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Another day, another reversal (of sorts). With the Street machine on "spin", everything started out looking swell. Talk of a reduction in the DoJ's efforts to prosecute tobacco companies under the RICO anti-organised-crime statue gave Philip Morris (I will never call it "Altria") some early legs, Texas Instruments upped its earnings forecast, and Imclone yabbered about how Carl Icahn wanted to buy some more of its stock.
The only pre-market economic
data was the Mortgage Bankers' Association's Purchase Applications Index,
which climbed another 3.6% (and refinancing rose more than 10%).
Mortgage rates fell 6 basis points for the prior week, and the
home-equity-extraction binge continues.
Federal Reserve Open Market Operations
The Fed's Open
Market Operations desk performed
1 repurchase operation - a $3.25billion, 2-day repurchase entirely in
T-backed collateral. That was never going to be enough to get the
market going.
Major US Indices
With all the bullish pablum
being spouted by the Street and its presstitutes at places like the Wall Street Journal,
the market opened with an upward flurry, with the Dow up over 50 points
in the first ten minutes. From there it had nowhere to go - although it
did make a marginally higher high just before 1 p.m. NY time (the new
higher high for the session was less than 10 Dow points above the 10:08
morning high... it was an intraday bull trap).
By the close, the Dow Jones Industrial Average had declined 6.21 points (0.06%), closing out the day at 10476.86 points. The intraday high of 10543.29 at 1 p.m. barely exceeded the opening flurry, and after testing the high and getting intraday breakout traders to jump long, the Dow turned and fell to its session low (10465.32) at 3 p.m., with 80% of the fall happening between 1 p.m. and 2 p.m. NY time.
Within the blue-chip index, 10 stocks rose, the biggest gainers being General Motors (GM, +4.20% to $32.02) and Caterpillar (CAT, +2.17% to $96.58), which accounted for 25 Dow points between them. Losers in the Dow numbered 19 and were led by Merck (MRK, -1.40% to $31.63) and Exxon Mobil (XOM, -1.25% to $56.73), with these two stocks contributing -9 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 177.1m shares to 106.4m.
The broader S&P500 dipped 2.59 points (0.22%), closing at 1194.67. Within the index, gainers numbered 200, while 286 S&P500 stocks fell for the day. Volume was tilted 1.2:1 in favour of the losers with 833.39 million units traded in the losers as compared with 688.83 million traded in the winners .
Over at Times Square, the Nasdaq Composite lost 6.98 points (0.34%), to close at 2060.18, while larger-cap technology issues fared better with the Nasdaq100 losing 3.44 points (0.22%), to end at 1527.68 points. Within the tech benchmark, gainers numbered 46, while 52 Nasdaq100 stocks fell for the day. Volume was tilted 1.2:1 in favour of the losers with 350.67 million traded in the losers compared to 283.27 million in the winners .
NYSE Volume was pretty chunky, with 1.72 billion shares changing hands, while Nasdaq Volume was only 'solid', with 1.65 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10476.86 | -6.21 | -0.06% |
| S&P500 | 1194.67 | -2.59 | -0.22% |
| Nasdaq Composite | 2060.18 | -6.98 | -0.34% |
| Nasdaq100 | 1527.68 | -3.44 | -0.22% |
| NYSE Volume | 1.72bn | - | - |
| Nasdaq Volume | 1.65bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.23%
- General Electric (GE) -$0.04 (0.11%) to $36.80;
- Citigroup (C) +$0.09 (0.19%) to $47.75 (the market never moves far without C moving);
- Wal Mart (WMT) -$0.19 (0.4%) to $47.55;
- I.B.M. (IBM) -$0.24 (0.32%) to $74.80;
- Intel (INTC) +$0.24 (0.89%) to $27.10;
- Cisco Systems (CSCO) -$0.00 (0%) to $19.41;
- eBay (EBAY) -$0.71 (1.88%) to $37.10;
- Fannie Mae (FNM) -$0.06 (0.1%) to $58.16; and
- Freddie Mac (FRE) -$0.22 (0.34%) to $65.41.
Market Breadth & Internals
NYSE declining Issues beat out advancers by 1840 to 1414, for a single-day A/D reading of -426; and Nasdaq losers exceeded gainers by 1750 to 1276. The 10-day moving average of the A/D line fell to 317.4 on the NYSE, while the 10dma of the Nasdaq A/D fell to -33.9.
