Interdum stultus opportuna loquitur...

Tuesday, June 21, 2005

USRant: Yawn... Better Late Than Never...

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

Wipes sleep from eyes... thanks Odin that he can roll out of bed and Rant in underpants despite chilling winds outside...

Generally I am happy when the market finally catches up with my 'wisdom', but this morning I can't get excited about it - only annoyed. Today's 'catch up' is that the entire world now views the Leading Economic Indicators index (LEI) as rubbish - something I have been saying since 2001.

The LEI, published by the Conference Board - is a hodgepodge of other stuff (a dozen items in all) which is reweighted periodically to 'fit history'. Then, the fact that the re-parameterised function has a good 'fit of history', is trumpeted as proof that it was able to FORECAST that history. It's outrageously dishonest, in fact - as anyone with a decent training in statistics or econometrics will tell you.

Still, the LEI has now been negative for the last five months straight (although last month's number was revised to zero), and today's number was -0.5% which was worse than the expected 0.2%. Immediately, though, the finance journos were all over it - how the LEI doesn't correlate well with future activity (something I've said, remember, since 2001), and so on. Funny how when the LEI (or th ISM/NAPM, or the Consumer Confidence indices) show expansion, the journalists will present the number as if it's Holy Writ, but if it's a stinker they attack the fundaments on which the index is based.

It's that sort of 'selective honesty' that resulted in widespread journalistic toadying on Iraq, and the same lack of spine is leading to a complete lack of proper reportage of the lies now being spread about Iran in preparation for another War Crime. the next one - tipped for this month - will be perpetrated either by the US or Israel; both effectively have Security Council immunity since the US will veto any sanction of itself or Israel, which is in violation of dozens of UNSC resolutions.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation - a $4.5billion, overnight repurchase with $4billion in T-backed collateral. That's not usually enough to get the market's groove thang going, and this session was no different.

Major US Indices

The Dow Jones Industrial Average shed 13.96 points (0.13%), closing out the day at 10609.11 points - but it took a 60-point rally in the Dow between 1:30 p.m. and 3:30 p.m. NY time to save it from considerably weaker closing numbers (and potentially a close under 10600).  There was absolutely no catalyst for the sudden acceleration upwards, although apart from the opening hour (and generally poor market breadth) the market had been trading with some bullish biases.

After opening with a lack of usual Monday enthusiasm (one minute after the open, the Dow was down almost 40 points), the softness stabilised at about the end of the first hour. From there the day actually had a mild upward tilt - each progressive half-hour high was higher than the prior period, and each low was higher too. Intraday breadth started to improve after the first hour, with the TICK indicator (NYSE upticks - NYSE downticks) moving from solidly negative back up into the black. In fact TICK never got genuinely 'awful' - its worst reading of the day (-526) is not even one of my signs of a large sell program going off...

The index set its session low - 10562.38 - just before 10:30 NY time, with breadth awful and TICK struggling - but then everything stopped falling (despite an awful reading on the meaningless LEI) and the market stabilised. TICK started to rise a little, and the market was like a big steam locomotive whose wheels were slipping as the engine started to try and gain traction...

Within the Dow, 10 stocks rose for the day, the biggest gainers being Caterpillar (CAT, +0.60% to $100.80) and General Motors (GM, +0.39% to $35.82), which accounted for 6 Dow points between them. Losers in the Dow numbered 20 and were led by Boeing (BA, -1.47% to $63.67) and Alcoa (AA, -0.88% to $28.00), 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 171.1m shares to 93.8m.

The broader S&P500 declined 0.86 points (0.07%), to 1216.1. Within the index, gainers numbered 187, while 303 S&P500 stocks fell for the day. Volume was tilted 1.1:1 in favour of the losers with 777.48 million units traded in the losers as compared with 725.44 million traded in the winners .

