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Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation.
- a $8billion, overnight repurchase entirely in T-backed collateral.
Clearly, with retail sales data as awful as it was, the large repo was required just to stanch the haemorrhaging. Oddly enough it didn't work (although since all the shorts were squeezed yesterday, perhaps there were none left to squeeze today).
Major US Indices
Well, although that bounce that happened yesterday was predictable (and predicted in this very page, the previous day), I said yesterday that it was suspect. My exact words were...
...this session's trajectory was pure fiction
And so it proved...
Yesterday's short squeeze was more suspect than the news of the "accidental" distribution of the H2N2 1952 pandemic flu virus by... the Americans. The lab in question is a very interesting one - see here for details - with ties to the NeoTrots and waist deep in the "Fatherland Security" apparatus.
If it wasn't for (government funded) Canadian researchers discovering the "accident", we would have had the"bioterror" act that we have all been warned about in the last few days. And in my opinion, that's exactly why it was distributed - to cause a massive outbreak of a flu strain to which a massive proportion of the population has no immunity. And if it had taken hold (as intended) and spread, it would have been blamed on al-Qaeda (which doesn't even exist).
Do not think for one second that this sort of thing is something that the US government "just wouldn't do". Remember all the other things they have shown themselves perfectly happy in doing - from giving small-pox infested blankets to Indians, through to incinerating entire cities with real WMDs, to deliberately starving over 1.5 million Germans POWs after the end of the Second World War. Eisenhower - who hated Germans the same way Hitler hated Jews - created a legal fiction in order to re-classify POWs in such a way as to then claim that the US was no longer responsible for them. He then ordered that no rations be provided, despite the fact that these POWs were in concentration camps - surrounded by armed guards and barbed wire fences and therefore unable to provision themselves. His private letters show that he wanted to eliminate 20% of the entire German population... So don't think that anything is beyond the evil machinations of the political class.
Oops.. digression alert.
The Dow Jones Industrial Average opened flat, with bad retail numbers being offset by declining oil prices. Retail sales rose an anaemic 0.3%, less than half of the expected 0.8%. Excluding cars (which are still being given away) retail sales rose just 0.1% (consensus called for 0.6%).
The market was able to make a marginally higher high at 10521.06 (lower than yesterday's high though) in the minutes following the oil inventory data (at 10:30 a.m. NY time), but from there it declined pretty much throughout the session (although the first touch of 10475 resulted in a bounce back to 10500). As the session wore on, and a second test of resistance at 10500 was rejected, the bulls' resistance was worn down and from about 1 p.m. the decline was uninterrupted until ten minutes before the close.
By the close the Dow was down 104.04 points (0.99%), closing out the day at 10403.93 points.
Within the blue-chip index, 6 stocks rose, the biggest gainers being Merck (MRK, +2.10% to $34.52) and Pfizer (PFE, +1.49% to $27.28), which accounted for 8 Dow points between them. Losers in the Dow numbered 24 and were led by Caterpillar (CAT, -3.05% to $88.60) and American International Group (AIG, -2.99% to $51.61), with these two stocks contributing -32 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 301.5m shares to 95.4m.
The broader S&P500 lost 13.97 points (1.18%), ending the day at 1173.79. Within the index, gainers numbered 45, while 449 S&P500 stocks fell for the day. Volume was tilted 7.5:1 in favour of the losers with 1707.28 million units traded in the losers as compared with 227.37 million traded in the winners .
The Nasdaq Composite lost 31.03 points (1.55%), to close at 1974.37, while larger-cap technology issues fared worse with the Nasdaq100 losing 27.48 points (1.85%), to end at 1461.68 points. Within the tech benchmark, gainers numbered 9, while 91 Nasdaq100 stocks fell for the day. Volume was tilted 20.9:1 in favour of the losers with 747.93 million traded in the losers compared to 35.75 million in the winners .
