Surprised? May 23, 2012

Scott Bleier – “Are You Surpised by This Action?”

Needless to say, we’re not.

We are now in the midst of giving back all of the “Europe is Saved” gains. Because, well, Europe is not saved. Frankly, there is little positive to hang your hat on except the hope for more Free Money. And that may not work either.

FACT: The reality of price is always transitory. Sometimes it pays to ignore what the market is telling you because it lies, regularly. But out of almost everyone who knew the truth of reality, only a few choose to heed its warnings. Now the market leadership, levitated by psudo-inflation, has crashed. The most gargantuan liquidity push in history has left the markets highly illiquid. Only the biggest and most defensive of issues have held up relatively well, in turn keeping the major indices close to positive for the year. These last holdouts will eventually succumb to the need for liquidity, as they always do. That will be coming soon.

Then, and only then, will the equity markets be set up for a proper washout and accumulation phase that will be infinitely more rewarding to investors.

And I think we’re a ways away from that washout.

News Flash May 23, 2012

Well, it’s not news to anyone who’s been paying attention.

More from Scott Bleier – “Let’s Get Serious for a Second”:

Here is a news flash: Markets are broken. Real liquidity is non-existent. Banks may show a profit but they are a mess. A deflationary vortex could be right around the corner. This is what the FED has been fighting all along. They say the are inflation fighters but now they are combating deflation by using the artificial inflation of financial assets to mask reality. And its been going on for almost four years now.

Maybe I’m just another End of Days jerk who will be prove to be an idiot by the Bernanke Bid after he creates another trillion or two dollars to boost asset prices. But it sure feels like the markets are going to shed double digit percent, maybe fast and maybe soon.

Maybe he’s right, and maybe not. But you should always be prepared to protect yourself. You know what they say about the bulls taking the stairs and the bears taking the elevator. Or, “they slide faster than they glide”.

Whoa May 22, 2012

“It’s worse than we thought…”

No wonder the Naz system got swamped with order cancellations Friday morning.

We haven’t heard the last of this, by far. The lawsuits are just getting started.

Market Wrap May 22, 2012

Dow Industrials 12502.81 -1.67 -0.01% S&P 500 1316.63 +0.64 +0.05% Nasdaq Comp. 2839.08 -8.13 -0.29% Russell 2000 759.63 -5.01 -0.66%

NYSE Comp. 7542.54 -0.44 -0.01% Nasdaq 100 2539.20 -6.23 -0.24% Dow Transports 5007.96 +4.85 +0.10% Dow Utilities 467.90 +2.26 +0.49%

View Major Index charts

Internals were mixed, leaning negative, with volume a bit heavier. Advances/declines were jut better than flat on the NYSE but 7 to 12 on the Nasdaq, with up/down volume just below flat on the NYSE 2 to 3 on the Nasdaq. New highs/lows were 23/47 on the NYSE and 25/75 on the Nasdaq.

Leaders — Banks (+1.13%), Homebuilders (+1.12%), Utilities (+0.59%), Software (+0.48%), REITs (+0.15%), Retailers (+0.15%), Insurance (+0.07%), Telecoms (-0.03%)
Laggards — Metals (-3.13%), Disk Drives (-2.33%), Comp. Hardware (-1.60%), Airlines (-1.38%), Gold/Silver (-1.05%), Paper (-1.03%), Semis (-0.77%), Commodities (-0.70%)

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

Treasury Yields — 6-Month : 0.14 %,  2-Year : 0.29 %,  5-Year : 0.76 %,  10-Year : 1.78 %,  30-Year : 2.87 %

Energy Prices — Crude oil: $91.44/barrel,  Gasoline: $2.93/gallon,  Natural Gas: $2.69/mmBTU

US Dollar Index — 81.688

Precious Metals — Gold: $1567.80/ounce,  Silver: $28.15/ounce,  Platinum: $1442.00/ounce

BMB Note:  
Well, it looked like they might bounce things a little higher again today, and they did – for a while. Until a late-day dive took it all away — and then bounced things back up into the close.

Facebook at 31. Ouch.

Oh well, doesn’t change our plan any. We are seeing shorts setting up, so we’re makin’ our list and checkin’ it twice, and waiting to see if we’ll be offered our entry points or not.

Don’t forget – long weekend coming up.

The Reality May 22, 2012

Scott Bleier:

There has certainly been significant corrective activity in financial markets since April 1 and more importantly since April 17. With all the myriad negative factors underway, it is no surprise. But why isn’t it worse?

