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Fridays - especially Friday afternoons - are notorous for being very very dull. So... very... boring.
Tedium is not to be sneezed at - being bored is better than being infuriated. I almost blew a pooper-valve when I read what Henry "Goldman's Man in the Treasury" Paulson thinks will solve the current problems in the US Financial sector. It's not reform, Dear Reader... oh no no no no no no no no no. Reform would indicate that folks like Paulson presided over the deliberate rape of the US financial system, That can't possibly be true - after all, he wears a tie.
No, Paulson's solution is... tightened restrictions on naked short selling. God spare me. Some numbskull has it in his head that making it harder to short sell will prevent stocks from reaping the negative consequences of managerial fat-headedness. Actually, no - they have hit upon short sellers as a bête noir that they can peddle to schoolteachers and stay-at-home mothers... people with the intelligence of Cheryl Kernot; in other words, short-sellers are sort of like da Jooze in pre-War Germany. Stuff going bad? Portfolio losing value? A loaf of bread costs a wheelbarrow full of money? Blame the short sellers - with their strange ways and their big noses and their odd belief that they are the Chosen.... boy, did I just get some metaphor-mixing on, or what?
And of course, major broker-dealers are exempted (you just knew - given that Paulson is a Wall Street stooge - that the Street was going to get a pass, didn't you?)Making shorting harder is dumb. Shorting is already hard due to the uptick rule - you can't short stock on a downtick, although you can BUY on an UPtick no problem. The new rule proposal is designed to do nothing more than pretend that short-sellers are somehow to blame for stock price declines. What balderdash - get a short wrong and you can get your head handed to you just as easily as folks who bought DavNet above $4.
As the old saying goes: "Him that sells what isn't his'n must buy it back or go to pris'n"; not every short position is profitable, but the short-seller boogeyman is like the (fictional) Al Qa'eda netwrok... it offers some nice arcana to fool suburbanites - who want to blame someone other than their government.
From my experience, short sellers are the guys who know the most about a company - in an unvarnished, not-sitting-down-with-some-chick-from-Marketing sort of way. Very few good short-side operators are technical traders - although there are some of those; in the main, people who decide to throw short on a stock have done MUCH more homework than the average noodle-headed nuffnuff who hits "Buy at Market" when Maria Bartiromo flashes her increasingly-wrinkled (but still lovely) eyes and mentions a stock code.
That's the sort of thing that is ignored by the doofuses (or is it doofii?) who nod approvingly at Paulson's pablum. Ooooh.. them naughty speculators, they dun droved up the price of oil.... Perhaps so, moron, but I didn't hear you bitchin when leverage-hypercharged specs were driving up the price of Nasdaq stocks... and houses, for that matter.
Don't get me wrong - this won't affect me one iota; I admire folks who construct long-short portfolios, but I'm not silly enough to try it myself. Much easier to short the whole index (and if you think some stocks are worth holding, use Index futures shorts to hedge away market risk when the market lacks investment merit; that way you retaining the stock-specific investment merit that you've found through well-performed investment research... and that works like a charm).
Small fry (like me) can get single-stock short-side exposure through options, of course - but then you're in the gutter with people like Paulson... facing Grand-Canyon type spreads, time decay, and low liquidity.
So option market makers will be loving Paulson right now.
Economic News
Not a sausage. Not even a 'core' sausage. Not even a hedonically adjusted, CES Birth Death sausage. In other words, there was no data released today. Yawn...
Fed Open Market Operations
The Fed's Open Market Operations desk performed a single repurchases today - a 3 Day (weekend) repurchase totalling $ 7.0billion, with $3.384 billion in Treasury-backed collateral, at a weighted average rate of 1.879% (i.e., 12.1 basis points below Fed Funds).
Headline Indices
With half an hour to go, the Dow Jones Industrial Average was basically unchanged on the day. Then - with absolutely no reason - it advanced relentlessly into the close, eventually posting a gain of +49.91 points (0.44%) to 11496.57 points (11500-ish). The index high for the day was actually 11510.82 (set during a 10-minute 50-pooint burst just after 11a.m. NY time), and the low was 11381.93 just after 10 a.m. (which was not a function of the opening process - remember the NYSE opens at 9:30 a.m.).
Of the 30 Dow components, 19 gained ground for the day, with total upside volume of 496.45m units. 10 Dow components suffered losses for the day, with total volume in declining index components of 239.11m units.
