Market Soapbox 12/23/05
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, bonds having their worst year since 1999 when the Fed bumped up eight times, inverting the yield curve on Jan 26, 2000 which subsequently pricked the dot com equities bubble in March 2000.
Yet, the bond market rallied to levels not seen in over 2 months on the largest drop in new home sales in over 12 years at -11.3%. New Home Sales 1245K vs est. 1290K vs prior 1404K . The magnitude of the drop is a result of following a record upswing last month which was the last flurry of buyers trying to lock in on lower interest rates. The average 30 year fixed loan now sits at 6.33%.
The drop indicates that one of the larger housing bubble areas is cooling with a 22.1% drop in the West, the biggest fall in more than 10 years. Indicating that business will continue to worsen for home builders such as Toll Brothers whose stock price fell 29 percent in the last six months.
Durable orders +4.4% vs est. +1.5% vs prior +3.0% the biggest jump in six months, showing seemingly robust durable orders on demand for commercial aircraft +134%. However, upon further review, bookings for non defense capital goods excluding aircraft, a proxy for future business investment, -2% vs. prior +1.2% and shipments -0.1% vs prior +1.6%.
Indicating that businesses trimmed orders for most types of equipment and are moving slowly to replenish depleted inventories in anticipation of an economic downturn. Warning, Danger, Will Robinson, with limited economic slack and low inventories, it won't take much of an increase in demand to result in an exponential increase in inflation. Michigan Sentiment 91.7 vs est. 88.7 vs prior 88.7 showing improved consumer sentiment.
A Milan court has issued a European arrest warrant for 22 CIA agents suspected of kidnapping an Egyptian cleric from Italy's financial capital in 2003. The case is one of several investigations into whether U.S. intelligence agents used Europe to illegally transfer militant suspects to third countries for interrogation. Really? You think so? Extradition and prisoner transport was never so fun... te he he
13 weeks ago, DJIA -270 breaking key support. 12 weeks ago, DJIA +148, lacking conviction. 11 weeks ago, DJIA -281 crashing down. 10 weeks ago, large swings DJIA -6. 9 weeks ago larger swings, DJIA -77. Five weeks of downturn totaling -486.
8 weeks ago, recovery begins with larger swings, DJIA +186. 7 weeks ago, broadbased gains DJIA +128. 6 weeks ago, DJIA +154. 5 weeks ago, a slowing, DJIA +79. 4 weeks ago, DJIA +165. Five weeks of gains totaling DJIA +712.
3 weeks ago, DJIA -53, breaking the up trend. 2 weeks ago, DJIA -99, two straight down weeks. Last week DJIA a deceiving +99 as mid, small, tech, semis, energy & precious metals pulled back.
Mon, a broadbased consolidation, DJIA -39. Tues, DJIA -31, MID & RUT resisting. Wen, a thinly traded day DJIA +28 bleeding into close. Thurs, DJIA +56 with improved internals.
Today, DJIA -6 on extremely low volume in the 2nd day of an energy sector pullback with the broader market advancing. This week DJIA +8. over the last 13 weeks DJIA +181.
DJIA, NDX, XAX, XMI, XAU & XOI down. RUT, SOX, MID, DJTA up. CAC & DAX up, FTSE down, Hang Seng up & Nikkei 225 flat.
Dollar up vs. Euro & down vs Yen, XAU & gold up @ 505, XOI down & crude up @ 58.43, CRB commodities down, Natural Gas plummeting another 5% for 14% loss in 2 days on a higher inventory read.
MAJOR low end inversion as bonds up BIG with the 10 year yield falling @ 4.38% & the 30 year @ 4.54. 6 month & 2 year gap @ 5 bp; 2 & 5 year gap @ 2 bp; 2 & 10 year gap @ 2 bp; 5 & 10 year gap @ 0 bp; 10 & 30 gap @ 16 bp.
Sectors: Airlines, Disk Drive, Networking, Telecom, Transports & REIT's up nicely. Energy, Oil Services, Natural Gas, Oil & Consumer beat down
Looking ahead at potential market influences: Dec 28 Consumer confidence; Dec 29 Initial claims, Existing home sales, EIA crude inventories; Dec 30 Chicago PMI
From yesterday: "we cannot preclude one last pop to the upside prior to year end... since 12/15 the put to call ratio on equity and index options has gone from 0.41 to 1.22, thats quite a change in sentiment in a very short time." Those short positions are set for Jan, Feb & Mar just check the open interest and options distribution.
"Over the last 5 trading days of the year; monthly, quarterly and year end "bonus" hunting for the brown shoed boys on the Street, will be accomodated" Since 1969, the S&P 500 has gained an average 1.7% in the final five trading days of the year, plus the first two of the new year.
We are paying close attention to Low: NDX 1665 High: SP500 1270 as break out points that will show us whether to pull up our "bermuda" shorts or to grab our "long" johns." Another number to watch: if the rally started 10/13 continues upward in a thinly traded fashion, it probably won't go past 1746 on the NDX.
Remember todays date because the yield curve at the low end collapsed and the equities market took some notice. With 1 or 2 more 25bps bumps, we believe the yield curve will invert sometime in Jan/Feb 2006 and lead to a lesser redux of the 2000 stock market in 2006.
