Market Summary May 15, 2001
Posted Daily Between 5 and 6:30 PM EST
by Lance Lewis
from prudentbear.com
Market Receives Its Usual Shooter, But Fails To Get a Buzz
Asia was higher last night as Japan bounced a percent and Hong
Kong was flat. Europe was up a percent this morning. The
FTSE’s steep fall yesterday turned out to be the result of a trader
mistakenly adding a few zeros to a sell order, and the FTSE
managed to rebound today. The US futures were flat this
morning as everybody awaited their rate cut. We treaded water
until 2:15 when we got our expected dosage: 50 bp and a
continued easy bias (i.e.- still leaning to more “printing.”) The
only mention that inflation got was “inflation is expected to
remain contained.” On the back of that, the S&Ps and NASDAQ
launched to new highs for the day. The bond market rallied
slightly, and gold turned higher. We fell back from the initial spike
higher in stocks and then slowly began to grind higher again as
the bond market hit new lows for the day. Gold traded back up to
the day’s high, after spending most of the day lower after the BOE
auction (more on that later.) Then, we took out the initial rate cut
high in the S&Ps and NASDAQ and squirted a little higher before
flaming out in the last hour and reversing to dive back into the red
and to the lows of the day. The final 30 minutes saw the usual
bounce to take us out near the open. Volume was OK (1 bil on
the NYSE and 1.7 bil on the NASDAQ.) Breadth was slightly
positive on both exchanges. Big winners were in the Internuts as
the INX rose 4 percent. Big losers were in the golds as the HUI
was hit for 2 percent.
SVGI, a semi equipment maker, warned this morning that Q3
revenue would be lower than expected and announced that they
were amputating 10 percent of their workforce. Other than that,
the day was mostly about the reaction to the FOMC. Before the
announcement, weakness was pretty scattered with more stocks
up than down. INTC and MU were noticeably not participating in
the party, and MU was having a hard time remaining above the
$40-level (a level many chart huggers have been watching
closely.) Once the announcement was out and the panic to buy
was on, just about everything flipped around to the green except
MU, which still couldn’t join in the party. As we got nearer to the
close and the NASDAQ started to lose steam, tech faded from the
highs with big cap tech in lead. Semis that were weak this
morning continued to underperform as INTC slipped back into
the red by a percent and MU dove to new lows for the day, down
4 percent and solidly below $40. While the NASDAQ ended up a
couple points on the day, the action in response to the FOMC had
to be a real disappointment to bulls. Financials performed
similarly. The BKX and XBD both traded up on the
announcement but fell back to end up only a percent. GE ended
up a percent. Credit cards were mixed, and FNM and FRE both
ended down a hair. Retailers were mostly lower after HD and
WMT reported this morning, and WMT said that it was cautious
about the last half of the year, fearing (and rightly so) that
consumers may slow their spending as they see “signs that
consumers are becoming more cautious.” The RLX ended down
almost 2 percent.
Oil rose 27 cents. The XOI rose a percent, and the OSX rose 2
percent. Gold fell 20 cents after trading down more than a dollar
earlier in the day. The BOE auction was at $268 and 3.7x
oversubscribed. Lease rates moved higher after recently
consolidating in the 2 percent area over the last few couple
months. The HUI slipped 2 percent, but remained above
yesterday’s low. The fact that gold didn’t collapse after initially
selling off on the BOE auction (as I’ve seen it do so many times) is
a rather bullish sign I think, and obviously the Fed’s continued
bias to easing doesn’t exactly hurt the fundamental picture for the
yellow dog. The US dollar index slipped a hair, and the euro
inched back up to just underneath the 88-cent level. Treasuries
were a little higher in the short end and lower in the long end with
the 30-yr and 10-yr both just shy of new lows for the move. The
bond market finally appears to be figuring out that Uncle Al is
going to try and inflate his way out of this debacle. So, we can
probably look for the bond market to keep selling off till such time
as stocks finally break badly to the downside.
Tonight we’ll hear from AMAT and BRCD. Today, those that
believe the Fed can print away all problems got exactly what they
wanted, a 50 bp cut and a promise of continued hand-holding
going forward. The fact that they couldn’t do anything with that
and had prices slide back to the lows after trying to jam the tape
is bearish. So, now we’ll see if reality matters, or if “hope” and
faith in the Fed can still hold us aloft. I tend to think reality will
matter in a big way going forward… |
