They tried to sell them off three times in early May but the bulls won the tug of war.

Market Statistics

The first three weeks of May were really choppy for the Dow, S&P and Nasdaq and really ugly for the Russell 2000. The Russell dipped to -10% from the highs while the S&P only managed about a -3% dip. Once it became apparent the Russell was not going lower the big cap averages began to recover and grind higher. The S&P added +55 points since the low on May 20th to close at another new high on Friday at 1,924.

The S&P managed to end May with a +2.1% gain while the Dow gained only +0.8%. The Nasdaq 100 ($NDX) was the big winner with a +4.3% gain thanks to Apple while the Nasdaq Composite gained +3%. The Russell 2000 actually ended the month with a gain of +0.6% to close at 1,134 after dipping to 1,082 on the 15th.

If you sold in May and went away you would have missed a lot of stomach turning whipsaw events in the first two weeks and you would have missed a minor gain at the end depending on which market you bought.

Just because May is behind us does not mean the worst is over. In midterm election years June is the worst month of the year for the Dow and S&P and 10th worst month for the Nasdaq and Russell according to the Stock Trader's Almanac. Heading into June the Dow and S&P closed at new highs and the Nasdaq 100 is at a 14 year high. Do you buy the new highs or do you take some chips off the table?

Economics

The economics were light on Friday with only the final revision to Consumer Sentiment. The headline number dropped sharply from 84.1 in April to 81.9 in May. The present conditions component declined from 98.7 to 94.5, the weakest reading since November, and the expectations component slipped from 74.7 to 73.7.

Inflation is weighing on consumers with food prices up +4.5% annualized since February. That is the strongest acceleration in prices since July 2011. With producer prices still rising this will continue to flow through to consumers in the months ahead. Sentiment should begin to decline in the summer as gasoline prices rise and the mudslinging begins in the midterm elections.


The coming week is a very heavy calendar for economic events. This is payroll week along with the ISM reports and a key ECB rate meeting.

In terms of importance the Nonfarm Payrolls on Friday will be the most watched report. The current consensus estimate is for a gain of +215,000 jobs, down from +288,000 in April. This is based on the theory that the April gains were a snap back from the weather depressed January/February levels. A downside miss here could be negative for the market. Investors are bullish on the market because of the forecasts for economic growth. A weak jobs number will suggest the economy is not as bullish as investors are hoping. The estimate range is from 110,000 to 240,000.

The ADP Employment report on Wednesday will give us some insight on what to expect on Friday. Expectations are for +210,000 jobs and a decline of -10,000 from April. The estimate range is from 120,000 to 235,000.

The Manufacturing ISM is expected to show only minimal improvement from 54.9 to 55.2 according to Moody's. The nonmanufacturing ISM is only expected to rise a miniscule amount from 55.2 to 55.3. If those numbers are accurate it is hard to build a solid case for economic growth.

The Beige Book on Wednesday is a report from all 12 Federal Reserve districts on economic strength. In the early April release 10 of the 12 districts reported an increase in activity. Auto sales were up and manufacturing had improved slightly as a result of the better weather. Several districts made a point of saying the weather had improved since February. (We really do pay people to tell us spring has arrived.)

A key event for the week will be the ECB rate decision on Thursday. Mario Draghi has finally run out of rope and he is widely expected to announce some kind of stimulus after the ECB meeting. He is expected to announce a cut in interest rates and possibly a negative rate for funds on deposit at the ECB. The ECB can't do a QE program like the U.S. Fed because every EU country sells it own bonds. There is no common treasury where the ECB could buy Euro bonds and no viable method of buying treasuries from all the individual countries. This means Draghi has to use some other method to apply stimulus to the European economy.

I believe the implied ECB rate cut is already priced into the market. However, Draghi has been promising to "do whatever it takes" for the last two years without ever taking action. If his pledge for this meeting is just a new effort to try and talk the market down and nothing happens the market is not going to like it. I see this as a sell the news event for the bond market regardless of what happens. Seriously, is another 0.15% decline in rates really going to make a difference?


You can tell summer has arrived. The amount of stock news out on Friday was microscopic. Late in the afternoon Valeant (VRX) raised its bid again for Allergan (AGN) only two days since they raised it the last time. Allergan had not even had time to respond to the prior raise.

Valeant said it would pay $72 in cash, up from $58.30 in the prior bid, along with a 0.83 fractional share of VRX stock and a $25 contingent right based on future sales of a potential eye treatment. Analysts said the value of the new deal was roughly $182 per share for Allergan or more than $53 billion. Wells Fargo Securities said this price would be almost impossible for Allergan's board to ignore. Shares of AGN spiked to $168 on the news.

