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Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation.
- a $3billion, overnight repurchase entirely in T-backed collateral.
Major US Indices
The Dow Jones Industrial Average shed 12.78 points (0.12%), closing out the day at 10448.56 points. The index hit an intraday high of 10482.18 twelve minutes after the open, and fell as low as 10438.44 (the low was set just before 11:30 a.m.). This sort of narrow range usually presages a sharp move; on balance (although it defies valuation and what-have-you) I would guess that the move will be up. All equity indices hit oversold (on a weekly basis) last week, having bounced off daily oversold conditions the week before. The CCI (or RoC - take your pick) also showed a really obvious divergence on dailies. I have a marked distaste for equity-index longs, but this looks quite solid. Check out an hourly chart and you will see the bounce brewing.
Within the blue-chip index, 13 stocks rose, the biggest gainers being Procter & Gamble (PG, +1.54% to $55.34) and Boeing (BA, +1.37% to $59.40), which accounted for 12 Dow points between them. Losers in the Dow numbered 17 and were led by International Business Machines (IBM, -1.60% to $86.20) and Alcoa (AA, -1.39% to $31.17), with these two stocks contributing -14 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 146.8m shares to 133.9m.
The broader S&P500 rose 0.01 points (as near as dammit to unchanged), at 1181.21. Within the index, gainers numbered 236, while 258 S&P500 stocks fell for the day. Volume was tilted 1.4:1 in favour of the losers with 831.70 million units traded in the losers as compared with 610.00 million traded in the winners .
The Nasdaq Composite dipped 7.23 points (0.36%), to close at 1992.12, while larger-cap technology issues fared worse with the Nasdaq100 losing 7.05 points (0.47%), to end at 1478.55 points. Within the tech benchmark, gainers numbered 34, while 63 Nasdaq100 stocks fell for the day. Volume was tilted 1.4:1 in favour of the losers with 358.48 million traded in the losers compared to 251.04 million in the winners .
NYSE Volume was chunky, with 1.53 billion shares changing hands, while Nasdaq Volume was about average, with 1.39 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10448.56 | -12.78 | -0.12% |
| S&P500 | 1181.21 | 0.01 | 0% |
| Nasdaq Composite | 1992.12 | -7.23 | -0.36% |
| Nasdaq100 | 1478.55 | -7.05 | -0.47% |
| NYSE Volume | 1.53bn | - | - |
| Nasdaq Volume | 1.39bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.39%
- General Electric (GE) +$0.08 (0.22%) to $35.82;
- Citigroup (C) +$0.21 (0.46%) to $45.61;
- Wal Mart (WMT) -$0.06 (0.12%) to $48.51;
- I.B.M. (IBM) -$1.40 (1.6%) to $86.20;
- Intel (INTC) -$0.17 (0.73%) to $23.12;
- Cisco Systems (CSCO) +$0.09 (0.5%) to $17.99;
- eBay (EBAY) -$1.19 (3.38%) to $33.97;
- Fannie Mae (FNM) +$0.38 (0.69%) to $55.53; and
- Freddie Mac (FRE) +$0.31 (0.49%) to $63.24.
Market Breadth & Internals
NYSE declining Issues beat out advancers by 1846 to 1423, for a single-day A/D reading of -423; and Nasdaq losers exceeded gainers by 1985 to 1073. The 10-day moving average of the A/D line fell to 35.7 on the NYSE, while the 10dma of the Nasdaq A/D fell to -307.8.
On the NYSE declining volume was greater than volume in advancing issues by 872.2 to 628.2 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 826.5 to 529.1 million shares.
