Interdum stultus opportuna loquitur...

Wednesday, September 08, 2004

The Headline Looks OK, but...

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The Federal Reserve's Open Market Operations desk did an $8.5 billion, overnight repurchase - all in Treasury-backed collateral.

Oddly, that did nothing at midnight our time; in fact the market dropped quite hard after midnight (between midnight and 12:28 a.m., it rose 0.75, then fell 2.25, then rose 2.5 - then dropped 3.5 in the follwing half hour. Believe me, it had no idea where it was going in the first 90 minutes.)

Then something (or someone) stuck a rocket under it, albeit a gentle rocket. The market was qual' piuma al vento - as Joe Green might say (I mean Giuseppe Verdi, not Mean Joe Green - the former defensive lineman for the Pittsburg Steelers).

"Like a feather on the wind" - it drifted a lazy 7 points higher until about 4 a.m., when it dropped qual stone-o off cliffo - losing eight points in an hour and hitting its low for the day session. Then of course there was a need for a rescue mission - so up it went, gaining another 6 points.

In all, it was a pretty unedifying spectacle; the thing is whipping around like a Dervish, but every time it sells off someone big jumps onto the buy.

Evidently it doesn't matter that the market is overpriced - so long as nothing blows up over any given weekend, there will be the impression of buying in the Monday numbers. But I don't like it one little bit... no sir, I don't.

The Dow Jones Industrial Average gained 82.59 points (0.8%), closing out the day at 10342.79 points; the broader S&P500 Index gained 7.67 points (0.69%), finishing the session at 1121.3.

Over at Times Square, the Nasdaq Composite gained 14.08 points (0.76%), to close at 1858.56. Larger-cap tech stocks were slightly less popular, with the Nasdaq100 Index adding 10.02 points (0.73%), to end at 1381.84 points.

The broader stock market measures advanced - the NYSE Composite Index gained 45.2 points (0.69%), closing at 6555.64, while the broadest measure of US equities, the Wilshire 5000, added 79.28 points (0.73%), finishing the session at 10900.16.

NYSE Volume was about average, with 1.21 billion shares crossing the tape, while Nasdaq Volume was below average, with 1.33 billion shares traded.

Nasdaq Composite1858.5614.080.76%
NYSE Composite6555.6445.20.69%
Wilshire 500010900.1679.280.73%
NYSE Volume1.21bn--
Nasdaq Volume1.33bn--
US 30-yr yld5.01%-0.05%-0.97%

On the NYSE the one-day A/D reading showed just how stupid goldfish-investors can be after a long weekend. Advancing Issues outpaced decliners by a massive 2435 to 888 - for a one-day A/D reading of 1547. That is a number associated with short-term market tops. Inshort, it showed that "investors" are the same wild-eyed religious-zealot type freaks as could be seen on footage of the Republican Convention; I loathe "working class Tories" at the best of times - because they are too stupid to know when they are being shafted - but mix in a near-messianic idolatry of a half-wit like Bush and ... no, I can't openly call for genocide.

Nasdaq gainers outpaced losers by 1919 to 1157; although slightly less euphoric than the NYSE's stats, it still shows that Pavlov's techniques work. After three years of being kicked in the guts every time they went near tech, one year of gains has brought "investors" back, slavering to the sound of Pavlov's bell.

NYSE advancing volume outpaced volume in decliners by 888.26 million shares to to 309.73 million. That is interesting given the huge disparity in advance-decline numbers; taking the two together, it is a sign of distribution.

Nasdaq advancing volume outpaced volume in decliners by 461.94 million shares to 232.67 million. Again, far too little of overall volume was in advancers - another sign of a distribution.

177 NYSE stocks posted new 52-week highs, and just 10 hit new 52-week lows. On the Nasdaq, 86 stocks hit new 52-week highs, and 36 plumbed 52-week lows.

Advancing Volume (m)888.26461.94
Declining Volume (m)309.73232.67
New Highs17786
New Lows1036

There was pretty huge call-buying in the options market last night. Given that implied volatilities went up, it shows that nuffuffs were paying up for calls. this late in a bounce (and this move is just a bounce) it shows that the dumbest-of-the-dumb money is now being lured in.

The Equity Put-Call ratio fell to 0.68; it's not yet "manic" enough to forecast a significant decline, but taken in conjunction with the A/D numbers and other indicators of sentiment, it looks like there might be a swift decline as we approach options expiration next Friday.

