Interdum stultus opportuna loquitur...

Thursday, January 06, 2005

USRant: A Potentially Important Juncture

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Economic Statistics

New Jobless Claims were reported, with the number at 364000, was much, much worse than the consensus guess (335000). Still, the market did almost nothing all the time of the data release, and in fact rallied slightly in the few minutes afterwards. The reason? The statistical summary included some absolute falderol which tried to slap lipstick all over the numbers in a bid to avert people's attention from the fact that the report was a pig.


Forthcoming US Economic Data

Tomorrow's US Economic Data Calendar

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 2 repurchase operations last night:

  • a $5b overnight repurchase with $5b in T-backed collateral ; and
  • a $9b 14-day repurchase with $4.196b in T-backed collateral.

With plenty of Fed-issued lighter fluid being spread over the kindling, there was every chance of a short-singe-ing rally at 10 a.m. NY time. Oddly, not much happened at that time - there was some residual consternation about the appalling jobless claims data, however the statistical department made soothing noises the moment the jobless claims data was released... "there were seasonal adjustment problems" - what the hell does that mean?

After a quick 2-point opportunity, the market softened considerably in the leadup to the release of weekly sales numbers from major chain stores (which was due at 11 a.m., NY time. When that data came out OK, the repo crack kicked in and the market shot up 7 points in about half an hour. When the repo grease is sufficiently abundant, the market's "slipperiness" is uniformly upwards.

Bond Auction Announcements

DateInstrumentAmount ($b)
Jan-103-month bills19
Jan-106-month bills16


Major US Indices

The futures-led rally started after upbeat sales reports from some of the chain stores which participate in the weekly number-fest. The pattern of sales was interesting - low-end stores like Wal-Mart and JCPenney had fairly lacklustre results, with sales growth below the inflation rate. Upper-end retailers like Nordstroms and Neiman Marcus showed much stronger growth - indicating that price is no object for the US middle-class consumer, so long as the plastic has enough space.

The DJIA rose 25.05 points (0.24%), closing out the day at 10622.88 points; the broader S&P500 posted a rise of 4.15 points (0.35%), to end the session at 1187.89.

There was an important event after the close of the cash market - the futures market fell away to the tune of 3 points in about as many minutes, on no news whatsoever. Call it "information leakage" or just "joining the dots": it's pretty clear that someone who swings a large line, took some decent sized bets against a good Jobs report tomorrow.


NYSE Most Actives

LU Lucent 3.57-0.07-1.92%56.17m
PFE Pfizer
EMC EMC 13.8-0.25-1.78%19.78m
GE General Electric
C Citigroup 48.930.470.97%18.02m


It was a completely different kettle of fish over at Times Square, the Nasdaq Composite dipped 1.24 points (0.06%), to close at 2090, while larger-cap technology issues fared worse with the Nasdaq100 losing 6.24 points (0.4%), to end at 1557.52 points.

Nasdaq Most Active

SIRISirius Satellite 7.495-0.145-1.9%89.62m
MSFT Microsoft 26.75-0.03-0.11%76.61m
SYMC Symantec 23.18-1.86-7.43%68.98m
CSCO Cisco Systems 18.850.281.51%63.61m
INTC Intel 22.460.070.31%63.26m


NYSE Volume was chunky, with 1.57 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.18 billion shares traded.

Nasdaq Composite2090-1.24-0.06%
NYSE Volume1.57bn--
Nasdaq Volume2.18bn--


My 9-stock "bellwethers" group rose by an average of 0.21%

  • Freddie Mac (FRE) +$0.47 (0.66%) to $71.75;
  • Intel (INTC) +$0.07 (0.31%) to $22.46;
  • Wal Mart (WMT) +$0.76 (1.43%) to $54.05;
  • Citigroup (C) +$0.47 (0.97%) to $48.93;
  • General Electric (GE) +$0.29 (0.81%) to $36.22;
  • Cisco Systems (CSCO) +$0.28 (1.51%) to $18.85;
  • Fannie Mae (FNM) +$0.55 (0.79%) to $70.35;
  • IBM (IBM) -$0.30 (0.31%) to $96.20; and
  • Ebay (EBAY) -$4.72 (4.26%) to $106.18.

