Friday, November 19, 2010

Stocks Slightly Higher into Final Hour on Tech Sector Optimism, Seasonal Strength, Short-Covering, Bargain-Hunting


Broad Market Tone:

  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Most Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 17.94 -4.32%
  • ISE Sentiment Index 118.0 -7.09%
  • Total Put/Call .66 -18.52%
  • NYSE Arms 1.29 +119.11%
Credit Investor Angst:
  • North American Investment Grade CDS Index 91.02 bps +.93%
  • European Financial Sector CDS Index 105.83 bps +3.69%
  • Western Europe Sovereign Debt CDS Index 163.0 bps unch.
  • Emerging Market CDS Index 217.61 bps -.34%
  • 2-Year Swap Spread 17.0 -1 bp
  • TED Spread 15.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .13% unch.
  • Yield Curve 237.0 -3 bps
  • China Import Iron Ore Spot $162.80/Metric Tonne -.25%
  • Citi US Economic Surprise Index +29.70 -.2 point
  • 10-Year TIPS Spread 2.13% +2 bps
Overseas Futures:
  • Nikkei Futures: Indicating +88 open in Japan
  • DAX Futures: Indicating +12 open in Germany
Portfolio:
  • Slightly Higher: On gains in my Retail and Technology long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 consolidates yesterday's gains on low volume despite China inflation concerns and euro sovereign debt angst. On the positive side, Gaming, Airline, Retail, HMO, Hospital, Restaurant, Disk Drive, Semi, Computer, Oil Tanker and Coal shares are especially strong, rising more than 1.0%. Cyclical and small-cap shares are outperforming. Tech shares have also been relatively strong throughout the day. US scrap steel prices are up +4.66% this week. On the negative side, Homebuilding, Bank, Utility and Telecom shares are underperforming, falling more than .5%. (XLF) has underperformed throughout the day. The Greece sovereign cds is jumping +3.49% to 1,004.11 bps and the Emerging Markets Sovereign Debt CDS Index is gaining +4.28% to 194.83 bps. Shanghai equities rallied overnight despite the announcement of additional tightening measures. While the euro currency has stabilized, I suspect investors need to see euro cds indices come in a bit before stocks can meaningfully build on yesterday's sharp gains. I expect US stocks to trade mixed-to-higher into the close from current levels on technical buying, short-covering, tech sector optimism, bargain-hunting and seasonal strength.

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