Tuesday, May 18, 2010

Stocks Sharply Lower into Final Hour on Rising Financial Sector Pessimism, Regulatory Fears, Tax Hike Worries, Euro Decline

Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Above Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 33.37 +8.20%
  • ISE Sentiment Index 96.0 -18.64%
  • Total Put/Call 1.02 +.99%
  • NYSE Arms 2.37 +155.41%
Credit Investor Angst:
  • North American Investment Grade CDS Index 118.55 bps +8.9%
  • European Financial Sector CDS Index 1335.63 bps -4.48%
  • Western Europe Sovereign Debt CDS Index 114.33 bps -.72%
  • Emerging Market CDS Index 272.79 bps +9.38%
  • 2-Year Swap Spread 38.0 +3 bps
  • TED Spread 31.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .16% +1 bp
  • Yield Curve 263.0 -6 bps
  • China Import Iron Ore Spot $162.90/Metric Tonne -.24%
  • Citi US Economic Surprise Index +22.80 +1.2 points
  • 10-Year TIPS Spread 2.18% -1 bp
Overseas Futures:
  • Nikkei Futures: Indicating -87 open in Japan
  • DAX Futures: Indicating -52 open in Germany
  • Slightly Lower: On losses in my Technology long positions
  • Disclosed Trades: Added to my (IWM), (QQQQ) hedges and added to my (EEM) short
  • Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is very bearish as equities trade near session lows despite gains in European shares, lower sovereign debt angst and a bounce in Shanghai overnight. On the positive side, HMO, Computer Service, Medical and Oil Tanker stocks are flat. Oil is lower again on rising supply, another euro plunge and worries over Chinese demand. The Spain sovereign cds is falling another -10.44% to 170.02 bps. On the negative side, Bank, Education, I-Bank, Steel, Disk Drive, Alt Energy, REIT and Semi shares are under meaningful pressure, falling 2.5%+. Cyclicals are underperforming, falling -2.3%. The sharp increase in the emerging market and North Amer. Inv. Grade cds is a large negative. As well, the 2-year swap spread is surging to the highest since the peak of the Greece fears 8 days ago. The decline in the euro is disorderly again and the 10-year yield is starting to fall too fast. US stocks have traded poorly all day. Even after a bounce in Shanghai overnight, lower sovereign debt angst, gains in European stocks and a jump in (WMT) shares, US stocks were met with meaningful selling since the open. Losses have accelerated on new regulatory fears and the disorderly decline in the euro. The horrid action in shares of (V)/(MA) is a red flag for the broad market. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, technical selling, regulatory rumors, rising economic fears, increasing financial sector pessimism and tax hike concerns.


Anonymous said...

Goog goes too far>....


Anonymous said...