Broad Market Tone: - Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Above Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 17.66 -7.70%
- ISE Sentiment Index 135.0 -33.17%
- Total Put/Call .71 -10.13%
- NYSE Arms .79 -13.47%
Credit Investor Angst:- North American Investment Grade CDS Index 92.73 -1.91%
- European Financial Sector CDS Index 139.83 -2.90%
- Western Europe Sovereign Debt CDS Index 290.83 -1.91%
- Emerging Market CDS Index 220.11 -3.18%
- 2-Year Swap Spread 25.0 -2 bps
- TED Spread 22.0 -2 bps
Economic Gauges:- 3-Month T-Bill Yield .03% +1 bp
- Yield Curve 260.0 +3 bps
- China Import Iron Ore Spot $174.10/Metric Tonne +.58%
- Citi US Economic Surprise Index -93.80 +.6 point
- 10-Year TIPS Spread 2.38% +7 bps
Overseas Futures: - Nikkei Futures: Indicating +120 open in Japan
- DAX Futures: Indicating +38 open in Germany
Portfolio:
- Higher: On gains in my Tech, Biotech, Retail and Medical sector longs
- Disclosed Trades: None
- Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades near session highs on plunging eurozone debt angst, more US debt ceiling optimism, financial sector strength, buyout speculation and earnings optimism. On the positive side, Road & Rail, Bank, I-Banking, Tobacco, Homebuilding, Construction, Paper, Steel, Defense, Energy, Semi and Biotech shares are especially strong, rising more than +2.0%. (XLF) has substantially outperformed throughout the day again. The Transports are also relatively strong. The France sovereign cds is dropping -2.91% to 100.0 bps, the Spain sovereign cds is down -9.30% to 309.34 bps, the Italy sovereign cds is down -12.05% to 252.50 bps, the Belgium sovereign cds is falling -19.72% to 152.77 bps, the Ireland sovereign cds is falling -13.89% to 912.76 bps, the Portugal sovereign cds is falling -13.37% to 946.27 bps, the Greece sovereign cds is falling -14.5% to 2,027.80 bps and the UK sovereign cds is declining -3.29% to 66.71 bps. Moreover, the Eurozone Investment Grade CDS Index is dropping -4.5% to 94.54 bps. Spanish and Italian equities surged around +3.0% today, finishing at session highs. Gold is falling -.81% and lumber is gaining +1.5%. On the negative side, Education, Networking, Disk Drive and Computer Hardware shares are lower on the day.
Tech stocks, in general, are lagging badly today. Oil is rising +1.0% and copper is falling -1.13%. Rice is rising +.48%, hovering near a multi-year high, and has soared almost +30.0% in about 2 weeks. The US price for a gallon of gas is +.01/gallon today at $3.69/gallon. It is up .55/gallon in less than 5 months. Chinese and Indian equities were lower again overnight and have been unable to rally with the rest of the world over the past two days. The large decline in many key eurozone sovereign cds is a large positive even as the longer-term debt problems in the region loom as large as ever. US stock earnings have been surprisingly strong so far, notwithstanding the recent downtick in global economic activity. I suspect any US debt ceiling deal will occur next week at the earliest, notwithstanding today's NYT report. Any solution to this issue would provide another upside catalyst for stocks. However, I continue to believe the slowing growth and rising inflation in key emerging markets remains more of an issue than is currently perceived. Two of my longs, (SXCI) and (VRX) are making record highs today. I still see substantial upside for these shares over the longer-term. I expect US stocks to trade mixed-to-higher into the close from current levels on plunging eurozone debt angst, more US debt ceiling optimism, financial sector strength, short-covering, bargain-hunting, buyout speculation, earnings optimism and technical buying.
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