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Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations.
- a $4.5billion, overnight repurchase with $0billion in T-backed collateral ; and
- a $8billion, 14-day repurchase with $0.843billion in T-backed collateral .
After yesterday's T-backed repo-riches, the Fed's OMO desk had to get back to trying to put a Band-Aid on the sucking chest wound in the Agency markets, pumping $6.3 billion into A-backed collateral and $5.2bill into Mortgage-backed.
Major US Indices
With no repurchase dough to speak of, and a fairly awful slate of economic data, the market never really had a chance of a rise.
The data was really "malaise-ish", with the exception of the survey-based trash that gets served up in the NAPM reports (which aren't correlated with a damn thing).
To summarise:
- incomes (+0.3%; consensus 0.4%) and expenditure (+0.3%; consensus +0.5%) weaker than expectations within the Personal Income and Outlays report;
- a 1.7% fall in non-defence capex ex-aircraft within the Factory Orders report (Orders +0.2%; consensus +0.5%);
- New Jobless Claims at 350k (consensus: 320k).
Sure, the Chicago NAPM registered an increase, but like all survey-based reports, it's not worth a tuppeny crap.
The employment report had better be good tomorrow.
The Dow Jones Industrial Average declined 37.17 points (0.35%), closing out the day at 10503.76 points. The index hit an intraday high of 10542.04 (at the open), and fell as low as 10490.38 during the session. The low was registered just before 12:30 p.m. NY time. There was an attempt to rally back to the highs, which saw the Dow gain 50 points between 12:20 and 2:40 p.m., but after falling just 2.5 points short of breaching the opening high, the Dow turned tail and gave it all back, eventually relying on 10500 to support the close.
Within the blue-chip index, 11 stocks rose, the biggest gainers being Alcoa (AA, +1.64% to $30.39) and Walt Disney (DIS, +1.34% to $28.73), which accounted for 6 Dow points between them. Losers in the Dow numbered 19 and were led - yet again - by American International Group (AIG, -3.06% to $55.41) and Mcdonalds (MCD, -1.61% to $31.14), with these two stocks contributing -17 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 227.1m shares to 138.4m.
The broader S&P500 slid 0.82 points (0.07%), to 1180.59. (Note to self - get the S&P500 components analysis finished this weekend).
I'll say it again... The employment report had better be good tomorrow.
Over at Times Square, the Nasdaq Composite lost 6.44 points (0.32%), to close at 1999.23, while larger-cap technology issues fared worse with the Nasdaq100 losing 9.21 points (0.62%), to end at 1482.53 points.
NYSE Volume was super-chunky, with 2.21 billion shares changing hands, while Nasdaq Volume was chunky, with 1.8 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10503.76 | -37.17 | -0.35% |
| S&P500 | 1180.59 | -0.82 | -0.07% |
| Nasdaq Composite | 1999.23 | -6.44 | -0.32% |
| Nasdaq100 | 1482.53 | -9.21 | -0.62% |
| NYSE Volume | 2.21bn | - | - |
| Nasdaq Volume | 1.8bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.71%
- General Electric (GE) -$0.14 (0.39%) to $36.06;
- Citigroup (C) +$0.02 (0.04%) to $44.94;
- Wal Mart (WMT) -$0.73 (1.44%) to $50.11;
- I.B.M. (IBM) +$0.70 (0.77%) to $91.38;
- Intel (INTC) -$0.26 (1.11%) to $23.23;
- Cisco Systems (CSCO) -$0.14 (0.78%) to $17.89;
- eBay (EBAY) -$0.43 (1.14%) to $37.26;
- Fannie Mae (FNM) -$0.70 (1.27%) to $54.45; and
- Freddie Mac (FRE) -$0.70 (1.1%) to $63.20.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 2013 to 1268 for a single-day A/D reading of 745; and Nasdaq losers exceeded gainers by 1548 to 1522. The 10-day moving average of the A/D line rose to -92.2 on the NYSE, while the 10dma of the Nasdaq A/D rose to -205.8.
NYSE advancing volume exceeded volume in decliners by 1175 to 1004.7 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1001.9 to 721.5 million shares.
