Broad Market Tone: - Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Volume: Light
- Market Leading Stocks: Outperforming
Equity Investor Angst: - VIX 16.51 +2.80%
- ISE Sentiment Index 94.0 -42.33%
- Total Put/Call 1.02 -6.42%
- NYSE Arms 1.18 -24.62%
Credit Investor Angst:- North American Investment Grade CDS Index 93.07 +2.29%
- European Financial Sector CDS Index 126.67 +7.49%
- Western Europe Sovereign Debt CDS Index 241.50 +5.54%
- Emerging Market CDS Index 209.31 +1.42%
- 2-Year Swap Spread 25.0 +1 bp
- TED Spread 24.0 -1 bp
Economic Gauges:- 3-Month T-Bill Yield .00% unch.
- Yield Curve 267.0 -2 bps
- China Import Iron Ore Spot $168.70/Metric Tonne +.12%
- Citi US Economic Surprise Index -81.30 unch.
- 10-Year TIPS Spread 2.34% -1 bp
Overseas Futures: - Nikkei Futures: Indicating -32 open in Japan
- DAX Futures: Indicating +26 open in Germany
Portfolio:
- Higher: On gains in my Retail, Medical, Biotech longs and Emerging Markets shorts
- Disclosed Trades: None
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 hugs the flat line despite emerging markets inflation fears, soaring eurozone debt angst, global growth concerns, more disappointing US economic data and recent equity gains. On the positive side, Software, Disk Drive, Computer Service, Medical Equipment, Hospital, Education and Road & Rail shares are especially strong, rising more than +.75%. Small-Caps and cyclicals are outperforming. (IYR) has traded well throughout the day again. Growth stock leaders continue to strongly outperform. Oil is falling -.2% and the UBS-Bloomberg Ag Spot Index is down -.4%. Weekly retail sales rose +3.8% last week versus a +3.5% gain the prior week. On the negative side, Homebuilding, I-Banking, Bank, Telecom, Semi, Steel, Energy, Oil Tanker and Coal shares are under pressure, falling more than -.75%.
(XLF) has underperformed throughout the day again. Gold is up +.91%, Lumber is falling -3.3%, copper is down -.4% and Rice is up +1.8%. Rice futures are up +17.0% in 5 days. The US price for a gallon of gas is +.01/gallon today to $3.57/gallon. It is up .43/gallon in less than 5 months. The Spain sovereign cds is up +8.71% to 293.43 bps, the Greece sovereign cds is up +12.4% to 2,168.19 bps, the Ireland sovereign cds is gaining +13.5% to 837.78 bps, the Italy sovereign cds is up +12.5% to 218.67 bps, the Belgium sovereign cds is up +11.38% to 167.0 bps, the Portugal sovereign cds is up +18.34% to 917.24 bps and the UK sovereign cds is up +7.75% to 67.73 bps. Moreover, the Eurozone Investment Grade CDS Index is rising +5.98% to 84.42 bps. The Italy sovereign cds is breaking out technically. As well, the Portugal and Ireland sovereign cds are hitting new record highs. European contagion fears are intensifying today, which is a major negative. As well, the situations in emerging markets with rising inflation and slowing growth are worsening more than most investors perceive, in my opinion. Given the extent of the bad news over the last 2 days and recent sharp equity gains, stocks remain extraordinarily resilient. I suspect this is mainly the result of how badly many large hedge funds are lagging this year and how swiftly markets rebounded last week. However, the news needs to improve very soon for the bulls or a meaningful pullback is is in the offing. I expect US stocks to trade modestly lower from current levels into the close on soaring eurozone debt angst, emerging markets inflation fears, global growth worries, profit-taking, more shorting and financial sector pessimism.
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