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Patience is apparently a virtue: if so, then like most virtues I am sadly lacking. The only virtues I managed to snaffle were beauty and brainitude, both of which are not virtues per se because they can be put to evil ends (as can patience, obviously... people like Darth 'dick' Cheney have to kiss politicians' arses until they are old codgers, before they earn a decent whack... but it pays off bigtime).
Anyhow. We on the USSpy team went long Crude yesterday (at precisely the wrong time of day) and so we're not unhappy in the least. Except (and there is always the 'except') that I was actually too patient in trying to formulate a perfect strategic (as opposed to tactical) entry into Precious Metals and Natural Gas.
If the essence of manoeuvre warfare is the application of fast moving violent semi-chaos in order to force the enemy to divert resources, then what we normally do is far more 4GW. Strike small, strike fast, exit the battlespace quickly and regroup.
That does not jibe, gentlemen, with the idea of formulating a longer-term strategy. In the highly leveraged world of futures, changing to a strategic perspective is to some extent setting aside a core tactical advantage. Too bad - this is one of those "twice in a decade" setups, and we're gonna ride it. If I am right then by the time the first tactical change is required we will be so deep in house money that we won't care if we're wrong thereafter.
Economic News
OK - where to start. Inflation: awful - even the 'core' PPI could not conceal rampant inflation; it was up 0.7% for the month, as opposed to consensus estimates of 0.2%. The actual PPI - the one that actually feeds into producers' costs - rose 1.2% for the month - and producing the highest annualised figure in almost a generation. Last time prices rose this fast, Reagan had just taken office.
Apart from that, it was really just 'vanilla' bad: Building Permits fell off a cliff to 935k from 1.14m last month, as against consensus estimates for a fall to 959k. Housing Starts also fell - from 1.084m to 965k (consensus was for a fall to 960k, so Iguess that counts as a 'beat'... tell that to stockholders in Lennard).
Fed Open Market Operations
The Fed's Open Market Operations desk performed 2 repurchase operations:
- a 28 Day repurchase totalling $ 20bn (the breakup and rate of longer-term repos is not relevant to our interests);
- a 1 Day repurchase totalling $3.25bn, with $2.569 billion in Treasury-backed collateral, with a weighted average rate of 1.95%. Too small to matter.
Headline Indices
The Dow Jones Industrial Average lost 130.84 points (1.14%) to 11348.55 points. The index high for the day was 11478.17 15 minutes after the open, while the low was 11318.50 just after midday. The index basically tried to hold its own for the most part in the afternoon, and held up reasonably well.
The 30 Dow components had total volume traded of 687.48m units. Within the index, 3 issues rose, with aggregate volume of 41.31m units; 25 issues fell, with aggregate volume of 628.7m units.
The S&P500 Index lost 11.91 points (0.93%) to 1266.69 points. Total volume traded in the index was 3.25bn units. Within the index, 96 issues rose, with aggregate volume of 447.34m units; 395 issues fell, with aggregate volume of 2.71bn units. The biggest decliners (in percentage terms) were -
- SLM Corporation (SLM) -2.47 (16%) to $13 on volume of 15.3m shares;
- Lehman Bros. (LEH) -1.96 (13%) to $13.07 on volume of 60.63m shares;
- MGIC Investment (MTG) -0.94 (11.5%) to $7.24 on volume of 5.11m shares;
- AutoNationInc. (AN) -0.88 (7.4%) to $11.05 on volume of 3.79m shares; and
- Macy's Inc. (M) -1.5 (6.9%) to $20.32 on volume of 9.56m shares.
The Nasdaq Composite lost 32.62 points (1.35%) to 2384.36 points and the Nasdaq100 lost 24.02 points (1.24%) to 1908.68 points. The total volume traded in the Nasdaq100 was 819.81m units. Within the index, 15 issues rose, with aggregate volume of 189.01m units; 83 issues fell, with aggregate volume of 626.94m units.
Today the index fell by 24.02 points (1.24%) to 1908.68 points. The main decliners (in percentage terms) were -
- UAL (UAUA) -1.37 (9.2%) to $13.57 on volume of 40.36m shares;
- Ryanair Holdings plc (RYAAY) -1.31 (5.2%) to $23.9 on volume of 0.88m shares;
- Wynn Resorts (WYNN) -4.34 (4.3%) to $96.05 on volume of 3.85m shares;
- Leap Wireless International (LEAP) -1.82 (4.3%) to $40.79 on volume of 1.25m shares; and
- Amylin Pharmaceuticals (AMLN) -1.25 (4.2%) to $28.51 on volume of 8.41m shares.
The CBOE Volatility Index advanced +0.30 points (1.43%) to 21.28 and the CBOE Nasdaq100 Volatility Index advanced +0.62 points (2.63%) to 24.21 points.
