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Economic Statistics
The data flow was ambiguous at best:
New Jobless Claims rose to 367000, well above the consensus guess (340000); however continuing claims dipped. Perhaps that means that some people's unemployment benefit coverage is running out.
Retail Sales were stronger than expected (at the headline level), rising 1.2% as compared with expectations of a 1% rise. However excluding automobiles (which consumers now get free with a bag of groceries, it seems... no deposit, no interest, no repayments for God knows how many years...) the number was disappointing, rising just 0.3% compared with expectations of 0.4% increase.
Tomorrow is the "big ticket" day for data, with Industrial Production, Capacity Utilisation, Business Inventories and the Producer Price Index. I tabulate consensus guesses for each of these earlier in the week, but I will revise those today and post before the US session.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations last night:
- a $2billion overnight repurchase, entirely in T-backed collateral; and
- an $8 billion, 14-day term repurchase, with 7.689billion in T-backed.
Now ordinarily, that would have been enough hot sauce to give the market a "Ring of Fire"... however it became very obvious (like at about 5 past 10, NY time) that the market had other things on its mind.
There was an auction of $10bill in 10-year TIPS, which cleared at a yield of 1.725% (fully 20.8 basis points lower than the previous auction) and a bid-to-cover ratio of 1.88x (down from an average of 2.02x in 2004). If more evidence of disinterest was required, consider that the "indirect bidders" component of demand - which includes foreign central banks and retail investors - was a lousy 37% of total bids.
Bond Auction Announcements
| Date | Instrument | Amount ($b) |
| Jan-18 | 3-month bills | 19 |
| Jan-18 | 6-month bills | 16 |
Major US Indices
For the first five and a half hours, the market basically wiggled in a frustratingly narrow range, no more than 4.5 points in the S&P. With a decent chunk of repo cash, the market should have been able to "free its arms' and play some decent cross-bat shots... and yet within 5 minutes of the repo (in the chat-room) I made it clear that the market should have been higher already (it had rallied 1.75 points in three minutes after the repo hit).
Something was amiss. The market was, as they say, "choppy". Now we had best get definitions sorted out: some people use the word "choppy" to mean "not nice"... as in "Sure, she may look terrific, but her manners are pretty choppy". In trading parlance a "choppy" market isn't necessarily "not nice", it's often just boring. (Last night is another matter - it got, as we say, chopped to pieces).
Choppy in this context just means "not prepared to go anywhere in any sort of hurry". It's a diabolical state that markets sometimes get into, where one index is up and others down, and some stocks within the faster-moving indices are strong and others not so much. When markets break out of these congested areas they tend to do so with some vigour - but usually after tricking traders in both directions.
Check out the chart below - it's the first 5 hours of the session. Bo-ring. Notice how there is a false break upwards which fails to break the Globex high (the Globex high is not shown), and a false break downwards which makes a new low for the day by a little more than a tick, only to reverse up and re-test the top of the range.
S&P Futures Intraday 5 minute chart
Now click on the chart to see the remainder of the session... ask yourself how a move like that happens with no news.
The pain went from bad to worse for longs (ask me how I know) with selling that simply didn't bounce at all. By the close the DJIA had dipped 111.95 points (1.05%), closing out the day at 10505.83 points; it was only through absolutely flagrant pumping in all three index futures (Dow, S&P and Nasdaq100) that the close for the Dow was painted to finish above 10500.
The broader S&P500 slid 10.25 points (0.86%), to close at 1177.45.
Over at Times Square, the Nasdaq Composite dipped 21.97 points (1.05%), to close at 2070.56, while larger-cap technology issues fared worse with the Nasdaq100 losing 20.6 points (1.32%), to end at 1545.18 points.
NYSE Volume was chunky, with 1.51 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.11 billion shares traded.
| Index | Close | Gain(Loss) | % |
| DJIA | 10505.83 | -111.95 | -1.05% |
| S&P500 | 1177.45 | -10.25 | -0.86% |
| Nasdaq Composite | 2070.56 | -21.97 | -1.05% |
| Nasdaq100 | 1545.18 | -20.6 | -1.32% |
| NYSE Volume | 1.51bn | - | - |
| Nasdaq Volume | 2.11bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 1.24%; none of the bellwethers rose, and the technical damage to Citigroup is now manifest.
