Interdum stultus opportuna loquitur...

Thursday, August 18, 2005

USRant: I'm Off Back to Bed...

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That grating noise you can hear is my teeth - since the S&P took the fact that I got to sleep at 3:50 a.m. as a signal that it was free to do what it wanted, rather than what it was supposed to.

Per yesterday's USRant, it was supposed to bounce enough to get just above the level it was at when the first of Tuesday's divergences occurred. It fell exactly a point short. Bloody thing.

Still, everything worked - although oil continued to tank after I thought it would bounce. The bounce will happen tonight, Oz time - should still get back up to $64.60 or so. As I explained in the post describing the likelihood of a bounce in Crude, playing for the bounce was one for the 'nerves-of-steel' psychotype. Even if it does get back up to $64.50, it would represent a bad value trade - holding through a $1.20 decline for a 50c net advance is just plain dumb. (It's like people who buy a stock at $1, hold it while it falls to 35c, then congratulate themselves for being a trader when they exit six months later at $1.05).

Oil had become mind-bogglingly oversold (the 15-minute CCI[14] was down at -600 when Crude dropped to $64.50... and the CCI improved from there - a divergence). Still, it dropped a further $1.20 - and now my previous forecast of under $60 this week doesn't look quite so far-fetched. I often talk about 'slipperiness' in a market - well, the Crude market stopped looking downwards-slippery when it got to the low $63s, but still had a teensy bit of momentum.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation - a $7.5billion, overnight repurchase entirely in T-backed collateral undertaken at a 5.1 basis point discount to the Fed Funds Rate (FFR). that's a bit mpore like it - at least they are handing out cash at a discount, and pretty good wodges of it, too.

Major US Indices

The Dow Jones Industrial Average rose 37.26 points (0.35%), closing out the day at 10550.71 points (10550-ish). The index hit an intraday high of 10588.93, after dipping to a low of 10503.37 (10500-ish) in the first minute of the session. There was a weensy divergence right at the intraday top, but it was one of those ones that is on the border between madness and reality; there was an hour between peaks (so there were four bars), and it was valid on all the major indices... there's no harm if you ignored it (as I did - I was asleep by then... just).

Within the blue-chip index, 17 stocks rose, the biggest gainers being Hewlett Packard (HPQ, +13.16% to $26.82) and Mcdonalds (MCD, +2.11% to $33.87), which accounted for 30 Dow points between them. Losers in the Dow numbered 12 and were led by Exxon Mobil (XOM, -1.51% to $58.18) and Alcoa (AA, -1.49% to $28.39), with these two stocks contributing -11 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 253.1m shares to 98.9m.

The broader S&P500 gained 0.9 points (0.07%), to 1220.24. Within the index, gainers numbered 272, while 208 S&P500 stocks fell for the day. Volume was tilted 1.5:1 in favour of the winners with 1016.89 million units traded in the winners as compared with 665.97 million traded in the losers. Notice how much weaker the S&P was compared with the Dow (and also weaker than the Nasdaq, below)? That tells you something.

Over at Times Square, the Nasdaq Composite posted a rise of 8.09 points (0.38%), to close at 2145.15, while larger-cap technology issues fared better with the Nasdaq100 adding 8.28 points (0.53%), to end at 1582.29 points. Within the tech benchmark, gainers numbered 62, while 31 Nasdaq100 stocks fell for the day. Volume was tilted 3.0:1 in favour of the winners with 509.60 million traded in the winners compared to 167.99 million in the losers .

NYSE Volume was super-chunky, with 1.89 billion shares changing hands, while Nasdaq Volume was about average, with 1.57 billion shares traded.

