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From where I sit, today's action was a day late... the last twenty minutes of yesterday's session almost had me rethinking my position (which, for the information of non-subscribers, is long). I was back in Paris last night (hence no USRant or OzRant for yesterday's session), but I will say this:
A hedge fund (at least one) just died and went to Hedge Fund Heaven. There is not other way to explain the massive downdraught in Gold and Silver, and the tendency of equities to experience "Don't care about the price" selling late in a given session - despite the fact that timing is right for a bounce, the price level was right, and there was a valid divergence. It was an ohbvious candidate for a contrarian low - what, I have to be a 'contrarian contrarian' now?.
Now when I say "Hedge Fund", I actually mean that sort of fund that takes people's money and punts in a highly leveraged way. Technically, that's not a 'hedge fund' - it's a leveraged punting vehicle: I don't have a problem with suchj vehicles, so long as clients don't think that the term 'hedge' in the name, ens that there's actually any hedging going on. Anyone who thinks that will eventually do their balls.
Thing is, it's relatively easy to perform in a stellar fashion if you're trading with leverage and relatively small amounts of money (say, less than $100 million - although I would reckong that even $50 million is hard enough to place on a day to day trading basis). But when the thng goes well and attracts larger pools of money, the traders (they are NOT 'hedge fund managers') start enjoying growth in FUM (Funds Under Management). They have an incentive to grow FUM due to their performance pay scales (a 1% performance bonus on $10 million is a nice bonus, but what if FUM was a billion?...) andf their 'standard' management fees. (What - you thought these guys would go 'no win, no fee'? Are you out of your f*cking mind?). (Ooopsie... sorry about the lingo - I have been watching Season 6 of "The Sopranos"... great stuff).
So anyway - you can bet your last twenty cents that the traders runnning the fund aren't broke... but the fund sure as hell is.
Federal Reserve Open Market Operations
The Fed's Open Market Operations desk performed 1 repurchase operation - a $9.25billion, overnight repurchase entirely in T-backed collateral undertaken at a 1 basis point discount to the Fed Funds Rate (FFR).
Major US Indices
The Dow Jones Industrial Average gained 110.78 points (1.03%), closing out the day at 10816.92 points. The index hit an intraday high of 10817 (at the close), after falling as low as 10698.85 (at the open). More importantly, the Dow futures closed above 10900. This bounce will not finish today (it might finish tomorrow, but I doubt it... the rest of expiration week will be used to kill newly sold puts - the put-call ratio today was off the scale, athough lots of those will not be for this week's expiration).
The CPI number was high (above expectations at the core), and the Dow futures sold off like blazes - in the absolutely text-book "wrong way reaction" (i.e., it would be the right thing to do if you weren't a contrarian). I have written about this before: whichever direction the market moves after an important data point, it is ALWAYS a fakeout. The Dow futures low was 10740... so it experienced a 160-point reversal: almost 75 points of that came in the last half-hour
Within the blue-chip index, 25 stocks rose, the biggest gainers being Boeing (BA, +6.53% to $82.01) - as a result of Airbus's announcement that it would not deliver the A380 on schedule - and Intel (INTC, +3.56% to $17.73), which accounted for 45 Dow points between them. Losers in the Dow numbered 5 and were led by JPMorganChase (JPM, -1.38% to $39.97) and Citigroup (C, -0.85% to $47.80), with these two stocks contributing -8 Dow points worth of downward pressure on the index. Volume traded was tilted in favour of the gainers by 448.2m shares to 55.3m.
The broader S&P500 posted a rise of 6.35 points (0.52%), at 1230.04 - note that it did not get back to the level of the previous session... that's not a very good sign, but the S&P is pretty heavy in Financials (25% of the index) and so - with brokers and banks still weak - it's no surprise. Within the index, gainers numbered 285, while 180 S&P500 stocks fell for the day. Volume was tilted 2.0:1 in favour of the winners with 1537.43 million units traded in the winners as compared with 781.54 million traded in the losers.
Over at Times Square, the Nasdaq Composite added 13.53 points (0.65%), to close at 2086, while larger-cap technology issues fared better with the Nasdaq100 adding 13.41 points (0.88%), to end at 1530.26 points. Within the tech benchmark, gainers numbered 63, while 29 Nasdaq100 stocks fell for the day. Volume was tilted 2.5:1 in favour of the winners with 658.08 million traded in the winners compared to 267.33 million in the losers .
