Market Soapbox 12/13/05
Resistance: DJIA 11000; SP500 1300; Nasdaq 2300; NDX 1750
Support: DJIA 10700 ; SP500 1240; Nasdaq 2200; NDX 1650
In our top story tonight, Generalissimo Francisco Franco is STILL dead.
In other news, Retail Sales in at +0.3% vs est. +0.7% vs prior +0.3%, ex-auto is the real story -0.3% vs est. -0.2% vs prior +0.8%, the largest drop in 19 months, showing signs that consumers have already spent their money at the gas pump earlier this year.
Business Inventories at +0.3% vs est. +0.5% vs prior +0.5%. This reduction is inventory would seem to contradict the dip in retail sales, by suggesting that consumers are buying down the inventories, due to falling gasoline prices.
This is anything but the case, as retail sales at gasoline stations dropped by 5.9 percent, the biggest one-month decline in 2 1/2 years, which contributed to the overall ex-auto drop and confirms that the consumer is strapped.
The retail inventory falling to +0.1% is most disturbing and was completely ignored by the markets, along with the inventories-to-sales ratio, a measure of how long it would take to deplete stocks at the current sales pace, which are at a record low 1.25 months.
Should oil & gasoline prices pull back, the consumer will have more discretionary money to spend next year. That event along with the historically lean inventories and minimal slack would spark inflation and keep the Fed raising.
And while on the subject, the FOMC raised FF 25 bps to 4.25%. The key phrases in the statement: "possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.... the Committee will respond to changes in economic prospects as needed."
References to "Monetary Policy Accomodation" which had been a mainstay, were absent from the statement. Noting this, the media talking heads spun the market into a frenzied pop to the upside. The phase "further measured policy firming is likely to be needed" was glossed over.
Translation: with little slack and higher energy inputs there is the possibility of inflation. We will respond as needed and finally, we will keep raising at a measured rate. The more things change, the more they stay the same.
Todays SOOHEY, PIG, PIG!! award goes to GM bond holders, as bonds of General Motors fell after S&P cut its credit rating by two notches to "B", five steps below investment grade, from "BB-minus." and said bankruptcy was not "far-fetched". Can't say you were not warned, SOOHEY PIG PIG!!!
12 weeks ago, DJIA -270 breaking key support. 11 weeks ago, DJIA +148, lacking conviction. 10 weeks ago, DJIA -281 crashing down. 9 weeks ago, large swings DJIA -6. 8 weeks ago larger swings, DJIA -77. Five weeks of downturn totaling -486.
7 weeks ago, recovery begins with larger swings, DJIA +186. 6 weeks ago, broadbased gains DJIA +128. 5 weeks ago, DJIA +154. 4 weeks ago, a slowing, DJIA +79. 3 weeks ago, DJIA +165. Five weeks of gains totaling DJIA +712.
2 weeks ago, DJIA -53, breaking the up trend. Last week, DJIA -99, two straight down weeks. Mon, a split tape day DJIA -11. Today, DJIA +56 with improved internals and higher volume. This week DJIA +45, over the last 12 weeks DJIA +119.
DJUA, SP500 & SOX leading the way up, MID weak, RUT, XAU & DJTA down. CAC & DAX & FTSE up, Hang Seng down, Nikkei 225 up.
Dollar down vs. Euro & up vs. Yen , XAU & gold down BIG, XOI up & crude down @ 61.33, CRB commodities up. Contra trend: none.
Bonds up with the 10 year yield falling @ 4.52% & the 30 year @ 4.72. The 2 & 5 year @ 2 basis points; the 5 & 10 year gap @ 10 basis points; the 10 & 30 gap @ 20 basis points.
Sectors: Biotech, Pharma, Tobacco, Utilities, Cyclical, Natural Gas, Oil, Energy, Semis, Finance, Banking & Commodity up nicely. Airline, Gold Bugs, Tech, Oil Services & Healthcare down.
Looking ahead at potential market influences: Dec 14 EIA Crude Inventories, Trade Balance, Import ex-oil & Export ex-ag Prices; Dec 15 CPI, Initial Claims, NY Empire Index, Net Foreign Purchases, Philly Fed, Capacity Utilization, Industrial Production; Dec 16 Current Account.
The market was going nowhere until after the Fed announcement, then +120 only to fall back 45 points into the close. Interesting observation: Energy sector up, yet Oil Services getting pounded down.
Today: the energy sector gained as crude fell, but natural gas futures spiked +3.6% to a new all time high. Meanwhile the broader market diverged with a pop up on the "happy days" FOMC media spin. With regard to oil futures, thats three straight days the market behaves like it should.
From yesterday: "Tomorrow perhaps a media spin on Retail Sales and the FOMC policy gets bonds, dollar and market pumped up on false hopes." Clueless investors swallowed the hook, and should be mounted as trophy bass.
That is, with the exception of mid and small caps, someone is paying attention. We think this may be the last pop up on the Santa Claus rally and could peak out sometime next week. We are seeing a choppy topping pattern, look out for the other shoulder.
