1/15/15…what goes up (overnight), sometimes PLUNGES!!!

 TB’s Wine Quote of the Day: “What wine goes with Captain Crunch?” the late George Carlin, and a neighbor when he was starting out. What TB wants to know though is: red or white? Rose???

Bloomberg Quote of the Day: “If music be the food of love, play on.” – Shakespeare…and wine?

In honor of Martin Luther King’s birthday today (although we celebrate it on Monday of course so we get a three day weekend, like poor Washington and Lincoln who have to share, here is a quote of his: “We must accept finite disappointment, but we must never lose infinite hope.” Sorry, Al Sharpton but you are no Martin Luther King…not even close!

Overnight Global Markets:

European equity markets swinging back to rally…but still not recovering from Wednesday’s losses: due to options expiration TOMORROW? Position squaring most likely; check out India – Unexpected rate cut o/n!!! FTSE: UK +0.6% (still the weakest link) vs -2.8%!!! vs +0.3% vs +0.1% vs -0.7% vs +1.2% vs -0.3% vs -1.5%; France +1.1% vs -1.5%! vs +1% vs +1% vs -0.7% vs +1.2% vs +0.4% vs -2.6%; Germany +1.1% vs -1.4%! vs +0.9% vs +1.2% vs -0.6% +1.2% vs +0.9% vs -2.3%; Japan +1.9% vs -1.7%! vs -0.6% vs closed +0.2% vs FLAT vs -3%!!! Hang Seng +1% vs -0.4% vs +0.8% vs +0.5% vs +0.4%; Korea unched vs -0.2% vs -0.3% vs -0.2% vs -0.2% vs +1/1%; India +2.7%!!! vs -0.3% vs 0.6% vs +0.5% vs -0.3% vs -3%!!! vs -0.2% vs +1.4%! U.S. equity futures NOT participating and reversed and more after gapping up sharply then retraced in short order, negating the gap and worse: DOW -7 (range 434!!!); SPX -2.60 (40!); NDQ -10 (90!!!). Today won’t be boring…stand down!

Global Money Markets: Libor: 0.253% 3 mos.; 0.358% 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%, 1 mo.; 0.03%, 3 mos; 0.07% 6 mos.; 0.15% 1-yr. back from 0.25% – the 12-month high, set on 12/22/14!

U.S. Treasury Bonds: STRONG and more new low yields…even TIPS are at their lows! O/n hifha: 10’s 1.74%!!! +9/16; 30’s 2.39% +1-5/8; Long TIP: 0.62%!!! +1-5/16. All are backing away but still solid gains.

European Bonds: mostly little changed and mixed, but near new 12-month lows; Greece with another SHARP decline in yield: Germany 0.48% (0.44% low yesterday) -1; UK 1.52% +1; France 0.67% +2; Italy 1.71% -1; Spain 1.56% +2; Portugal 2.61% -2; Greece 8.52%!!! -16!!! vs 8.75% vs 8.87% vs 9.20% vs 9.84% vs 10.19% vs 10.29% – look at the last 22 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% –.

Dollar Index: slightly weaker overnight but remains strong, but look at majors: Euro: traded down to $1.1667 a 9-year low o/n!, now $1.1689; Sterling $1.5234, series of higher highs and higher lows since Jan.8 ($1.5035), weakest since July.’13: $1.4833; Yen slowly getting stronger, currently 116.69 -.08 – yesterday’s best print: 116.07 – it has been weak since Oct. ‘14: 105.23…best was 2/4/14 @ 100.76!!! Oct. ’11: 75.35!!!

Commodities: Gold opened strong o/n quickly surging to $1261.10, and is currently $1251.20 +$16.70!!! Very low cost to owning it now compared to bond yields!slightly lower then turned around. Currently $1251.60 +$17.10 which took out res at $1256.20 AND the 200 day m/a!!!; next res:$1298-$1300, from Aug.’14! Silver also strong again with o/n high of $17.24, just below 12/18’s 17.36 print…above that is $17.83, the 10/15/14 high! Currently $17.10 +.11. Crude is at $48.87 +-.39 with a high of $49.59, following yesterday’s ‘power burst’ – is it sustainable? Dunno…next res is just above at $50!…then $58.98…can it happen? Yes! Will it? Doubtful. Note Tuesday’s low was $44.20, lowest since 4/21/09!!! $32.40-.70 is the 12/19/08 and 1/20/09 lows and THAT was during the financial crisis!

Wednesday’s Market Summary:

(Be sure to look at o/n U.S. Equity futures above…definitely an ‘E’ ticket ride!!!)

Yesterday? It was…in a word: UGLY!!! Especially for bank/broker stocks, which all broke or had broken the 200 day m/a – except Citi…but it is the weakest of the bunch anyway – Just another $3 will do the trick! Since 12/31, the major bank stocks are off from 6.5% (WFC) to 11.9% (BofA)…warned you about banks that don’t pay dividends!