The S&P500 Index advanced a meagre 0.36 points (0.03%) to 1260.68 points. The Nasdaq Composite lost 29.52 points (1.28%) to 2282.78 points. and the Nasdaq100 lost 30.24 points (1.63%) to 1823.23 points.
So in other words, the Dow's performance was goosed for the news headlines, and the rest of the market continued weak
The CBOE Volatility Index lost 0.92 points (3.68%) to 24.09 points. The CBOE Nasdaq100 Volatility Index advanced +0.60 points (2.01%) to 30.47 points.
A Total of 3455 issues traded today on the NYSE; today's total volume was 2bn shares (actually it was 1.997bn, but who's counting?). A total of 1783 counters posted gains for the day, with aggregate volume of 1.02 billion shares trading to the upside. Exerting downwards pressure on the index were the 1582 losers, which accounted for a total volume of 0.98 billion shares. 26 stocks made new 1-year highs on the NYSE, while 123 shares plumbed new 52-week depths.
Over on the Nasdaq 3022 tickers traded today; total Nasdaq volume was 2.2 billion shares. A total of 1274 stocks posted gains for the day, with aggregate volume of 0.9 billion shares trading to the upside. The red zone of the Nasdaq exchange was populated with 1619 losers, which accounted for a total volume of 1.27 billion shares. 54 Nasdaq-listed stocks hit new 52-week highs, while 112 shares dipped to new 1-year lows.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 11496.57 | +49.91 | 0.44% |
| S&P500 Index | 1260.68 | +0.36 | 0.03% |
| Nasdaq Composite | 2282.78 | -29.52 | -1.28% |
| Nasdaq100 | 1823.23 | -30.24 | -1.63% |
| CBOE Volatility Index | 24.09 | -0.92 | -3.68% |
| CBOE Nasdaq100 Volatility Index | 30.47 | +0.60 | 2.01% |
Major Advancers in the Dow were
- Citigroup (C) +1.38 (7.7%) to $19.35 on volume of 190.9m units
- Bank Of America (BAC) +0.99 (3.7%) to $27.49 on volume of 77.1m units
- IBM (IBM) +3.37 (2.7%) to $129.89 on volume of 8.7m units
- General Motors (GM) +0.33 (2.6%) to $13.18 on volume of 24.7m units
- Merck (MRK) +0.72 (1.9%) to $37.68 on volume of 11.3m units
Major Decliners in the Dow were
- Microsoft (MSFT) -1.66 (6%) to $25.86 on volume of 146.6m units
- JPMorganChase (JPM) -0.78 (1.9%) to $40.02 on volume of 28.2m units
- Caterpillar (CAT) -0.94 (1.3%) to $70.89 on volume of 4.5m units
- Disney Corp (DIS) -0.3 (1%) to $30.9 on volume of 6.2m units
- United Technologies (UTX) -0.61 (0.9%) to $64.09 on volume of 4.9m units
Most Traded Dow stocks were
- Citigroup (C) +1.38 (7.7%) to $19.35 on volume of 190.9m units
- Microsoft (MSFT) --1.66 (6%) to $25.86 on volume of 146.6m units
- Bank Of America (BAC) +0.99 (3.7%) to $27.49 on volume of 77.1m units
- Intel (INTC) +0.1 (0.5%) to $22.09 on volume of 54m units
- General Electric (GE) unchanged at $28 on volume of 41.3m units
Precious Metals
Precious metals futures continued weak - I mentioned in the first post of the recent season, that Platinum would roll oer first and drag the rest of the Precious complex down. -
| Precious Metals Futures | |||
| Index | Close | Gain(Loss) | % |
| Gold | 955.3 | -15.4 | -1.59 |
| Silver | 18.22 | -0.515 | -2.75 |
| Palladium | 416.6 | -9.75 | -2.29 |
| Platinum | 1859.7 | -40.7 | -2.14 |
The Gold Bugs index (XAU) contains 16 components; the total volume traded in the index was 50.08m units. Within the index, 9 issues rose, with aggregate volume of 32.84m units; 7 issues fell, with aggregate volume of 17.24m units. Today the index rose by 0.95 points (0.51%) to 187.91 points. Contributing tho the advance were -
- Coeur d'Alene (CDE) +0.11 (4.7%) to $2.46 on volume of 5.64m shares;
- Freeport-McMoran Cp & Gld (FCX) +3.79 (3.8%) to $103.24 on volume of 13.6m shares;
- Freeport McMoran (FCX) +3.79 (3.8%) to $103.24 on volume of 13.6m shares;
- Royal Gold (RGLD) +0.79 (2.3%) to $35.17 on volume of 0.68m shares;
- Silver Stand Resources (SSRI) +0.55 (1.9%) to $29.08 on volume of 0.54m shares;
Energy Complex
Energy futures continued weak - it seems that the nuffnuffs never get tired of learning - the hard way - that markets don't go in one direction forever, When you a quadratic won't proplerly model a chart's progress, the time is right for a pullback. (And of course there is the 'journalist rule' - whatever side the journalists are talking about, you need to be on the opposite side).