- Citigroup (C) -$0.47 (0.98%) to $47.60;
- General Electric (GE) -$0.45 (1.26%) to $35.23;
- Freddie Mac (FRE) -$0.51 (0.72%) to $70.11;
- Cisco (CSCO) -$0.15 (0.79%) to $18.78;
- IBM (IBM) -$0.76 (0.8%) to $94.45;
- Fannie Mae (FNM) -$0.39 (0.55%) to $69.94;
- Wal Mart (WMT) -$0.44 (0.81%) to $53.64;
- Intel (INTC) -$0.34 (1.47%) to $22.82;
- Ebay (EBAY) -$4.04 (3.77%) to $103.21;
Market Breadth & Internals
On the NYSE declining Issues beat out advancers by 1786 to 1524, for a single-day A/D reading of -262; Nasdaq losers exceeded gainers by 1923 to 1144; sure, both readings are negative, but considering the absolute pasting received by the market in the last half hour, I would have expected something a little more bearish.
On the NYSE declining volume was greater than volume in advancing issues by 944.96 to 545.43 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 785.16 to 331.17 million shares. Again, these are relatively mild, even if they do obviously indicate a less-than-stellar day.
68 NYSE-listed stocks rose to new 52-week highs, and 12 posted fresh 52-week lows, while on the Nasdaq there were 51 stocks that hit new 52-week highs, and 24 which fell to fresh 52-week lows.
| NYSE | Nasdaq | |
| Advancers | 1524 | 1144 |
| Decliners | 1786 | 1923 |
| Advancing Volume (m) | 545.43 | 331.17 |
| Declining Volume (m) | 944.96 | 785.16 |
| New Highs | 68 | 51 |
| New Lows | 12 | 24 |
Market Sentiment
| Index | Close | Gain(Loss) | % |
| Equity Call Volume (000) | 2807.51 | 235.95 | 9.18% |
| Equity Put Volume (000) | 2246.23 | 157.36 | 7.53% |
| CBOE Volatility Index | 12.84 | 0.28 | 2.23% |
| CBOE Nasdaq Volatility Index | 19.09 | -0.19 | -0.99% |
| Equity Put-Call Ratio | 0.8 | -0.01 | -1.5% |
| SPX-VIX Ratio | 91.7 | -2.86 | -3.02% |
Bond Market Analysis
Bonds rose all along the yield curve except at the very front (the 13-week bills). The rise was especially pronounced at the long end, with the yield on the benchmark 30-year Treasury bond shedding 7.8 basis points to 4.69% as the 30-year bond future climbed 21/32 for the session. Lockheed HayHeeHoo Macedon's call for a 10-year bond yield of 3.5% doesn't seem anywhere near as far fetched as it might have at first glance.
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.302 | 0.01 | 0.44% |
| UST 2Y (yld) | 3.152 | -0.05 | -1.56% |
| UST 5Y (yld) | 3.652 | -0.05 | -1.27% |
| UST 10Y (yld) | 4.165 | -0.071 | -1.68% |
| UST 30Y (yld) | 4.69 | -0.078 | -1.64% |
The Banks Index dipped 1.18 points (1.17%), to end the session at 99.94; within the index,
- Regions Financial (RF) -$0.95 (2.77%) to $33.39;
- North Fork Bancorp (NFB) -$0.71 (2.54%) to $27.28;
- MBNA Corp (KRB) -$0.52 (1.88%) to $27.09;
- Mellon Financial (MEL) -$0.54 (1.81%) to $29.36;
- M&T Bank Corp (MTB) -$1.74 (1.7%) to $100.77;
The Broker-dealer Index dipped 1.41 points (0.97%), to 144.66; the ticket clippers lined up as follows -
- Ameritrade (AMTD) -$0.37 (2.84%) to $12.64;
- Charles Schwab (SCH) -$0.25 (2.23%) to $10.98;
- Legg Mason (LM) -$0.87 (1.26%) to $68.19;
- Raymond James (RJF) -$0.35 (1.18%) to $29.22;
- Bear Stearns (BSC) -$1.18 (1.17%) to $99.96;
The Philadelphia SOX (Semiconductor) index declined 5.66 points (1.41%), to 396.17
- Novellus Systems (NVLS) -$0.83 (3.1%) to $25.96;
- National Semiconductor (NSM) -$0.44 (2.61%) to $16.41;
- K L A-Tencor (KLAC) -$1.00 (2.25%) to $43.45;
- Xilinx (XLNX) -$0.59 (2.19%) to $26.35;
- Broadcom (BRCM) -$0.71 (2.19%) to $31.71;
Gold & Silver Markets
Gold fell by $0.9 (0.21%) to close at $425.70 per ounce, and falling to $423.60 during the session after rising to a high of $427.30 during Asian market hours.
