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Economic Statistics
The Conference Board's Leading Economic Indicators for December04 rose 0.2%, matching consensus expectations. The November number was revised upwards to 0.3%.
I've mentioned before, that the LEI is a farce - it uses about a dozen different indicators, and simply curve-fits its component weights. Anyone who has done a decent econometrics course will tell you that a regression with that many exogenous variables will give a perfect "forecast of history", since using that many regressors you can always fit a curve to your dependent variable data. But for anything forward looking it's a waste of time. An absolute waste of time - and the fact that there are people in financial markets who place any faith in it whatsoever, is evidence of numerical ignorance.
"Philly Fed" does not mean "raised entirely on a diet of tasteless cream cheese". It is short for the Philadelphia Federal Reserve General Business Conditions Index, yet another survey-based (known in the trade as a "lie-to-me") index. This one purports to measure activity in the Mid-Atlantic manufacturing region.
The index fell to 13.2, not quite 50% lower than the consensus estimate of 26, and more than 10 points below the bottom of the consensus range (24.2-38). It was also just over half of the 25.4 reading from December.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations last night:
- a $7.75 billion, overnight repurchase with $7.75 billion in T-backed collateral ; and
- a $9 billion, 14-day repurchase with $4.649 billion in T-backed collateral.
With all that grease being slapped around the cogs, it was reasonable to expect a moonshot at 0 a.m.; what happened was less of a skyrocket and more of, well, a complete dud. Kind of like Missile Defence; lots of money, lots of promises, but will not get the job done.
Anyhow - from 10 a.m. there was a decent push upwards (about 3 points in the S&P futures) for ten minutes but it faded very rapidly... still, three points is nothing to be sneezed at. If you did sneeze, you lost those three points, by the way, because after another 10 minutes had elapsed the market was back where it started. Then, another, more gruelling, rise back to test the first hour's high... failed...
What that showed, was that the repo was doing King Canute's job... holding back an incipient tide of red. The whole basis of the Sentiment mail-list circular was that this week would be characterised by early rallies that failed, and those rallies would only transpire if the Fed gave out the cash. The Fed co-operated last night, but all it did was buy da Boyz some time.
Bond Auction Announcements
| Date | Instrument | Amount ($b) |
| Jan-27 | 20-year TIPS | 8 |
| Jan-24 | 3-month bills | 19 |
Major US Indices
After the second test of the first hour high, the market was set up with a textbook intraday double top. From there it declined 8.75 S&P points in an hour and a bit - that was the "easy money" trade of the session (apart from the Fed Repo pump). At 2 p.m. there was an attempt to generate a short-covering rally, but that failed, with TICK hitting +1000 before the market had even exceeded the pre-lunch high... evidence of the thing having to be pushed too hard. If the market doesn't gain any traction from a few well-placed bursts, and actual basket program trades have to be triggered to keep the thing rising, there's no way you will get any subsequent genuine short-covering... the only people who will bail is the nuffies who sold the low..After the 2:18 TICK extreme, the market gave almost all of it back, but - interestingly - did not break the 1:18 p.m. low. Looking at the chart, the move downward had little momentum, and not much volume either.
No matter... the important thing is that the Sentiment e-mail captured the general tenor of the market satisfactorily.
By the close, the DJIA had lost 68.5 points (0.65%), closing out the day at 10471.47 points; the broader S&P500 dipped 9.22 points (0.78%), ending the day at 1175.41. Over at Times Square, the Nasdaq Composite slid 27.71 points (1.34%), to close at 2045.88, while larger-cap technology issues fared worse with the Nasdaq100 losing 31.09 points (2.01%), to end at 1514.56 points.
NYSE Volume was chunky, with 1.69 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.23 billion shares changing online brokerage accounts.
| Index | Close | Gain(Loss) | % |
| DJIA | 10471.47 | -68.5 | -0.65% |
| S&P500 | 1175.41 | -9.22 | -0.78% |
| Nasdaq Composite | 2045.88 | -27.71 | -1.34% |
| Nasdaq100 | 1514.56 | -31.09 | -2.01% |
| NYSE Volume | 1.69bn | - | - |
| Nasdaq Volume | 2.23bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 2.65%, but the overwhelming bulk of that number came courtesy of eBay, which got absolutely taken to the woodshed (to the tune of 19%).