Major Market Statistics
Dow Jones Industrial Average10550.7137.260.35%
Nasdaq Composite2145.158.090.38%
NYSE Volume1.89bn--
Nasdaq Volume1.57bn--


My 9-stock "bellwethers" group rose by an average of 0.23%

  • General Electric (GE) +$0.22 (0.65%) to $34.10;
  • Citigroup (C) -$0.04 (0.09%) to $44.10;
  • Wal Mart (WMT) -$0.31 (0.65%) to $47.11;
  • I.B.M. (IBM) -$0.00 (0%) to $81.30;
  • Intel (INTC) +$0.09 (0.35%) to $26.09;
  • Cisco Systems (CSCO) +$0.21 (1.19%) to $17.84;
  • eBay (EBAY) +$0.09 (0.22%) to $40.47;
  • Fannie Mae (FNM) +$0.06 (0.12%) to $50.31; and
  • Freddie Mac (FRE) +$0.18 (0.3%) to $61.18.

Market Breadth & Internals

NYSE declining Issues beat out advancers by 1750 to 1487, for a single-day A/D reading of -263; Nasdaq gainers trumped losers by 1549 to 1461. The 10-day moving average of the A/D line fell to -189.8 on the NYSE, while the 10dma of the Nasdaq A/D rose to -255.3.

On the NYSE declining volume was greater than volume in advancing issues by 994.7 to 847.5 million shares; Nasdaq advancing volume was greater than volume in decliners by 1019.1 to 508.8 million shares.

68 NYSE-listed stocks rose to new 52-week highs, and 29 posted fresh 52-week lows, while on the Nasdaq there were 56 stocks that hit new 52-week highs, and 37 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)847.471019.12
Declining Volume (m)994.73508.81
New Highs6856
New Lows2937

Market Sentiment Statistics
CBOE Volatility Index13.3-0.22-1.63%
CBOE Nasdaq Volatility Index15.57-0.63-3.89%
Equity Put-Call Ratio0.86-0.09-9.47%
10-day PCR0.630.023.28%
SPX-VIX Ratio91.71.561.73%

Bond Market Analysis

Bonds fell hard at the long end, with the yield on the benchmark 30-year Treasury bond rising 4.2 bps to 4.475%. The 30-year bond future dropped over half a point (it actually fell 18/32) to close at 115-19 - just one tick above its intraday low.

The middle of the yield curve was broadly lower in price: five year yields rose to 4.142%, and ten-year yields rose to 4.273%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps tighter at -7.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 49.0 bps for 10-year AAA, and 83.5 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 2.0 bps tighter at 30.0 basis points and the 10-year AAA-A spread 1.0 bps looser at 5.0 bps.

Treasury Yields
UST 13wk (yld)3.43500%
UST 2Y (yld)4.030.041%
UST 5Y (yld)4.1420.0461.12%
UST 10Y (yld)4.2730.0461.09%
UST 30Y (yld)4.4750.0420.95%

The Banks Index advanced 0.07 points (0.07%), ending the day at 99.17; within the index,

  • Bank Of NY (BK) +$0.38 (1.25%) to $30.81;
  • Mellon Financial (MEL) +$0.37 (1.21%) to $31.05;
  • Northern Trust (NTRS) +$0.50 (1.02%) to $49.63;
  • Wachovia (WB) +$0.31 (0.62%) to $50.64; and
  • M&T Bank Corp (MTB) +$0.64 (0.6%) to $107.90.

The Broker-dealer Index shed 0.18 points (0.11%), closing at 169.93; the ticket clippers lined up as follows -

  • Raymond James (RJF) -$0.56 (1.87%) to $29.45;
  • Jeffries Group (JEF) -$0.56 (1.39%) to $39.70;
  • Merrill Lynch (MER) -$0.70 (1.2%) to $57.50;
  • Goldman Sachs (GS) -$0.95 (0.85%) to $111.13; and
  • Bear Stearns (BSC) -$0.45 (0.45%) to $99.85.

