Interdum stultus opportuna loquitur...

Thursday, August 11, 2005

USRant: But... But... But...

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

Here's a tip for young players: if you plan to get up at 6 a.m., don't stay up until 4 a.m.; it's asilly thing to do. (The reason? Trying to figure out why my beautiful, fast-as-lightning-in-Firefox menu system, runs like a sick dog in Internet Explorer. The answer: IE is crap).

It's late, but here goes...

If you look in the charting dictionary at the entry for 'doing your balls', you will see a picture of last night's Dow chart. Frankly, that's what happened to all the bullish breakout-traders that jumped on the break of the July 28th high, just as a classic %R overbought/CCI divergence was forming.

It must have felt so good for them in the 12 seconds that the Dow marched above 10720 (although the closing print shows it never did, my intraday print shows a Dow high at 10720.36), but from there it all went pear-shaped pretty quickly.

Who knows - maybe 'investors' are waking up to the fact that there's a malicious intent behind all the propaganda bullshit being spread at the moment... the stuff about weapons being used in Iraq being "unmistakably from Iran".

Variations on a theme - and the theme is that people are suckers and that they will believe anything if it's said by someone as supposedly august as the Vice President of the United States (V-PUS).  Remember hen 'there was no doubt that Iraq possesses some of the most lethal weapons ever devised"? Remember when "Saddam has - without question - reconstituted his nuclear program"? Same shit, different sandwich.

At the same time, the US is making sabre-rattling noises in its other area of century-olds malign interference - Latin America. The democratically elected and re-elected president of Venezuela, Hugo Chavez, thinks that his country is being slated for invasion by the US. Usually the American government interferes in more clandestine ways in Latin America - i.e., they have their wet teams go in and kill whoever they don't like (e.g., Salvador Allende - the democratically-elected leader of Chile that the CIA knocked off on September 11th, 1973), but occasionally they send in "the boys" - the government-salaried butchers whose job it is to hold countries down while Halliburton rapes them.

Yes, maybe investors are waking up to the malign influence of the NeoTrot scum that are trying to run the planet... but I doubt it. Here's the 'good oil', and NeoTrot dickwads like Charles Krauthammer (why would you hammer cabbage? I guess only he knows) would do well to read it.

The United States is losing on all fronts. Iraq? They can't protect the mayor of Baghdad. Global War On Terror? Now renamed to "Global Struggle Against Violent Extremism". The US has never beaten a fresh first-rate enemy in the field, and probably never will. They turned up in 1917 and prolonged WWI (to save their bankers), they turned up in 1941 and prolonged WWII (for the same reason) - and on both occasions they flooded the field when the opposition was already knackered from fighting Russians.

Frankly, if a player keeps turning up late in the second half and then claims to have been the key to victory, it rankles. In war, the US couldn't beat the ragtag militia of Mogadishu. It couldn't hold Saigon. It's the "bench player" of manouevre warfare - but it's prepared to grease tens of thousands of civilians, which impresses the shit out of court jesters like Krauthammer, who need to believe that their country is a force for good. Well, it fucking isn't. Nobody who would sacrifice thousands of civilians over a political argument (that's what war is), is a force for good.

The nasty part of me hopes that the Yanks try and take on Iran - it will dispel for ever, the idea that the US is a military power. Think Baghdad's hard? Try a country that hasn't been crippled by 12 years of sanctions and illegal deliberate bombing of civilian infrastructure (a WAR CRIME).

How many Iraqis would have been killed in the past year if Hussein had been in power? How many of them would have been children? Answer: (a) not many; (b) none.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation: a $5.5billion, overnight repurchase with $4.127billion in T-backed collateral undertaken at a 14.2 basis point discount to the new 3.5% Fed Funds Rate (FFR).

$4-odd billion is nice dollars if it's in your account, but it isn't enough to get the market moving for long.

Major US Indices

Oh, it all looked so promising to begin with...

The Dow had one of its rare opening gaps (i.e., the early-openers went ballistic) despite soft earnings from Cisco Systems the previous night. After five minutes the Dow was up over 50 points, and continued to climb for the next hour and a bit. At 10 a.m. NY time, the Energy information Administration declared that Crude Oil inventories had risen by 2.8 million barrels for the week - which caused a little spike down in Crude priced to the high-$62 level.

Then, something odd happened: Oil didn't fall anymore, and by the time 15 minutes had passed it above where it had been before the announcement.


Well, oil got over the inventory build in the same fashion that George Bush and Phony B.Liar (and their pet chimpanzee, John Howard) get over each civilian death in Iraq... by just ignoring the living shit out of it. Oil climbed, and climbed, and eventually stopped climbing when the front month had reached $65.

