10/23/14…today’s column was not meant to be…

Quote of the Day from the Friars Club Encyclopedia of Jokes: “You can do anything with a bayonet except sit on it.” – Napoleon Bonarparte …sure you can…once! TB

Bloomberg Quote of the Day: “Giving up is the ultimate tragedy.” – Robert J. Donovan

Bloomberg Top Stories:

Due to computer problems no headlines today, and market summary was partially deleted.
See Random Thoughts for more explanation. TB

Thursday’s Market Summary:

So, here we go again…stocks making a fool of TB…and perplexing the experts. Get a few positives and the market rallies…negatives, declines…but it is the magnitude of and volatility that is what should get our attention…but not the talking heads…no, sir! They have an answer for anything. So let’s not bother with yesterday other than to say that all indices were up from 2.1% (Transports) to 1.2% (S&P 500), Dow Utilities were still up 0.2% and remain numero uno ytd!
Here goes:
• Total Volume: 3.76B shares – it has been 13 sessions since we saw another sub- 4B share day…hmmm
• Volatility: 16.53 -1.34 with a range of 15.68-17.06!?! Range since 10/6 is 15.04-31.06.the last time it closed above 15 was 8/8/14, then 4/15. The high of 31.06 exceeds the prior highs of the last THREE years. Last time above 30? 11/28/11! In the interim it was 28 once in 2012; and 21.48-22.72 just FOUR times since.
• This month market has been up more than one percent 7 times and down 8 times. But the down days have ruled. MTD, even with yesterday’s rally: Dow -2.1%; Transports +0.4%; S&P -1.1%; Composite -0.9%; Dow Utilties? +4.7%!!! Get the picture???

So IF you believe this is a ‘normal’ market and remain bullish, picture all those high frequency traders laughing their fat asses off at your stupidity! And at the heads on CNBC! You want that?

Total NYSE Volume was steady at 3.76B shares vs 3.74B vs 3.96B vs 3.3B vs 5.05B vs 6.06B: average volume for October is 3.7B, or about 700M more than the recent average. Shares traded on the NYSE floor – affectionately referred to by TB as REAL volume: for October it is 890M shares!!! Trading slightly higher at 919M shares vs 802M vs 815M vs 742M vs 1.07B For comparison purposes, for the prior 12 months it is a historically weak 709M shares…but thus far in October, 895M shares including Wednesday’s HUGE 1.22B shared day – highest since 9/19. The lowest was 10/6’s 696M share session. April 30 – September 30 we had just SEVEN 800M shares…for October so far? 14 (this is no time to be superstitious!), including FIVE 900M+ share days.

A/D’s were back to positive and solid: NYSE: +3.3x! vs -2.2x vs +4.5x vs +2.8x vs +1.9x vs +2.3x vs -1.1x vs +1.6x vs -3.6x -7.2x!!! vs +4x! vs -3.4x; Nasdaq +2.7x vs -2.8x vs +2.9x vs +2.2x vs 1:1 vs +2x vs +1.2x vs +1.6x vs -2.7x vs -5.8x vs +2.5x vs -4.2x! Breadth was better still: NYSE +3.4x vs -3.7x! vs +5x!!! vs +3.1x vs +2.9x vs +1.7x vs -1.4x vs +1.6x vs -5.8x! vs -12.3x!!! vs +3.8x vs -4.7x!!! Nasdaq +5.7x!!! vs -2.9x vs +6.3x!!! vs +5x!!! vs +1.8x vs +1.4x vs +1.03x vs +1.1x -7.2x!!! vs -4.4x! New 52 Week Highs up a tad to 171 vs 161 vs 129 vs 62 vs 83 vs 52 vs 49 – their range for the year is 39-580!!! New Lows also higher at 89! vs 68 vs 56 vs 82 vs 67 vs 311 vs 1043!!! The 2014 range is 24-1043!!! S&P VIX lower again and back from those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!) closing at 16.53 -1.34 with a range of 15.68-17.06, still bearish and well above 9/18’s 12.03 The average of the past 12 months is 13.83, with a low of 10.32!

