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Wednesday, January 05, 2005

USRant: Politburo Inspires Decline

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Economic Statistics

ICSC-UBS chain store sales rose 0.2% last week as compared with the Christmas week. Year-on-year, the survey showed that store sales were up 4.6%, the strongest reading in 6 months.

Redbook confirmed what ICSC-UBS said - their measure showed a 5.2% year-over-year gain.

So what? So Americans went and plonked down the plastic during the post-Christmas sales. Given the massive discounting that's been going on, I doubt that the additional turnover adds dollar one to profits.

It's like the kid who was selling lemonade for 5c a cup, when it cost 10c a cup to make. When asked how he hoped to make money with those fundamentals, he replied "Simple... I'll make it up on volume".

Factory orders rose 1.2% at the headline level (which as you know by now, I ignore). The most important number in the report is... repeat after me...

Non-defence capex ex aircraft. That rose 0.8% after plummeting 4% in the prior month. Shipments data for non-defence capex ex aircraft fell 1.8% for the month. As I wrote a while back, plenty can happen between an order and a shipment... orders look (as Frank Barrone would say) "crap-tacular".

The Treasury auctioned $10b in 4-week Treasury bills, which cleared at a yield of 2% exactly (25 basis points below Fed Funds). the auction size was $6 bill lower than the previous quarter's average: little surprise, then, that the bid-to-cover ratio was a strong 3.54 (compared with the prior average of 2.52).

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 $10billion, 2-day repurchase with $10billion in T-backed collateral.

With that much repo greasola in the gears, and with solid (but unspectacular) data, there ought to have been a moonshot at 10 a.m. NY time. It happened, but you needed a microscope to see it... a paltry 2-point advance.

Given the data (and the repo size), the lack of 10 a.m. fireworks ought to have given a decent trader some pause. (I was asleep, so I was "fully paused"). It is too much perhaps to suggest that someone got a "heads up" on the Fed minutes which were to be released later in the day, but nothing surprises me about the crony-capitalist military-state that the US is becoming.

Major US Indices

You might have called it a "pop'n'drop", but that would be too kind... it was really a "drop'n'drop-some- more". There was no significant stock-based news, Europe was doing nicely (thanks to financials and carmakers, mostly), and there seemed a good chance of a bounce from yesterday.

BZZZZZT. Wrong... but thank you for playing!! As I mentioned yesterday, the key was whether the S&P could muscle its way past 1212 during the Globex session. The answer was resoundingly NO (the top was 1209.50) and the rot set in from there.

S&P Futures Intraday 5 minute chart

It got real nasty after the release of some minutes from the December convocation of the Central Planners at the FOMC (remember trillions the politicians wasted on the Cold War? What the f$%k was that for, again? To prevent central-planning? Well it failed, dinnit!)...

Turns out that the central wankers think that the pace of interest rate rises is not happening fast enough to curb inflation... which made everyone - stocks, bonds, currency - think that they were going to do their usual trick over over-tightening on the upswing (as if the US economy is in an "upswing"... laughable).

Anyhow, things got real ugly, and the Dow plummeted to within spitting distance of 10600 before a little bounce into the close.

The DJIA declined 98.65 points (0.92%) for the day, closing at 10630.78 points; the broader S&P500 dipped 14.03 points (1.17%), at 1188.05.

Over at Times Square, the Nasdaq Composite lost 44.29 points (2.06%), to close at 2107.86, while larger-cap technology issues fared better with the Nasdaq100 losing 31.68 points (1.98%), to end at 1571.83 points.

NYSE Volume was chunky, with 1.72 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.69 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Nasdaq Composite2107.86-44.29-2.06%
NYSE Volume1.72bn--
Nasdaq Volume2.69bn--


My 9-stock "bellwethers" group fell by an average of 1.69% - the damage was widespread.

  • Fannie Mae (FNM) -$1.36 (1.91%) to $69.91;
  • Intel (INTC) -$0.46 (1.99%) to $22.61;
  • Citigroup (C) -$0.41 (0.85%) to $47.86;
  • IBM (IBM) -$1.05 (1.07%) to $96.70;
  • General Electric (GE) -$0.44 (1.2%) to $36.15;
  • Wal Mart (WMT) -$0.13 (0.24%) to $53.22;
  • Freddie Mac (FRE) -$1.14 (1.56%) to $71.85;
  • Ebay (EBAY) -$2.80 (2.45%) to $111.31;
  • Cisco Systems (CSCO) -$0.76 (3.93%) to $18.56;

Market Breadth & Internals

NYSE declining Issues beat out advancers by 2545 to 822, for a single-day A/D reading of -1723 (yowza!!); and Nasdaq losers exceeded gainers by 2393 to 779.

Declining volume was greater than volume in advancing issues by 1478.98 to 191.74 million shares on the NYSE - a mind-boggling 7.7:1 ratio. On the Nasdaq declining volume exceeded volume in advancing issues by 1164.62 to 322.16 million shares. The Nasdaq is getting tame in its old age...

29 NYSE-listed stocks rose to new 52-week highs, and 4 posted fresh 52-week lows, while on the Nasdaq there were 61 stocks that hit new 52-week highs, and 10 which fell to fresh 52-week lows.

