On a quick personal note... I'm not sure how many of you live in Florida, but apparently my health care provider, B_C_B_S has cancelled 80% of all of their Florida policies this week, some 300,000 so far apparently because the policies don't meet the minimum O-Care criteria...apparently. I'm not sure if mine has been cancelled as I have not received a letter, however it just makes me think more acutely about how screwed up this entire O-Care mess is. I do believe we were told if "We like our current insurer, we can stay with them", I've been with mine over 10 years and intend on staying with them, however if I were cancelled right now, because O-Care's "No pre-existing condition denials" is not yet in effect, I'd basically be without insurance until O-Care came online if that ever happens as I see there are 4 lawsuits regarding a legal glitch in the law, you must buy insurance... "through an exchange established by the state.", but 36 states have decided against opening exchanges for now. LA Times has the complete story, it looks like the biggest threat to the system yet.
In any case, this would be more than a slight inconvenience for me, I think about the hundreds of thousands of employees that have already been effected and whether this law succeeds or fails, the damage in many cases is already irrevocably done. I'll leave it at that for the time as my personal feelings aren't pertinent to anything we do, but I do think this will be an economic issue much larger than it already is not to mention a founding document that seems to be less and less relevant every year, it starts with a "C".
OK, a quick look back at last week...
Gold had its best 2 week run in nearly 2 years, again I think there's mounting evidence for a sub-intermediate, perhaps intermediate and maybe even a primary uptrend in gold. This is not as an easy of a trend call to make as 2011 because the "would-be" base is not the same size (perhaps it will be though).
Meanwhile, Dr. Copper saw a -1% decline and Crude saw a -3% decline on the week, obviously this was not the week for bullish growth prospects.
Other than a few standout headline earnings, they were generally weak. I have some interesting information about the most important part of earnings, "Guidance" and the number of companies raising versus lowering guidance has been on a negative trend since Q3 of 2011, however it is now just a hair away from hitting new lows since we entered this uptrend in 2009.
In addition, US Macro vs the SPX doesn't look good.
And I thought this quote was a nice segue to the next chart, especially toward the bottom...
That brings us to NYSE Outstanding Margin Debt
Some more evidence from Rydex with regard to risk taking and some commentary below...
I'd say the ship is lop-sided and when the ship is lopsided it doesn't tend to stay that way too long, the market is a zero sum (for lack of a better word) "game", for one to make money one has to lose money. It's pretty hard for everyone to make money trading in the same direction, Wall St. usually settles that as it's really a feast or perhaps a "slaughter" would be a better term.
And where is the money coming from to chase these "Risky Assets"? This is the Rydex Money Market trend...
THIS WEEK SPECIFICALLY, ONCE AGAIN AS WE SAW IN JUNK CREDIT AND SIGNS IN HYG, CREDIT IS NOT BUYING THE EXUBERANCE EQUITIES ARE.
Since there are so many metrics around lately showing how this market is at a bubble, over-inflated, blow-off, I thought I'd post Warren Buffet's Indication of a Bubble, US Stock Market Total Capitalization vs. Gross National Product, which is currently at 110% which the the highest level since the NASDAQ's 2000 top.
More specifically Friday my gut feel was Monday would likely look something like Thursday and Friday which I termed as "Noise within the trend" which is still lateral with the SPX showing a daily candle very close to a bearish reversal Hanging Man and right in the range of resistance from 10/22. The Russell 2000 is nearly identical except the close was lower than the open; and the NDX is very similar to the Russell 2000, none are textbook Hanging Man, but again the point is not to memorize a textbook illustration, it is to understand the premise that each candle stands for.
Price/Volume Relationships were all over the place, there was no Dominant theme, except Volume Down was present in 4 of the 5 major averages, the close was mixed (these are the component stocks of each major average, not the average itself)
The SKEW Index remains elevated at 135, about the same as the previous two days.
The VIX was VERY clearly used to "Bang the close on Friday (HYG and TLT did NOT cooperate), the Spit VIX fell off at 3:30 along with VIX futures and VXX of course.
Sentiment indicators were mixed, 1 in line, the other moving opposite the SPX which I don't find surprising given expectations, where the market is and the recent range bound activity.
Yields as a leading indicator were negative Friday and overall since the 10/9 trend are very negative.
I also noted High Yield Credit refused to follow the "Bang the Close and instead went the opposite direction rather than staying put.
The EUR/JPY was once again dominant in guiding the market Friday, I did show a chart of the pair vs the SPX falling off a bit in to the afternoon, however it opened with a bang tonight obviously helping overnight futures at least for the time being.
Finally of note last week was the F_E_D's warning regarding "Lax leveraged loan underwriting", in a round-a-bout and not so obvious way, whether the F_E_D tapers or not, "Bubble" concerns are obviously growing which I think have been there since the 4th quarter of last year.
As for Treasuries, I'm still hopeful TLT pulls back to the $100-$102 area where I'd like to establish a long term core position (long).
You may recall I opened a long TBT (2x UltraShort 20+ year treasuries) as I think a near term TLT pullback is probable.
The 1-day 30 year treasury and even 10 year Treasury futures look to have based and look set to make a move higher soon, this is a daily chart of each.
I think gold is another longer term long play, personally I'd wait for a pullback before entering a new position or adding, but it looks like it may be good at least for an intermediate trend which can last 6 months or so.
I'll have PCLN, GOOG and perhaps AAPL updates in the a.m., I'm seeing interesting activity, especially in PCLN and really GOOG as well.
As for tonight, the EUR/JPY opened higher so it was no surprise to se Index futures open higher. There are 1 min negatives through all Index futures, but that's short term overnight jiggles, the more important 5 min chart is negative as well, but as I said Friday, the continued character of Thursday and Friday in to Monday would be my expectation as well as the fact the rounding area is larger so we lost the head fake move as it was absorbed in to the larger area which prompted me to question whether we'd see a new head fake move on the upside just because they are so common, about 80% of all reversal on just about any timeframe display this behavior which happens to be an excellent reversal timing marker.
I believe the Tuesday PBOC (we'll know early Tuesday morning or Monday in the early a.m. hours) liquidity injection will be a defining event for Tuesday as they have skipped 3 consecutive injections, with Norway and Sweden just deciding to place rates as is and Canada taking a slightly more dovish tone, I would not be surprised to see the PBoC fail to inject for the 4th consecutive time and the market is clearly worried about that.
FINALLY.... we have the F_O_M_C meeting on Tuesday with the policy statement Wednesday at 2 p.m. AS ALWAYS, DON'T FORGET ABOUT THE F_O_M_C KNEE JERK REACTION.
I have no idea what the F_O_M_C will do, there are all kinds of predictions from "Nothing" to increasing Treasury purchases by $15 billion a month, my prediction is that they will raise rates last week... If that makes no sense, it's suppose to, I think it's just about as useful as all of these F_E_D predictions flying around.
It's also a faurly heavy Eco-data week, mostly front loaded with Industrial Production and Pending Home Sales tomorrow morning (9:15 and 10 a.m. respectively), we have the PPI and Retail sales pre-market on Tuesday and Business Inventories and Consumer Confidence at 10 a.m., that should keep us busy right in to the F_O_M_C on Wednesday.
I'll check the futures in the a.m. as there's not much to say right now except the Nikkei is catching a bid as I type.
HAVE A GREAT WEEK, STAY PATIENT, ON WEDNESDAY STAY CALM, these F_O_M_C knee-jerk reactions are emotionally moving, but have a high rate of failure which ever way they initially knee-jerk.
Look for the PCLN and GOOG analysis as well as AAPL too tomorrow a.m.
