Interdum stultus opportuna loquitur...

Saturday, September 03, 2005

USRant: The Ruin if Many a Sandwich??

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

Several important things happened this week; Crude Oil finally began to re-engage its highest-probability trend (downwards) from the Hurricane spike on monday and attempts to keep spiking on Tuesday, Wednesday, and Thrursday. The hurricane did what 'bad' events always do - lured in a load of gullible new long money who thought that now was the time to jump in... that oil was a 'sure bet': at a time whe, as I said last week, smart money is positioning short.

That smart money didn't get the short Crude home-run it was looking for last Friday, but it hardly had a rough time of it this week - shorting intraday overbought in the oil market worked a treat.

The news emanating from "Noo Awlins" (that's how it's supposed to be pronounced... 'Naowlins' to the locals) has been absolutely dire,  and a very good lesson for those who think the State gives a flying monkey's balls about its citizens. 

First, the withdrawal of Federal money for levee works (Katrina did not hit New Orleans at Cat5... it hit a 'glancing' blow at Cat3; the existing levees should have been adequate). Then, the abysmal 'response' - effectively, saying to folks "if you can get out, you bettah go stay with someone in Baton Rouge, cher, otherwise you're screwed, petit... Ah ga-ron-teee".

I wonder if there is still "a house in New Orleans they call the Rising Sun". If so, it's unlikely to be the ruin of any poor boys in the near future. 

Interestingly, in Naowlins a 'poor boy' (pronounced "poh'boy") is a tres-piquant sandwich-y arrangement on crusty bread, usually with catfish, oyster or shrimp filling laced with chili sauce, mayo  ... yum. This is why foreigners (like Eric Burden of the Animals) shouldn't sing about places they ain't been - it's the same reason Roxette lyrics are so crap - although a load of other folks (from Leadbelly through to Peter, Paul & Mary covered it before The Animals... the original dates from about 1920 and was released by Texas Alexander).

You might try and give me shit about the lyrics not being Roxette-ish because Burden didn't write them... but the guys who did write them were Kentuckians (foreigners to Naowlins)... who, being ignorant of Louisiana vernacular, inadvertantly wrote a song about house in New Orleans that has been the ruin of many a fish sandwich (although the sandwich itself is named for the poor black youths who used to beg for free sandwiches, or so the story goes). 

(The original house was - so legend has it - a brothel at 826-830 St. Louis St. between 1862 and 1874 and was purportedly named for its madam, Marianne LeSoleil Levant... the clue is in the surname: the original "po'boy" came from Madame Begues coffee stall in New Orleans' Old French Market in 1895, or so the story goes).

But anyhow - I digress... for some reason Louisiana - with its melange of French, German and English heritages - has always fascinated me; the Creole accent is, to my ear at least, the most interesting of all the Southern accents, and collectively the South is accent-wise, the most interesting place outside of Northern England.

Oops, I'm starting to digress again...

The point is - the moment the State is really needed, its priorities can be guaranteed to be elsewhere. 

And of course our little Chimp-in-Charge took his position as First Tongue in the Conga Line of Suckholes, handing over our taxpayers' money to an Adminsitration which is squandering its own treasure in a completely unnecessary war. Howard has no such tendencies when it comes to his own people; do you think CentreLink would hand out money to a rich rapist, just because Nature blew in one of their windows? After all - in the context of the US economy, that's what happened.

Thankfully, the 'mainstream media' was forced to follow the blogosphere, and finally started to get mock-angry about Bush's diversion of finds, bodies and materiel away from domestic first response and towards his faux-Cowboy Jihad. (The MSM only exhibits its fake emotions to the extent that it's written on the autocue).

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation - a $6.5billion, overnight repurchase entirely in T-backed collateral undertaken at a 1.1 basis point discount to the Fed Funds Rate (FFR). Good size, but not enough discount to make a real difference.

The pre-market data was pretty lame: Non-farm Payrolls weaker than expected at +169k (consensus +190k), of which 132k were generated by the CES Net Birth-Death model. In other words, they're phantom jobs

Government jobs were another 15k... so in other words, the 'non-phantom', non-parasitic bits of the US economy aren't hiring anybody. Elsewhere in that report, wages were stagnant (rising 0.1%), the 'unemployment rate' dipped to 4.9% (counting phantoms as employed, but not adding them to the labour force), and the average workweek was stable at 33.7 hours. 

Major US Indices

The Dow Jones Industrial Average slid 12.26 points (0.12%), closing out the day at 10447.37 points, down up a little under 50 points for the week.

After a first hour that had no momentum whatsoever, the Dow softened - broke the first hur low and tracked down to 10434.71 at midday. At that point, the first-hour low (10458) was still only broken by 24 points - so 'fading' the first hour low (with a tease-margin) worked. 

