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Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation.
- a $3billion, weekend repurchase entirely in T-backed collateral.
Major US Indices
So Greenspan thinks "oil prices should stabilise". God spare us from that dickhead; it almost sets $100 oil in stone when that clown calls for prices to stabilise. Remember, Greenspan is a parasite, and his forecasting capacity is about the same as a bag of mouldy lettuce. He's the bloke whose "forecasting" consultancy was so bad it went broke, forcing him to abandon his supposed "Randian" principles and fasten like a red-headed stepchild onto the public teat for sustenance.
What it means though, is that the Fed is shitting itself about inflation; markets may well digest that by tomorrow, so watch for a nice little short in bonds (I'll send out an e-mail).
The Dow Jones Industrial Average consists of stocks traded by people who still think Greenspan is not just the hellspawn that resulted from a mad experiment that forced Mr Magoo to mate with a cane toad. As a result, they take him at face value (which makes intuitive sense - if he was two-faced he would almost always wear the other one). Problem with taking an idiot at face value, is that it leads to bad investments.
Anyhow... journalists attributed the feeble rise in the Dow to Greenspan's pontifications (are we allowed to say "pontifications" this week?). It might have made more sense to attribute it to falling oil prices, but that's like, totally, so yesterday... so I was like "It's Greenspan" and she was like "Yuh!" And I was like "Eeeew - he's like the Pope, only crinklier" and she was like "Barf me out" and I was like "Whateverrrrr...".
Point is - the dumbasses who write journo-babble don't look at the tape. Sure, the Dow added 37.32 points (0.36%) during a day when Greenspan waffled. Sure, it closed the day at 10458.46 points. But look at the tape and it's obvious that Greenspan had bugger all to do with anything.
The index opened at its low (10419.44) and rose to the 10470s within an hour - two hours before Greenspan's bureaucratic waffling started. It went sideways for the next two hours, and then at 2 p.m. - ten minutes into Greenspans' waffle - the index dropped 60 points in a little under 20 minutes after hitting its intraday high of 10476.49. And that means that the market did nothing as a result of Greenspan, except it's usual handjob before he spoke.
God, journalists shit me with their shallow analysis.
Within the blue-chip index, 20 stocks rose, the biggest gainers being Pfizer (PFE, +3.74% to $26.90) and JPMorganChase (JPM, +2.40% to $34.58), which accounted for 13 Dow points between them. Losers in the Dow numbered 9 and were led by Hewlett Packard (HPQ, -1.60% to $21.56) and Exxon Mobil (XOM, -0.97% to $60.06), with these two stocks contributing -7 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 313.9m shares to 78.2m.
The broader S&P500 gained 5.27 points (0.45%), closing at 1181.39. Within the index, gainers numbered 333, while 153 S&P500 stocks fell for the day. Volume was tilted 1.6:1 in favour of the winners - with 1.1billion shares traded in the winners compared with 681 million in the losers.
Over at Times Square, the Nasdaq Composite posted a rise of 8.25 points (0.41%), to close at 1999.32, while larger-cap technology issues fared better with the Nasdaq100 adding 7.03 points (0.48%), to end at 1483.75 points. Within the tech benchmark, gainers numbered 64, while 33 Nasdaq100 stocks fell for the day. Volume was tilted 1.4:1 in favour of the winners - 420.3 million shares traded in gainers and 299.2 million in the losers.
NYSE Volume was almost super-chunky, with 1.88 billion shares changing hands, while Nasdaq Volume was chunky, with 1.7 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10458.46 | 37.32 | 0.36% |
| S&P500 | 1181.39 | 5.27 | 0.45% |
| Nasdaq Composite | 1999.32 | 8.25 | 0.41% |
| Nasdaq100 | 1483.75 | 7.03 | 0.48% |
| NYSE Volume | 1.88bn | - | - |
| Nasdaq Volume | 1.7bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.57%; as a prefect illustration of what I said yesterday about journalists always being last on the bus, Fannie Mae rallied pretty much from the open. I got up too late to advocate a specific call option... bugger.
Still, you ought to know by now that I always use one-level OOM (out of the money) options, and I note that the one level up calls - the June-expiry $55s - rose from $170 top $200 (a one-session gain of 17%). That doesn't go into the "track record" though, because it was only discussed in "general terms" yesterday.
