Interdum stultus opportuna loquitur...

Thursday, April 21, 2005

USRant: Biggo repo, Biggo Bounce-o...

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The pre-market data was pretty (New Jobless Claims down a massive 36k due to bad measurement), but at 10 a.m. the Leading Economic Indicators (which as I've said before, don't lead a damn thing) was awful (-0.4%; consensus -0.3%). Still, Nokia's earnings report was much better than expected, and so was Motorola's.

Who are we kidding? NOK? MOT? Jobless Claims? Grow up, nincompoop. Those sort of details make journalistic copy less dull, and distract attention from the fact that the journalist's output is "content-free"... but they don't give you 200 points in a session - only liquidity and a short-squeeze gives you that.

The market's "oversold to buggery" condition, yesterday's manufactured low at almost exactly 10,000, and massive repuchase cash were the primary contributors. Earnings and economic statistics are the embroidery on the other edges of the handkerchief; we are concerned with getting right at the big lumps of snot right in the middle.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 2 repurchase operations.

  • a $7.25billion, overnight repurchase entirely in T-backed collateral; and
  • a $9billion, 14-day repurchase with $7.684billion in T-backed collateral.

I said on Monday that what was required to get some real upside traction to any rally, was a really large repurchase operation concentrated in T-backed collateral - well, look above and tell me if that's large enough for ya...

Major US Indices

A heavily oversold market making a new post-election low, plenty plenty repo, and data that looked OK if you believe the government's lie machines: no prizes for guessing what came next.

The Dow Jones Industrial Average advanced 206.24 points (2.06%), closing out the day at 10218.6 points (also the high for the day). The index opened at its low (10010.51 - which is just an artefact of the silly opening system for the Dow) and then had a 100-point surge in the first ten minutes. It then went largely sideways (with a mildly negative bias) until the release of the Philly Fed at 12 noon, whereupon the Dow stacked on another 100 points between that time and the close. Sure, the data helps catalyse the squeeze, but it's the liquidity from the big repo that gives da Boyz the wherewithal to engineer the squeeze, and the oversold condition that gets the shorts nervy to begin with.

Within the blue-chip index, 29 stocks rose, the biggest gainers being Altria Group (MO, +4.08% to $65.31) and Microsoft (MSFT, +3.95% to $25.28), which accounted for 26 Dow points between them. There was only one stock in the Dow that lost ground for the day - Mcdonalds (MCD, -0.30% to $29.85). Volume traded was tilted in favour of the gainers by 429.1m shares to 6.5m.

The broader S&P500 gained 22.45 points (1.97%), ending the day at 1159.95. Within the index, gainers numbered 469, while 30 S&P500 stocks fell for the day. Volume was tilted a whopping 9:1 in favour of the winners with 1983.56 million units traded in the winners as compared with a paltry 221.37 million traded in the losers .

Over at Times Square, the Nasdaq Composite added 48.65 points (2.54%), to close at 1962.41, while larger-cap technology issues fared better with the Nasdaq100 adding 40.52 points (2.88%), to end at 1447.37 points. Within the tech benchmark, gainers numbered 92, while 7 Nasdaq100 stocks fell for the day. Volume was tilted 8.7:1 in favour of the winners with 852.27 million traded in the winners compared to 98.17 million in the losers .

NYSE Volume was super-chunky, with 2.28 billion shares changing hands, while Nasdaq Volume was also pretty damned chunky, with 1.96 billion shares traded.

Major Market Statistics
Dow Jones Industrial Average10218.6206.242.06%
Nasdaq Composite1962.4148.652.54%
NYSE Volume2.28bn--
Nasdaq Volume1.96bn--


My 9-stock "bellwethers" group rose by an average of 1.36%

  • General Electric (GE) +$0.60 (1.69%) to $36.12;
  • Citigroup (C) +$0.14 (0.3%) to $46.27;
  • Wal Mart (WMT) +$0.43 (0.91%) to $47.78;
  • I.B.M. (IBM) +$2.02 (2.81%) to $74.03;
  • Intel (INTC) +$0.70 (3.09%) to $23.36;
  • Cisco Systems (CSCO) +$0.49 (2.85%) to $17.68;
  • eBay (EBAY) -$0.03 (0.09%) to $33.08;
  • Fannie Mae (FNM) -$0.07 (0.13%) to $53.20; and
  • Freddie Mac (FRE) +$0.51 (0.84%) to $61.41.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 2423 to 871 for a single-day A/D reading of 1552; Nasdaq gainers trumped losers by 2231 to 833. The 10-day moving average of the A/D line rose to 12.8 on the NYSE, while the 10dma of the Nasdaq A/D rose to -131.7.

NYSE advancing volume exceeded volume in decliners by 1874.2 to 368.9 million shares; Nasdaq advancing volume was greater than volume in decliners by 1662 to 269.6 million shares.

23 NYSE-listed stocks rose to new 52-week highs, and 66 posted fresh 52-week lows, while on the Nasdaq there were 28 stocks that hit new 52-week highs, and 105 which fell to fresh 52-week lows.

Market Breadth Statistics
Advancing Volume (m)1874.171662.01
Declining Volume (m)368.85269.64
New Highs2328
New Lows66105
Market Sentiment Statistics
CBOE Volatility Index14.37-2.68-15.72%
CBOE Nasdaq Volatility Index18.37-1.89-9.33%
Equity Put-Call Ratio0.64-0.22-25.58%
10-day PCR0.79-0.04-4.46%
SPX-VIX Ratio80.71420.99%

Bond Market Analysis

After the unnervingly positive data, bonds fell hard at the long end. The 30-year bond future fell 28/32nds for the session, which meant that overall, the bond had lost over a full point since yesterday's intrasession high at 114&17/32 (which, interestingly, is where a bond short taken from 117 was exited back in March despite my long-stated target of 30-years under 110 by June, which was achieved early). The yield on the benchmark 30-year Treasury bond rising 6.7 basis points to 4.638%.

