12/19/14…ain’t that a ‘witch’?

Quote of the Day from the Friars Club Encyclopedia of Jokes: “I’m at the age where just putting my cigar in the holder is a thrill.” – George Burns, lived to 100… stayed active! In Playboy at 90!

Bloomberg Quote of the Day: “Everything in moderation, including moderation.” – Julia Child… or as my late relative, Elbert Hubbard used to say, “Moderation in all things.” …I think I like Julia’s better!

Bloomberg Top Stories:
*Wall Street Firms Enduring Lost Decade After Goldman Sachs Peaked in 2007 – )
*U.S. Equity-Index Futures Fluctuate; Crude Rises With Ruble as Yen Weakens
*China Offers Enhanced Economic Cooperation as Russia Struggles With Crisis
*Oil Slump Exposes Hole in Shale Drillers’ Hedges as Three-Way Bets Tested – and NY imposed a ban on drilling in state!!!
*Sony Hackers Probably Snooped for Months Then Crashed system in 10 Minutes – !!!
*Japan Economy Minister Amari Wants Corporate Taxes Cut as Soon as Possible – !!!
*MetLife Derivatives, Illiquid Assets Cited by Panel After Risk Designation – !!!
*Pro-Taliban Cleric Now Wants Them Dead After Massacre of Pakistan Children
*Small-Cap Stocks Trailing S&P 500 by Most Since 1998 Is No Bargain to BofA – !!!

Thursday’s Market Summary:

When will it ever end (or as in Where did all the flowers go?: when will they ever learn…)? A humongous rally! In a week of BIG ups and downs. For the past FIVE session total NYSE Volume has averaged 4.6B shares! Note that the average volume for the past 12 months is just 727M shares. Share traded on the NYSE floor have averaged 993M compared to 833M since 10/1. December is now averaging 886M – incredible, along with incredible volatility…and it may not be over yet! Wait and see what happens today following the quadruple witching! Last year from 12/16-12/19 volume was pretty steady at around 733M shares, then on 12/20 (options!),it soared to 1.97B shares!!! Then it plunged through yearend to an average 460M shares – AND with a low of 272M on Dec. 24th! High was just 611M on 12/23! That is what happens when liquidity dries up!

The Russell 2000 weakest, up 1.5% BUT that followed a 3.1% gain Wednesday! HUGE!!! Dow Transports up just 1.6% for worst performer for a 2nd day following a 0.8% gain? This for the second best performer of the year behind Dow Utilities (?) – they were up 1.9% both days! The rest were up from 1.6-2.5%; wow, what a session that spiked out of the chute and never looked back…looks to TB like position squaring for money managers for yearend! They don’t like to wait till the last minute…ever! So where she goes from here is anyone’s guess, but ‘sometime’ between now and February we will probably get slammed again…and perhaps much worse! A/D’s and Breadth were ‘superstrong’ again, especially the latter…all bets are off! New 52 week highs nearly tripled to 330, very respectable, while new lows declined by 2/3 as one might expect to a more normal 73. The S&P VIX plunged again but despite a 2.63 drop to 16.81 remains very bearish! Note the range was 16.07-18.51!!! That is rather worrisome!

Total NYSE Volume slightly lower at 4.7B shares vs 4.93B vs 4.9B vs 4.38B vs 4.16B. Average volume since 9/30 continues to climb from about 3.6B shares or about 600M more than the 12-month average! Shares traded on the NYSE floor (aka REAL) slightly lower at 976B shares vs 1.05B, highest since 10/15’s options expiry of 1.22B, vs 1.02B vs 980M vs 941M. For comparison purposes, for the prior 12 months it is a historically weak 725M shares, but since 10/1: 830B shares – including a 1.22B (and four 1B+ share sessions), and since 12/1 886M shares!!! The lowest was 11/1’s 619M share session. April 30 – September 30 we had just SEVEN 800M shares…since 10/1: now at 22 – just one in Nov, and NINE 900M+ days: FOUR 800M days, FOUR 900M and FOUR 1B share days in Dec.!!!

A/D’s were very positive for a 2nd day following three negative sessions: NYSE: +4.1x! vs 6.7x!!! vs -1.4x vs -3.1x! vs -3.8x!!!; Nasdaq +3.2x vs 4x!!! vs -1.2x vs -2.5x vs -2.4x. Breadth was even better again: NYSE +8.1x!!! vs +14.3x!!! vs -1.2x vs -4.1x! vs -4.7x!!! vs +1.2x vs -15.5x!!! (Unbelievable!); Nasdaq +4.6x! vs 9.5x!!! vs -2.1x vs -3.3x!!! vs -2.6x. New 52 Week Highs nearly tripled to 330 vs 118 vs 56!!! vs 78 vs 111 – their range for the year is 39-612!!! New Lows fell by nearly 2/3 for a 2nd day to a more normal 73 vs 223 vs 712!!! vs 640 vs 603. The 2014 range is 24-1043!!! S&P VIX had a high of18.51 down from 24.61 and Tuesday’s 25.20, which was highest since 10/17 before closing at $16.81 -2.63. STILL very bearish!!! During the prior brief ‘rally’ it only made back down to 15.94! We still at risk of those bearish extremes that had a high of 31.06 (highest since 11/28/11!!!), and now a big possibility with options expiry this Friday! The average of the past 12 months is 14.08 and slowly climbing, with a low of 10.28!…high close of 26.25 on 10/15/14!

