Interdum stultus opportuna loquitur...

Monday, November 22, 2004

An Apple a Day? Not if you make Doughnuts

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Economic Statistics

There was nothing on the slate last night as far as "data" is concerned, but there were 2 Treasury auctions -

  • $19 bill in 3-month bills, cleared at 2.115% with a bid-to-cover of 2.47x; and
  • $17bill in 6-month bills, cleared at 2.365% with a bid-to-cover of 1.83x.

Notice that the spread to Fed Funds (for both tranches) is wider than last week - if you want a higher bid-to-cover ratio, the folks buying your debt gots to get paid.

There's a bit on tomorrow's data-plate;

  • weekly ICSC/UBS and BTM/Redbook chain store sales (for which there's no consensus guess);
  • Existing Home Sales (consensus guess: 6.8m; range 6.49m-6.93m); and
  • the State Street Investor Confidence Index (a relatively new index, but interesting in that it measures actual portfolio allocations to get an idea of risk appetite)

There is also the weekly 4-week bill auction (for $22bill) and the monthly 2-year note auction.

Forthcoming US Economic Data

Tomorrow's US Economic Data Calendar

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation last night:

  • a $9.75billion, overnight repurchase with $6.923billion in T-backed collateral .

Combined with the fact that it was Monday, that shold have prepped the major indices for a "flight to shite" at some stage during the session (usually starting at 10 a.m. NY time).

Sure enough, the session low (which was actually made almost an hour after 10 a.m.) was within a point of the 10 a.m. level.

So yet again, "Buy at 10 if the Fed's greasing the wheels" worked (even when it doesn't work, it never, EVER hurts to any real extent).

Major US Indices

The DJIA rose 32.51 points (0.31%), closing out the day at 10489.42 points; the broader S&P500 added 6.9 points (0.59%), to 1177.24.

The Nasdaq Composite added 14.56 points (0.7%), to close at 2085.19, and larger-cap technology issues fared better with the Nasdaq100 adding 16.17 points (1.04%), to end at 1568.28 points. Much of the ado in tech was due to a brokerage upgrade of Apple, with a price target of $100 - based on the bloody iPod, for God's sake. As if there are not already a dozen cometitive variants, eating into Apple's margins like little worms. I will not name the broker until this stupid, stupid, stupid call is due for its comeuppance.

To see what a comeuppance looks like, check out a chart of Krispy Kreme (the doughnut shop); last night it hit a fresh all time low after disappointing folks once too often.

Krispy Kreme... blyeaccch

NYSE Volume was reasonable, with 1.39 billion shares traded, while Nasdaq Volume was strong, with 1.9 billion shares crossing the tape.

Nasdaq Composite2085.1914.560.7%
NYSE Volume1.39bn--
Nasdaq Volume1.9bn--
US 30-yr yld4.83%-0.05%-1.01%

Market Breadth & Internals

On the NYSE advancing Issues exceeded decliners by 2297 to 1049 for a single-day A/D reading of 1248 (don't you love Mondays? Always mindlessly optimistic); Nasdaq gainers trumped losers by 1851 to 1275.

NYSE advancing volume exceeded volume in decliners by 942.87 to 427.17 million shares; Nasdaq advancing volume was greater than volume in decliners by 682.71 to 355.16 million shares.

166 NYSE-listed stocks rose to new 52-week highs, and 8 posted fresh 52-week lows, while on the Nasdaq there were 115 stocks that hit new 52-week highs, and 18 which fell to fresh 52-week lows

Advancing Volume (m)942.87682.71
Declining Volume (m)427.17355.16
New Highs166115
New Lows818

Market Sentiment

The rollover associated with options expiration (last week) is finished, and that's half the reason why options volume dropped.

All of the sentiment indicators are pretty much in "La La Land", but a market in an ebullient mood can continue to remain overbought for some time (just as, in a bear market, you don't trade the first 2 short-term oversold conditions).

I flagged 1220 as a possible upside target some tiem ago, but also pointed out that I doubted the ability of this market t oget there. I still doubt it, but the target is gaining some traction. I noticed last night that called for the front-mont hS&P to try and target the same area. I've got a bit of time for their stuff, but they're FAR better on intraday movements (albeit not very timely) than broader swings.

I still doubt that this market has any more legs. Too many people are trying to "front run" 2005 - which almost certainly means that 2005 will disappoint them. After everyone's bought, who is left to buy?

Look at the VIX, for crying out loud... it is telling us that equity investment is less risky than investment in US government bonds yielding 3%!!!

CBOE Equity Call Volume (000)727.36-173.31-19.24%
CBOE Equity Put Volume (000)380.96-56.14-12.84%
CBOE Volatility Index12.97-0.53-3.93%
CBOE Nasdaq Volatility Index18.77-0.95-4.82%
Equity Put-Call Ratio0.520.047.92%
10-day PCR0.530.00390.75%
SPX-VIX Ratio90.774.074.7%

Bond Market Analysis

Bonds rose from the belly to the long end, with the yield on the benchmark 30-year Treasury bond shedding 3.9 basis points to 4.826%.

