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Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation.
- a $11.5billion, overnight repurchase entirely in T-backed collateral.
And yet as far as "market help" goes ....Zip. Zilch. Nothing. Nada. Doughnut. Bad sign.
Actually, that's not strictly true. Between 10 a.m. and 10:30, the S&P futures rose 7 points and the Dow rose 50 points. But it was all given back with a heapin' helpin' of interest. Bad sign.
Major US Indices
The DJIA shed 174.02 points (1.61%), closing out the day at 10611.2 points; within the blue-chip index, only 1 stock rose - Verizon (VZ +0.20% to $35.38). Losers in the Dow numbered 29 and were led by Merck (MRK -4.29% to $31.21) and Home Depot (HD -4.14% to $40.28); Volume traded was tilted in favour of the losers by495.1m shares to 11.3m.
The broader S&P500 slid 17.43 points (1.45%), at 1184.16. Over at Times Square, the Nasdaq Composite declined 28.3 points (1.37%), to close at 2030.32, while larger-cap technology issues fared worse with the Nasdaq100 losing 21.33 points (1.41%), to end at 1494.07 points.
NYSE Volume was chunky, with 1.74 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.06 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).
| Index | Close | Gain(Loss) | % |
| DJIA | 10611.2 | -174.02 | -1.61% |
| S&P500 | 1184.16 | -17.43 | -1.45% |
| Nasdaq Composite | 2030.32 | -28.3 | -1.37% |
| Nasdaq100 | 1494.07 | -21.33 | -1.41% |
| NYSE Volume | 1.74bn | - | - |
| Nasdaq Volume | 2.06bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 1.49%. Along with eBay, major weakness was provided by Fannie Mae and Freddie Mac - the toxic twin debt pyramids that will help cause the eventual death-spiral of the US economy.
The Citibank $47.50 March puts that were advocated last week (dumb idea - buying an out of the money put on the last day before a long weekend!!!) rose to $50 from its close at $40 last week, and it hit an intraday high of $60. Recall that the notional entry point is $45. I don't 'trade around' the entry in options, but anybody would have been forgiven for taking the position off after a gain of 33% in a session... the usual mechanism is to hold a 2-lot until the position is up 100%, then exit one unit and let the second ride.
I'm still steamed at myself for not buying puts when I issued the challenge for anyone to provide me with a reason not to (nobody gave me a reason, but nevertheless Iignored myself).
- General Electric (GE) -$0.53 (1.48%) to $35.35;
- Citigroup (C) -$0.62 (1.28%) to $47.95;
- Wal Mart (WMT) -$0.72 (1.37%) to $52.00;
- I.B.M. (IBM) -$0.95 (1.02%) to $92.32;
- Intel (INTC) -$0.26 (1.08%) to $23.76;
- Cisco Systems (CSCO) +$0.01 (0.06%) to $17.31;
- eBay (EBAY) -$1.36 (3.2%) to $41.10;
- Fannie Mae (FNM) -$1.10 (1.87%) to $57.80; and
- Freddie Mac (FRE) -$1.36 (2.2%) to $60.37.
Market Breadth & Internals
NYSE declining Issues beat out advancers by 2661 to 736, for a single-day A/D reading of -1925; and Nasdaq losers exceeded gainers by 2324 to 868. the 10-day MA of the advance-decline line fell to -471 for the NYSE, and -504 for the Nasdaq. Neither of those numebrs are bad enough to generate anything more than a very short-term bounce.
On the NYSE declining volume was greater than volume in advancing issues by a massive margin 1457.5 to 276.2 million shares (that's over 5:1); On the Nasdaq declining volume exceeded volume in advancing issues by 1471.2 to 576.4 million shares - not even 3:1; how come the NYSE is behaving like the Nasdaq used to?
214 NYSE-listed stocks rose to new 52-week highs, and 38 posted fresh 52-week lows, while on the Nasdaq there were 76 stocks that hit new 52-week highs, and 64 which fell to fresh 52-week lows.
| NYSE | Nasdaq | |
| Advancers | 736 | 868 |
| Decliners | 2661 | 2324 |
| Advancing Volume (m) | 276.18 | 576.39 |
| Declining Volume (m) | 1457.52 | 1471.19 |
| New Highs | 214 | 76 |
| New Lows | 38 | 64 |
Market Sentiment
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 13.14 | 1.96 | 17.53% |
| CBOE Nasdaq Volatility Index | 19 | 1.13 | 6.32% |
| Equity Put-Call Ratio | 0.66 | -0.1 | -13.16% |
| 10-day PCR | 0.68 | 0 | -0.64% |
| SPX-VIX Ratio | 90.12 | -17.358 | -16.15% |
Bond Market Analysis
Bonds fell at every maturity past the 2-year, with the yield on the benchmark 30-year Treasury bond rising another 4 basis points to 4.684%.