NYSE Volume was super-chunky, with 2.04 billion shares changing hands, while Nasdaq Volume was chunky, with 1.76 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10403.93 | -104.04 | -0.99% |
| S&P500 | 1173.79 | -13.97 | -1.18% |
| Nasdaq Composite | 1974.37 | -31.03 | -1.55% |
| Nasdaq100 | 1461.68 | -27.48 | -1.85% |
| NYSE Volume | 2.04bn | - | - |
| Nasdaq Volume | 1.76bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 1.30%
- General Electric (GE) -$0.45 (1.25%) to $35.64;
- Citigroup (C) -$0.64 (1.38%) to $45.81;
- Wal Mart (WMT) -$0.06 (0.12%) to $48.57;
- I.B.M. (IBM) -$1.18 (1.38%) to $84.57;
- Intel (INTC) -$0.40 (1.72%) to $22.82;
- Cisco Systems (CSCO) -$0.24 (1.32%) to $18.00;
- eBay (EBAY) -$0.87 (2.58%) to $32.79;
- Fannie Mae (FNM) -$0.59 (1.04%) to $56.18; and
- Freddie Mac (FRE) -$0.59 (0.92%) to $63.41.
Market Breadth & Internals
NYSE declining Issues beat out advancers by 2316 to 987, for a single-day A/D reading of -1329; that's a horribly bad number which usually presages another bounce. Nasdaq losers exceeded gainers by 2198 to 883. The 10-day moving average of the A/D line fell to -82.7 on the NYSE, while the 10dma of the Nasdaq A/D fell to -400.8.
On the NYSE declining volume was greater than volume in advancing issues by over 4:1, with 1609.8m shares traded in losers compared to 388.8 million shares in winners; On the Nasdaq declining volume exceeded volume in advancing issues by almost 11:2, with 1476.7 million traded in losers compared to just 271.9 million in gainers.
52 NYSE-listed stocks rose to new 52-week highs, and 53 posted fresh 52-week lows, while on the Nasdaq there were 36 stocks that hit new 52-week highs, and 100 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 987 | 883 |
| Decliners | 2316 | 2198 |
| Advancing Volume (m) | 388.8 | 271.93 |
| Declining Volume (m) | 1609.81 | 1476.69 |
| New Highs | 52 | 36 |
| New Lows | 53 | 100 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 13.31 | 2.01 | 17.79% |
| CBOE Nasdaq Volatility Index | 16.07 | -0.17 | -1.05% |
| Equity Put-Call Ratio | 0.83 | 0.04 | 5.06% |
| 10-day PCR | 0.75 | 0.02 | 2.8% |
| SPX-VIX Ratio | 88.2 | -16.92 | -16.1% |
Bond Market Analysis
Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 3.0 basis points to 4.687%.
The middle of the yield curve was mixed: five year yields fell a basis point to 4.026%, and ten-year yields rose about the same amount to 4.374%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 5.0 basis points wider at 12 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell 4 basis points to 59.0 basis points for 10-year AAA, and rose 2.5 basis points to 86.5 basis points for 20-years.
Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly tighter with the AAA-A spread on 20-years 1.0 basis points looser at 40.0 basis points and the 10-year AAA-A spread 1.0 basis points looser at 82.0 basis points.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.717 | 0 | 0% |
| UST 2Y (yld) | 3.63 | -0.04 | -1.09% |
| UST 5Y (yld) | 4.026 | -0.012 | -0.3% |
| UST 10Y (yld) | 4.374 | 0.014 | 0.32% |
| UST 30Y (yld) | 4.687 | 0.03 | 0.64% |
The Banks Index slid 1.26 points (1.29%), ending the day at 96.7; within the index,
- BB&T Corp (BBT) -$1.29 (3.29%) to $37.92;
- Regions Financial (RF) -$0.87 (2.65%) to $31.98;
- North Fork Bancorp (NFB) -$0.73 (2.56%) to $27.82;
- MBNA Corp (KRB) -$0.60 (2.4%) to $24.37; and
- Bank Of NY (BK) -$0.57 (1.93%) to $28.94.
The Broker-dealer Index dipped 2.69 points (1.86%), closing at 142; the ticket clippers lined up as follows -
- Ameritrade (AMTD) -$0.38 (3.41%) to $10.77;
- Charles Schwab (SCH) -$0.28 (2.62%) to $10.42;
- Jeffries Group (JEF) -$0.96 (2.5%) to $37.50;
- Morgan Stanley (MWD) -$1.35 (2.48%) to $53.13; and
- Legg Mason (LM) -$1.29 (1.75%) to $72.53.
The Philadelphia SOX (Semiconductor) index lost 11.21 points (2.71%), to 401.93
- KLA-Tencor (KLAC) -$2.79 (6.15%) to $42.59;
- Teradyne (TER) -$0.72 (5.15%) to $13.25;
- Novellus Systems (NVLS) -$1.34 (5.06%) to $25.12;
- National Semiconductors (NSM) -$0.69 (3.44%) to $19.37; and
- Broadcom (BRCM) -$0.96 (3.13%) to $29.68.
