Interdum stultus opportuna loquitur...

Thursday, October 13, 2005

USRant: A "Big W" Day (Look at a chart)...

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Let's see... how many ethnic/religious groups can i upset today? Well, first of all, let's annoy the Red Sea Pedestrians. They were largely absent from proceedings today (it being Yom Kippur - since sundown Wednesday).  This year, the old "Buy on Rosh Hashana. Sell on Yom Kippur" maxim was a complete dud - about as useful as a one-legged Indian in an arse-kicking contest. Rosh Hashana (beginning on the evening of 3rd October) was a swing high, and the S&P has fallen almost exactly 60 points between then and the low today.

I'm a bit less tetchy about Dow 10250 today - even though the Dow closed beneath that number again. Sure, it means that there is almost zero chance of a new Dow high this year. Prior to today, I was still tentatively wedded to the idea  that S&P1300 could happen, which would have coincided with the Dow above its old record high).

Now I don't think that will happen, but I do think we are about to see a bounce that will shake the complacency of the bears. Just as I was bearish leading up to the test of 10700, I'm now comfortable on the buy side (intraday, at least), thanks to the fact that today's market looked like capitulation early on, and there was some clear futures-drive 'capping' in the market late in the session.

I have never before seen a second half-session where every five minutes had at least one TICK reading > 1000 and at least one TICK reading < -800. Today was such a day. The entire afternoon was a series of program-trading ambushes; perhaps due to thin trade thanks to the fact that 45% of the population of the Street was pretending to be pious.

Anyhow - back to my strange premonition of a rising market (for the next couple of weeks). How come that? I hear you say.

Well, plot a daily chart of the S&P500, and plot the CCI underneath it. Notice that yesterday and today marked two spike lows, lower than the October 6th low... and yet the CCI was markedly higher. Yes, we have a longer-term buying divergence. The target: about 1190-1200 on the S&P (that is to say.... as bounces go, it's not going to be anything special).

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 2 repurchase operations.

  • a $5billion, 14-day repurchase with $1.462billion in T-backed collateral undertaken at a 4 basis point discount to the Fed Funds Rate (FFR); and
  • a $7.75billion, overnight repurchase with $7.2billion in T-backed collateral undertaken at a 1.9 basis point discount to the Fed Funds Rate (FFR).
All taken together, that was easily enough to give the maket a bit of juice, but in the period after 10 a.m. all we got was a lousy 3-point spurt. (by that time we had already got the day's one-S&P-point target anyhow).

Major US Indices

The Dow Jones Industrial Average finished in the red by the skimpiest of margins - a teensy 0.32 points (about 0%), closing out the day at 10216.59 points. The index hit an intraday high of 10241.32 after about 10 minutes of trade, and 'teased' that level later in the day, thus describing a 'W' that was almost font-like in its precision - after graffiti-ing George Bush's moniker onto everyone's charts, da Boyz took the indices down to pretty much flat for the session.

The low was 10156.46 (10150-ish) set during the mid-session period when all the nuffnuffs get to trade amongst themselves. Because the market had been weakish in the morning, they all felt comfortable shorting near the low (and a tease break of the day low really got them excited)... then it was time for da Boyz to come back from lunch and start dishing out come pain. 

Within the blue-chip index, 15 stocks rose, the biggest gainers being Johnson & Johnson (JNJ, +3.59% to $64.02) and General Motors (GM, +1.69% to $27.15), which accounted for 21 Dow points between them. Losers in the Dow numbered 14 and were led by Altria Group (MO, -1.86% to $69.60) and Boeing (BA, -1.71% to $66.49), with these two stocks contributing -20 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 210.8m shares to 202.7m.

The broader S&P500 dipped a modest 0.84 points (0.07%), at 1176.84; the closing print on both indices was deliberately subdued. No idea why, but that's what happened. Within the index, gainers numbered 242, while 240 S&P500 stocks fell for the day. Volume was tilted 1.2:1 in favour of the winners with 1101.18 million units traded in the winners as compared with 898.21 million traded in the losers .

