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I'm going to go out on a limb this morning, and forecast that the Euro will be above 1.2000 before the end of this week (basis the ECZ5 futures, not the spot, which lags the futures by 27 pips at the moment). The thing is oversold to buggery - on daily and weekly charts as well as the shorter timeframes.
There's a significant CCI divergence that formed on the hourly chart, but as yet there are no signs of CCI divergences on either the daily or weekly chart (and we'd better hope none form - it would require a lower low on daily and weekly charts).
Given that this 'trade' will require a holding period of more than a day, the absence of a divergence on daily charts makes the 'call' partly a technical call (based on the fact that the oversold condition on the hourly chart alone could result in a 1.5c bounce in a session), and partly it's a 'judgement' call; it's buttressed by the fact that Euro has fallen 3c in three sessions - all because traders are suddenly not interested in external and fiscal imbalances, but have had their attention diverted by interest rate differentials.
Anyhow - the Euro futures are trading at 1.1835 at the moment (EURUSD spot is at 1.1809), so let's see how that little 'quasi-judgement call' pans out. I've always maintained that judgement should always be subordinate to technical work, and in this case I'm comfortable that I haven't over-egged the technical pudding by trying to 'read in' too much from the charts to justify my judgemental prejudices.
As an aside, I note that the media in Europe is starting to run with the Italian story that shows that the US used napalm (a banned weapon) and white phosphorus (also a banned weapon) in Fallujah and probably also in Ramadi. How interesting that the media somehow gets 'spontaneous' riots in France to take their minds off the developing story about the US doing what it claims Saddam did... using chemical weapons against Iraqi civilians. (Note to those unfamiliar with how the world works: there's no such thing as a spontaneous riot: there hasn't been since the demes in Byzantium had their differences of opinion over icons).
As a second aside, my little bird tells me that Rove will be leaving the White House within two weeks, and that Rumsfeld will be replaced within four months. If there was a series of puts on Dick 'Vice-Is-What-You-Put-Prisoners-Nuts-In' Cheney, I would be buying a couple of levels out of the money. He's not finished yet, but a 'health reasons' retirement is not outside the realms of possibility. Those on the old e-mail list will recall that my little bird was spot-on with the resignation of Harvey Pitt as SEC Chairman, and the appointment of Condoleezza Chevron-Texaco as Secretary of State.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation - a $6billion, overnight day repurchase. But there wasn't a solitary cracker in Treasury-backed collateral: it was all in Agency collateral.
Major US Indices
The Dow Jones Industrial Average gained 55.47 points (0.53%), closing out the day at 10586.23 points. After opening with the usual Monday orgasm, which had the Dow above 10550 within the first half-hour, the Dow dipped to 10520.43 ten minutes after the end of the first hour of trading (i.e., as usual, the first break of the first-hour range was a tease to lure in breakout traders... do they ever learn?). From there it was largely one-way traffic - upwards - with the Dow hugging its very-short-term moving trendlines and making higher lows and higher highs for pretty much the whole session, eventually hitting its intraday high of 10593.35 (10600-ish... the DJ and YM Dow futures hit 10599) at 3:06 p.m. NY time.
Within the blue-chip index, 23 stocks rose, the biggest gainers being Alcoa (AA, +3.06% to $25.94) and Intel (INTC, +2.13% to $24.50), which accounted for 10 Dow points between them. Losers in the Dow numbered 5 and were led by Exxon Mobil (XOM, -1.38% to $57.10) and Verizon Communications (VZ, -1.13% to $30.55), with these two stocks contributing -9 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 295m shares to 57.6m.
Now the other indices (the S&P500 and the two Nasdaq indices) were nowhere near as robust as the Dow; not even close - particaulrly as far as breadth and techncial 'shape' are concerned. In other words, we saw a day of 'circling the wagons' - trying to push the Dow through critical resistance in order to generate some cross-index-related short-covering.
The broader S&P500 posted a rise of 2.67 points (0.22%), ending the day at 1222.81. Within the index, gainers numbered 292, while 182 S&P500 stocks fell for the day. Volume was tilted 1.4:1 in favour of the winners with 967.10 million units traded in the winners as compared with 679.54 million traded in the losers .
