FRIDAY 2/14/14; Consumer Sentiment

Asia markets gain from +0.5% to 1.0% but NIKK sells off -1.5% collapsing under the 200-day MA. Japan receives no love as its Valentine’s Day card is lost in the mail. Kospi gains +0.7% but remains under its 200-day MA. The dollar/yen moves lower to 102 so the stronger yen sends Japan stocks lower. Japan’s largest retailer, Rakuten, buys VoIP and internet retailer Viber, based in Cyprus, for $900 million to expand its global and on-line shopping business.




[Text is Redacted: Purchase February 2014-02 to Read the Complete Chronology]

The session begins with weakness but the dip-buyers are tripping over themselves to buy the market on the long side. The SPX and Dow move higher but the Nasdaq and RUT are negative. Networking equipment provider BRCD leaps over +3%. Preliminary Consumer Sentiment is 81.2 matching the prior month’s final number creating a market boost. Flight cancellations hit 14K over recent days, steadily increasing each hour, as the winter weather saga continues. A 100-car pile-up occurs on the scenic, but snowy and dangerous, Pennsylvania Turnpike. President Obama promises to provide millions in aid to drought-stricken California. Italy’s Letta resigns as expected.

The dollar/yen remains well-behaved flat-lining at 101.88 all day long. The lower volatility is driving markets higher. The Nasdaq and RUT turn positive and traders take on a happy mood heading into the three-day holiday weekend. The pound is at 1.6742. The dollar remains relatively flat for months at 80.18; USD moves through 79-84 for over two years. Strategist Curry at BAC throws in the towel saying he was wrong to be bearish this year and turns strongly bullish on equities. Blackstone’s Byron Wien reverses his negative call on stocks this year and now proclaims a +20% rise in the market ahead. There are very few bears remaining; you can count them on your left hand. Traders are trained to expect nothing but upside regardless of any negative data, earnings or geopolitics. The market zeitgeist these days is summed up by the words of respected economist Irving Fisher at the exact market peak before the 1929 crash, “stock prices have reached what looks like a permanently high plateau….I expect to see the stock market a good deal higher within a few months.” Of course the epic market crash occurred instead.

The day ends with the SPX gaining +0.5% and Dow +0.8%. The Dow squeezes above 50-day MA at 16097 and closes at 16154. The SPX enters a key resistance zone at 1838-1843. The Nasdaq and RUT are flat although the Nasdaq does print a new 13-year high at 4251. Volume is light. The VIX finishes at 13.57 and the lower volatility provides the bull fuel. Natty gas is 5.21 marching higher due to the unending winter weather. 50% of the homes in the US are heated with natural gas. Gold finishes at 1319 above the 200-day MA at 1310. For the week, the SPX gains +2.3%, the Dow +2.3%, Nasdaq +3.4% and RUT +3%. Tech and small caps faded today but overall, for the week, did provide upside leadership. Is the leadership justified on a fundamental basis (no according to recent economic data) or are trader’s simply buying tech and small caps since they will lead if the BOJ and Fed keep printing money? Traders are leveraged to the long side at levels equal to the 2000 and 2007 market tops. Italy’s MIB is up +4% on the week unaffected by the ongoing political power struggle.

UA is hammered -2.4% receiving blame for the US speed skaters performance at the Olympics. Skaters will switch to a previous uniform since a flap in the new Under Armour manufactured uniforms may be slowing the skaters. The athletic-wear king receives a black eye and dent to its armour but perhaps the skaters should not have had those extra helpings of chocolate cake and ice cream the night before. NKE trades flat. CPB is mmm, mmm, good, gaining +7% so folks are seeking warm soup to fend off the cold weather as well as comfort foods to soothe the soul in these troubled times. TRLA collapses -13% and Z plummets -10% poking holes in the real estate recovery. VFC is kicked in the jeans losing -5%. MW drops -4.3% since its prospective merger with JOSB is likely dead due to Joseph A Bank’s acquisition of Eddie Bauer.

After the bell, hedge funds and other big shots disclose past and future holdings. Kyle Bass adds GM and tosses HFL, MSFT and JCP. Soros is bullish on banks buying JPM and C and exits Johnny John (JNJ). Jana hedge fund adds GM, exits AGU and holds JNPR. The guru’s often get it wrong as shown by the poor GM buys. Many other hedge funds ran into General Motors as well over the last three months. GM peaked in December at 42 and dropped to 34, -19%, in 6 weeks. Dan Loeb (Third Point) buys BBRY, NOK, AAPL and TMUS. David Einhorn (Greenlight Capital) likes energy companies including BP. Einhorn also likes MU but trims AET. Warren Buffett’s Berkshire Hathaway buys more WFC and XOM, GE, LBTYA and USG.  Buffett exits GSK and DISH. Paulson stays in GLD but nothing new here. Cooperman (Omega) buys TMUS and S. Activist Icahn adds to stakes in APPL and NUAN.

Thailand’s social unrest and violence continues. Riot police push anti-government protestors from key road intersections but the resistance is strong and the police appear outnumbered. The anti-protestors return and push the police back in short order. Adding to the ongoing violence, a rift is occurring between the majority Buddhist population and the Muslims. Tit for tat killings on each side are increasing. PM Yingluck Shinawatra remains the head of Thailand and the 2/2/14 elections have done nothing to calm the country. The anti-government protestors want her out and will accept nothing less. Moody’s rating agency raises Italy’s credit rating from negative to stable. Fed’s Fisher is in favor of continuing the QE taper even in light of the winter weather negativity. The US Treasury provides guidelines for banks in handling the growing marijuana industry which will help legitimize pot for medical and recreational use.