Interdum stultus opportuna loquitur...

Wednesday, June 15, 2005

USRant: Oil's Neck Gets Bruised...

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

Data out the wahzoo, and none of it particularly encouraging. Even the Central Wanker's Almanac (The Beige Book) couldn't spin a rosy scenario, and it's one of the most highly propagandised piece of rubbish since Angriff!. If the Fed can't put enough lipstick on the pig to get a rube to buy it, the only alternative is to dish out plenty of repo dough to the banks, to enable rescue operations as and when required.

Last night the market was fortunate to have two things; 10500/1200 round number support, and someone big sticking their foot on oil's neck... again.

The data could be characterised as 'mixed at best'; the Mortgage Applications Index jumped 10.4% (and refinancing jumped 25.6%) - a sign that asset mania is alive and well.

Business Inventories were slightly weaker than anticipated at 0.3% (consensus was for 0.4%), and a 1.2% increase in sales led to a dip in the inventory-sales ratio.

The Consumer Price Index dropped 0.1% at the headline (consensus was for a rise of 0.1%) while the 'core' rate rose 0.1% (consensus was for 0.2%).

Industrial Production was reportedly up 0.4% (stronger than the consensus guess of 0.2%) and capacity utilisation was  79.4% (expectations were for 79.2%).

Treasury International Capital Flows data showed that foreigner's appetite for US securities (particularly Treasuries) continues to soften - although the Treasury continues its habit of downwardly-revising last month's data in order to make the current month look better. I will write something later today about the TIC - as usual the mysterious 'Carribbean Financial Centres' took up a large quantity of slack demand.

Folks would already have had the data-headspins by 10:30, when the Oil Inventories data came out (showing a drop of 1.8 million barrels, when the market expected a decline of less than a million); July Crude Oil spiked to above $56.50 on the news, but try as it might, couldn't get through $56.70 on the first go. Or the second. Or the third...

And finally, the Beige Book. What can you say about this document, except that it forecasts nothing? It's useless, and has always been so; just as peasants sit rapt in awe as the local priest recites the latest edicts from Rome, so too do the financial market's idiots pore over the Beige Book for anything resembling a heads-up on the economy. It's mad.

Today's Beige Book said that everything is chugging along just nicely, but might slow down. Massive insight.

So why the massive intraday reversal in Crude? Just messing with the nuffie's heads, is all.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed a single repurchase operation - an $8.75billion, overnight repurchase entirely in T-backed collateral. The repo was struck at 6 bps above Fed Funds, which really makes it hard for da Boyz to use the funds to drive the market up (the repo sweet spot is when they're given funds at below the Fed Funds rate). The data was still flowing like diarrhoea at 10 a.m. anyhow, so the normal 'trading while data releasing' rules apply. That rule is simple: don't trade while data is being released...

Major US Indices

It was a day of 'tease ticks'. The Dow fell modestly in the first hour, and by 11 a.m. had touched 10500 - a logical place for a bounce, and sure enough, it got one. After trading in a tight range for the next two and a half  hours (tight being less than 30 Dow points) the market broke the 11 a.m. low and lured in the last of the breakout traders. Then of course, it handed them their heads, rising over 70 points between 1:30 p.m. and the closing bell.

The 'tease tick' to a new intraday low occurred at exactly the same time as the Oil  market teased longs; Oil - having retreated below $56 after its early failure to get through $56.70 - was bouncing again, and broke $56.70... trading at $56.75 and luring in a load of nuffnuffs who buy breakouts regardless of the time of day that the breakout happens. They got handed their heads, too (oil closed below $56).

The Dow rose at the open - for about ten minutes. At 9:40 NY time, it hit its intraday high of 10589.93, and proceeded to drop almost 90 points in the next 50 minutes. After spending the bulk of the day trading down, the Dow Jones Industrial Average staged a huge late-day rally as oil prices were given the throat-massage.

By the close the Dow had gained 18.8 points (0.18%), closing out the day at 10566.37 points. Within the blue-chip index, 16 stocks rose, the biggest gainers being Boeing (BA, +2.35% to $64.41) and International Business Machines (IBM, +1.88% to $76.30), which accounted for 22 Dow points between them. Losers in the Dow numbered 13 and were led by Walt Disney (DIS, -2.17% to $27.04) and Mcdonalds (MCD, -1.19% to $28.95), 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 192.8m shares to 135.1m.

