Interdum stultus opportuna loquitur...

Thursday, November 11, 2004

Qual' Piuma al' Vento

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Tonight's Pivots (US Market)


Economic Statistics

    There was no economic data released last night, due to the Veterans' Day holiday.

    Federal Reserve Open Market Operations

    The Fed's Open Market Operations desk had the day off (they're bureaucrats, remember - give them so much as a hint of a public holiday and they will desert).

    Major US Indices

    Those that the Gods would destroy, they first make mad. So the saying goes.

    It's not clear whether that saying includes mindless euphoria and optimism within its definition of madness, but it ought to; it's unfair to exclude the "manic" half of manic depressive behaviour (also known as "how markets work").

    The bond market takes Veterans' Day as a holiday, but the stock (and stock index) markets don't. Last night - if journalist-speak is to be repeated here - the stock market "took advantage of the holiday mood" and steamed upward for the bulk of the session on pretty solid volume.

    Holiday mood? How do you have a "holiday mood" when you're commemorating the fact that 18-25 year old working class males are dumb enough to be whipped into a martial frenzy (about once a generation), to go off and blow the bejesus out of each other so that their political classes can own a bit more land with a few more serfs on it?

    Anybody who understands economics (particularly Coase's insightful theorem) realises that war is the least efficient way to accomplish any territorial ambition; it bleeds the Treasury and wipes out a decent swathe of the aforementioned 18-25 yer old cohort of young impressionable idiots.

    So why is it popular with politicians? Simple, silly... it enables them to expand the reach of the State, with little or no argument from the electorate. Plus, the costs are borne by the society at large, but the benefits (military materiel provision, and so on) are reaped by a relatively narrow clique, usually non-arms-length from the government of the day. Think "Halliburton"... as Major General Smedley Butler famously said - "War is a Racket". (The entire book of the same name is here, and I urge everyone to read it... it's quite short).

    Bribing the "enemy" would - always, and everywhere - be a less costly way of preventing despotic expansions and of realising territorial ambitions. What it would not enable, is the expansion of the State and the massivetransfer of resources from taxpayers to war profiteers (again,,, think Halliburton).

    Imagine if we had bribed Hitler (offering him, say, a billion dollars and a new identity) to bugger off to the South of France (by himself - without an eight division Wermacht travelling-party). Every man has his price, after all. What misery would Europe have been spared? Sure, you might get a few extra despots lining up at the trough, but compare that with the massive loss of resources and life (and the disruption to civilians in disputed territory) of the "normal" approach.

    But I digress... this is supposed to be about market indices - you know, the really important stuff.

    The DJIA added 84.36 points (0.81%), closing out the day at 10469.84 points; the broader S&P500 rose 10.57 points (0.91%), ending the day at 1173.48.

    Techs went for yet another optimism-inspire squirt, with the Nasdaq Composite added 26.71 points (1.31%), to close at 2061.27, and larger-cap technology issues running harder with the Nasdaq100 adding 24.64 points (1.62%), to end at 1541.7 points. And the brown-ships - the Semiconductor and Internet stocks - went birko, adding 2% and 3.7% respectively.

    So it was a genuine "flight to shite" as an Irish chum might put it (although I don't have any Irish chums... I'm extrapolating from the video-store clerk on "Small Potatoes").

    NYSE Volume was solid, with 1.4 billion shares crossing the tape, while Nasdaq Volume was chunky, with 1.77 billion shares traded.

    Nasdaq Composite2061.2726.711.31%
    NYSE Volume1.4bn--
    Nasdaq Volume1.77bn--
    US 30-yr yld4.97%-0.01%-0.22%

    Market Breadth & Internals

    On the NYSE advancing Issues exceeded decliners by 2434 to 885 for an eye-popping single-day A/D reading of 1549; Nasdaq gainers trumped losers by 2034 to 1079 - yet again, the Nasdaq is being less manic than the NYSE. How strange.

    NYSE advancing volume exceeded volume in decliners by 1043.9 to 348.19 million shares; that, dear reader, is a 3:1 volume tilt, which you don't see all that often. Nasdaq advancing volume was greater than volume in decliners by 725.38 to 280.06 million shares.

    281 NYSE-listed stocks rose to new 52-week highs, and 6 posted fresh 52-week lows, while on the Nasdaq there were 182 stocks that hit new 52-week highs, and 20 which fell to fresh 52-week lows

    Advancing Volume (m)1043.9725.38
    Declining Volume (m)348.19280.06
    New Highs281182
    New Lows620

    Market Sentiment

    It's actually getting quite loopy now; continued falling volatility, continued "happy talk" from the sell-side, continued (albeit decelerating) falls in the put-call ratio.

    And this in a global economic climate which is as shaky as any time since WWII; China and Russia on the one hand, and the US on theother, are headed for a confrontation if the US presses the issue of Iran, and Iraq is not going well at all.