Everyone knows all the problems already. And the perception is that no matter what the problem, liquidity will provide the answer. See? We all know this!

But the reality is that even with trillions in free money, markets are more illiquid than at almost any time in modern history. With daily volume running half of what it was in 2007, the lights are on but nobody is home. God forbid there would be real selling of size. We got a tiny taste of that last week, down 5%.

The day will come when the actions of central banks will be unable to save markets. I have no idea when that time comes – but every day/week that passes brings us closer to that day.

Market Wrap May 21, 2012

Dow Industrials 12504.48 +135.10 +1.09% S&P 500 1315.99 +20.77 +1.60% Nasdaq Comp. 2847.21 +68.42 +2.46% Russell 2000 764.64 +17.43 +2.33%

NYSE Comp. 7542.92 +115.17 +1.55% Nasdaq 100 2545.43 +66.90 +2.70% Dow Transports 5003.11 +129.35 +2.65% Dow Utilities 465.64 +1.48 +0.32%

View Major Index charts

Internals were positive, volume was lighter than Friday’s. Advances/declines were 6 to 1 on the NYSE and 3 to 1 on the Nasdaq, with up/down volume 4 to 1 on the NYSE and 6 to 1 on the Nasdaq. New highs/lows were 20/65 on the NYSE and 16/112 on the Nasdaq.

Leaders — Metals (+3.90%), Oil Services (+3.85%), Paper (+3.35%), Chemicals (+3.29%), Gold/Silver (+3.13%), Comp. Hardware (+3.08%), Disk Drives (+3.03%), Biotechs (+2.92%)
Laggards — Utilities (+0.05%), Drugs (+0.55%), Banks (+0.58%), Insurance (+0.60%), Telecoms (+0.97%), Health Care Products (+1.14%), Defense (+1.34%), Hospitals (+1.75%)

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

Treasury Yields — 6-Month : 0.14 %,  2-Year : 0.29 %,  5-Year : 0.74 %,  10-Year : 1.74 %,  30-Year : 2.81 %

Energy Prices — Crude oil: $92.87/barrel,  Gasoline: $2.94/gallon,  Natural Gas: $2.62/mmBTU

US Dollar Index — 80.904

Precious Metals — Gold: $1592.90/ounce,  Silver: $28.49/ounce,  Platinum: $1463.00/ounce

BMB Note:  
And so a bounce has begun. You knew we’d see one sooner or later. Whether it turns into more than that remains to be seen. We’ll be expecting to see a number of short setups as the bounce continues.

Modern Times May 21, 2012

When the bank runs are invisible…

Better to have your money in Swiss or German bank than in a Greek one, every sentient vertebrate in Greece has to understand; as a result, hundreds of billions of euros have been moving out of the Greek banking system. At one point last week, television networks were sending camera crews out onto the streets to look for panicky customers standing in line at ATMs or at bank counters; but then they realized that these days you can do it all on the net. We have entered the age of the invisible bank run and are waiting for the first virtual panic.

An invisible bank run is a hard thing to watch; not only is it less telegenic than the old-fashioned kind, one relies on numbers from official government agencies for statistics.

—

They are very unlikely to tell you the truth. Officials lie like rats in times of financial panic; they do it out of a sense of duty. They will insist that a given country will never leave the euro until the moment that it does; they will say that a deposit freeze is unthinkable until they announce that they’ve done it; they will tell you a bank is rock solid until the moment they padlock its doors. This is all for your own good, of course. They don’t want you to panic — and they want to make sure that your money is trapped when they take it away or turn it from gold into straw.

Link from Instapundit.

ChartWatchers Newsletter May 20, 2012

Yup, twice a month. Here ya go.

Thanks Fed May 20, 2012

Thanks for nothin’.

Michael Kahn:

…thank you Fed for “saving” the economy by allowing banks to base their whole business on arbitrage instead of lending. Thanks for artificially inflating the stock market so it has a long way to fall to get back to true equilibrium. And thanks for keeping saving rates so low so that savers got screwed.

Maybe Not May 20, 2012

Scott Bleier:

I believe in “The System” and that it will endure long after we’re gone. But it needs a hard reboot and that will certainly be painful. Maybe the G-8 will pony up another trillion or three. Perhaps we can invent another product or sector that can distract investors and traders. Or maybe not.