Interdum stultus opportuna loquitur...

Monday, October 18, 2004

Techs go Nuts... What Else is New?

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


Having finally found a 'telecommunications solution' which is stable, I can take up the cudgels once more - on a more frequent basis.

On the personal front, my youngest brother (Christopher) was pleased by the advent of my first niece (I have five nephews). This happened on Thursday (exactly on schedule). We all went to visit them Sunday. Mother, baby and father all fine; baby referred to as Mia Angelina (the second name is a bit over the top, to my way of thinking; a bit woggy).

The universe doesn't permit unalloyed joy, however; my beloved catsie Nackanigh (he of the slightly-bemused facial expression) has gone missing.

Moving right along....

That option (QQQVJ - which expired on Friday) did OK provided the "take money off the table" strategy was employed. The first tranche, you will recall, was exited (metaphorically - I missed the actual entry) with a 100% gain. The second tranche was held right to expiry, at which time it was worth $35.

Doing the mind-boggling algebra required, the average gain on the two tranches is 58.3%; using actual brokerage commissions (from InteractiveBrokers - $1 per contract per side for options) that equates to a post-brokerage gain of exactly 50% per 2-contract lot.

The next option will probably be in Live Cattle, simply because I was too late (and too lazy) to look at an Oil chart on Friday... an oil put was a lay-down misere if oil hit $55 before the end of this week, but that boat is now gone. I ought to have given people a heads-up on Tuesday or Wednesday as to the likely vehicle, but I didn't so I won't harp about it.

Federal Reserve Open Market Operations

The Federal Reserve did an $85 billion overnight repurchase, with $5.34 billion of that in market-goosing Treasury-backed collateral.

Using the $5 bill notional cutoff for tradable manipulation efforts by major US banks, "buy at midnight" should have been the way to go. However if that strategy had been pursued, only the foolhardy would have profited; at midnight the S&P futures were trading at 1107.75, but precisely an hour later they were at 1103.25.

Sensible intraday risk management means that the "buy at midnight" trade would have been stopped out for a loss. Needless to say, the 1 a.m. (our time) print was the low for the day session - most of the moonshot happened during the lunch period (from about 2 a.m. our time) and once folks got back from lunch it stopped.

Economic Statistics

Absolutely nothing of note was released last night.

Tomorrow there's the CPI (consensus: 0.2% for both healine and "core" CPI) and Housing Starts (consensus: 1.95m units starts).

Major US Indices

Considering how much money was thrown at the lunchtime jamjob, thrre wasn't much to show for it outside of the looney-tunes land of Tech "investing".

The DJIA gained 22.94 points (0.23%), closing out the day at 9956.32 points; it was weighed down by MMM's profit "miss" (which was exactly offset - in Dow points - by a bounce in AIG).

The broader S&P500 gained 5.82 points (0.53%), finishing the session at 1114.02.

Over at Times Square, and on monitors all over cyberspace, tech investors had a rush of blood to the pelvis (or at least, to some area other than the brain).

The Nasdaq Composite gained 25.02 points (1.31%), to close at 1936.52, while larger-cap tech stocks fared better with the Nasdaq100 adding 26.33 points (1.84%), to end at 1457.31 points.

The reason? It was Monday. (That's as good a reason as you can get when you're talking about tech).

Jokes aside, folks appeared to be front-running IBM's earnings announcement, which was made after the closing bell (and which beat expectations, once you ignore any and all bad stuff and make heroic assumptions about future pension gains - having just been forced to spend $320 million to top up the plan).

NYSE Volume was solid, with 1.38 billion shares traded, while Nasdaq Volume was slightly below average, with 1.5 billion shares crossing the tape.

Nasdaq Composite1936.5225.021.31%
NYSE Volume1.38bn--
Nasdaq Volume1.5bn--
US 30-yr yld4.84%-0.01%-0.14%

Market Breadth & Internals

On the NYSE advancing issues exceeded decliners by 1800 to 1497 for a single-day A/D reading of 303; Nasdaq gainers exceeded losers by 1794 to 1238.

NYSE advancing volume also beat volume in decliners, with 734.21 million shares traded in staocks that gained for the session as compared with 603.16 million shares in today's losers.

Nasdaq advancing volume outpaced volume in decliners by 637.75 to 161.38 million shares - an almost 4:1 tilt in favour of gainers. Everybody knows how tech stocks benefit when oil prices are stood on for a single session... CNBC will tell them if they don't kow already, and the rest is Happy Happy Happy Joy Joy Joy.

89 NYSE-listed stocks rose to new 52-week highs, and 38 posted fresh 52-week lows, while on the Nasdaq there were 70 stocks that hit new 52-week highs, and 57 which fell to fresh 52-week lows.

Notice that? The number of stocks making new highs is contracting on both exchanges, and the number of new lows is expanding. We are headed for something pretty gut-wrenching.