The 'natural' entry point was the first oversold condition below the first-hour low (marked on the chart below by the green bubble on the CCI - occuring at 10440-ish). If you were feeling particularly aggressive you could have had a stab at buying a joint breach of the first-hour low itself and the red moving average: that's the dark cyan bubble on the price chart - but without any oscillator-based reinforcement, that's a riskier strategy. I've said before - when the CCI hits ±200, you can almost fade that indicator by itself, but it requires wider stops since if there's any momentum the market will defy the CCI until a divergence forms.

Dow 15-minute chart

From the CCI-extreme, the Dow bounced pretty nicely, eventually stalling at an intraday high of 10497.45 (10500-ish) - this time breaching the first hour high by a tease margin. That, plus %R overbought, plus 10500 as a natural barrier... three ducks lined up, all quacking 'Short me... short me..." at the red balloon on the %R chart. 

So within an apparently-flaccid day with no genuine divergences, there were still several  moderately low-risk opportunities.

Within the blue-chip index, 15 stocks rose, the biggest gainers being Caterpillar (CAT, +2.30% to $58.25) and Merck (MRK, +1.48% to $28.83), which accounted for 14 Dow points between them. Losers in the Dow numbered 15 and were led by Boeing (BA, -2.50% to $64.34) and Exxon Mobil (XOM, -1.62% to $60.68), with these two stocks contributing -21 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 149.6m shares to 144.6m.

The broader S&P500 dipped 3.57 points (0.29%), at 1218.02 - up 13 points for the week (a big outperformance relative to the Dow). Within the index, gainers numbered 173, while 311 S&P500 stocks fell for the day. Volume was tilted 1.4:1 in favour of the losers with 788.98 million units traded in the losers as compared with 564.56 million traded in the winners .

Over at Times Square, the Nasdaq Composite shed 6.83 points (0.32%), to close at 2141.07, while larger-cap technology issues fared better with the Nasdaq100 losing 4.13 points (0.26%), to end at 1573.12 points. Within the tech benchmark, gainers numbered 25, while 70 Nasdaq100 stocks fell for the day. Volume was tilted 2.0:1 in favour of the losers with 269.56 million traded in the losers compared to 136.24 million in the winners .

NYSE Volume was solid-to-chunky, with 1.64 billion shares changing hands, while Nasdaq Volume was weak, with 1.15 billion shares traded.

Major Market Statistics
Dow Jones Industrial Average10447.37-12.26-0.12%
Nasdaq Composite2141.07-6.83-0.32%
NYSE Volume1.64bn--
Nasdaq Volume1.15bn--


My 9-stock "bellwethers" group fell by an average of 0.07%

  • General Electric (GE) +$0.19 (0.57%) to $33.33;
  • Citigroup (C) +$0.17 (0.39%) to $43.88;
  • Wal Mart (WMT) -$0.45 (1%) to $44.55;
  • I.B.M. (IBM) -$0.08 (0.1%) to $79.46;
  • Intel (INTC) +$0.02 (0.08%) to $25.28;
  • Cisco Systems (CSCO) +$0.07 (0.4%) to $17.72;
  • eBay (EBAY) -$0.25 (0.63%) to $39.69;
  • Fannie Mae (FNM) +$0.01 (0.02%) to $49.59; and
  • Freddie Mac (FRE) -$0.21 (0.36%) to $57.76.

Market Breadth & Internals

NYSE declining Issues beat out advancers by 1758 to 1449, for a single-day A/D reading of -309; and Nasdaq losers exceeded gainers by 1759 to 1231. The 10-day moving average of the A/D line fell to 212.9 on the NYSE, while the 10dma of the Nasdaq A/D fell to -76.6.

On the NYSE declining volume was greater than volume in advancing issues by 957.5 to 651.6 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 703.4 to 396.8 million shares.

157 NYSE-listed stocks rose to new 52-week highs, and 42 posted fresh 52-week lows, while on the Nasdaq there were 76 stocks that hit new 52-week highs, and 40 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)651.62396.83
Declining Volume (m)957.48703.41
New Highs15776
New Lows4240

Market Sentiment Statistics
CBOE Volatility Index13.570.413.12%
CBOE Nasdaq Volatility Index15.670.63.98%
Equity Put-Call Ratio0.910.228.17%
10-day PCR0.6300%
SPX-VIX Ratio89.8-3.07-3.3%

Bond Market Analysis

Bonds fell marginally at the long end, with the yield on the benchmark 30-year Treasury bond rising 0.3 bps to 4.292%.

The middle of the yield curve was broadly lower: five year yields rose to 3.839%, and ten-year yields rose to 4.029%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 19.0 bps wider at 7.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 64.0 bps for 10-year AAA, and 100.0 bps for 20-years.

Credit spreads (spreads between corporate bonds of the same maturity profile but different creditworthiness) were broadly wider with the AAA-A spread on 20-years 18.0 bps wider at 68.0 basis points and the 10-year AAA-A spread 5.0 bps wider at 9.0 bps.