NYSE Volume was super-duper chunky, with 2.66 billion shares changing hands, while Nasdaq Volume was also super-chunky (over 2 bill), with 2.14 billion shares traded.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 10816.92 | 110.78 | 1.03% |
| S&P500 | 1230.04 | 6.35 | 0.52% |
| Nasdaq Composite | 2086 | 13.53 | 0.65% |
| Nasdaq100 | 1530.26 | 13.41 | 0.88% |
| NYSE Volume | 2.66bn | - | - |
| Nasdaq Volume | 2.14bn | - | - |
Bellwethers
My 9-stock "bellwethers" group rose by an average of 0.74%
- General Electric (GE) +$0.17 (0.5%) to $33.90;
- Citigroup (C) -$0.41 (0.85%) to $47.80;
- Wal Mart (WMT) +$0.18 (0.38%) to $47.71;
- I.B.M. (IBM) +$0.78 (1.01%) to $77.71;
- Intel (INTC) +$0.61 (3.56%) to $17.73;
- Cisco Systems (CSCO) +$0.25 (1.29%) to $19.61;
- eBay (EBAY) +$0.15 (0.49%) to $30.66;
- Fannie Mae (FNM) -$0.18 (0.38%) to $47.26; and
- Freddie Mac (FRE) +$0.36 (0.63%) to $57.58.
Market Breadth & Internals
NYSE advancing Issues exceeded decliners by 1719 to 1549 for a single-day A/D reading of 170; Nasdaq gainers trumped losers by 1620 to 1444. The 10-day moving average of the A/D line rose to -665.7 on the NYSE, while the 10dma of the Nasdaq A/D rose to -651.6.
NYSE advancing volume exceeded volume in decliners by 1736.9 to 894.6 million shares; Nasdaq advancing volume was greater than volume in decliners by 1453 to 648.8 million shares.
15 NYSE-listed stocks rose to new 52-week highs, and 266 posted fresh 52-week lows, while on the Nasdaq there were 28 stocks that hit new 52-week highs, and 236 which fell to fresh 52-week lows.
| Market Breadth Statistics | ||
| NYSE | Nasdaq | |
| Advancers | 1719 | 1620 |
| Decliners | 1549 | 1444 |
| Advancing Volume (m) | 1736.91 | 1452.99 |
| Declining Volume (m) | 894.57 | 648.78 |
| New Highs | 15 | 28 |
| New Lows | 266 | 236 |
| Market Sentiment Statistics | |||
| Index | Close | Gain(Loss) | % |
| CBOE Volatility Index | 21.46 | -2.35 | -9.87% |
| CBOE Nasdaq Volatility Index | 24.34 | -1.39 | -5.4% |
| Equity Put-Call Ratio | 24.13 | 23.12 | 2289.11% |
| 10-day PCR | 3.22 | 2.32 | 260.21% |
| SPX-VIX Ratio | 57.3 | 5.92 | 11.53% |
Bond Market Analysis
Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 7.5 bps to 5.085%.
The middle of the yield curve was broadly lower: five year yields rose to 5.026%, and ten-year yields rose to 5.05%.
Spreads between short-dated (2-yr) Treasuries and high-grade corporate bonds of similar maturity profiles were 1.0 bps tighter at 39.0 basis points; spreads between longer dated Treasuries and their corporate AAA counterparts fell to 77.0 bps for 10-year AAA, and 105.5 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 8.0 bps looser at 28.0 basis points and the 10-year AAA-A spread 5.0 bps looser at 17.0 bps.
| Treasury Yields | |||
| Index | Close | Gain(Loss) | % |
| UST 13wk (yld) | 4.76 | -0.012 | -0.25% |
| UST 2Y (yld) | 5.1 | 0.18 | 3.66% |
| UST 5Y (yld) | 5.026 | 0.101 | 2.05% |
| UST 10Y (yld) | 5.05 | 0.089 | 1.79% |
| UST 30Y (yld) | 5.085 | 0.075 | 1.5% |
The Banks Index dipped 1.13 points (1.06%), closing at 105.5; within the index,
- Fifth Third Bancorp (FITB) -$1.26 (3.3%) to $36.87;
- National City Corp (NCC) -$1.06 (2.88%) to $35.76;
- Comerica (CMA) -$1.04 (1.92%) to $53.22;
- PNC Financial Services (PNC) -$1.30 (1.91%) to $66.89; and
- Wachovia (WB) -$1.01 (1.9%) to $52.03.
