BETWEEN THE HEDGES

Friday, September 05, 2008

Market Week in Review

Posted by Gary .....at 11:02 PM

S&P 500 1,242.31 -4.48%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change

Indices
S&P 500 1,242.31 -4.48%
DJIA 11,220.96 -4.22%
NASDAQ 2,255.88 -6.46%
Russell 2000 718.85 -3.87%
Wilshire 5000 12,636.10 -4.49%
Russell 1000 Growth 521.36 -6.20%
Russell 1000 Value 671.13 -2.91%
Morgan Stanley Consumer 685.46 -1.66%
Morgan Stanley Cyclical 842.37 -4.56%
Morgan Stanley Technology 527.14 -8.15%
Transports 4,888.81 -4.89%
Utilities 448.53 -7.73%
MSCI Emerging Markets 36.86 -8.22%

Sentiment/Internals
NYSE Cumulative A/D Line 42,609 -1.55%
Bloomberg New Highs-Lows Index -834 -203.27%
Bloomberg Crude Oil % Bulls 43.0 +13.2%
CFTC Oil Large Speculative Longs 193,540 -5.8%
Total Put/Call .99 +19.28%
OEX Put/Call .88 -25.42%
ISE Sentiment 101.0 -37.65%
NYSE Arms .69 -17.86%
Volatility(VIX) 23.06 +18.68%
G7 Currency Volatility (VXY) 11.59 +12.2%
Smart Money Flow Index 8,070.48 -5.34%
AAII % Bulls 37.04 +20.73%
AAII % Bears 43.21 -4.93 %

Futures Spot Prices
Crude Oil 106.23 -7.87%
Reformulated Gasoline 268.61 -6.11%
Natural Gas 7.45 -7.14%
Heating Oil 298.28 -7.15%
Gold 802.80 -3.95%
Base Metals 208.21 -5.02%
Copper 309.85 -7.94%
Agriculture 383.46 -7.24%

Economy
10-year US Treasury Yield 3.70% -11 basis points
10-year TIPS Spread 1.99% -15 basis points
TED Spread 1.04 -6 basis points
N. Amer. Investment Grade Credit Default Swap Index 145.99 +4.07%
Emerging Markets Credit Default Swap Index 282.26 +7.77%
Citi US Economic Surprise Index +66.20 +5.92%
Fed Fund Futures 2.0% chance of 25 hike, 98.0% chance of no move on 9/16
Iraqi 2028 Govt Bonds 73.0 -1.22%
4-Wk MA of Jobless Claims 438,000 -.7%
Average 30-year Mortgage Rate 6.35% -5 basis points
Weekly Mortgage Applications 453,100 +7.47%
Weekly Retail Sales +1.7%
Nationwide Gas $3.67/gallon unch.
US Cooling Demand Next 7 Days 6.0% above normal
ECRI Weekly Leading Economic Index 126.30 +.72%
US Dollar Index 78.87 +2.31%
Baltic Dry Index 5,874 -15.22%
CRB Index 367.70 -6.52%

Best Performing Style
Small-cap Value -2.28%

Worst Performing Style
Mid-cap Growth -6.2%

Leading Sectors
Airlines +4.29%
Banks +4.22%
Retail +2.55%
Tobacco +1.78%
Insurance +.55%

Lagging Sectors
Oil Services -10.8%
Gold -13.64%
Construction -13.74%
Steel -14.11%
Coal -17.8%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Finish at Session Highs, Boosted by Financial, Homebuilding and Airline Shares

Posted by Gary .....at 4:22 PM

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Slightly Higher into Final Hour on Short-Covering, Less Financial Sector Pessimism, Falling Commodity Prices

Posted by Gary .....at 3:40 PM

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Medical longs, Retail longs and Commodity/Emerging Market shorts. I covered all my (IWM)/(QQQQ) hedges and took profits in some of my commodity shorts this morning, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative as the advance/decline line is lower, sector performance is mixed and volume is above average. Investor anxiety is above average. Today’s overall market action is neutral. The VIX is falling 3.0% and is still above-average at 23.31. The ISE Sentiment Index is low at 108.0 and the total put/call is above average at 1.04. Finally, the NYSE Arms has been running high most of the day, hitting a peak of 1.57, and is currently .81. The Euro Financial Sector Credit Default Swap Index is rising 1.99% today to 97.67 basis points. This index is up from a low of 52.66 on May 5^th, but down from 129.46 basis points on March 20^th. The North American Investment Grade Credit Default Swap Index is +2.38% to 148.75 basis points. The TED spread is falling .93% to 1.13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 1 basis point to 1.96%, which is down 66 basis points in about seven weeks and at the lowest level since August 2003. Despite more negative comments from Goldman Sachs this morning about Merrill Lynch(MER), the stock is trading at session high, rising .4%. As well, the (XLF) continues to trade very well given perceived headwinds, bouncing off its 50-day to session highs, rising 2%. Barton Biggs, of hedge fund Traxis Partners, just said on Bloomberg TV that he thinks the market is “pretty close” to a bottom from which it can mount a “powerful rally” and that falling energy prices will boost consumer spending. I agree with these statements. Oil continues to trade very poorly in the face of numerous potential upside catalysts. A test of $100/bbl. is likely next week barring any significant hurricane damage. I still think a clear break below $100/bbl. would be a big boost to the global economy, especially developed markets. Nikkei futures indicate a -27 open in Japan and DAX futures indicate a +63 open in Germany on Monday. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, less financial sector pessimism and falling commodity prices.

