Wednesday, March 16, 2011

Stocks Falling into Final Hour on Rising Energy Prices, Japan Nuclear Fears, Technical Selling, Mideast Unrest


Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Heavy
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 27.59 +13.77%
  • ISE Sentiment Index 63.0 -32.98%
  • Total Put/Call 1.23 +11.82%
  • NYSE Arms 2.37 +95.34%
Credit Investor Angst:
  • North American Investment Grade CDS Index 90.40 +1.38%
  • European Financial Sector CDS Index 115.32 -2.45%
  • Western Europe Sovereign Debt CDS Index 174.33 bps -.76%
  • Emerging Market CDS Index 224.43 +2.22%
  • 2-Year Swap Spread 20.0 +1 bp
  • TED Spread 22.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .09% unch.
  • Yield Curve 264.0 -7 bps
  • China Import Iron Ore Spot $163.60/Metric Tonne -.67%
  • Citi US Economic Surprise Index +60.20 -2.4 points
  • 10-Year TIPS Spread 2.38% -4 bps
Overseas Futures:
  • Nikkei Futures: Indicating -403 open in Japan
  • DAX Futures: Indicating -28 open in Germany
Portfolio:
  • Lower: On losses in my Tech, Retail and Medical longs
  • Disclosed Trades: Added (IWM)/(QQQQ) hedges and added to my (EEM) short
  • Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is bearish as the S&P 500 erases gains for the year. On the positive side, Coal and Ag shares are higher on the day. Small-caps and cyclicals are outperforming. Copper is rising +1.48%. The 10-year yield is declining -10 bps to 3.20%. The Spain sovereign cds is falling -4.84% to 227.21 bps, the Japan sovereign cds is falling -4.75% to 113.18 bps, the Belgium sovereign cds is falling -4.51% to 147.80 bps and the Asia Pacific sovereign cds index is dropping -5.59% to 120.47 bps. Moreover, the US Muni CDS Index is falling -3.55% to 153.72 bps. On the negative side, Airline, Education, Construction, Drug, I-Banking, Wireless, Computer Services, Disk Drive, Semi, Computer, Software, Steel, Oil Service and Energy shares are under significant pressure, falling more than 2.0%. Tech shares continue to underperform. China Iron Ore Spot has declined -14.4% in about 1 month. The avg. US price for a gallon of gas is -.01/gallon today to $3.55/gallon. It is up .43/gallon in 29 days. The fact that oil is rising +.99% today with such equity market weakness and a falling euro is also a negative. Some key market leaders are finally rolling over today. As well, the market is reacting poorly to known news, which is always a red flag. I suspect that global growth is slowing more than economists perceive right now. News that Shanghai's exports to the European Union shed 25.4 percent annually to US$2.1 billion last month is a red flag for global growth. I expect US stocks to trade mixed-to-lower into the close from current levels on Japan nuclear fears, global growth worries, rising energy prices, Mideast unrest, technical selling and more shorting.


1 comment:

Anonymous said...

http://www.bloomberg.com/news/2011-03-16/virus-identified-in-rural-china-causes-fever-30-fatality-rate.html