The broader S&P500 rose 2.67 points (0.22%), to 1206.58. Within the index, gainers numbered 270, while 218 S&P500 stocks fell for the day. Volume was tilted 1.5:1 in favour of the winners with 1008.29 million units traded in the winners as compared with 654.23 million traded in the losers .

Over at Times Square, the Nasdaq Composite posted a rise of 5.88 points (0.28%), to close at 2074.92, while larger-cap technology issues fared better with the Nasdaq100 adding 5.07 points (0.33%), to end at 1529.49 points. Within the tech benchmark, gainers numbered 59, while 40 Nasdaq100 stocks fell for the day. Volume was tilted 1.7:1 in favour of the winners with 446.99 million traded in the winners compared to 263.62 million in the losers .

NYSE Volume was super-chunky, with 1.83 billion shares changing hands, while Nasdaq Volume was chunky, with 1.71 billion shares traded.

Major Market Statistics
Index Close Gain(Loss) %
Dow Jones Industrial Average 10566.37 18.8 0.18%
S&P500 1206.58 2.67 0.22%
Nasdaq Composite 2074.92 5.88 0.28%
Nasdaq100 1529.49 5.07 0.33%
NYSE Volume 1.83bn - -
Nasdaq Volume 1.71bn - -

Bellwethers

My 9-stock "bellwethers" group rose by an average of 0.37%

  • General Electric (GE) -$0.09 (0.25%) to $36.32;
  • Citigroup (C) -$0.01 (0.02%) to $47.40;
  • Wal Mart (WMT) +$0.17 (0.34%) to $49.85;
  • I.B.M. (IBM) +$1.41 (1.88%) to $76.30;
  • Intel (INTC) +$0.24 (0.9%) to $26.94;
  • Cisco Systems (CSCO) +$0.14 (0.73%) to $19.32;
  • eBay (EBAY) +$0.25 (0.67%) to $37.34;
  • Fannie Mae (FNM) -$0.31 (0.53%) to $58.05; and
  • Freddie Mac (FRE) -$0.26 (0.4%) to $64.60.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1966 to 1293 for a single-day A/D reading of 673; Nasdaq gainers trumped losers by 1706 to 1316. The 10-day moving average of the A/D line rose to 451.6 on the NYSE, while the 10dma of the Nasdaq A/D rose to 172.2.

NYSE advancing volume exceeded volume in decliners by 1093.1 to 653.5 million shares; Nasdaq advancing volume was greater than volume in decliners by 1039.5 to 628 million shares.

242 NYSE-listed stocks rose to new 52-week highs, and 27 posted fresh 52-week lows, while on the Nasdaq there were 119 stocks that hit new 52-week highs, and 37 which fell to fresh 52-week lows.

Market Breadth Statistics


NYSE Nasdaq
Advancers 1966 1706
Decliners 1293 1316
Advancing Volume (m) 1093.13 1039.53
Declining Volume (m) 653.45 627.97
New Highs 242 119
New Lows 27 37

Market Sentiment Statistics
Index Close Gain(Loss) %
CBOE Volatility Index 11.46 -0.33 -2.8%
CBOE Nasdaq Volatility Index 15.45 -0.3 -1.9%
Equity Put-Call Ratio 0.61 0 0%
10-day PCR 0.63 0 -0.76%
SPX-VIX Ratio 105.3 3.17 3.11%

Bond Market Analysis

Bonds rose very weakly at the long end, with the yield on the benchmark 30-year Treasury bond shedding 0.7 bps to 4.422%. The June 30-year T-bond future was about unchanged at 116& 8/32.

The middle of the yield curve was mixed: five year yields rose to 3.89%, and ten-year yields fell to 4.115%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 4.0 bps wider at 5.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 46.0 bps for 10-year AAA, and 84.5 bps 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 12.0 bps looser at 47.0 basis points and the 10-year AAA-A spread 8.0 bps wider at 11.0 bps.

Treasury Yields
Index Close Gain(Loss) %
UST 13wk (yld) 2.955 0 0%
UST 2Y (yld) 3.69 0.01 0.27%
UST 5Y (yld) 3.89 0.016 0.41%
UST 10Y (yld) 4.115 -0.012 -0.29%
UST 30Y (yld) 4.422 -0.007 -0.16%

The Banks Index gained 0.71 points (0.72%), to 98.98; within the index,

  • Golden West Financial (GDW) +$2.29 (3.73%) to $63.71;
  • North Fork Bancorp (NFB) +$0.40 (1.46%) to $27.75;
  • Bank Of America (BAC) +$0.63 (1.37%) to $46.60;
  • Comerica (CMA) +$0.75 (1.33%) to $57.32; and
  • Suntrust Banks (STI) +$0.91 (1.26%) to $73.31.