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, bonds having their worst year since 1999 when the Fed bumped up eight times, inverting the yield curve on Jan 26, 2000 which subsequently pricked the dot com equities bubble in March 2000.
Yet, the bond market rallied to levels not seen in over 2 months on the largest drop in new home sales in over 12 years at -11.3%. New Home Sales 1245K vs est. 1290K vs prior 1404K . The magnitude of the drop is a result of following a record upswing last month which was the last flurry of buyers trying to lock in on lower interest rates. The average 30 year fixed loan now sits at 6.33%.
The drop indicates that one of the larger housing bubble areas is cooling with a 22.1% drop in the West, the biggest fall in more than 10 years. Indicating that business will continue to worsen for home builders such as Toll Brothers whose stock price fell 29 percent in the last six months.
Durable orders +4.4% vs est. +1.5% vs prior +3.0% the biggest jump in six months, showing seemingly robust durable orders on demand for commercial aircraft +134%. However, upon further review, bookings for non defense capital goods excluding aircraft, a proxy for future business investment, -2% vs. prior +1.2% and shipments -0.1% vs prior +1.6%.
Indicating that businesses trimmed orders for most types of equipment and are moving slowly to replenish depleted inventories in anticipation of an economic downturn. Warning, Danger, Will Robinson, with limited economic slack and low inventories, it won't take much of an increase in demand to result in an exponential increase in inflation. Michigan Sentiment 91.7 vs est. 88.7 vs prior 88.7 showing improved consumer sentiment.
A Milan court has issued a European arrest warrant for 22 CIA agents suspected of kidnapping an Egyptian cleric from Italy's financial capital in 2003. The case is one of several investigations into whether U.S. intelligence agents used Europe to illegally transfer militant suspects to third countries for interrogation. Really? You think so? Extradition and prisoner transport was never so fun... te he he
13 weeks ago, DJIA -270 breaking key support. 12 weeks ago, DJIA +148, lacking conviction. 11 weeks ago, DJIA -281 crashing down. 10 weeks ago, large swings DJIA -6. 9 weeks ago larger swings, DJIA -77. Five weeks of downturn totaling -486.
8 weeks ago, recovery begins with larger swings, DJIA +186. 7 weeks ago, broadbased gains DJIA +128. 6 weeks ago, DJIA +154. 5 weeks ago, a slowing, DJIA +79. 4 weeks ago, DJIA +165. Five weeks of gains totaling DJIA +712.
3 weeks ago, DJIA -53, breaking the up trend. 2 weeks ago, DJIA -99, two straight down weeks. Last week DJIA a deceiving +99 as mid, small, tech, semis, energy & precious metals pulled back.
Mon, a broadbased consolidation, DJIA -39. Tues, DJIA -31, MID & RUT resisting. Wen, a thinly traded day DJIA +28 bleeding into close. Thurs, DJIA +56 with improved internals.
Today, DJIA -6 on extremely low volume in the 2nd day of an energy sector pullback with the broader market advancing. This week DJIA +8. over the last 13 weeks DJIA +181.
DJIA, NDX, XAX, XMI, XAU & XOI down. RUT, SOX, MID, DJTA up. CAC & DAX up, FTSE down, Hang Seng up & Nikkei 225 flat.
Dollar up vs. Euro & down vs Yen, XAU & gold up @ 505, XOI down & crude up @ 58.43, CRB commodities down, Natural Gas plummeting another 5% for 14% loss in 2 days on a higher inventory read.
MAJOR low end inversion as bonds up BIG with the 10 year yield falling @ 4.38% & the 30 year @ 4.54. 6 month & 2 year gap @ 5 bp; 2 & 5 year gap @ 2 bp; 2 & 10 year gap @ 2 bp; 5 & 10 year gap @ 0 bp; 10 & 30 gap @ 16 bp.
Sectors: Airlines, Disk Drive, Networking, Telecom, Transports & REIT's up nicely. Energy, Oil Services, Natural Gas, Oil & Consumer beat down
Looking ahead at potential market influences: Dec 28 Consumer confidence; Dec 29 Initial claims, Existing home sales, EIA crude inventories; Dec 30 Chicago PMI
From yesterday: "we cannot preclude one last pop to the upside prior to year end... since 12/15 the put to call ratio on equity and index options has gone from 0.41 to 1.22, thats quite a change in sentiment in a very short time." Those short positions are set for Jan, Feb & Mar just check the open interest and options distribution.
"Over the last 5 trading days of the year; monthly, quarterly and year end "bonus" hunting for the brown shoed boys on the Street, will be accomodated" Since 1969, the S&P 500 has gained an average 1.7% in the final five trading days of the year, plus the first two of the new year.
We are paying close attention to Low: NDX 1665 High: SP500 1270 as break out points that will show us whether to pull up our "bermuda" shorts or to grab our "long" johns." Another number to watch: if the rally started 10/13 continues upward in a thinly traded fashion, it probably won't go past 1746 on the NDX.
Remember todays date because the yield curve at the low end collapsed and the equities market took some notice. With 1 or 2 more 25bps bumps, we believe the yield curve will invert sometime in Jan/Feb 2006 and lead to a lesser redux of the 2000 stock market in 2006.
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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