1/13/15…secular bear market??? Mauldin says yes!

TB’s Wine Quote of the Day: “It takes a lot of good beer to make good wine.” –Brian O’Donnell

Bloomberg Quote of the Day: “Music is a higher revelation than all wisdom and philosophy.”

– Ludwig von Beethoven…yes, but is he speaking from position? TB

Overnight Global Markets:

European equity markets higher…France and Germany strong for a 2nd day, Asia mixed: UK+0.3% vs +0.1% vs -0.7% vs +1.2% vs -0.3% vs -1.5%; France +1% vs +1% vs -0.7% vs +1.2% vs +0.4% vs -2.6%; Germany +0.9% vs +1.2%!!! vs -0.6% +1.2% vs +0.9% vs -2.3%; Japan -0.6%vs closed +0.2% vs FLAT vs -3%!!! Hang Seng +0.8% vs +0.5% vs +0.4% vs +0.8% vs -1%! vs -0.6% vs +1.1%; Korea -0.3% vs -0.2% vs -0.2% vs +1/1%! +0.1% vs -1.7%!!! India -0.6% vs +0.5% vs -0.3% vs -3%!!! vs -0.2% vs +1.4%! U.S. equity futures strong overnight: DOW +105! (range 30 + gap 18); SPX +9.60 (15+2); NDQ +26 (14+18!)

Global Money Markets: Libor: 0.254% 3 mos.; 0.362% 6 mos. – and still not that far off their recent record lows! The Fed Funds rate has averaged 0.09% and is now 0.12-0.14% – which remains the 9-month high. T-Bills: +0.01%, one-month; 0.02%, 3 mos; 0.18% back from 0.25% – the new 12-month high set on 12/22/14!

U.S. Treasury Bonds: STRONG again o/n with BOTH 10’s and 30’s hitting new lows: 10’s 1.88% +1/44; 30’s 2.47% +1/2; Long TIP: 0.68% +1/8. Looks like yields can go lower…where there’s a will, there’s a way, so stay OUT of the way!

European Bonds: yields lower across the board (ex-Portugal) and more 12-month lows for a 2nd straight session…again led by Greece: -32 bp’s vs -60bp’s.!!! (Benchmark is 10yr): Germany 0.46%!!! -2; UK 1.55%! -3; France 0.72%! -3; Italy 1.78%! -3; Spain 1.61%! -3; Portugal 2.60% vs 2.56%! -3; Greece 8.87% -32! vs 9.20% -64 vs 9.84% vs 10.19% vs 10.29% – look at the last 20 days range: 7.03% to 10.29%!!! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.25%! -1.

Dollar: little changed overnight but after rallying again Monday: Euro: $1.1779 and nearing lowest since 6/2010!!! ($1.1754); Sterling $1.5160, off lowest since 8/13: $1.5035; Yen slightly better but remains extremely weak, now 118.42, failed rally on 1/7 to 118.06 – it has been weak since 8/14: 105!

Commodities: Gold traded to $1244.50 o/n taking out res at $1239, next is $1256.20, the 10/21 high, while the low moved up to $1230.70. Selloff is now over, kaput! Silver traded to $17.06 o/n and is now $16.91 +.34. Crude is at $44.68 currently, having traded down to yet another new low of $44.20 o/n, adding another new handle since the selloff began: now 62 from the high of $107.73 on 6/20/14 -59%!!! MAJOR support is $32.40-.70, the 12/19/08 and 1/20/09 lows and THAT was during the financial crisis!

Monday’s Market Summary:

(Note: John Mauldin published his 2015 preview yesterday: he contends we remain in a ‘secular bear market’ – yes, BEAR…: “ I do not believe that the secular bear market in the United States that I began to describe in 1999 has ended. Secular bull markets simply do not begin from valuations like those we have today. Either we began a secular bull market in 2009, or we have one more major correction in front of us. Obviously, I think it is the latter.” Hmmmm…

Let me see…how did TB begin the summary yesterday? Oh yeah: Caveat emptor – seller too! Only a fool would proclaim knowledge of where this market will be a month, or a year from now…after all we are NOT trading on fundamentals…how else to you explain the market since the beginning of the year? It takes chutzpah and hubris to call it! Worst performer was NDQ 100 -1%, followed by the S&P 500, and Nasdaq Composite -0.8%, while the Dow 30, Transports, and Russell 2000 all lost 0.5%. Dow Utilities? -0.3%. As for NYSE Financials -0.7% but look: NYSE Brokers -0.6%; KBW and Nasdaq Banks -1%, that following a 2.3% plunge! Most heavily traded on the Big Board was, as usual, BofA which TB has warned about: -1.7% vs -1.8%! Excuse me but what has TB been sayin’ about banks for months? O-ver-valued!