| Energy Futures | |||
| Commodity | Close | Gain(Loss) | % |
| Crude Oil | 128.85 | -0.44 | -0.34 |
| Heating Oil | 3.7 | -0.0438 | -1.17 |
| Natural Gas | 10.679 | 0.142 | 1.35 |
| Gasoline RBOB | 3.1695 | 0.0062 | 0.2 |
| Ethanol | 2.417 | -0.093 | -3.71 |
The Oil Services index (OSX) contains 15 components; the total volume traded in the index was 64.19m units. Within the index, 15 issues rose, with aggregate volume of 64.19m units; 0 issues fell, with aggregate volume of 0m units. Today the index rose by 7.95 points (2.52%) to 323.2 points. Contributing tho the advance were -
- Rowan Cos. (RDC) +1.83 (4.5%) to $42.55 on volume of 2.56m shares;
- Smith International (SII) +3.29 (4.1%) to $82.88 on volume of 2.44m shares;
- BJ Services (BJS) +1.11 (4%) to $28.55 on volume of 5.12m shares;
Bellwethers
The nine-stock group that makes up the Rant bellwethers advanced on average by 3.9%. The fallout occurred as follows:
- General Electric (GE) -0 (0%) to $28.00 on volume of 41.34m units.
- Citigroup (C) +1.38 (7.68%) to $19.35 on volume of 190.86m units.
- Wal-Mart (WMT) +0.24 (0.42%) to $57.92 on volume of 8.91m units.
- IBM (IBM) +3.37 (2.66%) to $129.89 on volume of 8.68m units.
- Intel (INTC) +0.10 (0.45%) to $22.09 on volume of 54.03m units.
- Cisco Systems (CSCO) +0.14 (0.65%) to $21.66 on volume of 51.6m units.
- Google (GOOG) -52.12 (9.77%) to $481.32 on volume of 11.22m units.
- Fannie Mae (FNM) +2.47 (22.6%) to $13.40 on volume of 105.52m units.
- Freddie Mac (FRE) +0.85 (10.2%) to $9.18 on volume of 107.43m units.
Other Indices of Interest...
The Banks index (BKX) contains 24 components; the total volume traded in the index was 665.26m units. Within the index, 15 issues rose, with aggregate volume of 462.36m units; 9 issues fell, with aggregate volume of 202.9m units. Today the index rose by 0.57 points (0.92%) to 62.76 points. Contributing tho the advance were -- Washington Mutual (WM) +0.93 (18.6%) to $5.92 on volume of 59.25m shares;
- Citigroup Inc. (C) +1.38 (7.7%) to $19.35 on volume of 190.75m shares;
- Advanced Micro Devices (AMD) -0.65 (12.3%) to $4.65 on volume of 32.48m shares;
- Sandisk (SNDK) -0.55 (3%) to $17.57 on volume of 12.05m shares;
- Marvell Technology (MRVL) -0.45 (2.8%) to $15.55 on volume of 11.54m shares;
- L-3 Communications Holdings (LLL) +3.04 (3.4%) to $92.06 on volume of 0.67m shares;
- Boeing Company (BA) +1.22 (1.8%) to $68.14 on volume of 3.92m shares;
Currency Futures
Currency futures were fairly muted - as befits a Friday.
| Currency Futures | |||
| Index | Close | Gain(Loss) | % |
| U.S. Dollar Index | 72.42 | -0.075 | -0.1 |
| Euro FX | 1.5796 | 0.0026 | 0.16 |
| Swiss Franc | 0.9789 | 0.001 | 0.1 |
| Australian Dollar | 0.9632 | 0.0005 | 0.05 |
| Canadian Dollar | 0.993 | 0.0003 | 0.03 |
| Japanese Yen | 0.9384 | -0.0019 | -0.2 |
| New Zealand Dollar | 0.7545 | -0.0001 | -0.01 |