Advancing Volume (m)191.74322.16
Declining Volume (m)1478.981164.62
New Highs2961
New Lows410

Market Sentiment

Equity Call Volume (000)3200.79592.522.72%
Equity Put Volume (000)2193.131147.77109.8%
CBOE Volatility Index13.981.9816.5%
CBOE Nasdaq Volatility Index20.062.2712.76%
Equity Put-Call Ratio0.690.2870.96%
10-day PCR0.5700%
SPX-VIX Ratio84.98-16.15-15.97%

Bond Market Analysis

Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 6.5 basis points to 4.882%. Although bonds were weak anyway, they really accelerated once the FOMC Politburo minutes were released

30-yr Bond Futures Intraday 5 minute chart

UST 13wk (yld)2.2950.093.99%
UST 2Y (yld)3.1880.1073.47%
UST 5Y (yld)3.7090.082.32%
UST 10Y (yld)4.2920.0741.75%
UST 30Y (yld)4.8840.0671.39%

The Banks Index shed 1.01 points (0.98%), closing at 102.52; within the index,

  • MBNA Corp (KRB) -$0.69 (2.43%) to $27.69;
  • Mellon Financial (MEL) -$0.56 (1.82%) to $30.18;
  • Bank Of NY (BK) -$0.51 (1.54%) to $32.60;
  • National City (NCC) -$0.55 (1.48%) to $36.73;
  • Bank Of America (BAC) -$0.64 (1.38%) to $45.82;

The Broker-dealer Index declined 2.99 points (1.98%), at 147.98; the ticket clippers lined up as follows -

  • Ameritrade (AMTD) -$0.74 (5.28%) to $13.27;
  • E*Trade (ET) -$0.60 (4.08%) to $14.10;
  • Charles Schwab (SCH) -$0.27 (2.32%) to $11.39;
  • Legg Mason (LM) -$1.55 (2.16%) to $70.18;
  • Jeffries Group (JEF) -$0.73 (1.84%) to $38.90;

The Philadelphia SOX (Semiconductor) index dipped 13.9 points (3.28%), closing at 410.36

  • Teradyne (TER) -$1.00 (6.04%) to $15.57;
  • Marvell Tech (MRVL) -$1.95 (5.61%) to $32.78;
  • Advanced Micro Devices (AMD) -$1.20 (5.6%) to $20.21;
  • Infineon Tech (IFX) -$0.48 (4.43%) to $10.36;
  • Novellus Systems (NVLS) -$1.14 (4.18%) to $26.12;

Gold & Silver Markets

Gold fell by $2.50 (0.58%) to close at $428.20 an ounce. After a re-test of yesterday's spike low, it bounced a little mid-session before softening into the close.

Intraday 5 minute chart

Gold Bugs Index lost 4.39 points (2.13%), closing at 202.15

  • Meridian Gold (MDG) -$0.93 (5.16%) to $17.11;
  • Coeur d'Alene (CDE) -$0.17 (4.5%) to $3.61;
  • Freeport McMoran (FCX) -$1.47 (3.95%) to $35.74;
  • Golden Star (GSS) -$0.14 (3.75%) to $3.59;
  • Eldorado Gold (EGO) -$0.09 (3.17%) to $2.75;

Silver fell by $0.06 (0.92%) to close at $6.47 per ounce. The Gold and Silver Index (XAU) lost 2.14 points (2.24%), to 93.51 points.

  • Meridian Gold (MDG) -$0.93 (5.16%) to $17.11;
  • Freeport McMoran (FCX) -$1.47 (3.95%) to $35.74;
  • Anglogold Ashanti (AU) -$1.01 (2.88%) to $34.03;
  • Barrick Gold (ABX) -$0.67 (2.84%) to $22.89;
PHLX Gold and Silver Index93.51-5.84-5.88%
AMEX Gold BUGS Index202.15-14.81-6.83%

Oil Market

Oil gained back yesterday's decline, and then some, rising by $1.57 per barrel to $43.82 per barrel in a pretty-much coast-to-coast rally.

Intraday 5 minute chart

The Oil and Gas Index (XOI) shed 5.03 points (0.72%), at 694.79

  • Repsol Ypf (REP) -$0.37 (1.44%) to $25.27;
  • TotalFinaElf (TOT) -$1.44 (1.34%) to $105.76;
  • Royal Dutch Shell (RD) -$0.71 (1.26%) to $55.75;
The Oil service stocks (OSX) Index slid 0.46 points (0.39%), closing at 118.92
  • Global Industries Ltd (GLBL) -$0.28 (3.48%) to $7.77;
  • BJ Services (BJS) -$0.60 (1.34%) to $44.25;
  • Tidewater (TDW) -$0.39 (1.14%) to $33.96;
Reuters CRB279-0.25-0.09%
Crude Oil Light Sweet43.821.573.72%
AMEX Oil Index694.79-23.56-3.28%
Oil Service Index118.92-4.06-3.3%

Currency Markets

The USD index managed to get its groove on - largely as a result of the change in interest-rate differential expectations (coming out of the Fed's minutes)... traders now expect a faster tightening regime, which will change interest arbitrage conditions.

US Dollar Index82.711.31.6%
Australian Dollar0.7649-0.0124-1.6%
Swiss Franc1.16720.01911.66%
Canadian Dollar0.8174-0.0105-1.27%

European Markets

France's benchmark CAC-40 Index added 7.62 points (0.2%), ending the day at 3863.3; the German DAX-30 Index lost 1.03 points (0.02%), to end the session at 4290.5 points; and in the UK, the FTSE-100 Index gained 32.7 points (0.68%), ending the day at 4847 points.


Tonight's Pivots (US Futures Market)

R2108421216.631639.67113 16/32
R1107431203.871610.83112 21/32
Pivot106771195.431591.17112 1/32
S1105781182.671562.33111 6/32
S2105121174.231542.67110 18/32