Interdum stultus opportuna loquitur...

Saturday, August 27, 2005

USRant: Nice Work If You Can Get It...

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

Well, the ducks lined up beautifully in the Oil market, and the tech signals in the equity indices were just to die for. The US Dollar is somehow managing to hold its head up - at the moment I get the feeling we are at that point in Rocky III (or IV... I forget) where Mr T (or Ivan Drago... I forget) is beating the living crap out of Rocky, but he's got that glint in his eye...

Truth be told, I stopped watching Rocky movies after the second one (or the third one - I forget)... I was insulted by the notion that they expected me to believe that a bloke could get hit in the head that often in one fight and not require a good undertaker. The first story was OK as a morality tale about hard work and persistence and what-have-you... from there they got real bad real fast. 

Later, I was a bouncer at one of the premiers of one of the movies (I forget which) and noticed that 'Big Sly' is about the size of my six year old nephew. I don't want to denigrate boxers like Kostya Tzu (who is terrific) but the Rocky movies are about heavyweights and Stallone weighed about the same as one of my thighs (my thighs have since lost weight - I look almost normal now).

Not sure why that popped into my head. I was thinking of my old bouncing days yesterday while listening to Johnny Diesel (I worked at his gigs too). Fun times - hittin' drunk tattooed dickheads and gettin' paid for it... almost as much fun as being a smutterman.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation - a $8.25billion, weekend repurchase -whch might have helped, except that not a single cent was in T-backed collateral. 

What the hell are the Central Wankers thinking? How can Da Boyz "pump up the jam" without a little help from Greensplatt and his mates at the Sluzhba

I know - the Fed's nothing like the KGB - but then again back in the old KGB days the Sluzhba was more like the darkest reaches of the NKVD (who were like the Gestapo), so what's in a name? The effect I was trying to get was of a highly secretive organisation that is part of a structure which believes in a Soviet style of central planning... you know, the type of thing we spent trillions of dollars trying to prevent, even as our tax rates as a proportion of household income climbed and climbed.

Major US Indices

There were two intraday 'signals', and they did the business. The first was our old friend the CCI divergence, and it happened on the bar before the low bar of the day... nice. There's nothing like Ol' Faithful ...

The second was a massive 'sell on the strength of this alone' overbought CCI at the high of the subsequent bounce. I've said it before - I will not use the 'standard' trigger levels for %R or CCI... I wait for the market to get much more extreme than %R=20/80 and/or CCI=±100. A bit of patience is all you need. Check out the chart.

Dow 15-minute chart

Recall what I said the other day - that a single point (net) per day trading S&P futures results in your funds-at-risk being doubled every eight weeks; getting that point a day is often not as easy as it might appear, but that's mostly because  emotions get in the road, rather than a failure of well-chosen analysis techniques. It's the same wit hstocks - everybody knows that small-cap value stocks provide significant and consistent outperformance over long investment horizons, but everybody's Politburo-mandated super accounts holds the New Corpse at or near market weight. 'Professional' Fund mismanagers know the theory of how to outperform, yet they have portfolios full of shit... most of them, anyhow.

The Dow Jones Industrial Average dropped hard just after the open: blame the bad Consumer Sentiment numbers if you want, but a top was due (back on July 14-21, at 10720-30, like I said) and so far it's been prettty vapid as pullbacks go. After the technical bounce presaged by the divergence, the Dow lost steam and eventually closed with a loss of  53.34 points (0.51%), closing out the day at 10397.29 points. 

It wa another relaitvely narrow-range day: The index hit an intraday high of 10450.95 at the open (and challenged that level on the bounce off the lows), and fell as low as 10383.98 just after the CCI divergence was registered.

Within the blue-chip index, 7 stocks rose, the biggest gainers being Wal Mart (WMT, +0.91% to $45.70) and Mcdonalds (MCD, +0.54% to $33.48), which accounted for 5 Dow points between them. Losers in the Dow numbered 22 and were led by JPMorganChase (JPM, -1.38% to $33.65) and Boeing (BA, -1.34% to $66.31), with these two stocks contributing -11 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 223.1m shares to 68.7m.

The broader S&P500 dipped 7.27 points (0.6%), ending the day at 1205.1. Within the index, gainers numbered 80, while 403 S&P500 stocks fell for the day. Volume was tilted 3.4:1 in favour of the losers with 1013.82 million units traded in the losers as compared with 295.89 million traded in the winners .

