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Expiration Fridays are always faker than most blondes - they ought to hang a sign out the front of the NYSE on these days that says "don't bother - the tape today is completely tricked-up by the option writers". For so it always is, with the major indices always managing to find a way to close at or near the level that kills off the most aggregate option value. I don't mind it that much, but it makes it even more galling each time I hear Yanks gabble on about how the US is based on free enterprise. It's actually based - as we all know - on a series of scams, a series of corrupt liaisons between bent politicians and large corporations, and tearing foreign-sourced commodities and real-estate out of the hands of its rightful owners. That sort of 'free enterprise', coupled with the latter-day concentration camps at Gitmo, Bagram and so on, sounds a lot like a certain crowd that was active between about 1939 and about 1944, led by a chap with a square moustache who shouted a lot.
But enough of George Bush's Grandfather's business partners (yes, Virginia, Prescott was a chum of the Nazis - his company holdings in UBC and Silesian were seized on that very basis in 1942)... let's look at some market stuff.
The Economic data calendar was reasonably full:
- the Producer Price Index was unchanged at the headline (consensus was for +0.5%), while the 'core' fell 0.1% (consensus was for a 0.2% increase);
- Industrial Production was 0.9%, beating expectations of 0.4% (and Capacity Utilisation was 80% - the highest since about 2001) - but most of the rise is due to seasonal spikes in output of utilities companies, and also a large gain in 'autos'. Exclude these 'one time' events, and more than half of the increase in Industrial production simply disappears.
- The University of Michigan's Consumer Sentiment index rose to 96.5 (consensus was for 95.0).
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation - a $12.25billion, weekend repurchase entirely in T-backed collateral. Although the number looks impressive, it was actually undetaken at a 9-basis-point premium to the Fed Funds rate. Now there's one thing that puts a glum face on da Boyz, and that's an absence of guaranteed carry. So there was no way that anybody should have expected any repo fireworks, and sure enough, there were none.
Major US Indices
The Dow Jones Industrial Average wandered around the unchanged line for the first tow hours of the morning, never exceeding 10645 and never getting below 10615. From about 11:30 a.m. there was a little 'tease tick' down to break the first hour low (to lure in 'breakout' short-side traders), which reversed as you might expect in order to extract a chunk of flesh from the breakout traders' behinds.
The key, as you might expect, was that the first hour low at about 10615, was not appreciably higher than 10600 (leastways, not in a really interesting way). So when the first hour low was breached and a load of nuffie shorts hopped on, the Dow dipped, sure enough... to 10600.48 (is that close enough to 10600, d'you think?), then reversed 50 points over the next couple of hours - breaking the first hour high (and also breaking 10650) and luring a different bunch of nuffnuffs into long breakout trades.
By the close, there had been a good deal of spanking of nuffnuff accounts, and to top it off the Dow was finagled to a gain of rose 11.94 points (0.11%), closing out the day at 10640.83 points. It's now looking like Monday might be the 'burst' day - where the market bursts out of the blocks at the open, and after an hour (or less) the entire rally bursts. I think that 1135 ought to pretty much cap any upmove on Monday, and those prepared to punt Globex on Sunday night will get a nice little pullback (to the 1228 area) in order to get set for Monday's opening - the Charge of the Nuffie Brigade.
The index hit an intraday high of 10654.12, and fell as low as 10600.48 during the session. within the blue-chip index, 13 stocks rose, the biggest gainers being Mcdonalds (MCD, +4.70% to $30.99) and Intel (INTC, +1.51% to $28.30), which accounted for 14 Dow points between them. Losers in the Dow numbered 16 and were led by Exxon Mobil (XOM, -0.73% to $58.16) and General Motors (GM, -0.70% to $36.74), with these two stocks contributing -5 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 207.9m shares to 128.5m.
The broader S&P500 rose 1.42 points (0.12%), ending the day at 1227.92. Within the index, gainers numbered 258, while 232 S&P500 stocks fell for the day. Volume was tilted 1.1:1 in favour of the losers with 850.17 million units traded in the winners as compared with 779.36 million traded in the losers .