The Broker-dealer Index added 0.34 points (0.23%), to 149.16; the ticket clippers lined up as follows -

  • Ameritrade (AMTD) +$0.33 (2.22%) to $15.21;
  • Bear Stearns (BSC) +$1.01 (1.01%) to $101.34;
  • Goldman Sachs (GS) +$0.89 (0.91%) to $99.19;
  • A G Edwards (AGE) +$0.11 (0.26%) to $41.95; and
  • Merrill Lynch (MER) +$0.13 (0.24%) to $55.37.

The Philadelphia SOX (Semiconductor) index gained 1.58 points (0.37%), at 427.23

  • Broadcom (BRCM) +$0.60 (1.72%) to $35.45;
  • Micron Technology (MU) +$0.17 (1.58%) to $10.93;
  • Maxim Integrated (MXIM) +$0.55 (1.44%) to $38.71;
  • Teradyne (TER) +$0.14 (1.07%) to $13.19; and
  • National Semiconductors (NSM) +$0.20 (0.96%) to $21.06.

Gold & Silver Markets

Gold rose $2.10 (0.49%) to close at $429.5 per ounce as US dollar weakness took hold after the Treasury Capital flows data.

The Gold Bugs Index added 2.95 points (1.54%), to end the session at 194.34

  • Golden Star (GSS) +$0.14 (4.65%) to $3.15;
  • Coeur d'Alene (CDE) +$0.14 (4.08%) to $3.57;
  • Freeport McMoran (FCX) +$1.29 (3.65%) to $36.68;
  • Eldorado Gold (EGO) +$0.06 (2.4%) to $2.56; and
  • Goldcorp (GG) +$0.34 (2.34%) to $14.90.

Silver rose $0.05 (0.69%) to close at $7.33 per ounce. The Gold and Silver Index (XAU) gained 1.39 points (1.58%), ending the day at 89.41 points.

  • Durban Rooderpoert Deep (DROOY) +$0.04 (3.92%) to $1.06;
  • Freeport McMoran (FCX) +$1.29 (3.65%) to $36.68;
  • Placer Dome (PDG) +$0.44 (3.02%) to $15.03; and
  • Goldcorp (GG) +$0.34 (2.34%) to $14.90.
Precious Metals and Indices
Index Close Gain(Loss) %
Gold 429.50 2.10 0.49%
Silver 7.33 0.05 0.69%
PHLX Gold and Silver Index 89.41 1.39 1.58%
AMEX Gold BUGS Index 194.34 2.95 1.54%

Oil Market

Oil was firmer for the day, rising by $0.42 per barrel and closing at $55.42 per barrel - but the big story for the oil market was the $1.30-per-barrel reversal in the late afternoon. As I mentioned above, that was a nuffie-scalping exercise, and nothing much can be taken from it.

The Oil and Gas Index (XOI) gained 7.87 points (0.9%), to end the session at 882.03

  • Occidental Petroleum (OXY) +$1.61 (2.1%) to $78.34;
  • ConocoPhillips (COP) +$0.78 (1.38%) to $57.33; and
  • Marathon Oil (MRO) +$0.71 (1.36%) to $52.76.

The Oil service stocks (OSX) Index rose 1.95 points (1.36%), at 145.72

  • Weatherford International (WFT) +$1.63 (2.84%) to $59.09;
  • Smith International (SII) +$1.68 (2.79%) to $61.90; and
  • GlobalSantaFe (GSF) +$0.99 (2.49%) to $40.77.
Energy Complex
Index Close Gain(Loss) %
Reuters CRB 306.98 2.02 0.66%
Crude Oil Light Sweet 55.42 0.42 0.76%
Heating Oil 1.6215 -0.02 -0.93%
Natural Gas 7.421 0.19 2.67%
Unleaded Gas 1.559 0.02 1.17%
AMEX Oil Index 882.03 7.87 0.9%
Oil Service Index 145.72 1.95 1.36%

Currency Markets

USD Exchange Rates
Index Close Gain(Loss) %
US Dollar Index 88.66 -0.6 -0.67%
Euro 1.2115 0.0083 0.69%
Yen 109.205 -0.26 -0.24%
Sterling 1.8227 0.0167 0.92%
Australian Dollar 0.7696 0.0064 0.84%
Swiss Franc 1.271 -0.0064 -0.5%
Canadian Dollar 0.8088 0.0105 1.32%