If You Didn't Buy That Powerball Ticket...May 22, 2013

by Blaine Rollinsof 361 Capital

The May bar in this chart is now looking like an exclamation point on its move to all-timehighs…

(StockCharts)

And the New Highs in individual stocks are confirming the breadth of this rip higher…

@cperruna: 536 NH's is the 16th largest reading for NYSE starting with 1980 data - 1/20/04 also had

Page 1, ©2018 Advisor Perspectives, Inc. All rights reserved.

536 NH's, $DJIA was at 10,528 $NYA $SPX

Most important to Bulls is that Small Caps have now reclaimed leadership…

So onward and upward. What signals should Bulls be on the lookout for?

Change in breadth (Up v. Down Volumes, Advancers v. Decliners)Signs of distribution (Sharp down days accompanied by large % increases in trading volumes)Change in leadership away from RISKON sectors (don't want SmallCaps, Financials, Industrials,Transports or Housing to lag)At least an episode of 3-4 down days in a row. (The Dow Industrials still hasn't seen 3 linkeddown days since December!)Keep an eye on credit spreads and junk bonds (HYG & JNK hold over $25b in junk bonds so area good thermometer of risk)Be afraid of any shock in the Treasury bond market (a slow erosion of value is fine but daily 1+point pullbacks could impact the system)

So far the rise in 10 year yields have been orderly…

Page 2, ©2018 Advisor Perspectives, Inc. All rights reserved.

And the lift in risk free yields has not dented Mortgage Rates (nor residential housing activity)…

@stlouisfed: Average interest rate on a 30-year fixed-rate #mortgage rises to 3.51 percent fromprevious week’s 3.42

(FRED)

Page 3, ©2018 Advisor Perspectives, Inc. All rights reserved.

Meanwhile, rising housing and equity prices along with the slowly improving jobs data ishelping Consumer Sentiment…

(RenMac)

Another great week for the RISKON trade with Financials and Industrials leading the way…

If you are one of the few fans of the M. Night Shyamalan's, Unbreakable … Financials: BruceWillis as Gold Miners: Samuel L. Jackson…

Page 4, ©2018 Advisor Perspectives, Inc. All rights reserved.

If you didn't buy that Powerball ticket in Zephyrhills, FL, then hopefully you still own yourGreat, Great, Grandfathers shares in boring, old JNJ…

@RyanDetrick: $JNJ is now up an amazing 20 weeks in a row. This is a record for any stock since1990. Not bad for a 127 year old company. $DIA

Page 5, ©2018 Advisor Perspectives, Inc. All rights reserved.

Junk had a bit of a recovery this week. We are still watching this closely…

Main reasons for Bank Stocks outperformance: 1) No credit issues, 2) Widening 2/10 yr yields,3) Big and Rising dividends…

@DavidSchawel: US banks all in yields (div+buybacks) higher than US HY yields for the first time in

Page 6, ©2018 Advisor Perspectives, Inc. All rights reserved.

more than 25yrs

A great "No Sell in May" call by ISI Group this spring…

The S&P this May has so far diverged quite significantly from the 2010/11/12 "Sell in Mays". And ISI'scompany surveys have surged +1.7 over the past three weeks, approaching a quite significant upsidebreakout. If they don't fall back over the next two weeks, then we're probably out of the woods, i.e., noGrowth Problem.

And if you are looking for a Great Gatsby indicator, ISI Group follows that also…

+ ISI's Limousine Cos. Survey moved up from 68.4 to 69.4, the highest level on the survey sinceDecember 2010. Contacts reported another good week for group and corporate travel.

(ISI Group)

The mother of all RISKON investments, Greece, continues to reward investors…

@RichardBarley1: #Greek 10-yr yield closing in on 8% this morning per #Tradeweb. A week agoit was 9.6%.Greece has been the surprise market of 2013 – the ASE stock market jumped ~11%+ this weekand is now up ~27% YTD (behind only Japan). The press has been full of articles pointing toprominent HFs purchasing Greek assets in anticipation of large returns. (JPMorgan)"Until recently, many analysts believed that Greece was a lost case. We proved them wrong,"

Page 7, ©2018 Advisor Perspectives, Inc. All rights reserved.

