Market Wrap January 27, 2012

Dow Industrials 12660.46 -74.17 -0.58% S&P 500 1316.32 -2.11 -0.16% Nasdaq Comp. 2816.55 +11.27 +0.40% Russell 2000 798.85 +5.94 +0.75%

NYSE Comp. 7876.60 -7.30 -0.09% Nasdaq 100 2461.77 +7.14 +0.29% Dow Transports 5344.78 +41.93 +0.79% Dow Utilities 447.97 -6.07 -1.34%

View Major Index charts

Internals were positive, but volume was abysmal. Advances/declines were near 12 to 7 on both exchanges, with up/down volume just better than flat on the NYSE and 11 to 8 on the Nasdaq. New highs/lows were 178/9 on the NYSE and 75/11 on the Nasdaq.

Leaders — HMOs (+2.31%), Airlines (+2.08%), Hospitals (+1.93%), Disk Drives (+1.78%), Gold/Silver (+1.38%), Metals (+1.35%), Oil Services (+1.26%), Chemicals (+1.09%)
Laggards — Utilities (-1.29%), Oil (-0.73%), Paper (-0.63%), Drugs (-0.63%), Defense (-0.49%), Insurance (-0.29%), Telecoms (-0.03%), Health Care Products (-0.01%)

An extensive visual representation of the day’s winners and losers can be found at Finviz.com.

Treasury Yields — 6-Month : 0.08 %,  2-Year : 0.21 %,  5-Year : 0.75 %,  10-Year : 1.89 %,  30-Year : 3.06 %

Energy Prices — Crude oil: $99.66/barrel,  Gasoline: $2.93/gallon,  Natural Gas: $2.69/mmBTU

US Dollar Index — 78.873

Precious Metals — Gold: $1737.80/ounce,  Silver: $33.95/ounce,  Platinum: $1618.00/ounce

BMB Note:  
I think Larry McMillan did a good job of ‘market wrap’ today in his Option Strategist Weekly Updater:

There have only been four down days in January, and as a result the market is very overbought. The intermediate-term indicators are mostly still positive at this time, although there is one glaring exception — a new sell signal (just registered today) from the standard equity-only put-call ratio.

Other intermediate-term indicators remain positive, though. For example, $SPX is still clearly in an uptrend. However, if the 1260 level were breached, that would be much more bearish.

Breadth indicators remain on buy signals. $VIX remains in a steady downtrend, which is also bullish.

In summary, a short-term correction should begin almost immediately. But the intermediate-term bullish trend should be able to reassert itself.

Correction? What’s that?

Air Pockets January 27, 2012

John Hussman:

We know from historical experience that overvalued, overbought, overbullish syndromes have a tendency to produce an extended period of small incremental advances and marginal new highs, often followed abruptly by “air pockets” where the market can give up weeks or months of gains in a handful of sessions. As noted above, we don’t have latitude here for bullish positions, but provided more benign data, we expect to modestly soften our hedges in order to reduce our vulnerability during periodic (if short-lived) waves of “risk-on” speculation.

While in your seat, please keep your seatbelt firmly fastened.

Market Wrap January 26, 2012

Dow Industrials 12734.63 -22.33 -0.18% S&P 500 1318.45 -7.61 -0.57% Nasdaq Comp. 2805.28 -13.03 -0.46% Russell 2000 792.91 -2.67 -0.34%

NYSE Comp. 7883.90 -30.91 -0.39% Nasdaq 100 2454.63 -11.03 -0.45% Dow Transports 5302.85 +20.85 +0.39% Dow Utilities 454.04 +0.55 +0.12%

View Major Index charts

Internals were negative, with volume slightly heavier. Advances/declines were just below flat on the NYSE and 4 to 5 on the Nasdaq, with up/down volume 1 to 2 on both exchanges. New highs/lows were 233/6 on the NYSE and 100/14 on the Nasdaq.