As an additional sweetener Pershing Square said it would agree to receive no cash from the transaction. This means they would give up about $600 million and that cash would sweeten the deal for everyone else. Bill Ackman and Pershing Square are pursuing Allergan together. He owns about 9.7% of Allergan with a basis close to $116. He said he would only take stock which would reduce his price for shares by -$20.75 compared to other shareholders.

Originally Valeant offered $46 billion and was turned down. On Wednesday they offered $50 billion and Allergan had not yet responded. The Friday bid of just over $53 billion may still need to be adjusted slightly higher just because the board is going to want Valeant to pay a premium.

If Valeant is successful it would double the size of the company and protect the 11,600 Allergan employees from broad restructuring and layoffs already announced by Allergan.


Shares of Infoblox (BLOX) fell -37% to a new historic low after the company reported a -26% decline in earnings to 7 cents on revenue of $61 million. Analysts were expecting 3 cents and $61.65 million so it would appear on the surface to be a win. However, they lowered their guidance on earnings to a range of zero to 2 cents compared to estimates for 6 cents. Revenue was forecast in a range of $60-$61 million and analysts were looking for $66.6 million. Full year guidance also fell below analyst estimates. If that was not bad enough the CEO for the last ten years resigned unexpectedly to "pursue other personal and professional goals." He did say he would stay on until the board appointed a replacement. I believe investors should look elsewhere to pursue their financial goals.


Sanderson Farms (SAFM) reported blowout earnings of $2.21 compared to estimates for $1.68 thanks to higher demand for poultry products and lower grain costs. With beef prices soaring, consumers are switching to chicken as their staple protein. Revenues rose +6.4% to $660.7 million and well over estimates of $630 million. Cash on hand rose +43% to $84 million. Long term debt decreased from $29 million to $10 million. Shares rose on the news but I suspect they were also up thanks to the food fight over Hillshire Brands, Pinnacle Foods, Tyson and Pilgrim's Pride. It never hurts to be profitable in a sector where the top dogs are fighting over meat.


Lions Gate (LGF) is going to milk the Hunger Games series for all its worth. They announced on Friday "The Hunger Games: The Exhibition" tour for summer 2015. The state-of-the-art exhibition will include interactive displays of authentic costumes, props and other elements of the world of Hunger Games. The first two films grossed more than $1.5 billion with Catching Fire was the highest grossing domestic release of 2013. The Exhibition will launch several months before the November 20th opening of the next installment "Mockingjay - Part 2" and will include artifacts from the first three films.

Want more Hunger Games? Lions Gate said it was exploring theme park attractions around the world for the Hunger Games franchise and other branded properties in the portfolio. The Divergent series has two more movies planned.

Unfortunately Lions Gate shares diverged from the rally with a -11.5% decline on crummy earnings. The CEO described it as a quarter without any movies. The company surges when a block buster movie is released but once those move into video on demand the revenue stream evaporates. I did not know this but Lions Gate has over 40 TV shows on more than 20 networks including Madmen, Nurse Jackie, Anger Management, Nashville, Wendy Williams Show and Orange is the New Black to name a few. They also have a library of 15,000 movies and TV shows that provide revenue to support the production business.


Cheniere Energy (LNG) spiked +$10 over the last two days after the U.S. Energy Dept (DOE) proposed an overhaul of the LNG export application process. Under the proposal the department would no longer issue conditional approvals of projects. Instead the department would decide whether an LNG export project was in the national interest only after the Federal Energy Regulatory Commission (FERC) had issued a final environment review. This would take the pressure off the DOE by reducing the time, paperwork and money involved in getting an export approval.

Companies pay up to $100 million to complete the FERC process, an investment that only serious projects with valid financial backing, can complete. LNG facilities cost billions to build. The DOE export application only costs $20,000 to file.

Previously companies could file the DOE application and then shop for funding with many applications never completed. Now only those applications approved by FERC will be considered by the DOE. That means any company with a real project and real funding can jump right to the top of the heap at the DOE once FERC approves their environmental application.

For companies like Cheniere Energy with two major LNG projects and projected output of 40 million tons per annum (MTPA) they will go straight to the top. Cheniere has already received FERC approval for the Sabine Pass facility and the Corpus Christi facility is nearing approval. If the DOE proposal is adopted the Corpus Christi project would probably be the first to be approved. Construction is well underway at Sabine Pass with first exports in late 2015.

