1/14/15..more on the case for a ‘secular bear’!

TB’s Wine Quote of the Day: “The discovery of a wine is of greater moment than the discovery of a constellation. The universe is too full of stars.“ – Benjamin Franklin…TB has no truck with that!

Bloomberg Quote of the Day: “Deep in their roots, all flowers keep the light.” – Theodore Roethke

Overnight Global Markets:

European equity markets, Nikkei, and Hang Seng hammered…especially FTSE: UK -2.8%!!! vs +0.3% vs +0.1% vs -0.7% vs +1.2% vs -0.3% vs -1.5%; France -1.5%! vs +1% vs +1% vs -0.7% vs +1.2% vs +0.4% vs -2.6%; Germany -1.4%! vs +0.9% vs +1.2% vs -0.6% +1.2% vs +0.9% vs -2.3%; Japan -1.7%! vs -0.6% vs closed +0.2% vs FLAT vs -3%!!! Hang Seng -0.4% vs +0.8% vs +0.5% vs +0.4% vs +0.8%; Korea -0.2% vs -0.3% vs -0.2% vs -0.2% vs +1/1%; India -0..3% vs 0.6% vs +0.5% vs -0.3% vs -3%!!! vs -0.2% vs +1.4%! U.S. equity futures obliterated overnight: DOW -238!!! (range 292! – no gap down!); SPX -25! (34!); NDQ -42! (55!). See summary below:

Global Money Markets: Libor: 0.253% 3 mos.; 0.359% 6 mos. – a tad lower near 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: +0.02%, one-month; 0.03%, 3 mos; 0.17% back from 0.25% – the new 12-month high set on 12/22/14!

U.S. Treasury Bonds: STRONG and stronger!!! BOTH 10’s and 30’s hitting new lows, finally the TIPS are participating too: 10’s 1.80%!!! +15/16; 30’s 2.41% +2 pts; Long TIP: 0.66%!!! +2 pts!!!

European Bonds: SHARPLY lower yields across the board and more new 12-month lows for a 3rd straight session: Germany 0.44%!!! -3; UK 1.54%! -5; France 0.67%! -6; Italy 1.71%! -10!; Spain 1.54%! –!; Portugal 2.61% -2; Greece 8.75% -8 vs 8.87% vs 9.20% vs 9.84% vs 10.19% vs 10.29% – look at the last 21 days range: 7.03% to 10.29%!!! 10/16’s close was 8.54%! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.24%! -1.

Dollar: slightly weaker overnight but after rallying Monday: Euro: traded down to $1.1738 taking out the 6/2010 low ($1.1754), now $1.1821; Sterling $1.5257, off weakest since 8/13: $1.5035; Yen trying to get lift, now 116.44 -.56 – taking out the failed rally on 1/7 to 118.06 – it has been weak since peaking on 8/14: 105!

Commodities: Gold opened slightly lower then turned around. Now $1240.70 +$6.30 following yesterday’s rally high of $1244.50, with res at $1256.20, the 10/21 high Silver slightly lower but with a session high of $17.10 and is now $16.97 -.19. Crude is at $45.78 -.12 in an ‘inside session’, following yesterday’s new low of $44.20! MAJOR support is $32.40-.70, the 12/19/08 and 1/20/09 lows and THAT was during the financial crisis!

Tuesday’s Market Summary:

Yesterday, TB mentioned John Mauldin’s statement that we ‘remain in a secular bear market.’ Huh? You say, markets are coming off record highs…yes, but…and this is the point TB has tried to make: he is NOT a perma-bear! Suggest you Google the topic and see that it began in March 2000, and the average length of a secular bear is 17 years! It is market by rallies but to slight new highs, and thus vulnerable…yet we have been ‘seduced’ by the ‘eggspurts’ who keep seeing value in stocks…yeah, right!

What a time for an options expiration!!! A lot of players caught flatfooted…or was that yesterday???