- General Electric (GE) +$0.26 (0.74%) to $35.50;
- Citigroup (C) +$0.35 (0.78%) to $44.94;
- Wal Mart (WMT) +$0.26 (0.53%) to $49.67;
- I.B.M. (IBM) -$0.75 (0.83%) to $89.57;
- Intel (INTC) +$0.20 (0.87%) to $23.13;
- Cisco Systems (CSCO) +$0.15 (0.85%) to $17.82;
- eBay (EBAY) +$0.12 (0.31%) to $38.28;
- Fannie Mae (FNM) +$0.82 (1.59%) to $52.28; and
- Freddie Mac (FRE) +$0.19 (0.31%) to $61.76.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1857 to 1418 for a single-day A/D reading of 439; Nasdaq gainers trumped losers by 1602 to 1447. The 10-day moving average of the A/D line rose to 330.3 on the NYSE, while the 10dma of the Nasdaq A/D rose to -168.2.
NYSE advancing volume exceeded volume in decliners by 1100.1 to 746.3 million shares; Nasdaq advancing volume was greater than volume in decliners by 901.7 to 738.4 million shares.
74 NYSE-listed stocks rose to new 52-week highs, and 38 posted fresh 52-week lows, while on the Nasdaq there were 50 stocks that hit new 52-week highs, and 119 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1857 | 1602 |
| Decliners | 1418 | 1447 |
| Advancing Volume (m) | 1100.13 | 901.74 |
| Declining Volume (m) | 746.3 | 738.35 |
| New Highs | 74 | 50 |
| New Lows | 38 | 119 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 13.68 | -0.43 | -3.05% |
| CBOE Nasdaq Volatility Index | 17.67 | -0.4 | -2.21% |
| Equity Put-Call Ratio | 0.7 | -0.1 | -12.5% |
| 10-day PCR | 0.72 | -0.01 | -0.69% |
| SPX-VIX Ratio | 86.4 | 3.01 | 3.61% |
Bond Market Analysis
Bonds fell from the 5-year to the long end, with the yield on the benchmark 30-year Treasury bond rising 2.3 basis points to 4.753%. Five- and ten-year yields rose a little over a basis point each.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.728 | 0 | 0% |
| UST 2Y (yld) | 3.71 | 0 | 0% |
| UST 5Y (yld) | 4.13 | 0.013 | 0.32% |
| UST 10Y (yld) | 4.47 | 0.014 | 0.31% |
| UST 30Y (yld) | 4.753 | 0.023 | 0.49% |
The Banks Index advanced 0.42 points (0.44%), to end the session at 96.33; within the index,
- JPMorganChase (JPM) +$0.81 (2.4%) to $34.58;
- MBNA Corp (KRB) +$0.26 (1.06%) to $24.90;
- Fifth Third Bancorp (FITB) +$0.39 (0.92%) to $42.87;
- M&T Bank Corp (MTB) +$0.86 (0.84%) to $102.81; and
- Citigroup (C) +$0.35 (0.78%) to $44.94.
The Broker-dealer Index dipped 0.19 points (0.13%), to end the session at 144.98; the ticket clippers lined up as follows -
- Morgan Stanley (MWD) -$1.85 (3.17%) to $56.45;
- A G Edwards (AGE) -$0.63 (1.45%) to $42.77;
- Lehman Brothers (LEH) -$0.97 (1.03%) to $93.30;
- Bear Stearns (BSC) -$1.02 (1.03%) to $98.27; and
- Raymond James (RJF) -$0.29 (0.96%) to $30.01.
The Philadelphia SOX (Semiconductor) index advanced 0.49 points (0.12%), closing at 409.91
- Freescale Semiconductors (FSL-B) +$0.22 (1.3%) to $17.09;
- Linear Technology (LLTC) +$0.47 (1.24%) to $38.37;
- Xilinx (XLNX) +$0.30 (1.03%) to $29.48;
- Intel (INTC) +$0.20 (0.87%) to $23.13; and
- Altera (ALTR) +$0.10 (0.51%) to $19.54.
Gold & Silver Markets
Gold rose $0.10 (0.02%) to close at $424.50 per ounce. It won't be long now before large numbers of inexperienced traders - almost all of whom are long - will get "stale". That will be the shorting opportunity that I mentioned yesterday. It's not likely to happen tomorrow, or anytime this week - but before it starts I will be sure and e-mail those who have expressed an interest. It's likely that Gold will drop $10-$15 in a very short period of time when the next downdraught happens, which will be a very nice gainer (since each $1 an ounce fall is $100 per contract on margin of $2025).
