Tuesday, August 10, 2010

Stocks Declining into Final Hour on Rising Economic Pessimism, Profit-Taking, More Shorting, China Concerns


Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Most Declining
  • Volume: Around Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 22.30 +.72%
  • ISE Sentiment Index 96.0 -25.58%
  • Total Put/Call 1.07 +32.10%
  • NYSE Arms 1.16 +11.27%
Credit Investor Angst:
  • North American Investment Grade CDS Index 105.25.0 bps +2.18%
  • European Financial Sector CDS Index 112.34 bps +10.65%
  • Western Europe Sovereign Debt CDS Index 125.50 bps +4.30%
  • Emerging Market CDS Index 212.11 bps +1.61%
  • 2-Year Swap Spread 19.0 -1 bp
  • TED Spread 26.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .14% unch.
  • Yield Curve 224.0 -4 bps
  • China Import Iron Ore Spot $145.10/Metric Tonne +.42%
  • Citi US Economic Surprise Index -33.0 unch.
  • 10-Year TIPS Spread 1.81% +2 bp
Overseas Futures:
  • Nikkei Futures: Indicating -56 open in Japan
  • DAX Futures: Indicating +27 open in Germany
Portfolio:
  • Lower: On losses in my Retail and Technology long positions
  • Disclosed Trades: Added (IWM)/(QQQQ) hedges, added to my (EEM) short
  • Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 is trading off session lows despite rising worries over China's economy and dovish US Fed rhetoric. On the positive side, Telecom, Utility, Wireless, Drug, Food, Medical, Computer Service and Gold stocks are relatively strong, rising on the day. Weekly retail sales rose +3.0% this week versus a +2.9% gain the prior week and a +2.8% increase two weeks ago, which is a positive considering recent sentiment readings. On the negative side, Semi, Computer, Coal, Gaming, Education and Homebuilding shares are especially weak, falling 1.5%+. Cyclical and Small-cap shares are underperforming. Tech stocks have also underperformed throughout the day. The 10-year yield is falling another -6 bps to 2.77%, which is a negative. The Spain sovereign cds is rising +4.9% to 202.34 bps and the UK sovereign cds is rising +5.16% to 60.15 bps. The US Muni CDS Index is gaining +3.75% to 217.09 bps. The large increase in the Euro Financial Sector CDS Index is a big negative. As well, I am concerned by the recent action in the tech sector and that investors are paying attention to China's difficulties again. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting and mostly positive earnings reports.

3 comments:

Anonymous said...

http://www.cnbc.com/id/38635990

Anonymous said...

http://www.foxnews.com/opinion/2010/08/09/dr-marc-siegel-obamacare-physicians-howard-dean-mandate-health-insurance-care/

Gary said...

Thanks.