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Don't get too twitterpated about the supposed 'big fall' in oil prices last night. Front-month crude dropped just over a percent, but (and there is always a but) most of that was due to position rollovers by institutions. These folks have relatively large holdings, and in order to roll out of the front month and into the first-forward contract, they have to be prepared to move the market.
The rollover is performed (for long positions) by selling the front month (currently July05, for Crude) and buying the forward month. the trades to do this are often performed simultaneously.
The strange thing about it is
that the broader nuffnuff type of trader (i.e., about 85% of the
trading community) don't position themselves in advance of rollovers,
and so they get whipped around like a dervish; their stops get
triggered and add to the downward momentum in the front-month, and
dumbass pretend-hedgies who try to trade calendar spreads also drive
down the forward month through arbitrage. The fact that the forward
month falls less than the front month (i.e., the contango widens) is
due to the fact that the institutions are in there buying the
forward... detracting
from downward momentum.
So it should come as no surprise that while July05 crude dipped 65¢, August05 only dipped 29¢ - despite the fact that the August contract was trading over $1 higher than the July at the start of the session. And examine the rest of the energy complex (in the tables way down below) to see that it was actually a very bullish session for the Energies.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation - a $9billion, overnight repurchase entirely in T-backed collateral. That helped a little, but it was odd that the market was relatively weak considering it was a Monday, Greenspan was waffling about how everything looks great when you get fed by the taxpayer, and oil prices looked soft (if you had your head up your arse and ignored the rollover).
Major US Indices
Speaking of heads up arses (and
just before we get to the morning's numbers), you will often have heard
me rabbit on about how mergers and acquisitions are almost always a
'dick thing' - that is, they are for self-aggrandising CEOs who, like
politician, are required to be seen to be doing something.
So Fiorina lays waste to Compaq by acquiring Hewlett Packard, for
example; Time
Warner gets hollowed out by a
wanker in charge of AOL.
As I've said before, "synergies, my arse"... it's all driven by
fee-generation at merchant banks, and idiocy (and megalomania) at CEO
level.
Well, I'm finally not alone...
the only journalist at the New York Times
whose writings are worth reading (Gretchen Morgenson) wrote this terrific
piece about mergers.
Short answer: they're a dick thing. If you are remotely interested in
analysing companies properly, you really must
read this piece.
It's like I always say, read my
waffle (about China,
about mergers,
about DavNet,
about New
Corpse... hell, I even got Qantas
right), and disagree with it all you like, so long as you're prepared
to let me put a tick in a box when it happens.
The Dow Jones Industrial Average rose a scant 6.06 points (0.06%), closing out the day at 10467.03 points. The index traded in a pretty narrow range, dipping to 10430.97 at 11 a.m., then grinding its way higher for most of the remainder of the session. The intraday high of 10481 was posted with less than twenty minutes let on the game clock.
Within the blue-chip index, 13
stocks rose, the biggest gainers being Boeing
(BA,
+1.38% to $65.55) and Du Pont (DD,
+1.34% to $46.72), which accounted for 11 Dow points between them.
Losers in the Dow numbered 17 and were led by General
Motors (GM,
-1.65% to $30.42) and International
Business Machines (IBM,
-1.04% to $75.00), with these two stocks contributing -10 Dow points
worth of downward pressure on the index.
Volume traded was tilted in favour of the losers
by 179.8m shares to 79m.
The broader S&P500 posted a rise of 1.49 points (0.12%), closing at 1197.51. Within the index, gainers numbered 272, while 219 S&P500 stocks fell for the day. Volume was tilted 1.3:1 in favour of the losers with 791.51 million units traded in the losers as compared with 590.34 million traded in the winners.
Over at Times Square, the Nasdaq Composite advanced 4.33 points (0.21%), to close at 2075.76, while larger-cap technology issues fared worse with the Nasdaq100 adding 0.79 points (0.05%), to end at 1545.27 points. Within the tech benchmark, gainers numbered 51, while 46 Nasdaq100 stocks fell for the day. Volume was tilted 2.3:1 in favour of the losers with 419.46 million traded in the losers compared to 181.43 million in the gainers.
Notice something there? Mildly
positive breadth, but volume breakups that favour the losing team? Odd,
that.