Over at Times Square, the Nasdaq Composite slid 1.98 points (0.09%), to close at 2088.13, while larger-cap technology issues fared better with the Nasdaq100 losing 0.82 points (0.05%), to end at 1537.31 points. Within the tech benchmark, gainers numbered 35, while 63 Nasdaq100 stocks fell for the day. Volume was tilted 1.1:1 in favour of the losers with 299.54 million traded in the losers compared to 281.61 million in the winners .

NYSE Volume was chunky, with 1.71 billion shares changing hands, while Nasdaq Volume was about average, with 1.45 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Major Market Statistics
Dow Jones Industrial Average10609.11-13.96-0.13%
Nasdaq Composite2088.13-1.98-0.09%
NYSE Volume1.71bn--
Nasdaq Volume1.45bn--


My 9-stock "bellwethers" group fell by an average of 0.25%

  • General Electric (GE) -$0.22 (0.6%) to $36.28;
  • Citigroup (C) -$0.09 (0.19%) to $47.37;
  • Wal Mart (WMT) -$0.07 (0.14%) to $48.86;
  • I.B.M. (IBM) +$0.16 (0.21%) to $76.55;
  • Intel (INTC) -$0.22 (0.81%) to $26.90;
  • Cisco Systems (CSCO) +$0.07 (0.36%) to $19.60;
  • eBay (EBAY) -$0.81 (2.13%) to $37.24;
  • Fannie Mae (FNM) +$0.27 (0.45%) to $60.42; and
  • Freddie Mac (FRE) +$0.42 (0.64%) to $66.36.

Market Breadth & Internals

NYSE declining Issues beat out advancers by 1960 to 1312, for a single-day A/D reading of -648; and Nasdaq losers exceeded gainers by 1774 to 1260. The 10-day moving average of the A/D line fell to 391.0 on the NYSE, while the 10dma of the Nasdaq A/D fell to 100.9.

On the NYSE declining volume was greater than volume in advancing issues by 901.9 to 789.2 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 695.1 to 655.8 million shares.

200 NYSE-listed stocks rose to new 52-week highs, and 22 posted fresh 52-week lows, while on the Nasdaq there were 97 stocks that hit new 52-week highs, and 36 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)789.22655.77
Declining Volume (m)901.93695.05
New Highs20097
New Lows2236

Market Sentiment Statistics
CBOE Volatility Index11.47-0.01-0.09%
CBOE Nasdaq Volatility Index14.70.070.48%
Equity Put-Call Ratio0.6100%
10-day PCR0.620-0.39%
SPX-VIX Ratio1060.020.02%

Bond Market Analysis

Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 1.9 bps to 4.384%. The 30-ayer bond future dipped below 116 briefly, before a little rallyette into the close.

The middle of the yield curve was broadly lower: five year yields rose to 3.885%, and ten-year yields rose to 4.103%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps tighter at 0.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 55.0 bps for 10-year AAA, and 95.0 bps 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 bps tighter at 31.0 basis points and the 10-year AAA-A spread 4.0 bps tighter at -1.0 bps - yep, the 10-year credit spectrum is ass-backwards again.

Treasury Yields
UST 13wk (yld)2.9200%
UST 2Y (yld)
UST 5Y (yld)3.8850.0180.47%
UST 10Y (yld)4.1030.0250.61%
UST 30Y (yld)4.3840.0190.44%

The Banks Index declined 0.09 points (0.09%), to 99.62; within the index,

  • Zions Bancorp (ZION) -$0.90 (1.2%) to $74.27;
  • Golden West Financial (GDW) -$0.74 (1.11%) to $66.00;
  • US Bancorp (USB) -$0.20 (0.68%) to $29.32;
  • Bank Of NY (BK) -$0.18 (0.61%) to $29.30; and
  • Comerica (CMA) -$0.26 (0.44%) to $58.20.

