Interdum stultus opportuna loquitur...

Saturday, August 20, 2005

USRant: Well, It Tried...

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Divergences are wunnerful, but it can be disconcerting when the major indices don't agree on whether or not one actually occurred.

Today, there was one that - to quote Australian economist John Freebairn - stood out like dog's nuts. (Freebairn was a man whose intellect was obvious if you could ignore his taste for the vernacular - like any genuine near-genius he was determined not to be shackled by conversational niceties). 

Today's divergence appeared on the S&P, and only on the S&P. It was textbook, and as usual it worked... examine the chart:

S&P Intraday Chart

As I said, there was no divergence on the Dow or Nasdaq100 chart - the Dow failed to make a new high at the time the S&P and Nasdaq made their new swing highs, and the Nasdaq100 made its new swing high without a divergence on the CCI.

Oh - and that bounce I called for in Oil (which was supposed to run far enough upward to save me from embarrassment about calling a 'stopless' long from $64) did the business well and truly... Oil got all the way to the $64.60  bounce target and kept right on going. Yes, it was a day late, but it was a full dollar better than expected.

Oil didn't get down as far as I thought it would last Friday - I had postulated that it could get gutted to the tune of a drop below $60 - but given that it got to $62.25 and was showing all manner of divergences, I am putting the call and the reversal in the RantRecord.

I'm crediting myself with a $66.75 entry and a $64 exit short, and a $64 entry long with the exit on the first divergence above $64.60 - which happened to be on the closing bar of the day, at $65.35. Not bad - capturing a $4.10 ($4100 per contract on margin of $4050) round trip in a week where the close-to-close change in Crude was a fall of $1.50. That's what I call "adding alpha".

Time to digress - I've been concentrating way too hard lately.

Just one non-market whinge for today: Spare me all the fucking bleeding heart crap about the illegal occupants of Gaza. Spare me the attempts at finding a crying photogenic woman whose home - built on land occupied in violation of UN Security Council Resolutions - is finally being taken off her (with a hundred grand's worth of compenasation. Nobody cried for (or compensated, or put a camera in front of) the 25000 Palestinian homeowners whose houses were bulldozed by the IDF - but there are more journalists in Israel covering this mock 'pullout' than there were at the Princess Di's funeral. 

If you occupy territory in violation of international law, you don't get a fucking prize when you finally comply with international law. You don't get sympathy, you don't get more aid, you don't get Jack Shit. And the stage-managed 'confrontation' between the illegal occupiers and the IDF? Spare me! 

One thing would have caused a mass exodus the like of which hasn't been seen since Moses said "Bugger this - I'm off... anyone else coming?" All that was required to get those Eastern European Ashkenazi reffos off Gaza was to remove all IDF protection for the 'settlements'. (I hate that term... and fuck calling them 'settlers' - it's like referring to Eichmann as an "Office Manager" or Goebbels as a "Marketing Expert"). One thing is for sure - they might pretend to be motivated by a Swaggart-like adherence to some ancient fairy tale, but without the IDF tanks and snipers to knock off those pesky Palestinian schoolkids, the lunatic Ashkenazi fringe would not set one sandalled foot in Gaza or the West Bank.

Where are Phony B.Liar's bromides about the importance of international law? How come UNSC Resolutions were critical stuff when Saddam was (supposedly) flouting them, but it's fine if every Israeli givernment since Moshe Dyan's does the same thing? These things - and more besides - intrigue me.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation - a $3billion, weekend repurchase entirely in T-backed collateral undertaken at a 7.1 basis point premium to the Fed Funds Rate (FFR).

Hell, that ain't gonna get your lunch bill paid, let alone give da Boyz reason to crotch-grab the shorts.

Major US Indices

No news, bugger-all repurchase dough, a Friday and a market that (as I showed during the week) is correcting from a very significant weekly sell divergence. Did you seriously expect the opening gallop to be continued through the session?

After the first hour was finished with, the dow was riding high - it was up nearly 75 points, and touched an intraday high of 10626.26 (10625-ish) - it paused for 15 minutes on the way to pay its respects to 10600.

From there it all went pear-shaped pretty quickly - while the S&P and Nasdaq made new, higher intraday highs a about 11:40 a.m. NY time, the Dow failed to do so. So you were faced with a littel intraday double top on the Dow, a %R overbought/CCI divergence on the S&P, and only the "crazy cousin" - the Nasdaq - behaving as if everything was just jim-dandy. If I had to ignore one index, it would always be the Nasdaq.

