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Very bloody funny, Karol.
Obviously the Great Architect didn't take too kindly to my "dig" at the recently-departed former occupant of the throne stolen from James by Paul (and given to Peter). I was literally putting the final touches to what was - in my view - the best Rant ever... and the power went off. Only for long enough to force the PC to reboot - not even long enough to change the display on the microwave.
Spooky, huh? And there was no "Omen" music at the time, which is odd... usually when HWHY does stuff in the movies, there's a whole sound and light show. It's taken me an hour to rewrite the damn thing - because it takes much longer to try and remember what you lost than it takes to write the original. take my word for it - it was senational and I am annoyed.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation.
- a $6.25billion, weekend repurchase entirely in T-backed collateral.
You'll notice something from the "Bellwethers" section - Fannie Mae fell again. As I've mentioned several times recently, there's something amiss in the mortgage market that has required vast amounts of Fed-induced liquidity in the form of asset- and mortgage-backed repurchase activity.
I now think I know what it is (well, I've been told what it is, by someone whose opinions I trust). At present it's little more than "chatter", but it's from sources which are better than those used by the Office of Special Plans (the "sources" that helped con the US into fighting Israel's enemies). Still, having sources better than OSP is hardly anything to brag about - if the source is any better than a crack whore, it beats the OSP's hands-down.
Still, let's set aside the source and get to the meat before the power goes off again (I'm not sure how HWHY feels about the current crop of Israelites - my guess is not too fondly, but he always liked a bit of mass murder and land expropriation, so maybe I'm off-base).
The meat is this: apparently, Fannie Mae might end up being renamed "Ennie Mae" for its Enron-like use of SPVs (special purpose vehicles) and off-balance sheet "creativity". What is being talked about (quietly) is that Fannie has a load of off-balance sheet, wholly-owned "subsidiaries that aren't named as subsidiaries", who have been buying up loads of Fannie's ABS's (asset-backed securities - parcels of mortgages that are issued as bonds). In other words, Fannie has been trying to shore up prices of its ABS and MBS issues by buying them itself (by proxy, though).
If this is true, it's going to be even more toxic than what is already known (which is that Fannie's balance sheet is a disaster that makes LTCM look like the local footy club meat tray). If there's any substance to it, Fannie Mae will go bankrupt, and even the Fed couldn't bail it out.
Major US Indices
The Dow Jones Industrial Average rose 16.84 points (0.16%) for the session, closing out the day at 10421.14 points. The index dipped to an intraday low of 10356.71 about an hour into the session, as early trade was focused on "high oil prices" and nuffies - whose teensy minds were bathed in journalistic crap all weekend - took that as a sign to hit "sell" on their little desktop stock trading platforms. Once the nuffies were all set on their usual side of the boat (the wrong side), the smart folks sent the Dow up 50 points in half an hour jsut to make the nuffnuffs feel stupid(er).
Just before the market opened, with oil prices setting new contract highs at $59.28, I sent out an e-mail telling folks that the smart money would short oil at the open; I expected (as I mentioned on Friday) a $2 pullback - sadly, the intraday pullback maxed out at $1.68 as oil fell as low as $56.60 during the session. Still - as I also mentioned on Friday, and reiterated to the Mighty African Warrior in an earlier e-mail yesterday - Heating Oil was a better avenue for shorting since it was even more overbought than Crude. Anyone who shorted HO as a result of the e-mail made a little over 50% during the session.
See, this shit isn't hard - find the sector that journalists are jabbering about, find out what side they're talking, and take the opposite side. They're jabbering about a weak USD? You ought to be short Euro. They're jabbering about high oil prices? Find the most-overbought member of the Energy complex, and short that sucker. Anyone who takes their investment advice from brokers or journalists (they crawl out of the same bucket) usually can't get their head around the idea of being "short" - which means that the short side is always getting a hand from the selling of dumb-ass "breakout longs" whose stops get triggered.
But I digress...
A second retest of the 10350 area happened during the slow lunch period, before another rally to the intraday high of 10444.28, set at about 3:30 in the afternoon.
Within the blue-chip index, 14 stocks rose, the biggest gainers being American International Group (AIG, +4.61% to $53.30) and Procter & Gamble (PG, +2.45% to $53.90), which accounted for 27 Dow points between them. Losers in the Dow numbered 16 and were led by General Motors (GM, -1.12% to $29.05) and Altria Group (MO, -1.09% to $64.47), with these two stocks contributing -8 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 252.7m shares to 186.8m.
The broader S&P500 rose 3.2 points (0.27%), ending the day at 1176.12. Within the index, gainers numbered 274, while 219 S&P500 stocks fell for the day. Volume was very nearly a tie, but was tilted slightly to the winners -1.04 billion shares in the gainers, to 933.2 million in the losers.
Over at Times Square, the Nasdaq Composite posted a rise of 6.26 points (0.32%), to close at 1991.07, while larger-cap technology issues fared better with the Nasdaq100 adding 7.37 points (0.5%), to end at 1476.72 points. Within the tech benchmark, gainers numbered 55, while 45 Nasdaq100 stocks fell for the day. Volume was tilted about 12:10 in favour of the winners - 400.47 million shares traded in Nasdaq100 winners, compared with 341.9 million in the losers.