The Broker-dealer Index slid 0.3 points (0.16%), ending the day at 192.94; the ticket clippers lined up as follows -
- E*Trade (ET) -$1.24 (6.01%) to $19.38;
- A G Edwards (AGE) -$0.34 (0.7%) to $48.14;
- Goldman Sachs (GS) -$0.75 (0.54%) to $138.50;
- Merrill Lynch (MER) -$0.25 (0.38%) to $65.41; and
- Ameritrade (AMTD) -$0.00 (0%) to $14.32.
The Philadelphia SOX (Semiconductor) index rose 5.94 points (1.37%), at 439.33
- Taiwan Semiconductors (TSM) +$0.43 (5.08%) to $8.90;
- Marvell Tech Group (MRVL) +$1.89 (4.04%) to $48.73;
- Intel (INTC) +$0.61 (3.56%) to $17.73;
- ST Microelectronic (STM) +$0.49 (3.3%) to $15.32; and
- Advanced Micro Devices (AMD) +$0.72 (2.95%) to $25.11.
Gold & Silver Markets
Gold fell by $0.3 (0.05%) to close at $566.50 per ounce. At one stage it was down another $15 or so from yesterday's level (the low was 546.40).
The Gold Bugs Index added 6.14 points (2.24%), to end the session at 279.87
- Freeport McMoran (FCX) +$1.95 (4.46%) to $45.70;
- Coeur d'Alene (CDE) +$0.17 (4.3%) to $4.12;
- Meridian Gold (MDG) +$0.91 (3.49%) to $26.96;
- Goldcorp (GG) +$0.73 (2.96%) to $25.43; and
- Gold Fields (GFI) +$0.48 (2.92%) to $16.94.
Silver rose $0.11 (1.14%) to close at $9.74 per ounce.
The Gold and Silver Index (XAU) gained 2.63 points (2.19%), closing at 122.71 points.
- Freeport McMoran (FCX) +$1.95 (4.46%) to $45.70;
- Durban Rooderpoert Deep (DROOY) +$0.05 (4.31%) to $1.21;
- Meridian Gold (MDG) +$0.91 (3.49%) to $26.96; and
- Goldcorp (GG) +$0.73 (2.96%) to $25.43.
| Precious Metals and Indices | |||
| Index | Close | Gain(Loss) | % |
| Gold | 566.50 | -0.30 | -0.05% |
| Silver | 9.74 | 0.11 | 1.14% |
| PHLX Gold and Silver Index | 122.71 | 2.63 | 2.19% |
| AMEX Gold BUGS Index | 279.87 | 6.14 | 2.24% |
Oil Market
Oil was firmer, rising by $0.58 per barrel, closing at $69.14 per barrel.
The Oil and Gas Index (XOI) added 19.24 points (1.91%), at 1025.92
- Occidental Petroleum (OXY) +$1.31 (1.42%) to $93.41;
- Marathon Oil (MRO) +$1.94 (2.78%) to $71.77; and
- ConocoPhillips (COP) +$1.55 (2.68%) to $59.46.
The Oil service stocks (OSX) Index gained 5.04 points (2.71%), to 190.85
- Noble Corp (NE) +$2.45 (3.9%) to $65.22;
- Halliburton (HAL) +$2.54 (3.72%) to $70.81; and
- Tidewater (TDW) +$1.51 (3.6%) to $43.46.
| Energy Complex | |||
| Index | Close | Gain(Loss) | % |
| Reuters CRB | 372.25 | -0.25 | -0.07% |
| Crude Oil Light Sweet | 69.14 | 0.58 | 0.85% |
| Heating Oil | 1.9359 | 0 | 0.22% |
| Natural Gas | 6.59 | 0.43 | 6.93% |
| Unleaded Gas | 2.0359 | -0.02 | -0.77% |
| AMEX Oil Index | 1025.92 | 19.24 | 1.91% |
| Oil Service Index | 190.85 | 5.04 | 2.71% |
Currency Markets
| USD Exchange Rates | |||
| Index | Close | Gain(Loss) | % |
| US Dollar Index | 85.73 | -0.29 | -0.34% |
| Euro | 1.2598 | -0.0023 | -0.18% |
| Yen | 115.075 | 114.1959 | 12990.09% |
| Sterling | 1.8428 | 0.0053 | 0.29% |
| Australian Dollar | 0.7369 | 0.001 | 0.14% |
| Swiss Franc | 1.2315 | 0.4162 | 51.05% |
| Canadian Dollar | 0.8975 | -0.0036 | -0.4% |