Here is the key point. With 26-30 applications pending at the DOE there is a very good chance only 4-6 would eventually be approved for export. If all were approved and built the export capacity would be more than 25% of our current production capability. Our gas prices would soar. For this reason the DOE is not going to find it is in the "national interest" to approve them all. The DOE also said it was going to undertake additional studies of the economic impact of exporting 12-20 Bcf per day. That is the next hurdle because they are likely to find out it is "not in the national interest."

By changing the application process to force approval by FERC with the $100 million fee it will weed out all the questionable applicants. Only those completing the FERC path will eventually be approved by the DOE. Essentially the DOE decision has eliminated a significant number of potential applicants and projects.

Since Cheniere Energy already has export approval for the initial trains at Sabine Pass and Corpus Christi they are now on the fast track to be the first and possibly the only major LNG facility in the country. The Sabine Pass facility is the only project in the country that has received the FERC and DOE approvals.

At the Sabine Pass facility they are building six trains each with annual production of 4.5 million tons per annum.(MTPA). Trains 1&2 began construction in August 2012 and are 63% complete. First production is expected in late 2015. Trains 3&4 began construction in May 2013 and are 27% complete. First production is expected in late 2016, early 2017. Trains 5&6 are still in permit mode with 503 Bcf of annual exports already being approved to Free Trade Agreement (FTA) countries and the non FTA authorization is pending. Trains 1-4 already have that authorization.

The three trains to be constructed in Corpus Christi for 13.5 MTPA are nearing the end of the permit approval process. Full approvals are expected not later than January 6th 2015. Purchase agreements for 3.8 MTPA have already been signed and the DOE has approved 767 Bcf per year for export to FTA countries with the authorization for non FTA countries still pending. They signed a 20 year export deal with Iberdola, a Spanish energy company, for 800,000 tpa on Thursday.

A MTPA = roughly 50 Bcf. When complete both Cheniere facilities could export a total of 40.5 MTPA or 2,025 Bcf per year or roughly 5.6 Bcf per day or more than 8% of our current production. Our current gas in storage hit decade lows last winter and we are expected to have a shortage in storage going into the fall. This is without any exports.


Energy XXI (EXXI) and EPL Oil & Gas (EPL) shareholders both voted to accept the proposed merger. EXXI is acquiring EPL and the acquisition is expected to be completed on Monday. EXXI is a rapidly growing E&P company with a large inventory of shallow water properties in the Gulf. EXXI is a buy and exploit company. They do little pure exploration and favor buying existing properties, reworking existing wells and drilling new ones into proven reserves. The CEO claims "We don't discover oil, we produce it." The acquisition of EPL gives them dozens of new properties and enhances their ownership of some existing leases where EPL was a fractional leaseholder.

EXXI has had a tough 9 months. In 2012 they bought a huge portfolio of properties from Exxon that offered them a large increase in production capability. However, when they started to pump the new oil through the infrastructure they found it was too old and worn out to accept higher volumes and they had to replace a lot of it. This cost them time, production and money. In 2013 they joint ventured with Apache on 12 Gulf leases that involved two new wells to secure the venture.

EXXI has a bright future but right now I think they have too many projects underway that are not currently producing so their earnings suffer. Once these projects are brought online their production volume should spike significantly. I think EXXI is a bargain at $20 and a fair acquisition target themselves. The combined company is currently producing 65,000 Boepd of which 70% is oil. Earnings are expected to increase +25% in 2015. Insiders have bought $1.5 million in stock in May with smaller amounts in January, April and March.


Gold attracted a lot of attention last week with a loss of $42 to $1251. With inflation low, the equity market high and the bond markets around the world in rally mode nobody seems to be interested in gold. However, multiple analysts came out on Friday saying the return to $1200-$1225 was a significant buying opportunity. None of them were Peter Schiff who always has a buy on gold no matter what.

A problem with gold is the 20% decline in demand from China. The current credit crisis inside China is restricting the availability of cash. India put a tax on gold that slowed demand in that country in order to reduce the outflow of dollars. I don't know what would put gold back into rally mode other than a sharp increase in inflation and that may not happen until 2015. I might be a buyer of the GLD with gold at $1200 for a trade but I would want to see a resumption of a rebound before going long for an extended period. I don't want to catch this falling knife.