U.S. bond market closed weak with the long bond over 3%, and slipping from the new 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closing at 2.27% -1/2; 30’s 3.04%!!! -1-1/16!!!; and the long TIP 0.97% -1-1/4!!! Better overnight: 10’s 2.26% +1/4; 30’s 3.03% +5/16; and long TIP 0.96% +5/16.
Libor update: 0.233% 3 mos.; 0.323% 6 mos., both just above new record lows! The Fed Funds rate has averaged 0.09% and is steady at 0.08-0.10%. T-Bills range from 0.01%, one-month, to just 0.10% one year!!! Foreign bond yields little changed overnight; except volatile Greece (Benchmark is 10yr): Germany 0.88% -2; UK 2.22% -2; France 1.29% -1; Italy 2.52% +2; Spain 2.18% –; Portugal 3.24% -2; Greece 7.14% -5. 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.46% -1.

Gold closed sharply lower at $1229.10 -$16.40, with a low of $1226.30, and is again well below the 40/50 day m’a’s, following a new recent high of $1255.60, highest since 9/10/14. There have been just two prints below $1200 since 12/31/13 – 10/3 and 10/6 and soundly rejected! Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! Res is the 40 day at $1234, Res the 50 day $1245, and the 200 day at $1284. Recent high was $1392.60 on 3/17, highest high since 9/4/13. Jan. 2’s low was $1181.40 – A MULTI-DECADE LOW!!! Overnight it is slightly higher at $1233.80 +$4.70. Silver still holding in low $17’s, after falling to $16.64 on 10/3 – lowest since 2/9/2010 and very close to $15.73, a multi-decade low!!!

Crude was hit hard plunged to $80.05 (2nd only to 10/16’s 79.79). before closing at $82.09 +$1.57! Last Thursday’s high $84.83, low $79.78, defining October’s range. There have been 28!!! handles since peaking at $107.73 on June 13th at $107.73 highest since 9/19/13 (a huge down session which put it in freefall. The record high of $147.27 was on 9/30/08, the low since on 12/30/11 is $74.95: $93.60 is the midpoint!!! Recent rally high and close are $110.70 and $110.53 respectively. RES at the 40 day ($89.92), then the 50 day ($90.90), and lastly the 200 day (98.56) – all declining. The range is now $79.78-$112.24 since 3/1/12. Overnight weaker at $81.07 -$1.02 but coming off a low of $80.73.

Global equities lower, ex-India: UK +0.2% vs -0.9% vs +1% vs -0.7% vs -2.8%!!! France +0.2% vs -1.3%! vs +2.1%!!! vs -1.1% vs -3.6%!!! Germany +0.4% vs -1.4%! vs +2%!!! vs -0.4% vs -2.9%!!! Japan +1% vs -0.4% vs +2.6%! vs -2%! vs +4%!!! vs -1.4% vs -2.2%!!! vs -2.4%!!!; Hang Seng -0.1% vs -0.3% vs +1.4% vs +0.1% vs +0.2% vs +0.5% vs -1%! vs -1! Korea -0.3% vs -0.3% vs +1.1% vs -0.8% vs +1.6%! vs -1%!; India +0.2% vs +0.8% vs +0.8% vs +0.6% vs +1.2%! vs +0.4% vs -1.3%. U.S. equity futures little changed after diving following yesterday’s STRONG performance: Dow -8 (range 124); SPX -1.60 (15); NDQ +4.75 (39).
Some random thoughts:
FRUSTRATION!!! Originally was going to write a column on control fraud. TB got interested listening to the Moyers interview with William Black and bought his book The Way to Rob a Bank is to Own One. A very difficult book as it starts right off with the aforementioned topic. But what it it? Control fraud is when someone ‘takes over’ a company, either by buying it as Charles Keating and many others did during the S&L crisis, or becoming CEO and inserting a ‘no questions asked’ board, which to TB is either the Citi under Sandy Weill, Countrywide under Angelo Mozillo, or Weill’s understudy, Jamie Dimon at JPMorgan.

When someone from the outside buys a problem bank/S&L, they are ‘opportunists’ as opposed to the insiders. TB is not accusing Dimon of fraud but it was actions like his (London Whale), that led to the crisis. What is amazing is how quickly speculators see the opportunity, while the regulators still can’t figure it out. True, ever since Ronald Reagan, regulation has been lax and only sporadically leads to meltdowns, but the examiners and their supervisors are either out-gunned or become co-conspirators – willingly or otherwise.

On Monday, will discuss further. The other frustration was that TB wrote an entire piece on market volatility which was to replace contract fraud in the market today…will have to re-create because thanks to the new, improved (sic) Microsoft Word, when trying to copy it to this section it was deleted. Never had that happen with the old Word. Damn…double damn!

Have a great weekend,

TB

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