Samaras said in a speech in Beijing during a trip to China on Friday. "Most of them now witnessnot a "Grexit" - an exit from the euro zone - but a "Greekovery" - a recovery of the Greekeconomy." (Reuters)Ten-year Greek government bond yields fell nearly a full percentage point to 8.2 per cent, thelowest since June 2010. Fitch raised Greece’s rating to B minus from CCC on Tuesday, and saidthe outlook was stable. Greek bond yields have now been below 10 per cent since the start of themonth, indicating that investors now doubt that the country will slump out of the Europeancurrency bloc. In March 2012 yields peaked at 37 per cent. The rating agency said Greece’sprogress towards eliminating its budget and current account deficits, along with signs of aneconomic stabilisation, had led it to raise its rating by one notch. (FT)

And new data last week showed that Abenomics appears to be working in Japan…

Growth jumped to a 3.5pc rate in the first quarter, vindicating the government’s efforts to break Japan’sdeflation psychology and lift the country out of its 20-year ice age. “Abe’s kickstart appears to havesucceeded,” said Flemming Nielsen from Danske Bank. Retail sales are soaring as a “wealth shock”electrifies the economy. The Nikkei Index has risen 70pc since November, with foreign hedge fundsamong the first to jump on the bandwagon. The weaker yen is already delivering a powerful punch,accounting for almost half the growth. The currency has dropped 30pc against the dollar and China’syuan since August, and 37pc against the euro. The yen-slide - or "Enyasu" - has raised concerns thatJapan is exporting deflation through a "beggar-thy-neighbour" push for export share, a claim rejectedby Tokyo… Danske Bank said rising yields should be viewed as success, since they mean the BoJ hasfinally convinced markets that it will defeat deflation. The plummeting cost credit default swaps used toinsure against a Japanese sovereign default is a sign that investors think the policy reduces the risk ofblow-up.

(Telegraph)

China is the big market that everyone dislikes, but would love to invite to the party…

Page 8, ©2018 Advisor Perspectives, Inc. All rights reserved.

(ISI Group)

Property prices are most important to the Chinese banking system. Maybe a floor is being putin place?

@lindayueh: #China's house prices +4.9% accelerated to its fastest pace in April in 2 years,driven by jump in Beijing, Shanghai (Reuters)@M_McDonough: If China's investors are even marginally optimistic housing prices will rise (onlyviable investment option)

Page 9, ©2018 Advisor Perspectives, Inc. All rights reserved.

The Chinese market broke a 3 month downtrend last week. Keep an eye open here…

@hmeisler: Yet everyone hates this particular market.

THIS IS A GAME CHANGER… Georgia Tech is going to offer an online Master’s degree inComputer Science for $7,000. Imagine 80% price deflation for a degree that has very highemployer demand…

Page 10, ©2018 Advisor Perspectives, Inc. All rights reserved.

Georgia Institute of Technology has announced a partnership with Udacity to offer an online Master’sDegree in Computer Science for $7,000, down 80% from the existing cost of $40,000 for the on-campus, instructor led program. Suddenly, master’s programs around the country will have to competewith Georgia Tech‘s $7,000 program, and that won’t be easy or fast in coming. The traditionally taughtgraduate degree in computer science at Georgia Tech is a very well-regarded program that is in highdemand and has very positive outcomes in terms of jobs and earnings. Georgia Tech graduates tend todo very well in earnings upon graduation, especially in computer science. Now students from aroundthe world will be able to obtain the same degree online at an 80% discount – which is, no doubt, asonic boom rattling the windows in the offices of college administrators across the country.

(Forbes)

Video interview with Georgia Tech:

(WSJ)

Happy 16th birthday of being a public company Amazon…

@JeffMacke: "'World's Largest Bookstore'?!" That'll never work. RT “@BrianSozzi: On May 15, 1997$AMZN went public at $18.00 per share $AMZN”

It has not been a good week for President Obama. You've got Benghazi, the IRS scandal, this APrecords scandal, and, worst of all, his Chicago Bulls got eliminated by the Miami Heat. Do youknow what that means? LeBron James is going to get audited by the IRS. (Jay Leno, TheTonight Show)@rupertmurdoch: Growing IRS scandal makes perfect case for flat tax and abolition alldeductions. Nothing could be fairer and abuse free.

© 361 Capital

www.361capital.com

Page 11, ©2018 Advisor Perspectives, Inc. All rights reserved.