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Quote of the Day

Thursday, April 05, 2012

April 5, 2012 -- "The truth will set you free, but first it will piss you off." Gloria Steinem

 

It's a strange stock market. It opens at a certain number, and then stays within 1 or 2 percent of that number all day long. Gold does much the same thing. It's as if the markets don't have any clear opinion as to where they want to go or what lies ahead.

 

In the background Europe is darn near broke (debt, debt and more debt), and the US isn't faring much better. Germany has the discipline and the money, but Germany doesn't want to play Atlas, and hold up the whole world. And the Germans are frightened at the very word -- inflation. Meanwhile, the theory or the prevailing thinking is that the Yankee dollar is strong, and further -- the US economy is infinitely stronger than Europe's staggering economy.

 

The markets are now very concerned with the next Fed action -- QE3 or no QE3. Bernanke has decided that no action (perhaps low interest rates forever) will trigger a real housing recovery. Therefore, Bernanke has shifted his attention to unemployment. He knows that he must get unemployment below 8% before the coming presidential election. Bernanke knows that the voting public will vote their pocketbooks or wallets. But many voting members of the Fed are now opposed to more easing. Meanwhile, the stock market only rallies when QEs are in operation. So uncertainty -- will the Fed open the monetary spigots again or won't they? Ah, if we only knew. But since we don't know, we (and the markets) are in a state of confusion and uncertainty.

 

Remember, the market prices itself for conditions that it believes will exist six month to a year out into the future. If that is true, then conditions this summer and fall "should be" unsettled and confused. So at present, the markets and the economy resemble that old Hollywood rule that states that "nobody knows anything." But don't despair, and don't be bored -- it's always calm before the next big storm.

 

And I'll say it again -- I feel safest on the sidelines, just watching the big show.

 

By the way, the following are "distribution days" which have occurred over the last two weeks of trading --

 

8 on the NYSE

5 on the S&P 500

4 on the NASDAQ

 

That, in my experience, is a lot of distribution days for just two weeks.

 

A distribution day is a day when the market closes lower on volume that is above the volume of the preceding day. Distribution days are considered days when the institutions and pros are selling.

 

For your interest, China's foreign exchange reserves (minus gold) for Dec. 2011 were 3.181 trillion dollars (from Google). This is equal to $1,500 per head for the entire population of China.

 

My sense is that professional money is very suspicious and fearful of the European situation, and the viability of Europe's currency, the euro. Suspicion has transferred from little broke Greece to much larger and shaky Spain. Which nation will be the first to drop out of the Eurozone? Your guess is as good as mine!

 

TODAY'S MARKET ACTION:

 

My PTI was down 2 at 6387. The moving average at 6366, so my PTI is bullish by 21.

 

The Dow was down 14.61 to 13060.14.

 

Transports were up 7.82 to 5284.33.

 

Utilities were down 2.48 to 458.75.

 

NASDAQ was up 12.41 to 3080.50.

 

S&P 500 was down 0.88 to 1398.08.

 

There were 1299 advances and 1701 declines on the NYSE.

 

There were 58 new highs and 40 new lows.

 

Total Volume on the NYSE and associated exchanges was 3.3 billion.

 

Bonds: Yield on the 10 year T-note was 2.176. Yield on the long T-bond was 3.321. Yield of the 91 day T-bill was 0.076%.

 

Dollar Index was up 0.30 at 80.08. Euro was down 0.73 at 130.68. Yen was up 0.34 at 121.49. Currency Prices as of 1 PM Pacific Time.

June gold was up 16.00 to 1630.10. May silver was up 0.68 to 31.73.

 

May light crude was up 1.84 to 103.31.

 

My Most Active Stocks Index was down 9 at 301.

 

The Big Money Breadth Index was down 4 at 1036.

 

GDX was down 0.50 at 46.20.

 

HUI was down 4.20 to 441.06.

 

CRB Commodity Index was up 1.53 at 306.49.

 

The VIX up 0.24 to 16.68.

 

Permanent Portfolio Fund (PRPFX) was down 0.75 to 48.48 (previous day closing). YTD Return: 4.21%.

 

Late Notes -- The Dow ended very close to where it started, down 16 points and still holding above 13,000 but barely. Adding to the boredom gold hovered above 1600 while adding $10 to the mix. We're moving into a three day holiday weekend and I wish all my subscribers a fun-filled vacation.