Market Soapbox 11/09/05
Resistance: DJIA 10600; SP500 1225; Nasdaq 2200; NDX 1640
Support: DJIA 10200 ; SP500 1175; Nasdaq 2000; NDX 1500
In our top story tonight, Generalissimo Francisco Franco is STILL dead.
In other news, EIA reported a hugh jump in crude supply +4.5M barrels vs est. +2M and Gasoline inventory +4.2M vs est. +1.2M. However, distillates, -100K vs est. +700K. Oil pulled back to under $59 per barrel intraday.
U.S. wholesalers are the leanest and meanest in 16 months. Sales +2.4 & wholesale inventories +0.6% in September vs est +0.3%. This brought the Sales to Inventory ratio down from 1.17 to 1.15, approaching the record low of 1.14 in March 2004.
In yesterdays $18 Billion 3 year auction yields averaged 4.458%, indirect bidders, including the central banks, bought 29.9% of the securities, in line with 28% in August and falling off from the 40% average of the past five auctions.
Today's $13 Billion 5 year auction yields averaged 4.525% indirect participation was the worst since June 2003 at 21.1% vs 45.8% last month and falling from the 39.2% average since March 2003.
Tomorrow $13 Billion in 10 year notes will be auctioned. We see more downside i.e. rising yields; for the existing bond market with next years 30 year reintro & refinancing for 70% of the US Treasury debt which all comes due in 2007.
The Fed will raise 25 bps in December & January and the odds are March will see another 25 bps bringing Fed Funds to 4.75, analysts now estimate the 10 year rising to 5.50 by March, we already went on record at a very conservative 5.45 in Jump? How High??
Today's SOOHEY PIG PIG award goes to me for letting the pig have a peaceful day in its poke.
7 weeks ago, DJIA -270 on higher volume, plunging below all major DMA's. 6 weeks ago, DJIA +148, lacking conviction. 5 weeks ago, DJIA -281 crashing down on higher volume. 4 weeks ago, large swings DJIA -6.
3 weeks ago larger swings, DJIA -77, 2 weeks ago, even larger swings, DJIA +186. Last week, broadbased gains on higher volume DJIA +128. This makes two consecutive weeks of gains totaling DJIA +314 as the upward grind started 10/13.
This week, Mon. a weak attempt with DJIA +55 on so-so internals. Tues, a down day DJIA -47 on wretched internals and lower volume. Today, DJIA bounced off of 10600 and closed +6 bleeding into the close on improved internals. This week, DJIA +14, over the last 8 weeks DJIA -158.
For equities, energy futures led the way down & up today, as the inverse relationship of rising oil futures = rising equities continues. And this is a tell that the underlying markets are still fundamentally weak.
DJTA, DJUA, SOX, XAU & RUT all up nicely as the underlying tech rally resumed on its 8th day, the XOI was down. CAC down, DAX flat, FTSE down, Hang Seng up BIG & Nikkei 225 up.
Dollar up 5th straight day, longest winning streak since Aug. vs. Euro & up vs. Yen, XAU & gold up BIG , XOI & crude down, CRB commodities & bonds down. Contra trend: $ & gold up.
Sectors: Airlines, Broadband, Gold Bugs, Biotech, Retail, Real Estate, REIT's, Securities, Transports, Utilities, Semis & Banking all up nicely. Healthcare & Oil down.
Bonds down with the 10 year yield rising @ 4.64% & the 30 year @ 4.82. The 2 & 5 year gap @ 9 basis points; the 5 & 10 year gap @ 8 basis points; the 10 & 30 gap @ 18 basis points.
Looking ahead at potential market influences, options unwind around Wen Nov 9th; Thurs Nov 10th; 10 year note auction, Export & Import prices, Treasury budget & Trade balance. Nov 15th: PPI & Retail Sales; Nov 16th: CPI & Net Foreign Purchases; Nov 17th Philly Fed, Capacity Utilization, Industrial Production. Nov 18th: Options Expiration.
From this week: "a November 440 @ 2.50 put might be a good play this and next week... the ride down may have started at noon today when the SOX hit 455.76." Not so fast on that option Joe... unless the SOX gets hit through this Friday, its bad timing.