The Philadelphia SOX (Semiconductor) index gained 5.95 points (1.3%), at 464.15

  • Applied Materials (AMAT) +$1.05 (6.12%) to $18.22;
  • Advanced Micro Devices (AMD) +$0.89 (4.38%) to $21.19;
  • Teradyne (TER) +$0.59 (3.91%) to $15.68;
  • Freescale Semiconductors (FSL-B) +$0.91 (3.74%) to $25.21; and
  • Novellus Systems (NVLS) +$0.89 (3.37%) to $27.33.

Gold & Silver Markets

I mentioned yesterday that Gold bulls were getting cocky, and that $450 looked like K2. Right on cue, Gold fell by $6.30 (1.41%) to close at $442 per ounce. Note I did not call a short in Gold - from me you will find that shorts in Gold will be very few and far between; it's the one market where - for me at least - shorting is nearly taboo. Not because I get twitterpated about gold, but because one day this market is going to literally explode upwards, and it's going to happen from a point where it seems a perfect shorting candidate. 

Gold Bugs Index slid 6.81 points (3.16%), to end the session at 208.92

  • Hecla Mining (HL) -$0.24 (5.93%) to $3.81;
  • Freeport McMoran (FCX) -$1.78 (4.18%) to $40.76;
  • Harmony Gold (HMY) -$0.36 (4.05%) to $8.52;
  • Meridian Gold (MDG) -$0.81 (4.01%) to $19.38; and
  • Kinross Gold (KGC) -$0.27 (3.99%) to $6.50.

Silver fell by $0.05 (0.71%) to close at $6.99 per ounce. The Gold and Silver Index (XAU) lost 2.74 points (2.77%), ending the day at 96.05 points.

  • Freeport McMoran (FCX) -$1.78 (4.18%) to $40.76;
  • Harmony Gold (HMY) -$0.36 (4.05%) to $8.52;
  • Meridian Gold (MDG) -$0.81 (4.01%) to $19.38; and
  • Kinross Gold (KGC) -$0.27 (3.99%) to $6.50.
Precious Metals and Indices
PHLX Gold and Silver Index96.05-2.74-2.77%
AMEX Gold BUGS Index208.92-6.81-3.16%

Oil Market

Ah Oil. You're so damned predictable. Thanks for being "you", but now get your ass into gear and bounce. You don't have to bounce much, just enough to get back above $64.25 or so.

This session Oil's decline continue, with front-month crude losing significant ground despite mildly bullish AEI Inventory data (which showed a build of just 0.3m barrels, and a huge drawdown in distillate stocks). After a little spike following the data (Oh Dear... the big "Nuffie Oil Traders at Work" sign), the black stuff kicked the living crap out of longs,  shedding $2.83 per barrel fopr the session and closing at $63.25 per barrel. 

The Oil and Gas Index (XOI) dipped 25.17 points (2.58%), to end the session at 952.29

  • Sunoco (SUN) -$3.34 (5.17%) to $61.23;
  • ConocoPhillips (COP) -$2.38 (3.71%) to $61.70; and
  • Amerada Hess (AHC) -$3.97 (3.16%) to $121.76.

The Oil service stocks (OSX) Index declined 3.71 points (2.27%), at 159.63

  • BJ Services (BJS) -$1.85 (3.04%) to $59.05;
  • Cooper Cameron (CAM) -$2.04 (2.88%) to $68.83; and
  • Rowan Companies (RDC) -$0.94 (2.72%) to $33.58.
Energy Complex
Reuters CRB310.11-1.96-0.63%
Crude Oil Light Sweet63.25-2.83-4.28%
Heating Oil1.7839-0.08-4.3%
Natural Gas9.391-0.36-3.7%
Unleaded Gas1.891-0.09-4.67%
AMEX Oil Index952.29-25.17-2.58%
Oil Service Index159.63-3.71-2.27%

Currency Markets

USD Exchange Rates
US Dollar Index880.610.7%
Australian Dollar0.7605-0.0089-1.16%
Swiss Franc1.26210.00770.61%
Canadian Dollar0.8242-0.0101-1.21%