The 30-year bond future fell another 10 ticks for the session, putting another $312.50 in the swag of those who are short from 117. At one stage the contract got as low as 113 & 16/32 - a gain of precisely $3500 per $1755 margin... a tick short of triple-one's-money. Not bad for three weeks, but don't rule out a spike upwards, since the 30-years are now drastically oversold on very short term basis. Medium term, the long bond will fall to under 110 sometime between now and June. My eventual target for the US long bond is under 100 (which equates to 30-year interest rates of 6.5%) - but not for some time yet.
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.573 | 0 | 0% |
| UST 2Y (yld) | 3.41 | -0.01 | -0.29% |
| UST 5Y (yld) | 3.871 | 0.02 | 0.42% |
| UST 10Y (yld) | 4.285 | 0.025 | 0.59% |
| UST 30Y (yld) | 4.684 | 0.04 | 0.86% |
The Banks Index declined 1.43 points (1.44%), to 98.02; within the index,
- Keycorp (KEY) -$0.68 (2.06%) to $32.25;
- M&T Bank Corp (MTB) -$2.02 (2.04%) to $96.93;
- Wachovia (WB) -$1.08 (2.04%) to $51.87;
- Comerica (CMA) -$1.14 (1.97%) to $56.73; and
- Bank Of Ny (BK) -$0.58 (1.93%) to $29.45.
The Broker-dealer Index declined 2.33 points (1.58%), ending the day at 144.84; the ticket clippers lined up as follows -
- Ameritrade (AMTD) -$0.35 (3.19%) to $10.61;
- Jeffries Group (JEF) -$0.95 (2.52%) to $36.80;
- Raymond James (RJF) -$0.62 (2.03%) to $29.88;
- Legg Mason (LM) -$1.30 (1.63%) to $78.58; and
- Merrill Lynch (MER) -$0.90 (1.53%) to $57.96.
The Philadelphia SOX (Semiconductor) index dipped 1.94 points (0.45%), to end the session at 425.79
- Marvell Tech Group (MRVL) -$1.13 (3.04%) to $36.03;
- Broadcom (BRCM) -$0.60 (1.88%) to $31.25;
- Taiwan Semiconductors (TSM) -$0.11 (1.23%) to $8.86;
- Intel (INTC) -$0.26 (1.08%) to $23.76; and
- KLA-Tencor (KLAC) -$0.49 (1.01%) to $48.18.
Gold & Silver Markets
Gold rose $8.90 (2.08%) to close at $437.30 per ounce. Unlike the Oil move, this was in large part a USD weakness story rather than strenght in Gold per se. Gold has had a pretty feeble time of it lately, and although I remain a long-term bull (in USD terms) I still think the market needs up to 2 years of consolidation (if not outright decline) before it can store sufficient energy to break $500. The "$100 pullback" hypothesis is still not entirely invalidated although it has been somewhat ovetaken by events.
Gold Bugs Index gained 7.85 points (3.74%), to 217.74
- Kinross Gold (KGC) +$0.51 (8.24%) to $6.70;
- Randgold Resources (GOLD) +$0.88 (7.11%) to $13.26;
- Meridian Gold (MDG) +$1.28 (6.44%) to $21.15;
- Newmont Mining (NEM) +$2.03 (4.78%) to $44.50; and
- Agnico Eagle (AEM) +$0.65 (4.66%) to $14.60.
Silver rose $0.10 (1.39%) to close at $7.54 per ounce. The Gold and Silver Index (XAU) gained 3.64 points (3.78%), at 99.93 points.