I think the real trade for the next 18 months is shorting treasuries. Yields on the 10-year fell to 2.4% intraday on Thursday and rebounded only slightly on Friday. This bond rally is unsustainable in the long term. While we could see further decline in yields in the short term the long term outlook is very bearish. The Fed is talking about raising rates in Q2-2015 and any rebound in the economy in the months ahead should produce a selloff in bonds.

Obviously traders have been talking about this trade ever since Bernanke first floated the taper topic in May 2013. The early adopters made money but anyone short bonds since December is in serious pain. We could see a further decline in yields next week if the ECB brings out the bazookas as Draghi promised. However, a stronger than expected Nonfarm Payrolls on Friday and some improvement in the ISM reports and we could see some selling in the treasury market.

The great rotation from bonds into stocks will eventually occur. When it will occur is the $64 question. If the Fed gets its wish for 2% inflation not only will these treasuries barely be keeping pace with that inflation but owners will suffer loss of principal as interest rates rise. This is a horrible investment at this level unless the economy is about to fall off a cliff.

You can short bonds with ETFs like the TBF but even if you are right about direction they move at a snail's pace. Do NOT try to use the leveraged 2X and 3X ETFs. The drag from the futures and options they use to create that leverage is a major drag on the ETF performance long term. They are ok to use for a 2-3 day trade but never for a long term position. Larry Fink at Blackrock said last week the leveraged ETFs should be banned because the average investor does not understand the negative drag of leverage on a long term position.


International Data Corp (IDC) reported by 2018 Android powered smartphones would control 77.6% of the market with Apple's iPhone at 13.7%. Windows powered phones should increase share from 3.5% in 2014 to 6.4% in 2018. Blackberry only controls 0.8% share today and expected to drop to 0.3% by 2018.

Windows phone partners are expanding rapidly and now include HTC, Samsung, Lenovo, LG, Foxconn, Gionee, Xolo, Longcheer, JSR, Karbonn, ZTE, Micromax and Prestigio. Before now almost all Windows phones were manufactured by Nokia, with a few by HTC and Samsung. More partners, means sales in more countries since most of those brands listed above are country specific. IDC said smartphone shipments are expected to double to key emerging markets including India, Indonesia and Russia.

IDC also predicted tablet sales growth would shrink from 51.8% in 2013 to 12% in 2014. The reason is the rapid growth of phablets or large screen smartphones. IDC defines phablets as phones with screens from 5.5 to 7.0 inches. Apple is expected to announce an iPhone 6 with a 5.5 inch screen later this year.

IDC also said traditional PC sales rose only 3.9% in Q1 over Q1-2013. That was down -35.7% from Q4. Dell garnered 23.1% share with HP at 20.4%, Lenovo at 14.0% and Acer at 10.9%.

Summer Fridays are typically low volume days. That was not the case last week because of the rebalance of the MSCI indexes. Morgan Stanley announced on May 14th the rebalance of the various indexes to be completed on May 30th. In the MSCI Global Small Cap Indexes there were 417 additions and 312 deletions. In the MSCI Global All Cap Indexes there were 485 additions and 194 deletions. The MSCI US Large Cap 300 Index had five additions and nine deletions. The three largest additions by market cap were WDC, FRX and SNDK. The numbers were similar for all the other various MSCI indexes. Click here for the full details

The volume on Friday was the heaviest day of the week but it was still anemic at 5.94 billion shares. Thursday was the lowest at 5.062 billion and just barely over that 5 billion level. If you are looking to volume to confirm the market gains it was not there. Without the index rebalance we could have seen the lowest day of the year on Friday.

The S&P added +23 points for the week to close at 1,923 and a new record high. With the Ukraine situation fading from the headlines, the ECB poised to launch new stimulus and analysts predicting a strong snapback from the Q1 contraction the index is poised to grind higher. It appears that investors are more worried about missing out on a big move higher than they are afraid of a big move lower. If they were worried about a possible decline they would be buying puts and the VIX would be higher and not at a 7 year low.


After the big market gain in 2013 investors have forgotten about the inevitably of market corrections. This reminds me of 2000 when everyone kept buying new highs expecting stocks to continue doubling and tripling.

The market does not need a shock to force a correction. Markets can correct without a reason. Typically when markets do begin to decline the market reporters will find a reason or reasons to blame for the drop. It makes a better sound bite than saying "I don't know why the market is falling."

The S&P move over 1,900 is a powerful lure for investors in cash on the sidelines. I have reported here multiple times over the last month about the rising amount of cash in funds, the growing short positions and the expectations for a correction. All of those money managers not currently long the market are getting very nervous. When the Dow and Nasdaq 100 both closed at a new highs on Friday to confirm the S&P breakout you can bet the anxiety level spiked even more for anyone short or under invested.

