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Anybody who watched "HotDocs" on SBS last night should still have a chill down their spine. The documentary-makers who did that pieec of work should be given all the applause that the scum in the journalistic community heap upon themselves at their annual mutual arse-kissing festivals... although last night for once a "mainstream" current affairs (sic) show had a decent story (I refer to the story on the Naomi Robson Show about CEO remuneration - it was true from start to finish... and it's about time that shareholders started to let it be known that the shitheads who "run" companies are never EVER worth seven figures a year.
Makes a pleasant change from their usual crap about magic bullet medical fixes and miracle diets. They must have had a temp on the production staff or something (maybe the EP as on holidays - I'm struggling to see how it got through...
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation.
- a $3.25billion, overnight repurchase with $3.02billion in T-backed collateral .
Nothing on the repo side of things gave anything to be confident about - all that there was to rely on was the usual handjob given to Greenstain prior to all FOMC announcements.
Why on earth the Street still practices such hagiolatry with regard to this thrice-failed dunce is beyond me. (Thrice-failed is premature, since his last failure is a work in progress... the first two are that he failed to complete a PhD [he got his honorarily... like politicians do], and failed in the private sector as a consultant. Now, he is failing to prevent the decline of the US as an economic power)
Major US Indices
The Dow Jones Industrial Average shed 94.88 points (0.9%), closing out the day at 10470.51 points. The index hit an intraday high of 10609.95 the minute before the Fed's decision was announced, and fell as low as 10470.28 - which is to say that the market closed at its low.
Within the blue-chip index, 4 stocks rose, the biggest gainers being Du Pont (DD, +0.70% to $51.74) and Boeing (BA, +0.67% to $57.22), which accounted for 5 Dow points between them. Losers in the Dow numbered 26 and were led by American International Group (AIG, -2.94% to $56.20) and Citigroup (C, -2.86% to $44.45), with these two stocks contributing -22 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 433.8m shares to 23m.
The broader S&P500 declined 12.07 points (1.02%), ending the day at 1171.71 (I mentioned yesterday that the next target for the S&P futures was 1175... that's now history... now the year low has to be tested).
I said yesterday that the break of 2000 in the Nasdaq Comp was an intraday nuffie-killer (which it was... it happened too early in the day), but today's session had the right shape. 2000 was broken - with some real vigour - just before 3 p.m.; after providing some casual interest (the index twiddled around 2000 for ten minutes or so) the decline's momentum was obvious. And we got a close below 2000, which is much more important than an intraday breach of that level. The Nasdaq Composite lost 18.17 points (0.91%), to close at 1989.34, while larger-cap technology issues fared worse with the Nasdaq100 losing 19.36 points (1.3%), to end at 1465.09 points.
NYSE Volume was super-chunky, with 2.11 billion shares changing hands, while Nasdaq Volume was chunky, with 1.81 billion shares traded during he session (although this involves some double-counting, since QQQQ had turnover of 110 million units).
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10470.51 | -94.88 | -0.9% |
| S&P500 | 1171.71 | -12.07 | -1.02% |
| Nasdaq Composite | 1989.34 | -18.17 | -0.91% |
| Nasdaq100 | 1465.09 | -19.36 | -1.3% |
| NYSE Volume | 2.11bn | - | - |
| Nasdaq Volume | 1.81bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 1.18%
- General Electric (GE) -$0.51 (1.42%) to $35.50;
- Citigroup (C) -$1.31 (2.86%) to $44.45... man, I wish I had paid the extra premium and bought April puts!!;
- Wal Mart (WMT) -$0.27 (0.53%) to $50.90;
- I.B.M. (IBM) -$0.01 (0.01%) to $89.50;
- Intel (INTC) -$0.48 (2.04%) to $23.02;
- Cisco Systems (CSCO) -$0.02 (0.11%) to $17.92;
- eBay (EBAY) -$0.25 (0.69%) to $35.88;
- Fannie Mae (FNM) -$0.92 (1.68%) to $53.96; and
- Freddie Mac (FRE) -$0.82 (1.27%) to $63.69.
