Thursday, February 17, 2011

Stocks Rising into Final Hour on Fund Inflows, Lower Long-Term Rates, Technical Buying, Short-Covering

Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 16.56 -.96%
  • ISE Sentiment Index 116.0 -20.55%
  • Total Put/Call .69 -24.18%
  • NYSE Arms .74 -31.31%
Credit Investor Angst:
  • North American Investment Grade CDS Index 79.78 -.21%
  • European Financial Sector CDS Index 127.50 bps -.26%
  • Western Europe Sovereign Debt CDS Index 174.0 bps -.48%
  • Emerging Market CDS Index 217.24 -1.52%
  • 2-Year Swap Spread 20.0 unch.
  • TED Spread 22.0 +2 bps
Economic Gauges:
  • 3-Month T-Bill Yield .09% -2 bps
  • Yield Curve 281.0 +3 bps
  • China Import Iron Ore Spot $191.90/Metric Tonne unch.
  • Citi US Economic Surprise Index +72.10 +8.2 points
  • 10-Year TIPS Spread 2.29% +1 bp
Overseas Futures:
  • Nikkei Futures: Indicating +39 open in Japan
  • DAX Futures: Indicating +6 open in Germany
  • Higher: On gains in my Ag, Biotech, Medical, Retail and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 trades at new multi-year highs, despite recent equity gains, global inflation concerns, rising Mideast unrest and mixed economic data. On the positive side, Education, Homebuilding, Construction, HMO, Hospital, Medical, Networking, Semi, Steel and Oil Service shares are especially strong, rising more than 1.0%. Small-Cap and cyclical stocks are outperforming. Tech shares are also outperforming again today, despite (AAPL) weakness. Copper is rising +.78%. The 10-year yield is falling -4 bps to 3.57% despite recent "hot" inflation readings, a very strong Philly Fed report and intensifying concerns over the US budget deficit. The US Muni CDS Index is dropping another -1.57% to 165.43 bps, which is also a large positive. The Citi US Economic Surprise Index is now at the highest level since Sept. 4th 2008. Singapore Electronics Exports grew +5.8% yoy in January versus a -1.1% yoy decline in Dec. On the negative side, Bank, Disk Drive, Computer and Airline shares are lower on the day. (XLF) has underperformed throughout the day. The UBS-Bloomberg Ag Spot Index is rising +1.68% and gold is rising .73%. The Saudi sovereign cds is jumping +4.08% to 126.24 bps and the Israeli sovereign cds is climbing +3.51% to 146.09 bps. Oil is beginning to gain a little upside traction, rising +1.48%. Further near-term gains are likely ahead of a three-day weekend with Mideast unrest spreading. The TED spread has broken out of its multi-month range and is now at the highest level since Aug. 11th, 2010. US equities remain extraordinarily resilient to any potential headwinds as they continue their slow grind higher. I expect US stocks to trade mixed-to-higher into the close from current levels on earnings optimism, US fund inflows, falling long-term rates, buyout speculation, technical buying and short-covering.

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