Despite First Data issuing downside FY05 guidance, and a disappointing Q3 report and downside FY05 and FY06 guidance from Marvell, the SOX surged 1.3% to 460 and the 440 Nov put went down to 1.10.
We suspect this is a ramp job, as max pain is at 440 and Cisco Systems reports Q1 (Oct) results after the close while Dell reports Q3 earnings tomorrow. With the Nov option expiring next Friday, the time value erosion would negate our potential upside, perhaps a Dec 440 put might be a better option, less return, but more time for the target to walk into our crosshairs.
From yesterday: "Incidentally and unnoticed by most, the NDX hit a 46 month high yesterday at 1636.84, not since 01/11/02 has it been this high." Observing the SOX chart, May UP, June DOWN, July UP, Aug DOWN, Sept UP, Oct DOWN, Nov??? So far following the pattern, UP.
From this week: "Depending on how these reports are received... we could see another consolidation from Nov 8th through Nov 18th." Further study reveals since May, the maximum duration for upswings is around 30 days. The overall market upswing which commenced on 10/13 will reach 30 days next week. The question is how much gas is left in the tank???
Yesterday and today the markets rose prior to the bond auction, during and after they plunged. The liquidity drain is evident. In my opinion we are witnessing a ramp job on auction days. How much of this rally has been a ramp job??
Regarding these questions and overall consolidation, tomorrows 10 year auction, 15th PPI & 16th CPI may force the market down slightly and delay breaking through the former support levels which are now acting as resistance. Having been a range bound and sideways market, these barriers are of great psychological import to investors.
With the real estate bubble peaking & cooling, and rising rates, money may continue to flee the bond market and support equities. Considering the aforementioned and the possibility that the polarity of energy futures to equities could reverse itself with energy futures continuing their slide.
Under those conditions, the tank may be full enough in the near term. Without a change in polarity the rally will stall and the markets will go sideways, something to ponder and TBD.
Keep it tween da ditches, we take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong and Hey! Hey! Lets be careful out there...This is The Nattering Naybob and your NOT!!!
Support: DJIA 10200 ; SP500 1175; Nasdaq 2000; NDX 1500
In our top story tonight, Generalissimo Francisco Franco is STILL dead.
In other news, EIA reported a hugh jump in crude supply +4.5M barrels vs est. +2M and Gasoline inventory +4.2M vs est. +1.2M. However, distillates, -100K vs est. +700K. Oil pulled back to under $59 per barrel intraday.
U.S. wholesalers are the leanest and meanest in 16 months. Sales +2.4 & wholesale inventories +0.6% in September vs est +0.3%. This brought the Sales to Inventory ratio down from 1.17 to 1.15, approaching the record low of 1.14 in March 2004.
In yesterdays $18 Billion 3 year auction yields averaged 4.458%, indirect bidders, including the central banks, bought 29.9% of the securities, in line with 28% in August and falling off from the 40% average of the past five auctions.
Today's $13 Billion 5 year auction yields averaged 4.525% indirect participation was the worst since June 2003 at 21.1% vs 45.8% last month and falling from the 39.2% average since March 2003.
Tomorrow $13 Billion in 10 year notes will be auctioned. We see more downside i.e. rising yields; for the existing bond market with next years 30 year reintro & refinancing for 70% of the US Treasury debt which all comes due in 2007.
The Fed will raise 25 bps in December & January and the odds are March will see another 25 bps bringing Fed Funds to 4.75, analysts now estimate the 10 year rising to 5.50 by March, we already went on record at a very conservative 5.45 in Jump? How High??
Today's SOOHEY PIG PIG award goes to me for letting the pig have a peaceful day in its poke.
7 weeks ago, DJIA -270 on higher volume, plunging below all major DMA's. 6 weeks ago, DJIA +148, lacking conviction. 5 weeks ago, DJIA -281 crashing down on higher volume. 4 weeks ago, large swings DJIA -6.
