Interdum stultus opportuna loquitur...

Tuesday, October 04, 2005

USRant: Flopping and Chopping...

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

There's something about Sydney (the central bits of it) that sticks in my craw. It reminds me of News Corpse; lots of pointless and inefficient "action", but structurally there's nothing worth writing home about. Whoever designed the road layout ought to be a poster child for bad urban design (what design?)... basically I loathe central Sydney.

I like well-laid out central areas - like London (a sephirot), Melbourne (a grid). Sydney's is like a plate of spaghetti. And there's no point having a nice harbour if you surround it with McMansions that could be pulled apart in half an hour using a pair of pliers. Docklands in Melbourne is a standing joke; Darling Harbour is not quite as awful (or as bad an investment) as Docklands, but it's close.

When The Lovely decreed that we would go to Sydney for her birthday, I should have said something (actually I did, but there you go).

First, it was a long weekend; second, it was Grand Final weekend in Thugby League (a game which is just like Sydney - fundamentally not worth bothering about, but the locals seem to like it).

The food at Rockpool? Started out brilliantly, but by the time dessert arrived I was fifteen minutes past ready to leave. You don't get tattooed ladies in denim jeans at Flower Drum: not because there's a dress code, but because Melbourne still has a social code. In Sydney any riff-raff can buy their way to importance - including the semi-mongoloid Canadian at the next table who thought that openly (and loudly) criticising the food to the head waiter was something that made him (the mongol Canadian) important.  

Seriously - you ought to have seen this guy; if his mother had sneezed at any time during the pregnancy he would have been completely mongoloid instead of partially so. At least then he wouldn't have been buggering up my dinner.

For the record, I think that what I refer to as 'mongoloids' are now called 'Downs Syndrome', or perhaps there's some new NewSpeak term for them - "alternatively gifted and super-duper special don't call him retarded oh God it's not my fault" or whatever... this guy was one base-pair away from that particular train: he had the short limbs, bulbous forehead and lack of impulse control, but escaped the drooling (barely). 

But enough about Sydney and its resident food critics; I hope that the dullards who were ensnared in the 28km outbound-from-Sydney tailback as we were coming IN to Sydney at 2 p.m. Saturday, didn't have similar trafficality yesterday, otherwise they wouldn't have got back in to Sydney before midnight last night.  What a shitful way to spend a long weekend... hours upon hours in traffic, and then arrive at the unspoilt little country town per the plan, and it's full of Sydneysiders. GACK.

It's like a case study in herd behaviour: every idiot decided to leave the bank's house and jump in the credit company's 'SUV', then hurtle down the freeway at 10km over the limit... and then curse the traffic bottleneck at the other end, and then get the resulting Oxford-Street-style congestion in the streets of tiny places like Kiama. DUH... 

Whether it's traffic or investment, it's always nice to be in the contra-flow. Contrarianism, baby - it's where it's at (says the dill was in Sydney on Grand Final eve... nobody's perfect)

Federal Reserve Open Market Operations

The Fed's Open Market Operations desk performed 1 repurchase operation: a $7billion, overnight repurchase entirely in T-backed collateral undertaken at a 2 basis point discount to the Fed Funds Rate (FFR). Odd that it didn't do more.

Major US Indices

The buying divergence I mentioned before Friday's session worked even more better than anybody would have anticipated; if you weren't able to snaffle the daily 1-pt target somewhere in the subseuqent 15 point rise, you must've been asleep. I mentioned the selling divergence that developed later in the day; it indicated likely lower prices early on Friday, and that's what we got - although the one-point objective required a short to be taken the moment the divergence appeared.

Today was more like a typical; Monday - opening orgasm, followed quickly by a shorting opportunity. Check out the chart, and notice that the very first bar of the day gives us a selling divergence relative to Friday's afternoon swing high (important - make sure you compare the CCI with the CCI of the FIRST bar that exceeds the high of the previous swing)...

So the CCI sell divergence set up a selling bias which had a load of other stuff in its favour; 10600 as potential resistance above (always allowing for a 'tease tick' above it to lure in nuffnuffs), and 'news-traders'  prepared to try and buy the stronger-than-expected ISM Index. There was a 7-point decline during which to try to get the day's one-point objective. Not hard. And if you've got a long-side tendency, there was a mid-session buying divergence (which coincided with a 10525 test)  that also worked beautifully. Either way...