- Wal Mart (WMT) -$0.41 (0.76%) to $53.37;
- Fannie Mae (FNM) -$1.23 (1.82%) to $66.20;
- Intel (INTC) -$0.02 (0.09%) to $22.58;
- Intl Business Mac (IBM) -$0.10 (0.11%) to $93.00;
- General Electric (GE) -$0.07 (0.2%) to $35.37;
- Cisco Systems (CSCO) +$0.17 (0.94%) to $18.32;
- Citigroup (C) -$0.27 (0.56%) to $47.77;
- Freddie Mac (FRE) -$1.44 (2.07%) to $67.97;
- Ebay Inc (EBAY) -$19.72 (19.14%) to $83.33;
Market Breadth & Internals
On the NYSE declining Issues beat out advancers by 2242 to 1052, for a single-day A/D reading of -1190; and Nasdaq losers exceeded gainers by 2120 to 963. That A/D number is a whopper, considering how lame the final hour's decline was. Don't be at all surprised if the hopefuls try to generate a bounce at the open tomorrow. The"journalist" headline for any such bounce will be how the market was pleased with Bush's Inauguration Fable about bombing the third world into a new vista of Freedom® and Democracy©. Why don't the Yanks just go ahead and name same sanitary pads after those two words and be done with it - they've done about everything else they can to remove all genuine meaning from them...
Back to the markets (concentrate, fat-boy, concentrate...).
On the NYSE declining volume was greater than volume in advancing issues by 1242.22 to 438.28 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 793.96 to 320.99 million shares.
41 NYSE-listed stocks rose to new 52-week highs, and 23 posted fresh 52-week lows, while on the Nasdaq there were 39 stocks that hit new 52-week highs, and 41 which fell to fresh 52-week lows
| NYSE | Nasdaq | |
| Advancers | 1052 | 963 |
| Decliners | 2242 | 2120 |
| Advancing Volume (m) | 438.28 | 320.99 |
| Declining Volume (m) | 1242.22 | 793.96 |
| New Highs | 41 | 39 |
| New Lows | 23 | 41 |
Market Sentiment
Put volume is rising too fast - as is the put-call ratio. Either options buyers are getting smarter (unlikely) or the downside from here is pretty limited. Another bounce, in continuing defiance of the low volatility level, perhaps?
| Index | Close | Gain(Loss) | % |
| Equity Call Volume (000) | 3811.55 | 849.15 | 28.66% |
| Equity Put Volume (000) | 3270.53 | 1070.71 | 48.67% |
| CBOE Volatility Index | 13.83 | 0.65 | 4.93% |
| CBOE Nasdaq Volatility Index | 19.5 | 0.26 | 1.35% |
| Equity Put-Call Ratio | 0.86 | 0.12 | 15.55% |
| SPX-VIX Ratio | 84.99 | -4.89 | -5.44% |
Bond Market Analysis
Bonds were strong across the board, with the 30-year staging an impressive rally through the session, rising from 113 & 16/32 all the way up to 114 & 9/32 before a slight back-off into the close. The yield on the benchmark 30-year Treasury bond fell 1.7 basis points to 4.654%.
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.322 | -0.02 | -0.85% |
| UST 2Y (yld) | 3.179 | -0.038 | -1.18% |
| UST 5Y (yld) | 3.672 | -0.04 | -1.16% |
| UST 10Y (yld) | 4.161 | -0.026 | -0.62% |
| UST 30Y (yld) | 4.654 | -0.017 | -0.36% |
The Banks Index dipped 0.29 points (0.29%), at 100.56; within the index,
- Northern Trust (NTRS) -$1.15 (2.51%) to $44.75;
- Bank Of NY (BK) -$0.55 (1.76%) to $30.75;
- JPMorganChase C (JPM) -$0.59 (1.56%) to $37.25;
- Fifth Third Bancorp (FITB) -$0.39 (0.84%) to $46.29;
- State Street (STT) -$0.37 (0.82%) to $44.69;
The Broker-dealer Index dipped 0.94 points (0.64%), at 145.15; the ticket clippers lined up as follows -
- Ameritrade (AMTD) -$0.23 (1.85%) to $12.23;
- Jeffries Group (JEF) -$0.66 (1.71%) to $37.88;
- Bear Stearns (BSC) -$1.24 (1.22%) to $100.06;
- Legg Mason (LM) -$0.86 (1.21%) to $70.15;
- E*Trade Finl (ET) -$0.14 (1.06%) to $13.04;
The Philadelphia SOX (Semiconductor) index shed 3.08 points (0.77%), closing at 394.81
- Freescale Semiconductor (FSL-B) -$0.66 (3.69%) to $17.23;
- Marvell Tech Group (MRVL) -$0.97 (2.85%) to $33.11;
- Texas Instruments (TXN) -$0.54 (2.46%) to $21.38;
- Infineon Tech (IFX) -$0.22 (2.32%) to $9.28;
- National Semiconductor (NSM) -$0.31 (1.87%) to $16.30;
Gold & Silver Markets
Gold fell by $0.80 (0.19%) to close at $422.50 per ounce. It traded as low as $420.30 during the session; if Friday is the usual slow day, don't be surprised to see something surprising - like
- a stealth intervention in the USD (pushing the US dollar above 84.45 would give it "clear air" to 86);
- a shellacking of Gold to under $418 (achieved through manipulating the contango rather than selling hard in the front-month); and
- strength in non-bullion stocks.
