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Ihave written here and elsewhere that the car-maker bailout - once announced - should be faded, just as I said that the bank bailout - once announced - should be faded.
Well, Shrubbie McShoeDodger (formerly known as Cokehead McDraftDodger) announced last night that the US government is making the US people subsidise US car-makers.
If you're a US taxpayer, you just bought yourself a shitload of GM stock, and your funds were committed to provide a subsidy to anyone who buys a GM, Ford or Chrysler car. If you're a GM bondholder, you just had Uncle Sam insert hisself in front of you, regardless of how 'senior' you thought your debt was.
CHimpy McIdiot's announcement - delivered in the squinty-eyed semi-lucid format we're used to - moved the markets in the desired direction, for all of about an hour. It was yet another victory for the fade.
For those of you unfamiliar with the terminology, to 'fade' a market means to judiciously take a position in the opposite direction to the prevailing wisdom. In short, it means to find out what the moron-investor thinks, and "bet" against it.
The thinking of the moron investor can best be assessed by watching CNBC for any stretch of 45 seconds. Find out what CNBC thinks, then 'bet' against it once the ducks line up and the initial 'pop' is over.
I put "bet" in quotes because I do not believe that such a strategy actually involves betting: to me, the term 'bet' or 'gamble' implies a game in which it is not possible to construct a strategy with a positive expected return.
For example in blackjack it is possible to 'tilt' the odds (by card-counting) but the long-term expected value of such a strategy can never be raised to above zero. By contrast, the house is not gambling; there is a positive expected return from taking the house side of blackjack players' bets.
Fading big moves - in either direction - has been the lietmotif of the OzRant for weeks now. Those who have been paying attention will have noticed just how often a big move at the open gets reversed savagely later in the day - often the high (or low) of the day is set in the first half hour.
Likewise, on 'big news' days (FOMC meetings, the announcement of TARP, today's car bailout plan) the initial reaction to the news is invariably from people who don't think hard enough about the consequences. They dive in on one side of the market or another, and the market shoots up in that direction; then da Boyz take them to the cleaners.
Economic News
Zilch. Nada. Doughnut.Headline Indices
The Dow Jones Industrial Average slid 25.88 points (0.3%) to 8579.11 points. The index high for the day was 8787.23, set at 10:45 a.m., and then there was a decline of almost 200 points in the following 90 minutes. The low for the session occurred at 3:20 p.m., at 8550.67 points.
Total volume traded in the 30 components of the index was 1.33bn shares. Decliners outpaced gainers by 1.3 to one, with 17 decliners to 13 advancers. Declining volume was greater than advancing volume by 772.69m to 557.94m shares. The main decliners (in percentage terms) were -- Citigroup (C) -0.41 (5.5%) to $7.02 on volume of 201.52m shares;
- AIG (AIG) -0.07 (4.2%) to $1.60 on volume of 45.03m shares;
- Chevron (CVX) -2.18 (3%) to $70.85 on volume of 29.92m shares;
- Exxon-Mobil (XOM) -1.98 (2.6%) to $75.02 on volume of 67.27m shares; and
- Disney Corp (DIS) -0.4 (1.8%) to $22.43 on volume of 20.96m shares.
The S&P500 index (SPX) added 2.6 points (0.29%) to 887.88 points. Total volume traded in the 500 components of the index was 4.92bn shares. Advancers outpaced decliners by 1.6 to one, with 292 advancers to 188 decliners. Advancing volume exceeded declining volume by 2.69bn to 2.14bn shares. The biggest gainers (percentage-wise) were -
- General Motors (GM) +0.83 (22.7%) to $4.49 on volume of 69.38m shares;
- MGIC Investment (MTG) +0.55 (21.6%) to $3.1 on volume of 2.89m shares;
- Darden Restaurants (DRI) +4.57 (19.1%) to $28.55 on volume of 12.86m shares;
- ProLogis (PLD) +1.22 (15.2%) to $9.24 on volume of 15.48m shares; and
- Micron Technology (MU) +0.38 (14.6%) to $2.99 on volume of 35.66m shares.
The Nasdaq Composite rose 11.95 points (0.77%) to 1564.32 points and the Nasdaq100 rose 12.50 points (1.04%) to 1217.19 points..
Total volume traded in the 100 components of the Nasdaq100 was 1.15bn shares. Advancers outpaced decliners by 1.6 to one, with 60 advancers to 38 decliners. Advancing volume exceeded declining volume by 638.58m to 515.61m shares. The biggest gainers (percentage-wise) were -
- Focus Media Holding (FMCN) +1.78 (19.3%) to $10.98 on volume of 7.77m shares;
- Research in Motion (RIMM) +4.39 (11.4%) to $42.83 on volume of 55.27m shares;
- Flextronics International (FLEX) +0.24 (10.7%) to $2.49 on volume of 10.13m shares;
- Oracle (ORCL) +1.17 (7%) to $17.78 on volume of 87.39m shares; and
- Cognizant Technology Solutions (CTSH) +0.88 (5.1%) to $18 on volume of 4.82m shares.
Volatility
The CBOE Volatility Index lost 2.41 points (5.09%) to 44.93 points and the CBOE Nasdaq100 Volatility Index lost 2.53 points (5.5%) to 43.50 points..
Breadth and Internals
A total of 3915 issues traded today on the NYSE; today's total volume was 6.85bn shares. A total of 2277 stocks posted gains for the day, and volume in advancing issues totalled 3.72bn shares. Exerting downwards pressure on the index were 1539 losers, which accounted for a total declining volume of 2.95bn shares. 24 stocks made new 1-year highs on the NYSE, while 95 shares plumbed new 52-week depths.
On the Nasdaq 3059 tickers traded today; total Nasdaq volume was 2.54bn shares. A total of 1451 stocks posted gains for the day, with aggregate volume of 1.49bn shares changing hands in the day's winners. The red zone of the Nasdaq exchange comprised 1506 losers, and total declining volume was 1.03bn shares. 10 Nasdaq-listed stocks hit new 52-week highs, while 114 shares dipped to new 1-year lows.
| Major Market Statistics | |||
| Index | Close | Gain(Loss) | % |
| Dow Jones Industrial Average | 8579.11 | -25.88 | -0.3% |
| S&P500 Index | 887.88 | +2.60 | 0.29% |
| Nasdaq Composite | 1564.32 | +11.95 | 0.77% |
| Nasdaq100 | 1217.19 | +12.50 | 1.04% |
| CBOE Volatility Index | 44.93 | -2.41 | -5.09% |
| CBOE Nasdaq100 Volatility Index | 43.50 | -2.53 | -5.5% |
Dow Darlings
- General Motors (GM) +0.83 (22.7%) to $4.49 on volume of 69.4m units
- General Electric (GE) +0.54 (3.4%) to $16.50 on volume of 128.8m units
- Merck (MRK) +0.82 (3%) to $28.56 on volume of 25.9m units
- American Express (AXP) +0.53 (2.8%) to $19.43 on volume of 19.5m units
- AT&T (T) +0.4 (1.4%) to $28.12 on volume of 47.7m units
Dow Duds:
- Citigroup (C) -0.41 (5.5%) to $7.02 on volume of 201.6m units
- Chevron (CVX) -2.18 (3%) to $70.85 on volume of 29.9m units
- Exxon-Mobil (XOM) -1.98 (2.6%) to $75.02 on volume of 67.3m units
- Disney Corp (DIS) -0.40 (1.8%) to $22.43 on volume of 21m units
- Coca-Cola (KO) -0.75 (1.7%) to $44.43 on volume of 24.8m units
Most Traded Dow stocks:
- Citigroup (C) --0.41 (5.5%) to $7.02 on volume of 201.6m units
- General Electric (GE) +0.54 (3.4%) to $16.50 on volume of 128.8m units
- Microsoft (MSFT) --0.18 (0.9%) to $19.12 on volume of 104.7m units
- Bank Of America (BAC) --0.16 (1.1%) to $13.8 on volume of 103.1m units
- General Motors (GM) +0.83 (22.7%) to $4.49 on volume of 69.4m units
Precious Metals
Precious metals futures got flogged - Gold fell over $37 from its prior session high...
| Precious Metals Futures | |||
| Index | Close | Gain(Loss) | % |
| Gold | 840 | -20.6 | -2.39 |
| Silver | 10.86 | -0.26 | -2.34 |
| Palladium | 177.5 | -1 | -0.56 |
| Platinum | 850.7 | -13.2 | -1.53 |
The Gold Bugs index (XAU) rose 1.89 points (1.7%) to 112.75 points. Total volume traded in the 16 components of the index was 156.25m shares. Advancers outpaced decliners by 4.3 to one, with 13 advancers to 3 decliners. Advancing volume exceeded declining volume by 113.96m to 42.29m shares The biggest gainers (percentage-wise) were -
- RandGold Resources (GOLD) +3.06 (7.6%) to $43.22 on volume of 1.93m shares;
- Agnico Eagle Mines (AEM) +2.95 (6.8%) to $46.62 on volume of 5.79m shares;
- Royal Gold (RGLD) +2.77 (6.6%) to $44.79 on volume of 1.17m shares;
- Silver Wheaton (SLW) +0.29 (5.4%) to $5.69 on volume of 13.33m shares; and
- AngloGold Ashanti (AU) +1.07 (4.4%) to $25.54 on volume of 2.85m shares.
Energy Complex
Energy futures continued to be weak; it's no big deal (note thatthe Crude quote below reflects the new front month, not the spot level)
| Energy Futures | |||
| Commodity | Close | Gain(Loss) | % |
| Crude Oil | 36.00 | -0.22 | -0.61 |
| Heating Oil | 1.4114 | 0.0385 | 2.8 |
| Natural Gas | 5.334 | -0.214 | -3.86 |
| Gasoline RBOB | 0.98 | 0.0171 | 1.78 |
| Ethanol | 1.57 | -0.003 | -0.19 |
The Oil Services index (OSX) rose 2.5 points (2.19%) to 116.68 points. Total volume traded in the 15 components of the index was 139.71m shares. Advancers outpaced decliners by 4 to one, with 12 advancers to 3 decliners. Advancing volume exceeded declining volume by 102.44m to 37.26m shares The biggest gainers (percentage-wise) were -
- Baker Hughes (BHI) +1.74 (6.2%) to $29.99 on volume of 7.3m shares;
- Smith International (SII) +1.26 (5.7%) to $23.42 on volume of 4.79m shares;
- BJ Services (BJS) +0.51 (4.7%) to $11.26 on volume of 5.62m shares;
- Weatherford International (WFT) +0.42 (4.4%) to $9.96 on volume of 14.64m shares; and
- Halliburton (HAL) +0.62 (3.7%) to $17.51 on volume of 26.16m shares.
Currency Futures
Currency futures continued the "Yen pullback" hypothesis that I posted here (and elsewhere) yesterday. Euro and $A were collateral damage - caught in a crossfire of self-immolation between the US and Japan.
| Currency Futures | |||
| Index | Close | Gain(Loss) | % |
| U.S. Dollar Index | 82.09 | 1.475 | 1.83 |
| Euro FX | 1.3853 | -0.043 | -3.01 |
| Swiss Franc | 0.9051 | -0.0276 | -2.96 |
| Australian Dollar | 0.6771 | -0.0118 | -1.71 |
| Canadian Dollar | 0.8175 | -0.016 | -1.92 |
| Japanese Yen | 1.1198 | 0.0001 | 0.01 |
| New Zealand Dollar | 0.5687 | -0.0151 | -2.59 |
Bellwethers
The nine-stock group that makes up the Rant bellwethers declined on average by 1.9%. The fallout occurred as follows:
- General Electric (GE) +0.54 (3.38%) to $16.50 on volume of 128.79m units.
- Citigroup (C) -0.41 (5.52%) to $7.02 on volume of 201.56m units.
- Wal-Mart (WMT) +0.33 (0.6%) to $55.74 on volume of 32.06m units.
- IBM (IBM) -0.48 (0.57%) to $83.52 on volume of 12.85m units.
- Intel (INTC) +0.18 (1.26%) to $14.44 on volume of 68.83m units.
- Cisco Systems (CSCO) -0.02 (0.12%) to $16.64 on volume of 59.9m units.
- Google (GOOG) -0.11 (0.04%) to $310.17 on volume of 5.47m units.
- Fannie Mae (FNM) -0.06 (8.7%) to $0.63 on volume of 14.86m units.
- Freddie Mac (FRE) -0.05 (7.25%) to $0.64 on volume of 10.11m units.
Other Indices of Interest...
The Banks index (BKX) dipped -0.4 points (0.91%) to 43.32 points. Total volume traded in the 24 components of the index was 672.34m shares. Decliners outpaced gainers by 1.6 to one, with 14 decliners to 9 advancers. Declining volume was greater than advancing volume by 501.97m to 170.38m shares. The main decliners (in percentage terms) were -
- M&T Bank (MTB) -3.76 (6.3%) to $55.96 on volume of 3.45m shares;
- Citigroup Inc (C) -0.41 (5.5%) to $7.02 on volume of 201.52m shares;
- Huntington Bancshares (HBAN) -0.42 (5.4%) to $7.31 on volume of 9m shares;
- Zions Bancorp (ZION) -1.03 (4%) to $24.94 on volume of 3.49m shares; and
- Regions Financial (RF) -0.29 (3.5%) to $8.07 on volume of 11.17m shares.
The Semiconductor index (SOX) added 2.89 points (1.38%) to 211.84 points. Total volume traded in the 18 components of the index was 250.97m shares. Advancers outpaced decliners by 5 to one, with 15 advancers to 3 decliners. Advancing volume exceeded declining volume by 236.86m to 14.1m shares The biggest gainers (percentage-wise) were -
- Micron Technology (MU) +0.38 (14.6%) to $2.99 on volume of 35.66m shares;
- Teradyne (TER) +0.27 (6.7%) to $4.29 on volume of 6.36m shares;
- Marvell Technology (MRVL) +0.29 (4.2%) to $7.13 on volume of 17.44m shares;
- Sandisk (SNDK) +0.35 (3.8%) to $9.6 on volume of 11.5m shares; and
- Novellus Systems (NVLS) +0.3 (2.4%) to $12.77 on volume of 1.92m shares.
The ChildKiller ("Defence") index (DFX) gained 1.18 points (0.47%) to 254.71 points. Total volume traded in the 17 components of the index was 177.89m shares. Advancers outpaced decliners by 1.7 to one, with 10 advancers to 6 decliners. Advancing volume exceeded declining volume by 167.72m to 10.17m shares The biggest gainers (percentage-wise) were -
- Northrop Grummanl (NOC) +1.69 (4.1%) to $42.44 on volume of 4.76m shares;
- General Electric (GE) +0.54 (3.4%) to $16.5 on volume of 128.77m shares;
- L-3 Holdings (LLL) +1.42 (2%) to $72.54 on volume of 1.82m shares;
- Rockwell Collins (COL) +0.73 (2%) to $37.69 on volume of 1.62m shares; and
- FLIRr Systems (FLIR) +0.51 (1.9%) to $26.95 on volume of 2.14m shares.
