A New Quarter... Starts with a Bang.

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

Do not believe any media outlet that tries to paint a draw from the debacle that was the Thursday debate between President-to-Be John Kerry and President-that-stole-the-job-thanks-to-his-brothers-racist-voter-purge George W Bush.

I've seen a lot of comments on Fox and other media shills, claiming that the Bush-Kerry debate was a draw.

Baloney.

Bush looked like his earpiece wasn't receiving most of what was being prompted to him (I'm serious; anyone who's ever had one of those things in knows how bad it is). He was shrill and argumentative and Kerry made him look like a dunce.

Anyhow... no more politics until Bush is gone. (I'm not a Democrat, Republican, Green, Liberal, Labour, or anything else... I just want the keys to be turned over as often as possible).

Federal Reserve Open Market Operations

The Fed's Open Market desk performed a $6.5 billion over-th-weekend repurchase, but only $2.826 billion was in Treasury-backed collateral.

It didn't matter one iota - the market was already in melt-up mode before the Fed's repurchase intentions crossed the newswires. By the time the cash market opened, the futures were already up 5 points, and everything just kept going up from there.

In the usual journalistic "there must be a reason" vein, some real doozies were attempted: "US Stocks Rise as Oil Prices Ease, Techs Surge" for example (Oil closed UP $0.48 to $50.15... so Anupama Chandrasekaran of Reuters goes on the "pay no attention to this whacker" list).

Stocks went ballistic - for no good reason. Simple as that.

Economic Statistics

Another data-heavy night: The University of Michigan Consumer Sentiment Index was the first cab off the rank, and it was mildly disappointing. Consensus had expected a reading of 95.8, but the actual release was 94.2.

Next came Construction Spending - which exceeded expectations. The headline number came in at 0.8%, while it was expected to be about 0.5%. The strongest area of the report was single-family dwellings, which should be no surprise given the recent falls in mortgage rates.

Finally, the Institute of Supply Management (ISM) Manufacturing Index fell to 58.5, exceeding expectations (consensus had expected a fall to 58).

None of this data - most of it neutral-to-negative - was going to get in the way of the herd today; it was clear from the hugh program trading volumes that some "new quarter" money was on the buy side.

Major US Indices The DJIA gained 112.38 points (1.11%), closing out the day at 10192.65 points; the broaderS&P500 gained 16.92 points (1.52%), finishing the session at 1131.5.

Over at Times Square, and on monitors all over trader-space, people were following orders from brokerage houses. An upgrade of a bunch of techs (Novellus, Applied Materials and Teradyne) by JPMorganChase made Pavlov's Dogs go absolutely frothy at the chops.

The Nasdaq Composite gained 45.36 points (2.39%), to close at 1942.2, while the larger-cap stocks fared better with the Nasdaq100 adding 40.2 points (2.85%), to end at 1452.94 points.

While that might appear absolutely insane, take a look at the Semiconductor Index - it rose 4.6% for the session. Madness.

The broader stock market measures were more bullish than the Dow: NYSE Composite Index gained 92.94 points (1.41%), closing at 6663.19, while the broadest measure of US equities, the Wilshire 5000 posted a gain of 163.22 points (1.5%), finishing the session at 11058.7

NYSE Volume was pretty chunky, with 1.59 billion shares changing hands, while Nasdaq Volume was well above average, with 1.81 billion shares traded.

Index	Close	Gain(Loss)	%
DJIA	10192.65	112.38	1.11%
S&P500	1131.5	16.92	1.52%
Nasdaq Composite	1942.2	45.36	2.39%
Nasdaq100	1452.94	40.2	2.85%
NYSE Composite	6663.19	92.94	1.41%
Wilshire 5000	11058.7	163.22	1.5%
NYSE Volume	1.59bn	-	-
Nasdaq Volume	1.81bn	-	-
US 30-yr yld	4.943%	0.05%	1.19%

Market Breadth & Internals

On the NYSE advancing issues absolutely thrashed decliners by 2454 to 826 for a single-day A/D reading of 1628; Nasdaq gainers outpaced losers by 2156 to 893.

NYSE volume was ludicrously tilted to gainers. Advancing volume absolutely dominated volume in decliners by a factor of 6-to-1; 1364.04 million shares were traded in stocks thatr went up for the day, versus just 214.93 million shares in stocks that declined.

On the Nasdaq it was actually less tilted at 4.77:1: advancing volume exceeded volume in decliners by 834.98 to 171.01 million shares.

289 NYSE-listed stocks rose to new 52-week highs, and 8 posted fresh 52-week lows, while on the Nasdaq there were 127 stocks that hit new 52-week highs, and 23 which fell to fresh 52-week lows.

	NYSE	Nasdaq
Advancers	2454	2156
Decliners	826	893
Advancing Volume (m)	1364.04	834.98
Declining Volume (m)	214.93	171.01
New Highs	289	127
New Lows	8	23

Market Sentiment

The massive surge in both put and call buying shows that a lot of the stock buying last night was portfolio inflows. Today's call turnover was the highest since July 14th - the same date as the previous high of put volume.

The put-call ratio actually rose (to 0.83) but remains in neutral territory. What is definitely not in neutral territory is the VIX; if I was having trrouble getting my head around a VIX of 13.xx, spare a thought for my brain now that it's got a "12" in front.

