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Transparent Push To Record High

David Fry's picture





 

3-28-2013 4-20-32 PM sp high

Jobless Claims rose sharply even after upward adjustments (357K vs 340K & prior 341K revised higher from 336K). The Chicago PMI fell sharply (52.4 vs 56.1 & prior 56.8), which should distress the economic growth meme.

GDP report shows the economy almost in a dead stall (0.4% vs 0.6% expected & prior estimate 0.1%) Consumer Metrics provided an in-depth report from which we cherry-picked a summary comment as follows: 

“As we have mentioned before, 4Q-2012 may be the quarter that in retrospect will be viewed as the last gasp of the 'Great Recovery' -- before there were significant economic headwinds created by reductions in consumer take-home pay, rising gas prices and accelerating contractions in global trade.” 

Lastly, the Fed launched a large POMO Thursday providing trading desks with plenty of liquidity to ramp equities.

The takeaway from these reports is the “bad-news-is-good” mantra remains fixed on QE, which bullishly steamrolls most other news and data.

Many people don’t understand or respect this market, and for good reason, since veterans have never seen these kinds of policies previously. Emails received from old hands particularly are angry with QE/ZIRP and the bullish result thinking the entire exercise leads to phony results. This also prompted PIMCO’s CEO, Mohamed El Erian, to state Thursday, “Markets are at artificial levels because of the Fed.” The tape doesn’t lie frankly, but in the end may merely seduce and deceive. We’re with PIMCO, but our job is to follow the trend so we’re long generally.

Meanwhile, overseas in the UK, the Bank of England eased bank balance sheet capitalization issues giving “da boyz” there a pass on issues other central banks wouldn’t. Funny how that works, eh? German Retail Sales(EWG) was unexpectedly higher at 0.4% vs -0.4% consensus. In South Korea (EWY) the government is preparing a stimulus package which may include lower interest rates as economic growth is forecast to slip.  In China there is a shake-up occurring in a top economic planning agency which may lead to new pro-growth policies some believe.

As the holiday weekend starts and quarter ends, what better time is there to go out on a new S&P 500 Index high? The new high was in the cards.

One thing bulls should worry about is a report that pension plans may rebalance as much as $29-35 billion out of stocks to bonds and other assets with the quarter end. We’ll see how that works this coming week.

Thedollar (UUP) fell slightly as did gold (GLD). Commodities (DBC) were much weaker despite oil prices (USO) as grains (JJG) and base metals (DBB) took a beating. Stocks were higher across the board with high priced stocks in the DJIA(IBM, MCD, MMM, TRV, and UTX) leading the market higher. Underperforming sectors included banks (KBE), miners (XME) and gold stocks (GDX). With the stock rally bonds (TLT) sold off.

Volume on this pre-holiday ramp higher was quite light which made conditions easy for window dressing. Breadth per the WSJ was positive. 

3-28-2013 6-54-34 PM diary

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The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

 

The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.

Okay, so the S&P 500 Index set a historical record high. This seemed like a done deal when markets rallied on dreadful data early in the week.
 
So we’re long, but not liking it much since we know what the deal is as do most. But if you’re paid to make people money, that’s what you have to do even with one eye on the exit.
 
The government is releasing Consumer Sentiment and Personal Income and Spending data on Friday with equity markets closed. This doesn’t seem right but must be some PC thing.
 
Now I hope everyone likes the many charts (LOL!). I loved the comment, “Even Magellan didn’t have this many charts!” That made my day.
 
Let’s see what happens.
 


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Fri, 03/29/2013 - 10:48 | Link to Comment TacticalZen
TacticalZen's picture

Citizens understand quite well.  Check the inventory (or complete lack of inventory) of ammo and firearms at WalMart, Bass Pro, etc.  IMHO, they are not planning on legislative changes such as more restrictive gun control.  Rather, they are purchasing in advance of coming Civil War.  Pareto's law rules - 80/20.  Probably was the same from 1776-1789.

Be thankful for all of the items that are available because so many are asleep.

I'm renaming this period in history to "the great crumble".

Fri, 03/29/2013 - 10:19 | Link to Comment max2205
max2205's picture

At least zh is presenting sector coverage.  Thx td

Fri, 03/29/2013 - 00:52 | Link to Comment Mr. Saxby
Mr. Saxby's picture

"One thing bulls should worry about is a report that pension plans may rebalance as much as $29-35 billion out of stocks to bonds and other assets with the quarter end."

