Friday, February 11, 2011

Stocks Surging into Final Hour on Falling Energy Prices, Lower Long-Term Rates, Economic Optimism, Fund Inflows

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 15.59 -3.11%
  • ISE Sentiment Index 161.0 +13.38%
  • Total Put/Call .83 +9.21%
  • NYSE Arms 1.01 -14.66%
Credit Investor Angst:
  • North American Investment Grade CDS Index 81.18 -1.30%
  • European Financial Sector CDS Index 130.33 bps -.81%
  • Western Europe Sovereign Debt CDS Index 170.33 bps +1.49%
  • Emerging Market CDS Index 221.22 +1.44%
  • 2-Year Swap Spread 120.0 +1 bp
  • TED Spread 20.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .11% -1 bp
  • Yield Curve 280.0 -5 bps
  • China Import Iron Ore Spot $188.90/Metric Tonne +.48%
  • Citi US Economic Surprise Index +67.10 +.5 point
  • 10-Year TIPS Spread 2.31% -3 bps
Overseas Futures:
  • Nikkei Futures: Indicating +120 open in Japan
  • DAX Futures: Indicating +21 open in Germany
  • Higher: On gains in my Retail, Ag, Tech and Medical long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is 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, Airline, Road&Rail, Gaming, Restaurant, Homebuilding, Construction, HMO, Hospital, Medical, I-Banking, Bank, Networking, Paper, Steel, Ag and Alt Energy shares are especially strong, rising more than 1.0%. The Transports are very strong again today. (XLF) is also strongly outperforming. The Egypt sovereign cds is falling -4.66% to 321.89 bps. Oil is falling -1.4% and copper is rising +.25%. Moreover, the UBS-Bloomberg Spot Ag Index is falling -.74%. The 10-year yield is falling -5 bps to 3.64%. The Citi US Economic Surprise Index is rising another +.75% and remains at the highest level since Sept. 1, 2009. On the negative side, Drug and Wireless shares are under mild pressure, falling more than .5%. The Greece sovereign cds is up +2.29% to 861.47 bps, the Italy sovereign cds is gaining +2.21% to 177.41 bps and the Spain sovereign cds is rising +2.11% to 241.05 bps. Moreover, the Israeli sovereign cds is rising +3.79% to 148.16 bps, which is the highest since July 21st, 2009. The Emerging Markets CDS Index is rising +1.44% today despite a rally in emerging market stocks on the Egypt news. Many growth stocks continue to massively outperform the major averages. The action in shares of (PNRA) should give the bears further pause. One of my longs, (ISRG), is breaking out of its recent consolidation. I still see substantial upside in the shares from current levels over the intermediate-long term. The major US averages are continuing their slow grind higher, despite potential headwinds, which is a major positive. I expect US stocks to trade mixed-to-higher into the close from current levels on earnings optimism, US fund inflows, buyout speculation, lower long-term rates, economic optimism, less financial sector pessimism and falling energy prices.


theyenguy said...

I expect stocks to trade lower the week beginning 2-15-2011.

The experience in the Pharmaceuticals, XPH, S&P Biotech, XBI, the Nasdaq Biotech, IBB, the Automobile Sector, DJUSAP, The Inflationary Four, Philippines, EPHE, Indonesia, IDX, Turkey, TUR, and Thailand, THD, and the Asia Tigers, South Korea, EWY, and Taiwan, EWT, is that quantitative easing is now exhausting, and stocks are now falling lower. All of these mentioned in this paragraph are the canaries warning the investor to exit the stock market coal mine.

The downturn in these markets is not a correction, but the entrance into an Elliott Wave 3 Down that will for all practical purposes wipe out all investment value.

Exhaustion of quantitative easing, failure of traditional carry trade investing, the US Federal Deficit, a municipal bond funding crisis, and the European sovereign debt and banking crisis, are the dynamos that will propel the world from the Age of Leverage and into the Age of Deleveraging.

One might consider short selling stocks like ISRG; that is those whose chart pattern shows completion, but I am invested in gold bullion as I desire hard metal assets far away from any brokerage.

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