On the NYSE declining volume was greater than volume in advancing issues by 903.7 to 758 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 921.8 to 654 million shares.
142 NYSE-listed stocks rose to new 52-week highs, and 32 posted fresh 52-week lows, while on the Nasdaq there were 67 stocks that hit new 52-week highs, and 43 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1414 | 1276 |
| Decliners | 1840 | 1750 |
| Advancing Volume (m) | 758.04 | 654.04 |
| Declining Volume (m) | 903.7 | 921.8 |
| New Highs | 142 | 67 |
| New Lows | 32 | 43 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 12.7 | 0.31 | 2.5% |
| CBOE Nasdaq Volatility Index | 15.8 | 0.19 | 1.22% |
| Equity Put-Call Ratio | 0.79 | 0.07 | 9.72% |
| 10-day PCR | 0.72 | 0.02 | 2.32% |
| SPX-VIX Ratio | 94.1 | -2.56 | -2.65% |
Bond Market Analysis
Bonds fell at the long end,
with the yield on the benchmark 30-year
Treasury bond rising 3.0 bps to
4.225%. the 30-year June05 T-bond future dropped to 118&12/32
by the close, but never really looked like breaking 118 (during the
session the 30-year got as high as 118&26/32... but I suspect
that bond market folks have had their fill of the long side for the
moment - long rates can't fall substantially further. Not because the
economy's not stuffed - it is - but because the massive new bond
issuance will not be soaked up: the 'Carribbean and Offshore' category
in the TIC data doesn't have enough money to replace central banks for
more than a couple of months. I think it's hilarious that the entire US
government is now running 'off balance sheet' entities to do its
financing. The whole 'Carribbean' machine is a scam.
The middle of the yield curve was also broadly lower: five year yields rose to 3.724%, and ten-year yields rose to 3.94%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 3.0 bps tighter at 1.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 66.0 bps for 10-year AAA, and 104.0 bps for 20-years.
Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were mixed with the AAA-A spread on 20-years 1.0 bps tighter at 49.0 basis points and the 10-year AAA-A spread 2.0 bps 'wider' (i.e., heading back towards normality) at -10.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 2.947 | 0 | 0% |
| UST 2Y (yld) | 3.58 | 0.04 | 1.13% |
| UST 5Y (yld) | 3.724 | 0.036 | 0.98% |
| UST 10Y (yld) | 3.94 | 0.029 | 0.74% |
| UST 30Y (yld) | 4.225 | 0.03 | 0.72% |
The Banks Index added 0.17 points (0.17%), closing at 98.55; within the index,
- North Fork Bancorp (NFB) +$0.26 (0.96%) to $27.21;
- Northern Trust (NTRS) +$0.33 (0.72%) to $46.28;
- Mellon Financial (MEL) +$0.15 (0.54%) to $28.00;
- JPMorganChase (JPM) +$0.19 (0.54%) to $35.67; and
- MBNA Corp (KRB) +$0.11 (0.51%) to $21.60.
The Broker-dealer Index gained 1.05 points (0.71%), at 148.5; the ticket clippers lined up as follows -
- E*Trade (ET) +$0.54 (4.28%) to $13.15;
- Ameritrade (AMTD) +$0.17 (1.16%) to $14.86;
- Merrill Lynch (MER) +$0.59 (1.07%) to $55.48;
- Raymond James (RJF) +$0.25 (0.91%) to $27.80; and
- Jeffries Group (JEF) +$0.32 (0.89%) to $36.27.
The Philadelphia SOX (Semiconductor) index advanced 2.75 points (0.64%), to 430.27
- ST Microelectronic (STM) +$0.47 (3.02%) to $16.01;
- Texas Instruments (TXN) +$0.62 (2.27%) to $27.90;
- Applied Materials (AMAT) +$0.31 (1.87%) to $16.89;
- Micron Technology (MU) +$0.19 (1.81%) to $10.68; and
- Teradyne (TER) +$0.19 (1.45%) to $13.27.