I wouldn't worry about any rebalancing out of equities, except, perhaps, on Joe Lunchbucket's 401(k) statement. Regardless of where Joe thinks he put his retirement funds, I expect they are firmly lodged in our current equities bubble. Fraudulent misallocation of 401(k) funds by Wall Street would be so simple to accomplish, I can't possibly see how it isn't happening, for the good of the country, of course.

Fri, 03/29/2013 - 00:16 | Link to Comment CheapBastard
CheapBastard's picture

It's almost unfathomable to believe anything in RE can be up given the massive number of people out of work  or on food stamps or ss disability and so on.

However, saying that I did go by two builders offices today. What I saw befuddled me: 20-somethings being sold $355,000 (and up) houses with only $1,000 down. The rep said not to worry. Their lender will be able to juggle the numbers so the 3% down can be wrapped into something or other....

 

I wish these kids well, esp the couple with three kids hanging on their legs....

Fri, 03/29/2013 - 00:29 | Link to Comment HD
HD's picture

That couple can immediately default and live in that house rent free for a year or two. This is sound financial planning in the new normal.

Fri, 03/29/2013 - 08:49 | Link to Comment dark pools of soros
dark pools of soros's picture

Better yet the guy say he is paying the mortgage but stashing it until they get booted, ditches her and the kids and flys off to the islands

Thu, 03/28/2013 - 23:21 | Link to Comment ebworthen
ebworthen's picture

Thanks for the charts, good stuff.

Big picture?  I see cotton candy.  A little bit of sugar syrup used with hot air and a rotating nozzle to spin a puffy confection devoid of nutrition but pleasing to the children in the moment.

Why the hell do they think 48 million people are on Food Stamps (SNAP)?  DUH!  Because we are in a recession/depression still!

Dumb fucks.

PONZI!

Fri, 03/29/2013 - 08:43 | Link to Comment dark pools of soros
dark pools of soros's picture

No - because it is a wonderful way for corporations to give mass credit to the unwashed to buy their products and stick the bill to the never ending future printing

No messy business with supporting an economy with jobs and hoping the fools show up and not blow it on drugs and booze.

Nice and neat like the free school lunch programs

Thu, 03/28/2013 - 23:04 | Link to Comment rlouis
rlouis's picture

At least everyone is complacent - until they're not. It "feels" like the global system is stressed to an extreme and being complacent expecting the Fed to keep stimulating and goosing the market, and everyone is pissed because they have to stay with it, is the perfect set up for a fall.

Fri, 03/29/2013 - 08:38 | Link to Comment dark pools of soros
dark pools of soros's picture

The cattle rounded up and making noise... But no will or balls for a stampede

Thu, 03/28/2013 - 22:25 | Link to Comment JR
JR's picture

These are the stirrings of a financial emergency.  Fed governors do not expound on changes in policy like the one below in Sanders’ column unless they are carrying a message. It’s easy to see that one aspect of the message is they are worried about a serious, substantial market correction and what it might do to the political and economic climate.

It seems to me the Fed is taking incredible chances, not just with savers but with sound money. Without some kind of anchor, investors can’t really predict anything beyond the next market day. It gets to the point where the only game is the Fed. There is something drastically wrong. This is not Keynesian. This is not central planning. This is emergency fare.

It was just a week ago that Bernanke said that employment was a major target. And now this.

Housing and the Fed: A Low Rate, Consumer Confidence, Money Multiplier and Velocity Recovery? | Confounded Interest | Anthony B. Sanders - George Mason University

Mar 28

Nick Timiraos at the Wall Street Journal wrote in interesting piece yesterday called “Home Prices Seen Making Stronger Gains in 2013.” Numerous analysts have upgraded their forecast for house price growth for 2013, primarily based on limited inventory and growing demand.

Here is an interesting take from Logan Mohtashami on housing and The Fed.

Speaking of The Fed, yesterday the Fed of Minneapolis President Narayan Kocherlakota reinforced the notion that The Fed will keep the pedal to the metal (MORE asset purchases) even if unemployment falls below 6.5%.