Market Breadth & Internals
NYSE declining Issues beat out advancers by 2381 to 943, for a single-day A/D reading of -1438; and Nasdaq losers exceeded gainers by 1888 to 1203. The 10-day moving average of the A/D line fell to -742.3 on the NYSE, while the 10dma of the Nasdaq A/D fell to -417.1.
On the NYSE declining volume was greater than volume in advancing issues by 1508.1 to 561.8 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1343.3 to 437 million shares.
62 NYSE-listed stocks rose to new 52-week highs, and 83 posted fresh 52-week lows, while on the Nasdaq there were 62 stocks that hit new 52-week highs, and 78 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 943 | 1203 |
| Decliners | 2381 | 1888 |
| Advancing Volume (m) | 561.75 | 436.98 |
| Declining Volume (m) | 1508.07 | 1343.33 |
| New Highs | 62 | 62 |
| New Lows | 83 | 78 |
Market Sentiment
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 14.23 | 0.62 | 4.56% |
| CBOE Nasdaq Volatility Index | 18.01 | 0.18 | 1.01% |
| Equity Put-Call Ratio | 0.76 | 0.05 | 7.04% |
| 10-day PCR | 0.79 | -0.01 | -1.08% |
| SPX-VIX Ratio | 82.3 | -4.64 | -5.33% |
Bond Market Analysis
Bonds fell hard at the long end, with the yield on the benchmark 30-year Treasury bond rising 6.5 basis points to 4.891%. As I said some time ago, my target for the 30-year bond was for the futures to break below 110 before June. Well, they did that last night, with the June contract falling to 109 & 19/32.
I mentioned last night that the test of 4.25% yield on the 5-year would happen today, or would be postponed for a month. Well, it happened. 5 year yields rose above 4.25%, and - more importantly - closed above 4.25%.
Sad that the only bond position taken recently - the short off 117 from February - was closed by a trailing profit-protection stop which locked in a gain of $3500 per contract... the stops should have been looser, aiming to capture more of the bigger picture targets (110 before June, and a long-term target of under 100).
Yesterday advocated a strangle in the 10-year, which worked (so far) - the 108 puts doubled (from 5 to 10 ticks) while the 110 calls fell from 4 ticks to 1 tick. So the trade cost of $283.25 (which includes commissions) per strangle pair, closed at $343.75 for a one-session gain of 21.4%.
The problem now is that bonds need to tank further in order to really give this setup a touch of "Goodbye Mr Spalding" - but they're so oversold that a bounce becomes more likely with each passing session. Still, oversold instruments can become more oversold, and recent bounces have been tepid (just enough to trigger my profit-protection stops, dammit)... given that the 5-year yield was permitted to close above 4.25%, it would not surprise me to see the bonds keep falling until the 30-year yield gets much closer to 5% - at which time a decent bounce is on the cards.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.802 | 0 | 0% |
| UST 2Y (yld) | 3.81 | 0.12 | 3.25% |
| UST 5Y (yld) | 4.276 | 0.099 | 2.37% |
| UST 10Y (yld) | 4.61 | 0.085 | 1.88% |
| UST 30Y (yld) | 4.891 | 0.065 | 1.35% |
The Banks Index dipped 1.71 points (1.76%), ending the day at 95.52; within the index,
- North Fork Bancorp (NFB) -$1.01 (3.54%) to $27.49;
- Citigroup (C) -$1.31 (2.86%) to $44.45;
- Wachovia (WB) -$1.10 (2.16%) to $49.91;
- National City Corp (NCC) -$0.71 (2.11%) to $33.00; and
- US Bancorp (USB) -$0.61 (2.1%) to $28.40.
The Broker-dealer Index lost 2.54 points (1.71%), to 146.28; the ticket clippers lined up as follows -
- Jeffries Group (JEF) -$1.08 (2.77%) to $37.85;
- Legg Mason (LM) -$2.16 (2.59%) to $81.15;
- Morgan Stanley (MWD) -$1.31 (2.3%) to $55.70;
- Bear Stearns (BSC) -$2.29 (2.25%) to $99.58; and
- Charles Schwab (SCH) -$0.20 (1.93%) to $10.18.