At important tops, this group of bellwethers usually shows a couple of things: Citigroup will usually give a dip (already happened) then get ramped up a dollar to trigger stops before a renewed plunge. And EBay - which will invariably move up harder than the market on anything approaching a good day - will be inexplicably sullen. Uh-oh...


Market Breadth & Internals

On the NYSE advancing Issues exceeded decliners by 1900 to 1405 for a single-day A/D reading of 495; Nasdaq gainers trumped losers by 1562 to 1528.

NYSE advancing volume exceeded volume in decliners by 957.15 to 583.06 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 649.89 to 559.76 million shares.

24 NYSE-listed stocks rose to new 52-week highs, and 9 posted fresh 52-week lows, while on the Nasdaq there were 29 stocks that hit new 52-week highs, and 17 which fell to fresh 52-week lows.

Advancing Volume (m)957.15559.76
Declining Volume (m)583.06649.89
New Highs2429
New Lows917

Market Sentiment

OK, here's the deal. The market needs a caning; a good, solid, make the nuffie's bums bleed, caning. Something like a pullback to 1160 or so on the S&P.

If the jobs report isn't a pearler, that caning will happen tonight. IN fact even if the jobs report is GOOD, if the S&P futures can't break 1194 before the opening of the NY market, 1175 is still likely to be tested. There's not enough fear - not by a long chalk.

When you think of the market, think of a machine whose sole purpose is to destroy the herd. Not to "pick off" weak and injured animals in the way that a predator would, but to destroy them all, the way that packs of yahoo tourists did to the massive herds of bison that used to roam the American grasslands. The way it achieves this goal is through subterfuge - by encouraging homo nuffnufficus to zig when he ought to zag, and vice versa.

Two events explain the entire recent rally from the recent swing low... one of them was Bush's re-election. I'll tell you the other one tomorrow, with a pretty picture to go with it.

But now, everyone is loaded up for a "Yippee" year, because everyone now knows that all years ending in 5 have been up years (at least, since 1865). Not a single down year amongst them. Folks are primed to think "No sirreee, there's no way that folks are gonna git their-damfool-selves kilt in this market, no how".

What does that mean? As Bill Bonner might quote (in one of his best pieces ever)... "They are giving us their flank".


Index Close Gain(Loss) %
Equity Call Volume (000) 2325.12 -875.67 -27.36%
Equity Put Volume (000) 1803.31 -389.77 -17.77%
CBOE Volatility Index 13.58 -0.4 -2.86%
CBOE Nasdaq Volatility Index 20.13 0.07 0.35%
Equity Put-Call Ratio 0.78 0.09 13.2%
SPX-VIX Ratio 87.47 2.49 2.93%

Bond Market Analysis

Bonds rose along the curve after the jobless numbers surprise, but overall the yield curve kept the same shape (i.e., it neither steepened nor flattened). The yield on the benchmark 30-year Treasury bond shedding 0.2 basis points to 4.846%.

UST 13wk (yld)2.273-0.02-0.66%
UST 2Y (yld)3.144-0.036-1.13%
UST 5Y (yld)3.679-0.03-0.7%
UST 10Y (yld)4.263-0.02-0.47%
UST 30Y (yld)4.846-0.032-0.66%

The Banks Index posted a rise of 0.43 points (0.42%), to 102.68; within the index,

  • MBNA Corp (KRB) +$0.64 (2.32%) to $28.24;
  • Bank Of NY (BK) +$0.65 (1.99%) to $33.30;
  • Northern Trust (NTRS) +$0.55 (1.17%) to $47.39;
  • Citigroup (C) +$0.47 (0.97%) to $48.93;
  • and
  • National City Corp (NCC) +$0.25 (0.69%) to $36.59.

The Broker-dealer Index added 1.83 points (1.25%), at 148.66; the ticket clippers lined up as follows -

  • Morgan Stanley (MWD) +$1.30 (2.36%) to $56.28;
  • Lehman Bros (LEH) +$1.83 (2.12%) to $88.18;
  • Jeffries Group (JEF) +$0.68 (1.78%) to $38.86;
  • Charles Schwab (SCH) +$0.19 (1.68%) to $11.51; and
  • Goldman Sachs (GS) +$1.43 (1.38%) to $105.23.