Treasury Yields
UST 13wk (yld)3.37700%
UST 2Y (yld)3.73-0.05-1.32%
UST 5Y (yld)3.8390.0170.44%
UST 10Y (yld)4.0290.010.25%
UST 30Y (yld)4.2920.0030.07%

The Banks Index shed 0.14 points (0.14%), to 98.39; within the index,

  • National City Corp (NCC) -$0.40 (1.09%) to $36.22;
  • Mellon Financial (MEL) -$0.35 (1.07%) to $32.45;
  • Northern Trust (NTRS) -$0.43 (0.85%) to $50.18;
  • M&T Bank Corp (MTB) -$0.85 (0.79%) to $107.05; and
  • Wells Fargo (WFC) -$0.44 (0.74%) to $59.29.

The Broker-dealer Index lost 0.63 points (0.37%), to end the session at 170.34; the ticket clippers lined up as follows -

  • Morgan Stanley (MWD) -$0.57 (1.11%) to $50.83;
  • Raymond James (RJF) -$0.33 (1.09%) to $30.01;
  • Ameritrade (AMTD) -$0.16 (0.79%) to $20.06;
  • Charles Schwab (SCH) -$0.09 (0.67%) to $13.41; and
  • E*Trade (ET) -$0.10 (0.61%) to $16.34.

The Philadelphia SOX (Semiconductor) index shed 0.95 points (0.2%), to end the session at 467.42

  • Freescale Semiconductors (FSL-B) -$0.49 (2%) to $24.00;
  • ST Microelectronic (STM) -$0.17 (1.03%) to $16.34;
  • KLA-Tencor (KLAC) -$0.51 (1.03%) to $49.17;
  • Texas Instruments (TXN) -$0.26 (0.79%) to $32.50; and
  • Xilinx (XLNX) -$0.19 (0.68%) to $27.65.

Gold & Silver Markets

Gold rose $1.90 (0.43%) to close at $445.40 per ounce as the US dollar continued to soften.

The Gold Bugs Index slid 0.96 points (0.45%), at 212.47

  • Coeur d'Alene (CDE) -$0.09 (2.36%) to $3.72;
  • Kinross Gold (KGC) -$0.12 (1.76%) to $6.70;
  • Glamis Gold (GLG) -$0.26 (1.28%) to $20.00;
  • Hecla Mining (HL) -$0.04 (1.12%) to $3.53; and
  • Meridian Gold (MDG) -$0.19 (0.97%) to $19.33.

Silver rose $0.04 (0.6%) to close at $7.01 per ounce. The Gold and Silver Index (XAU) lost 0.14 points (0.14%), to 99.01 points.

  • Kinross Gold (KGC) -$0.12 (1.76%) to $6.70;
  • Meridian Gold (MDG) -$0.19 (0.97%) to $19.33;
  • Freeport McMoran (FCX) -$0.35 (0.81%) to $42.97; and
  • Goldcorp (GG) -$0.12 (0.63%) to $18.82.
Precious Metals and Indices
PHLX Gold and Silver Index99.01-0.14-0.14%
AMEX Gold BUGS Index212.47-0.96-0.45%

Oil Market

Oil lost ground, shedding $1.90 per barrel, closing at $67.57 per barrel - still up $1.44 for the week, but way off its highs. Ah do bleeve Ah menshun such a thang jest this Muhnday, shehr... (that's my attempt at a Nawlins accent).

The Oil and Gas Index (XOI) declined 13.31 points (1.26%), at 1040.39

  • Sunoco (SUN) -$2.79 (3.58%) to $75.25;
  • ConocoPhillips (COP) -$2.23 (3.23%) to $66.77; and
  • Marathon Oil (MRO) -$1.75 (2.62%) to $65.07.

The Oil service stocks (OSX) Index shed 3.8 points (2.18%), ending the day at 170.17

  • Global Industries (GLBL) -$0.65 (4.76%) to $13.00;
  • National Oilwells/Varco (NOV) -$2.44 (3.72%) to $63.10; and
  • Schlumberger (SLB) -$2.82 (3.25%) to $83.83.
Energy Complex
Reuters CRB324.04-1.31-0.4%
Crude Oil Light Sweet67.57-1.9-2.73%
Heating Oil2.0911-0.11-4.89%
Natural Gas11.691-0.07-0.56%
Unleaded Gas2.1837-0.23-9.35%
AMEX Oil Index1040.39-13.31-1.26%
Oil Service Index170.17-3.8-2.18%

Currency Markets

USD Exchange Rates
US Dollar Index86.25-0.34-0.39%
Australian Dollar0.76510.00340.45%
Swiss Franc1.2306-0.0048-0.39%
Canadian Dollar0.8417-0.003-0.36%