Market Soapbox 11/10/05
Resistance: DJIA 10800; SP500 1250; Nasdaq 2225; NDX 1670
Support: DJIA 10200 ; SP500 1175; Nasdaq 2000; NDX 1500
In our top story tonight, Generalissimo Francisco Franco is STILL dead.
In other news, as we keep seeding our Chinese affiliates as the trade deficit with China has doubled in the last 16 months, the overall trade deficit widened 11% to a new record $66.1B, from $59B in Aug. vs. est. $61.3B. Oct. Treasury budget checked in at -$47.2B vs.est -$50B, thats an improvement.
And some of the money keeps coming back home, as todays $13 Billion 10 year notes auction saw a yield of 4.578% with indirect bidders buying a record 55.6%, up sharply from 22.1% at a sale of additional 10-year notes in September and the August refunding's 46.9%.
Cisco Systems gave disappointing sales forecasts, their stock dropped -3.5%. Dell's net income fell 28% in Q3 and cut its forward looking growth estimates in half, the stock dropped 1% in afterhours trading.More accounting woes weighing on our Fannie, again missing a regulatory deadline for filing a financial report, this time for the third quarter.
The SEC has ordered Fannie to restate earnings back to 2001, Fannie Mae affirmed previous estimates that the correction will total about $11 billion. The company said it likely will not complete the reworking of its accounting before the second half of next year.
Fannie Mae also disclosed new accounting problems that have been uncovered in recording losses on mortgages and the mortgage-backed securities it guarantees as well as expenses for financing some real estate investments and accounting for low-income housing tax credits and mortgage insurance. Our Fannie Fiasco is going to make GM look like a walk in the park.
Speaking of which, in the last 3 trading days, General Motor shares plunged -5%, -4% and -6.5% respectively for a total drop of over 15%. This action is pertaining to GM quadrupling its Q2 loss figure to $12 Billion and having to restate 2001 earnings and reports that the Pension Benefit Guaranty Corp. may demand a chunk of profits from a potential sale of GMAC.
Today's SOOHEY PIG PIG award once again goes to the holders of GM stock & bonds, and the executives and board members at GM who are the posterboys for everything that is wrong in today's corporate America.
PBGC's demand is WAY OVERDUE and in fact should be MANDATED through FEDERAL LAW. I believe that PBGC should REQUIRE ANY AND ALL necessary proceeds from any liquidation of assets or sale or reorganization of Delphi, GMAC or GM; to be used for honoring the pension & healthcare plans that were promised, before anything else, including executive pay and bonuses.
With the new BK law's, I can't shed my skin and defrock, corporations should not be able to either. This would eliminate the corporate board shenanighans of screwing wage donkeys and unions out of their hard earned benefits, while the executives play golf, jet about & get mega pay and bonuses. SOOHEY, PIG, PIG!!!!
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. Wen, DJIA bounced off of 10600 and closed +6.
Today, an auction inspired major rally in bonds and the dollar spurred the DJIA +94, ripping through 10600 with AUTHORITY on higher volume and with vastly improved internals. This week, DJIA +108, over the last 8 weeks DJIA -64.
DJUA, XAU & XOI pounded down senseless, DJTA, SOX & NDX leading the way up. CAC down, DAX flat, FTSE down, Hang Seng up & Nikkei 225 flat.
Dollar up 6th straight day, longest winning streak since Aug. vs. Euro & up vs. Yen, XAU & gold down, XOI & crude down, CRB commodities down & bonds up. Contra trend: none.
Sectors: Airlines +4%, Biotech, Materials, Finance, Tech, Telecom, Retail, Securities, Tobacco, Transports, Consumer, Cyclical, Healthcare +2.3%, Semis, Real Estate, REIT's & Banking +2% all up BIG. Energy -3%, Gold Bugs, Natural Gas, Networking, Oil, Oil Services -4.2%, Utilities & Commodity clubbed senseless and left for dead.
Bonds UP BIG flattening the curve with the 10 year yield falling @ 4.56% & the 30 year @ 4.74. The 2 & 5 year gap @ 4 basis points; the 5 & 10 year gap @ 9 basis points; the 10 & 30 gap @ 18 basis points.