Bloomberg News reports that Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, in a speech he gave on Wednesday, said the Fed’s Open Market Committee “may choose not to raise the main interest rate when the jobless rate falls below 6.5 percent.” Kocherlakota said, “The unemployment rate threshold is not a trigger for FOMC action.” Bloomberg notes the FOMC “affirmed last week it will keep the federal funds rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation does not exceed 2.5 percent.”

The third estimate of Q4 GDP report was released this morning, and although GDP was revised up, growth was still very weak at a 0.4% annualized real rate in Q4. Personal consumption expenditures (PCE) were at a 1.8% annualized real growth rate; the third consecutive quarter with a sub 2% growth rate.

Slow economy, slow recovery, Fed printing like crazy. And then there are other issues for the housing market...

In summary, we have a Fed-induced low mortgage rate recovery with minimal money multiplier (below 1) and money velocity. Cash investors (30% of the house sales) are driving the market along with population growth.

And consumers remain grumpy.

http://confoundedinterest.wordpress.com/

Fri, 03/29/2013 - 09:27 | Link to Comment Schmuck Raker
Schmuck Raker's picture

con-found-interestdotwordpressdotcom

The shill client that will not die.

Fri, 03/29/2013 - 23:39 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Golly-Gee-Willickers__________

Anybody Down vote me that isn't busy sukin' the Profs Tiny Prick?

Fri, 03/29/2013 - 23:40 | Link to Comment Schmuck Raker
Schmuck Raker's picture

#NOT THE ACCIDENTAL DBL POST#

Golly-Gee-Willickers__________

Anybody Down vote me that isn't busy sukin' the Profs Tiny Prick?

Fri, 03/29/2013 - 08:33 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"Cash investors (30% of the house sales) are driving the market along with population growth." -  Can someone tell me what the wages are for that growing population?  Doesn't look sustainable to me.

Thu, 03/28/2013 - 21:15 | Link to Comment machineh
machineh's picture

XLV (SPDR Health Care sector) is on a mighty tear.

Why? Because when ObamaCare kicks in next year, the health care cartel gets free rein to rape its victims, forced by law to purchase insurance.

Health insurance premiums are going up anywhere from 30% to 80%.

XLV, bItCHeZ. Nancy Pelosi's getting rich off it. Should't you?

 

Fri, 03/29/2013 - 10:38 | Link to Comment WTF_247
WTF_247's picture

No worries - it will implode on itself.  People do not have an average of 50% more money each month just "sitting there" to pay the premiums.  They will not get paid.  

For many families the monthly expense is already in the 600-700 range.  Another 50% puts it at 900-1150 - which is about equal to mortgage payments in many areas of the country. The savings rate is so low - this indicates that the money is not there to pay this - either the extra 300-500 per month would be going into the bank or be spent in the economy - neither is happening.

This new Obamacare payment is the equivalent of being able to afford mortgages on 2 homes - How many average Americans can afford mortgage payments on 2 homes?  We saw how that worked out in 2007 ....

The only way people would be able to come up with the money is to cut something else - who needs food?  who needs utilities?  who needs rent or mortgage payment?  who needs a form of transportation to work?

I am sure the good, hard working Americans will cut some of the above to pay their healthcare premiums.

Thu, 03/28/2013 - 21:52 | Link to Comment JR
JR's picture

news item...

Study estimates Obamacare could raise individual claim costs 32 percent

Actuaries groups offers sobering look at the rising costs for individual insurance coverage plans under Obama health law

March 28, 2013 | BY John Solomon

One of the nation's premier experts in numbers has a tough diagnosis for President Barack Obama's health care law.

In a report that could prove a big political headache for the administration, the Society of Actuaries estimated Tuesday that insurers will have to pay out an average of 32 percent more for claims on individual health policies under the Affordable Care Act, a cost likely to be passed on to consumers.

While some areas will see declines in medical claims costs, the report predicts the majority of states will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers rather than get coverage from employers.

By 2017, the estimated increase would be 62 percent for California, about 80 percent in Ohio and Wisconsin, more than 20 percent for Florida and 67 percent for Maryland. Much of the reason for the higher claims costs is that sicker people are expected to join the pool, the report said.

http://www.washingtonguardian.com/study-health-overhaul-raise-claims-cost-32-pct-1

The link was posted today by Bingfa on ZH.