Over at Times Square, the Nasdaq Composite posted a rise of 3.96 points (0.18%), to close at 2156.78, after spending the entire first half underwater. Larger-cap technology issues fared better with the Nasdaq100 adding 4.38 points (0.28%), to end at 1577.82 points. Within the tech benchmark, gainers numbered 50, while 49 Nasdaq100 stocks fell for the day. Volume was tilted 1.1:1 in favour of the losers with 346.94 million traded in the winners compared to 315.02 million in the losers .
NYSE Volume was chunky, with 1.72 billion shares changing hands, while Nasdaq Volume was about average, with 1.52 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10640.83 | 11.94 | 0.11% |
| S&P500 | 1227.92 | 1.42 | 0.12% |
| Nasdaq Composite | 2156.78 | 3.96 | 0.18% |
| Nasdaq100 | 1577.82 | 4.38 | 0.28% |
| NYSE Volume | 1.72bn | - | - |
| Nasdaq Volume | 1.52bn | - | - |
Bellwethers
My 9-stock "bellwethers" group fell by an average of 0.03%
- General Electric (GE) -$0.10 (0.28%) to $35.53;
- Citigroup (C) -$0.08 (0.17%) to $46.42;
- Wal Mart (WMT) -$0.26 (0.51%) to $50.25;
- I.B.M. (IBM) -$0.04 (0.05%) to $82.38;
- Intel (INTC) +$0.42 (1.51%) to $28.30;
- Cisco Systems (CSCO) -$0.05 (0.25%) to $19.89;
- eBay (EBAY) +$0.04 (0.11%) to $35.08;
- Fannie Mae (FNM) -$0.28 (0.47%) to $59.80; and
- Freddie Mac (FRE) -$0.10 (0.15%) to $66.55.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1622 to 1599 for a single-day A/D reading of 23; Nasdaq gainers trumped losers by 1554 to 1445. The 10-day moving average of the A/D line fell to 283.5 on the NYSE, while the 10dma of the Nasdaq A/D fell to 160.2.
On the NYSE declining volume was greater than volume in advancing issues by 816.2 to 778.1 million shares; Nasdaq advancing volume was greater than volume in decliners by 829.3 to 665.1 million shares.
125 NYSE-listed stocks rose to new 52-week highs, and 18 posted fresh 52-week lows, while on the Nasdaq there were 99 stocks that hit new 52-week highs, and 22 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1622 | 1554 |
| Decliners | 1599 | 1445 |
| Advancing Volume (m) | 778.1 | 829.26 |
| Declining Volume (m) | 816.24 | 665.11 |
| New Highs | 125 | 99 |
| New Lows | 18 | 22 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 10.28 | -0.51 | -4.73% |
| CBOE Nasdaq Volatility Index | 13.28 | -0.95 | -6.68% |
| Equity Put-Call Ratio | 0.66 | 0.01 | 1.54% |
| 10-day PCR | 0.52 | 0 | 0% |
| SPX-VIX Ratio | 119.4 | 5.78 | 5.08% |
Bond Market Analysis
Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 1.2 bps to 4.405%. The 30-year bond future clsoed at 116-15/32 although it got as low as 115-29/32 immediately after the Industrial Production and Capacity Utilisation data.
The middle of the yield curve was mixed: five year yields rose to 3.977%, and ten-year yields fell to 4.175%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps tighter at -5.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 35.0 bps for 10-year AAA, and 73.5 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 6.0 bps tighter at 37.0 basis points and the 10-year AAA-A spread 7.0 bps wider at 17.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 3.178 | 0 | 0% |
| UST 2Y (yld) | 3.84 | 0.01 | 0.26% |
| UST 5Y (yld) | 3.977 | 0.001 | 0.03% |
| UST 10Y (yld) | 4.175 | -0.005 | -0.12% |
| UST 30Y (yld) | 4.405 | -0.012 | -0.27% |
The Banks Index advanced 0.38 points (0.37%), to 101.89; within the index,
- National City Corp (NCC) +$0.94 (2.63%) to $36.70;
- US Bancorp (USB) +$0.71 (2.37%) to $30.64;
- Bank Of NY (BK) +$0.32 (1.09%) to $29.66;
- Washington Mutual (WM) +$0.39 (0.95%) to $41.47; and
- Wells Fargo (WFC) +$0.40 (0.64%) to $62.87.
The Broker-dealer Index rose 0.06 points (0.04%), closing at 168.47; the ticket clippers lined up as follows -
- Ameritrade (AMTD) +$0.43 (2.25%) to $19.52;
- Legg Mason (LM) +$0.54 (0.49%) to $110.50;
- Lehman Brothers (LEH) +$0.31 (0.3%) to $105.04;
- Raymond James (RJF) +$0.07 (0.23%) to $30.62; and
- Goldman Sachs (GS) -$0.05 (0.05%) to $108.50.
The Philadelphia SOX (Semiconductor) index dipped 0.29 points (0.06%), closing at 463.64
- ST Microelectronic (STM) -$0.16 (0.89%) to $17.90;
- Broadcom (BRCM) -$0.34 (0.88%) to $38.40;
- Maxim Integrated (MXIM) -$0.34 (0.8%) to $42.11;
- KLA-Tencor (KLAC) -$0.34 (0.7%) to $48.47; and
- Xilinx (XLNX) -$0.17 (0.61%) to $27.73.
Gold & Silver Markets
Gold rose $1.50 (0.36%) to close at $421.50 per ounce.
Gold Bugs Index shed 2.91 points (1.48%), ending the day at 194.08
- Eldorado Gold (EGO) -$0.13 (4.81%) to $2.57;
- Hecla Mining (HL) -$0.11 (2.65%) to $4.04;
- Glamis Gold (GLG) -$0.40 (2.4%) to $16.29;
- Gold Fields (GFI) -$0.24 (2.15%) to $10.91; and
- Harmony Gold (HMY) -$0.18 (2.14%) to $8.22.
Silver fell by $0.01 (0.07%) to close at $6.97 per ounce. The Gold and Silver Index (XAU) lost 1.17 points (1.28%), closing at 90.09 points.
- Gold Fields (GFI) -$0.24 (2.15%) to $10.91;
- Harmony Gold (HMY) -$0.18 (2.14%) to $8.22;
- Meridian Gold (MDG) -$0.36 (2.06%) to $17.14; and
- Placer Dome (PDG) -$0.28 (1.83%) to $15.03.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 421.50 | 1.50 | 0.36% |
| Silver | 6.97 | -0.01 | -0.07% |
| PHLX Gold and Silver Index | 90.09 | -1.17 | -1.28% |
| AMEX Gold BUGS Index | 194.08 | -2.91 | -1.48% |
Oil Market
Oil was firmer, rising by $0.05 per barrel, closing at $58.09 per barrel after trading as high as $58.90 and as low as $57.80. The Oil and Gas Index (XOI) shed 2.99 points (0.33%), closing at 916.52
- Kerr Mcgee (KMG) -$1.16 (1.51%) to $75.66;
- Unocal (UCL) -$0.64 (0.97%) to $65.65; and
- Marathon Oil (MRO) -$0.45 (0.81%) to $55.23.
The Oil service stocks (OSX) Index shed 0.98 points (0.66%), at 146.97
- National Oilwells/Varco (NOV) -$0.72 (1.51%) to $46.89;
- Rowan Companies (RDC) -$0.42 (1.4%) to $29.68; and
- Noble Corp (NE) -$0.75 (1.21%) to $61.30.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 313.18 | -0.15 | -0.05% |
| Crude Oil Light Sweet | 58.09 | 0.05 | 0.09% |
| Heating Oil | 1.6621 | 0 | -0.17% |
| Natural Gas | 7.849 | -0.02 | -0.2% |
| Unleaded Gas | 1.6883 | -0.01 | -0.31% |
| AMEX Oil Index | 916.52 | -2.99 | -0.33% |
| Oil Service Index | 146.97 | -0.98 | -0.66% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 89.72 | 0.25 | 0.28% |
| Euro | 1.2041 | -0.004 | -0.33% |
| Yen | 112.23 | -0.1 | -0.09% |
| Sterling | 1.7527 | -0.0035 | -0.2% |
| Australian Dollar | 0.7494 | -0.003 | -0.4% |
| Swiss Franc | 1.295 | 0.0047 | 0.36% |
| Canadian Dollar | 0.8193 | -0.0057 | -0.69% |