Dow 15-minute chart 

After shooting its bolt in the first fifteen minutes, the Dow Jones Industrial Average had a soggy rest of the session. By the close it had dipped 33.22 points (0.31%), closing out the day at 10535.48 points. 

The index hit an intraday high of 10608.56 before the end of the first half-hour, and fell as low as 10523.63 jsut after mid-session (at which point the day's CCI buying divergence was confirmed, per the green arrows above). 

Within the blue-chip index, 10 stocks rose, the biggest gainers being General Motors (GM, +1.40% to $31.04) and Pfizer (PFE, +1.28% to $25.29), which accounted for 6 Dow points between them. Losers in the Dow numbered 20 and were led by Alcoa (AA, -2.25% to $23.87) and Exxon Mobil (XOM, -1.65% to $62.49), 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 272.6m shares to 92.2m.

The broader S&P500 slid 2.11 points (0.17%), to 1226.7. Within the index, gainers numbered 234, while 242 S&P500 stocks fell for the day. Volume was tilted 1.1:1 in favour of the losers with 964.46 million units traded in the losers as compared with 908.93 million traded in the winners .

Over at Times Square, the Nasdaq Composite rose 3.74 points (0.17%), to close at 2155.43, while larger-cap technology issues fared better with the Nasdaq100 adding 3.93 points (0.25%), to end at 1605.59 points. Within the tech benchmark, gainers numbered 56, while 39 Nasdaq100 stocks fell for the day. Volume was tilted 1.2:1 in favour of the losers with 435.71 million traded in the winners compared to 358.62 million in the losers .

NYSE Volume was super-chunky, with 2.05 billion shares changing hands, while Nasdaq Volume was chunky, with 1.85 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).

Major Market Statistics
Dow Jones Industrial Average10535.48-33.22-0.31%
Nasdaq Composite2155.433.740.17%
NYSE Volume2.05bn--
Nasdaq Volume1.85bn--


My 9-stock "bellwethers" group fell by an average of 0.33%

  • General Electric (GE) -$0.44 (1.31%) to $33.23;
  • Citigroup (C) -$0.01 (0.02%) to $45.51;
  • Wal Mart (WMT) -$0.06 (0.14%) to $43.76;
  • I.B.M. (IBM) +$0.23 (0.29%) to $80.45;
  • Intel (INTC) -$0.05 (0.2%) to $24.60;
  • Cisco Systems (CSCO) -$0.18 (1%) to $17.74;
  • eBay (EBAY) +$0.60 (1.46%) to $41.80;
  • Fannie Mae (FNM) -$0.52 (1.16%) to $44.30; and
  • Freddie Mac (FRE) -$0.50 (0.89%) to $55.96.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1816 to 1457 for a single-day A/D reading of 359; Nasdaq gainers trumped losers by 1623 to 1422. The 10-day moving average of the A/D line rose to -107.0 on the NYSE, while the 10dma of the Nasdaq A/D rose to -119.9.

NYSE advancing volume exceeded volume in decliners by 1096.2 to 911 million shares; Nasdaq advancing volume was greater than volume in decliners by 1024.1 to 774.2 million shares.

230 NYSE-listed stocks rose to new 52-week highs, and 57 posted fresh 52-week lows, while on the Nasdaq there were 161 stocks that hit new 52-week highs, and 42 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)1096.231024.11
Declining Volume (m)911.01774.24
New Highs230161
New Lows5742

Market Sentiment Statistics
CBOE Volatility Index12.460.544.53%
CBOE Nasdaq Volatility Index13.970.664.96%
Equity Put-Call Ratio0.550.023.77%
10-day PCR0.600.023.45%
SPX-VIX Ratio98.52.12.18%

Bond Market Analysis

Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 5.3 bps to 4.621%.

The middle of the yield curve was broadly lower: five year yields rose to 4.245%, and ten-year yields rose to 4.386%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 25.0 bps wider at 15.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 39.0 bps for 10-year AAA, and 66.5 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 widening by 4.0 bps to 51.0 basis points and the 10-year AAA-A spread 1.0 bps wider at 19.0 bps.