The Dow slid all afternoon, eventually closing just above its opening level (it never fell below the opening level) and registering a gain of 4.3 points (0.04%) for the day, finishing at 10559.23 points. The index hit an intraday high of 10626.26, after opening at 10552.7 points. 

Within the blue-chip index, 12 stocks rose, the biggest gainers being Caterpillar (CAT, +3.14% to $54.82) and International Business Machines (IBM, +1.98% to $82.76), which accounted for 26 Dow points between them. Losers in the Dow numbered 18 and were led by Merck (MRK, -7.73% to $28.06) and Wal Mart (WMT, -1.40% to $46.58), with these two stocks contributing -24 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 242.2m shares to 70.3m.

The broader S&P500 added 0.69 points (0.06%), to end the session at 1219.71. Within the index, gainers numbered 273, while 204 S&P500 stocks fell for the day. Volume was tilted 1.1:1 in favour of the losers with 725.15 million units traded in the winners as compared with 641.40 million traded in the losers .

Over at Times Square, the Nasdaq Composite lost 0.52 points (0.02%), to close at 2135.56, while larger-cap technology issues fared worse with the Nasdaq100 losing 2.04 points (0.13%), to end at 1573.72 points. Within the tech benchmark, gainers numbered 43, while 52 Nasdaq100 stocks fell for the day. Volume was tilted 1.4:1 in favour of the losers with 312.44 million traded in the losers compared to 226.73 million in the winners .

NYSE Volume was solid, with 1.57 billion shares changing hands, while Nasdaq Volume was modest, with 1.24 billion shares traded.

Major Market Statistics
Dow Jones Industrial Average10559.234.30.04%
Nasdaq Composite2135.56-0.52-0.02%
NYSE Volume1.57bn--
Nasdaq Volume1.24bn--


My 9-stock "bellwethers" group rose by an average of 0.06%

  • General Electric (GE) -$0.04 (0.12%) to $33.95;
  • Citigroup (C) -$0.05 (0.11%) to $44.16;
  • Wal Mart (WMT) -$0.66 (1.4%) to $46.58;
  • I.B.M. (IBM) +$1.61 (1.98%) to $82.76;
  • Intel (INTC) -$0.23 (0.89%) to $25.65;
  • Cisco Systems (CSCO) +$0.16 (0.91%) to $17.82;
  • eBay (EBAY) +$0.08 (0.2%) to $40.01;
  • Fannie Mae (FNM) +$0.07 (0.14%) to $50.83; and
  • Freddie Mac (FRE) -$0.10 (0.16%) to $60.88.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1798 to 1438 for a single-day A/D reading of 360; Nasdaq gainers trumped losers by 1580 to 1422. The 10-day moving average of the A/D line rose to -169.4 on the NYSE, while the 10dma of the Nasdaq A/D rose to -248.9.

NYSE advancing volume exceeded volume in decliners by 787.1 to 738.6 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 652.1 to 571.6 million shares.

59 NYSE-listed stocks rose to new 52-week highs, and 26 posted fresh 52-week lows, while on the Nasdaq there were 40 stocks that hit new 52-week highs, and 39 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)787.13571.61
Declining Volume (m)738.6652.1
New Highs5940
New Lows2639

Market Sentiment Statistics
CBOE Volatility Index13.4200%
CBOE Nasdaq Volatility Index16.160.875.69%
Equity Put-Call Ratio0.840.1318.31%
10-day PCR0.6300%
SPX-VIX Ratio90.90.050.06%

Bond Market Analysis

Bonds rose a touch at the long end, with the yield on the benchmark 30-year Treasury bond shedding 0.6 bps to 4.421%.

The middle of the yield curve was mixed: five year yields rose to 4.079%, and ten-year yields fell to 4.211%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps wider at -5.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 58.0 bps for 10-year AAA, and 93.5 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 12.0 bps tighter at 17.0 basis points and the 10-year AAA-A spread 3.0 bps tighter at -5.0 bps.

Treasury Yields
UST 13wk (yld)3.42800%
UST 2Y (yld)40.020.5%
UST 5Y (yld)4.0790.0020.05%
UST 10Y (yld)4.211-0.005-0.12%
UST 30Y (yld)4.421-0.006-0.14%

The Banks Index added 0.29 points (0.29%), ending the day at 99.65; within the index,

  • Mellon Financial (MEL) +$1.25 (4.02%) to $32.36;
  • State Street (STT) +$0.75 (1.58%) to $48.17;
  • Northern Trust (NTRS) +$0.71 (1.43%) to $50.49;
  • BB&T Corp (BBT) +$0.41 (1.01%) to $41.00; and
  • Bank Of NY (BK) +$0.30 (0.98%) to $31.00.

