Wednesday, June 30, 2010

Stocks Reversing Sharply Lower into Final Hour on Rising Economic Fear, China Hard-Landing Worries, Tax Hike Concerns

Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Slightly Above Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 33.78 -1.03%
  • ISE Sentiment Index 107.0 +27.38%
  • Total Put/Call 1.02 -5.56%
  • NYSE Arms 1.46 -74.50%
Credit Investor Angst:
  • North American Investment Grade CDS Index 119.47 bps -1.08%
  • European Financial Sector CDS Index 149.84 bps -3.84%
  • Western Europe Sovereign Debt CDS Index 163.50 bps +1.55%
  • Emerging Market CDS Index 268.19 bps -.55%
  • 2-Year Swap Spread 36.0 +1 bp
  • TED Spread 36.0 -3 bps
Economic Gauges:
  • 3-Month T-Bill Yield .17% +3 bps
  • Yield Curve 233.0 -2 bps
  • China Import Iron Ore Spot $138.90/Metric Tonne -.36%
  • Citi US Economic Surprise Index -35.90 +.5 point
  • 10-Year TIPS Spread 1.85% -3 bps
Overseas Futures:
  • Nikkei Futures: Indicating -100 open in Japan
  • DAX Futures: Indicating -60 open in Germany
  • Slightly Higher: On gains in my Medical/Retail long positions and ETF hedges
  • Disclosed Trades: None
  • Market Exposure: 50% Net Long
BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows despite a bounce in the euro, end-of-the-quarter and the market's oversold state. On the positive side, Airline and Oil service stocks are relatively strong, rising .5%+. The S&P GSCI Ag Spot Index is jumping 3.6%, its best showing in many months. Spain sovereign cds is falling -8.4% to 251.63 bps, despite Moody's negative comments. The Greece sovereign cds is falling -8.8% to 910.88 bps and the Portugal sovereign cds is dropping -5.3% to 311.38 bps. The On the negative side, Gaming, Oil Tanker, Computer, Bank, HMO, Networking and Semi shares are under meaningful pressure, falling 1.5%+. Despite the decline in some country-specific sovereign cds, the Western Europe Sovereign CDS Index is moving very close to a new record high. Moreover, the US Municipal CDS Index is jumping another +5.0% to a record 266.3 bps, which is another large negative. The 10-year yield continues to fall too much and is rolling back over to session lows. The market is oversold short-term, but the overall technical action is very poor. Some leading stocks, that had been holding up relatively well, are breaking convincingly below their 50-day moving averages today. Economic data tomorrow will likely continue the recent trend of disappointments. I expect US stocks to trade mixed-to-lower into the close from current levels on rising sovereign debt angst, China hard-landing concerns, increasing economic fear, tax hike worries, regulatory fears and oil spill concerns.


Anonymous said...

Gary said...