Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.
I've written a lot recently about how I was uncomfortable with having a buying bias as a result of the technical structure of the market (as of October 13th - check the RantArchive): recent market action just goes to show... if you've got a method that works, then trust the method and trade with the bias. Money management ought to be what tells you you're wrong, rather than a gut feeling (gut feelings are your enemy: the market is always trying to look like its own opposite in order to fleece as many people as possible... tha'ts why my methodology is what I call 'contrarian at extremes').
The Euro continued its bounce (it's now up almost a full cent since I decreed it should bounce), but frankly it looks weak: in other words the thing driving the move was short-covering rather than actual buying. I'll tell you why: if you look at a chart of the EC futures (you can also use the EURUSD spot, ut you'll have to substract 0.0030 from everything hereafter), you will notice that after a dip to about 1.2020 and almost three hours of testing of that level from above, the market shot up to 1.2100 in less than two hours - with most of the move coming in 2 massive bursts at 12.15 a.m. and 2:15 a.m. Australian time, respectively.
From there, it traded between 1.2085 and 1.2115 for the rest of the session - and that is actually overstating the range, because the spike to above 1.2110 and the dip to below 1.2090 both lasted less than a minute and a half each.
In other words, a bunch of the nuffnuffs that I have been mentioning these past couple of days discovered that the ECB will likely hike today (European time). They then got sweaty palms (as well they might) and covered their shorts. There just doesn't seem to be any actual buying of Euro.
Anyhow... once it got to strongly-overbought (on the hourly first, and then on the 15-minute) I had a pop at the short side: bad move... I'm short at 1.2091 (the market is currently at 1.2093): if I had stayed awake I would have been able to exit with a few pips, but alas I think this one is set to die unloved and unrewarded.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation - a $3.5billion, overnight repurchase. Not a single cent of it was undertaken in Treasury-backed collateral.
Major US Indices
In case anyone's wondering why I haven't been putting charts in, it's primarily because of the data-SNAFU that I mentioned yesterday - the 15-minute charts of the US indices are still not right in my ProSuite due to the system becoming confused during the daylight savings switchover. Since moving averages and other ndicators of that nature use backward-looking data which may still be stuffed, it'll take another couple of sessions for the guff data to 'wash out' of the various calcualtions. Shorter timeframes (real intraday stuff like the 85-tick) are fine, thought.
And boy, what a time to have had a buying bias (even if it was something about which I was - and am - highly skeptical). There is a CCI divergence forming on the Dow's daily chart, but it ain't there yet. The market's move still feels fake - like a whole bunch of people are betting on a seasonal rally, and that they are effectively ensuring that it doesn't happen. Rallies don't happen when every idiot with an CyberTrader account sees them coming. Citigroup is again the key - it's just not moving.
But anyhow... the buying bias is still in effect for at least another couple of days.
Today, the Dow Jones Industrial Average gained 65.96 points (0.63%), closing out the day at 10472.73 points. After falling to 10388.76 early in the session (which coincided with the Dow futures breaking 10400 from above... for all of about six minutes... just enough time to wrong-foot a bunch of breakout-morons). From there the reversal was a sight to hold your breath and watch with awe: the index rallied over 100 points from its low to hit an intraday high of 10493.54 (which coincided with the Dow futures breaching 10500 by three ticks before reversing hard... I wonder if it was the same idiots buying 10500 - the top - as shorting 10400...the bottom?)
Within the blue-chip index, 23 stocks rose, the biggest gainers being Intel (INTC, +3.18% to $23.37) and Microsoft (MSFT, +1.93% to $26.46), which accounted for 10 Dow points between them. Losers in the Dow numbered 7 and were led by General Motors (GM, -2.39% to $26.54) and Johnson & Johnson (JNJ, -0.97% to $61.30), with these two stocks contributing -10 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 383.3m shares to 56.7m.
The broader S&P500 advanced 12 points (1%), at 1214.76. Within the index, gainers numbered 404, while 77 S&P500 stocks fell for the day. Volume was tilted 3.2:1 in favour of the winners with 1885.67 million units traded in the winners as compared with 593.77 million traded in the losers .