Lemme see…Volume as pretty steady at 3.45B shares; A/D’s and Breadth negative again, new highs bounced back a tad to 286, splitting the difference, while new lows more than doubled to 258. The S&P VIX rose nearly 12% – quashing any folly that this is a bull market…or is it just Grand Ole Expiry? Nope, systemic overload by the flash boys!

A/D’s and Breadth were negative (also at 3:3), while new 52 week highs were halved and new lows rose sharply. As for the S&P VIX (it too at 3:3), it rose to 17.55 so will Thursday’s low print of 16.89 be the end of the good news? Options expiry says yes!

Total NYSE Volume slightly higher at an average 3.45B shares vs 3.35B vs 3.92B vs 3.79B vs 4.44B – 12/24’s 12-month low was 1.4B shares. Shares traded on the NYSE floor also rose to a slightly above average 778M shares vs 732M vs 848M vs 778M vs 942M – highest since 12/19, 12/24’s 349M was the 12-month low…average is 734M shares! For the first week of 2015, the average was 829M – mostly to the downside and dropping. The average for Dec. peaked at 979M shares on Dec. 22nd and has declined steadily – and accelerating.

Advance/Decline’s negative for a 2nd session: NYSE: -1.7x vs -1.7x vs +3.3x vs +3.2x vs -2x vs -3.3x; Nasdaq -1.6x vs -1.9x vs +2.9x vs +2.1x vs -3.2x vs -2.4x; Breadth was similar: NYSE -2.2x vs -2.4x vs +5x!!! vs +2.8x vs -2.5x vs -7.3x!!! Nasdaq -1.4x vs -1.7x vs +4.4x!!! vs +2.5x vs -3.3x! vs -4x!!! New 52 Week Highs remain volatile: 286 vs 178 vs 342 vs 283 vs 206 vs 144 – their range for the last 12 mos. is 39-612!!! New Lows doubled to a strong 286 vs 118 vs 78 vs 158 vs 223 vs 143 vs 52 (12/16’s high was 712!!!) The 12-month range is 24-1043!!! S&P VIX bounced back off its nadir to 19.60 +2.05 – up 11.7%! The range was 18.02 – 20.44! This closed the gap from 18.42 to 19.04: more bearishness! On Jan.6 it closed at 21.12 with an intraday high of 22.90, highest since 12/16’s high of 25.20, which was highest since 10/17(31.06!) which was the highest since 11/2//11!!! Too late now to buy ‘put’ protection! We remain at risk of those bearish extremes as we approach options expiration. The average of the past 12 months is 14.33 slowly and steadily climbing, with a low of 10.28!…high close was 26.25 on 10/15/14!

U.S. Bond Market closed strong again with the 10-year setting another new low, and 30-year right at its low. The score is now NINE rally days in the last 12 resulting in new 12-month low yields (10’s 1.91%; 30’s 2.50% and long TIP 0.66%!!!). Closes: 10’s 1.91%! +5/16; 30’s 2.50% +5/8; long TIP 0.69% -3/16.

Gold traded up to $1236, now highest since 10/22, and closed firmly at $1232.80 +$16.70 with another higher high and higher low! Now the highest close since 10/21!!! and the sixth straight session without a print below $1200! It is the antithesis of Crude! Major support at the 40/50 day! $1239 is next resistance – then $1256, the 10/21/14 high – and MAJOR! 11/7’s low was $1130.40, the current 12-month low! There hasn’t been a close above $1300 on 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! MAJOR SUP at the 40 day $1197, and the 50 day $1193, with major res at the 200 day $1256 – all stable. The 12-month high is $1392.60 on 3/17/14, highest high since 9/4/13. Silver too held above $16 closing at $16.56 – highest since 1/6’s $16.74. Recent high is $17.36 on 12/10. $14.12 is the recent low (12/1/14), not seen in more than five years!

Crude, for the first time in eight sessions did NOT hit a new low following Wednesday’s $46.83 print, still lowest since 4/30/09. It closed at $48.79 +.16 in a boring session. 10 days ago the high was $58.91 Consider: 10/25’s high was $84.83. There have been 61!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13, and if off 55% since then! The record high of $147.27 was on 9/30/08, the low since on 4/30/09 is $51.94. Recent rally high and close are $110.70 and $110.53 respectively. RES at the 40 day ($63.11!!!), then the 50 day ($66.37!!!), and lastly the 200 day ($90.25) – 50 day still in freefall. The recent range is now $46.83-$112.24 since 3/1/12. 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%!!!). TB’s bet? $42…don’t ask why…

Note: TB’s new wine blog is now posted at traderbillonwine.com

Have a great day and don’t forget options expiration on Friday!!!



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