Monday, February 14, 2011

Stocks Rising Slightly into Final Hour on Lower Energy Prices, Buyout Speculation, Fund Inflows, Short-Covering

Broad Market Tone:

  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 15.85 +1.02%
  • ISE Sentiment Index 179.0 +16.23%
  • Total Put/Call .88 +8.64%
  • NYSE Arms .76 -29.78%
Credit Investor Angst:
  • North American Investment Grade CDS Index 80.66 -.64%
  • European Financial Sector CDS Index 137.83 bps +5.60%
  • Western Europe Sovereign Debt CDS Index 173.67 bps +.96%
  • Emerging Market CDS Index 220.32 -.41%
  • 2-Year Swap Spread 20.0 unch.
  • TED Spread 20.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .11% unch.
  • Yield Curve 277.0 -3 bps
  • China Import Iron Ore Spot $189.50/Metric Tonne +.32%
  • Citi US Economic Surprise Index +68.40 +1.3 points
  • 10-Year TIPS Spread 2.31% unch.
Overseas Futures:
  • Nikkei Futures: Indicating +40 open in Japan
  • DAX Futures: Indicating +19 open in Germany
  • Higher: On gains in my Ag, Tech and Biotech 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 trades at a new multi-year high, despite recent equity gains, ongoing Mideast unrest/uncertainty, emerging markets inflation fears and rising eurozone debt angst. On the positive side, Coal, Oil Tanker, Oil Service, Steel and Construction shares are especially strong, rising more than 1.0%. Small-caps are outperforming. Oil is falling -.5% and continues to trade very poorly. Copper is rising +1.94% and continues to trade very well. Moreover, the UBS-Bloomberg Spot Ag Index is falling -.84%, which is also a positive. The 10-year yield is stable at 3.62%. The Citi US Economic Surprise Index remains at the highest level since Sept. 1, 2009. The Saudi sovereign cds is falling -5.34% to 118.32 bps and the Israeli sovereign cds is declining -2.23% to 144.85 bps. On the negative side, Retail, Wireless, Utility, Insurance, Telecom and Defense shares are under mild pressure, falling more than .5%. The Greece sovereign cds is up +5.29% to 909.65 bps, the Brazil sovereign cds is rising +3.35% to 124.0 bps and the Spain sovereign cds is rising +4.80% to 253.25 bps. The Western Europe Sovereign CDS Index has been trending higher over the past week, which is a big negative. Heavily-shorted (GMCR) is exploding higher on volume. While I am not currently long this stock, it is another situation that should give the bears pause. The major US averages are continuing their slow grind higher, despite potential headwinds, which is a big positive. The import price index, released tomorrow, will likely exceed estimates. I will monitor the 10-year yield's reaction to this data closely. I expect US stocks to trade mixed-to-higher into the close from current levels on earnings optimism, short-covering, technical buying, US fund inflows, buyout speculation and falling energy prices.


Anonymous said...

Can both these be correct? TX

Israeli sovereign cds is declining -2.23% to 144.85 bps.

Israeli sovereign cds is rising +3.79% to 148.16 bps, which is the highest since July 21st, 2009.

Gary said...

No. That was incorrect. I meant to take that last quote out. Thanks for the heads up. The Israeli cds was down -2.23% today.

Anonymous said...