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, this is The Nattering Naybob and your NOT!!!
Support: DJIA 10700 ; SP500 1240; Nasdaq 2200; NDX 1650
In our top story tonight, Generalissimo Francisco Franco is STILL dead.
In other news, Retail Sales in at +0.3% vs est. +0.7% vs prior +0.3%, ex-auto is the real story -0.3% vs est. -0.2% vs prior +0.8%, the largest drop in 19 months, showing signs that consumers have already spent their money at the gas pump earlier this year.
Business Inventories at +0.3% vs est. +0.5% vs prior +0.5%. This reduction is inventory would seem to contradict the dip in retail sales, by suggesting that consumers are buying down the inventories, due to falling gasoline prices.
This is anything but the case, as retail sales at gasoline stations dropped by 5.9 percent, the biggest one-month decline in 2 1/2 years, which contributed to the overall ex-auto drop and confirms that the consumer is strapped.
The retail inventory falling to +0.1% is most disturbing and was completely ignored by the markets, along with the inventories-to-sales ratio, a measure of how long it would take to deplete stocks at the current sales pace, which are at a record low 1.25 months.
Should oil & gasoline prices pull back, the consumer will have more discretionary money to spend next year. That event along with the historically lean inventories and minimal slack would spark inflation and keep the Fed raising.
And while on the subject, the FOMC raised FF 25 bps to 4.25%. The key phrases in the statement: "possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.... the Committee will respond to changes in economic prospects as needed."
References to "Monetary Policy Accomodation" which had been a mainstay, were absent from the statement. Noting this, the media talking heads spun the market into a frenzied pop to the upside. The phase "further measured policy firming is likely to be needed" was glossed over.
Translation: with little slack and higher energy inputs there is the possibility of inflation. We will respond as needed and finally, we will keep raising at a measured rate. The more things change, the more they stay the same.
Todays SOOHEY, PIG, PIG!! award goes to GM bond holders, as bonds of General Motors fell after S&P cut its credit rating by two notches to "B", five steps below investment grade, from "BB-minus." and said bankruptcy was not "far-fetched". Can't say you were not warned, SOOHEY PIG PIG!!!
12 weeks ago, DJIA -270 breaking key support. 11 weeks ago, DJIA +148, lacking conviction. 10 weeks ago, DJIA -281 crashing down. 9 weeks ago, large swings DJIA -6. 8 weeks ago larger swings, DJIA -77. Five weeks of downturn totaling -486.
7 weeks ago, recovery begins with larger swings, DJIA +186. 6 weeks ago, broadbased gains DJIA +128. 5 weeks ago, DJIA +154. 4 weeks ago, a slowing, DJIA +79. 3 weeks ago, DJIA +165. Five weeks of gains totaling DJIA +712.
2 weeks ago, DJIA -53, breaking the up trend. Last week, DJIA -99, two straight down weeks. Mon, a split tape day DJIA -11. Today, DJIA +56 with improved internals and higher volume. This week DJIA +45, over the last 12 weeks DJIA +119.
DJUA, SP500 & SOX leading the way up, MID weak, RUT, XAU & DJTA down. CAC & DAX & FTSE up, Hang Seng down, Nikkei 225 up.
Dollar down vs. Euro & up vs. Yen , XAU & gold down BIG, XOI up & crude down @ 61.33, CRB commodities up. Contra trend: none.
Bonds up with the 10 year yield falling @ 4.52% & the 30 year @ 4.72. The 2 & 5 year @ 2 basis points; the 5 & 10 year gap @ 10 basis points; the 10 & 30 gap @ 20 basis points.
Sectors: Biotech, Pharma, Tobacco, Utilities, Cyclical, Natural Gas, Oil, Energy, Semis, Finance, Banking & Commodity up nicely. Airline, Gold Bugs, Tech, Oil Services & Healthcare down.
Looking ahead at potential market influences: Dec 14 EIA Crude Inventories, Trade Balance, Import ex-oil & Export ex-ag Prices; Dec 15 CPI, Initial Claims, NY Empire Index, Net Foreign Purchases, Philly Fed, Capacity Utilization, Industrial Production; Dec 16 Current Account.
The market was going nowhere until after the Fed announcement, then +120 only to fall back 45 points into the close. Interesting observation: Energy sector up, yet Oil Services getting pounded down.
Today: the energy sector gained as crude fell, but natural gas futures spiked +3.6% to a new all time high. Meanwhile the broader market diverged with a pop up on the "happy days" FOMC media spin. With regard to oil futures, thats three straight days the market behaves like it should.
From yesterday: "Tomorrow perhaps a media spin on Retail Sales and the FOMC policy gets bonds, dollar and market pumped up on false hopes." Clueless investors swallowed the hook, and should be mounted as trophy bass.
That is, with the exception of mid and small caps, someone is paying attention. We think this may be the last pop up on the Santa Claus rally and could peak out sometime next week. We are seeing a choppy topping pattern, look out for the other shoulder.
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, this is The Nattering Naybob and your NOT!!!
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