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Wednesday, October 12, 2005

USRant: The Clock Struck One (Again)...

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Yesterday the death clock had to be re-set - with the Dow closing above 10250 (although only by a hair). Today the death clock is again registering 1 'consecutive' close below the key 10250 level (leave aside the semantics about how you can have 'one in a row'). Another close below 10250 tomorrow, and the year-end target of 1300 for the S&P is definitively kaput, and a year-end target with the Dow sub-10k becomes a genuine possibility. That's no news to regular readers - I've said it several times before.

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation: a $6.25billion, overnight repurchase with $5.25billion in T-backed collateral undertaken at a whopping 15 basis point discount to the Fed Funds Rate (FFR). A decent sized repurchase, with a decent slab of dough in T-backed collateral, at a significant discount to the FFR. And yet (as it turns out) the 10 a.m. (NY time) print was the day's high; there was not a single sausage of positive momentum at the usual repo-boost period.

There were a couple of reasons for this: first, the market opened in "Handjobs for Greenspan" mode; His Magoo-ness was waffling about something - speaking to a crowd of Italian-Americans (the guys that used to be called 'wops'). In the course of the usual tripe, listeners were regaled with tales of how increased financial flexibility had helped the US economy weather a storm. 

Whateverrrrr... It also helps to redefine any bad statistic so that its sign changes... phantom workers, hedonically adjusted output and prices, chain-weighted price indices for inflation, and a new definition of the savings rate. Greenstain didn't mention that. All that's left is to redefine a deficit as a surplus and redefine George Bush as a genius,  and the farce will be complete.

Major US Indices

Boy, did today ever stink. The final print numbers weren't too bad, but the actual tradability sucked ass.

The Dow Jones Industrial Average slid 36.26 points (0.35%), closing out the day at 10216.91 points. The index hit an intraday high of 10308.88 just after the end of the first half-hour, then it turned and got downright nasty. 

Stuck with a buying bias, buying the open was the way to go - but that wasn't what happened. Instead, we waited and wound up buying the first %R oversold on the 85-tick chart, which didn't happen until after the first half-hour had passed... does the phrase "catch a falling knife" mean anything to you? It just got nastier and nastier. There was no 'higher level' sell signal anywhere to be seen, so shorting was sadly not indicated. And to top it off, just as everything looked absolutely sick, a buying divergence occurred a couple of bars before the day's low (10186.09 - a third 'tease break' of 10200). That presages a bounce tomorrow (as does the woeful market internals - it would suprise me if the market simply continued today's fairly nasty down-move)

Within the blue-chip index, 10 stocks rose, the biggest gainers being Pfizer (PFE, +2.22% to $24.84) and Boeing (BA, +1.42% to $67.65), which accounted for 12 Dow points between them. Losers in the Dow numbered 19 and were led by Mcdonalds (MCD, -2.07% to $31.67) and American Express (AXP, -1.97% to $48.21), with these two stocks contributing -13 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the losers by 305.9m shares to 134.3m.

The broader S&P500 dipped 7.19 points (0.61%), closing at 1177.68. Within the index, gainers numbered 126, while 352 S&P500 stocks fell for the day. Volume was tilted 2.6:1 in favour of the losers with 1604.13 million units traded in the losers as compared with 611.47 million traded in the winners .

Over at Times Square, the Nasdaq Composite shed 23.62 points (1.15%), to close at 2037.47, while larger-cap technology issues fared worse with the Nasdaq100 losing 18.12 points (1.18%), to end at 1521.19 points. Within the tech benchmark, gainers numbered 25, while 72 Nasdaq100 stocks fell for the day. Volume was tilted 3.3:1 in favour of the losers with 707.62 million traded in the losers compared to 214.28 million in the winners .

NYSE Volume was super-chunky, with 2.49 billion shares changing hands, while Nasdaq Volume was also super-chunky (over 2 bill), with 2.06 billion shares being chucked out with the bathwater.

Major Market Statistics
Dow Jones Industrial Average10216.91-36.26-0.35%
Nasdaq Composite2037.47-23.62-1.15%
NYSE Volume2.49bn--
Nasdaq Volume2.06bn--


My 9-stock "bellwethers" group fell by an average of 0.31%

  • General Electric (GE) -$0.00 (0%) to $33.80;
  • Citigroup (C) -$0.20 (0.45%) to $44.60;
  • Wal Mart (WMT) -$0.08 (0.18%) to $44.94;
  • I.B.M. (IBM) -$1.00 (1.2%) to $82.19;
  • Intel (INTC) -$0.18 (0.77%) to $23.24;
  • Cisco Systems (CSCO) +$0.24 (1.4%) to $17.43;
  • eBay (EBAY) -$1.04 (2.57%) to $39.42;
  • Fannie Mae (FNM) +$0.52 (1.21%) to $43.34; and
  • Freddie Mac (FRE) -$0.16 (0.28%) to $57.84.

Market Breadth & Internals

NYSE declining Issues beat out advancers by 2635 to 692, for a single-day A/D reading of -1943; and Nasdaq losers exceeded gainers by 2307 to 739. The 10-day moving average of the A/D line fell to -874.8 on the NYSE, while the 10dma of the Nasdaq A/D fell to -796.5. Both exchanges appear to be in the midst of a selling blowoff.

On the NYSE declining volume was greater than volume in advancing issues by 1865 to 576.6 million shares; On the Nasdaq declining volume exceeded volume in advancing issues by 1601.7 to 394.5 million shares.

