North American Investment Grade CDS Index 89.73 bps +3.48%
European Financial Sector CDS Index 96.33 bps +10.28%
Western Europe Sovereign Debt CDS Index 100.17 bps +1.09%
Emerging Market CDS Index 212.75 bps +2.99%
2-Year Swap Spread 18.0 +3 bps
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .15% +1 bp
Yield Curve 275.0 +1 bp
China Import Iron Ore Spot $184.70/Metric Tonne -.97%
Citi US Economic Surprise Index +21.60 -1.2 point
10-Year TIPS Spread 2.34% -1 bp
Overseas Futures:
Nikkei Futures: Indicating -39 open in Japan
DAX Futures: Indicating +48 open in Germany
Portfolio:
Higher: On gains in my Retail, Financial and Tech long positions
Disclosed Trades: Covered all my (IWM)/(QQQQ) hedges and some of my (EEM) short
Market Exposure: Moved to 100% Net Long
BOTTOM LINE: Today's overall market action is very bullish as equities reverse morning losses on heavy volume despite mostly negative news. On the positive side, Gaming, Restaurant, Homebuilding, Disk Drive and Semi stocks are especially strong, rising 2.0%+. Small/Mid-Caps are outperforming. Cyclicals are also relatively strong. (IYR) has outperformed throughout most of the day, rising +1.7%. The AAII % Bulls fell to 38.12 this week, while the % Bears rose to 34.25, which is also a positive. The euro is trading near session lows and continues to trade poorly. On the negative side, Education, Drug, Medical and Wireless shares are under meaningful pressure, falling 1.0%+. The Greece 10-year/bund spread is gaining +13.0% to 576 basis points. The Greece sovereign cds is rising another +24.7% today to 605.75 bps and the Portugal sovereign cds is jumping +20.0% to 269.0 bps. Investor angst gauges are registering a bit more fear, which is a big positive. Market leading stocks are strongly outperforming. The broad market continues to trade very well in the face of significant headwinds, which is a large positive. President Obama's speech on financial reform was much less combative than expected, which reversed morning losses in the big banks. As well, the market seems to be interpreting the eurozone debt problems as a net positive short-term for US equities as large global institutions seek the relative safety of US assets. Finally, (AAPL)'s sharp reversal higher on heavy volume was an important factor in today's market rally off the lows. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less financial sector pessimism and earnings optimism.
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