The Gold Bugs Index declined 1.52 points (0.74%), ending the day at 204.25
- Meridian Gold (MDG) -$0.39 (2.18%) to $17.54;
- Iamgold (IAG) -$0.12 (1.93%) to $6.11;
- Gold Fields(GFI) -$0.22 (1.75%) to $12.33;
- Hecla Mining (HL) -$0.09 (1.61%) to $5.49;
- Harmony Gold (HMY) -$0.14 (1.51%) to $9.16;
Silver rose $0.04 (0.59%) to close at $6.77 per ounce. The Gold and Silver Index (XAU) lost 0.9 points (0.95%), at 94.12 points.
- Durban Roodepoert Deep (DROOY) -$0.04 (2.9%) to $1.34;
- Meridian Gold (MDG) -$0.39 (2.18%) to $17.54;
- Gold Fields Ltd (GFI) -$0.22 (1.75%) to $12.33;
- Anglogold Ashanti (AU) -$0.58 (1.68%) to $33.93;
| Index | Close | Gain(Loss) | % |
| Gold | 425.7 | -0.9 | -0.21% |
| Silver | 6.765 | 0.04 | 0.59% |
| PHLX Gold and Silver Index | 94.12 | -0.9 | -0.95% |
| AMEX Gold BUGS Index | 204.25 | -1.52 | -0.74% |
Oil Market
Oil was firmer, rising by $1.39 per barrel, closing at $47.90 per barrel (well off its high of $48.48).
The Oil and Gas Index (XOI) added 4.21 points (0.59%), ending the day at 717.65
- Unocal (UCL) - former employer of US stooge Hamid Karzai - up $0.81 (1.78%) to $46.31;
- Sunoco Inc (SUN) +$1.25 (1.56%) to $81.21;
- ConocoPhillips (COP) +$1.33 (1.52%) to $88.60;
- Noble (NE) +$1.81 (3.61%) to $51.98;
- Halliburton (HAL) - war profiteer and former employer of Dick Cheney - up $1.08 (2.73%) to $40.60;
- BJ Services (BJS) +$1.14 (2.55%) to $45.88;
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 284.5 | 2.75 | 0.98% |
| Crude Oil Light Sweet | 47.9 | 1.39 | 2.99% |
| AMEX Oil Index | 717.65 | 4.21 | 0.59% |
| Oil Service Index | 124.62 | 2.15 | 1.76% |
Currency Markets
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 82.59 | 0.39 | 0.47% |
| Euro | 1.3212 | -0.0043 | -0.32% |
| Yen | 102.38 | 0.03 | 0.03% |
| Sterling | 1.8815 | -0.0093 | -0.49% |
| Australian Dollar | 0.7654 | -0.001 | -0.13% |
| Swiss Franc | 1.172 | 0.0043 | 0.37% |
| Canadian Dollar | 0.8319 | -0.0003 | -0.04% |
European Markets
France's benchmark CAC-40 Index rose 17.97 points (0.47%), to end the session at 3834.11
The German DAX-30 Index posted a rise of 3.32 points (0.08%), to end the session at 4212.14
In the UK, the FTSE-100 Index posted a rise of 16.7 points (0.35%), ending the day at 4800.3
| Index | Close | Gain(Loss) | % |
| CAC-40 | 3834.11 | 17.97 | 0.47% |
| DAX-30 | 4212.14 | 3.32 | 0.08% |
| FTSE-100 | 4800.3 | 16.7 | 0.35% |
Tonight's Pivots (US Futures Market)
| Dow | S&P500 | Nasdaq | Bonds | |
| R2 | 10663 | 1193.4 | 1582.33 | 114 13/32 |
| R1 | 10584 | 1185.7 | 1566.17 | 114 1/32 |
| Pivot | 10534 | 1181.1 | 1556.83 | 113 17/32 |
| S1 | 10455 | 1173.4 | 1540.67 | 113 5/32 |
| S2 | 10405 | 1168.8 | 1531.33 | 112 21/32 |