Looking ahead at potential market influences, Nov 15th: PPI & Retail Sales; Nov 16th: CPI & Net Foreign Purchases; Nov 17th Philly Fed, Capacity Utilization, Industrial Production. Nov 18th: Options Expiration.
From yesterday: "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."
From yesterday: "The inverse relationship of rising oil futures = rising equities continues. And this is a tell that the underlying markets are still fundamentally weak."
Today, oil pulled back -2% to its lowest level since July @ 57.65, and the energy equities were pounded, but the rest of the market ignored the mugging in progress and moved upward and onward.
The market punched through resistence with conviction, decoupling itself from the underlying action of crude by reversing polarity on the oil - equities relationship. This is a VERY POSITIVE sign as the rally was broadbased with the exception of energy.
It seems we could finally be on our way to a new year end high. The bond auction which sparked a bond rally relaxed interest rate fears, so much so that the Amex Broker/Dealer index XBD hit a 52 week high today. But next week the PPI & CPI loom to stoke those fears again, as does the 30 day upswing test.
Caveat Emptor: Falling energy prices more than offset rising costs of other goods and services to cut U.S. import costs 0.3 percent last month. The Labor Department also said that U.S. export prices rose 0.6 percent in October, more than the 0.2 expected, following a 0.8-percent advance the previous month.
The 0.3-percent decline in the price index of U.S. imports marked the first decrease for the index since May and only the second monthly drop recorded in 2005. Prior to the October decline, import prices rose 6.3 percent between May and September, driven by a 36.2-percent jump in petroleum prices over that period.
Folks, if you read between the lines, the bad news is that while oil import costs were less than expected, it was the non-oil segment that grew, which implies the arrival of core inflation growth. Signs of core inflation growth imply higher rates.
The market and investors did not digest this or chose to ignore it because a bond party was in progress. My take is they were unaware of it as the talking heads chose not to say it too loudly.
The upward trend begun on 10/13 is intact and was validated today in a big way. However, we suspect that today was a big ramp job with an eager herd being led by the salt lick of lower rates. As for the 440 put on the SOX, perhaps next weeks action after the CPI & PPI will bring a Dec put into the money just before Friday, lets wait and see.
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, as we keep seeding our Chinese affiliates as the trade deficit with China has doubled in the last 16 months, the overall trade deficit widened 11% to a new record $66.1B, from $59B in Aug. vs. est. $61.3B. Oct. Treasury budget checked in at -$47.2B vs.est -$50B, thats an improvement.
And some of the money keeps coming back home, as todays $13 Billion 10 year notes auction saw a yield of 4.578% with indirect bidders buying a record 55.6%, up sharply from 22.1% at a sale of additional 10-year notes in September and the August refunding's 46.9%.
Cisco Systems gave disappointing sales forecasts, their stock dropped -3.5%. Dell's net income fell 28% in Q3 and cut its forward looking growth estimates in half, the stock dropped 1% in afterhours trading.More accounting woes weighing on our Fannie, again missing a regulatory deadline for filing a financial report, this time for the third quarter.
The SEC has ordered Fannie to restate earnings back to 2001, Fannie Mae affirmed previous estimates that the correction will total about $11 billion. The company said it likely will not complete the reworking of its accounting before the second half of next year.
Fannie Mae also disclosed new accounting problems that have been uncovered in recording losses on mortgages and the mortgage-backed securities it guarantees as well as expenses for financing some real estate investments and accounting for low-income housing tax credits and mortgage insurance. Our Fannie Fiasco is going to make GM look like a walk in the park.
Speaking of which, in the last 3 trading days, General Motor shares plunged -5%, -4% and -6.5% respectively for a total drop of over 15%. This action is pertaining to GM quadrupling its Q2 loss figure to $12 Billion and having to restate 2001 earnings and reports that the Pension Benefit Guaranty Corp. may demand a chunk of profits from a potential sale of GMAC.
Today's SOOHEY PIG PIG award once again goes to the holders of GM stock & bonds, and the executives and board members at GM who are the posterboys for everything that is wrong in today's corporate America.