Advancing Volume (m)734.21637.75
Declining Volume (m)603.16161.38
New Highs8970
New Lows3857

Market Sentiment

Call volume is still above 2.3 million contracts - a very high number - while put volume is cratering.

The teensy washoff we had in volatility last week is not even worth writing about - if folks think that the little reaction we had off about 1140 in the S&P means that it's all upward from here to the election, they're going to be sadly disappointed.

Everybody (bar a very few folks - perma-bears and gold nuts, mostly) is on the same side of the boat at the moment. Everybody sees ANY dip as a "buying opportunity". This is a recipe for a very significant 'out of the blue' decline.

It may also be that a lot of money is being bet on George W Bush's campaign pulling an "October Surprise" - yanking a bearded Islamicist from a holding cell and parading his "capture". Arbustito is not above any level of skulduggery.

The Bush campaign's symbiotic relationship with Sinclair Communications - which saw the broadcaster attempt to force local affiliate stations to run an anti-Kerry polemic as "news" - has come unstuck already. Protests have included, but not been limited to, the withdrawal and threatened withdrawal of advertising loot from Sinclair affiliates if the affililates run the show.

In short, having been kept scoreless in the debates, Bush needs a bomb to go off within the US, or the capture of a major "terror figure" (they might claim to have killed the quasi-mythical Abu Musab al-Zarqawi, who used to only have one leg until he started making beheading videos... he also used to be dead, if you believe previous CIA announcements about him).

For those who think that politicians would never stoop to such a thing... read some history.

Equity Call Volume2.41m0.05m2.26%
Equity Put Volume1.73m-0.15m-7.74%
CBOE Volatility Index14.71-0.33-2.19%
CBOE Nasdaq Volatility Index20.72-1.08-4.95%
Equity Put-Call Ratio0.72-0.08-9.78%
SPX-VIX Ratio75.732.052.78%


UST 2Y (yld)2.5030-0.16%
UST 5Y (yld)3.296-0.009-0.27%
UST 10Y (yld)4.047-0.01-0.3%
UST 30Y (yld)4.839-0.011-0.23%
The Banks Index gained 0.43 points (0.44%), finishing the session at 98.63; within the index,

  • the Derivative King - JPMorganChase gained $0.26 (0.67%) to close at $39.00; and
  • Citigroup gained $0.26 (0.59%) to close at $44.20

The Broker-dealer Index lost 0.11 points (0.09%), finishing the session at 126.13; the ticket clippers lined up as follows -

  • Merrill Lynch gained $0.59 (1.14%) to close at $52.22
  • Morgan Stanley Dean Witter gained $0.60 (1.24%) to close at $48.84
  • Goldman Sachs gained $0.09 (0.1%) to close at $94.25
  • Lehman Brothers gained $0.16 (0.2%) to close at $80.14

The Philadelphia SOX (Semiconductor) index gained 2.98 points (0.78%), finishing the session at 384.35

  • Triquint gained $0.04 (1.04%) to close at $3.88
  • Micron Technology lost $0.01 (0.09%) to close at $11.37
  • Intel gained $0.18 (0.87%) to close at $20.79
  • Altera gained $0.12 (0.61%) to close at $19.71
  • JDS Uniphase gained $0.05 (1.51%) to close at $3.36

Gold & Silver

Gold weakened by $2.80 (0.67%) to $417.30, which contributed to the Gold Bugs Index losing 6.11 points (2.69%) to close at 221.36.

Silver fell by $0.12 to close at $6.99 per ounce. The Gold and Silver Index (XAU) lost 1.5 points (1.5%), finishing the session at 98.39

PHLX Gold and Silver Index98.39-1-1.01%
AMEX Gold BUGS Index221.36-2.62-1.17%


Oil tanked hard during the New York session (the PPT doesn't just intervene in equities). Having hit a new record high of $55.33 during the Asian and European sessions, Oil dropped like a rock, shedding $1.75 per barrel for the session (and $2.15 from its high), closing at $53.18 per barrel.

The Oil and Gas Index (XOI) lost 8.18 points (1.17%), finishing the session at 691.3, while the Oil service stocks (OSX) Index lost 2.05 points (1.71%), closing at 117.54 points.

Reuters CRB283.9-2.55-0.89%
Crude Oil Light Sweet53.18-1.75-3.19%
AMEX Oil Index691.3-8.18-1.17%
Oil Service Index117.54-2.05-1.71%


The "gain/loss" and "%" numbers in the table below are incorrect; they will right themselves tomorrow.

US Dollar Index87.15-1.14-1.29%
Australian Dollarar0.72510.011.21%
Swiss Franc1.2305-0.028-2.22%

European Markets

France's benchmark CAC-40 Index lost 10.95 points (0.3%), finishing the session at 3659.81 points; the German DAX-30 Index lost 6.94 points (0.18%), finishing the session at 3915.17; and in the UK, the FTSE-100 Index gained 3.9 points (0.08%), finishing the session at 4626.6