Interdum stultus opportuna loquitur...

Tuesday, December 13, 2005

USRant: Shock! Fed Hikes! (i.e., No Meteor)...

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

See yesterday's USRant for the meteor reference)...

Damn, and double Damn, what? Bally Gold market went and fell out of bed before I had a chance to send out a missive declaring an entry. I was very explicit last week - to wit (from Friday's USRant):

It has risen a whopping $23 this week; to me, that seems excessive - and I'm going to start looking to short Gold next week. That will be the first time in Rant history, and in fact for the first time since a one-day short follwing a spike in Gold to above $300, way way back in January 1999

Well, the thing dropped $7 for the session, and Rantsketeers were not on it unless they did so in a self-directed manner. Sorry about that.

Still, the little scalp in the S&P futures paid its way - and for a couple of newcomers, repaid their monthly subscription with the first trade they entered. Always nice to get the first delivery squarely in the middle... but keep in mind always that the overarching principle is to play 'in the V' - straight bat, front foot forward, elbow up... collect the singles unless the bowler provides an absolute gift. 

We're not looking to exhibit the preternatural elegance of D.I. Gower or the brutal power of I.V.A Richards: we're looking to be G. Boycott; not even a second-initial's worth of flair, but try getting the bugger out in less than half a session.

So anyhow... entry (short) was at 1270.25/50 (or at 7 a.m. Oz time, which gave a safer entry price of 1272) and exits were at 1269.25 and 1267. Nice, except I stuffed up the final exit. Look at the picture: the red balloon is the short entry area, and the two yellow splodges are the interim exits. The arrow marked 'X' is the final exit (which was driven more by the sudden drying up of volume in the December05 contract; rolloever happened abruptly and I didn't want anyone getting whipped; ordinarily the area close to the prior-bar high is actually a re-entry level, not an exit level).

ES 15-minute intraday

The RantRecord is only getting credited with the 1270.25 entry rather than 1272, so the score for today was (1, 3.25, 0.5)... 3-and-up lots did worse than the small-lots (that's rare). So even though I was asleep at the switch on Gold, the day was not a total loss. (And a note: subscription prices for the intraday stuff will rise next month for those who are not already members of one or other of the Rant subscriber bits).

Federal Reserve Open Market Operations

As you might imagine, I was utterly shocked - shocked, I tells ya - that the Fed raised rates. And I was equally shocked - shocked, I tells ya - that they signalled that they reckon they might have nearly done enough. It's not clear to me why the market reacted with any sort of alacrity to something that was so utterly utterl predictable: the Fed can't tighten much mroe because the US economy is screwed - that is not cause to buy equities, in my book.

The Fed's Open Market Operations desk performed 1 repurchase operation.

  • a $3billion, overnight repurchase entirely in T-backed collateral undertaken at a -26 basis point discount to the Fed Funds Rate (FFR).

Major US Indices

The Dow Jones Industrial Average posted a rise of 55.95 points (0.52%), closing out the day at 10823.72 points. The index hit an intraday high of 10871.51 (10875-ish) at - you guessed it - 12:57 p.m. NY time, after dipping as low as 10751.36 (10750-ish) in the first 15 minutes of trade.

Within the blue-chip index, 19 stocks rose, the biggest gainers being Procter & Gamble (PG, +2.81% to $58.51) and Mcdonalds (MCD, +2.32% to $35.27), which accounted for 24 Dow points between them. Losers in the Dow numbered 10 and were led by General Motors (GM, -3.25% to $22.30) on a statement from Stadard and Poors that GM was at risk of bankruptcy (as usual, S&P are a year behind MarketRant... Gm is not a bankruptcy risk, they are already dead and just need someone to nail the lid on the coffin). Pressure too on  and Hewlett Packard (HPQ, -3.00% to $29.07). These two stocks contributed -13 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 305.5m shares to 202.7m.

The broader S&P500 added 7 points (0.56%), to end the session at 1267.43. Within the index, gainers numbered 342, while 135 S&P500 stocks fell for the day. Volume was tilted 1.6:1 in favour of the winners with 1285.72 million units traded in the winners as compared with 795.06 million traded in the losers .