    Sure, oil has backed off, but remember when $40 oil was considered bad news? Well, stock prices were lower then.

    And don't beleive any balderdash about "stock prices discounting the future" or "looking across the valley" or any of the other trite garbage that you'll read this weekend. If stock prices are such a good economic forecaster, what were they seeing in 1999/2000? Answer (as Jamie Oliver might say)... "Happy Days, me old China".

    What did we get? A world where the global political order fostered over half a century has been lain waste by an idiot with the IQ of a retarded chimp and his cabal of neo-crazies. So save the "forward looking" garbage for CNBC... at 5000 the Nasdaq wasn't looking where it was going at all.

    CBOE Equity Call Volume (000)720.03-2.67-0.37%
    CBOE Equity Put Volume (000)390.81-18-4.4%
    CBOE Volatility Index13.04-0.04-0.31%
    CBOE Nasdaq Volatility Index18.92-0.49-2.52%
    Equity Put-Call Ratio0.54-0.01-2.39%
    10-day PCR0.590.00020.04%
    SPX-VIX Ratio89.991.081.22%


    Although the bond market was closed, there was still trade in the Lehman 20-yr Treasury iShares, which fell another 19c. This drove the $89 November put (TLT WK) up another $25 to $1.85 (recall, this is the second half of a 2-lot purchased at $70 - the first half was sold when it hit 100% profit).

    And a good thing, too - after all, the QQQ put got hammered as a result of the equities rally (but I would not be too concerned about it - there's still a week until expiry and the MaxPain level for QQQ is under $37).

    The Banks Index posted a rise of 0.93 points (0.91%), to 102.99; within the index,

    • the Derivative King - JPMorganChase added $0.23 (0.59%) closing at $39.18; and
    • Citigroup gained $0.21 (0.46%) ending the day at $46.26

    The Broker-dealer Index gained 2.32 points (1.65%), to end the session at 142.92; the ticket clippers lined up as follows -

    • Merrill Lynch added $0.47 (0.85%) to $55.97
    • Morgan Stanley Dean Witter gained $0.59 (1.14%) at $52.15
    • Goldman Sachs gained $2.25 (2.23%) at $103.00
    • Lehman Brothers rose $0.97 (1.17%) to end the session at $83.92

    The Philadelphia SOX (Semiconductor) index added 8.5 points (2.09%), to 414.26

    • Triquint advanced $0.12 (3.09%) ending the day at $4.00
    • Micron Technology rose $0.15 (1.3%) to $11.65
    • Intel gained $0.31 (1.36%) closing at $23.17
    • Altera gained $0.59 (2.7%) to $22.42
    • JDS Uniphase gained $0.04 (1.28%) at $3.17

    Gold & Silver

    Gold stalled a little, eventually closing with a gain of $0.60 (0.14%) to $434.80 per ounce. The Gold Bugs Index lost 0.21 points (0.09%), ending the day at 237.24 points.

    Silver rose $0.04 (0.47%) to close at $7.47 per ounce. The Gold and Silver Index (XAU) gained 0.53 points (0.5%), at 106 points.

    PHLX Gold and Silver Index1060.530.5%
    AMEX Gold BUGS Index237.24-0.21-0.09%


    Oil continues its "nuffie-killing" retrenchment, and last night it shed another $1.35 per barrel (2.76%), closing at $47.51 per barrel. The Oil and Gas Index (XOI) slid 0.44 points (0.06%), ending the day at 701.96 points.

    The Oil service stocks (OSX) Index shed 0.51 points (0.44%), to 116.28

    Reuters CRB283.25-1-0.35%
    Crude Oil Light Sweet47.51-1.35-2.76%
    AMEX Oil Index701.96-0.44-0.06%
    Oil Service Index116.28-0.51-0.44%


    Trade in the ForEx market was pretty tame last night, with a narrow range in all the USD crosses. The US Dollar Index is not going to be able to form any sort of medium-term bottom until a few more washouts and bounces. As you'll be aware, genuine bottoms are formed when every man and his dog declare that the only way is down, and that the fundamentals of the asset justify the direction of the market.

    At present, most people view the weakness of the US dollar as a "one way bet" but still think that the US is a "strong economy". That means a few more short-covering bounces before everybody genuinely believes thatthe USDX deserves to be where it is... then it will form a bottom. (Think of Gold under $270, when only the Gold-a-holics were interested in it).

    US Dollar Index84.34-0.18-0.21%
    Australian Dollar0.7640.00550.73%
    Swiss Franc1.1777-0.004-0.34%
    Canadian Dollar0.8358-0.0006-0.07%

    European Markets

    France's benchmark CAC-40 Index advanced 48.88 points (1.29%), at 3833.79; the German DAX-30 Index gained 41.68 points (1.02%), at 4130.81; and in the UK, the FTSE-100 Index advanced 42.4 points (0.9%), to 4776.9 points.