Among the major indices, once again only Dow Utilities ended the session positively, +1.1%! Next best was the Russell 2000 -0.3%, followed by the two Nasdaq’s -0.5% the pair, S&P 500 -0.6%, Dow Transports -0.9%!, with the goat being the Dow 30 -1.1%. So far in 2015, only Utilities (+2%) are in the green, while the rest are all off at least 2%!!! NYSE Financials are down 4.4%! Nasdaq Banks are down 7.6% and KBW Banks (the bigger ones! (-9%!!! – in just NINE sessions??? Philly Gold/Silver is up 6.5%, REITS +5.8%; Biotech+3.9%, and Healthcare is the only other one +2.1%. How do you feel about conserving energy? Not so good if you own TSLA which peaked at $291.42 on 9/4/14, and has steadily come down steadily along with oil prices. It gapped down today to $185, before recovering to close at $192.69 – a 33% loss from the high but if you followed the charts and though about gas prices, should have been obvious. The whammy for Tesla owners is the cost of the new battery. Did you know that the battery replacement cost for the Tesla- S Model is $30,000 – no, not a typo…on a $50,000 car??? That’s a lot of gas…especially at $1.80 a gallon!

You have to love this: in his conference call yesterday, Jamie Dimon warned of $990 million in reserve for legal fees this year…when does it stop, Jamie? …and when do you stop getting more compensation? Enough is enough! More headlines o/n:

Citi Q4 profit misses Estimaes After Year-End Drop in Trading…that explains it – NOT!

BofA Q4 Profit Drops 11% as Fixed-Income Trading Revenue Falls – make sense? -NOT!

BofA’s Head of Futures, Option Unit Said to Resign – make sense? Oh yeah!

JPMorgan Falls Most in Three Months on Trading, Legal Costs – mostly legal, right?

Wells Fargo Expenses Rise to Highest in 2 Years, Crimping Profit – billed best of litter but those strong prior earnings were do to to factors: loan loss reserve recapture – now Kaput AND expense reduction…what now, Mr. Stumpf? Like others, no loan growth!

Total NYSE Volume was slightly higher again due to volatility, not momentum at a high 4.37B shares vs 4.1B 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 climbed to 929M replacing Tuesday’s 876M shares as 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 1/5 the average is 841M shares! Even higher than for the first week of 2015: 829M – both mostly to the downside. The average for Dec. peaked at 979M shares on Dec. 22nd and has declined steadily.

Advance/Declines were negative for a 4th session! NYSE: -1.5x vs -1.1x vs -1.7x vs -1.7x vs +3.3x vs +3.2x; Nasdaq –1.7x vs -1.1x vs -1.6x vs -1.9x vs +2.9x; Breadth was worse: NYSE -2.1x vs -1.8x vs -2.2x vs -2.4x vs +5x!!! Nasdaq -2x vs -1.6x vs -1.4x vs -1.7x vs +4.4x!!! New 52 Week Highs plunged back to 211 from a strong 350 (note these are HIGHS, not CLOSES!) vs 286 vs 178 vs 342 – their range for the last 12 mos. is 39-612!!! New Lows more than doubled to 386 vs 157 vs 286 vs 118 vs 78 (12/16’s high was 712!!!) The 12-month range is 24-1043!!! S&P VIX had a range of 21.32-23.34, a new recent high following a negative key reversal for stocks! Today’s high was highest since 12/16’s high of 25.20, which was also highest since 10/17(31.06!) and that was the highest since 11/2//11!!! Options expiration on Friday could be a very bumpy ride…especially with a three day weekend! 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 and with more new 12-month low yields except long TIP: (10’s 1.85%; 30’s 2.47% and long TIP 0.66%!!!). The score is now TEN rally days in the last 14. Closes: 10’s 1.85% +7/16; 30’s 2.47% +3/4; long TIP 0.068% +1-3/8 – an inflation hedge ain’t what it used to be, or is it there is NO fear of inflation?

Gold traded up to $1244.60 – 10 cents higher than Tuesday and still highest since 10/22, but closed flat at $1230.50 +0.10 in a slight ‘outside’ session. Jan. 12 was the highest close since $1251 on 10/21!!! This is the 7th straight session without a print below $1200! It remains the antithesis of Crude! $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 since 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! MAJOR SUP at the 40 day $1202, and the 50 day $1194, 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 $16.85 – with a session high of $17.10. 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 only the 2nd time in 10 sessions didn’t hit another nearly 6-year new low. Tuesday’s low was $44.20, lowest since 3/09. It closed at $48.48 +$2.59, a day after a new low close. 12/17’s high was $58.98 Consider: 10/25’s high was $84.83. There have been 63!!! handles since peaking at $107.73 on June 13th, highest since 9/19/13, and if is off 55% 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 ($60.20!!!), then the 50 day ($63.63!!!), and lastly the 200 day ($89.17) – all declining faster than the price at the pump! The 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: check out TB’s new wine blog: traderbillonwine.com

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

TB

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