Leaders — Airlines (+1.98%), Transport (+1.64%), Gold/Silver (+1.13%), REITs (+0.57%), Insurance (+0.32%), Utilities (+0.24%), Drugs (-0.00%), Paper (-0.07%)
Laggards — Disk Drives (-3.33%), Natural Gas (-2.43%), Broker Dealers (-2.35%), Banks (-2.23%), Oil (-1.61%), HMOs (-1.50%), Homebuilders (-1.40%), Telecoms (-1.36%)

An extensive visual representation of the day’s winners and losers can be found at Finviz.com.

Treasury Yields — 6-Month : 0.07 %,  2-Year : 0.21 %,  5-Year : 0.77 %,  10-Year : 1.94 %,  30-Year : 3.09 %

Energy Prices — Crude oil: $99.87/barrel,  Gasoline: $2.85/gallon,  Natural Gas: $2.59/mmBTU

US Dollar Index — 79.433

Precious Metals — Gold: $1720.50/ounce,  Silver: $33.44/ounce,  Platinum: $1606.00/ounce

BMB Note:  
Minor reversal/pullback today — actually, I’d like to see more. And the pullback should serve as a gauge. Dave Landry:

Sooner or later the market will have to correct. And, again, the nature of the next correction will be important. If the market comes back in below its prior breakout levels (circa the January lows) then as trend followers, there’s no trend to follow. If it has a minor correction then goes back to climbing the wall of worry, then it’s all good.

A few more thoughts on yesterday’s Fed foolery:

Now that they’ve said that we’ll have low rates until the end of time, everyone just *knows* that the market will just keep going up and up on an endless supply of free money. They’re absolutely certain of it, because that’s just the way it works, right?

But it ain’t that simple. It never is. If it was, the Fed would just print non-stop and the market would never go down.

You know what they say, if everybody knows it, it probably isn’t worth knowing.

Best Measure January 26, 2012

Bruce Krasting:

The markets are the best measures of how people perceived today’s announcements from the Fed. The dollar pissed on the Fed in general, the gold market hit Bernanke square in the face with an ingot.

Crucified January 25, 2012

And Ben will keep pounding the nails until we’re all dead, dead, dead. The banks and gov’ts (indistinguishable at this point) will be all that’s left.

“Gold, Silver, $HUI React to Bernanke Pledge to Hold Rates near Zero “At Least” through Late 2014; Hello Stephanie, Ben Promises More of the Same”

Bernanke’s policy now boils down to “if it doesn’t work, we’ll keep doing it until it does”. Those on fixed incomes have been crucified by the Fed’s policies and will continue to be crucified by the Fed’s policies until low interest rates work.

—

Treasuries rallied as banks and brokers font-ran the trade.

This is all well and good for the 1% and for the banks that front-ran the bond trade, but it sure is not doing anything good for those on fixed income or most of the 99%.

As Scott Bleier said on Twitter: ‘We will soon say, “I remember when $50k bought a really nice car”…’

Market Wrap January 25, 2012

Dow Industrials 12758.85 +83.10 +0.66% S&P 500 1326.06 +11.41 +0.87% Nasdaq Comp. 2818.31 +31.67 +1.14% Russell 2000 795.57 +7.30 +0.93%

NYSE Comp. 7914.80 +74.15 +0.95% Nasdaq 100 2465.66 +31.70 +1.30% Dow Transports 5282.00 +76.46 +1.47% Dow Utilities 453.49 +7.22 +1.62%

View Major Index charts

Internals were positive, volume was better. Advances/declines were 3 to 1 on the NYSE and 2 to 1 on the Nasdaq, with up/down volume 7 to 2 on the NYSE and 14 to 5 on the Nasdaq. New highs/lows were 147/9 on the NYSE and 97/10 on the Nasdaq.

Leaders — Gold/Silver (+6.10%), Biotechs (+5.05%), Metals (+3.69%), Airlines (+2.99%), Natural Gas (+2.72%), Homebuilders (+2.33%), Commodities (+2.05%), Oil Services (+1.66%)
Laggards — Paper (-2.22%), Network (-1.35%), Broker Dealers (-0.61%), HMOs (-0.53%), Banks (+0.14%), Drugs (+0.19%), Defense (+0.25%), Insurance (+0.42%)

An extensive visual representation of the day’s winners and losers can be found at Finviz.com.