Fri, 03/29/2013 - 01:12 | Link to Comment sun tzu
sun tzu's picture

racist

Fri, 03/29/2013 - 04:36 | Link to Comment Tom_333
Tom_333's picture

Dats spelled RACISS  !

Get wiff da program honkey. We won. Ya need to become a playa.Or at least an operator or a merc if you's gonna have a place in the new wonderful society that we are building.

Thu, 03/28/2013 - 21:12 | Link to Comment Apolitical Blues
Apolitical Blues's picture

I never cease to be amzaed at the level of total destruction of the FEDS MOPE by people that know their next move before they do. These human turds in Banksterville  must be becoming more and more restive. The heat in their kitchen is headed higher and the stench of them crapping in their pants has be effecting them...I can only hope!

Fri, 03/29/2013 - 01:15 | Link to Comment sun tzu
sun tzu's picture

If all else fails, they will steal from your retirement and bank accounts with the blessing of our politicians and bureaucrats

Fri, 03/29/2013 - 08:36 | Link to Comment Cdad
Cdad's picture

That is coming, but they will probably not announce deposit haircuts, but rather pass legislation that forces 401k account holders to help fund the government through mandatory conversion of some level of their accounts into US treasury bills.  

And when it is announced, it will be for the people's good.  And they will like it.  And they will be made to understand that DC knows best.

Fri, 03/29/2013 - 10:42 | Link to Comment WTF_247
WTF_247's picture

This is exactly right. The plan is already in place.

They are likely to bribe people at first to pull it off - if you put your 401k into treasuries, the tax rate upon withdrawal will be half.. or something like that.  It will be required to move your money to a govt account to do it.

Once in place and they have your money they will then change the rules 5-10 years down the road to negate what they told people.  And people will take it.  Until they dont.

Thu, 03/28/2013 - 20:58 | Link to Comment cpzimmon
cpzimmon's picture

My God, do the American people understand what's happening here? You say most Americans are muppets and they think this is all good? You've got to be kidding me.

Fri, 03/29/2013 - 08:17 | Link to Comment moneybots
moneybots's picture

"You say most Americans are muppets and they think this is all good?"

 

People cheered the Nasdaq bubble while it expanded and cheered the housing bubble while it expanded.  They don't think about the day when the bubble bursts, they think about today.

Fri, 03/29/2013 - 08:24 | Link to Comment Cdad
Cdad's picture

What the people think about the current situation is clear.  There is no support for Wall Street, Ben Bernanke, or politicians gone wild in DC.  You can make up excuses for the contrary, and you can do that all day long, but you will still be wrong.  

Fri, 03/29/2013 - 08:08 | Link to Comment Cdad
Cdad's picture

Yeah...the average American Muppet...it's his fault for not understanding.  Right.

Unfortunately, that isn't true, at all.  Does anyone remember why the Tea Party was born?  It was the people's revulsion to government spending, specifically.  The people do not support Ben Bernanke going all Banana Tree Republic here.  No, Wall Street supports what Ben Bernanke is doing.  And what Ben Bernanke is doing, quite literally, is perpetually bailing out a financial services industry that America has rejected.  You can see America's rejection in the form of 4 years of equity selling.  It isn't hard to see.

No, it ain't the muppets that are confused here.  Ben Bernanke continues to infuse obscene amounts of money created from nowhere to support an industry that is dead.  And Wall Street is dead for a good reason.  It is no longer a financial services industry.  Wall Street has become a crime syndicate, and QE forever is the greatest robbery the world has ever seen.

Period.

 

Fri, 03/29/2013 - 01:37 | Link to Comment The Heart
The Heart's picture

"My God, do the American people understand what's happening here?"

Do you mean like understanding the insanity of a bunch of babylonian banksters that hire these kinds of goons, and uses the worn out excuse of the "war on terror" for the insanity of declaring war on it's own citizens?

http://www.insanemedia.net/forum-shill-gets-busted-ats-and-glp-censor-n-...

What is the definition of DESPICABLE?

Thu, 03/28/2013 - 22:17 | Link to Comment 12ToothAssassin
12ToothAssassin's picture

Couldnt find any more charts?

Fri, 03/29/2013 - 10:08 | Link to Comment eclectic syncretist
eclectic syncretist's picture

Let's hope not.  This guy can't draw a proper trendline.  He needs to go back and read Edwards and Magee's text.

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