WEDNESDAY 2/26/14

The dollar/yen falls to 102.10 and lower so the NIKK loses -0.5%. TM drops -1.3% so there must be continued weakness expected for exports. Sumitomo Mitsui Financial Group lost -1.7% overnight. Panasonic gained +6% on news of a potential partnership with TSLA. Fukishima’s radioactive contamination plume is moving across the Pacific Ocean and reaches Canada’s Coast. Water samples from Vancouver, British Columbia, show elevated radiation readings. WHOI scientists will continue monitoring the coastal waters and say the contamination is well within safe limits and will not harm marine and animal life. Millions of dead starfish are ignored and scientists will not connect this baffling tragedy to the Fukishima contamination. Hawaii is receiving elevated levels of contaminated water and the West Coast of the US will receive the affects of the contamination plume moving forward. The scientists say do not worry but they are not the ones swimming and exposed to the Pacific Ocean each day.

China’s property stocks recover slightly from the recent beatings. Chinese banks are weak with ICBC losing -1.9% and Bank of China dumping -1.2%. Traders are increasingly worried about the Chinese credit markets since the current behavior is reminiscent of the trouble in the US ahead of the Lehman Brothers failure and financial crisis of late 2008 early 2009. The Shanghai and Hang Seng end higher. The rapid drop in the yuan, now at 6.1243, creates concern over future Treasury demand from Asian banks. Asian currencies are beginning to align more with the renminbi (yuan) rather than the dollar. In recent years, Asian currencies have appreciated against the dollar helping to create Treasury demand; however, as Asian currencies follow the yuan lower, this may negatively affect Treasury demand going forward. China owns $1.3 trillion of US government debt and Japan holds $1.2 trillion. Korean stocks gain overnight. The Thailand turmoil and social unrest continues. Thai Airways moves sideways after reporting losses for the last nine consecutive months as the violence destroys Thailand’s tourism industry.

Ukraine vows to protect bank deposits as 7% of bank funds have fled the country in recent days. Turchynov, the interim Ukraine president, assumes full control of the Armed Forces and voices concern over a risk of the country separating. The IMF says aid to Ukraine will be provided to cover its debts and help stabilize the country. The Uganda shilling drops the most in two years, to 2513 per dollar, as nation donors cut aid due to ...........




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

Retail and biotech stocks rocket launch higher with traders returning to these leading sectors from last year. Retail earnings are nothing to write home about but the buybacks send stocks higher anyway. Financials were supposed to lead in 2014 but traders have abandoned that ship and are running towards the retail and biotech shiny objects. TGT catapults +7% higher. ANF +10%. WMT +1.5%. BIIB +1.2%. ALXN +1.1%. MYL +1.3%. Tech continues to fly higher when typically the late February period is where traders typically begin cycling out of tech stocks. Q4 is the strongest quarter for technology. GOOG, AMZN and FB are all higher. Chip maker AVGO gains +4.7% on strong earnings. RGR is shot in the foot losing -9.5% after missing earnings for the first time since 2009. Logistics company UTIW is lost stumbling -24% lower.

Europe closes flat to lower with Greece up a big +3%. Greece is up +12% this year with this economically troubled nation outperforming the continent. Tesco, a large retailer, loses -3%. DAL bounces +1.3% after announcing a plan to provide frequent flier miles based on ticket price rather than miles. IBM opens up the ‘Watson’ platform hoping that developers can create new lines of business. Watson was made famous after appearing on the Jeopardy television show.

The dollar/yen is up to 102.56 keeping equities elevated today. The SPX keeps knocking at the 1851-1853 resistance. VIX keeps dancing above and below the 14 level. The 5-Year Note Auction is well received with the yield now trading at 1.50%. Natty gas continues to slide lower to 4.58 but traders remain bullish as the cold weather and snow continues across the northern US. Activist Icahn keeps stirring the pot with eBay sending EBAY up +2.6%. Tech, biotech and retail sectors are pushing stocks higher. The bears are trying to keep a lid on the upside by keeping the VIX above 14. A few minutes before 2 PM, stocks top out for the day and slide strongly lower.

The day ends with the SPX dead flat at 1845. This is the third consecutive day that price breaks up through the closing high at 1848.38 but fails to close above. The Dow ends flat to slightly higher at 16198 remaining above the 50-day MA at 16130.  The Nasdaq is flat and RUT small caps gain +0.7% due to the ongoing bullishness in speculative biotech stocks. The SOX gains +0.7% showing a strong demand for semiconductor stocks in recent days. SOX is up about +11% during February. LNKD is up +1.4% continuing a seven-day +16% rally. A cloud covers FSLR sending this solar play -9% lower. Fast-casual restaurant chain NDLS, still a young IPO but darling of long traders, jumps +8% ahead of earnings after the bell.

After the bell, NDLS misses earnings estimates and pukes -8% giving up the gains during the regular trading session. JCP bounces +18% with a short-covering rally after posting a profit for the first time in years and stating that the hard part of the restructuring is over. TSLA announces plans for a new ‘gigafactory’ that will supply lithium-ion batteries and electric storage applications. There are four sites targeted for the battery factory; Texas, Arizona, Nevada and New Mexico. TSLA is up +4.2% in AH trading.