A Total of 3475 issues traded today on the NYSE; today's total volume was 4.16 billion shares. A total of 948 counters posted gains for the day, with aggregate volume of 0.98 billion shares trading to the upside. Exerting downwards pressure on the index were the 2441 losers, which accounted for a total volume of 3.11 billion shares. 14 stocks made new 1-year highs on the NYSE, while 176 shares plumbed new 52-week depths.Over on the Nasdaq 2955 tickers traded today; total Nasdaq volume was 1.78 billion shares. A total of 776 stocks posted gains for the day, with aggregate volume of 0.35 billion shares trading to the upside. The red zone of the Nasdaq exchange was populated with 2053 losers, which accounted for a total volume of 1.41 billion shares. 29 Nasdaq-listed stocks hit new 52-week highs, while 110 shares dipped to new 1-year lows.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 11348.55 | -130.84 | -1.14% |
| S&P500 Index | 1266.69 | -11.91 | -0.93% |
| Nasdaq Composite | 2384.36 | -32.62 | -1.35% |
| Nasdaq100 | 1908.68 | -24.02 | -1.24% |
| CBOE Volatility Index | 21.28 | +0.30 | 1.43% |
| CBOE Nasdaq100 Volatility Index | 24.21 | +0.62 | 2.63% |
Dow Darlings:
- Exxon-Mobil (XOM) +1.42 (1.9%) to $77.95 on volume of 22.1m units
- Chevron (CVX) +1.52 (1.8%) to $84.71 on volume of 10.3m units
- Johnson & Johnson (JNJ) +0.06 (0.1%) to $71.15 on volume of 8.9m units
- AIG (AIG) -1.28 (5.9%) to $20.32 on volume of 58.1m units
- Bank Of America (BAC) -1.22 (4.2%) to $28.08 on volume of 69.5m units
- General Motors (GM) -0.41 (4%) to $9.95 on volume of 23.5m units
- Home Depot (HD) -1 (3.7%) to $25.96 on volume of 30.6m units
- American Express (AXP) -1.26 (3.3%) to $36.73 on volume of 13.4m units
Most Traded Dow stocks
- Citigroup (C) --0.43 (2.4%) to $17.19 on volume of 76.2m units
- Bank Of America (BAC) --1.22 (4.2%) to $28.08 on volume of 69.5m units
- Intel (INTC) --0.42 (1.7%) to $23.59 on volume of 66.1m units
- AIG (AIG) --1.28 (5.9%) to $20.32 on volume of 58.1m units
- General Electric (GE) --0.64 (2.2%) to $28.71 on volume of 42.1m units
Precious Metals
Precious metals futures advanced reasonably solidly - looks like we might have to grit our teeth and buy the first pullback, having probably missed the low yesterday.
| Precious Metals Futures | |||
| Index | Close | Gain(Loss) | % |
| Gold | 815.7 | 13.9 | 1.73 |
| Silver | 13.21 | 0.11 | 0.84 |
| Palladium | 288.8 | 1.9 | 0.66 |
| Platinum | 1365 | -28.9 | -2.07 |
The Gold Bugs index (XAU) contains 16 components; the total volume traded in the index was 91.04m units. Within the index, 15 issues rose, with aggregate volume of 89.93m units; 1 issues fell, with aggregate volume of 1.1m units.
Today the index rose by 3.25 points (2.33%) to 142.71 points. Contributing to the advance were -
- Agnico Eagle Mines (AEM) +2.54 (4.9%) to $54.18 on volume of 4.54m shares;
- Silver Wheaton (SLW) +0.49 (4.6%) to $11.04 on volume of 5.97m shares;
- GoldCorp (GG) +1.38 (4.5%) to $31.74 on volume of 12.36m shares;
- Gold Fields Ltd (GFI) +0.39 (4.4%) to $9.18 on volume of 7.08m shares; and
- Harmony Gold (HMY) +0.33 (4.4%) to $7.85 on volume of 3.95m shares.
Energy Complex
Energy futures finally did the business: at one stage they were around $116 a barrel on front-month crude - a $4000 profit on a $2000 margin position . Not bad since yesterday. that said, we're not in Crude for a quick scalp - this is going to be similar to the blog-induced entry when Crude was down in the 50's. Seems like an eternity ago, don't it?
| Energy Futures | |||
| Commodity | Close | Gain(Loss) | % |
| Crude Oil | 114.87 | 2 | 1.77 |
| Heating Oil | 3.141 | 0.0562 | 1.82 |
| Natural Gas | 8.047 | 0.159 | 2.02 |
| Gasoline RBOB | 2.88 | 0.0648 | 2.3 |
| Ethanol | 2.198 | 0.018 | 0.83 |
The Oil Services index (OSX) contains 15 components; the total volume traded in the index was 81.05m units. Within the index, 14 issues rose, with aggregate volume of 77.3m units; 1 issues fell, with aggregate volume of 3.74m units.
Today the index rose by 8.58 points (3.08%) to 287.47 points. Contributing to the advance were -
- Nabors Industries (NBR) +1.52 (4.7%) to $33.92 on volume of 6.72m shares;
- Smith International (SII) +3.2 (4.7%) to $71.7 on volume of 7.16m shares;
- National Oilwell Varco (NOV) +2.93 (4.4%) to $69.91 on volume of 6.11m shares;
- Schlumberger (SLB) +3.51 (3.9%) to $92.88 on volume of 8.57m shares; and
- Cameron International (CAM) +1.63 (3.6%) to $46.32 on volume of 2.99m shares.
Bellwethers
The nine-stock group that makes up the Rant bellwethers declined on average by 2.1%. The fallout occurred as follows:
- General Electric (GE) -0.64 (2.18%) to $28.71 on volume of 42.06m units.
- Citigroup (C) -0.43 (2.44%) to $17.19 on volume of 76.25m units.
- Wal-Mart (WMT) -0.63 (1.07%) to $58.20 on volume of 15.33m units.
- IBM (IBM) -2.03 (1.63%) to $122.56 on volume of 9.31m units.
- Intel (INTC) -0.42 (1.75%) to $23.59 on volume of 66.1m units.
- Cisco Systems (CSCO) -0.25 (1.02%) to $24.24 on volume of 26.8m units.
- Google (GOOG) -7.8 (1.57%) to $490.50 on volume of 3.05m units.
- Fannie Mae (FNM) -0.14 (2.28%) to $6.01 on volume of 84.55m units.
- Freddie Mac (FRE) -0.22 (5.01%) to $4.17 on volume of 113.15m units.
Other Indices of Interest...
The Banks index (BKX) contains 24 components; the total volume traded in the index was 492.96m units. All components fell.
Today the index fell by 2.16 points (3.4%) to 61.42 points. The main decliners (in percentage terms) were -
- BB&T Corp (BBT) -1.63 (5.6%) to $27.44 on volume of 11.88m shares;
- Suntrust Banks (STI) -2.32 (5.6%) to $39.24 on volume of 6.86m shares;
- Comerica Inc (CMA) -1.32 (4.5%) to $27.99 on volume of 3.56m shares;
- Wachovia (WB) -0.66 (4.4%) to $14.3 on volume of 57.2m shares; and
- Keycorp (KEY) -0.49 (4.4%) to $10.66 on volume of 11.32m shares.
The Semiconductor index (SOX) contains 18 components; the total volume traded in the index was 201.14m units. Within the index, 1 stock rose, with aggregate volume of 13.03m units; 17 issues fell, with aggregate volume of 188.11m units.
Today the index fell by 8.37 points (2.26%) to 361.57 points. The main decliners (in percentage terms) were -
- Advanced Micro Devices (AMD) -0.33 (5.6%) to $5.58 on volume of 21.23m shares;
- National Semiconductor (NSM) -1.04 (4.5%) to $21.93 on volume of 6.71m shares;
- Sandisk (SNDK) -0.65 (4.1%) to $15.19 on volume of 10.81m shares;
- Micron Technology (MU) -0.19 (3.7%) to $4.9 on volume of 9.35m shares; and
- Broadcom (BRCM) -0.91 (3.3%) to $26.99 on volume of 10.13m shares.
The ChildKiller ("Defence") index (DFX) contains 17 components; the total volume traded in the index was 70.98m units. Within the index, 1 issues rose, with aggregate volume of 2.71m units; 16 issues fell, with aggregate volume of 68.27m units.
Today the index fell by 5.92 points (1.56%) to 373.17 points. The main decliners (in percentage terms) were -
- Gencorp (GY) -0.27 (3.2%) to $8.07 on volume of 0.22m shares;
- Esterline Tech (ESL) -1.44 (2.8%) to $50.73 on volume of 0.17m shares;
- Rockwell Collins (COL) -1.21 (2.3%) to $52 on volume of 1.48m shares;
- General Electric (GE) -0.64 (2.2%) to $28.71 on volume of 42.06m shares; and
- Teledyne Tech (TDY) -1.23 (1.9%) to $63.01 on volume of 0.21m shares.
Currency Futures
Currency futures showed some softening of the USD bid, with the Euro being the prime beneficiary. Now, go back and read what I wrote the other day about why we would take our currency position in long Euro rather than short USD.
Oh, wait - you probably can't... because you're probably not a subscriber.
| Currency Futures | |||
| Index | Close | Gain(Loss) | % |
| U.S. Dollar Index | 76.915 | -0.355 | -0.46 |
| Euro FX | 1.4745 | 0.007 | 0.48 |
| Swiss Franc | 0.9153 | 0.0042 | 0.46 |
| Australian Dollar | 0.8675 | 0.0017 | 0.2 |
| Canadian Dollar | 0.9405 | 0.0014 | 0.15 |
| Japanese Yen | 0.912 | 0.003 | 0.33 |
| New Zealand Dollar | 0.7094 | 0.0014 | 0.2 |