Over at Times Square, the Nasdaq Composite posted a rise of 8.81 points (0.41%), to close at 2178.24, while larger-cap technology issues fared worse with the Nasdaq100 adding 1.24 points (0.08%), to end at 1629.27 points. Within the tech benchmark, gainers numbered 53, while 40 Nasdaq100 stocks fell for the day. Volume was tilted 1.3:1 in favour of the winners with 353.07 million traded in the winners compared to 270.68 million in the losers .
NYSE Volume was pretty chunky, with 1.96 billion shares changing hands, while Nasdaq Volume was soft, with 1.59 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10586.23 | 55.47 | 0.53% |
| S&P500 | 1222.81 | 2.67 | 0.22% |
| Nasdaq Composite | 2178.24 | 8.81 | 0.41% |
| Nasdaq100 | 1629.27 | 1.24 | 0.08% |
| NYSE Volume | 1.96bn | - | - |
| Nasdaq Volume | 1.59bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.76%
- General Electric (GE) -$0.00 (0%) to $34.02;
- Citigroup (C) +$0.83 (1.82%) to $46.43;
- Wal Mart (WMT) +$0.36 (0.75%) to $48.05;
- I.B.M. (IBM) +$0.61 (0.73%) to $83.61;
- Intel (INTC) +$0.51 (2.13%) to $24.50;
- Cisco Systems (CSCO) -$0.02 (0.11%) to $17.85;
- eBay (EBAY) +$0.29 (0.7%) to $41.87;
- Fannie Mae (FNM) +$0.48 (1.02%) to $47.48; and
- Freddie Mac (FRE) -$0.15 (0.24%) to $61.24.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1815 to 1418 for a single-day A/D reading of 397; Nasdaq gainers trumped losers by 1703 to 1335. The 10-day moving average of the A/D line rose to 273.4 on the NYSE, while the 10dma of the Nasdaq A/D rose to 246.0.
NYSE advancing volume exceeded volume in decliners by 1052.4 to 795.3 million shares; Nasdaq advancing volume was greater than volume in decliners by 887.3 to 622.3 million shares.
95 NYSE-listed stocks rose to new 52-week highs, and 90 posted fresh 52-week lows, while on the Nasdaq there were 127 stocks that hit new 52-week highs, and 45 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1815 | 1703 |
| Decliners | 1418 | 1335 |
| Advancing Volume (m) | 1052.43 | 887.33 |
| Declining Volume (m) | 795.27 | 622.25 |
| New Highs | 95 | 127 |
| New Lows | 90 | 45 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 12.97 | -0.2 | -1.52% |
| CBOE Nasdaq Volatility Index | 15.65 | 0.47 | 3.1% |
| Equity Put-Call Ratio | 0.68 | -0.04 | -5.56% |
| 10-day PCR | 0.65 | 0 | 0% |
| SPX-VIX Ratio | 94.3 | 1.63 | 1.76% |
Bond Market Analysis
Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 2.4 bps to 4.828%.
The middle of the yield curve was broadly higher: five year yields fell to 4.548%, and ten-year yields fell to 4.639%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 10.0 bps wider at 17.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts rose to 53.0 bps for 10-year AAA, and 73.0 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 46.0 basis points and the 10-year AAA-A spread 2.0 bps looser at 9.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 3.827 | -0.038 | -0.98% |
| UST 2Y (yld) | 4.44 | -0.02 | -0.45% |
| UST 5Y (yld) | 4.548 | -0.007 | -0.15% |
| UST 10Y (yld) | 4.639 | -0.018 | -0.39% |
| UST 30Y (yld) | 4.828 | -0.024 | -0.49% |
The Banks Index advanced 0.94 points (0.94%), ending the day at 100.74; within the index,
- Citigroup (C) +$0.83 (1.82%) to $46.43;
- Northern Trust (NTRS) +$0.84 (1.64%) to $51.99;
- Regions Financial (RF) +$0.53 (1.61%) to $33.42;
- US Bancorp (USB) +$0.40 (1.39%) to $29.09; and
- Suntrust Banks (STI) +$0.90 (1.23%) to $73.84.