I've previously expressed my misgivings about the SPX-VIX ratio - that it is the ratio of two quantities of different orders of integration. That said, it has performed reasonably well as an indicator of short-term tops, though (I'll put up a chart of it tomorrow - I'm not at my own PC right now).

All things considered, I would look for the following: a spurt on Monday morning (US time), and then a pretty dramatic reversal over the next couple of weeks.

Personally I'm going to wait for the opening orgasm on Monday, after I see the Fed repurchase data. If there's no big repurchase on the table I'm going to buy some "one level down" puts on the QQQ... ten minutes after the open. At this stage it looks like they will be October 36 strike. They closed Friday at $45; if there's an opening orgasm a Monday they should be able to be bought for $35.

If the Fed does a big repurchase I'll wait until 10 past midnight, but the option will be the same.

Index	Close	Gain(Loss)	%
Equity Call Volume	2.86m	0.74m	35.07%
Equity Put Volume	2.37m	0.73m	44.62%
CBOE Volatility Index	12.75	-0.59	-4.42%
CBOE Nasdaq Volatility Index	18.91	-1.57	-7.67%

Bonds

Bonds fell along the curve, with the steepest falls at the long end (well, along the 5-30yr strip where all yields rose by about 5 basis points). The yield on the benchmark US 30-yr bond rose 5.1 basis points to 4.943%.

Index	Close	Gain(Loss)	%
UST 2Y (yld)	2.61	0.005	0.19%
UST 5Y (yld)	3.418	0.055	1.64%
UST 10Y (yld)	4.183	0.06	1.55%
UST 30Y (yld)	4.943	0.051	1.04%

The Banks Index gained 1.53 points (1.57%), finishing the session at 99.11; within the index,

• the Derivative King - JPMorganChase gained $0.61 (1.54%) to close at $40.34; and
• Citigroup rose $0.75 (1.7%) to $44.87

The Broker-dealer Index gained 1.83 points (1.45%), finishing the session at 128.44; the ticket clippers lined up as follows -

• Merrill Lynch gained $0.89 (1.79%) to $50.61
• Morgan Stanley Dean Witter rose $1.26 (2.56%) to close at $50.56
• Goldman Sachs added $0.68 (0.73%) to finish at $93.92
• Lehman Brothers gained $0.72 (0.9%) to close at $80.44

The Philadelphia SOX (Semiconductor) index gained 17.71 points (4.61%), finishing the session at 401.91

• Triquint added $0.18 (4.62%) to close at $4.08
• Micron Technology gained $0.33 (2.74%) to $12.36
• Intel rose $0.79 (3.94%) to $20.85
• Altera gained $0.69 (3.53%) to $20.26
• JDS Uniphase added $0.06 (1.78%) to close at $3.43

The stocks that were upgraded by JPM (NVLS, AMAT and TER) all rose madly - by

• 5.11% (NVLS);
• 4.91% (AMAT); and
• 7.16% (TER) for the day.

Hands up anyone who thinks that any long term money went into those stocks. Sadly, I think a lot of it was retail.

Gold & Silver

Gold strengthened by $0.30 (0.07%) to 418.50. The Gold Bugs Index fell 1.99 points (0.86%), finishing the session at 229.39 points.

Silver was basically unchanged, rising $0.002 an ounce to close at $6.918 per ounce.

The Gold and Silver Index (XAU) lost 0.89 points (0.87%), finishing the session at 101.06 points.

Index	Close	Gain(Loss)	%
Gold	418.5	0.3	0.07%
Silver	6.918	0.002	0.03%
PHLX Gold and Silver Index	101.06	-0.89	-0.87%
AMEX Gold BUGS Index	229.39	-1.99	-0.86%

Oil

Oil was firmer, rising by $0.71 per barrel, closing at $50.15 per barrel.

The Oil and Gas Index (XOI) which gained 8.4 points (1.2%), closing at 707.14 points, while the Oil service stocks (OSX) Index gained 2.38 points (1.97%), ending the week at 123.17 points.

Index	Close	Gain(Loss)	%
Reuters CRB	284.95	-0.15	-0.05%
Crude Oil Light Sweet	50.15	0.71	1.44%
AMEX Oil Index	707.14	8.4	1.2%
Oil Service Index	123.17	2.38	1.97%

Currencies

Index	Close	Gain(Loss)	%
US Dollar Index	87.76	0.26	0.3%
Euro	1.2399	-0.0031	-0.25%
Yen	110.52	0.51	0.46%
Sterling	1.798	-0.0137	-0.76%
Australian Dollarar	0.7259	0.0008	-0.1%
Swiss Franc	1.2511	0.0056	0.45%

European Markets

France's benchmark CAC-40 Index gained 89.55 points (2.46%), finishing the session at 3730.16; the German DAX-30 Index went absolutely silly, rising 102.06 points (2.62%) to 3994.96 (but never pushing above 4000).

In the UK, the FTSE-100 Index gained 88.8 points (1.94%), closing out the week at 4659.6o points.

Index	Close	Gain(Loss)	%
CAC-40	3730.16	89.55	2.46%
DAX-30	3994.96	102.06	2.62%
FTSE-100	4659.6	88.8	1.94%