PBGC's demand is WAY OVERDUE and in fact should be MANDATED through FEDERAL LAW. I believe that PBGC should REQUIRE ANY AND ALL necessary proceeds from any liquidation of assets or sale or reorganization of Delphi, GMAC or GM; to be used for honoring the pension & healthcare plans that were promised, before anything else, including executive pay and bonuses.
With the new BK law's, I can't shed my skin and defrock, corporations should not be able to either. This would eliminate the corporate board shenanighans of screwing wage donkeys and unions out of their hard earned benefits, while the executives play golf, jet about & get mega pay and bonuses. SOOHEY, PIG, PIG!!!!
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. Wen, DJIA bounced off of 10600 and closed +6.
Today, an auction inspired major rally in bonds and the dollar spurred the DJIA +94, ripping through 10600 with AUTHORITY on higher volume and with vastly improved internals. This week, DJIA +108, over the last 8 weeks DJIA -64.
DJUA, XAU & XOI pounded down senseless, DJTA, SOX & NDX leading the way up. CAC down, DAX flat, FTSE down, Hang Seng up & Nikkei 225 flat.
Dollar up 6th straight day, longest winning streak since Aug. vs. Euro & up vs. Yen, XAU & gold down, XOI & crude down, CRB commodities down & bonds up. Contra trend: none.
Sectors: Airlines +4%, Biotech, Materials, Finance, Tech, Telecom, Retail, Securities, Tobacco, Transports, Consumer, Cyclical, Healthcare +2.3%, Semis, Real Estate, REIT's & Banking +2% all up BIG. Energy -3%, Gold Bugs, Natural Gas, Networking, Oil, Oil Services -4.2%, Utilities & Commodity clubbed senseless and left for dead.
Bonds UP BIG flattening the curve with the 10 year yield falling @ 4.56% & the 30 year @ 4.74. The 2 & 5 year gap @ 4 basis points; the 5 & 10 year gap @ 9 basis points; the 10 & 30 gap @ 18 basis points.
Looking ahead at potential market influences, Nov 15th: PPI & Retail Sales; Nov 16th: CPI & Net Foreign Purchases; Nov 17th Philly Fed, Capacity Utilization, Industrial Production. Nov 18th: Options Expiration.
From yesterday: "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."
From yesterday: "The inverse relationship of rising oil futures = rising equities continues. And this is a tell that the underlying markets are still fundamentally weak."
Today, oil pulled back -2% to its lowest level since July @ 57.65, and the energy equities were pounded, but the rest of the market ignored the mugging in progress and moved upward and onward.
The market punched through resistence with conviction, decoupling itself from the underlying action of crude by reversing polarity on the oil - equities relationship. This is a VERY POSITIVE sign as the rally was broadbased with the exception of energy.
It seems we could finally be on our way to a new year end high. The bond auction which sparked a bond rally relaxed interest rate fears, so much so that the Amex Broker/Dealer index XBD hit a 52 week high today. But next week the PPI & CPI loom to stoke those fears again, as does the 30 day upswing test.
Caveat Emptor: Falling energy prices more than offset rising costs of other goods and services to cut U.S. import costs 0.3 percent last month. The Labor Department also said that U.S. export prices rose 0.6 percent in October, more than the 0.2 expected, following a 0.8-percent advance the previous month.
The 0.3-percent decline in the price index of U.S. imports marked the first decrease for the index since May and only the second monthly drop recorded in 2005. Prior to the October decline, import prices rose 6.3 percent between May and September, driven by a 36.2-percent jump in petroleum prices over that period.
Folks, if you read between the lines, the bad news is that while oil import costs were less than expected, it was the non-oil segment that grew, which implies the arrival of core inflation growth. Signs of core inflation growth imply higher rates.
The market and investors did not digest this or chose to ignore it because a bond party was in progress. My take is they were unaware of it as the talking heads chose not to say it too loudly.
The upward trend begun on 10/13 is intact and was validated today in a big way. However, we suspect that today was a big ramp job with an eager herd being led by the salt lick of lower rates. As for the 440 put on the SOX, perhaps next weeks action after the CPI & PPI will bring a Dec put into the money just before Friday, lets wait and see.
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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