12/9/14…a big caution on stocks!!!

Quote of the Day from the Friars Club Encyclopedia of Jokes: “

Bloomberg Quote of the Day: “There is no cure for birth and death save to enjoy the interval.” – George Santayana…no relation to Carlos Santana!

Bloomberg Top Stories:
*Stocks Drop Worldwide on China While Yen Rallies, Gold Advances With Bonds
*Bank of America Says Fourth Quarter trading Revenues to Fall on ‘Headwinds’ LOL!
*Fed Officials Debate ‘Considerable Time’ Rate Pledge as FOMC Meeting Nears – Hah!
*Biggest Banks Face U.S. Capital Requirement Tougher Than Global Agreement
*China Curbs Opaque Local-Government Financing in Puish for Municipal Bonds – !?!
…that’s the important ‘stuff’ for today!

Monday’s Market Summary
…and the beat goes on…sort of. To the CNBC tune of ‘we had a new record high today’. Oh, how special! Since 12/31, the S&P 500’s climb has been relentless…and with just three minor corrections, and one that had the potential of a big one. The slope for the year was +8.1% – until July 3rd but from their until 9/19 it was just +2.2% – ahead of that 10% ‘faux’ correction (20-25% would be a real correction). It has continued its rise but since July 3rd the slope is now just 4.7%. The increase from the 3/6/09 post-crisis low of 666 (the Hex!), is 208% (13.6% annualized – 22.2% w’divvies reinvested) – by the way, the ‘Hex’ was the lowest since 9/30/96 – if we take the 3/31/00 peak (why do these seem to occur at end of quarters?) to present the increase is 2% annualized, 4.2% w/divvies reinvested in the index BUT it would still be 3.3% in T-Bills! – think about that! Since 10/31’s record high we have had TEN new highs…the most recent on 12/5 (2079 vs 2018) – that is just 3% higher – a solid sign of a lack of confidence! Hope you found this ‘enlightening which is more than you can say of the blather on CNBC!

Yesterday was a down day on higher than average volume of 3.72B shares (?), the only index in the green was Dow Utilities +0.9%% (offsetting Friday’s decline). Worst was Dow Transports -1.3%, followed closely by the Russell 2000 -1.2%. The rest ranged from -0.6%, Dow 30, to -0.8% – both Nasdaq’s. A/D’s and Breadth were very negative; new 53 week highs jumped to 386 on the early rally, but new lows soared to a huge 416! Most telling was the VIX which having dropped to 11.82 Friday – very bullish, retraced 4 and nearly 5 days to a bearish 14.18 +2.36!!! The high was 14.67! Caution! This is a market whose time has ‘went’ – as Pancho would say to Cisco. Also, don’t be fooled by the weakness in bonds on Friday: that was merely a reaction to the ECB delaying the QE’s until 2015 – oh…you didn’t notice…that’s a one-month deferment!

Total NYSE Volume surged to an above average 3.72B shares vs 3.36B vs 3.37B vs 3.58B vs 3.64B vs 4.14B. Average volume since 9/30 remains about 3.6B shares or about 600M more than the 12-month average. Shares traded on the NYSE floor (aka REAL) also rose to 770M shares vs 755M vs 798M vs 776M vs 809M vs 877M vs 649M (lowest since 11/11 and unusual for a monthend). For comparison purposes, for the prior 12 months it is a historically weak 718M shares…but since 10/1: 815B shares – including that HUGE 1.22B share day – highest since 9/19, followed by two more 1B plus days leading to options expiry!. The lowest was 11/1’s 619M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: now at 19 – just one in Nov, and FIVE 900M+ days. Two 800M days for Dec.

A/D’s were very negative: NYSE: -2.3x vs +1.1x vs -1.7x vs +1.8x vs +2x vs -3.5x; Nasdaq -2.9x! vs +1.9x vs +1.5x vs +1.6x vs +2.1x vs -3.5x. Breadth was worse: NYSE -3.8x!!! vs 1:1 vs -2.4x vs +2.4x vs +1.3x vs -3.8x!!! vs -2.4x; Nasdaq -3.3x! vs +1.6x vs -1.5x vs +2.2x vs +2.1x vs -4.7x!!! New 52 Week Highs climbed again to 386 (this due to the early rally) vs 363 vs 302 vs 328 vs 197 vs 201! vs 515! – their range for the year is 39-612!!! New Lows climbed again to a VERY strong 416!!! vs 283 vs 248 vs 185 vs 253 vs 447!!! The 2014 range is 24-1043!!! S&P VIX reversed nearly five sessions of decline with a high of 14.67 and a low of 12.55 despite Friday’s bullish close of 11.82 –it closed at 14.18 +2.36!!! – leaving just one session without a ‘13’ print and worse for bulls just one ‘11’ print! This 11 days after hitting a very bearish 15.74, highest since 11/4, and just 4 days ago 14.75! We may again see those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!). The average of the past 12 months is 13.97, with a low of 10.28!…high close of 26.25 on 10/15/14! TODAY is the closely watched payrolls report! Stay tuned.