45 NYSE-listed stocks rose to new 52-week highs, and 40 posted fresh 52-week lows, while on the Nasdaq there were 49 stocks that hit new 52-week highs, and 97 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 2013 | 1522 |
| Decliners | 1268 | 1548 |
| Advancing Volume (m) | 1175.02 | 721.54 |
| Declining Volume (m) | 1004.65 | 1001.91 |
| New Highs | 45 | 49 |
| New Lows | 40 | 97 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 14.02 | 0.36 | 2.64% |
| CBOE Nasdaq Volatility Index | 17.65 | 0.28 | 1.61% |
| Equity Put-Call Ratio | 0.65 | -0.1 | -13.33% |
| 10-day PCR | 0.72 | -0.02 | -2.37% |
| SPX-VIX Ratio | 84.2 | -2.28 | -2.64% |
Bond Market Analysis
Bonds rose sharply along the curve as a result of the pretty fleh economic data. The yield on the benchmark 30-year Treasury bond shed 4.1 basis points to 4.766%, but the bigger action was in the 5-year note, where the yield fell straight through the 4.25% mark without so much as a pause for breath. Likewise, the 10-year yield fell through 4.5% (just).
With the employment report due out tomorrow, a foolhardy trader might think that another option strangle might be worth considering; unfortunately with so long to expiry (22 days) the "one-level OOM" options are just too expensive. The current outlay for each strangle would be almost 81 ticks (for the 30-year), which would mean that the long bond would have to fall almost 3 full points in order to guarantee a 100% return on outlay (although convexity would help mitigate that requirement). So we'll continue to "look away" for now, and wait for this bond bounce to exhaust itself before taking a more "one-directional" fade.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.722 | 0 | 0% |
| UST 2Y (yld) | 3.77 | -0.05 | -1.31% |
| UST 5Y (yld) | 4.174 | -0.083 | -1.95% |
| UST 10Y (yld) | 4.496 | -0.062 | -1.36% |
| UST 30Y (yld) | 4.766 | -0.041 | -0.85% |
The Banks Index added 0.11 points (0.11%), closing at 96.55; within the index,
- Northern Trust (NTRS) +$0.75 (1.76%) to $43.44;
- Golden West Financial (GDW) +$0.77 (1.29%) to $60.50;
- US Bancorp (USB) +$0.19 (0.66%) to $28.82;
- Comerica (CMA) +$0.36 (0.66%) to $55.08; and
- Keycorp (KEY) +$0.20 (0.62%) to $32.45.
The Broker-dealer Index gained 0.79 points (0.55%), closing at 145.64; the ticket clippers lined up as follows -
- A G Edwards (AGE) +$1.80 (4.19%) to $44.80;
- Morgan Stanley (MWD) +$1.97 (3.56%) to $57.25;
- Charles Schwab (SCH) +$0.04 (0.38%) to $10.51;
- Legg Mason (LM) +$0.20 (0.26%) to $78.14; and
- Goldman Sachs (GS) +$0.19 (0.17%) to $109.99.
The Philadelphia SOX (Semiconductor) index declined 2.67 points (0.64%), to 416.99
- Applied Materials (AMAT) -$0.39 (2.34%) to $16.25;
- Novellus Systems (NVLS) -$0.45 (1.66%) to $26.73;
- Teradyne (TER) -$0.22 (1.48%) to $14.60;
- Micron Technology (MU) -$0.14 (1.34%) to $10.34; and
- KLA-Tencor (KLAC) -$0.58 (1.24%) to $46.01.
Gold & Silver Markets
Gold rose $2.30 (0.54%) to close at $428.30 per ounce. Weak USD and soft economic data... it will be some time before Gold reignites significantly.
Gold Bugs Index posted a rise of 2.71 points (1.36%), ending the day at 201.86
- Eldorado Gold (EGO) +$0.17 (6.3%) to $2.87;
- Golden Star (GSS) +$0.14 (5.13%) to $2.87;
- Coeur d'Alene (CDE) +$0.16 (4.56%) to $3.67;
- Randgold Resources (GOLD) +$0.34 (2.83%) to $12.36; and
- Meridian Gold (MDG) +$0.38 (2.31%) to $16.84.
