Wednesday, February 09, 2011

Stocks Slightly Lower into Final Hour on Profit-Taking, Emerging Markets Inflation Fears, More Shorting

Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 16.47 +4.17%
  • ISE Sentiment Index 98.0 -46.74%
  • Total Put/Call .83 +1.22%
  • NYSE Arms 1.31 +33.77%
Credit Investor Angst:
  • North American Investment Grade CDS Index 80.80 +1.56%
  • European Financial Sector CDS Index 130.33 bps -1.37%
  • Western Europe Sovereign Debt CDS Index 167.44 bps +1.99%
  • Emerging Market CDS Index 214.38 +2.18%
  • 2-Year Swap Spread 19.0 unch.
  • TED Spread 18.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .13% -1 bp
  • Yield Curve 285.0 -3 bps
  • China Import Iron Ore Spot $186.40/Metric Tonne +.38%
  • Citi US Economic Surprise Index +63.60 +.2 point
  • 10-Year TIPS Spread 2.34% -2 bps
Overseas Futures:
  • Nikkei Futures: Indicating -12 open in Japan
  • DAX Futures: Indicating +6 open in Germany
  • Higher: On gains in my Retail, Ag and Tech long positions and emerging markets short positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades lower, despite buyout speculation, mostly positive earnings, fund inflows and lower energy prices. On the positive side, Ag, Computer, Semi, Telecom, Wireless, Restaurant and Road&Rail shares are higher on the day. (IYR) has traded relatively well throughout the day. The US Muni CDS Index is falling another -1.77% to 176.04 bps. Oil is falling -.38% despite euro strength and Mideast tensions. Lumber is rising +1.58%. The 10-year yield is falling -9 bps to 3.65%. On the negative side, Construction, Bank, Computer Service, Steel, Oil Service, Energy, Oil Tanker, Alt Energy and Coal shares are under pressure, falling more than 1.0%. The Hungary sovereign cds is up +3.50% to 284.58 bps, the Brazil sovereign cds is rising +3.05% to 118.17 bps and the Belgium sovereign cds is gaining +2.46% to 164.95 bps. Moreover, the Egypt sovereign cds is rising +4.51% to 354.94 bps. The gasoline crack spread is soaring +9.2% today and is at the highest level since Feb. 2009 despite US gasoline supplies at 20-year high levels. The UBS-Bloomberg Ag Spot Index is rising +1.37%. China's 1-Year Swap Rate is rising +28 bps to the highest level since June 27th, 2008. More emerging market indices are breaking down technically. The major US averages continue to display resilience as the bears are unable to gain meaningful traction with potential negative catalysts, once again. I expect US stocks to trade modestly higher into the close from current levels on earnings optimism, US fund inflows, buyout speculation and falling energy prices.


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Gary said...