Over at Times Square, the Nasdaq Composite gained 9.75 points (0.48%), to close at 2047.22, while larger-cap technology issues fared better with the Nasdaq100 adding 12.61 points (0.83%), to end at 1533.8 points. Within the tech benchmark, gainers numbered 58, while 38 Nasdaq100 stocks fell for the day. Volume was tilted 1.6:1 in favour of the winners with 507.41 million traded in the winners compared to 322.16 million in the losers .

NYSE Volume was super-chunky, with 2.33 billion shares changing hands, while Nasdaq Volume was chunky, with 1.78 billion shares traded.

Major Market Statistics
Dow Jones Industrial Average10216.59-0.320%
Nasdaq Composite2047.229.750.48%
NYSE Volume2.33bn--
Nasdaq Volume1.78bn--


My 9-stock "bellwethers" group rose by an average of 0.14%; otice that Citigroup rose quite a decent amount - further evidence that a rally is in the offing (since C is the most highly manipulated major stock on the planet).

  • General Electric (GE) +$0.22 (0.65%) to $34.02;
  • Citigroup (C) +$0.12 (0.27%) to $44.72;
  • Wal Mart (WMT) -$0.18 (0.4%) to $44.76;
  • I.B.M. (IBM) +$0.01 (0.01%) to $82.20;
  • Intel (INTC) -$0.04 (0.17%) to $23.20;
  • Cisco Systems (CSCO) -$0.13 (0.75%) to $17.30;
  • eBay (EBAY) +$0.22 (0.56%) to $39.64;
  • Fannie Mae (FNM) +$0.14 (0.32%) to $43.48; and
  • Freddie Mac (FRE) +$0.46 (0.8%) to $58.30.

Market Breadth & Internals

NYSE declining Issues beat out advancers by 2152 to 1158, for a single-day A/D reading of -994; Nasdaq gainers trumped losers by 1499 to 1490. The 10-day moving average of the A/D line fell to -896.2 on the NYSE, while the 10dma of the Nasdaq A/D rose to -651.5.

On the NYSE declining volume was greater than volume in advancing issues by 1308.1 to 947 million shares; Nasdaq advancing volume was greater than volume in decliners by 1082.2 to 670.7 million shares.

17 NYSE-listed stocks rose to new 52-week highs, and 380 posted fresh 52-week lows, while on the Nasdaq there were 29 stocks that hit new 52-week highs, and 236 which fell to fresh 52-week lows.

I haven't mentioned the VIX for a while - we initiated a tracking position in the VIX futures on the day the VIX 'spot' dipped under 10; it's currently at 16.34 . I think the appropriate phrase is "well spotted, young Stopper."

 Market Breadth Statistics

Advancing Volume (m)946.991082.21
Declining Volume (m)1308.11670.66
New Highs1729
New Lows380236

Market Sentiment Statistics
CBOE Volatility Index16.340.211.3%
CBOE Nasdaq Volatility Index17.21-0.54-3.04%
Equity Put-Call Ratio1.350.086.3%
10-day PCR0.6100%
SPX-VIX Ratio72-0.99-1.36%

Bond Market Analysis

Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 4.9 bps to 4.705%. Much more of an increase in the long bond yield, and the mortgage market is going to really experience some pain; there are a load of newbie real estate speculators who are already as close to upside-down as makes no odds... and loads of them have variable rate mortgages.

The middle of the yield curve was broadly lower: five year yields rose to 4.327%, and ten-year yields rose to 4.475%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 11.0 bps wider at 16.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 44.0 bps for 10-year AAA, and 74.5 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 1.0 bps tighter at 50.0 basis points and the 10-year AAA-A spread 7.0 bps wider at 20.0 bps.

Treasury Yields
UST 13wk (yld)3.6620.0471.3%
UST 2Y (yld)4.2200%
UST 5Y (yld)4.3270.0170.39%
UST 10Y (yld)4.4750.0340.77%
UST 30Y (yld)4.7050.0491.05%

The Banks Index shed was unchanged, ending the session at 93.27; within the index,

  • PNC Financial Services (PNC) -$0.33 (0.59%) to $55.16;
  • Mellon Financial (MEL) -$0.02 (0.07%) to $30.66;
  • North Fork Bancorp (NFB) +$0.02 (0.08%) to $23.75;
  • National City Corp (NCC) +$0.04 (0.12%) to $32.28; and
  • Comerica (CMA) +$0.07 (0.12%) to $56.19.

