Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Volume: Above Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- VIX 43.48 +1.90%
- ISE Sentiment Index 70.0 -2.5%
- Total Put/Call 1.36 -8.72%
- NYSE Arms 1.35 -37.47%
Credit Investor Angst:
- North American Investment Grade CDS Index 118.70 +2.35%
- European Financial Sector CDS Index 226.60 +10.08%
- Western Europe Sovereign Debt CDS Index 296.17 +1.25%
- Emerging Market CDS Index 276.11 -.48%
- 2-Year Swap Spread 29.0 +2 bps
- TED Spread 30.0 unch.
Economic Gauges:
- 3-Month T-Bill Yield .00% unch.
- Yield Curve 187.0 -1 bp
- China Import Iron Ore Spot $177.30/Metric Tonne +.11%
- Citi US Economic Surprise Index -82.50 +1.4 points
- 10-Year TIPS Spread 2.02% +6 bps
Overseas Futures:
- Nikkei Futures: Indicating -51 open in Japan
- DAX Futures: Indicating -50 open in Germany
Portfolio:
- Slightly Higher: On gains in my Biotech/Retail sector longs, Index hedges and Emerging Markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, 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 is falling meaningfully with good volume on global growth worries, rising Eurozone debt angst, emerging markets inflation fears, more shorting, forced margin selling, tax hike fears and tech/financial sector weakness. On the positive side, Defense, Biotech, Medical, Drug, Retail, Restaurant and Tobacco shares are up slightly or just mildly lower on the day. Lumber is rising +.95%. On the negative side, Alt Energy, Oil Service, Computer, Disk Drive, Computer Service, I-Banking, Construction, Bank shares are under significant pressure, dropping more than -2.50%.
Cyclicals are very weak again today. The Transports continue to trade very poorly and tech/financial shares remain under meaningful pressure. Gold is rising +1.3%, the UBS-Bloomberg Ag Spot Index is jumping +1.72% and Oil is rising +1.0%. Rice is still near a multi-year high, rising +27.0% in about 7 weeks. The US price for a gallon of gas is unch. today at $3.59/gallon. It is up .45/gallon in about 7 months. The Germany sovereign cds is rising +1.34% to 81.0 bps, the France sovereign cds is rising +1.57% to 150.50 bps, the Greece sovereign cds is rising +3.77% to 1,977.68 bps, the Portugal sovereign cds is gaining +2.6% to 900.67 bps, the Spain sovereign cds is gaining +.75% to 364.66 bps, the Italy sovereign cds is rising +1.1% to 356.17 bps, the Israel sovereign cds is jumping +4.63% to 158.93 bps, the China sovereign cds is gaining +3.25% to 112.03 bps and the UK sovereign cds is rising +1.97% to 81.06 bps. Moreover, the European Investment Grade CDS Index is gaining +3.5% to 134.74 bps. The FRA/OIS Spread made a new 52-week high today and is rising +2.55 bps to 43.0 bps. The 3-Month Euro Basis Swap is falling -5.25 bps to -84.62 bps. Asian indices were down substantially overnight and are very near recent lows. Ukraine shares plunged -7.2% today and have collapsed -44.3% from their Feb. 21 high. French, Spanish and Italian stocks fell another -2.0% today and are back near their lows. Germany's DAX made a new 52-week low today and is now down -20.7% ytd. Gauges of investor angst are surging today, which is a positive. The UBS-Bloomberg Ag Spot Index is breaking out of a multi-month trading range and is very close to its record high, which is a huge negative. The market is very oversold again and will likely see another vigorous bounce next week, however too many investors appear to be depending on the Fed, which is a mistake, in my opinion, given recent inflation readings and the surge in food prices. I expect US stocks to trade mixed-to-lower into the close from current levels on tech/financial sector pessimism, rising eurozone debt angst, tax hike fears, more shorting, global growth worries, emerging markets inflation fears, rising food/energy prices and forced margin selling.
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