The Broker-dealer Index posted a rise of 0.24 points (0.13%), ending the day at 186.57; the ticket clippers lined up as follows -
- Raymond James (RJF) +$0.54 (1.54%) to $35.71;
- Jeffries Group (JEF) +$0.37 (0.84%) to $44.19;
- Merrill Lynch (MER) +$0.48 (0.73%) to $65.80;
- Morgan Stanley (MWD) +$0.31 (0.59%) to $52.72; and
- E*Trade (ET) +$0.11 (0.59%) to $18.71.
The Philadelphia SOX (Semiconductor) index rose 1.45 points (0.32%), at 453.28
- Freescale Semiconductors (FSL-B) +$0.94 (3.75%) to $25.99;
- Intel (INTC) +$0.51 (2.13%) to $24.50;
- National Semiconductors (NSM) +$0.46 (2%) to $23.46;
- Altera (ALTR) +$0.32 (1.88%) to $17.30; and
- Applied Materials (AMAT) +$0.27 (1.6%) to $17.12.
Gold & Silver Markets
Gold rose $2.50 (0.55%) to close at $460.40 per ounce.
The Gold Bugs Index dipped 0.24 points (0.11%), to end the session at 223.51
- Golden Star (GSS) -$0.07 (2.71%) to $2.51;
- Eldorado Gold (EGO) -$0.04 (1.2%) to $3.30;
- Agnico Eagle (AEM) -$0.16 (1.16%) to $13.60;
- Meridian Gold (MDG) -$0.16 (0.86%) to $18.49; and
- Freeport McMoran (FCX) -$0.41 (0.82%) to $49.87.
Silver rose $0.03 (0.42%) to close at $7.61 per ounce.
The Gold and Silver Index (XAU) gained 0.41 points (0.39%), at 106.24 points.
- Placer Dome (PDG) +$0.24 (1.23%) to $19.70;
- Barrick Gold (ABX) +$0.30 (1.2%) to $25.22;
- Newmont Mining (NEM) +$0.43 (1.01%) to $43.01; and
- Gold Fields (GFI) +$0.08 (0.6%) to $13.40.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 460.40 | 2.50 | 0.55% |
| Silver | 7.61 | 0.03 | 0.42% |
| PHLX Gold and Silver Index | 106.24 | 0.41 | 0.39% |
| AMEX Gold BUGS Index | 223.51 | -0.24 | -0.11% |
Oil Market
Can I resist an emoticon at the performance of Crude? (Yes, of course I can: there has never been an emoticon in a Rant post, and there never will be, by Crom).
Oil lost ground, shedding $1.11 per barrel, closing at $59.47 per barrel. the session low was again under $59 - at $58.60.
The Oil and Gas Index (XOI) dipped 17.85 points (1.79%), closing at 977.77
- Kerr Mcgee (KMG) -$3.64 (4.25%) to $82.06;
- Marathon Oil (MRO) -$1.95 (3.2%) to $58.98; and
- Amerada Hess (AHC) -$3.16 (2.45%) to $125.64.
The Oil service stocks (OSX) Index slid 1.86 points (1.08%), to 169.9
- Halliburton (HAL) -$1.96 (3.21%) to $59.15;
- National Oilwells/Varco (NOV) -$1.42 (2.33%) to $59.58; and
- Transocean (RIG) -$1.17 (1.95%) to $58.72.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 330.03 | 0.13 | 0.04% |
| Crude Oil Light Sweet | 59.47 | -1.11 | -1.83% |
| Heating Oil | 1.7861 | -0.01 | -0.56% |
| Natural Gas | 11.873 | 0.46 | 4.01% |
| Unleaded Gas | 1.5561 | -0.05 | -3.23% |
| AMEX Oil Index | 977.77 | -17.85 | -1.79% |
| Oil Service Index | 169.9 | -1.86 | -1.08% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 91.33 | 0.05 | 0.05% |
| Euro | 1.1809 | -0.0008 | -0.07% |
| Yen | 117.615 | -0.67 | -0.57% |
| Sterling | 1.7443 | -0.0055 | -0.31% |
| Australian Dollar | 0.7328 | -0.0005 | -0.07% |
| Swiss Franc | 1.3052 | -0.0015 | -0.11% |
| Canadian Dollar | 0.8426 | -0.0024 | -0.28% |