The Broker-dealer Index posted a rise of 0.54 points (0.32%), to end the session at 170.19; the ticket clippers lined up as follows -

  • Jeffries Group (JEF) +$0.60 (1.53%) to $39.90;
  • Legg Mason (LM) +$1.24 (1.17%) to $107.22;
  • Bear Stearns (BSC) +$0.85 (0.86%) to $100.16;
  • Merrill Lynch (MER) +$0.38 (0.66%) to $58.35; and
  • Goldman Sachs (GS) +$0.42 (0.38%) to $111.27.

The Philadelphia SOX (Semiconductor) index added 0.99 points (0.21%), ending the day at 462.27

  • Teradyne (TER) +$0.35 (2.28%) to $15.69;
  • Taiwan Semiconductors (TSM) +$0.13 (1.58%) to $8.37;
  • Broadcom (BRCM) +$0.60 (1.45%) to $41.88;
  • National Semiconductors (NSM) +$0.33 (1.4%) to $23.92; and
  • Infineon Tech (IFX) +$0.13 (1.35%) to $9.76.

Gold & Silver Markets

Gold fell by $2.4 (0.54%) to close at $439.10 per ounce. All of a sudden $450 no longer looks lie K2 (as I said on Monday or thereabouts): it now looks more like the Dandenongs - but only because now it's being viewed from a much greater distance.

The Gold Bugs Index advanced 0.88 points (0.42%), ending the day at 209.07

  • Randgold Resources (GOLD) +$0.39 (2.84%) to $14.11;
  • Goldcorp (GG) +$0.37 (2.16%) to $17.47;
  • Glamis Gold (GLG) +$0.20 (1.08%) to $18.68;
  • Freeport McMoran (FCX) +$0.31 (0.76%) to $41.12; and
  • Gold Fields (GFI) +$0.07 (0.63%) to $11.16.

Silver rose $0.01 (0.14%) to close at $7.01 per ounce. The Gold and Silver Index (XAU) gained 0.38 points (0.4%), closing at 96.22 points.

  • Goldcorp (GG) +$0.37 (2.16%) to $17.47;
  • Durban Rooderpoert Deep (DROOY) +$0.01 (0.96%) to $1.05;
  • Freeport McMoran (FCX) +$0.31 (0.76%) to $41.12; and
  • Gold Fields (GFI) +$0.07 (0.63%) to $11.16.
Precious Metals and Indices
PHLX Gold and Silver Index96.220.380.4%
AMEX Gold BUGS Index209.070.880.42%

Oil Market

Oil was firmer, rising by $2.08 per barrel, closing at $65.35 per barrel. It took an additional 24 hours to do its job (which, as with all markets, is to make me look good). 

The strong divergence at the close portends a high likelihood that da Boyz will engineer an attempted fail of a new high next week. Perhaps a break of the previous high by a few cents (up to 50c) just to lure in more nuffnuffs, and then BANG. da Boyz will have less mercy on the nuffies than an IDF sniper has on a Palestinian schoolgirl.

The Oil and Gas Index (XOI) posted a rise of 16.58 points (1.75%), to end the session at 964.84

  • Kerr Mcgee (KMG) +$2.74 (3.29%) to $85.99;
  • ConocoPhillips (COP) +$1.47 (2.39%) to $63.07; and
  • Sunoco (SUN) +$1.38 (2.26%) to $62.48.

The Oil service stocks (OSX) Index posted a rise of 2.52 points (1.58%), at 162.25

  • National Oilwells/Varco (NOV) +$1.67 (2.95%) to $58.32;
  • Transocean (RIG) +$1.52 (2.75%) to $56.81; and
  • BJ Services (BJS) +$1.41 (2.38%) to $60.55.
Energy Complex
Reuters CRB310.891.20.39%
Crude Oil Light Sweet65.352.083.29%
Heating Oil1.82280.031.8%
Natural Gas9.1110.182.05%
Unleaded Gas1.90390.042.2%
AMEX Oil Index964.8416.581.75%
Oil Service Index162.252.521.58%

Currency Markets

USD Exchange Rates
US Dollar Index88.60.060.07%
Australian Dollar0.7515-0.0018-0.24%
Swiss Franc1.27570.00490.39%
Canadian Dollar0.82570.00510.62%