The middle of the yield curve was also broadly lower: five year yields rose to 3.96%, and ten-year yields rose to 4.3%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 4.0 basis points tighter at 10 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 58.0 basis points for 10-year AAA, and 82.0 basis points for 20-years.

Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly wider with the AAA-A spread on 20-years unchanged at 49.0 basis points and the 10-year AAA-A spread 58.0 basis points tighter at 4.0 basis points. I suspect another bad tick in the 10-year A data - it showed 10-year A yields falling 58 basis points, while the rest of the 10-year market didn't move by more than a couple of ticks. Also, A-rated corporates of different maturities didn't move in line with the 10-year A's... when a move is that big, but is not reflected anywhere else in the duration or risk spectrums, you know the data's cocked.

Treasury Yields
UST 13wk (yld)2.81700%
UST 2Y (yld)3.610.133.74%
UST 5Y (yld)3.960.1062.75%
UST 10Y (yld)4.30.0892.11%
UST 30Y (yld)4.6380.0671.47%

The Banks Index posted a rise of 0.48 points (0.51%), to end the session at 95.24; within the index,

  • State Street (STT) +$2.07 (4.73%) to $45.84;
  • North Fork Bancorp (NFB) +$1.20 (4.56%) to $27.52;
  • PNC Financial Services (PNC) +$1.94 (3.89%) to $51.80;
  • Fifth Third Bancorp (FITB) +$1.01 (2.49%) to $41.51; and
  • Washington Mutual (WM) +$0.79 (2.08%) to $38.80.

The Broker-dealer Index added 1.29 points (0.95%), to end the session at 137.33; the ticket clippers lined up as follows -

  • Morgan Stanley (MWD) +$0.99 (1.97%) to $51.18;
  • Lehman Brothers (LEH) +$1.73 (1.94%) to $90.90;
  • Merrill Lynch (MER) +$0.97 (1.85%) to $53.45;
  • Charles Schwab (SCH) +$0.14 (1.42%) to $10.01; and
  • Bear Stearns (BSC) +$1.16 (1.23%) to $95.35.

The Philadelphia SOX (Semiconductor) index advanced 10.75 points (2.8%), at 394.72

  • Broadcom (BRCM) +$1.33 (4.73%) to $29.45;
  • National Semiconductors (NSM) +$0.80 (4.25%) to $19.61;
  • Xilinx (XLNX) +$1.09 (3.84%) to $29.44;
  • ST Microelectronic (STM) +$0.57 (3.78%) to $15.65; and
  • Marvell Tech Group (MRVL) +$1.12 (3.33%) to $34.71.

Gold & Silver Markets

Gold fell by $2.30 (0.53%) to close at $433 per ounce.

Gold Bugs Index lost 1.8 points (0.94%), closing at 190.22

  • Coeur d'Alene (CDE) -$0.09 (2.45%) to $3.59;
  • Eldorado Gold (EGO) -$0.06 (2.43%) to $2.41;
  • Meridian Gold (MDG) -$0.35 (2.14%) to $16.01;
  • Golden Star (GSS) -$0.05 (1.84%) to $2.67; and
  • Iamgold (IAG) -$0.11 (1.83%) to $5.91.

Silver fell by $0.12 (1.64%) to close at $7.21 per ounce. The Gold and Silver Index (XAU) lost 0.98 points (1.09%), ending the day at 89 points.

  • Durban Rooderpoert Deep (DROOY) -$0.02 (2.53%) to $0.77;
  • Anglogold Ashanti (AU) -$0.88 (2.52%) to $34.11;
  • Meridian Gold (MDG) -$0.35 (2.14%) to $16.01; and
  • Placer Dome (PDG) -$0.20 (1.32%) to $14.95.
Precious Metals and Indices
PHLX Gold and Silver Index89-0.98-1.09%
AMEX Gold BUGS Index190.22-1.8-0.94%

Oil Market

Oil continues to mock me for being 2 sessions (and $1.50) early in callingfor a bounce. You'll recall that I said oil should bounce when crude was $51.25 last Tuesday... it actually bounced from around $49.75, starting Tuesday of this week. Today it was firmer again, rising by $1.69 per barrel, closing at $54.29 per barrel. The Oil and Gas Index (XOI) advanced 18.96 points (2.33%), at 833.76

  • Exxon Mobil (XOM) +$2.14 (3.75%) to $59.28;
  • Occidental Petroleum (OXY) +$2.46 (3.58%) to $71.22; and
  • Sunoco (SUN) +$3.04 (3.11%) to $100.86.

The Oil service stocks (OSX) Index advanced 4.1 points (3.1%), closing at 136.46

  • Global Industries (GLBL) +$0.46 (4.56%) to $10.55;
  • Rowan Companies (RDC) +$1.24 (4.46%) to $29.03; and
  • Smith International (SII) +$2.31 (3.96%) to $60.68.
Energy Complex
Reuters CRB306.71-0.28-0.09%
Crude Oil Light Sweet54.291.693.21%
Heating Oil1.53350.032.3%
Natural Gas7.0530.040.61%
Unleaded Gas1.62450.063.54%
AMEX Oil Index833.7618.962.33%
Oil Service Index136.464.13.1%

Currency Markets

USD Exchange Rates
US Dollar Index83.70.260.31%
Australian Dollar0.7758-0.0003-0.04%
Swiss Franc1.18250.00550.47%
Canadian Dollar0.80720.00130.16%