The Gold Bugs Index rose 0.75 points (0.38%), at 199.05
- Golden Star (GSS) +$0.11 (3.75%) to $3.04;
- Randgold Resources (GOLD) +$0.18 (1.46%) to $12.53;
- Harmony Gold (HMY) +$0.11 (1.45%) to $7.71;
- Gold Fields (GFI) +$0.14 (1.24%) to $11.42; and
- Meridian Gold (MDG) +$0.15 (0.91%) to $16.67.
Silver rose $0.02 (0.27%) to close at $7.04 per ounce. The Gold and Silver Index (XAU) gained 0.32 points (0.35%), closing at 92.78 points.
- Durban Rooderpoert Deep (DROOY) +$0.03 (3.57%) to $0.87;
- Harmony Gold (HMY) +$0.11 (1.45%) to $7.71;
- Gold Fields (GFI) +$0.14 (1.24%) to $11.42; and
- Placer Dome (PDG) +$0.18 (1.16%) to $15.68.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 424.50 | 0.10 | 0.02% |
| Silver | 7.04 | 0.02 | 0.27% |
| PHLX Gold and Silver Index | 92.78 | 0.32 | 0.35% |
| AMEX Gold BUGS Index | 199.05 | 0.75 | 0.38% |
Oil Market
Oil dropped another $1.01 per barrel, closing at $55.76 per barrel. The short crude position advocated before the open yesterday, is now showing profit of $2240 (although anyone trading multiple lots should have taken half the position off when the profit reached $1,500 per contract). $2240 per contract is 55.3%, which is a good "get" for two sessions, even though the initial expectations was for that sort of gain to happen within yesterday's session.
The other Energy short vehicle - the one that was seen as preferable to shorting crude - was Heating Oil. HO dropped another full 2c, bringing the total gain over the two sessions to $3045 per contract. On an initial margin requirement of $3375, that's a 90% gain in two days. For those with multiple lots, half the position should have been taken off when Crude had fallen $1.50 a barrel, as mentioned in the update e-mail.
There is one significant bounce-risk during tomorrow's session - the Crude Oil Inventories numbers. With a protective stop is now at break-even, this trade cannot turn into a loser, but it would be a shame to see the gains evaporate because of a drawdown in either Crude or distillate stocks. Nimble traders would exit the short before the inventories numbers and buy a strangle centred on the nearest half-dollar strike - using part of the profits on the position to obtain a much more leverage position, but using "house money".
What that means is this: exit the crude position (pocketing $2240 per contract if you do it about now) and then - when the market opens - buy a call just above the current price, and a put just below the current price. If the market opens at the same level ($55.76) that would mean buying a $56 call and a $55.50 put (but those will adjust if the crude market is lower at the open tomorrow). The April expiry options have 10 days of life left, and as of the close last night the $56 call was priced at $149 and the $55.50 put was priced at $121.
The same strategy can be pursued with the Heating Oil position.
If the crude market bounces (i.e., if the inventory numbers are good), it will bounce hard. If the numbers are bad it will likely tank another couple of bucks. In any case, what we've done here is effectively take a couple of grand in profits out of the crude market, then risked a couple of hundred of the gains in a second-tier leveraged position.
The Oil and Gas Index (XOI) lost 8.27 points (0.96%), to 853.07
- Kerr Mcgee (KMG) -$2.52 (3.2%) to $76.23;
- Unocal (UCL) -$1.36 (2.28%) to $58.24; and
- ChevronTexaco (CVX) -$1.27 (2.23%) to $55.71.
The Oil service stocks (OSX) Index declined 1.23 points (0.87%), to 140.29
- Tidewater (TDW) -$0.92 (2.31%) to $38.90;
- Rowan Companies (RDC) -$0.61 (1.99%) to $29.98; and
- Weatherford International (WFT) -$0.76 (1.3%) to $57.60.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 308.77 | -1.33 | -0.43% |
| Crude Oil Light Sweet | 55.76 | -1.01 | -1.78% |
| Heating Oil | 1.6175 | -0.02 | -1.49% |
| Natural Gas | 7.56 | -0.01 | -0.07% |
| Unleaded Gas | 1.679 | -0.04 | -2.16% |
| AMEX Oil Index | 853.07 | -8.27 | -0.96% |
| Oil Service Index | 140.29 | -1.23 | -0.87% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.66 | -0.13 | -0.15% |
| Euro | 1.2852 | 0.0006 | 0.05% |
| Yen | 108.21 | -0.05 | -0.05% |
| Sterling | 1.8798 | 0.0046 | 0.25% |
| Australian Dollar | 0.7674 | 0 | 0% |
| Swiss Franc | 1.2068 | -0.0028 | -0.23% |
| Canadian Dollar | 0.82 | 0.0018 | 0.22% |