NYSE Volume was solid but unspectacular, with 1.55 billion shares changing hands, while Nasdaq Volume was about average, with 1.52 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10467.03 | 6.06 | 0.06% |
| S&P500 | 1197.51 | 1.49 | 0.12% |
| Nasdaq Composite | 2075.76 | 4.33 | 0.21% |
| Nasdaq100 | 1545.27 | 0.79 | 0.05% |
| NYSE Volume | 1.55bn | - | - |
| Nasdaq Volume | 1.52bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.14%
- General Electric (GE) -$0.09 (0.25%) to $36.61;
- Citigroup (C) +$0.13 (0.27%) to $47.69;
- Wal Mart (WMT) +$0.38 (0.8%) to $47.73;
- I.B.M. (IBM) -$0.79 (1.04%) to $75.00;
- Intel (INTC) -$0.16 (0.59%) to $27.17;
- Cisco Systems (CSCO) -$0.02 (0.1%) to $19.38;
- eBay (EBAY) +$0.84 (2.22%) to $38.64;
- Fannie Mae (FNM) -$0.02 (0.03%) to $58.59; and
- Freddie Mac (FRE) unchanged at $66.00.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1948 to 1329 for a single-day A/D reading of 619; Nasdaq gainers trumped losers by 1613 to 1380. The 10-day moving average of the A/D line rose to 487.1 on the NYSE, while the 10dma of the Nasdaq A/D rose to 107.7.
NYSE advancing volume exceeded volume in decliners by 775.7 to 740.1 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 737 to 734.8 million shares.
153 NYSE-listed stocks rose to new 52-week highs, and 21 posted fresh 52-week lows, while on the Nasdaq there were 100 stocks that hit new 52-week highs, and 37 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1948 | 1613 |
| Decliners | 1329 | 1380 |
| Advancing Volume (m) | 775.7 | 734.75 |
| Declining Volume (m) | 740.09 | 737.01 |
| New Highs | 153 | 100 |
| New Lows | 21 | 37 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 12.28 | 0.13 | 1.07% |
| CBOE Nasdaq Volatility Index | 15.74 | 0.15 | 0.96% |
| Equity Put-Call Ratio | 0.74 | -0.05 | -6.33% |
| 10-day PCR | 0.70 | 0.01 | 1.27% |
| SPX-VIX Ratio | 97.5 | -0.92 | -0.94% |
Bond Market Analysis
Bonds rose at the long end,
with the yield on the benchmark 30-year
Treasury bond shedding 3.2 bps
to 4.249%. I'm pretty steamed at myself for not at least having a crack
at a bond short after last Friday's spike, but the time's not quite
right yet.
The middle of the yield curve was broadly higher: five year yields fell to 3.727%, and ten-year yields fell to 3.962%.
Spreads
between short-dated (2-yr) Treasuries and high-grade corporate bonds of
similar maturity profiles were unchanged at 4.0 basis points; spreads
between longer dated Treasuries and their corporate AAA counterparts
rose to 70.0 bps for 10-year AAA, and 101.5 bps for 20-years. About
time the 20-year corporate spread got above 100bps; it ought to be
closer to 150 (I think I've said that before).
Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were mixed with the AAA-A spread on 20-years 2.0 bps tighter at 58.0 basis points and the 10-year AAA-A spread 1.0 bps wider at -12.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.932 | 0 | 0% |
| UST 2Y (yld) | 3.56 | 0.01 | 0.28% |
| UST 5Y (yld) | 3.727 | -0.004 | -0.11% |
| UST 10Y (yld) | 3.962 | -0.017 | -0.43% |
| UST 30Y (yld) | 4.249 | -0.032 | -0.75% |
The Banks Index added 0.05 points (0.05%), to end the session at 98.67; within the index,
- State Street (STT) +$1.12 (2.24%) to $51.08;
- Northern Trust (NTRS) +$0.51 (1.12%) to $46.18;
- Fifth Third Bancorp (FITB) +$0.30 (0.71%) to $42.27;
- MBNA Corp (KRB) +$0.14 (0.66%) to $21.39; and
- Bank Of NY (BK) +$0.17 (0.59%) to $29.01.
The Broker-dealer Index added 1.13 points (0.77%), closing at 147.81; the ticket clippers lined up as follows -
- E*Trade (ET) +$0.25 (2.02%) to $12.65;
- Jeffries Group (JEF) +$0.54 (1.51%) to $36.19;
- Legg Mason (LM) +$1.29 (1.5%) to $87.11;
- Goldman Sachs (GS) +$1.12 (1.15%) to $98.42; and
- Raymond James (RJF) +$0.28 (1.03%) to $27.55.