NYSE Volume was super-chunky, with 2.08 billion shares changing hands, while Nasdaq Volume was chunky, with 1.62 billion shares being flipped around like God-knows-what.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10421.14 | 16.84 | 0.16% |
| S&P500 | 1176.12 | 3.2 | 0.27% |
| Nasdaq Composite | 1991.07 | 6.26 | 0.32% |
| Nasdaq100 | 1476.72 | 7.37 | 0.5% |
| NYSE Volume | 2.08bn | - | - |
| Nasdaq Volume | 1.62bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.03%; the burning smell you can detect at the bottom of the bellwethers is the charring of Fannie Mae's corpse. That said - the moment you see any journalistic coverage of FNM's woes, get ready to buy some calls...
- General Electric (GE) -$0.23 (0.65%) to $35.24;
- Citigroup (C) -$0.03 (0.07%) to $44.59;
- Wal Mart (WMT) +$0.42 (0.86%) to $49.41;
- I.B.M. (IBM) -$0.12 (0.13%) to $90.32;
- Intel (INTC) -$0.08 (0.35%) to $22.93;
- Cisco Systems (CSCO) -$0.03 (0.17%) to $17.67;
- eBay (EBAY) +$1.09 (2.94%) to $38.16;
- Fannie Mae (FNM) -$1.78 (3.34%) to $51.46; and
- Freddie Mac (FRE) +$0.72 (1.18%) to $61.57.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1701 to 1579 for a single-day A/D reading of 122; and Nasdaq losers exceeded gainers by 1678 to 1409. The 10-day moving average of the A/D line fell to 306.4 on the NYSE, while the 10dma of the Nasdaq A/D fell to -239.1.
NYSE advancing volume exceeded volume in decliners by 1013.8 to 1013.3 million shares; we should basically call that a tie, n'est-ce pas? Nasdaq advancing volume was greater than volume in decliners by 836.5 to 772.1 million shares.
59 NYSE-listed stocks rose to new 52-week highs, and 57 posted fresh 52-week lows, while on the Nasdaq there were 42 stocks that hit new 52-week highs, and 135 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1701 | 1409 |
| Decliners | 1579 | 1678 |
| Advancing Volume (m) | 1013.81 | 836.48 |
| Declining Volume (m) | 1013.33 | 772.11 |
| New Highs | 59 | 42 |
| New Lows | 57 | 135 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 14.11 | 0.02 | 0.14% |
| CBOE Nasdaq Volatility Index | 18.07 | 0.46 | 2.61% |
| Equity Put-Call Ratio | 0.8 | -0.04 | -4.76% |
| 10-day PCR | 0.73 | 0.02 | 2.65% |
| SPX-VIX Ratio | 83.4 | 0.11 | 0.13% |
Bond Market Analysis
Bonds fell at the long end (only just - the 30-year bond future finished with a loss of just one tick, after being up as much as half a point during the session). The yield on the benchmark 30-year Treasury bond rising 0.1 basis points to 4.73%, and yields on the 5- and 10-year T-bills are attempting to consolidate above price support (yield resistance) at 4.25% and 4.5% respectively. I don't think those levels will hold (i.e., I expect bonds to reignite to the downside shortly), but for now the powder is being kept dry (or deployed elsewhere, like last night's lightning short of the Energy market).
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.688 | 0 | 0% |
| UST 2Y (yld) | 3.71 | 0 | 0% |
| UST 5Y (yld) | 4.117 | -0.008 | -0.19% |
| UST 10Y (yld) | 4.456 | 0.005 | 0.11% |
| UST 30Y (yld) | 4.73 | 0.001 | 0.02% |
The Banks Index rose 0.07 points (0.07%), to 95.91; within the index,
- MBNA Corp (KRB) +$0.44 (1.82%) to $24.64;
- Suntrust Banks (STI) +$0.78 (1.1%) to $71.68;
- BB&T Corp (BBT) +$0.41 (1.06%) to $39.14;
- M&T Bank Corp (MTB) +$1.06 (1.05%) to $101.95; and
- Zions Bancorp (ZION) +$0.56 (0.82%) to $68.83.
The Broker-dealer Index advanced 1.05 points (0.73%), at 145.17; the ticket clippers lined up as follows -
- Morgan Stanley (MWD) +$1.43 (2.51%) to $58.30;
- Lehman Brothers (LEH) +$1.49 (1.61%) to $94.27;
- Goldman Sachs (GS) +$1.70 (1.56%) to $111.00;
- Bear Stearns (BSC) +$1.02 (1.04%) to $99.29; and
- Legg Mason (LM) +$0.55 (0.72%) to $76.75.
The Philadelphia SOX (Semiconductor) index lost 1.8 points (0.44%), to end the session at 409.42
- Teradyne (TER) -$0.49 (3.43%) to $13.80;
- Micron Technology (MU) -$0.17 (1.66%) to $10.09;
- Taiwan Semiconductors (TSM) -$0.13 (1.52%) to $8.43;
- Advanced Micro Devices (AMD) -$0.24 (1.48%) to $15.95; and
- KLA-Tencor (KLAC) -$0.64 (1.41%) to $44.61.