Today's Headlines

Posted by Gary .....at 2:34 PM

Bloomberg:
- Russian stocks plunged and the cost to protect government bonds from default jumped to the highest in four years after the central bank shored up the ruble. Russia's RTS Index dropped 3.8 percent today, capping its worst week since May 2006, and credit-default swaps on the government's debt rose 14 basis points to 166, the highest since November 2004. Investors in Russia pulled out a net $4.6 billion since the invasion of Georgia last month, according to the central bank, contributing to the worst quarterly slump in stocks since the government's debt default a decade ago.
- Corporate bond sales in Europe fell 25 percent this week as the extra yield investors demand to buy the debt jumped to the highest in at least a decade.
- Copper fell the most in a year in London as the largest surge in inventories in three years signaled slowing demand in China, the biggest buyer. Prices extended their drop after the U.S. economy lost jobs in August. Stockpiles rose 18,775 metric tons, or 10 percent, to 200,875 tons, the steepest climb since August 2005, figures from the London Metal Exchange today showed. Almost 90 percent of new metal added went into warehouses in South Korea, the biggest source of LME-monitored copper inventories in Asia. ``This is clear proof that demand from China is growing less dynamically than previously expected,'' said Peter Fertig, a consultant for Dresdner Kleinwort in Hainburg, Germany. Copper will probably decline next year, he said. Copper is the ``most vulnerable'' among metals, Sanford C. Bernstein Ltd. analysts Andrew Keen and Nik Stanojevic wrote in a report today.
- Crude oil fell to a five-month low as the dollar gained, curbing demand for commodities as a hedge, and a government report showed employers in the U.S. cut more jobs last month than forecast, a signal that demand may drop. ``Demand destruction and the strength of the dollar are tailor-made to send oil prices lower,'' said Daniel Flynn, a broker with Alaron Trading Corp. in Chicago. ``If it weren't for the active hurricane season, prices would be below $100.''
- The euro may extend its decline to $1.3355 should it close this week below so-called support between $1.4310 and $1.4365, technical analysts at Citigroup Global Markets Inc. said.
- China, the world's biggest grain consumer, plans to grow genetically modified corn and soybeans for the first time starting next year, the country's largest independent agricultural researcher said. The country now has the technology and is ready to use it to create ``sustainable growth'' in farming incomes and boost grain output, Hanver Li, managing director of Shanghai JC Intelligence Co., said in an interview at a forum in Chengdu.
- John McCain's campaign expects to leave the Republican National Convention with $200 million in the bank and be able to match the Democrats' spending in the next two months, an aide said.
- ADC Telecommunications Inc.(ADCT), the maker of phone equipment for AT&T Inc., rose the most in three months in Nasdaq trading after projecting annual sales that topped analysts' estimates.

Wall Street Journal:
- Oil companies in Alaska are paying more money in taxes than ever before. The state's oil and gas tax revenues for its just-ended fiscal 2007 topped $10 billion. That's twice as much as fiscal 2006 and four times more than 2004. Some supporters of Barack Obama see that money coming in and say that John McCain's running mate, Alaska Gov. Sarah Palin, must have done what Sen. Obama wants to do -- sock those companies with a big fat windfall profit tax. This is a deeply misleading reading of her 2007 tax reform. Mrs. Palin's plan -- called "Alaska's Clear and Equitable Share" (ACES) -- improves incentives for developing new resources. It ensures the state does well in boom times -- as it is doing now -- when oil prices are high. But it also hedges against low prices in the future by ensuring that oil companies exposed to commodity price swings don't face a crushing tax burden when commodity prices fall.
- Top Citadel Investment Group executive Joe Russell, a key architect of the hedge fund's investments in E*Trade Financial Corp. and hedge fund Sowood Capital, has resigned from the firm, according to people familiar with the matter.
- Dell Inc.(DELL) is seeking to sell all of its manufacturing plants worldwide and has approached contract computer manufacturers.

NY Times:
- ESPN, Electronic Arts(ERTS) Merge Game Graphics, Anchors.

CNBC.com:
- Hedge Funds: Another Superman Falls to Earth.

Boston Globe:
- The One Laptop Per Child Foundation will sell its $200 computers at Amazon.com(AMZN) later this year, citing the group’s founder.

TradeWinds:
- Dry-bulk shipping rates won’t rebound any time soon because of weaker demand for raw materials from Chinese steelmakers, citing Shagang Shipping Managing Director Shen Wen Fu. Steelmakers are less willing to hire ships because higher raw-material costs and falling prices are squeezing margins, TradeWinds cited Shen as saying. A weakening Chinese property market is curbing demand for steel, Shen said.

LA Times:
- The average cost of a new vehicle in the second quarter was $25,632 -- a 2.3% decline from the year-earlier period and the steepest drop recorded in the bank's 41-year-old survey.

CBS News:
- The presidential race between Barack Obama and John McCain is now even at 42 percent, according to a new CBS News poll conducted Monday-Wednesday of this week. Twelve percent are undecided according to the poll, and one percent said they wouldn't vote.

TechCrunch:
- Use of Chrome among TechCrunch readers is much higher: 6.23% since Tuesday, making it the fourth most popular browser among TechCrunch readers after Firefox, IE and Safari. Nearly all the market share was taken from IE.

USDA Commodity Intelligence Report:
- With sown area up by 4 percent from last year and yields forecast to increase by at least 10 percent, Russian grain production for 2008/09 will likely reach at least 94 million tons, the largest harvest in 15 years.

Reuters:
- Blackstone Group LP (BX) and Kohlberg Kravis Roberts & Co are each looking to buy parts of Lehman's real estate and asset management units, sources familiar with the situation said on Friday.