldn’t match it! NYSE Volume was stable at 2.64B but NYSE-traded shares declined by 556M…111M less than that at the closing bell! Do we have to ask who is doing the trading? Not mom and pop! Not institutions…just same old, same old…not going to bother with much more other than A/D’s and Breadth were solidly positive, but not great, and new 52 week highs rose again to 294 vs 266 while new lows slipped a bit. As for those highs, when you are near record highs, doesn’t it stand to reason that a lot of stocks will be making new ones? TB’s just sayin’… The VIX declined slightly again to 12.21…TB sees this as VULNERABLE. Range was very narrow so not much action…how low can it go? Hmmm. Bonds weaker overnight…gold and crude still feeble.

Total NYSE Volume was basiclally flat at a weak 2.64B shares vs 2.61B vs 2.96B vs 2.7B vs 2.59B vs 2.76B vs 2.87B. Real NYSE Volume dropped to a WEAK 556M shares from 605M vs 758M vs 517M vs 559M vs 543M vs 596M. Last week’s average was just 594M shares! There have been just four sessions above 800M since 4/28! The 12-month average is a historically weak 702M shares. Since 4/30 the average volume has been just 665M shares ranging from 517M to 927B….12 month high is 2.06B shares on 9/20/13!

A/D’s were positive for a 2nd session: +1.8x vs +3.6x vs -1.3x vs +2.1x vs +2.9x; Nasdaq +1.2x vs +3x vs +1.2x vs +1.3x vs +2x. Breadth was even better: NYSE +4.3x! vs -1.3x vs+1.8x vs +2.1x vs -1.8x; Nasdaq +4.8x!!! vs +1.2x vs +1.6x vs +3x vs -2.1x.. New 52 Week Highs close to a double at 266 vs 193 vs 141 vs 140 vs 96 – recent range is 46-580!!! New Lows down by 1/3 to 60 vs 99 vs 72 vs 79 vs 84 – recent range is 24-260! S&P VIX reversed yet again (not a good sign when it is this low to 12.32 -.83. The range ‘narrowed’ to 12.26-12.85 – no ‘13’s or ‘14’s…a first in a while: since 7/25!

Bonds closed weaker again especially the long TIP but still near the ‘old’ 12-month highs: 10 yr closed at 2.40% -1/16; 30 yr 3.21%- 1/4; the long TIP 0.92% -11/16! Overnight they are slightly weaker again: 10’s 2.41% -1/8; 30’s 3.12% -3/16; and long TIP 0.93% -1/4. Cycle highs yields: 30 yr high was 3.97% on 12/31; the 10 yr recent high 3.03%! Long TIP was 1.64%. The (record?) low of 0.36% was set on 4/5/13.

Libor update: 0.232% 3 mos.; 0.329% 6 mos., both remain near their record lows, set recently: 0.222% and 0.320% respectively! NOTE the Fed Funds rate has averaged 0.09% since 5/22/13 and is at 0.08-0.10% where they have been for weeks! Foreign bond yields, ex-UK, lower across the board – especially Portugal and Greece; all at/near 12-month low yields: Germany 0.98% –2; UK 2.42% +2; France 1.38% -1; Italy 2.57% -2; Spain 2.37% -4!; Portugal 3.39% -11!!!; Greece 5.67% -8!; The recent high on selloff was 6.75%. Recently 5.42% to 12.57%. Japan: 0.51% +2.

Gold closed weaker for a 3rd day, leaving intact Friday’s low of $1293.00, but with the 2nd straight sub-$1300 close since 8/6: $1296.70 -$1.090 It is well below the 40 day AND 50 day while the 200 day is within $10. 7/17’s session high was $1346.60, highest since March 19th!!! 6/9’s $1240.20 was lowest since 1/31/14!!! First RES is again at the 50 day $1304, then the 50 day at $1309, leaving the 200 day as sole support at $1286. Note the recent high of $1392.60 on 3/17, highest high since 9/4/13…that too ended the session with a negative key reversal sparking the downturn! Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight it is slightly higher at $1297.70 +$1.00 BUT only after putting in a new low of $1292.40, still lowest since 8/6.

Crude closed sharply lower with a new recent low of $94.27!!! This is lowest since 1/21/14! It closed at $94.48 -$1.93! It has now had TWELVE handles since 6/30! 7/22’s high was $105.20, still highest since 7/2. 7/15’s session low was $90.01 – lowest since 3/21. 6/20’s run to $107.73 was highest since 9/19/13 (a huge down session which put it in freefall. 3/2’s session low was $97.37, lowest since 2/4! 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. RES at the 200 day ($99.77), then the 40 day ($101.12), then the 50 day ($102.12)…the latter two remain in freefall! The range is $85.61-$112.24 since March 1, 2012. Overnight it is modestly higher at $95.70 +$1.22.

European equity markets weaker following three days of rally…Asia slightly better: UK -0.5% vs +0.5% vs +0.7% vs +0.8% vs +0.5%; France -0.8% vs +0.4% vs +0.5% vs +1.2% vs +1%; Germany -0.07% vs +0.9% vs +1.5%! vs +0.9% vs +0.3%; Japan – vs +0.8% vs flat for 2 days vs +0.7%; Hang Seng +0.2% vs +0.7% vs – vs +0.6% vs -0.4%; Korea +0.1% vs +0.9% vs -0.5% vs closed vs –; India -0.4% vs +0.1% vs +1.1% vs closed vs +0.7%. U.S. equity futures slightly higher after being weak early in the session. Market as of 10:15am EDT: Dow +2.80; S&P -0.60; NDQ -6…Dow Transports UP 18!

Some random thoughts:

…back late from Rotary…so will just say…

Have a great day!

TB

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