Over at Times Square, the Nasdaq Composite advanced 4.05 points (0.18%), to close at 2265, while larger-cap technology issues fared better with the Nasdaq100 adding 7.42 points (0.44%), to end at 1705.77 points. Within the tech benchmark, gainers numbered 63, while 30 Nasdaq100 stocks fell for the day. Volume was tilted 1.0:1 in favour of the losers with 404.59 million traded in the winners compared to 403.82 million in the losers .

NYSE Volume was well above recent averages, with 2.39 billion shares changing hands, while Nasdaq Volume was fairly strong at 1.92 billion shares.

Major Market Statistics
Dow Jones Industrial Average10823.7255.950.52%
Nasdaq Composite22654.050.18%
NYSE Volume2.39bn--
Nasdaq Volume1.92bn--


My 9-stock "bellwethers" group rose by an average of 0.67%

  • General Electric (GE) -$0.08 (0.23%) to $35.47;
  • Citigroup (C) +$0.76 (1.56%) to $49.44;
  • Wal Mart (WMT) +$0.79 (1.62%) to $49.47;
  • I.B.M. (IBM) -$2.25 (2.62%) to $83.71;
  • Intel (INTC) +$0.06 (0.22%) to $26.68;
  • Cisco Systems (CSCO) -$0.02 (0.11%) to $17.50;
  • eBay (EBAY) +$0.93 (2.09%) to $45.36;
  • Fannie Mae (FNM) +$0.75 (1.58%) to $48.35; and
  • Freddie Mac (FRE) +$1.25 (1.95%) to $65.31.

Market Breadth & Internals

NYSE advancing Issues exceeded decliners by 1834 to 1468 for a single-day A/D reading of 366; and Nasdaq losers exceeded gainers by 1575 to 1487. The 10-day moving average of the A/D line rose to 178.5 on the NYSE, while the 10dma of the Nasdaq A/D fell to -2.1.

NYSE advancing volume exceeded volume in decliners by 1398.1 to 938.1 million shares; Nasdaq advancing volume was greater than volume in decliners by 923.2 to 886.1 million shares.

179 NYSE-listed stocks rose to new 52-week highs, and 168 posted fresh 52-week lows, while on the Nasdaq there were 117 stocks that hit new 52-week highs, and 43 which fell to fresh 52-week lows.

Market Breadth Statistics

Advancing Volume (m)1398.07923.17
Declining Volume (m)938.13886.12
New Highs179117
New Lows16843

Market Sentiment Statistics
CBOE Volatility Index11.11-0.38-3.31%
CBOE Nasdaq Volatility Index14.22-0.58-3.92%
Equity Put-Call Ratio0.54-0.1-15.63%
10-day PCR0.5800%
SPX-VIX Ratio114.14.383.99%

Bond Market Analysis

Bonds rose at the long end, with the yield on the benchmark 30-year Treasury bond shedding 0.3 bps to 4.737%.

The middle of the yield curve was broadly higher: five year yields fell to 4.437%, and ten-year yields fell to 4.535%.

Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps wider at 14.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 65.0 bps for 10-year AAA, and 93.0 bps for 20-years.

Treasury Yields
UST 13wk (yld)3.8270.0020.05%
UST 2Y (yld)4.4100%
UST 5Y (yld)4.437-0.019-0.43%
UST 10Y (yld)4.535-0.012-0.26%
UST 30Y (yld)4.737-0.003-0.06%

The Banks Index added 1.36 points (1.31%), to end the session at 105; within the index,

  • Washington Mutual (WM) +$1.48 (3.57%) to $42.94;
  • National City Corp (NCC) +$1.04 (3.07%) to $34.96;
  • US Bancorp (USB) +$0.64 (2.14%) to $30.56;
  • Mellon Financial (MEL) +$0.66 (1.98%) to $33.98; and
  • BB&T Corp (BBT) +$0.71 (1.68%) to $43.08.