The Gold Bugs Index gained 0.15 points (0.07%), ending the day at 204.45
- Gold Fields (GFI) +$0.22 (1.87%) to $11.98;
- Golden Star Resources (GSS) +$0.07 (1.83%) to $3.90;
- Kinross Gold (KGC) +$0.09 (1.33%) to $6.86;
- Coeur d'Alene (CDE) +$0.04 (1.1%) to $3.67; and
- Eldorado Gold Cor (EGO) +$0.02 (0.73%) to $2.76.
Silver fell by $0.04 (0.6%) to close at $6.58 per ounce. The Gold and Silver Index (XAU) lost 0.41 points (0.44%), closing at 93.12 points.
- Newmont Mining (NEM) -$0.56 (1.32%) to $41.76;
- Freeport McMoran (FCX) -$0.38 (1.02%) to $36.78;
- Placer Dome (PDG) -$0.16 (0.89%) to $17.87; and
- Meridian Gold (MDG) -$0.15 (0.82%) to $18.15.
| Index | Close | Gain(Loss) | % |
| Gold | 422.5 | -0.8 | -0.19% |
| Silver | 6.58 | -0.04 | -0.6% |
| PHLX Gold and Silver Index | 93.12 | -0.41 | -0.44% |
| AMEX Gold BUGS Index | 204.45 | 0.15 | 0.07% |
Oil Market
Oil was firmer, rising by $0.46 per barrel, closing at $47.52 per barrel. The Oil and Gas Index (XOI) shed 7.85 points (1.08%), closing at 716.95
- Marathon Oil Corp (MRO) -$0.71 (1.85%) to $37.74;
- ConocoPhillips (COP) -$1.54 (1.73%) to $87.73;
- ChevronTexaco (CVX) - the firm that named an oil tanker after Condoleeza "Mushroom Clouds" Rice - fell $0.73 (1.39%) to $51.96.
- Global Inds (GLBL) -$0.28 (3.54%) to $7.63;
- BJ Services (BJS) -$0.99 (2.14%) to $45.21; and
- Nabors (NBR) -$0.70 (1.41%) to $48.90.
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 284 | 1 | 0.35% |
| Crude Oil Light Sweet | 47.52 | 0.46 | 0.98% |
| AMEX Oil Index | 716.95 | -7.85 | -1.08% |
| Oil Service Index | 125.81 | -0.72 | -0.57% |
Currency Markets
US dollar... bouncing in the lamest possible way. Still, the intervention has been "measured" (to coin a Fed-speak phrase) so far If tonight is thin, watch for the USD to suddenly spike - hard - to the mid-84's.
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 83.95 | 0.3 | 0.36% |
| Euro | 1.2963 | -0.0044 | -0.34% |
| Yen | 103.32 | 0.54 | 0.53% |
| Sterling | 1.8722 | 0.0022 | 0.12% |
| Australian Dollar | 0.7585 | -0.0019 | -0.25% |
| Swiss Franc | 1.1892 | 0.0042 | 0.35% |
| Canadian Dollar | 0.8115 | -0.0032 | -0.39% |
European Markets
France's benchmark CAC-40 Index lost 26.57 points (0.69%), at 3842.44; the German DAX-30 Index shed 25.12 points (0.59%), to 4220.43 (having been down almost 50 at one stage); and in the UK, the FTSE-100 Index declined 17.5 points (0.36%), at 4800.8 points.
| Index | Close | Gain(Loss) | % |
| CAC-40 | 3842.44 | -26.57 | -0.69% |
| DAX-30 | 4220.43 | -25.12 | -0.59% |
| FTSE-100 | 4800.8 | -17.5 | -0.36% |
Tonight's Pivots (US Futures Market)
| Dow | S&P500 | Nasdaq | Bonds | |
| R2 | 10586 | 1186.8 | 1548.5 | 114 24/32 |
| R1 | 10530 | 1181.6 | 1536 | 114 14/32 |
| Pivot | 10493 | 1177.8 | 1527.5 | 114 |
| S1 | 10437 | 1172.6 | 1515 | 113 22/32 |
| S2 | 10400 | 1168.8 | 1506.5 | 113 8/32 |
