Broad Market Tone: - Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 20.91 +5.02%
- ISE Sentiment Index 79.0 -22.55%
- Total Put/Call 1.07 +8.08%
- NYSE Arms 1.18 +41.47%
Credit Investor Angst:- North American Investment Grade CDS Index 96.0 +1.33%
- European Financial Sector CDS Index 143.50 +3.01%
- Western Europe Sovereign Debt CDS Index 283.50 -1.05%
- Emerging Market CDS Index 222.30 +.92%
- 2-Year Swap Spread 27.0 -1 bp
- TED Spread 24.0 unch.
Economic Gauges:- 3-Month T-Bill Yield .00% unch.
- Yield Curve 258.0 +5 bps
- China Import Iron Ore Spot $174.10/Metric Tonne unch.
- Citi US Economic Surprise Index -96.10 +1.9 points
- 10-Year TIPS Spread 2.26% -3 bps
Overseas Futures: - Nikkei Futures: Indicating -21 open in Japan
- DAX Futures: Indicating -15 open in Germany
Portfolio:
- Slightly Higher: On gains in my ETF hedges and Emerging Markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some of them
- Market Exposure: 50% Net Long
BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 reverses to session lows despite gains in Asian equities, less financial sector pessimism, a bounce in the euro and some positive economic data. On the positive side, Restaurant shares are higher on the day. Oil is falling -2.1% and the UBS-Bloomberg Ag Spot Index is down -1.17%. On the negative side, Airline, Education, Wireless, Networking, Internet, Steel, Hospital, I-Banking, Disk Drive, Semi, Software, Oil Service, Oil Tanker, Defense and Alt Energy shares are especially weak today, falling more than -1.5%.
Small-caps and cyclicals are underperforming. Tech shares continue to trade poorly. The Transports, which had been leading the market, are now testing their 50-day moving average. Gold is up +.2%, copper is falling -.36% and lumber is down -1.32%. Rice is jumping another +1.9%. Rice is hitting a new multi-year high and has soared +30.0% in less than 2 weeks. The US price for a gallon of gas is +.01/gallon today to $3.66/gallon. It is up .52/gallon in less than 5 months. The Spain sovereign cds is up +1.43% to 3223.13 bps, the Portugal sovereign cds is up +2.22% to 1,097.37 bps and the Ireland sovereign cds is up 2.25% to 1,081.77 bps. Moreover, the US sovereign cds is jumping +7.92% to 54.50 bps. The Western Europe Sovereign CDS Index is hovering near its record high and the European Financial Sector CDS Index is near its recent high. The Ireland sovereign cds is making a new record high today, as well. The 2-yr euro swap spread is moving +6.75% today to 72.94 bps, which is near its recent record. The Libor-OIS spread has moved up +4 bps to 16.0 bps over the last 9 days. Shanghai copper inventories have risen +33.0% in 5 days. Brazil's Bovespa fell another -1.9% today to the lowest since May 2010 and is down -14.1% ytd. Italian equities fell another -1.1%, finishing at session lows, and are down -7.6% ytd. The euro currency put in a fairly large reversal lower today. The currency looks vulnerable over the short and longer-run. The AAII % Bulls fell to 39.31 this week, while the % Bears rose to 29.25, which is still a negative considering the magnitude of the current headwinds. The broad market feels heavy today. The damage is worse than the major averages suggest. I expect US stocks to trade modestly lower into the close from current levels on rising eurozone debt angst, emerging markets inflation fears, tech sector pessimism, US debt ceiling concerns, profit-taking, more shorting and global growth worries.
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