Gold & Silver Markets
Gold
fell by $0.10 (0.02%) to close at $424.70 per ounce. Talk about
Dullsville... although Gold did trade as high as $428.60 in the period
after the release of the EIA Petroleum Status Report at 10:30 a.m. NY
time - after rallying for most of the morning, Gold tanked almost $4 in
the afternoon as someone stuck their boot on Oil's
face.
Gold Bugs Index lost 0.54 points (0.29%), to 184.21
- Randgold Resources (GOLD) -$0.33 (2.56%) to $12.56;
- Coeur d'Alene (CDE) -$0.08 (2.45%) to $3.19;
- Freeport McMoran (FCX) -$0.66 (1.85%) to $34.96;
- Gold Fields (GFI) -$0.05 (0.49%) to $10.20; and
- Newmont Mining (NEM) -$0.13 (0.35%) to $36.75.
Silver fell by $0.01 (0.07%) to close at $7.43 per ounce. The Gold and Silver Index (XAU) lost 0.23 points (0.27%), at 85.21 points.
- Freeport McMoran (FCX) -$0.66 (1.85%) to $34.96;
- Anglogold Ashanti (AU) -$0.55 (1.64%) to $33.08;
- Gold Fields (GFI) -$0.05 (0.49%) to $10.20; and
- Newmont Mining (NEM) -$0.13 (0.35%) to $36.75.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 424.70 | -0.10 | -0.02% |
| Silver | 7.43 | -0.01 | -0.07% |
| PHLX Gold and Silver Index | 85.21 | -0.23 | -0.27% |
| AMEX Gold BUGS Index | 184.21 | -0.54 | -0.29% |
Oil Market
Oil lost ground, shedding $1.27 per barrel, closing at $52.50 per barrel. The smart money must be loving the ability to re-set its long positions at lower prices (the entire market is still in contango though, and the contango is widening).
Look at the falls for the forward contracts compared to the front-month: while the July contract fell $1.27:
- August fell $1.09;
- September fell $1.04; and
- December fell $0.88.
I said a while ago that oil would have to work hard to make new highs, but last night was a real doozy.
After the EIA Petroleum Status Report showed a 3 million barrel drawdown (an increase was expected) and also drawdowns in distillate stocks, the entire Energy complex skyrocketed. Crude jumped $1.50 in less than 5 minutes (from $53.50 to $55) immediately after the data, and Unleaded was almost impossible to trade, the market was so fast.
Then, a big boot came crashing
down on the face of those silly enough to buy a spike. Oil dropped
$2.50 in a relentless
post-EIA rout, pausing only to bounce at $53 as it became
very oversold on short term charts. After intraday scalpers had their
fill of the fade, it reversed again and dropped a dollar from the
post-bounce high.
The Oil and Gas Index (XOI) declined 0.16 points (0.02%), at 839.59
- Repsol YPF (REP) -$0.31 (1.26%) to $24.35;
- Exxon Mobil (XOM) -$0.72 (1.25%) to $56.73; and
- Royal Dutch Shell (RD) -$0.53 (0.89%) to $58.88.
The Oil service stocks (OSX) Index rose 0.65 points (0.48%), ending the day at 137.44
- GlobalSantaFe (GSF) +$0.53 (1.42%) to $37.80;
- Transocean (RIG) +$0.71 (1.42%) to $50.84; and
- Noble Corp (NE) +$0.59 (1.01%) to $58.85.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 303.73 | -2.48 | -0.81% |
| Crude Oil Light Sweet | 52.5 | -1.27 | -2.36% |
| Heating Oil | 1.549 | -0.05 | -3.31% |
| Natural Gas | 7.02 | -0.16 | -2.23% |
| Unleaded Gas | 1.4965 | -0.02 | -1.51% |
| AMEX Oil Index | 839.59 | -0.16 | -0.02% |
| Oil Service Index | 137.44 | 0.65 | 0.48% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 87.88 | 0.39 | 0.45% |
| Euro | 1.2234 | -0.005 | -0.41% |
| Yen | 107.29 | 0.7 | 0.66% |
| Sterling | 1.8233 | -0.0116 | -0.63% |
| Australian Dollar | 0.7649 | -0.0037 | -0.48% |
| Swiss Franc | 1.2549 | 0.0098 | 0.79% |
| Canadian Dollar | 0.7994 | -0.0031 | -0.39% |
