1/23/15…Draghi giveth and taketh away…a quandry!

TB’s Wine Quote of the Day: “I am certainly glad you know your wine. Most of the guests who stay here wouldn’t know the difference between a Bordeaux and a Claret. – ‘Basil Fawlty’

Bloomberg Quote of the Day: “Hope is being able to see that there is light despite all of the darkness.” – Desmond Tutu – great advice from a great man in a ‘half-empty’ world. TB

Overnight Global Markets:

Global equity markets surprisingly rallying given dollar and bond strength (have left longer changes in markets that have been most volatile: UK +0.2% vs 0.3% vs +0.7% vs +0.5% vs -0.1%; France +1.7%! vs +0.7% vs +1.4% vs +0.5% vs +0.3% vs +1.1% vs -1.5%! vs +1% vs +1%; Germany +1.9%!!! vs +0.4% vs +0.3% vs +0.7% vs -0.1% vs +1.1% vs -1.4%! vs +0.9% vs +1.2%; Japan +1.1% vs +0.3% vs +2.1%!!! vs +0.9% vs -1.4% vs +1.9% vs -1.7%; Hang Seng +1.3% vs +0.7% vs +1.9%!!! vs +0.9% vs –1.5% vs -1% vs +1%; Korea +0.8% vs flat vs +0.2% vs +0.8% vs +0.8% vs -1.4%!; India +0.9% vs +0.4% vs +1.9%!!! vs +0.5% vs 0.2% vs +2.7%!!! U.S. equity futures slightly weaker but off lows: DOW -22 (range 80!); SPX –4.90 (11); NDQ -8.75 (12). U.S. market opening WEAK, led by yesterday’s winner, Transports: Dow -47; Trans -125!; SPX -6; Comp -3; NDQ 100 -5; Russell 2000 -1.25; Dow Utilities +3.75. !?!

Global Money Markets: Libor: 0.257% 3 mos.; 0.359%; 6 mos. – still hovering near their recent record lows! The Fed Funds rate has averaged 0.09% and is 0.12-0.14% currently still at the 9-month high. T-Bills: 0.01%, 1 mo; 0.02%, 3 mos; 0.07% 6 mos.; 0.16% 1-yr. – back from 0.25% – the 12-month high, like watching paint dry!

U.S. Treasury Bonds: rallying yet again overnight following yesterday’s surprise reversal. Long end is STRONG: 10’s 1.83% +3/4; 30’s 2.39% +1 point; Long TIP: 0.62%! +1-5/16!

European Bonds: Yields PLUNGING to new lows across the board led by Greece/Portugal: Germany 0.37%!!! -7! UK 1.49% -3 (low is 1.46%); France 0.54%!!! -8! Italy 1.52%! -3; Spain 1.34%! -5; Portugal 2.40%!!! -15!!!; Greece 8.21% -36!!! – recent range: 7.03% to 10.29%!!! – cycle low: 5.42%; Crisis high: 12.57%. Japan: 0.22%!!! -8! – just above the a HUGE new low of 0.19%, set 1/19!

Dollar Index roaring again with a new high overnight at 95.481!!! highest since 9/30/03! Currently 94.817 +.74. Euro: plunged to 1.1115 now 1.1221 -.0400; and that is WEAK!!! At an 11-year low!!! Sterling also diving to $1.4952 and barely a nudge to $1.4986,and just above it now with a double bottom at $1.48 from 3/29-31/2013! Yen consolidating at 117.88 +.18, 1/15’s 115.86 was best since 12/17/14’s 115.57 – weak since peak Oct. ‘14: 105.23; recent best 2/4/14 @ 100.76!!! Record: 12/30/11: 75.35!!!

Commodities: Gold slightly weaker after closing at $1300.70, for the first time since 8/15! Currently $1296.00 -$4.70. Res/Sup remains at $1300-02, then $1296.40, the 8/28/14 high! Silver back up at $18.30 following Weds. High of $18.55 right at the 200 day! Crude continues to struggle and is now $45.85 -.46, just off session low of $45.35, with res at $51.27, the 1/15 high from last Thursday’s failed attempt to breakout. Note 1/13’s low was $44.20, lowest since 4/21/09!!! $32.40-.70 is the 12/19/08 and 1/20/09 low is final support! THAT had BETTER hold!

Thursday’s Market Summary:

DOLLAR ROARING OVERNIGHT…take that Draghi! It ain’t gonna work!

Surprise, surprise, as Gomer would say. The shocking news that Draghi engaged in a massive stimulus plan for the EU, not to get it out of recession although that is one reason, but to ‘attempt’ to keep it from DEFLATION, drove the markets higher…or did it? Perhaps it only caused the shorts to panic. Whatever happened to ‘buy the rumor, sell the news’ as this wasn’t even rumored, it was discussed with the only missing element being ‘when’? Volume was strong, as were A/D’s and Breadth, new highs not so much, while the S&P VIX plunged to 16.45 and STILL remains in bear country! Whew!