3 weeks ago larger swings, DJIA -77, 2 weeks ago, even larger swings, DJIA +186. Last week, broadbased gains on higher volume DJIA +128. This makes two consecutive weeks of gains totaling DJIA +314 as the upward grind started 10/13.
This week, Mon. a weak attempt with DJIA +55 on so-so internals. Tues, a down day DJIA -47 on wretched internals and lower volume. Today, DJIA bounced off of 10600 and closed +6 bleeding into the close on improved internals. This week, DJIA +14, over the last 8 weeks DJIA -158.
For equities, energy futures led the way down & up today, as the inverse relationship of rising oil futures = rising equities continues. And this is a tell that the underlying markets are still fundamentally weak.
DJTA, DJUA, SOX, XAU & RUT all up nicely as the underlying tech rally resumed on its 8th day, the XOI was down. CAC down, DAX flat, FTSE down, Hang Seng up BIG & Nikkei 225 up.
Dollar up 5th straight day, longest winning streak since Aug. vs. Euro & up vs. Yen, XAU & gold up BIG , XOI & crude down, CRB commodities & bonds down. Contra trend: $ & gold up.
Sectors: Airlines, Broadband, Gold Bugs, Biotech, Retail, Real Estate, REIT's, Securities, Transports, Utilities, Semis & Banking all up nicely. Healthcare & Oil down.
Bonds down with the 10 year yield rising @ 4.64% & the 30 year @ 4.82. The 2 & 5 year gap @ 9 basis points; the 5 & 10 year gap @ 8 basis points; the 10 & 30 gap @ 18 basis points.
Looking ahead at potential market influences, options unwind around Wen Nov 9th; Thurs Nov 10th; 10 year note auction, Export & Import prices, Treasury budget & Trade balance. Nov 15th: PPI & Retail Sales; Nov 16th: CPI & Net Foreign Purchases; Nov 17th Philly Fed, Capacity Utilization, Industrial Production. Nov 18th: Options Expiration.
From this week: "a November 440 @ 2.50 put might be a good play this and next week... the ride down may have started at noon today when the SOX hit 455.76." Not so fast on that option Joe... unless the SOX gets hit through this Friday, its bad timing.
Despite First Data issuing downside FY05 guidance, and a disappointing Q3 report and downside FY05 and FY06 guidance from Marvell, the SOX surged 1.3% to 460 and the 440 Nov put went down to 1.10.
We suspect this is a ramp job, as max pain is at 440 and Cisco Systems reports Q1 (Oct) results after the close while Dell reports Q3 earnings tomorrow. With the Nov option expiring next Friday, the time value erosion would negate our potential upside, perhaps a Dec 440 put might be a better option, less return, but more time for the target to walk into our crosshairs.
From yesterday: "Incidentally and unnoticed by most, the NDX hit a 46 month high yesterday at 1636.84, not since 01/11/02 has it been this high." Observing the SOX chart, May UP, June DOWN, July UP, Aug DOWN, Sept UP, Oct DOWN, Nov??? So far following the pattern, UP.
From this week: "Depending on how these reports are received... we could see another consolidation from Nov 8th through Nov 18th." Further study reveals since May, the maximum duration for upswings is around 30 days. The overall market upswing which commenced on 10/13 will reach 30 days next week. The question is how much gas is left in the tank???
Yesterday and today the markets rose prior to the bond auction, during and after they plunged. The liquidity drain is evident. In my opinion we are witnessing a ramp job on auction days. How much of this rally has been a ramp job??
Regarding these questions and overall consolidation, tomorrows 10 year auction, 15th PPI & 16th CPI may force the market down slightly and delay breaking through the former support levels which are now acting as resistance. Having been a range bound and sideways market, these barriers are of great psychological import to investors.
With the real estate bubble peaking & cooling, and rising rates, money may continue to flee the bond market and support equities. Considering the aforementioned and the possibility that the polarity of energy futures to equities could reverse itself with energy futures continuing their slide.
Under those conditions, the tank may be full enough in the near term. Without a change in polarity the rally will stall and the markets will go sideways, something to ponder and TBD.
Keep it tween da ditches, we take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong and Hey! Hey! Lets be careful out there...This is The Nattering Naybob and your NOT!!!
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