Monday, November 15, 2010

Stocks Slightly Higher into Final Hour on Buyout Activity, Less Euro Sovereign Debt Angst, Diminishing Economic Fear


Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Rising
  • Volume: Slightly Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 19.46 -5.58%
  • ISE Sentiment Index 177.0 +110.71%
  • Total Put/Call .76 -21.65%
  • NYSE Arms .78 -55.99%
Credit Investor Angst:
  • North American Investment Grade CDS Index 91.77 bps -.79%
  • European Financial Sector CDS Index 112.28 bps +3.87%
  • Western Europe Sovereign Debt CDS Index 165.66 bps -2.74%
  • Emerging Market CDS Index 213.41 bps +1.46%
  • 2-Year Swap Spread 20.0 -2 bps
  • TED Spread 15.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .13% +1 bp
  • Yield Curve 239.0 +13 bps
  • China Import Iron Ore Spot $160.80/Metric Tonne -.62%
  • Citi US Economic Surprise Index +28.50 -7.5 points
  • 10-Year TIPS Spread 2.09% +1 bp
Overseas Futures:
  • Nikkei Futures: Indicating +68 open in Japan
  • DAX Futures: Indicating +9 open in Germany
Portfolio:
  • Slightly Higher: On gains in my Medical and Biotech long positions
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades just slightly higher despite a decline in euro sovereign debt angst, buyout activity and mostly positive US economic data. On the positive side, Road & Rail, Education, Gaming, Disk Drive and Oil Tanker Shares are especially strong, rising more than 1%. (XLF) has outperformed throughout the day. Small-cap and cyclical shares are also outperforming. The Spain sovereign cds is declining -4.56% to 254.83 bps, the Portugal sovereign cds is down -2.80% to 438.61 bps and the Ireland sovereign cds is down -4.93% to 525.34 bps. On the negative side, Homebuilding, Networking, Internet, Gold, Ag and HMO shares are under meaningful pressure, falling more than 1.0%. Tech sector shares have underperformed today. Lumber is dropping -1.5%. The Illinois and California municipal cds are up +3.87% and +4.21%, respectively. Another jump in the Euro Financial Sector CDS Index, despite the decline in euro sovereign debt angst, is also a big negative. The euro currency continues to trade poorly. DRAM prices continue to move lower. The Citi Asia Pacific Economic Surprise Index is falling another -2.2 points today to -3.50, which is very near a 52-week low. The 10-year yield continues to rise too much too fast, gaining another +13 bps to 2.92%. Overall investor angst is a big too bullish given recent headwinds and the market's overbought technical state, which is also a negative. I expect US stocks to trade mixed-to-lower into the close from current levels on rising US municipal debt angst, rising long-term rates, profit-taking, more shorting and China hard-landing fears.

No comments: