Interdum stultus opportuna loquitur...

Thursday, August 11, 2005

USRant: Boinggg....

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

Pre-market data wasn't that flash - New Jobless Claims fell back a little to 308k (consensus was for 315k), and Retail Sales were much weaker than expected (especially excluding vehicle sales, which were driven by more depseration-driven 'incentives'). Headline retail sales were up 1.8% (compared to expectations for a 2.4% rise) but rose just 0.3% (consensus was for 0.8%) excluding vehicle sales.

Vehicle sales were up a staggering 6.7% - and that's following last month's 4.6% increase. They're practically giving the bloody things away - and GM, Ford and DaimlerChrysler are all losing money on every car sold. Are they trying to 'make it up on volume'? No - they are relying on being able to collateralise the loans they write, and sell them packaged as a form of bond.

All this 'creative accounting' and financial engineering - whereby carmakers lose money on their core operations, but their finance arms drive profit growth - smacks of disaster in the making. Thus far, bond managers have been prepared to pony up for these toxic waste products, because of default risk insurance taken out by the issuer which brings each tranche up to investment grade.

This all sound familiar? It ought to - it's precisely how Fannie Mae padded its earnings for five years.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 2 repurchase operations.

  • a $2.5billion, overnight repurchase entirely in T-backed collateral undertaken at a 6.8 basis point discount to the Fed Funds Rate (FFR); and
  • a $13billion, 14-day repurchase entirely in T-backed collateral, undertaken at a 7.3 basis point discount to the FFR.
So the world was pretty much awash in money - and that money was given to da Boyz at a modest (healthy) discount to Fed Funds. The big dollop - the $13 billion repurchase - was doled out at 8:35 a.m.... and announced well before the market opened. That's like announcing "Club Fed announces that its Jamjob Express is now boarding at the NYSE" over the tannoy. That said, the 1-day repo was a little on the light side.

Major US Indices

The Dow Jones Industrial Average posted a rise of 91.48 points (0.86%), closing out the day at 10685.89 points - the high of the day. After an early goosing, the thing actually softened back towards the zero line, but thankfully for the bulls 10600 provided some decent support.

Like the Nasdaq (but unlike the S&P) the Dow's opening low of 10588.52 was never challeneged during the session. The closest it got was a little double-bottom that formed intraday when the market came back to test 10600 (at 12:35 p.m. and 2:25 p.m. respectively). 10600 was actually breached both times (to give breakout traders a reason to short, in order to clean them out).

The S&P actually didn't form any double bottom - it made a lower low at 2:35, and while the %R for the S&P was oversold (for the first time during the session) the CCI made a (very slightly) higher low... a CCI divergence. This wasn't confirmed by any of the other indices, so you would have been forgiven for ignoring it. You would also have been kicking yourself, as the S&P rose 9 points (and the Dow rose 80) in the aftermath - but frankly I would have ignored it had I been awake. (Speaking of awakeness, I'm back off to nigh-nighs as soon as I finish this...)

Within the blue-chip index, 23 stocks rose, the biggest gainers being Mcdonalds (MCD, +6.09% to $34.69) and United Technology (UTX, +3.30% to $51.63), which accounted for 29 Dow points between them. Losers in the Dow numbered 7 and were led by Du Pont (DD, -0.83% to $41.79) and Home Depot (HD, -0.38% to $41.50), with these two stocks contributing -4 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 240.5m shares to 97.1m.

The broader S&P500 rose 8.68 points (0.71%), to end the session at 1237.81. Within the index, gainers numbered 388, while 101 S&P500 stocks fell for the day. Volume was tilted 2.0:1 in favour of the winners with 1115.31 million units traded in the winners as compared with 549.69 million traded in the losers .

Over at Times Square, the Nasdaq Composite advanced 16.74 points (0.78%), to close at 2174.55, while larger-cap technology issues fared better with the Nasdaq100 adding 14.94 points (0.94%), to end at 1600.65 points. Within the tech benchmark, gainers numbered 73, while 23 Nasdaq100 stocks fell for the day. Volume was tilted 1.1:1 in favour of the losers with 371.75 million traded in the winners compared to 339.27 million in the losers .

NYSE Volume was super-chunky, with 1.87 billion shares changing hands, while Nasdaq Volume was about average, with 1.54 billion shares traded.

Major Market Statistics
Dow Jones Industrial Average10685.8991.480.86%
Nasdaq Composite2174.5516.740.78%
NYSE Volume1.87bn--
Nasdaq Volume1.54bn--


My 9-stock "bellwethers" group rose by an average of 0.20%

  • General Electric (GE) +$0.63 (1.86%) to $34.51;
  • Citigroup (C) +$0.21 (0.48%) to $43.51;
  • Wal Mart (WMT) +$0.11 (0.23%) to $48.95;
  • I.B.M. (IBM) +$0.64 (0.78%) to $82.66;
  • Intel (INTC) -$0.06 (0.22%) to $26.82;
  • Cisco Systems (CSCO) -$0.19 (1.04%) to $18.06;
  • eBay (EBAY) -$0.03 (0.07%) to $41.58;
  • Fannie Mae (FNM) -$0.64 (1.22%) to $52.00; and
  • Freddie Mac (FRE) +$0.61 (0.99%) to $62.43.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 2267 to 1038 for a single-day A/D reading of 1229; Nasdaq gainers trumped losers by 1915 to 1096. The 10-day moving average of the A/D line rose to 134.3 on the NYSE, while the 10dma of the Nasdaq A/D rose to -84.5.

NYSE advancing volume exceeded volume in decliners by 1329 to 490.3 million shares; Nasdaq advancing volume was greater than volume in decliners by 898.8 to 610.1 million shares.

