Broad Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Almost Every Sector Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- VIX 35.95 -9.58%
- ISE Sentiment Index 89.0 unch.
- Total Put/Call 1.24 -2.36%
- NYSE Arms .49 -56.98%
Credit Investor Angst:
- North American Investment Grade CDS Index 126.17 +1.75%
- European Financial Sector CDS Index 236.32 -.63%
- Western Europe Sovereign Debt CDS Index 303.0 +.55%
- Emerging Market CDS Index 299.45 +.23%
- 2-Year Swap Spread 30.0 unch.
- TED Spread 33.0 +1 bp
Economic Gauges:
- 3-Month T-Bill Yield .00% unch.
- Yield Curve 200.0 -2 bps
- China Import Iron Ore Spot $178.30/Metric Tonne unch.
- Citi US Economic Surprise Index -67.80 +.9 point
- 10-Year TIPS Spread 2.02% -5 bps
Overseas Futures:
- Nikkei Futures: Indicating -12 open in Japan
- DAX Futures: Indicating +26 open in Germany
Portfolio:
- Higher: On gains in my Tech, Medical, Biotech and Retail sector longs
- Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 rallies despite rising Eurozone debt angst, global growth worries, rising food/energy prices, hurricane Irene concerns and some investors' disappointment with Bernanke's speech. On the positive side, Education, Gaming, Construction, HMO, Biotech, Computer Service, Networking, Disk Drive, Software, Internet, Oil Service and Alt Energy shares are especially strong, rising over +1.75% on the day. "Growth" shares substantially outperformed "value" today. Small-caps and cyclicals are substantially outperforming, as well. Tech shares have traded well throughout the day. Copper is gaining +.25% and Lumber is rising +3.45%. The Greece sovereign cds is down -2.62% to 2,237.11 bps and the Ireland sovereign cds is down -1.07% to 828.07 bps. On the negative side, Telecom and Utility shares are lower on the day.
(XLF) is relatively weak. Gold is up +2.48%, Oil is rising +.67% and the UBS-Bloomberg Ag Spot Index is up +1.86%. Rice is still near a multi-year high, rising +28.0% in about 8 weeks. The US price for a gallon of gas is +.01/gallon today to $3.59/gallon. It is up .45/gallon in about 7 months. China sovereign cds is rising +2.64% to 119.80 bps, the Japan sovereign cds is rising +3.14% to 112.0 bps and the Brazil sovereign cds is increasing +2.09% to 164.19 bps. The Eurozone Financial Sector CDS Index is still very near it recent all-time high. The Citi Eurozone Economic Surprise Index has plunged -110.3 points in about 3 weeks to -104.20. The UBS-Bloomberg Ag Spot Index is at another new closing record high, which is a large negative. The Libor-OIS spread is now at the highest since July 2010. India equities fell another -1.84% overnight, taking out technical support, and are now down -22.7% ytd. European equities traded poorly again today. Ukraine shares plunged -3.8%, taking out technical support, and are now down -35.4% ytd. German, French and Italian stocks were all under pressure again, as well. Germany's DAX is now down -19.9% ytd. The ongoing rise in key cds remains a large negative. Volume was lackluster again on today's advance. Much of the gains were likely related to short-covering by hedge funds on Bernanke's speech given the recent large increase in short interest. I continue to believe any sustainable equity advance must be accompanied by a meaningful decline in Eurozone debt angst, which has yet to be seen. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, a bounce in the euro, technical buying and tech sector strength.
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