The Philadelphia SOX (Semiconductor) index slid 1.98 points (0.46%), to 432.28
- Freescale Semiconductors (FSL-B) -$0.48 (2.31%) to $20.33;
- Teradyne (TER) -$0.31 (2.31%) to $13.13;
- Infineon Tech (IFX) -$0.19 (2.07%) to $8.98;
- Micron Technology (MU) -$0.22 (2.03%) to $10.60; and
- Altera (ALTR) -$0.35 (1.58%) to $21.84.
Gold & Silver Markets
Gold
rose $2.80 (0.66%) to close at $426.50 per ounce. There's still almost
nothing doing in this market, which - as time goes by - is actually
quite a good thing for the Gold bulls. The US dollar index appears to
be losing steam just about where it was supposed to (I proffered 90 as
a maximum
upside bounce target when USDX was at or about 82), and in the recent
(perhaps last throes) part of the dollar rally, Gold has held its
ground (and Silver has gone positively birko).
The Gold Bugs Index dipped 1.89 points (0.99%), at 188.58
- Harmony Gold (HMY) -$0.24 (3.06%) to $7.60;
- Kinross Gold (KGC) -$0.15 (2.63%) to $5.56;
- Coeur d'Alene (CDE) -$0.08 (2.36%) to $3.31;
- Hecla Mining (HL) -$0.10 (2.19%) to $4.46; and
- Freeport McMoran (FCX) -$0.64 (1.74%) to $36.18.
Silver rose $0.01 (0.13%) to close at $7.52 per ounce. The Gold and Silver Index (XAU) lost 1.01 points (1.15%), ending the day at 87.14 points.
- Harmony Gold (HMY) -$0.24 (3.06%) to $7.60;
- Kinross Gold (KGC) -$0.15 (2.63%) to $5.56;
- Freeport McMoran (FCX) -$0.64 (1.74%) to $36.18; and
- Anglogold Ashanti (AU) -$0.50 (1.45%) to $33.93.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 426.50 | 2.80 | 0.66% |
| Silver | 7.52 | 0.01 | 0.13% |
| PHLX Gold and Silver Index | 87.14 | -1.01 | -1.15% |
| AMEX Gold BUGS Index | 188.58 | -1.89 | -0.99% |
Oil Market
Oil
lost ground, shedding $0.65 per barrel in the July contract, closing at
$54.38 per barrel (as I said above, don't read anything into that...
the August fell by only 29¢).
The Oil and Gas Index (XOI) added 1.25 points (0.15%), to 845.06
- Amerada Hess (AHC) +$0.91 (0.94%) to $97.85;
- Exxon Mobil (XOM) +$0.45 (0.79%) to $57.60; and
- TotalFinaElf S.A. (TOT) +$0.71 (0.63%) to $112.61.
The Oil service stocks (OSX) Index posted a rise of 0.7 points (0.51%), at 137.97
- Noble Corp (NE) +$1.27 (2.19%) to $59.16;
- Weatherford International (WFT) +$1.09 (2.06%) to $54.00; and
- GlobalSantaFe (GSF) +$0.39 (1.04%) to $37.80.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 307.28 | 0.58 | 0.19% |
| Crude Oil Light Sweet | 54.38 | -0.65 | -1.18% |
| Heating Oil | 1.6125 | 0.01 | 0.81% |
| Natural Gas | 7.12 | 0.24 | 3.49% |
| Unleaded Gas | 1.5293 | -0.03 | -1.79% |
| AMEX Oil Index | 845.06 | 1.25 | 0.15% |
| Oil Service Index | 137.97 | 0.7 | 0.51% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 87.7 | -0.29 | -0.33% |
| Euro | 1.2256 | 0.0034 | 0.28% |
| Yen | 106.92 | -0.75 | -0.7% |
| Sterling | 1.8242 | 0.009 | 0.5% |
| Australian Dollar | 0.765 | 0.0087 | 1.15% |
| Swiss Franc | 1.249 | -0.0032 | -0.26% |
| Canadian Dollar | 0.8033 | 0.0014 | 0.17% |