49 NYSE-listed stocks rose to new 52-week highs, and 76 posted fresh 52-week lows, while on the Nasdaq there were 25 stocks that hit new 52-week highs, and 104 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1423 | 1073 |
| Decliners | 1846 | 1985 |
| Advancing Volume (m) | 628.22 | 529.14 |
| Declining Volume (m) | 872.15 | 826.54 |
| New Highs | 49 | 25 |
| New Lows | 76 | 104 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 11.98 | -0.64 | -5.07% |
| CBOE Nasdaq Volatility Index | 16.9 | -0.06 | -0.35% |
| Equity Put-Call Ratio | 0.72 | -0.06 | -7.69% |
| 10-day PCR | 0.71 | 0 | 0.26% |
| SPX-VIX Ratio | 98.6 | 5 | 5.34% |
Bond Market Analysis
Bonds rose sharply at the long end, with the 30-year bond future rising half a point to 111&27/32, pushing the yield on the benchmark 30-year Treasury bond down 4.2 basis points to 4.733%.
The middle of the yield curve was broadly higher: five year yields fell to 4.118%, and ten-year yields fell to 4.445%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 basis point tighter at 10 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 61.0 basis points for 10-year AAA, and 85.5 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 3.0 basis points wider at 34.0 basis points and the 10-year AAA-A spread a huge 10.0 basis points wider at 13.0 basis points.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.697 | 0 | 0% |
| UST 2Y (yld) | 3.71 | -0.01 | -0.27% |
| UST 5Y (yld) | 4.118 | -0.035 | -0.84% |
| UST 10Y (yld) | 4.445 | -0.046 | -1.02% |
| UST 30Y (yld) | 4.733 | -0.042 | -0.88% |
The Banks Index posted a rise of 0.24 points (0.25%), to 96.83; within the index,
- Wells Fargo (WFC) +$0.44 (0.74%) to $60.00;
- Bank Of America (BAC) +$0.30 (0.67%) to $44.98;
- Suntrust Banks (STI) +$0.42 (0.59%) to $71.98;
- Wachovia (WB) +$0.27 (0.53%) to $50.93; and
- Bank Of NY (BK) +$0.15 (0.51%) to $29.42.
The Broker-dealer Index declined 0.84 points (0.58%), closing at 143.83; the ticket clippers lined up as follows -
- Morgan Stanley (MWD) -$1.33 (2.39%) to $54.34;
- A G Edwards (AGE) -$1.00 (2.32%) to $42.19;
- Raymond James (RJF) -$0.49 (1.63%) to $29.55;
- E*Trade (ET) -$0.17 (1.44%) to $11.63; and
- Legg Mason (LM) -$1.01 (1.35%) to $73.80.
The Philadelphia SOX (Semiconductor) index dipped 3.34 points (0.8%), ending the day at 413.61
- Marvell Tech Group (MRVL) -$0.94 (2.58%) to $35.45;
- Altera (ALTR) -$0.49 (2.44%) to $19.62;
- Teradyne (TER) -$0.22 (1.54%) to $14.04;
- Xilinx (XLNX) -$0.42 (1.4%) to $29.54; and
- Novellus Systems (NVLS) -$0.30 (1.12%) to $26.59.
Gold & Silver Markets
Gold rose $1.20 (0.28%) to close at $428.10 per ounce. Recall that on Friday, Gold was stagnant despite a decent-sized pullback in the USD index. Today, Gold's rise matched the USD fall, percentage-point for percentage-point. One more bout of urgent buying ought to do it.
That said, check out the MACD on a daily Gold futures chart (you can find them all over the web - they're thoroughly commoditised). Everything on such a chart says it's screaming "Buy"; an MACD crossover just below the zero line after a period of stagnant volatility? It looks like a slam dunk (which means it probably isn't). Hopefully it will give us the necessary 'burst' of nuffie-stampede that's required to push this baby to a nicely shortable position.
Gold Bugs Index slid 0.96 points (0.48%), to 198.03
- Kinross Gold (KGC) -$0.14 (2.33%) to $5.88;
- Golden Star (GSS) -$0.05 (1.71%) to $2.87;
- Hecla Mining (HL) -$0.09 (1.71%) to $5.17;
- Coeur d'Alene (CDE) -$0.04 (1.14%) to $3.48; and
- Iamgold (IAG) -$0.05 (0.82%) to $6.02.
Silver rose $0.09 (1.26%) to close at $7.25 per ounce. The Gold and Silver Index (XAU) lost 0.51 points (0.55%), at 92.38 points.