“What goes up, must go down, spinning wheels, got to go round…” – Blood, Sweat & Tears…and that folks, is EXACTLY what happened yesterday: for stocks, while bonds did the reverse! Ah, ‘tis the Tuesday before options expiration, so it had to be today or tomorrow “…which creeps on in this petty pace.”(apologies to the Bard; this from Macbeth, Act 5, Scene 5…see, TB has klass!). How else could the Dow have rocketed to 17,923 in minutes after the open, then ramp down to 17,498 over the next few hours then struggle to get back to even? If you said, ‘retail buying’ go to the back of the class an sit down! No hope for you. Conversely, bonds were strong until the updraft in stocks, the 30-year declining ¾ of a point then coming back after a few hours then they too faded into the close – except long TIPS which closed off 1-1/4! Inflation protection…who needs it!

All indices were off from 0.1%-0.5%, except Dow Utilities +0.3%!

All attributed to Crude hitting yet another 6-1/2 year low ($44.20!). Gold steeled in and closed little changed, while the Dollar continued to rally! What a day! Oh, and Wells, reports tomorrow, PNC, M&T Bank, and Comerica on the 16th, then next week, following MLK Day, the rest: Regions on the 20th, USB, Fifth Third on the 21st – at least it won’t be boring!

Total NYSE Volume was higher but due to volatility, not momentum at a high 4.1B shares vs 3.45B 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 876M shares – 2nd highest ytd – vs 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 735M shares! Since yearend the average is 791M shares, and 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/Declines were slightly negative for a 3rd session: NYSE: -1.1x vs -1.7x vs -1.7x vs +3.3x vs +3.2x; Nasdaq –1.1x vs -1.6x vs -1.9x vs +2.9x vs +2.1x; Breadth was worse: NYSE -1.8x vs -2.2x vs -2.4x vs +5x!!! vs +2.8x; Nasdaq -1.6x vs -1.4x vs -1.7x vs +4.4x!!! vs +2.5x. New 52 Week Highs rose to a strong 350 (note these are HIGHS, not CLOSES!) vs 286 vs 178 vs 342 vs 283 – their range for the last 12 mos. is 39-612!!! New Lows were halved to 157 vs 286 vs 118 vs 78 vs 158 (12/16’s high was 712!!!) The 12-month range is 24-1043!!! S&P VIX declined to 17.65 on the early run-up the soared to 21.58 before closing at a very bearish 20.56 +0.96 AND creating a negative key reversal for stocks! 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 started out strong, then got whipped as stocks rallied then came back to near even at the close BUT with the 10-year setting another new low, and 30-year right at its low for a 2nd day. The score is now NINE rally days in the last 13 resulting in new 12-month low yields (10’s 1.90%; 30’s 2.50% and long TIP 0.66%!!!). Closes: 10’s 1.90%! +1/32; 30’s 2.50% -1/8; long TIP 0.73% -1-1/4-who needs an inflation hedge?

Gold traded up to $1244.50, again highest since 10/22, but closed little changed at $1234.40 -$1.60. Jan. 12 was the highest close since 10/21!!! and this is the 7th straight session without a print below $1200! It is the antithesis of Crude! Major support at the 40/50 day! $1251 is next resistance, then $1256, the 10/21/14 high and 200 day m/a! 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 $1201, and the 50 day $1193, with major res at the 200 day $1255 – 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 8th time in 9 sessions hit another nearly 6-year new low of $44.20, lowest since 3/09. It closed at $45.89 -.18 and a new low close. 12 days ago the high was $58.91 Consider: 10/25’s high was $84.83. There have now been 63!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13, and if off 57% since then! The record high of $147.27 was on 9/30/08. Recent rally high and close are $110.70 and $110.53 respectively. RES at the 40 day ($60.90!!!), then the 50 day ($64.29!!!), and lastly the 200 day ($89.44) – all declining faster than the price at the pump! The recent range is now $44.20-$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

Good day and good luck…you may need it!

TB

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: