The Market was just Ducky
Well baby ducks, it was another contra cyclical, split tape, sideways day which weakened into the close. Consumer inflation was reflected in the Feb CPI report which rose 0.4% (consensus +0.3%), the most in four months, while core CPI, which excludes food and energy costs, rose 0.3%. This stoked further interest rate fears.
The market had a very bearish breadth to it and some unhealthy internals. Overall volume was tepid, NYSE Advance/Decline issues ratio 1 to 3, A/D volume 1/3, 52 week high/low 1/2. The Amex and Nasdaq were a bit healthier, but neither encouraging or convincing.
Interest rate sensitive issues (utilities, homebuilders, MREITS, financial), Small-caps, Mid-caps, Commodities, Oil and Gold got beat like a drum. The sectors getting support were Airlines, Biotech, Semis, Pharmaceutical and Telecom. The bond market, in its 2nd stage of blowoff, (where a continued flight to safety hurt the emerging bond market) held its own.
Airlines where the big gainers on the day, yet the transports were down as trucking companies gave warning of lower revenues. In the last 2 days, while the dollar has firmed back up to $1.30 per Euro and 105 Yen, oil and commodities have had a nice pullback. Crude oil prices with a 4% pullback, recorded their largest one-day decline in 2005, falling $2.22 to $53.81/bbl following the largest build in crude oil supplies since July 2002.
Contra cyclical patterns are not a healthy sign. When the money is flowing to the weakest links in the chain and away from what little strength the market has had, its an indicator that the brown shoes on the street hear the ducks quacking. And loudly quacking ducks are hungry ducks, so the boys throw them some crumbs to eat. Once the ducks are fat and all in line, they will be prepared Peking or L'Orange.
The market had a very bearish breadth to it and some unhealthy internals. Overall volume was tepid, NYSE Advance/Decline issues ratio 1 to 3, A/D volume 1/3, 52 week high/low 1/2. The Amex and Nasdaq were a bit healthier, but neither encouraging or convincing.
Interest rate sensitive issues (utilities, homebuilders, MREITS, financial), Small-caps, Mid-caps, Commodities, Oil and Gold got beat like a drum. The sectors getting support were Airlines, Biotech, Semis, Pharmaceutical and Telecom. The bond market, in its 2nd stage of blowoff, (where a continued flight to safety hurt the emerging bond market) held its own.
Airlines where the big gainers on the day, yet the transports were down as trucking companies gave warning of lower revenues. In the last 2 days, while the dollar has firmed back up to $1.30 per Euro and 105 Yen, oil and commodities have had a nice pullback. Crude oil prices with a 4% pullback, recorded their largest one-day decline in 2005, falling $2.22 to $53.81/bbl following the largest build in crude oil supplies since July 2002.
Contra cyclical patterns are not a healthy sign. When the money is flowing to the weakest links in the chain and away from what little strength the market has had, its an indicator that the brown shoes on the street hear the ducks quacking. And loudly quacking ducks are hungry ducks, so the boys throw them some crumbs to eat. Once the ducks are fat and all in line, they will be prepared Peking or L'Orange.
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