Equity Call Volume2.130.6342.43%
Equity Put Volume1.460.1713.29%
CBOE Volatility Index14.070.161.15%
CBOE Nasdaq Volatility Index21.440.381.8%

Bonds rose at the long end, with the benchmark US 30-year bond yield shedding 0.049 points to 5.012%. The whole yield curve dropped, but longer term yields fell several basis points more than short-term yields - that is, the yield curve flattened.

The bond market is being sustained by foreign government buying at the moment; countries with massive bilateral trade surpluses withe the US are recycling their US-dollar earnings by buying treasuries. This serves to prevent the US dollar from depreciating, and helps the countries concerned (China and Japan) from losing exports to the US as a result of any appreciation.

The US appears to be too stupid to see the ramifications of this: effectively it gives two major foreign powers a very significant vote in the US economy. For example, if the Chinese central government was sufficiently pissed off at Americans (over, say,TAIWAN), they could dump US treasuries - setting of a massive spiral in the US credit market.

And that. my dear habibi, is why the U.S. is willing to pose and primp like a schoolyard bully after it beats the crap out of teensy little countries whose back is already broken, but will not do anything meaningful when it comes to China - regarding Tibet, regarding Taiwan...

UST 2Y (yld)2.555-0.02-0.89%
UST 5Y (yld)3.449-0.047-1.34%
UST 10Y (yld)4.236-0.06-1.28%
UST 30Y (yld)5.008-0.051-1.01%
The Banks Index gained 0.77 points (0.78%), finishing the session at 99.9; within the index,
  • the Derivative King - JPMorganChase gained $0.02 (0.05%) to close at $39.87; and
  • Citigroup gained $0.37 (0.79%) to close at $47.21

The Broker-dealer Index gained 3.36 points (2.69%), finishing the session at 128.15; the ticket clippers lined up as follows -

  • Merrill Lynch gained $1.29 (2.49%) to $53.13
  • Morgan Stanley Dean Witter gained $1.72 (3.37%) to close at $52.72
  • Goldman Sachs gained $2.03 (2.25%) closing at $92.23
  • Lehman Brothers gained $2.05 (2.76%) to $76.25

The Philadelphia SOX (Semiconductor) index still can't get its head out of the porridge. It lost 4.08 points (1.14%), finishing the session at 353.76

  • Triquint lost $0.02 (0.54%) to $3.65
  • Micron Technology lost $0.11 (0.98%) finishing at $11.12
  • Intel lost $0.16 (0.8%) to $19.89
  • Altera lost $0.06 (0.34%) closing at $17.75
  • JDS Uniphase gained $0.03 (0.98%) to $3.08

Other indices popular with the beta-chasers were up, with the

  • Biotech Index gaining 2.97 points (0.59%), finishing the session at 506.05
  • the Hi-Tech Index gaining 0.78 points (0.18%), closing at 422.45

Gold weakened by $2.10 (1.00%) to $398.40 (Timbo - I told you it was going under $400), which contributed to the Gold Bugs Index losing 2.59 points (1.28%) to 199.3. Silver got tennelled by $0.35 (5.4%) to close at $6.21 per ounce. The Gold and Silver Index (XAU) lost 0.78 points (0.84%), finishing the session at 92.15.

PHLX Gold and Silver Index92.15-0.78-0.84%
AMEX Gold BUGS Index199.3-2.59-1.28%

Oil lost ground, shedding $0.70 per barrel, closing at $43.21 per barrel. Nothing blew up in Iraq on the weekend, and the latest hurricane missed pretty much all of the oil derricks in the Gulf of Mexico. Plus, Labour Day is behind us, so energy demand for hydrocarbons gets a little squishy until winter's demand for heating ouil ramps up.

The Oil and Gas Index (XOI) only lost 0.16 points (0.02%), finishing the session at 651.41 while the Oil service stocks (OSX) Index lost 1.26 points (1.1%), finishing the session at 112.83.

Reuters CRB273-2.25-0.82%
Crude Oil Light Sweet43.21-0.7-1.59%
AMEX Oil Index651.41-0.16-0.02%
Oil Service Index112.83-1.26-1.1%
US Dollar Index89.33-0.32-0.36%
Australian Dollarar0.693600.36%
Swiss Franc1.2676-0.0026-0.2%

European bourses were basically flat: France's benchmark CAC-40 Index gained 9.11 points (0.25%), to 3682.14. The German DAX-30 Index gained 1.46 points (0.04%), closing at 3889.04 and the UK FTSE-100 Index gained 1.8 points (0.04%), finishing the session at 4565.6