Over at Times Square, the Nasdaq Composite shed 13.6 points (0.64%), to close at 2120.77, while larger-cap technology issues fared better with the Nasdaq100 losing 7.04 points (0.45%), to end at 1558.84 points. Within the tech benchmark, gainers numbered 22, while 73 Nasdaq100 stocks fell for the day. Volume was tilted 2.3:1 in favour of the losers with 341.98 million traded in the losers compared to 149.62 million in the winners .

NYSE Volume was chunky, with 1.54 billion shares changing hands, while Nasdaq Volume was modest, with 1.3 billion shares traded.

Major Market Statistics
Dow Jones Industrial Average10397.29-53.34-0.51%
Nasdaq Composite2120.77-13.6-0.64%
NYSE Volume1.54bn--
Nasdaq Volume1.3bn--


My 9-stock "bellwethers" group fell by an average of 0.39%; take a look (somewhere else, for now) at a chart of Fannie and Freddie (the Toxic Twins) to get an idea of why the Agency and Mortgage-backed repurchases were so high today.

  • General Electric (GE) -$0.12 (0.36%) to $33.38;
  • Citigroup (C) -$0.17 (0.4%) to $43.10;
  • Wal Mart (WMT) +$0.41 (0.91%) to $45.70;
  • I.B.M. (IBM) -$0.72 (0.89%) to $80.38;
  • Intel (INTC) -$0.05 (0.2%) to $25.41;
  • Cisco Systems (CSCO) -$0.08 (0.46%) to $17.40;
  • eBay (EBAY) +$0.09 (0.23%) to $38.97;
  • Fannie Mae (FNM) -$0.56 (1.1%) to $50.41; and
  • Freddie Mac (FRE) -$0.73 (1.21%) to $59.61.

Market Breadth & Internals

NYSE declining Issues beat out advancers by 2265 to 983, for a single-day A/D reading of -1282; and Nasdaq losers exceeded gainers by 2050 to 941. The 10-day moving average of the A/D line fell to -219.5 on the NYSE, while the 10dma of the Nasdaq A/D fell to -282.5.

On the NYSE declining volume was greater than volume in advancing issues by 1206.4 to 309.9 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 894.6 to 376.9 million shares.

68 NYSE-listed stocks rose to new 52-week highs, and 37 posted fresh 52-week lows, while on the Nasdaq there were 54 stocks that hit new 52-week highs, and 45 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)309.89376.94
Declining Volume (m)1206.37894.57
New Highs6854
New Lows3745

Market Sentiment Statistics
CBOE Volatility Index13.72-0.01-0.07%
CBOE Nasdaq Volatility Index15.370.020.13%
Equity Put-Call Ratio0.990.3145.59%
10-day PCR0.6300%
SPX-VIX Ratio87.8-0.47-0.53%

Bond Market Analysis

Bonds fell a little at the long end, right on cue. I mentioned them yesterday, but not explicitly as a short: here's what I said:

The bounce I foresaw (when the 30-year bond futures were trading just under 114) is just about spent, with the 30-year futures hitting 117-03 intraday today before settling at 117.

No explicit 'short this thing', so I'm not claiming it for the RantRecord - but I've let it be known for ages that every bounce in the bonds is to be shorted, so those of you with ears to hear could at least have changed your biases.

Today the 30-year future dropped 10/32 to 116-22/32 (and got ass low as 116-17/32 and the yield on the benchmark 30-year Treasury bond rising 1.6 bps to 4.381%.

The middle of the yield curve was broadly lower: five year yields rose to 4.084%, and ten-year yields rose to 4.189%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps tighter at -8.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 51.0 bps for 10-year AAA, and 82.5 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 4.0 bps tighter at 32.0 basis points and the 10-year AAA-A spread 1.0 bps tighter at 2.0 bps.

Treasury Yields
UST 13wk (yld)3.46700%
UST 2Y (yld)
UST 5Y (yld)4.0840.0461.14%
UST 10Y (yld)4.1890.0290.7%
UST 30Y (yld)4.3810.0160.37%

The Banks Index slid 1.23 points (1.25%), at 97.14; within the index,

  • National City Corp (NCC) -$0.93 (2.56%) to $35.38;
  • Washington Mutual (WM) -$0.83 (2%) to $40.75;
  • Golden West Financial (GDW) -$1.19 (1.89%) to $61.91;
  • BB&T Corp (BBT) -$0.76 (1.87%) to $39.84; and
  • Keycorp (KEY) -$0.58 (1.75%) to $32.60.