Gold & Silver Markets
Gold rose $1.30 (0.3%) to close at $429.30 per ounce. Nobody is looking at that MACD buy signal I mentioned yesterday - which I consider bearish, because it means that technical traders who use some of the most widespread tools, are already long.
Gold Bugs Index shed 5.3 points (2.7%), to end the session at 191.05
- Gold Fields (GFI) -$0.59 (5.27%) to $10.61;
- Harmony Gold (HMY) -$0.35 (4.71%) to $7.08;
- Freeport McMoran (FCX) -$1.73 (4.52%) to $36.51;
- Golden Star (GSS) -$0.10 (3.52%) to $2.74; and
- Randgold Resources (GOLD) -$0.40 (3.21%) to $12.05.
Silver rose $0.07 (0.98%) to close at $7.22 per ounce. The Gold and Silver Index (XAU) lost 1.82 points (1.98%), to 90.13 points.
- Durban Rooderpoert Deep (DROOY) -$0.05 (5.88%) to $0.80;
- Gold Fields (GFI) -$0.59 (5.27%) to $10.61;
- Harmony Gold (HMY) -$0.35 (4.71%) to $7.08; and
- Freeport McMoran (FCX) -$1.73 (4.52%) to $36.51.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 429.30 | 1.30 | 0.3% |
| Silver | 7.22 | 0.07 | 0.98% |
| PHLX Gold and Silver Index | 90.13 | -1.82 | -1.98% |
| AMEX Gold BUGS Index | 191.05 | -5.3 | -2.7% |
Oil Market
Some days are diamonds, but this one was a dog. I had speculated that the oil inventory data (which was released at 10:30 NY time) would "trick" the masses, we would see an unexpected inventory drawdown, and that would be the catalyst for a decent-sized bounce in the Energy complex. Instead, the inventories data surprised to the upside and oil tanked again.
Fortunately, the call option I mentioned in the e-mail I sent out before the open, opened sharply lower; in the e-mail I had pointed out that it closed at $114 but should be able to be had for $110. Well, it turns out that it opened at $60 (it closed at $33), which is actually a GOOD thing since a bid at $110 would have been filled at $60. I still think Crude bounces from here, but whether or not it can bounce to $52.10 before Friday (to enable the option to be exited with some dignity) is unclear.
It just goes to show - when you time a top (as I did last week with the entire Energy complex) it's terrific, but if you try to time the bottom in the same, now-rapidly-declining market you risk losing some fingers; that's why they call it "catching a falling knife".
For the session though, Oil lost yet more ground, shedding $1.16 per barrel (2.25%), closing at $50.31 per barrel.
The Oil and Gas Index (XOI) lost 18.92 points (2.23%), to end the session at 829.29
- Occidental Petroleum (OXY) -$3.09 (4.31%) to $68.58;
- Marathon Oil (MRO) -$1.52 (3.22%) to $45.63; and
- ConocoPhillips (COP) -$2.98 (2.75%) to $105.30.
The Oil service stocks (OSX) Index slid 3.33 points (2.43%), at 133.97
- Rowan Companies (RDC) -$1.17 (3.97%) to $28.32;
- Transocean (RIG) -$1.68 (3.27%) to $49.70; and
- Global Industries (GLBL) -$0.33 (3.16%) to $10.12.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 300.83 | -1.8 | -0.59% |
| Crude Oil Light Sweet | 50.31 | -1.16 | -2.25% |
| Heating Oil | 1.447 | -0.01 | -0.82% |
| Natural Gas | 6.994 | -0.08 | -1.17% |
| Unleaded Gas | 1.4815 | -0.04 | -2.85% |
| AMEX Oil Index | 829.29 | -18.92 | -2.23% |
| Oil Service Index | 133.97 | -3.33 | -2.43% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.42 | -0.03 | -0.04% |
| Euro | 1.2917 | -0.0001 | -0.01% |
| Yen | 107.3 | -0.45 | -0.42% |
| Sterling | 1.8942 | 0.0023 | 0.12% |
| Australian Dollar | 0.7778 | 0.0024 | 0.31% |
| Swiss Franc | 1.1989 | 0.0004 | 0.03% |
| Canadian Dollar | 0.8076 | -0.0002 | -0.02% |
