The Dollar proved to be a little bit of an issue, on an otherwise quiet news day. The Dollar Index started the day higher, flirting with Friday’s peak at 80.855. That is still well below the breakout point at 81.34, but it has moved up away from the rising trend line at 79.99. Fitch called Greek’s bailout plan “uncertain” and also told Bloomberg that it may downgrade Portugal if measures to reduce debt are “insufficient”. Weakness in the Euro led to strength in the Dollar. That early pop in the Dollar weighed on crude, which slipped $1.71 to $80.16. Commodities were lower, dragging down Basic Material and Energy stocks. China told the Financial Times that it intends to continue buying US debt. That means holding Dollar assets, which helped boost the buck and bring down rates ahead of the first leg of the Treasury monthly refunding. Yesterday’s $40 billion in 3-year notes were expected to go off without a hitch, so the Dollar seemed to benefit early. The auction results were decent. The bid-to-cover was 3.13 and indirect bidders took down 51.8% of the offering. The Dollar slowly deteriorated throughout the day, giving up early gains. That weakness aided in a recovery of commodities and the related groups. This is more typical action than what we’ve seen over the past month, where all asset classes seemed to be benefitting from concerns about foreign markets and investments.
Another catalyst that gradually pushed higher throughout the midday session stemmed from Cisco’sq CSCO (0.0%) announcement of its CRS-3. This “Carrier Router System” would increase traffic capacity by 12 times the existing competition. Faster is better, to be sure. However, it isn’t a new “must have” product like the iPhone was for Apple Inc. AAPL (+1.8%). Instead, this improves the capacity for those looking to increase speed and band, but probably won’t have customers, especially customers of competitors, tossing their existing routers in the trash for a new one. It is still good news for the Tech industry. Products can be only as good as the speed at which data can be carried. So now you can get the entire Library of Congress downloaded in just over a second. Impressive, but even my Evelyn Wood Speed Reading Course training won’t get me to read it that fast. Cisco was unchanged, but had surged in the two days prior, as the company arranged for a press conference to announce something that would change the role of the internet “forever”. Cisco was up 3.7% on Monday.
There was a pronounced midday dip. I failed to find a real catalyst, although Basic Materials, one of the groups doing well early in the day, took some of the heat. The sectors that lost ground were mostly defensive, Food, Utilities, Beverage, Tobacco, Insurance, and Pharma. It’s not too negative when it is the “defensive” groups trying to drag the market lower. Telecom topped the list, thanks to Cisco’s coattails to companies that would benefit from super-fast download speeds. Transportation, Capital Goods, Durable Goods and Appliances, and Diversified Financials all did well. These are economically sensitive sectors, which managed to keep the averages in the green. Internally, the action remains bullish, as the Russell 2000 and NASDAQ scored new bull-market rally highs. Advances outpaced declines, which means it was yet another new high for the Breadth Index. We don’t want to get our hopes up too high, but volume actually increased yesterday. Okay, it made it over a billion shares on the NYSE, where it has been pathetic lately. Still, we’ll take an uptick on a positive day as good news.
We’re gearing up for another boring day on Wall Street. Mortgage applications for the week of March 5th will be out. Wholesale Inventories for January are expected to edge up by just 0.2% after falling 0.8% in December. Later in the afternoon, the monthly budget deficit for February is expected to increase to -$222 billion from -$194 billion in January. These aren’t typically market-moving numbers. There will be some interest in Thursday’s report on weekly jobless claims. The weather may be impacting the creation of jobs, but hope springs eternal that the layoffs have slowed. Expectations are for 460,000, down from 469,000 last week. The consolidation process continues. We expect to see more back-and-fill action with investors keenly focused on the old high for the S & P at 1150.45.
The Dollar proved to be a little bit of an issue, on an otherwise quiet news day. The Dollar Index started the day higher, flirting with Friday’s peak at 80.855. That is still well below the breakout point at 81.34, but it has moved up away from the rising trend line at 79.99. Fitch called Greek’s bailout plan “uncertain” and also told Bloomberg that it may downgrade Portugal if measures to reduce debt are “insufficient”. Weakness in the Euro led to strength in the Dollar. That early pop in the Dollar weighed on crude, which slipped $1.71 to $80.16. Commodities were lower, dragging down Basic Material and Energy stocks. China told the Financial Times that it intends to continue buying US debt. That means holding Dollar assets, which helped boost the buck and bring down rates ahead of the first leg of the Treasury monthly refunding. Yesterday’s $40 billion in 3-year notes were expected to go off without a hitch, so the Dollar seemed to benefit early. The auction results were decent. The bid-to-cover was 3.13 and indirect bidders took down 51.8% of the offering. The Dollar slowly deteriorated throughout the day, giving up early gains. That weakness aided in a recovery of commodities and the related groups. This is more typical action than what we’ve seen over the past month, where all asset classes seemed to be benefitting from concerns about foreign markets and investments.
Another catalyst that gradually pushed higher throughout the midday session stemmed from Cisco’sq CSCO (0.0%) announcement of its CRS-3. This “Carrier Router System” would increase traffic capacity by 12 times the existing competition. Faster is better, to be sure. However, it isn’t a new “must have” product like the iPhone was for Apple Inc. AAPL (+1.8%). Instead, this improves the capacity for those looking to increase speed and band, but probably won’t have customers, especially customers of competitors, tossing their existing routers in the trash for a new one. It is still good news for the Tech industry. Products can be only as good as the speed at which data can be carried. So now you can get the entire Library of Congress downloaded in just over a second. Impressive, but even my Evelyn Wood Speed Reading Course training won’t get me to read it that fast. Cisco was unchanged, but had surged in the two days prior, as the company arranged for a press conference to announce something that would change the role of the internet “forever”. Cisco was up 3.7% on Monday.
There was a pronounced midday dip. I failed to find a real catalyst, although Basic Materials, one of the groups doing well early in the day, took some of the heat. The sectors that lost ground were mostly defensive, Food, Utilities, Beverage, Tobacco, Insurance, and Pharma. It’s not too negative when it is the “defensive” groups trying to drag the market lower. Telecom topped the list, thanks to Cisco’s coattails to companies that would benefit from super-fast download speeds. Transportation, Capital Goods, Durable Goods and Appliances, and Diversified Financials all did well. These are economically sensitive sectors, which managed to keep the averages in the green. Internally, the action remains bullish, as the Russell 2000 and NASDAQ scored new bull-market rally highs. Advances outpaced declines, which means it was yet another new high for the Breadth Index. We don’t want to get our hopes up too high, but volume actually increased yesterday. Okay, it made it over a billion shares on the NYSE, where it has been pathetic lately. Still, we’ll take an uptick on a positive day as good news.
We’re gearing up for another boring day on Wall Street. Mortgage applications for the week of March 5th will be out. Wholesale Inventories for January are expected to edge up by just 0.2% after falling 0.8% in December. Later in the afternoon, the monthly budget deficit for February is expected to increase to -$222 billion from -$194 billion in January. These aren’t typically market-moving numbers. There will be some interest in Thursday’s report on weekly jobless claims. The weather may be impacting the creation of jobs, but hope springs eternal that the layoffs have slowed. Expectations are for 460,000, down from 469,000 last week. The consolidation process continues. We expect to see more back-and-fill action with investors keenly focused on the old high for the S & P at 1150.45.