And didn't the Dow just love that little set of circumstances?

Well, it all sounds plausible - but really the Dow was primed for a fall anyway. Yesterday's little divergences (which were only modestly profitable) presaged a bigger divergence today, and that one paid its way. Check out the chart:

Dow 15-minute chart

Four bars make a swing, I tells ya. (the opening swing takes 5 bars, actually - but taking the shot at 4 bars still felt like being Juba in Baghdad... snipers aren't so ghughing glorious when they're the other guys).

From an intraday gain of over 100 points, the Dow Jones Industrial Average reversed nearly 150 points (from high to low) before closing with a loss of 21.26 points (0.2%) at 10594.41 points. The index hit an intraday high of 10719.41 (on a break of both the first-hour high and the year-to-date high), at a time which lured in the largest proportion of breakout traders. Then, it took those poor saps to the cleaners, falling as low as 10570.05 (suckering breakouts of yesterday's low) before a 25-point recovery into the close.

Within the blue-chip index, 12 stocks rose, the biggest gainers being American Express (AXP, +1.64% to $56.50) and American International Group (AIG, +1.34% to $62.24), which accounted for 14 Dow points between them. Losers in the Dow numbered 17 and were led by Walt Disney (DIS, -2.56% to $25.47) and International Business Machines (IBM, -1.77% to $82.02), with these two stocks contributing -17 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 271.2m shares to 104.9m.

The broader S&P500 slid 2.25 points (0.18%), closing at 1229.13. Within the index, gainers numbered 235, while 248 S&P500 stocks fell for the day. Volume was tilted 1.8:1 in favour of the losers with 1223.03 million units traded in the losers as compared with 679.79 million traded in the winners .

Over at Times Square, the Nasdaq Composite declined 16.38 points (0.75%), to close at 2157.81, while larger-cap technology issues fared worse with the Nasdaq100 losing 15.43 points (0.96%), to end at 1585.71 points. Within the tech benchmark, gainers numbered 30, while 66 Nasdaq100 stocks fell for the day. Volume was tilted 4.9:1 in favour of the losers with 683.92 million traded in the losers compared to 140.48 million in the winners .

NYSE Volume was super-chunky, with 2.22 billion shares changing hands, while Nasdaq Volume was chunky, with 1.89 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Major Market Statistics
Dow Jones Industrial Average10594.41-21.26-0.2%
Nasdaq Composite2157.81-16.38-0.75%
NYSE Volume2.22bn--
Nasdaq Volume1.89bn--


My 9-stock "bellwethers" group fell by an average of 2.04%; even XBATH is making a comeback. And look at Citigroup again... it remains the best guide imaginable - a veritable Tonto.

  • General Electric (GE) -$0.26 (0.76%) to $33.88;
  • Citigroup (C) -$0.30 (0.69%) to $43.30;
  • Wal Mart (WMT) -$0.38 (0.77%) to $48.84;
  • I.B.M. (IBM) -$1.48 (1.77%) to $82.02;
  • Intel (INTC) -$0.02 (0.07%) to $26.88;
  • Cisco Systems (CSCO) -$1.36 (6.94%) to $18.25;
  • eBay (EBAY) -$1.20 (2.8%) to $41.61;
  • Fannie Mae (FNM) -$2.19 (3.99%) to $52.64; and
  • Freddie Mac (FRE) -$0.33 (0.53%) to $61.82.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1908 to 1381 for a single-day A/D reading of 527; and Nasdaq losers exceeded gainers by 1694 to 1342. The 10-day moving average of the A/D line rose to -106.0 on the NYSE, while the 10dma of the Nasdaq A/D fell to -282.9.

NYSE advancing volume exceeded volume in decliners by 1104.7 to 1056.1 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1228.1 to 573.4 million shares.

190 NYSE-listed stocks rose to new 52-week highs, and 38 posted fresh 52-week lows, while on the Nasdaq there were 106 stocks that hit new 52-week highs, and 45 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)1104.66573.41
Declining Volume (m)1056.111228.1
New Highs190106
New Lows3845

Market Sentiment Statistics
CBOE Volatility Index12.38-0.04-0.32%
CBOE Nasdaq Volatility Index15.670.312.02%
Equity Put-Call Ratio0.780.1421.88%
10-day PCR0.5700%
SPX-VIX Ratio99.30.140.14%

Bond Market Analysis

Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 0.6 bps to 4.58%.

The middle of the yield curve was mixed: five year yields fell to 4.237%, and ten-year yields rose to 4.404%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 0.0 bps tighter at -4.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 40.0 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 broadly tighter with the AAA-A spread on 20-years 1.0 bps tighter at 39.0 basis points and the 10-year AAA-A spread 0.0 bps tighter at 14.0 bps.