Over at Times Square, the Nasdaq Composite advanced 30.26 points (1.43%), to close at 2144.31, while larger-cap technology issues fared worse with the Nasdaq100 adding 20.77 points (1.32%), to end at 1597.29 points. Within the tech benchmark, gainers numbered 79, while 14 Nasdaq100 stocks fell for the day. Volume was tilted 2.9:1 in favour of the winners with 784.60 million traded in the winners compared to 268.77 million in the losers .
NYSE Volume was super-chunky, with 2.69 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill), with 2.23 billion shares being shifted from one online brokerage account to another (and back again, in all likelihood).
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10472.73 | 65.96 | 0.63% |
| S&P500 | 1214.76 | 12 | 1% |
| Nasdaq Composite | 2144.31 | 30.26 | 1.43% |
| Nasdaq100 | 1597.29 | 20.77 | 1.32% |
| NYSE Volume | 2.69bn | - | - |
| Nasdaq Volume | 2.23bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.81%
- General Electric (GE) +$0.21 (0.63%) to $33.81;
- Citigroup (C) +$0.15 (0.33%) to $45.55;
- Wal Mart (WMT) +$0.57 (1.21%) to $47.56;
- I.B.M. (IBM) -$0.53 (0.65%) to $81.06;
- Intel (INTC) +$0.72 (3.18%) to $23.37;
- Cisco Systems (CSCO) +$0.15 (0.86%) to $17.63;
- eBay (EBAY) +$0.81 (2.01%) to $41.08;
- Fannie Mae (FNM) +$0.15 (0.32%) to $47.35; and
- Freddie Mac (FRE) -$0.36 (0.59%) to $60.73.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 2430 to 849 for a single-day A/D reading of 1581; Nasdaq gainers trumped losers by 2135 to 895. The 10-day moving average of the A/D line rose to 398.7 on the NYSE, while the 10dma of the Nasdaq A/D rose to 241.1.
NYSE advancing volume exceeded volume in decliners by 2115.4 to 541.8 million shares; Nasdaq advancing volume was greater than volume in decliners by 1622.9 to 572.5 million shares.
169 NYSE-listed stocks rose to new 52-week highs, and 95 posted fresh 52-week lows, while on the Nasdaq there were 150 stocks that hit new 52-week highs, and 66 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 2430 | 2135 |
| Decliners | 849 | 895 |
| Advancing Volume (m) | 2115.41 | 1622.88 |
| Declining Volume (m) | 541.77 | 572.52 |
| New Highs | 169 | 150 |
| New Lows | 95 | 66 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 13.48 | -1.37 | -9.23% |
| CBOE Nasdaq Volatility Index | 15.82 | -1.57 | -9.03% |
| Equity Put-Call Ratio | 0.65 | 0 | 0% |
| 10-day PCR | 0.68 | 0 | 0% |
| SPX-VIX Ratio | 90.1 | 9.12 | 11.26% |
Bond Market Analysis
Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 3.2 bps to 4.801%.
The middle of the yield curve was broadly lower: five year yields rose to 4.497%, and ten-year yields rose to 4.61%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 7.0 bps wider at 18.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 57.0 bps for 10-year AAA, and 77.5 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 3.0 bps tighter at 35.0 basis points and the 10-year AAA-A spread unchanged at 4.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 3.837 | -0.025 | -0.65% |
| UST 2Y (yld) | 4.4 | 0.01 | 0.23% |
| UST 5Y (yld) | 4.497 | 0.031 | 0.69% |
| UST 10Y (yld) | 4.61 | 0.033 | 0.72% |
| UST 30Y (yld) | 4.801 | 0.032 | 0.67% |
The Banks Index gained 0.66 points (0.67%), ending the day at 99.68; within the index,
- Golden West Financial (GDW) +$1.19 (2.03%) to $59.79;
- State Street (STT) +$0.79 (1.44%) to $55.72;
- Washington Mutual (WM) +$0.55 (1.41%) to $39.63;
- Regions Financial (RF) +$0.45 (1.38%) to $33.00; and
- North Fork Bancorp (NFB) +$0.35 (1.38%) to $25.73.
The Broker-dealer Index gained 2.55 points (1.39%), ending the day at 185.77; the ticket clippers lined up as follows -
- Legg Mason (LM) +$2.88 (2.66%) to $110.98;
- Goldman Sachs (GS) +$2.53 (2%) to $129.13;
- Jeffries Group (JEF) +$0.81 (1.91%) to $43.27;
- Bear Stearns (BSC) +$1.92 (1.84%) to $106.49; and
- Lehman Brothers (LEH) +$1.84 (1.52%) to $122.55.