Take a look at the Treasury auction stuff at the top of the page - the US is sloshing out bond supply like there's no tomorrow. Everybody continues to bank on China and Japan to gobble these up as a way of recycling their US dollar trade surpluses; that's been a losing strategy for two years now (what a surprise - government on the wrong side of a trade!!!), but eventually these two funders of last resort will get tired of propping up the globe's greatest moocher.

UST 2Y (yld)2.9340.030.89%
UST 5Y (yld)3.558-0.007-0.2%
UST 10Y (yld)4.178-0.03-0.59%
UST 30Y (yld)4.844-0.039-0.8%

The Banks Index added 0.75 points (0.74%), to 101.51; within the index,

  • the Derivative King - JPMorganChase rose $0.16 (0.43%) at $37.58; and
  • Citigroup added $0.01 (0.02%) at $45.16

The Broker-dealer Index advanced 0.81 points (0.57%), ending the day at 143.32; the ticket clippers lined up as follows -

  • Merrill Lynch advanced $0.46 (0.82%) closing at $56.80
  • Morgan Stanley Dean Witter declined $0.31 (0.59%) closing at $51.95
  • Goldman Sachs rose $0.38 (0.37%) to end the session at $103.42
  • Lehman Brothers added $1.46 (1.79%) closing at $83.10

Last night was a farce, with brokers altering estimates on each other.

The Philadelphia SOX (Semiconductor) index advanced a paltry single point (0.23%), ending the day at 432.88

  • Triquint rose $0.04 (0.94%) to $4.28
  • Micron Technology declined $0.27 (2.31%) ending the day at $11.43
  • Intel declined $0.06 (0.25%) ending the day at $24.10
  • Altera advanced $0.05 (0.21%) at $23.45
  • JDS Uniphase added $0.02 (0.64%) closing at $3.16

Gold & Silver Markets

Gold strengthened by $1.70 (0.38%) to $449.20 per ounce; $450 is so close that you can smell it, but nobody wants to be the schmuck who bought the offer at $450 only to see da Boyz rip the heart out of the market.

The Gold Bugs Index gained 0.7 points (0.29%), to 242.02 points.

Silver fell by $0.04 (0.53%) to close at $7.57 per ounce. The Gold and Silver Index (XAU) gained 0.57 points (0.52%), to end the session at 110.25 points.

PHLX Gold and Silver Index110.250.570.52%
AMEX Gold BUGS Index242.020.70.29%

Oil Market

Oil lost ground, shedding $0.34 per barrel (0.7%), closing at $48.30 per barrel after trading as high as $49.20 during the session. The Oil and Gas Index (XOI) posted a rise of 11.35 points (1.58%), at 730.49.

The Oil service stocks (OSX) Index rose 0.69 points (0.56%), ending the day at 123.67.

Reuters CRB286.5-1-0.35%
Crude Oil Light Sweet48.30-0.34-0.70%
AMEX Oil Index730.4911.351.58%
Oil Service Index123.670.690.56%

Currency Markets

The US dollar index is poised at the edge of the abyss; with the amount of bearish babbling in the US and other press, the odds of a good bounce are increasing all the time. If the USDX gets down to a mid-82 handle, I would be a seller of the currencies that have moved the most in recent times; the Auusie dollar and the Yen.

US Dollar Index83.25-0.12-0.14%
Australian Dollar0.7821-0.0009-0.11%
Swiss Franc1.16280.0010.09%
Canadian Dollar0.84270.0050.6%

European Markets

Typical - if they don't get head-faked, the Poms, Frogs and Krauts get "ass faked". Everything looked shabby during the Euopean session last night, with the S&P futures down 4.5 points as Euope opened. So the Euro-bozos all sold, and tonight they will all buy back... at a loss. For as the aphorism about short-selling goes...

"He what sells what isn't his'n,

must buy it back or go to pris'n."

They ought to switch off their CNBC and Fox News screens and learn how to do fundamental research. Then they can actually price euro-denominated assets instead of just doing whatever the Yanks do.

France's benchmark CAC-40 Index shed 24.53 points (0.65%), to 3774.25; The German DAX-30 Index shed 10.91 points (0.26%), to end the session at 4123.98 points, and in the UK, the FTSE-100 Index shed 27.7 points (0.58%), ending the day at 4733.1 points.


Tonight's Pivots (US Futures Market)

R2105631185.81588.33113 24/32
R1105321181.91580.17113 18/32
Pivot104861175.11564.33113 4/32
S1104551171.21556.17112 30/32
S2104091164.41540.33112 16/32