The Broker-dealer Index declined 1.46 points (0.96%), ending the day at 150.23; the ticket clippers lined up as follows -

  • Ameritrade (AMTD) -$0.42 (2.8%) to $14.59;
  • Legg Mason (LM) -$1.30 (1.51%) to $84.68;
  • Bear Stearns (BSC) -$1.41 (1.35%) to $103.38;
  • Merrill Lynch (MER) -$0.65 (1.16%) to $55.19; and
  • Jeffries Group (JEF) -$0.42 (1.1%) to $37.88.

The Philadelphia SOX (Semiconductor) index lost 2.21 points (0.51%), at 428.3

  • Infineon Tech (IFX) -$0.20 (2.11%) to $9.27;
  • ST Microelectronic (STM) -$0.34 (2.08%) to $16.02;
  • Teradyne (TER) -$0.25 (1.82%) to $13.51;
  • Micron Technology (MU) -$0.17 (1.57%) to $10.66; and
  • Novellus Systems (NVLS) -$0.36 (1.36%) to $26.05.

Gold & Silver Markets

Gold rose $0.10 (0.02%) to close at $438.40 per ounce. I still can't believe that Gold bulls (small traders, mostly) have gotten away without having their accounts smashed one last time. I'm skeptical of this rally, and would still short intraday strength (hourly overbought, for example).

The Gold Bugs Index lost 5.29 points (2.62%), at 196.87

  • Randgold Resources (GOLD) -$0.84 (5.72%) to $13.84;
  • Eldorado Gold (EGO) -$0.15 (5.64%) to $2.51;
  • Coeur d'Alene (CDE) -$0.19 (5.07%) to $3.56;
  • Golden Star (GSS) -$0.10 (3.16%) to $3.06; and
  • Hecla Mining (HL) -$0.15 (3.16%) to $4.59.

Silver fell by $0.06 (0.82%) to close at $7.29 per ounce. The Gold and Silver Index (XAU) lost 1.52 points (1.64%), to 91.39 points.

  • Agnico Eagle (AEM) -$0.38 (2.95%) to $12.50;
  • Gold Fields (GFI) -$0.29 (2.64%) to $10.70;
  • Freeport McMoran (FCX) -$1.01 (2.62%) to $37.53; and
  • Anglogold Ashanti (AU) -$0.83 (2.32%) to $35.00.
Precious Metals and Indices
PHLX Gold and Silver Index91.39-1.52-1.64%
AMEX Gold BUGS Index196.87-5.29-2.62%

Oil Market

Oil was firmer again, rising by $0.63 per barrel, closing at $59.10 per barrel in the July contract. the contango in the futures market actually widened as well - that is, the out-months rose more than the front-month (note to self - front-month should properly be August now).

The Oil and Gas Index (XOI) shed 1.37 points (0.15%), closing at 911.51

  • Repsol YPF (REP) -$0.35 (1.34%) to $25.85;
  • TotalFinaElf S.A. (TOT) -$1.26 (1.05%) to $118.54; and
  • ConocoPhillips (COP) -$0.56 (0.92%) to $60.12.

The Oil service stocks (OSX) Index shed 0.85 points (0.57%), at 147.97

  • Rowan Companies (RDC) -$0.46 (1.49%) to $30.38;
  • Nabors Industries (NBR) -$0.90 (1.49%) to $59.70; and
  • Transocean (RIG) -$0.83 (1.44%) to $56.90.
Energy Complex
Reuters CRB313.632.650.85%
Crude Oil Light Sweet59.10.631.08%
Heating Oil1.660.010.5%
Natural Gas7.605-0.09-1.11%
Unleaded Gas1.6430-0.25%
AMEX Oil Index911.51-1.37-0.15%
Oil Service Index147.97-0.85-0.57%

Currency Markets

USD Exchange Rates
US Dollar Index88.490.820.94%
Australian Dollar0.7756-0.0023-0.3%
Swiss Franc1.27090.01341.07%
Canadian Dollar0.8095-0.004-0.49%