Gold & Silver Markets
Gold fell by $1.50 (0.35%) to close at $424.40 per ounce. USD Strength = Gold weakness. How many weeks have I been writing that? Must be three, almost. I'm nearly tempted to find a low-cost solution for a short nibble at the Gold market; if the USD starts looking a bit more momentumised, there would be some good gains in it. The problem is it's too much like "breakout" trading, which as y'all know, I view with absolute disdain (unless you've got buku deep pockets); better to wait for the break, let the nuffie-shorts get slaughtered, then jump short on the bounce. If you're on the e-mail lists you will know before the market opens on the day in question...
Gold Bugs Index dipped 4.81 points (2.37%), to 198.3
- Eldorado Gold (EGO) -$0.14 (4.75%) to $2.81;
- Iamgold (IAG) -$0.22 (3.58%) to $5.93;
- Randgold Resources (GOLD) -$0.45 (3.52%) to $12.35;
- Harmony Gold (HMY) -$0.27 (3.43%) to $7.60; and
- Coeur d'Alene (CDE) -$0.12 (3.32%) to $3.49.
Silver rose $0.03 (0.43%) to close at $7.02 per ounce. The Gold and Silver Index (XAU) lost 1.55 points (1.65%), to 92.46 points.
- Durban Rooderpoert Deep (DROOY) -$0.03 (3.45%) to $0.84;
- Harmony Gold (HMY) -$0.27 (3.43%) to $7.60;
- Kinross Gold (KGC) -$0.19 (3.1%) to $5.93; and
- Goldcorp (GG) -$0.44 (3.07%) to $13.88.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 424.40 | -1.50 | -0.35% |
| Silver | 7.02 | 0.03 | 0.43% |
| PHLX Gold and Silver Index | 92.46 | -1.55 | -1.65% |
| AMEX Gold BUGS Index | 198.3 | -4.81 | -2.37% |
Oil Market
Well, the e-mail sent out last night did it's job, but it didn't do it as well as it should have. As I mentioned in the email update (just as the market was hitting new session lows), the Energy complex was displaying some "capitulatory" (I misspelled it in the e-mail, but you knew what I meant) behaviour and was ripe for a bouncelet. That bounce hadn't materialised to any real extent by the close, and it's now likely that the entire energy complex will have another bad session at least (probably with a bounce back towards $57 first. This is not a longer-term "positional" trade - it's solely to ensure that we're on the opposite side to the nuffnuffs at all times.
After spiking to $58.28 five minutes before I sent out the e-mail, Oil lost ground throughout the session (notwithstanding a couple of hair-raising bounces). By the close it was lower than Friday's close, shedding $0.50 per barrel on a close-close basis, closing at $56.77 per barrel (just over $1.50 lower than its session high). I had mentioned that if I was trading a 2-lot, I would take one lot off when oil had lost $1.50, which almost happened during the session (the entry point was as near to $58 as makes no odds; the session low was $56.60).
Heating Oil - the preferred vehicle - has slid even further in the after-market; that trade's entry level was about 1.6900 and it's currently showing a gain of $2016 per $3375 margin requirement. Yippeee... I said there would be two grand in a session... but it wasn't in Crude. Still, it's almost time for a bounce - but I'm not advocating longs at this point (not just yet... but e-mail list subscribers will know when I do).
The Oil and Gas Index (XOI) lost 8.89 points (1.02%), at 861.34
- Unocal (UCL) -$4.75 (7.38%) to $59.60;
- ChevronTexaco (CVX) -$2.33 (3.93%) to $56.98; and
- Kerr Mcgee (KMG) -$1.15 (1.44%) to $78.75.
The Oil service stocks (OSX) Index lost 0.76 points (0.53%), to end the session at 141.52
- Baker Hughes (BHI) -$0.82 (1.8%) to $44.73;
- Noble Corp (NE) -$0.85 (1.46%) to $57.45; and
- BJ Services (BJS) -$0.62 (1.17%) to $52.40.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 310.1 | -1.78 | -0.57% |
| Crude Oil Light Sweet | 56.77 | -0.5 | -0.87% |
| Heating Oil | 1.642 | -0.02 | -1.31% |
| Natural Gas | 7.565 | -0.18 | -2.37% |
| Unleaded Gas | 1.716 | -0.02 | -0.87% |
| AMEX Oil Index | 861.34 | -8.89 | -1.02% |
| Oil Service Index | 141.52 | -0.76 | -0.53% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.79 | 0.36 | 0.43% |
| Euro | 1.2846 | -0.0057 | -0.44% |
| Yen | 108.26 | 0.7 | 0.65% |
| Sterling | 1.8752 | -0.0051 | -0.27% |
| Australian Dollar | 0.7674 | -0.0037 | -0.48% |
| Swiss Franc | 1.2096 | 0.0064 | 0.53% |
| Canadian Dollar | 0.8182 | -0.0045 | -0.55% |