Treasury Yields
UST 13wk (yld)3.43400%
UST 2Y (yld)
UST 5Y (yld)4.237-0.007-0.16%
UST 10Y (yld)4.4040.010.23%
UST 30Y (yld)4.580.0060.13%

The Banks Index dipped 0.36 points (0.36%), closing at 98.61; within the index,

  • Washington Mutual (WM) -$0.58 (1.38%) to $41.59;
  • Golden West Financial (GDW) -$0.79 (1.25%) to $62.48;
  • M&T Bank Corp (MTB) -$0.93 (0.86%) to $107.58;
  • National City Corp (NCC) -$0.27 (0.75%) to $35.86; and
  • Citigroup (C) -$0.30 (0.69%) to $43.30.

The Broker-dealer Index rose 1.23 points (0.72%), to end the session at 170.97; the ticket clippers lined up as follows -

  • Legg Mason (LM) +$3.65 (3.46%) to $109.15;
  • Morgan Stanley (MWD) +$0.55 (1.05%) to $53.13;
  • Lehman Brothers (LEH) +$0.87 (0.84%) to $104.83;
  • Ameritrade (AMTD) +$0.15 (0.75%) to $20.12; and
  • A G Edwards (AGE) +$0.32 (0.73%) to $44.01.

The Philadelphia SOX (Semiconductor) index lost 5.76 points (1.22%), at 465.75

  • Broadcom (BRCM) -$1.39 (3.2%) to $41.92;
  • Novellus Systems (NVLS) -$0.73 (2.62%) to $27.13;
  • Micron Technology (MU) -$0.29 (2.51%) to $11.25;
  • Maxim Integrated (MXIM) -$1.05 (2.39%) to $42.84; and
  • Applied Materials (AMAT) -$0.38 (2.14%) to $17.40.

Gold & Silver Markets

Gold rose $2.30 (0.53%) to close at $438.90 per ounce as the USDX softened. Gold bulls are still too bullish - they need a pants-kickin', but if Gold gets above $445 it's all over, Rover.

The Gold Bugs Index rose 4.22 points (2.07%), at 208.06

  • Coeur d'Alene (CDE) +$0.25 (6.7%) to $3.98;
  • Eldorado Gold (EGO) +$0.13 (4.73%) to $2.88;
  • Kinross Gold (KGC) +$0.27 (4.52%) to $6.25;
  • Randgold Resources (GOLD) +$0.40 (2.81%) to $14.65; and
  • Glamis Gold (GLG) +$0.49 (2.66%) to $18.94.

Silver rose $0.04 (0.61%) to close at $7.08 per ounce. The Gold and Silver Index (XAU) gained 1.34 points (1.42%), closing at 95.53 points.

  • Kinross Gold (KGC) +$0.27 (4.52%) to $6.25;
  • Meridian Gold (MDG) +$0.50 (2.64%) to $19.43;
  • Freeport McMoran (FCX) +$0.98 (2.39%) to $41.91; and
  • Goldcorp (GG) +$0.37 (2.18%) to $17.32.
Precious Metals and Indices
PHLX Gold and Silver Index95.531.341.42%
AMEX Gold BUGS Index208.064.222.07%

Oil Market

Oil was firmer, rising by $1.83 per barrel, closing at $64.90 per barrel. Yowza. Who woulda thunk it? Inventories go up, and prices - after a weensy wobble, to attract the dumb money - go absolute berserk in what seems like the opposite direction.

How odd.

The Oil and Gas Index (XOI) posted a rise of 13.94 points (1.42%), at 992.87

  • Sunoco (SUN) +$1.57 (2.45%) to $65.72;
  • Kerr Mcgee (KMG) +$1.78 (2.1%) to $86.39; and
  • ChevronTexaco (CVX) +$1.26 (2.06%) to $62.48.

The Oil service stocks (OSX) Index added 3.24 points (1.95%), at 169.25

  • Global Industries (GLBL) +$0.71 (6.6%) to $11.46;
  • Rowan Companies (RDC) +$1.63 (4.71%) to $36.21; and
  • Tidewater (TDW) +$1.27 (3.13%) to $41.89.
Energy Complex
Reuters CRB316.342.470.79%
Crude Oil Light Sweet64.91.832.9%
Heating Oil1.83880.063.5%
Natural Gas9.0710.424.88%
Unleaded Gas1.89630.074.06%
AMEX Oil Index992.8713.941.42%
Oil Service Index169.253.241.95%

Currency Markets

USD Exchange Rates
US Dollar Index87.6-0.26-0.3%
Australian Dollar0.76530.00410.54%
Swiss Franc1.2567-0.0032-0.25%
Canadian Dollar0.8260.0020.24%