Closing Market Commentary For 03-26-2013
Markets melted up to previous highs and stopped, disgustingly on low volume. Who out there believes this isn’t manipulation buy the HFT algo computers and DaBoyz?
The party is nearly over folks, collect your personal belongings and leave your seat in the upright position. If ‘IT’ doesn’t happen this week, then it will be next week and ‘IT’ isn’t going to be pretty.
In this past weekend’s missive we showed, in rather excruciating detail in multiple charts, that complacency in the financial markets is at extremely elevated levels.
Investors behave much the same way as individuals who addicted to gambling. When they are winning they believe that their success is based on their skill. However, when they began to lose, they keep gambling thinking the next “hand” will be the one that gets them back on track.
Eventually – they leave the table broke. It is true that bull markets are more fun than bear markets. Bull markets elicit euphoria and feelings of psychological superiority. Bear markets bring fear, panic and depression.
What is interesting is that no matter how many times we continually repeat these “cycles” – as emotional human beings we always “hope” that somehow this “time will be different.” Unfortunately, it never is, and this time won’t be either.
Wealth levies and a European banking system collapsing; dismal capital goods new orders; a miss for new home sales and Richmond Fed; almost the lowest volume of the year in stocks, and Treasury bonds trading at their lowest yield since the Cyprus debacle started – a perfect recipe to try a run to all-time closing highs in the S&P 500.
The previous high close (not intraday) was 1565.17 on 10/09/07 and we missed it by less than 2 points today.
What has taken us to these new post-Cyprus highs, safety – Staples, Healthcare, and Utilities (up 1-3% since 3/15 Cyprus). Banks remain battered with C, GS, and MS all down 5-6%. Treasuries and corporate bonds reflected a considerably different perspective on risk-appetite to stocks today. While the USD largely flatlined, with JPY weakening, EURJPY (and WTI it seems) led stocks higher on dismal volume.
Gold, silver, and copper flatlined (following the USD’s lead) but the disconnect between VIX/Stocks and Bonds/Credit was extreme by the close.
VIX remains 1.5 vols higher than it was when stocks were last here and the protection bid in credit markets (and low volume in stocks) suggests equity algos simply forgot that Europe opens again in 8 hours.
The DOW at 4:00 is at 15559 up 111 or 0.77%.
The SP500 is at 1563 up 12 or 0.78%.
SPY is at 156.15 up 1.20 or 0.77%.
The $RUT is at 949.82 up 3.97 or 0.42%.
NASDAQ is at 3252 up 17 or 0.53%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been neutral to bullish and the current bias is up.
WTI oil is trading between 94.62 and 95.70 today. The session bias is neutral to bullish and is currently trading up at 95.60.
Brent crude is trading between 107.40 and 108.25 today. The session bias is neutral with a a bullish slant and is currently trading up at 108.06.
Gold fell from 1607.00 earlier to 1594.60 and is currently trading up at 1600.10.
Dr. Copper is at 3.47 up from 3.44 earlier.
The US dollar is trading between 83.14 and 82.91 and is currently trading sideways at 83.05, the bias is currently neutral to bullish.
The 500 at the close.
The DOW at the close.
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Written by Gary