- Kinross Gold (KGC) +$0.51 (8.24%) to $6.70;
- Meridian Gold (MDG) +$1.28 (6.44%) to $21.15;
- Durban Rooderpoert Deep (DROOY) +$0.07 (4.9%) to $1.50; and
- Newmont Mining (NEM) +$2.03 (4.78%) to $44.50.
| Index | Close | Gain(Loss) | % |
| Gold | 437.3 | 8.9 | 2.08% |
| Silver | 7.535 | 0.103 | 1.39% |
| PHLX Gold and Silver Index | 99.93 | 3.64 | 3.78% |
| AMEX Gold BUGS Index | 217.74 | 7.85 | 3.74% |
Oil Market
Oil was very strong, rising by $2.80 per barrel and closing at $51.15 per barrel. Venezuela has been making a lot of noises lately, with Hugo Chavez making clear to the world that the US has every intention of implementing yet another of its favoured "kill the democratically elected left-winger", just as they did in Chile on "the other 9-11" (September 11, 1973) when they underwrote the assassination of Salvador Allende.
Anyhow, Chavez has also strengthened ties with... CHINA.
If you do a search on this blog for Sudan, you will note that I have harped on for some time about how the US is losing the geopolitical strategic game with China for control over hydrocarbons. China is smrt enough to realise that the US is trying to extend military control over major oil-transport chokepoints (mostly the Straits of Hormuz and the Straits of Malacca, but also Suez and the Panama Canal). China's recent agreement with Venezuela renders the Panama Canal less essential for Venezuela, and puts at risk 10-15% of all US oil imports (which come from Venezuela).
The Oil and Gas Index (XOI) gained 0.21 points (0.03%), closing at 827.21
- Kerr Mcgee (KMG) +$3.70 (5.25%) to $74.20;
- Royal Dutch Shell (RD) +$0.40 (0.65%) to $62.08; and
- BP (BP) +$0.32 (0.51%) to $63.52.
The Oil service stocks (OSX) Index lost 2.12 points (1.52%), to 137.07
- Noble Corp (NE) -$1.41 (2.49%) to $55.32;
- Transocean (RIG) -$1.20 (2.48%) to $47.25; and
- Cooper Cameron (CAM) -$1.35 (2.39%) to $55.12.
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 297.66 | 7 | 2.41% |
| Crude Oil Light Sweet | 51.15 | 2.8 | 5.79% |
| Heating Oil | 1.4315 | 0.0822 | 6.09% |
| Natural Gas | 6.06 | 0.152 | 2.57% |
| Unleaded Gas | 1.308 | 0.0446 | 3.53% |
| AMEX Oil Index | 827.21 | 0.21 | 0.03% |
| Oil Service Index | 137.07 | -2.12 | -1.52% |
Currency Markets
The "journo explanation" for the recent weakness in the USD - the "one liner" seized upon by the sort of people who just reiterate government news releases in "investigative reports" about WMD - is the continued stream of central banks that have started declaring an intention to diversify away from holding USD.
Usually when central wankers start reorienting portfolios away from something, it's time to buy whatever it is, however silly you feel at the time. Gold's the perfect example; central wankers were doing their sharehodlers a massive disservice, dumping gold all the way down. In fact, like typical nuffnuff investors, central bank disenchantment with Gold reached a crescendo when Gordon BRown sold the last of the massive UK gold sales - pretty much on the day of a 20-year low.
See, if these vermin could make a living any other way but by sucking at the public teat, they would do so. Hell, Greenspan tried (vide Townsend, Greenspan) but as with most things in his life he failed. So he had to do what all unemployable graduates do - go on the dole... and if you've finished a degree, the dole is a job in the bureaucracy. And so it is with all central wankers, and anyone who tells you otherwise is selling something.
That's why they are so fervent in their belief in central planning. Maybe that needs rephrasing: they are too stupid to actually see monetary policy as central planning, but they are ardently in favour of central banking and more general State intervention. Dills always think that government is a solution, not the problem.
Anyhow... I'm not prepared to declare that central wank divestment of USD is a genuine reason for being long USD - I am a long-term USD bear. But if the Bank of England ever starts talking about diversifying away from USD in its holdings, that is the signal for loading up the truck on the long side. (That'll never happen, by the way - the UK owes far too much to the US for various war debts, which is why the US entered both World Wars... if England had lost either of them, all the war loans extended to the UK by the US would have been dishonoured by the new owners).
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 82.43 | -1.06 | -1.27% |
| Euro | 1.3253 | 0.0225 | 1.73% |
| Yen | 104.05 | -1.58 | -1.5% |
| Sterling | 1.9109 | 0.0164 | 0.87% |
| Australian Dollar | 0.7937 | 0.0047 | 0.6% |
| Swiss Franc | 1.1585 | -0.0222 | -1.88% |
| Canadian Dollar | 0.8163 | 0.0053 | 0.65% |