Treasury Yields — 6-Month : 0.06 %,  2-Year : 0.22 %,  5-Year : 0.80 %,  10-Year : 2.00 %,  30-Year : 3.14 %

Energy Prices — Crude oil: $99.81/barrel,  Gasoline: $2.85/gallon,  Natural Gas: $2.75/mmBTU

US Dollar Index — 79.419

Precious Metals — Gold: $1710.40/ounce,  Silver: $33.31/ounce,  Platinum: $1579.00/ounce

BMB Note:  
Not much for comments today. Proof that overbought can become more overbought. And I’d say mean, nasty, ugly, evil things about Bernanke and the Fed, but then I’d have black SUVs pulling up in front of my house.

On the Fed news, the PMs jumped, and bond yields took a dive, especially the five-year.

Then again, maybe it’s not so bad. By now, we should all be getting pretty comfortable with the whole “bubble, crash, bubble, crash, bubble, crash” routine.

Scott Bleier on Twitter:

Gotta get with the program: If the FED adds another half trillion and the ECB does the same, the DOW is going to 14k within six months. $$

It is insane nonetheless.

Why don’t then just get it over with and do a trillion each. Just print enough to retire ALL DEBT? 15 trillion for U.S.? why not

Fed Day January 25, 2012

Those of us trying to save our money are eternally screwed.

ZH says: “No QE3. ZIRP extended thru 2014. Lacker objects.”

Joe Saluzzi says: “The largest theft in history from the savers of this country continues unabated.”

Savers now — the taxpayers are next to the guillotine.

Here’s the statement.

Twilight Zone January 25, 2012

From Instapundit:

Only in the twilight zone that is Washington could a President who has bailed out and stimulated our economy to death stand in the Capitol and declare there should be ‘no bailouts, no handouts, and no cop-outs’. Can anyone spell GM or TARP or Solyndra?

The President said we deserve a government that plays by the same rules as millions of hard-working Americans. Perhaps that should begin with the government not borrowing and printing 43 cents of every dollar it spends – something hard-working Americans can’t and don’t do.

At Mish’s site: “Obama Proposes Mortgage Bailouts, Handouts, Copouts Exactly One Paragraph After Stating “Top to Bottom: No Bailouts, No Handouts, and No Copouts”; How the Taxpayer Ripoff Works”

“Let’s never forget: Millions of Americans who work hard and play by the rules every day” will be royally screwed by Obama’s proposition in the form of higher taxes down the road.

Keeping The Spirit January 25, 2012

Michael Kahn on technical analysis:

Our view is that we need to respect the spirit of any pattern and not worry too much about the letter of the law, so to speak. Opens and closes on doji candles need not be exactly the same. Island gaps reversals (abandoned babies) need not have actual gaps. Why? Because 24-hour trading, decimalization, derivatives, etc… have changed the landscape and what constitutes an open and a close is now a very fuzzy proposition.

The financial markets are radically different than they were last century, last decade and even last year. The spirit of the tools still works because humans do the same old dumb (and occasionally) smart things over and over. It is the actual rules of the analysis that are questionable so keep it simple and you should be fine.

Playing Along January 24, 2012

Scott Bleier – “Second Verse Same as the First”:

Like clockwork, over the past several years since the 2008 crash, this time of the year brings about a raucous markup of highly liquid financial-related assets. And like clockwork, during this same time-frame, the estimated prices of homes drops between 6-12%. Last year, in 2011, we were square in the middle of a fabulous QE stimulus where seven billion dollars a day was funnelled into the closed loop of the financial system in order to aid prices. This year, in 2012, we have Operation Twist which was not nearly as strong as last years stimulus. But the rally was birthed around the world simultaneously and on the day of the technical breakdown, October 4, and it has not stopped as of this date. Yet, most everyone looks at the markets with a glazed eye of doubt.

This goes back to our “training” as “investors”. The playbook is the same. Bad news means more stimulus and free money. Good news may mean that all the free money is working. But deep in their hearts, everyone knows whats really going on. But we all play along just the same and will continue to do so until either a “new beginning” or “the end”.