New highs tend to attract new money faster than flies at a picnic and that produces higher highs.

The uptrend resistance at 1,923-1,925 level is critical. Any continued move higher by the S&P and the other major indexes could accelerate as fund managers and individual investors begin to chase stocks to avoid being left behind.

Initial support is in the 1,908-1,910 range but real support is well back at the 50-day at 1,875.


The Dow edged out a new high close at 16,717 by 2 points. Most of the gains came at the close as shorts gave up and bailed out to avoid another short squeeze Monday. The index appears to be setting up for a test of the next uptrend resistance at 16,800. The Dow components were mostly positive but only fractionally.

Initial support is 16,635 followed by the 50-day at 16,457.



Two weeks ago I showed this chart before the breakout with the caption "The Nasdaq 100 will provide market direction." That appears true again for next week. The Nasdaq big caps stalled exactly at resistance and gained only +1 point on Friday. That is better than a loss because it means there were not a lot of sellers waiting at that level or maybe those sellers had taken off early for a long weekend.

This week is going to be critical for the Nasdaq 100 because Apple's World Wide Developer's Conference begins on Monday. Historically the stock declines after the opening of the conference after a sprint into the event. Apple shares have gained +108 points since April 23rd when they announced earnings, dividends and the 7:1 stock split. The stage is set for a big decline if the opening announcements don't excite investors.

On Friday Apple set a new 52-week high at $644 just before noon and then crashed back to $629 by 1:30. This looks a lot like an exhaustion top. However, anyone long over the prior week's gains had a lot of profit to protect and bailing out before the weekend is a valid strategy.

It is entirely possible we could see $600-$610 again next week. The wild card is the 7:1 split that occurs the following Monday. This could incite investors to continue buying in hopes of a continued pre-split run.

Apple is 12% of the Nasdaq 100 weighting, MSFT 9%, GOOG 7%, AMZN 4% and CSCO 4%. This means a material decline in Apple shares will impact the NDX. I believe the majority of the NDX gains over the last week were the result of Apple gains.


Likewise the intraday decline on the Nasdaq Composite on Friday exactly mirrored the decline in Apple shares.


The Nasdaq Composite rebound slowed to a crawl over the last three days. The Nasdaq closed at 4,237 on Tuesday and 4,241 on Friday for only a +4 point gain the last three days. Are traders losing interest in the tech rally?

I believe this emphasizes my point on Apple and the Nasdaq gains. The rest of the Nasdaq stocks were mostly positive but relatively dormant. Nasdaq market breadth was lousy on Friday with 1,546 decliners to 949 advancers with 87 unchanged.

If the Nasdaq indexes are going to fail this is where it should happen. Apple will remain the wild card for next week.

However, most traders don't understand the relationship between the individual big cap stocks and the indexes so all they are seeing today is a new 14 year high close on the NDX and they are thinking a breakout is about to appear.

Support on the Composite is about 4,217-4,220. Resistance is 4,252.



The Russell 2000 peaked at 1,144 at the open on Tuesday and never recovered that level. The rest of the week was choppy with the index losing -5.57 points on Friday. Is the rebound over? That is tough to say but the Russell appears to be weakening again.

In any significant market decline there are repeated rebounds. The more oversold the bigger the rebound but it does not necessarily mean the decline is over. I would watch the Russell carefully this week for a decline back below the 200-day at 1,120. That could mean we are going back to retest the lows.

Resistance at 1,146 could also be a challenge on any continued move higher.


The Dow Transports have also been setting new daily highs but resistance held on Friday for a minor loss. If the transports begin to roll over this could damage sentiment for the Dow industrials. This has been a strong rally in the transports and it is time to rest.


There are a high number of critical events next week that could impact the market. The two ISM reports, China PMI, ECB rate decision, ADP and Nonfarm payrolls, etc. The markets exceeded expectations in May and now we are heading into the summer doldrums. There is nothing to prevent further gains if investors are willing to buy the new highs. However, volume is going to continue to decline in the weeks ahead and we could see some investors going to cash for the summer. Nobody wants to be worried about their brokerage accounts while they are sitting on the beach with the grandkids.

Random Thoughts

QE is not over. The Fed is still buying $45 billion a month in treasuries and mortgage backed securities. The Fed is still supporting the market. Peter Boockvar reminded everyone last week that once that QE crutch is removed the patient is going to stagger if not fall.

