Volume Off the High- Jan. 2 Trading Day Edition

Strangely enough, there was not many names coming off their highs despite the overall market weakness and increased supply. Although the names below reach the criteria I set for 'volume off the high names' none of them appear particularly interesting to me. That said, CDI is reorganizing its business and laying people to 'align the business'. This could be a euphemism for investors to watch earnings carefully in the next few quarters and could be one to watch.

Four Observations From 2013

By Simon Black

1) Politicians believe there are no consequences for destroying our liberty...

Stimulus and response. That's the easiest way of summing this up. When politicians steal, and there are no consequences, they're going to keep stealing.

Cyprus proved this point handily. The government froze bank accounts for everyone in the country (of course, the big bosses got their money out in time). And yet, there was no violent revolution in the streets. People just accepted it.

Poland nationalized pensions. Argentina imposed severe capital controls. The French are taxing everything under the sun. The US government was caught red-handed spying on... everyone.

And yet, there have been ZERO consequences. Citizens have been trained like caged animals to simply roll over and acquiesce. I imagine the politicians are thinking, "Holy Cow! I can't believe we just got away with that..."

It only reinforces their behavior. With each destructive act, they become more bold, more brazen in dismantling our liberties, confident that they can continue to act with total impunity.


2) ...Central bankers and economists believe there are no consequences to printing money...

The Fed expanded its balance sheet by $1.1 TRILLION in 2013, a whopping 38.5%. Nobody seems to mind. The stock market surged to all-time highs, the bond market remained stable, and everyone pronounced the 'recovery' was in.

I attended a dinner a few months ago where Ben Bernanke himself touted how much his quantitative easing had helped US economic conditions.

They really believe in what they are doing. They really believe that conjuring endless quantities of money out of thin air is the path to prosperity.

Not to mention, our modern society awards its most esteemed prizes for intellectual achievement to the likes of idiot savants like Paul Krugman who tell us that the Fed should be printing even MORE money. And people listen to him.

So we can only expect Ben "I can raise interest rates in 15 minutes" Bernanke, and his heir apparent Janet Yellen, to give us more of the same.


3) ...Investors think there are no consequences to deficits, or debasement...

In 2013, headlines like "the US deficit is only $700 billion" were actually considered good news.

And markets have given all of these fiascos a pass-- from the government shutdown to record-shattering debt levels to downgrades by the rating agencies. AA became the new AAA in 2013.

Nobody cares that the US government 'borrowed' a record amount of money from the Social Security Trust Fund. Or that they spent a record amount just to pay interest on the debt at a time when interest rates are at all-time lows.

Rather, they just keep investing... without a single thought to the possible risks. The fear of missing the big boom is greater than the fear of losing money. But then again, it's not their money at risk. It's yours.


4)  ...But Joe Six-Pack knows this is all crap.

In 2013, the collective net worth of the 300 richest people in the world grew to $3.7 trillion, 16.5% higher than 2012. Corporate profits were also at record levels.

Fortune 500s, the super-rich, rich, and even upper middle class have largely been beneficiaries of the central bank induced asset bubble.

But everyone else is getting hammered by inflation... watching their savings and livelihoods melt away before their very eyes.

A report from the US Census Bureau this year showed that median household income has declined for five straight years. And those living in poverty, using food stamps, or receiving unemployment benefits remained at record high levels in 2013.

Meanwhile, the wealth gap has grown to its largest since 1929-- the year of that fateful financial collapse.

It's time for a reality check: something is wrong with this picture.

We've become desensitized to everything. "Unprecedented" monetary policy. Record debts. Massive wealth gap. Government surveillance. Theft. Deceit. Inflation.

We've become so accustomed to getting screwed, it's just par for the course now. We sit quietly and wait for the next round of beatings, shrugging it all off as the new normal.

This isn't normal. This is not how a free society is supposed to function.

A free society does not spy on its own people, threaten them with drone assassination, and award an unelected banking elite with supreme authority to rob purchasing power from the masses in favor of a bubbly stock market.

