Lance Lewis Daily Market commentary. Lance writes a free (for now)daily market summary. Here's the link. home.attbi.com
By Lance Lewis
Asia was a little higher last night, but Japan failed to recover the key 10,000 level on the Nikkei. Europe was up a percent this morning, and the US futures were higher. We opened flat and flopped around until the Chicago PMI hit, which showed a bump up to 45.1 in Jan from 41.5 in Dec. That was pretty much ignored. From there we began a slow crawl higher that lasted basically the entire day. By the time the last hour rolled around the Dow was seeing some pretty good motion (up about a percent) but the S&Ps and NASDAQ were basically still flat on the day. Finally, in the last hour the end of the month markup boys showed up and pushed us to a new high for the day, which was where we went out. Volume backed off from yesterday’s unusually high pace but was still respectable (1.5 bil on the NYSE and 1.8 bil on the NASDAQ.) Breadth was 2 to 1 positive on the NYSE and slightly less than that on the NASDAQ.
NEC (NIPNY), Japan’s biggest PC seller and second largest chipmaker reported its loss last night in Japan and guided lower and announced another 10,000 job cuts on top of the 4000 it had already announced. NEC’s ADRs fell 3 percent to a new low in New York. ORCL had an analyst milk and cookies party last night and called “bottom,” again. That seemed to help ORCL tack on 4 percent. ORCL trades at 33x its May ’03 estimate and 9x sales. AMKR, which does semi testing and packaging, reported its loss last night, and (as with most of the chip equipment companies) management said that it was getting more optimistic about the next couple quarters. AMKR is losing money hand over fist, has a debt/equity ratio of 169, and trades at 2x sales. AMKR apparently wasn’t owned by the right funds because it fell 3 percent after that optimistic outlook. The SOX was unusually quiet and only managed to tack on a percent.
JPR was one of the bigger movers lower as it lost 7 percent. The communications semis seemed to be under a little pressure as well. But, elsewhere in networking, CSCO was up 2 percent, so I’m not sure anything other than end of the month chaos was going on there. Today was more about the continuation of the month end markup that began yesterday. I’m not sure there’s anything to glean from the action other than which funds have more muscle at the moment. Janus was incidentally looking a little puny as 2 of its big holdings, MXIM and LLTC, actually sank on the day.
Financials were mostly higher. The BKX rose a percent, and the XBD rose 2 percent. The derivative king rose 3 percent, not quite fully regaining Tuesday’s loss. GE spent most of the day in the red, but (as is commonly seen on end of the month markup day) in the last 15 minutes it managed to squirt about 2 percent to end in the green and up a percent, like magic. FNM and FRE seemed to react more to the weak bond market and sank a percent. Retailers were mostly higher as the RLX rose a percent to a new high for the move.
Oil rose 40 cents. The XOI rose 2 percent, and the OSX rose 4 percent. Gold was unchanged. The HUI rose 2 percent. The JSE Gold index in South Africa was up 4 percent this morning off of AU’s results and ahead of GOLD’s earnings out on Feb 4th. AU reported this morning and announced that it had cut its hedge book last year by almost 20 percent. AU said that it will no longer be adding any further hedges and is looking to unwind its hedges further in order to take advantage of what it feels are positive fundamentals for gold. The US dollar index rose a touch and is once again closing in on a new high for the move. The Yen was smacked for a penny to a new low for the move. The euro slipped back below the 86-cent level and ever so close to a new low. Treasuries were lower with the yield on the 10yr rising to 5.02%.
Today was just another extension of the “Fed has OK’d the recovery/let’s celebrate” rally combined with the month end markup (which is of course illegal, but nobody seems to care, as with Enron, until after they’ve been wiped out.) Tomorrow we have the unemployment number as well as the NAPM (now called the ISM index.) As always with tomorrow’s unemployment number, all that matters is the reaction. We’ve seen numerous times over the last year where we have rallied into the number and then reversed on the news. Let’s see if that pattern holds tomorrow or not. Today’s put/call ratio held steady at around .6 for almost the entire day (as opposed to yesterday’s extremely high ratio.) So, the proper frothiness is certainly present to signal a reversal is around the corner. As chaotic as the market has been lately though, who knows? |