The Philadelphia SOX (Semiconductor) index slid 2.11 points (0.52%), at 402.14

  • KLA Tencor (KLAC) -$0.81 (1.88%) to $42.31;
  • Xilinx (XLNX) -$0.44 (1.6%) to $27.10;
  • Maxim Integrated (MXIM) -$0.57 (1.45%) to $38.81;
  • Teradyne (TER) -$0.19 (1.24%) to $15.17; and
  • Micron Technology (MU) -$0.12 (1.04%) to $11.41.

Gold & Silver Markets

Gold fell by $5.9 (1.38%) to close at $422.3 per ounce.

Gold Bugs Index shed 0.47 points (0.23%), closing at 201.29

  • Eldorado Gold (EGO) -$0.08 (2.9%) to $2.68;
  • Coeur d'Alene (CDE) -$0.09 (2.51%) to $3.50;
  • Goldcorp (GG) -$0.28 (2.02%) to $13.58;
  • Hecla Mining (HL) -$0.11 (1.98%) to $5.44; and
  • Iamgold (IAG) -$0.12 (1.94%) to $6.08.

Silver fell by $0.01 (0.08%) to close at $6.46 per ounce. The Gold and Silver Index (XAU) lost 0.33 points (0.35%), to end the session at 93.01 points.

  • Barrick Gold (ABX) -$0.68 (3.01%) to $21.91;
  • Goldcorp (GG) -$0.28 (2.02%) to $13.58;
  • Meridian Gold (MDG) -$0.21 (1.23%) to $16.84; and
  • Agnico Eagle (AEM) -$0.10 (0.77%) to $12.88.
PHLX Gold and Silver Index93.01-0.5-0.53%
AMEX Gold BUGS Index201.29-0.86-0.43%

Oil Market

Oil was firmer, rising by $1.54 per barrel, closing at $45.35 per barrel. The Oil and Gas Index (XOI) added 12 points (1.73%), to end the session at 703.91

  • Unocal (UCL) - former employer of Hamid Karzai - +$3.15 (7.65%) to $44.34;
  • Sunoco (SUN) +$2.50 (3.26%) to $79.15;
  • Kerr Mcgee (KMG) +$1.49 (2.69%) to $56.96;
The Oil service stocks (OSX) Index rose 2.22 points (1.88%), to end the session at 120.48
  • GlobalSantaFe Cp (GSF) +$1.51 (4.66%) to $33.92;
  • Transocean (RIG) +$1.45 (3.64%) to $41.25;
  • Tidewater (TDW) +$0.93 (2.77%) to $34.56;
Reuters CRB280.51.50.54%
Crude Oil Light Sweet45.351.543.52%
AMEX Oil Index703.919.121.31%
Oil Service Index120.481.561.31%

Currency Markets

The USD Index continues its little bounce - all very nicely choreographed, but ultimately futile. The US dollar will, in the fullness of time, be revalued to reflect the complete loss of its unilateral position as global reserve currency. The eventual target low for the USDX for this year is 70, and if that breaks, 65.

Still, it's nice to see that contrarianism still works; the year-end papers and mainstream TV and web were all blathering about US dollar weakness... which of course means that everyone who's going to short USD has already done so... which means that everyone's on the same side of the boat... which means the USD rally had to start.


US Dollar Index83.250.540.65%
Australian Dollar0.7605-0.0033-0.43%
Swiss Franc1.17420.00630.54%
Canadian Dollar0.8088-0.0088-1.08%

European Markets

France's benchmark CAC-40 Index gained 27.12 points (0.71%), to 3856.48; the German DAX-30 Index posted a rise of 42.7 points (1%), to 4300.94 points; and in the UK, the FTSE-100 Index added 18.3 points (0.38%), closing at 4824.3 points.


Tonight's Pivots (US Futures Market)

R2107101197.631582.83112 21/32
R1106641192.871572.17112 11/32
Pivot106291188.831566.83112 3/32
S1105831184.071556.17111 25/32
S2105481180.031550.83111 17/32