U.S. bond market closed weaker retracing the rally of the prior three days (including closing a gap up on 12/12! This puts them half way back to the 11/28 hight…don’t bet against them though – it ain’t over till it’s over…right, Yogi? Note on 12/2, the 30 yr bottomed at 3.01%. The recent 12 month low yields (10’s 2.06%!; 30’s 2.69%! and long TIP 0.76%!!!), 10’s closed at 2.21% -5/8; 30’s 2.82% -1-7/8!, and the long TIP 0.90% -2-15/16!!! Overnight, flutuating: 10’s 2.19% +1/8; 30’s 2.81% +5/16; long TIP 0.89% also +1/4. Where is there a safe harbor?
Libor update: 0.245% 3 mos.; 0.344% 6 mos. Both higher, but not far off their recent record lows! The Fed Funds rate has averaged 0.09% and is currently 0.13-0.14% – a slight 9-month high. T-Bills: 0.02% one-month; 0.03% 3 mos; 0.23%!!! – STILL climbing slowly!
Foreign bond yields mixed, PIIGS LOWER (Benchmark is 10yr): Germany 0.60% -2; UK 1.88% +1; France 0.89% –; Italy 1.96% +1; Spain 1.71%! -3; Portugal 2.72%! -3; Greece 8.22% 14; look at the last NINE days ranges: 7.03% to 8.88%!?! Not for the faint of heart! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.35% –.

Gold closed slightly higher but merely explored $1200 before settling at $1194.70 +.30, range $1189-1207, following Wednesday’s low of $1184.00, lowest since 12/1, below $1200 for the 4th time since 12/2 – $1200 is again resistance! Rally’s over…right? Last week’s intraday high was $1238.00 – highest since 10/22/ This is the 3rd sub-$1200 close which ended its seven straight $1200+ closes since 12/5 when the selloff began. Stuck below the 40/50 day! 11/7’s low was $1130.40, a new 12-month low!). Now 32 of last 33 sessions with prints below $1200. Last close above $1300 was on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! RESISTANCE again at $1200 (psych) and the 40 day ($1195!), the 50 day $1204, then the 200 day $1267. The 12-month high is $1392.60 on 3/17, highest high since 9/4/13. 11/7’s low was $1130.40! Overnight high is $1201.50, now $1198.50 +$3.70. Silver slightly below $16, following its $17.27 high last week! This after a $14.12 recent low, not seen in more than five years!

Crude still weak with a parallel session, with both days highs at $58.91. It closed at $55.11 -$2.36!!!, two days after plunging again to $53.60, lowest since 5/6/09! – there had been 10 straight lower closes! Consider: 10/25’s high was $84.83. There have been 51!!! 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 5/15/09 is $56.07: $89.85 is the average! Recent rally high and close are $110.70 and $110.53 respectively. RES at the 40 day ($71.86!), then the 50 day ($74.13!), and lastly the 200 day ($93.28!), all STILL increasing their rate of decline! Did we just avoid $50? The recent range is now $53.60-$112.24 since 3/1/12. Overnight, it is slightly higher in another inside session at $55.60 +$1.49, at session high and WEAK! 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%!!!).

Overnight Global Markets:

European equities weak ex-UK, Asia STRONG, Korea flat: UK +0.4% vs +1.6%! vs -0.8% vs – vs -0.3% vs -1.5%!; France -0.7% vs +2.9%!!! vs -0.7% vs -1%! vs +0.1% vs -1.5%; Germany -0.8% vs -0.9% vs -0.6% vs +0.1% vs -1.4%! Japan +2.4%!!! vs 2.3%!!! vs +0.4% vs -2%!!! vs -1.6%; Hang Seng +1.3%! vs +1.1%! vs -0.4% vs -1.6%! vs -1%! Korea +1.7%! vs -0.1% vs-0.2% vs -0.9% vs -0.1%; India +0.9% vs +1.6%! vs -0.3% vs -2%!!! vs -0.1% vs -0.9% vs -0.8%. U.S. equity futures not sure what to do: DOW +20 (131); SPX +2.60 (15); NDQ +7.75 (26). Hmm

Some random thoughts:

Would rather sit this one out and see how the quadruple witching goes!
Have a great weekend…and don’t buy anything today! Stocks that is!

TB

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