BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Internet longs, Medical longs and Biotech longs. I added to my (IWM)/(QQQQ) hedges this morning and then covered them, covered some of my EEM short and covered some of my commodity shorts this afternoon, thus leaving the Portfolio 75% net long. The tone of the market is very negative as the advance/decline line is substantially lower, almost every sector is declining and volume is above average. Investor anxiety is still very elevated. Today’s overall market action is bearish. The VIX is rising 14.98% and is still historically elevated at 63.45. The ISE Sentiment Index is below average at 116.0 and the total put/call is above average at 1.07. Finally, the NYSE Arms has been running very high most of the day, hitting 3.17 at its intraday peak, and is currently 2.05. The Euro Financial Sector Credit Default Swap Index is rising 9.7% today to 95.4 basis points. This index is up from a low of 52.66 on May 5th, but down significantly from 157.81 on Sept. 16th. The North American Investment Grade Credit Default Swap Index is rising 5.2% to 185.18 basis points. The TED spread is falling .3% to 435 basis points. The 2-year swap spread is rising 11.5% to 139.5 basis points.The Libor-OIS spread is dropping .5% to 342 basis points.The 10-year TIPS spread, a good gauge of inflation expectations, is falling 4 basis point to .99%, which is down 164 basis points in just over three months and at the lowest level since February 1999.The steep decline in the (XLF), given recent government action, is a big negative.I suspect we could see more weakness here in the morning after another weak night in Asia, however another sharp rally in US shares is likely very close.Nikkei futures indicate a -800 open in Japan and DAX futures indicate a -31 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting.
No comments:
Post a Comment