Thursday, March 31, 2011

Stocks Slightly Lower into Final Hour on Rising Energy Prices, Profit-Taking, Eurozone Debt Angst, Japan Concerns

Broad Market Tone:

  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 17.45 -1.47%
  • ISE Sentiment Index 151.0 +58.95%
  • Total Put/Call .79 +6.76%
  • NYSE Arms 1.42 +95.41%
Credit Investor Angst:
  • North American Investment Grade CDS Index 95.50 -.44%
  • European Financial Sector CDS Index 96.08 -2.18%
  • Western Europe Sovereign Debt CDS Index 169.25 bps +.99%
  • Emerging Market CDS Index 205.23 -.61%
  • 2-Year Swap Spread 17.0 unch.
  • TED Spread 22.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .09% unch.
  • Yield Curve 267.0 +2 bps
  • China Import Iron Ore Spot $172.40/Metric Tonne +1.11%
  • Citi US Economic Surprise Index +42.90 -1.5 points
  • 10-Year TIPS Spread 2.49% +4 bps
Overseas Futures:
  • Nikkei Futures: Indicating -20 open in Japan
  • DAX Futures: Indicating +41 open in Germany
  • Slightly Higher: On gains in my Biotech and Medical longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 consolidates recent gains, despite rising Mideast unrest, rising energy prices, emerging market inflation fears, eurozone debt angst and Japan concerns. On the positive side, Road & Rail, REIT, Biotech, Networking, Paper, Ag and Defense shares are especially strong, rising .75%+. The Transportation Index is making a new multi-year high today. (IYR) has traded well throughout the day again. Small-caps are also outperforming again. Lumber is rising +1.34% and Copper is gaining +.47%. The Saudi sovereign cds is falling -2.24% to 119.55 bps and the US sovereign cds is declining -1.49% to 42.19 bps. The 10-year yield is stable, rising +2 bps to 3.45%. On the negative side, Airline and Semi shares are under mild pressure, falling more than .75%. (XLF) has undperformed throughout the day. Oil is rising +2.35% and the UBS-Bloomberg Spot Ag Index is gaining +2.17%. The US price for a gallon of gas is up +.02 today to $3.61/gallon. It is up .49/gallon in 44 days. The Spain sovereign cds is jumping +6.79% to 233.50 bps, the Japan sovereign cds is rising +2.62% to 99.63 bps and the Ireland sovereign cds is climbing +2.86% to 640.17 bps. Despite Goldman Sachs moving Chinese stocks to Overweight last night, the Shanghai Composite fell for the third day in a row, declining -.94%, and finished near session lows. Gains in european equities and tomorrow's jobs report could spur further stock gains tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, more economic optimism, window-dressing and buyout speculation.

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