197 NYSE-listed stocks rose to new 52-week highs, and 33 posted fresh 52-week lows, while on the Nasdaq there were 96 stocks that hit new 52-week highs, and 38 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)1329.01898.79
Declining Volume (m)490.3610.11
New Highs19796
New Lows3338

Market Sentiment Statistics
CBOE Volatility Index12.390.010.08%
CBOE Nasdaq Volatility Index15.53-0.14-0.89%
Equity Put-Call Ratio0.6-0.18-23.08%
10-day PCR0.610.047.02%
SPX-VIX Ratio99.90.620.62%

Bond Market Analysis

Bonds rose sharply at the long end, with the yield on the benchmark 30-year Treasury bond shedding 5.3 bps to 4.527%. The 30-year bond future rose 22/32 to close at 114-29/32 - just below its high of the session at 115 even.

The middle of the yield curve was broadly higher: five year yields fell to 4.204%, and ten-year yields fell to 4.334%.

Treasury Yields
UST 13wk (yld)3.42200%
UST 2Y (yld)4.100%
UST 5Y (yld)4.204-0.033-0.78%
UST 10Y (yld)4.334-0.07-1.59%
UST 30Y (yld)4.527-0.053-1.16%

The Banks Index rose 0.58 points (0.59%), at 99.19; within the index,

  • Golden West Financial (GDW) +$2.57 (4.12%) to $64.99;
  • M&T Bank Corp (MTB) +$1.98 (1.84%) to $109.56;
  • North Fork Bancorp (NFB) +$0.49 (1.8%) to $27.72;
  • National City Corp (NCC) +$0.57 (1.59%) to $36.43; and
  • Washington Mutual (WM) +$0.61 (1.47%) to $42.20.

The Broker-dealer Index advanced 1.03 points (0.6%), closing at 172; the ticket clippers lined up as follows -

  • Goldman Sachs (GS) +$2.11 (1.88%) to $114.14;
  • A G Edwards (AGE) +$0.74 (1.68%) to $44.75;
  • Lehman Brothers (LEH) +$1.74 (1.66%) to $106.37;
  • Morgan Stanley (MWD) +$0.87 (1.64%) to $54.00; and
  • Raymond James (RJF) +$0.48 (1.61%) to $30.23.

The Philadelphia SOX (Semiconductor) index added 3.3 points (0.71%), to end the session at 469.05

  • Teradyne (TER) +$0.54 (3.64%) to $15.36;
  • Applied Materials (AMAT) +$0.39 (2.24%) to $17.79;
  • Marvell Tech Group (MRVL) +$0.77 (1.78%) to $44.08;
  • KLA-Tencor (KLAC) +$0.73 (1.51%) to $48.94; and
  • National Semiconductors (NSM) +$0.29 (1.21%) to $24.19.

Gold & Silver Markets

Gold rose $8.90 (2.03%) to close at $447.80 per ounce, and traded as high as $450. To really seal the bull case, it needs to close above this level ($447) at least once more. I said some time ago that $445-$447 was a line in the sand, above which Gold bulls would have the shorts by the nuts. The calculus has changed somewhat (I think when I mentioned it, the from month was March or maybe June), but the numbers are roughly the same.

Gold Bugs Index gained 9.79 points (4.71%), ending the day at 217.85

  • Eldorado Gold (EGO) +$0.29 (10.07%) to $3.17;
  • Golden Star (GSS) +$0.22 (6.83%) to $3.44;
  • Hecla Mining (HL) +$0.26 (6.74%) to $4.12;
  • Goldcorp (GG) +$1.00 (5.77%) to $18.32; and
  • Kinross Gold (KGC) +$0.36 (5.76%) to $6.61.

Silver rose $0.11 (1.48%) to close at $7.18 per ounce. The Gold and Silver Index (XAU) gained 3.93 points (4.11%), ending the day at 99.46 points.

  • Durban Rooderpoert Deep (DROOY) +$0.17 (18.68%) to $1.08;
  • Goldcorp (GG) +$1.00 (5.77%) to $18.32;
  • Kinross Gold (KGC) +$0.36 (5.76%) to $6.61; and
  • Harmony Gold (HMY) +$0.45 (5.51%) to $8.62.
Precious Metals and Indices
PHLX Gold and Silver Index99.463.934.11%
AMEX Gold BUGS Index217.859.794.71%

Oil Market

Oil was firmer, rising by $0.90 per barrel, closing at $65.80 per barrel and trading as high as $66 flat. Today's spin will be "good for oil company profits, therefore the market rose"... I guess.

The Oil and Gas Index (XOI) advanced 9.59 points (0.97%), at 1002.46

  • Amerada Hess (AHC) +$2.37 (1.9%) to $126.80;
  • Occidental Petroleum (OXY) +$1.52 (1.85%) to $83.65; and
  • Exxon Mobil (XOM) +$1.05 (1.75%) to $60.95.

The Oil service stocks (OSX) Index gained 0.69 points (0.41%), at 169.94

  • Rowan Companies (RDC) +$0.55 (1.52%) to $36.76;
  • Halliburton (HAL) +$0.75 (1.27%) to $59.82; and
  • National Oilwells/Varco (NOV) +$0.74 (1.24%) to $60.60.
Energy Complex
Reuters CRB316.750.410.13%
Crude Oil Light Sweet65.80.91.39%
Heating Oil1.89850.063.25%
Natural Gas9.3010.232.54%
Unleaded Gas1.94980.052.82%
AMEX Oil Index1002.469.590.97%
Oil Service Index169.940.690.41%

Currency Markets

USD Exchange Rates
US Dollar Index87.1-0.5-0.57%
Australian Dollar0.77470.00941.23%
Swiss Franc1.2452-0.0115-0.92%
Canadian Dollar0.83310.00710.86%