Treasury Yields
UST 13wk (yld)3.4850.0150.43%
UST 2Y (yld)4.19-0.005-0.12%
UST 5Y (yld)4.2450.051.19%
UST 10Y (yld)4.3860.0581.34%
UST 30Y (yld)4.6210.0531.16%

The Banks Index added 0.08 points (0.08%), to end the session at 96.23; within the index,

  • National City Corp (NCC) +$0.52 (1.56%) to $33.96;
  • Mellon Financial (MEL) +$0.42 (1.31%) to $32.39;
  • Northern Trust (NTRS) +$0.55 (1.09%) to $51.10;
  • Comerica (CMA) +$0.56 (0.95%) to $59.46; and
  • State Street (STT) +$0.44 (0.9%) to $49.36.

The Broker-dealer Index rose 0.8 points (0.44%), to 181.26; the ticket clippers lined up as follows -

  • Jeffries Group (JEF) +$1.06 (2.43%) to $44.61;
  • Merrill Lynch (MER) +$0.84 (1.37%) to $62.19;
  • Lehman Brothers (LEH) +$1.25 (1.07%) to $117.73;
  • Ameritrade (AMTD) +$0.18 (0.84%) to $21.65; and
  • Raymond James (RJF) +$0.13 (0.4%) to $32.25.

The Philadelphia SOX (Semiconductor) index posted a rise of 2.79 points (0.59%), to end the session at 478.11

  • Freescale Semiconductors (FSL-B) +$0.65 (2.76%) to $24.23;
  • Micron Technology (MU) +$0.34 (2.56%) to $13.64;
  • Altera (ALTR) +$0.35 (1.83%) to $19.46;
  • Advanced Micro Devices (AMD) +$0.46 (1.83%) to $25.66; and
  • ST Microelectronic (STM) +$0.24 (1.39%) to $17.52.

Gold & Silver Markets

Gold fell by $3.70 (0.79%) to close at $466.10 per ounce.

The Gold Bugs Index dipped 2.48 points (1.01%), at 242.71

  • Eldorado Gold (EGO) -$0.13 (3.66%) to $3.42;
  • Hecla Mining (HL) -$0.16 (3.65%) to $4.22;
  • Golden Star (GSS) -$0.12 (3.59%) to $3.22;
  • Glamis Gold (GLG) -$0.76 (3.44%) to $21.34; and
  • Kinross Gold (KGC) -$0.21 (2.73%) to $7.47.

Silver rose $0.05 (0.7%) to close at $7.46 per ounce. The Gold and Silver Index (XAU) lost 0.57 points (0.5%), to end the session at 112.35 points.

  • Kinross Gold (KGC) -$0.21 (2.73%) to $7.47;
  • Meridian Gold (MDG) -$0.26 (1.19%) to $21.65;
  • Anglogold Ashanti (AU) -$0.44 (1.04%) to $42.00; and
  • Freeport McMoran (FCX) -$0.37 (0.76%) to $48.22.
Precious Metals and Indices
PHLX Gold and Silver Index112.35-0.57-0.5%
AMEX Gold BUGS Index242.71-2.48-1.01%

Oil Market

Oil lost ground, shedding $0.77 per barrel, closing at $65.47 per barrel. It needs to get some downward momentum pretty damned soon, or I am going to get cranky.

The Oil and Gas Index (XOI) slid 2.12 points (0.2%), to 1074.19

  • Exxon Mobil (XOM) -$1.05 (1.65%) to $62.49;
  • ConocoPhillips (COP) -$0.95 (1.36%) to $68.96; and
  • TotalFinaElf S.A. (TOT) -$1.43 (1.05%) to $134.39.

The Oil service stocks (OSX) Index dipped 0.62 points (0.35%), closing at 175.31

  • Rowan Companies (RDC) -$0.89 (2.51%) to $34.60;
  • Noble Corp (NE) -$1.18 (1.72%) to $67.28; and
  • Schlumberger (SLB) -$0.95 (1.13%) to $83.43.
Energy Complex
Reuters CRB335.131.80.54%
Crude Oil Light Sweet65.47-0.77-1.16%
Heating Oil2.0809-0.05-2.29%
Natural Gas14.0170.10.69%
Unleaded Gas2.0622-0.03-1.65%
AMEX Oil Index1074.19-2.12-0.2%
Oil Service Index175.31-0.62-0.35%

Currency Markets

USD Exchange Rates
US Dollar Index90.140.620.69%
Australian Dollar0.76280.00030.04%
Swiss Franc1.30160.00910.7%
Canadian Dollar0.8576-0.0024-0.28%