19 NYSE-listed stocks rose to new 52-week highs, and 320 posted fresh 52-week lows, while on the Nasdaq there were 25 stocks that hit new 52-week highs, and 232 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)576.61394.53
Declining Volume (m)1865.031601.7
New Highs1925
New Lows320232

Market Sentiment Statistics
CBOE Volatility Index16.130.53.2%
CBOE Nasdaq Volatility Index17.750.63.5%
Equity Put-Call Ratio1.270.2625.74%
10-day PCR0.6100%
SPX-VIX Ratio73-2.8-3.69%

Bond Market Analysis

Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 6.6 bps to 4.656%. With Greensplatt telling his Italian-American chums that the US economy is holding up well, it gave the signal that theFed will probably keep tightening the noose until the patient's neck snaps. They will then attempt to repair the damage by loosening the noose.

The middle of the yield curve was broadly lower: five year yields rose to 4.31%, and ten-year yields rose to 4.441%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 9.0 bps wider at 12.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 44.0 bps for 10-year AAA, and 67.5 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 13.0 bps looser at 51.0 basis points and the 10-year AAA-A spread 7.0 bps looser at13.0 bps.

Treasury Yields
UST 13wk (yld)3.6150.0551.54%
UST 2Y (yld)
UST 5Y (yld)4.310.0481.13%
UST 10Y (yld)4.4410.0571.3%
UST 30Y (yld)4.6560.0661.44%

The Banks Index dipped 0.39 points (0.42%), ending the day at 93.27; within the index,

  • Golden West Financial (GDW) -$1.14 (2.01%) to $55.64;
  • State Street (STT) -$0.85 (1.71%) to $48.85;
  • National City Corp (NCC) -$0.56 (1.71%) to $32.24;
  • Washington Mutual (WM) -$0.58 (1.55%) to $36.92; and
  • Zions Bancorp (ZION) -$0.84 (1.23%) to $67.72.

The Broker-dealer Index lost 4 points (2.31%), closing at 168.93; the ticket clippers lined up as follows -

  • A G Edwards (AGE) -$1.77 (4.26%) to $39.78;
  • Ameritrade (AMTD) -$0.71 (3.47%) to $19.74;
  • E*Trade (ET) -$0.50 (2.98%) to $16.27;
  • Charles Schwab (SCH) -$0.36 (2.69%) to $13.04; and
  • Legg Mason (LM) -$2.46 (2.34%) to $102.59.

The Philadelphia SOX (Semiconductor) index declined 1.74 points (0.4%), ending the day at 436.97

  • Advanced Micro Devices (AMD) -$3.00 (12.5%) to $21.00;
  • Teradyne (TER) -$0.50 (3.4%) to $14.19;
  • Infineon Tech (IFX) -$0.17 (1.73%) to $9.66;
  • ST Microelectronic (STM) -$0.27 (1.63%) to $16.30; and
  • Marvell Tech Group (MRVL) -$0.64 (1.5%) to $42.06.

Gold & Silver Markets

Gold fell by $3.20 (0.67%) to close at $476.60 per ounce.

The Gold Bugs Index declined 5.82 points (2.42%), closing at 234.91

  • Hecla Mining (HL) -$0.17 (4.28%) to $3.80;
  • Meridian Gold (MDG) -$0.81 (3.66%) to $21.35;
  • Golden Star (GSS) -$0.10 (3.34%) to $2.89;
  • Freeport McMoran (FCX) -$1.48 (3.12%) to $45.98; and
  • Gold Fields (GFI) -$0.39 (2.69%) to $14.10.

Silver fell by $0.04 (0.47%) to close at $7.84 per ounce. 

The Gold and Silver Index (XAU) lost 3.03 points (2.69%), ending the day at 109.42 points.

  • Durban Rooderpoert Deep (DROOY) -$0.07 (5.07%) to $1.31;
  • Anglogold Ashanti (AU) -$1.97 (4.48%) to $42.01;
  • Meridian Gold (MDG) -$0.81 (3.66%) to $21.35; and
  • Freeport McMoran (FCX) -$1.48 (3.12%) to $45.98.
Precious Metals and Indices
PHLX Gold and Silver Index109.42-3.03-2.69%
AMEX Gold BUGS Index234.91-5.82-2.42%

Oil Market

Oil was firmer again, rising by $0.59 per barrel to close at $64.12 per barrel. Annoying - it now looks to have completed any retracement that was forecast, but stopped well short of our modest decline targets.

The Oil and Gas Index (XOI) dipped 20.94 points (2.08%), closing at 983.91

  • Sunoco (SUN) -$2.41 (3.17%) to $73.53;
  • Amerada Hess (AHC) -$3.18 (2.61%) to $118.46; and
  • Kerr Mcgee (KMG) -$2.24 (2.57%) to $85.06.

The Oil service stocks (OSX) Index dipped 2.59 points (1.59%), to 159.92

  • Transocean (RIG) -$1.76 (3.1%) to $55.01;
  • Rowan Companies (RDC) -$0.96 (3.01%) to $30.98; and
  • National Oilwells/Varco (NOV) -$1.65 (2.75%) to $58.25.
Energy Complex
Reuters CRB337.070.910.27%
Crude Oil Light Sweet64.120.590.93%
Heating Oil2.01570-0.11%
Natural Gas13.52400.04%
Unleaded Gas1.8276-0.01-0.31%
AMEX Oil Index983.91-20.94-2.08%
Oil Service Index159.92-2.59-1.59%

Currency Markets

USD Exchange Rates
US Dollar Index89.65-0.32-0.36%
Australian Dollar0.7550.00250.33%
Swiss Franc1.2876-0.0022-0.17%
Canadian Dollar0.85440.00420.49%