The Broker-dealer Index shed 1.72 points (1.02%), closing at 167.21; the ticket clippers lined up as follows -

  • Jeffries Group (JEF) -$1.89 (4.56%) to $39.60;
  • Goldman Sachs (GS) -$2.47 (2.14%) to $113.18;
  • E*Trade (ET) -$0.33 (2.03%) to $15.94;
  • Ameritrade (AMTD) -$0.24 (1.22%) to $19.50; and
  • Lehman Brothers (LEH) -$1.26 (1.17%) to $106.18.

The Philadelphia SOX (Semiconductor) index rose 9.36 points (2.14%), to end the session at 446.33

  • Novellus Systems (NVLS) +$1.26 (5.32%) to $24.94;
  • KLA-Tencor (KLAC) +$1.83 (3.93%) to $48.36;
  • Marvell Tech Group (MRVL) +$1.38 (3.28%) to $43.44;
  • National Semiconductors (NSM) +$0.76 (3.22%) to $24.35; and
  • Advanced Micro Devices (AMD) +$0.63 (3%) to $21.63.

Gold & Silver Markets

Gold fell by $2.80 (0.59%) to close at $473.80 per ounce. If my RantSense is correct, the weakness in Gold stocks portends a more substantial correction in Gold - in conjunction with a broader equities rally, probably centred on riskier stocks.

The Gold Bugs Index declined 4.32 points (1.84%), at 230.59

  • Eldorado Gold (EGO) -$0.24 (6.74%) to $3.32;
  • Iamgold (IAG) -$0.30 (4.17%) to $6.90;
  • Goldcorp (GG) -$0.63 (3.22%) to $18.94;
  • Gold Fields (GFI) -$0.42 (2.98%) to $13.68; and
  • Golden Star (GSS) -$0.07 (2.42%) to $2.82.

Silver fell by $0.10 (1.31%) to close at $7.74 per ounce. 

The Gold and Silver Index (XAU) lost 1.51 points (1.38%), to end the session at 107.91 points.

  • Goldcorp (GG) -$0.63 (3.22%) to $18.94;
  • Gold Fields (GFI) -$0.42 (2.98%) to $13.68;
  • Meridian Gold (MDG) -$0.51 (2.39%) to $20.84; and
  • Barrick Gold (ABX) -$0.38 (1.37%) to $27.27.
Precious Metals and Indices
PHLX Gold and Silver Index107.91-1.51-1.38%
AMEX Gold BUGS Index230.59-4.32-1.84%

Oil Market

Oil lost ground after the Oil Inventories data showed mixd outcomes: oil stocks up, distillate stocks down, and NAtural Gas stocks up sharply (good news for winter heating bills). Overall the marekt took it as an excuse to sell off, shedding $1.04 per barrel, closing at $63.08 per barrel. 

The Oil and Gas Index (XOI) shed 22.82 points (2.32%), at 961.09

  • ConocoPhillips (COP) -$2.42 (3.81%) to $61.05;
  • Marathon Oil (MRO) -$2.29 (3.68%) to $59.90; and
  • Sunoco (SUN) -$2.68 (3.64%) to $70.85.

The Oil service stocks (OSX) Index lost 0 points (0%), to 159.92

  • Tidewater (TDW) -$2.43 (5.4%) to $42.54;
  • National Oilwells/Varco (NOV) -$2.80 (4.81%) to $55.45; and
  • Global Industries (GLBL) -$0.52 (3.98%) to $12.54.
Energy Complex
Reuters CRB335.34-1.73-0.51%
Crude Oil Light Sweet63.08-1.04-1.62%
Heating Oil1.998-0.02-0.88%
Natural Gas13.103-0.42-3.11%
Unleaded Gas1.7579-0.07-3.81%
AMEX Oil Index961.09-22.82-2.32%
Oil Service Index159.9200%

Currency Markets

USD Exchange Rates
US Dollar Index90.010.360.4%
Australian Dollar0.7509-0.0041-0.54%
Swiss Franc1.28820.00060.05%
Canadian Dollar0.8456-0.0088-1.03%