And despite the conventional wisdom, this is not a consequence-free environment.

History is full of examples of entire nations that reached their breaking points... shouting from the rooftops "I'm mad as hell! And I'm not going to take it anymore!"

2013 already saw violent unrest in some of the most stable countries in the world like Singapore and Sweden, all underpinned by absolute disgust for the status quo.

Whether today or tomorrow, this year or next, there will be a reckoning. The system is far too broken to repair, it must be reset.

It's simply absurd to look at the situation objectively and presume this status quo can continue indefinitely... that this time is different... that we're somehow special and immune to universal principles.

This is not some prediction for doom and gloom. Far from it.

It's actually a message of optimism. For the sooner these crackpot criminal politicians and their central banking ilk are stricken from power, the better off we'll all be.

Unfortunately there's going to be quite a bit of turmoil to get there.

Here's to 2014. It's going to be a hell of a year.

Record Number Of Companies Issueing Negative Guidance

The below is from Factset research. I am probably wrong in the following assertion, but the combination of the negative price bias and that the downtrodden tone to earnings is already know by the market may suggest price gains come earnings season. That is unless guidance and numbers come out even more negative than is assumed.

For Q4 2013, 94 companies have issued negative EPS guidance and 13 companies have issued positive EPS guidance. If these are the final numbers for the quarter, it will mark the highest number of companies issuing negative EPS guidance and tie the mark for the lowest number of companies issuing positive EPS guidance since FactSet began tracking the data in 2006. The percentage of companies issuing negative EPS guidance is 88% (94 out of 107). If this is the final percentage for the quarter, it will mark the highest percentage of companies issuing negative EPS guidance for a quarter. However, companies are guiding EPS estimates down by a lower margin than average. For Q4 2013, companies have issued EPS guidance that has been 5.7% below the mean EPS estimate on average. This percentage decline is smaller than the five-year average of -11.1%.
























It is interesting to note that stock prices have come down on average not only for companies issuing negative EPS guidance, but also for companies issuing positive EPS guidance. The average price change (2 days before issuing guidance through 2 days after issuing guidance) for the 94 companies that issued negative EPS guidance for the fourth quarter was -1.5%, which is nearly double the average decrease over the past five years of -0.8%. However, the market reaction on average to the performance of the few companies that have issued positive EPS guidance has also been negative. For the 13 companies that have issued positive EPS guidance for Q4 2013, the average price change (2 days before the guidance was issued through 2 days after the guidance was issued) was -0.1%. This percentage is well below the average over the past five years of +3.0%, and marks the first time the average price change for companies issuing positive EPS guidance has been negative since Q4 2008 (-0.2%).

Gold Biased To The Upside But...

But buying appears to be more of a reallocation trade over renewed demand.

High Volume High- Jan 2 Trading Day Edition

A couple names for your review. First, ANN caught an upgrade by one of the investment houses and the shares reacted positively. Second, it appears that the CSIQ shares got caught up in the increased bids in the solar investment complex. The increased bids were enough to push shares to new highs on volume.

Gold To Test Bottom and Turn Early in 2014- Kitco

via Kitco News. My opinion, we still have not seen the volume strength yet. 

As January Goes, So Goes the Year- S&P 500 Price/Volume Heat Map Jan 2

As January goes, so goes the rest of the year. Or so adage goes. I have never tested this hypothesis nor do I remember any other tests (I am sure they exist), but if yesterday's trading action is any indication it will be a tough year for the bulls if the weakness persists. That all said, I believe in none of that hocus-pocus and will continue to watch the price and volume levels to discern the overall supply/demand balance in the market. Yesterday, without a doubt, was a distribution day, with the market losing about 90 basis points of value of declines across all sectors.

Supply ruled the day in yesterday's trading and no nascent sign of demand was present. That said, overall volume levels were relatively tame and price spread was nonexistent. The sell-off may indicate something more, but without corroborating information, I have to chalk it up to noise for the moment.