Broad Market Tone: - Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Volume: Around Average
- Market Leading Stocks: Underperforming
Equity Investor Angst: - VIX 17.14 +6.92%
- ISE Sentiment Index 88.0 -19.27%
- Total Put/Call .95 +13.10%
- NYSE Arms 2.09 +61.31%
Credit Investor Angst:- North American Investment Grade CDS Index 88.24 -.80%
- European Financial Sector CDS Index 93.17 +.23%
- Western Europe Sovereign Debt CDS Index 179.25 -2.45%
- Emerging Market CDS Index 207.63 +1.0%
- 2-Year Swap Spread 19.0 +1 bp
- TED Spread 24.0 unch.
Economic Gauges:- 3-Month T-Bill Yield .02% unch.
- Yield Curve 261.0 unch.
- China Import Iron Ore Spot $178.80/Metric Tonne -.11%
- Citi US Economic Surprise Index -34.40 +.9 point
- 10-Year TIPS Spread 2.37% -7 bps
Overseas Futures: - Nikkei Futures: Indicating -53 open in Japan
- DAX Futures: Indicating -14 open in Germany
Portfolio:
- Slightly Lower: On losses in my Biotech, Medical and Tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some of them
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows despite falling food/energy prices, a strong US dollar, mostly positive economic data and falling long-term rates. On the positive side, HMO, Restaurant and Gaming shares are rising on the day. The Belgium sovereign cds is falling -3.12% to 135.22 bps, the Ireland sovereign cds is falling -2.06% to 630.57 bps and the Spain sovereign cds is declining -2.66% to 235.83 bps. The US dollar continues to trade very well, which is a short-term negative and a large long-term positive. Gold is down -.61%, Lumber is rising +1.1%, copper is gaining +.86% and the UBS-Bloomberg Ag Spot Index is down -.75%. The 10-year TIPS spread has broken down technically. The 10-year yield is falling -4 bps to 3.19%. On the negative side, Airline, Road & Rail, Construction, Hospital, I-Banking, Bank, Paper, Steel, Alt Energy and Coal shares are under significant pressure, falling more than -1.75%.
Small-cap and cyclical shares are underperforming again. (XLF) has been heavy throughout the day. Tech and transport shares are also relatively weak. The US price for a gallon of gas is unch. today at $3.98/gallon. It is up .84/gallon in 86 days. Oil is rising +.3%. The Emerging Markets Sovereign CDS Index is gaining +1.76% to 154.54 bps, the Russia sovereign cds is rising +1.32% to 136.14 bps, the Japan sovereign cds is gaining +2.48% to 82.5 bps and the US Muni CDS Index is rising +2.9% to 124.34 bps. The Nikkei looks like it is rolling over again. Spain's Ibex 35 looks like a technical breakdown is in the offing. Moreover, Brazil's Bovespa continues to trade very poorly, falling another -1.1% today and is now down -8.7% for the year. A number of key US stocks continue to trade poorly, as well. Commodities continue to trade as if further downside is in store. The last time the 10-year TIPS spread broke down technically, which is a longer-term positive, the S&P 500 began a -15% correction in early May 2010. I expect US stocks to trade mixed-to-lower into the close from current levels on technical selling, more shorting, eurozone debt worries, rising Mideast unrest, rising energy prices, global growth concerns, emerging market inflation fears and profit-taking.
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