Silver rose $0.03 (0.41%) to close at $7.17 per ounce. The Gold and Silver Index (XAU) gained 0.5 points (0.54%), ending the day at 93.73 points.
- Meridian Gold (MDG) +$0.38 (2.31%) to $16.84;
- Freeport McMoran (FCX) +$0.77 (1.98%) to $39.61;
- Barrick Gold (ABX) +$0.30 (1.27%) to $23.96; and
- Agnico Eagle (AEM) +$0.16 (1.11%) to $14.55.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 428.30 | 2.30 | 0.54% |
| Silver | 7.17 | 0.03 | 0.41% |
| PHLX Gold and Silver Index | 93.73 | 0.5 | 0.54% |
| AMEX Gold BUGS Index | 201.86 | 2.71 | 1.36% |
Oil Market
Oil rose strongly, rising by $1.18 per barrel, closing at $55.25 per barrel; at one stage during the session it was as high as $56.10. The reason? Apparently Goldman Sachs released some "research" that blathered about a the possibility of a "super spike" in oil prices to above $100.
Whoop-de-frigging doo. These are the same clots who had a 2005 oil price "target" of $45 - until today, when they raised it to $50. How very much like S&P's ratings system... after the horse has bolted, go out and tell everyone you've shut the gate.
Typical brokerage bullshit - what use is a bull-market target price that is posted after it's achieved? The subtext here is that GS thinks that oil will fall back toward $50 by the end of the year - thereby encouraging selling by idiots who take GS at their word (what is the point of being long if oil's going to fall?).
With their nuffnuff clients on the sell, GS would then be... on the buy. I said some time ago (as oil started having strange intraday dips) that major houses were stepping on its neck in order to improve entry positions - well, this latest tripe out of the GS machine is about as good an indication as you can get.
You can back it in - that's the way these vermin work. And it's not just GS - it's the entire industry. Whether it's putting a strong buy on James Hardie to enable a major shareholder to EXIT the stock, or whether it's writing a cheerleader report on News Corpse, brokerage analysis almost always exists to do one of two things: to generate turnover (and ticket-clippings), or to enable a major client to take the opposite side of the research (e.g., the aforementioned HAH scam). The reason that brokerages like the latter more, is that they get the ticket-clippings from both sides of the transaction. It's Abednego Nickel, writ large.
NEVER TRUST "RESEARCH" FROM ANY FIRM WITH A TICKET-CLIPPNG OPERATION. NEVER.
The Oil and Gas Index (XOI) rose 12.36 points (1.47%), to end the session at 852.52
- Sunoco (SUN) +$3.03 (3.02%) to $103.52;
- Marathon Oil (MRO) +$1.11 (2.42%) to $46.92; and
- Occidental Petroleum (OXY) +$1.67 (2.4%) to $71.17.
The Oil service stocks (OSX) Index rose 4.2 points (3.11%), to end the session at 139.31
- Transocean (RIG) +$2.60 (5.32%) to $51.46;
- Noble Corp (NE) +$2.37 (4.4%) to $56.21; and
- GlobalSantaFe (GSF) +$1.40 (3.93%) to $37.04.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 313.57 | 2.55 | 0.82% |
| Crude Oil Light Sweet | 55.25 | 1.18 | 2.18% |
| Heating Oil | 1.6576 | 0.05 | 3.31% |
| Natural Gas | 7.631 | 0.16 | 2.16% |
| Unleaded Gas | 1.6549 | 0.06 | 3.56% |
| AMEX Oil Index | 852.52 | 12.36 | 1.47% |
| Oil Service Index | 139.31 | 4.2 | 3.11% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 84.04 | -0.34 | -0.4% |
| Euro | 1.2959 | 0.0037 | 0.29% |
| Yen | 107.16 | -0.32 | -0.3% |
| Sterling | 1.8901 | 0.011 | 0.59% |
| Australian Dollar | 0.7727 | 0.0022 | 0.29% |
| Swiss Franc | 1.1967 | -0.0023 | -0.19% |
| Canadian Dollar | 0.8264 | 0.0044 | 0.54% |