The Broker-dealer Index gained 1.29 points (0.66%), to end the session at 195.31; the ticket clippers lined up as follows -

  • Raymond James (RJF) +$0.71 (1.93%) to $37.53;
  • Legg Mason (LM) +$2.14 (1.8%) to $121.11;
  • Morgan Stanley (MWD) +$0.85 (1.5%) to $57.37;
  • Charles Schwab (SCH) +$0.22 (1.48%) to $15.10; and
  • Goldman Sachs (GS) +$1.63 (1.25%) to $131.64.

The Philadelphia SOX (Semiconductor) index posted a rise of 2.64 points (0.53%), at 502.84

  • Freescale Semiconductors (FSL-B) +$0.78 (2.94%) to $27.33;
  • Xilinx (XLNX) +$0.60 (2.24%) to $27.42;
  • Altera (ALTR) +$0.27 (1.39%) to $19.69;
  • Broadcom (BRCM) +$0.63 (1.29%) to $49.50; and
  • KLA-Tencor (KLAC) +$0.64 (1.22%) to $53.29.

Gold & Silver Markets

Gold fell by $7.40 (1.39%) to close at $524.10 per ounce. I've already said my Mea Culpa, Mea Maxima Cupla in the prefaratory remarks, so if you think you're getting another apology down in this section, you've got another think coming.

The Gold Bugs Index lost 1.5 points (0.57%), to 259.47

  • Coeur d'Alene (CDE) -$0.16 (3.81%) to $4.04;
  • Hecla Mining (HL) -$0.10 (2.65%) to $3.67;
  • Iamgold (IAG) -$0.18 (2.41%) to $7.29;
  • Randgold Resources (GOLD) -$0.35 (2.22%) to $15.44; and
  • Eldorado Gold (EGO) -$0.09 (2.18%) to $4.04.

Silver fell by $0.30 (3.34%) to close at $8.59 per ounce. 

The Gold and Silver Index (XAU) lost 0.03 points (0.02%), to 122.95 points.

  • Harmony Gold (HMY) -$0.22 (1.67%) to $12.99;
  • Placer Dome (PDG) -$0.15 (0.66%) to $22.50;
  • Meridian Gold (MDG) -$0.13 (0.64%) to $20.23; and
  • Gold Fields (GFI) -$0.10 (0.59%) to $16.82.
Precious Metals and Indices
PHLX Gold and Silver Index122.95-0.03-0.02%
AMEX Gold BUGS Index259.47-1.5-0.57%

Oil Market

Last night was almost certainly the high in oil for the time being; if it nudges a little higher tomorrow, that's OK. Time and price are spot on for a massive downdraft (again) - but this time the best vehicle for speculation will be Heating Oil or Natural Gas futures. At more than $15, NatGas is priced ridiculously. Short Crude if you like (it will also be a good ride down - it's a downtrend, silly), but frankly HO is the GO.

Oil was firmer, rising by $0.07 per barrel, closing at $61.37 per barrel. The Oil and Gas Index (XOI) rose 3.4 points (0.33%), to 1021.15

  • Amerada Hess (AHC) +$4.23 (3.39%) to $128.95;
  • Occidental Petroleum (OXY) +$0.92 (1.11%) to $83.56; and
  • TotalFinaElf S.A. (TOT) +$1.25 (0.97%) to $129.70.

The Oil service stocks (OSX) Index slid 2.94 points (1.54%), closing at 187.98

  • Noble Corp (NE) -$2.40 (3.18%) to $73.05;
  • Rowan Companies (RDC) -$1.08 (2.78%) to $37.80; and
  • Transocean (RIG) -$1.72 (2.46%) to $68.27.
Energy Complex
Reuters CRB349.110.940.27%
Crude Oil Light Sweet61.370.070.11%
Heating Oil1.83650.063.61%
Natural Gas15.3780.543.62%
Unleaded Gas1.64590-0.05%
AMEX Oil Index1021.153.40.33%
Oil Service Index187.98-2.94-1.54%

Currency Markets

USD Exchange Rates
US Dollar Index90.490.140.15%
Australian Dollar0.7543-0.0009-0.12%
Swiss Franc1.29360.00360.28%
Canadian Dollar0.86950.00110.13%