U.S. bond market closed STRONG! Not the 30 yr peaked at 3.01%. The recent 12 month low yields (10’s 2.09%; 30’s 2.87%; and long TIP 0.83%), 10’s closed at 2.26% +7/16; 30’s 2.91%! +1-1/4, and the long TIP 0.93% +1-1/16. Overnight STRONG again!: 10’s 2.22%! +3/8; 30’s 2.86%! +7/8; and long TIP 0.90%! +13/16.

Libor update: 0.236% 3 mos.; 0.330% 6 mos. – still near their new record lows! The Fed Funds rate has averaged 0.09% and is currently 0.11-0.13% – a 9-month high. T-Bills: 0.03% one-month; 0.02%! 3 mos; 0.15%! one year.

Foreign bond yields mixed but PIIGS weak – especially Greece!!! (Benchmark is 10yr): Germany 0.70% -1; UK 1.90%!!! -6!; France 0.97%! –; Italy 2.01% +8!; Spain 1.81% +3; Portugal 2.79% +9!; Greece 7.71%!!! vs 7.03%! +67!!! Nott for the faint of heart! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.41% -3.

Gold closed slightly higher in a parallel session at $1194.90 +$4.80. Below the 40/50 day for a second day (streak ended at 3!) since 10/21! 11/7’s low was $1130.40, a new 12-month low!). The last 28 sessions have had prints below $1200 – first time since 12/31/13 Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! Res/Sup is at $1200 (psych), then the 40 day at $1200, the 50 day $1203, then the 200 day at $1272 – bottomed out? The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. 11/7’s low was $1130.40! Overnight it is STRONG at $1219.00 +$24.10!!! with a high of $1222.20!!! Note the low was $1199.90but without a $1200 print (high: $1198.70)0. There have now been 10 highs above $1200 since 10/31. Silver traded as high at $16.84 overnight. 12/1’s low was $14.12, more than a five year low.

Crude closed WEAK for a 2nd day at $63.05 -$2.79 with a session low of $62.78!!! Another new 5 year plus low!!! This takes out last Monday’s 4 handle session – with a low of $63.72 – a new five year plus low (6/2010)! 10/28’s session high was $77.83. 10/25’s high was $84.83. There have been 44!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13. 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 ($76.74!), then the 50 day ($79.30!), and lastly the 200 day (95.06!), all increasing their rate of decline! A failure here could take us to $59!!! The recent range is now $63.72-$112.24 since 3/1/12. Overnight it is lower again at $63.01 -.04 with another new low of $62.25! Note that following the financial crisis it traded down to $32.40 on 12/31/08 from a high of $147.27 just three months earlier (-78%!!!).

Global equities WEAK, especially Europe!: UK -1.5%!!! vs -0.9% vs +0.8% vs -0.2% vs -0.3%; France -1.8%!!! vs -0.9% vs +1.3% vs -0.9% vs –; Germany -1.6%!!! vs -0.5% vs +1.3% vs -0.6% vs +0.3%; Japan -0.7% vs +0.1% vs +0.2% vs +0.9% vs +0.3%; Hang Seng -2.3%!!! vs +0.2% vs +0.7% vs +1.7%!!! vs -1%! vs +1.2% vs -2.6%!!! – rioting will do that! Korea -0.4% vs -0.4% vs — vs +0.9% vs +0.2%; India -1.2%! vs -1.2%! vs -0.4% vs +0.4% vs –. U.S. equity futures SLAMMED – no opening gap!!!: DOW -176 (197!!!); SPX -20.40!!! (23!!!); NDQ -41!!! (37!!!). OUCH! U.S. market opening in line with futures!

Could be a very bad day!

Some random thoughts:

…all eyes are – or should be on stocks! CAUTION!!! See today’s market commentary above for details!

Get out your helmets…could be a violent session…or worse!

TB

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