The Broker-dealer Index shed 0.78 points (0.46%), closing at 167.53; the ticket clippers lined up as follows -

  • E*Trade (ET) -$0.29 (1.77%) to $16.08;
  • Charles Schwab (SCH) -$0.14 (1.03%) to $13.47;
  • Ameritrade (AMTD) -$0.17 (0.84%) to $20.01;
  • Goldman Sachs (GS) -$0.75 (0.68%) to $109.75; and
  • Raymond James (RJF) -$0.20 (0.67%) to $29.52.

The Philadelphia SOX (Semiconductor) index lost 3.03 points (0.65%), closing at 464.02

  • Marvell Tech Group (MRVL) -$1.06 (2.28%) to $45.36;
  • Infineon Tech (IFX) -$0.20 (2.06%) to $9.52;
  • Altera (ALTR) -$0.42 (1.93%) to $21.35;
  • Micron Technology (MU) -$0.17 (1.5%) to $11.18; and
  • Xilinx (XLNX) -$0.39 (1.43%) to $26.87.

Gold & Silver Markets

Gold fell by $1 (0.23%) to close at $439 per ounce. I posited yesterday that Gold might have a hard time overcoing Silver's recent weakness (which continued today, confirming the technical damage I mentioned yesteday).

The Gold Bugs Index posted a rise of 2.2 points (1.09%), to 203.49

  • Eldorado Gold (EGO) +$0.66 (22.84%) to $3.55;
  • Glamis Gold (GLG) +$0.31 (1.68%) to $18.81;
  • Meridian Gold (MDG) +$0.25 (1.36%) to $18.60;
  • Goldcorp (GG) +$0.18 (1.04%) to $17.55; and
  • Golden Star (GSS) +$0.02 (0.68%) to $2.97.

Silver fell another $0.09 (1.32%) to close at $6.74 per ounce. 

The Gold and Silver Index (XAU) lost 0.39 points (0.41%), to 93.87 points.

  • Placer Dome (PDG) -$0.45 (3.08%) to $14.17;
  • Harmony Gold (HMY) -$0.12 (1.58%) to $7.47;
  • Durban Rooderpoert Deep (DROOY) -$0.01 (0.98%) to $1.01; and
  • Freeport McMoran (FCX) -$0.39 (0.97%) to $39.85.
Precious Metals and Indices
PHLX Gold and Silver Index93.87-0.39-0.41%
AMEX Gold BUGS Index203.492.21.09%

Oil Market

Oil lost ground, shedding $1.32 per barrel, closing at $66.13 per barrel. It behaved exactly as I indicated it would - a rush of new, dumb money took it to $67.95 before the knivescame out and a bunch of nuffie-guts was spilt.

Here are my thoughts from the last two sessions regarding Crude - see if you can match it to a chart...

Wednesday:'s up at $67.81 in the after-market... get ready for a flood of nuffies on the long side over the next day or so, then another massacre.


...the flood of nuffnuffs certainly didn't happen today - give it time. There is a genuine need of a new bunch of dumb, new, inexperienced longs in this market - the cleanout last week got rid of quite a few, I'm picking.

And today we got a rush from $67.10 to $67.95 before a gut-wrenching slide from the high all the wy down to $65.90 (the intraday low).

See? This analysis shit isn't hard: find out what dumbshits are doin', and bet against them when the time is right.

The Oil and Gas Index (XOI) lost 11.74 points (1.21%), ending the day at 955.37

  • Repsol YPF (REP) -$0.69 (2.38%) to $28.32;
  • Occidental Petroleum (OXY) -$1.76 (2.2%) to $78.17; and
  • ConocoPhillips (COP) -$1.16 (1.84%) to $61.88.

The Oil service stocks (OSX) Index declined 2.04 points (1.25%), ending the day at 161.43

  • GlobalSantaFe (GSF) -$0.97 (2.1%) to $45.28;
  • Global Industries (GLBL) -$0.22 (2.03%) to $10.64; and
  • Transocean (RIG) -$1.08 (1.88%) to $56.25.
Energy Complex
Reuters CRB311.85-0.04-0.01%
Crude Oil Light Sweet66.13-1.32-1.96%
Heating Oil1.8712-0.04-1.92%
Natural Gas9.8060.040.37%
Unleaded Gas1.8534-0.02-1.3%
AMEX Oil Index955.37-11.74-1.21%
Oil Service Index161.43-2.04-1.25%

Currency Markets

USD Exchange Rates
US Dollar Index87.870.130.15%
Australian Dollar0.756-0.0033-0.43%
Swiss Franc1.25880.0020.16%
Canadian Dollar0.8335-0.0056-0.67%