- Kinross Gold (KGC) -$0.14 (2.33%) to $5.88;
- Placer Dome (PDG) -$0.30 (1.9%) to $15.48;
- Durban Rooderpoert Deep (DROOY) -$0.01 (1.2%) to $0.82; and
- Barrick Gold (ABX) -$0.20 (0.84%) to $23.69.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 428.10 | 1.20 | 0.28% |
| Silver | 7.25 | 0.09 | 1.26% |
| PHLX Gold and Silver Index | 92.38 | -0.51 | -0.55% |
| AMEX Gold BUGS Index | 198.03 | -0.96 | -0.48% |
Oil Market
Oil was slightly firmer by the close, after dipping sharply at the open. It hit a low of $52.10 at 10:20 New York time, then bounced $1.75 during the session to set its high at $53.85 just before the close. It finished with a closing gain of $0.36 per barrel, closing at $53.68 per barrel.
The rest of the energy complex followed suit - downdraft then a big bounce to close up for the session - with the exception of Heating Oil, which had the "dip'n'bounce" but failed to make a gain on a closing basis.
The option strangle in Crude was softer; the short leg dropped to $214 and the call fell to $25 - which puts the strangle underwater (weekends are a killer as far as time premium is concerned). If it was me I would consider selling the put and holding the call until expiration, on the basis that Crude got oversold enough on all timeframes (except weekly) to enable a good-sized bounce between now and Friday. If I was still short crude futures, I would get out of it (crude is currently trading at $53.68 on NYMEX's ACCESS overnight platform).
The Heating Oil strangle continued to perform; the put rose again to 136.3 ticks (up just 3% for the session), and the call fell 5.1 ticks to 12 ticks. As a result, the overall strangle rose a single tick (but at its session high it was up 10 ticks). There is little point in holding the call through to expiration for this strangle, as the odds of a bounce strong enough to take HO back above $1.61 are very slim indeed. Instead, I would ditch the call and ride the put to see where it led... that's the benefit of playing with house money.
Anyone who simply held on to the short futures in HO is currently sitting on a 2005-tick gain, which is a nice number (since it corresponds to the year); I think this trade is pushing its luck at the moment (remember from the e-mail - and from the Rant from Friday-before-last - as far as I can tell the move in the energy sector is just a counter-trend pullback). I would get out of it (with heating oil currently at 1.4900 on the ACCESS overnight platform).
The Oil and Gas Index (XOI) rose 8 points (0.94%), at 860.59
- Kerr Mcgee (KMG) +$1.35 (1.81%) to $75.91;
- Marathon Oil (MRO) +$0.75 (1.57%) to $48.50; and
- Amerada Hess (AHC) +$1.32 (1.36%) to $98.72.
The Oil service stocks (OSX) Index added 1.29 points (0.93%), to end the session at 139.99
- Global Industries (GLBL) +$0.18 (1.72%) to $10.66;
- BJ Services (BJS) +$0.74 (1.4%) to $53.50; and
- Noble Corp (NE) +$0.73 (1.32%) to $56.15.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 304.18 | -0.14 | -0.05% |
| Crude Oil Light Sweet | 53.68 | 0.36 | 0.68% |
| Heating Oil | 1.4895 | -0.01 | -0.51% |
| Natural Gas | 7.305 | 0.06 | 0.87% |
| Unleaded Gas | 1.5534 | 0.02 | 1.09% |
| AMEX Oil Index | 860.59 | 8 | 0.94% |
| Oil Service Index | 139.99 | 1.29 | 0.93% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.16 | -0.24 | -0.28% |
| Euro | 1.297 | 0.0089 | 0.69% |
| Yen | 107.77 | -0.39 | -0.36% |
| Sterling | 1.8903 | 0.0051 | 0.27% |
| Australian Dollar | 0.7753 | 0.0046 | 0.6% |
| Swiss Franc | 1.1935 | -0.0048 | -0.4% |
| Canadian Dollar | 0.8103 | -0.0034 | -0.42% |