The Philadelphia SOX (Semiconductor) index gained 12.68 points (2.96%), closing at 441.22
- Freescale Semiconductors (FSL-B) +$1.34 (5.61%) to $25.23;
- KLA-Tencor (KLAC) +$2.47 (5.39%) to $48.27;
- Advanced Micro Devices (AMD) +$1.12 (4.85%) to $24.20;
- Taiwan Semiconductors (TSM) +$0.35 (4.35%) to $8.40; and
- Texas Instruments (TXN) +$1.09 (3.82%) to $29.64.
Gold & Silver Markets
Gold rose $1.20 (0.26%) to close at $464.60 per ounce.
The Gold Bugs Index posted a rise of 6.51 points (2.93%), ending the day at 229.03
- Eldorado Gold (EGO) +$0.22 (6.98%) to $3.37;
- Golden Star (GSS) +$0.14 (5.34%) to $2.76;
- Hecla Mining (HL) +$0.17 (5.25%) to $3.41;
- Coeur d'Alene (CDE) +$0.15 (4.03%) to $3.87; and
- Meridian Gold (MDG) +$0.72 (3.89%) to $19.22.
Silver rose $0.01 (0.13%) to close at $7.56 per ounce.
The Gold and Silver Index (XAU) gained 2.2 points (2.08%), to end the session at 108.1 points.
- Durban Rooderpoert Deep (DROOY) +$0.08 (6.3%) to $1.35;
- Meridian Gold (MDG) +$0.72 (3.89%) to $19.22;
- Gold Fields (GFI) +$0.49 (3.73%) to $13.62; and
- Kinross Gold (KGC) +$0.24 (3.44%) to $7.21.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 464.60 | 1.20 | 0.26% |
| Silver | 7.56 | 0.01 | 0.13% |
| PHLX Gold and Silver Index | 108.1 | 2.2 | 2.08% |
| AMEX Gold BUGS Index | 229.03 | 6.51 | 2.93% |
Oil Market
Oil lost ground, shedding $0.10 per barrel, closing at $59.75 per barrel. that's all well and good, but yet again oil had an inexplicable rally late in the session - another $1-plus job. The session low in oil was $58.75, and the thing shot up as high as $59.90 in the following hour. Odd that everyone is keen to buy dips all of a sudden. Maybe the market needs more longs to sacrifice in one last exhaustion move down to my target ($57-ish), but the odds get worse with ewach passing day. But, since the advocated short was entered above $67 there's no cause for alarm.
The Oil and Gas Index (XOI) posted a rise of 17.22 points (1.74%), to 1005.85
- Amerada Hess (AHC) +$4.56 (3.65%) to $129.56;
- Marathon Oil (MRO) +$1.87 (3.13%) to $61.54; and
- Sunoco (SUN) +$1.72 (2.31%) to $76.33.
The Oil service stocks (OSX) Index posted a rise of 4.68 points (2.75%), to end the session at 175.05
- Halliburton (HAL) +$2.91 (4.85%) to $62.95;
- Transocean (RIG) +$2.23 (3.84%) to $60.33; and
- Global Industries (GLBL) +$0.49 (3.75%) to $13.57.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 328.79 | 1.59 | 0.49% |
| Crude Oil Light Sweet | 59.75 | -0.1 | -0.17% |
| Heating Oil | 1.8279 | 0.02 | 1.27% |
| Natural Gas | 11.604 | -0.26 | -2.16% |
| Unleaded Gas | 1.5691 | -0.03 | -2.15% |
| AMEX Oil Index | 1005.85 | 17.22 | 1.74% |
| Oil Service Index | 175.05 | 4.68 | 2.75% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 89.77 | -0.29 | -0.32% |
| Euro | 1.2063 | 0.0047 | 0.39% |
| Yen | 116.905 | 0.08 | 0.07% |
| Sterling | 1.7745 | 0.0101 | 0.57% |
| Australian Dollar | 0.7412 | -0.0019 | -0.26% |
| Swiss Franc | 1.2797 | -0.0081 | -0.63% |
| Canadian Dollar | 0.8472 | -0.0023 | -0.27% |