Nevertheless (three little words that become significant when put together), stocks rallied, but from where? The brink? At the opening where some indices were up, some down, and Dow Transports surged, closing up 2.9% for honors! Once again all the indices were up from 1.5% to 1.9% (isn’t that a sign of broad shortcovering?), except Dow Utilities, the ‘powerhouse’ lost 0.5%, but at +4.5% ytd, it has now competition for the ‘gold’. Despite its rally yesterday, Transports are FLAT ytd. Note that the REIT sector is up 7.9%! Philly Gold/Silver? UP 17.9%!!! Wow!

As for the banks, BAC topped out yesterday right at its 200 day moving average (I love my Bloomberg): $16.19! I then closed just below at $16.09. What a golden opportunity to see whether the ‘euphoria’ from the Draghi announcement (which, by the way has been talked about for some time…buy the rumor, sell the news?). C and JPM, couldn’t even get close to the 200 day, nor could BBT where all three m/a’s are ‘locked’ well above it. WFC led the procession by a couple of days and yesterday’s high and close was right at the merged 40/50 day ($53.77)! USB was right behind. PNC got close to the 40/50 day, while ‘faux’ bank, GS, didn’t even clos a ‘gap’ and a double bottom at just below $184, settling at $182, just off its high. So what, you say? Because today, or next week could determine whether this is just a ‘dead cat bounce’ or Memorex.

Total NYSE Volume climbed to 4.1B in the confusion over Draghi’s stimulus move vs 3.64B shares vs 3.9B vs 4B vs 4.18B vs 4.37B – 12/24’s 12-month low was 1.4B shares. Shares traded on the NYSE floor surged to 890M (692M at the bell!) from a near average 771M (with 130M at the closing bell, 2nd lowest of ’15) vs 861M vs 976M shares – the ‘15 high – vs 879M vs 929M. 12/24’s 349M was the 12-month low…average is 740M shares! Since 1/5 the average is 849M shares – still heavily waited to the downside. The average for Dec. peaked at 979M shares on Dec. 22nd and has been declining steadily.

Advance/Declines were strong on the NYSE for only the 3rd time in 8 sessions, Nasdaq was less so. NYSE: +3.5x! vs +1.7x vs -1.6x vs +4.4x! vs -1.9x ; Nasdaq +2.7x vs -1.4x vs -1.5x vs +3x! vs -3.5x!!! Breadth was better on both: NYSE +4.2x!!! vs +2.8x vs -1.5x vs +6.9x!!! vs -2.3x; Nasdaq +3.7x!!! vs +1.3x vs 1:1? vs +3.3x! vs -4.9x!!!. New 52 Week Highs climbed back to 259 vs 200 vs 327 vs 323 vs 260 vs 211 vs 350 – their range for the last 12 mos. is 39-612!!! New Lows declined again to 122 vs 177 vs 237 vs 216 vs 282 vs 386 (12/16’s high was 712!!!) The 12-month range is 24-1043!!! S&P VIX had a range of 16.2-18.23, closing at 16.45 -2.40 –over 4 pts in 3 days and still very bearish! 23.36, Thursday’s high is highest since 12/16’s 25.20, which was second only to 10/17’s (31.06!) – highest since 11/2//11!!! Average of the past 12 months is 14.53 and now steadily climbing, with a low of 10.28!…high close was 26.25 on 10/15/14!

U.S. Bond Market closed mixed with short end and 10’s lower: (10’s 1.88% -1/64 (1.72% low yield); 30’s 2.44% -7/16 (2.36%); Long TIP 0.67% +1-5/16 (0.57%). The score is now 12 rally days in the last 19.

Gold had a slightly higher high of $1307.80 in a slightly outside session, highest since 8/19/14! – and closed at $1307.00 +$13.30. Support is now $1300-02, followed by the 200 day ($1255) easily. Next resistance #1312.80, the 8/19/14 high! 11/7’s low, $1130.40 is the current 12-month low! This is the first close above $1300 since 8/15. 7/17’s session high was $1346.60, highest since March 19th!!! MAJOR SUP at the 200 day $1255, then the 40 day $1214, followed by the 50 day at $1207. The 12-month high is $1392.60 on 3/17/14, highest high since 9/4/13. Silver, Ran up to $18.49 – creating a double top with Wednesday’s $18.50 – just below the 200 day ($18.54) – and closed at $18.36 +.16. Is this the long awaited breakout? $14.12 is the recent low (12/1/14), not seen in more than five years!

Crude, which hit $51.27 last Thursday, highest since 1/5, had a narrow range ‘negative’ key reversal, before closing at $46.31 -$1.47- ouch! – fifth straight, and most significant direction reversal without going anywhere! The pain trade is still not over as $50-52 remains formidable resistance. Tuesday’s low was $44.20, lowest since 3/09. 12/17’s high was $58.98 Consider: 10/25/14’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 57% since then! The record high of $147.27 was on 9/30/08. RES at the 40 day ($56.66!!!), then the 50 day ($60.52!!!), and lastly the 200 day ($87.84) – be careful as the averages continue to fall so fast that they could become support soon, precipitating a rally! The range is $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? $43.83, or else…that is the June 2009 low if that fails, a test of that $32.40 low…by the way the decline from the 9/20/08 high to the low took EXACTLY 6 months – we are now in the 8th month of decline!!!

Have a great day…then get out of here and enjoy a football free weekend!

TB

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