According to the Stock Trader's Almanac 2014 (page 84), the first trading day of each month combined produce more than double the gains of all other days. However, based on the Dow, June's first trading day is the worst performing first trading day of all twelve months.

Citigroup CFO John Gerspach said second quarter trading revenue could fall as much as 25%. JP Morgan estimated a -20% drop earlier in May. Goldman Sachs said trading activity was "abnormal" and the environment was "quite difficult" right now. Goldman said volatility drives trading and the lack of volatility meant customers did not need to trade.

Goldman said the lack of volatility in bonds was probably "economic in nature. We don't have a clear vision of economic growth or lack of growth." The yield on the ten-year treasury over the last three months has traded in the narrowest band in the last 35 years.

On Thursday the government reported the Q1 GDP actually contracted -0.98% rather than the minor gain of +0.11% previously reported. Analysts tell us not to worry it was all weather related and it will snap back to 4% or even 5% growth in Q2. I will believe it when I see it. Even though I know there was some harsh weather in Q1 if my memory is correct there is always harsh weather in Q1. It will be interesting to see what excuse they use if Q2 fails to rebound as expected.

None other than Campbell Soup (CPB) reported a Q1 miss saying "We believe the miss is in part a reflection of the persistence of an exceptionally challenging consumer environment. As many others have noted, consumers are suffering from continuing underemployment, reductions in the SNAP program (food stamps), rising home, fuel and healthcare costs. In combination, these factors are significantly affecting purchasing behavior, pressuring the performance of a number of our key customers (Walmart, Target) and constraining growth across the industry, particularly in center store categories." (My comments added)

Walmart posted lower sales for the fifth consecutive quarter.

CEO Confidence from the Bloomberg Orange Book has returned to 52-week lows.

Real consumer spending in April declined -0.3%, the largest monthly decline since 2009. Durable goods spending declined -0.5%. There was no harsh winter weather in April. Analysts claim among other things, higher healthcare costs under the Affordable Care Act are pressuring consumer spending.


Global GDP, the blue line, continues to drop while the MSCI World Equity Index, red line, continues to rise. This is not going to end well.

Chart from Zero-Hedge

I told you last week that Italy was going to put prostitution and illegal drug sales into its GDP calculations. That will boost the GDP and allow them to borrow more money under the EU debt to GDP limits.

This week the UK has decided to do the same thing. They believe by including illegal prostitution and drug sales the GDP will increase $16.7 billion. They said they had to include these activities to "harmonize economic reporting across the EU." Prostitution and some drugs are legal in the Netherlands and the Dutch include those activities in official government statistics. Now that Italy is going to include the numbers the UK is doing it in self defense. Estonia, Austria, Slovenia, Finland, Sweden and Norway already do it. It won't be long before all the rest of the EU countries join in the illicit activities. You have to wonder how they are going to "estimate" the amount of money flowing through these activities. It would seem there is a lot of room for the bean counters to fudge the numbers to make the GDP look better.

How do you know when a person has too much money? It is when they pay 100% more than they have to just to make sure they are the winning bidder. Microsoft ex-CEO Steve Ballmer agreed to buy the California Clippers for $2 billion when the other four bidders were in the $1 billion range. I guess if you have $18 billion in the bank you can buy whatever you want and not worry about paying too much.

Reportedly Ballmer is a basketball fanatic. He bid on two prior teams and did not win either one. I guess he decided this time he was not going to lose out again. Sterling only paid $12.5 million for the Clippers in the early 1980s. Ballmer is paying $2 billion, which is 15 times annual revenue, not profits. Also, the Clippers don't own their stadium so they lose out on all the extra revenue most major NBA teams get from owning their venue. With Ballmer's cash he can buy them a venue without having to ask the city for money.

The people most happy with Ballmer's bid are the owners of all the other NBA and NFL teams. Their valuations just rocketed higher. They should send a thank you card to Ballmer.

The S&P's current bull market streak of 970 days is nearly twice the average number of days without a correction. Ice Cap Asset Management says it has been 1,284 days since a -20% correction. Since 1950 there have been 200 trading days where the S&P rose or fell 3% in a single day. Since 1950 there have been 16,202 trading days, which means we average a 3% day every 81 days. It has been 623 days since we have had a 3% day on the S&P. That is the 6th longest streak in 65 years. A 3% move on the Dow would be roughly 500 points.

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Enter passively and exit aggressively!

Jim Brown

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