The Philadelphia SOX (Semiconductor) index slid 3.32 points (0.8%), to 410.09
- Advanced Micro Devices (AMD) -$0.37 (2.35%) to $15.38;
- Intel (INTC) -$0.48 (2.04%) to $23.02;
- Taiwan Semiconductors (TSM) -$0.17 (2.01%) to $8.28;
- Maxim Integrated (MXIM) -$0.69 (1.66%) to $40.79; and
- Novellus Systems (NVLS) -$0.43 (1.59%) to $26.61.
Gold & Silver Markets
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Gold fell by $4.1 (0.95%) to close at $427.3 per ounce.
Gold Bugs Index lost 4.77 points (2.26%), at 206.17
- Eldorado Gold (EGO) -$0.14 (4.59%) to $2.91;
- Golden Star (GSS) -$0.13 (4.45%) to $2.79;
- Coeur d'Alene (CDE) -$0.17 (4.26%) to $3.82;
- Iamgold (IAG) -$0.25 (3.88%) to $6.19; and
- Randgold Resources (GOLD) -$0.43 (3.44%) to $12.08.
Silver fell by $0.02 (0.34%) to close at $7.07 per ounce. The Gold and Silver Index (XAU) lost 2.01 points (2.06%), ending the day at 95.78 points.
- Placer Dome (PDG) -$0.64 (3.78%) to $16.30;
- Goldcorp (GG) -$0.47 (3.16%) to $14.41;
- Kinross Gold (KGC) -$0.18 (2.79%) to $6.27; and
- Anglogold Ashanti (AU) -$0.96 (2.59%) to $36.06.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 427.30 | -4.10 | -0.95% |
| Silver | 7.07 | -0.02 | -0.34% |
| PHLX Gold and Silver Index | 95.78 | -2.01 | -2.06% |
| AMEX Gold BUGS Index | 206.17 | -4.77 | -2.26% |
Oil Market
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Oil lost ground, shedding $1.02 per barrel, closing at $55.6 per barrel. The Oil and Gas Index (XOI) dipped 15.18 points (1.75%), to end the session at 852.91
- Marathon Oil (MRO) -$1.31 (2.78%) to $45.82;
- Exxon Mobil (XOM) -$1.25 (2.01%) to $60.90; and
- BP (BP) -$1.30 (2.01%) to $63.52.
The Oil service stocks (OSX) Index posted a rise of 0.77 points (0.56%), to end the session at 139
- Global Industries (GLBL) +$0.25 (2.67%) to $9.61;
- Transocean (RIG) +$1.22 (2.49%) to $50.20; and
- GlobalSantaFe (GSF) +$0.72 (1.97%) to $37.20.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 313.02 | -0.47 | -0.15% |
| Crude Oil Light Sweet | 55.6 | -1.02 | -1.8% |
| Heating Oil | 1.5375 | -0.04 | -2.29% |
| Natural Gas | 7.215 | -0.14 | -1.84% |
| Unleaded Gas | 1.563 | -0.03 | -2.01% |
| AMEX Oil Index | 852.91 | -15.18 | -1.75% |
| Oil Service Index | 139 | 0.77 | 0.56% |
Currency Markets
The USD is being helped by the idiotic proposition that bond yields differentials are closing, and therefore there will be increase purchases of USD as a result of people re-equilibrating multi-country bond portfolios in order for "uncovered interest parity" to be met.
That's just stupid, considering what is causing the bond yield rises (at the end of the curve not controlled by the Soviet-style central planners at the Fed)... namely, a slowing of the rate at which foreign central banks are accumulating USD reserves (and recycling same into US Treasuries). So in fact the demand side for USD is not strengthening as a result of covered interest parity; rates are rising because of weak demand for USD. I don't really care, because we have known for three years where this ends; it ends with US interest rates in double digits and the USD at 85 Yen (or lower). You can't be a global moocher and expect a strong currency.
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 83.37 | 0.48 | 0.58% |
| Euro | 1.3083 | -0.0081 | -0.62% |
| Yen | 105.56 | 0.47 | 0.45% |
| Sterling | 1.8858 | -0.0115 | -0.61% |
| Australian Dollar | 0.7826 | -0.0029 | -0.37% |
| Swiss Franc | 1.1879 | 0.0101 | 0.86% |
| Canadian Dollar | 0.8273 | 0.0017 | 0.21% |
