Friday, September 30, 2011

Stocks Falling into Final Hour on Rising Global Debt Angst, Tech/Financial Sector Pessimism, Global Growth Worries, Technical Selling


Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Slightly Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 41.34 +6.44%
  • ISE Sentiment Index 97.0 +1.04%
  • Total Put/Call 1.19 -2.46%
  • NYSE Arms 2.51 +203.94%
Credit Investor Angst:
  • North American Investment Grade CDS Index 140.91 +.69%
  • European Financial Sector CDS Index 258.83 +8.32%
  • Western Europe Sovereign Debt CDS Index 342.17 +.92%
  • Emerging Market CDS Index 370.86 +5.75%
  • 2-Year Swap Spread 32.0 +2 bps
  • TED Spread 36.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .01% unch.
  • Yield Curve 165.0 -5 bps
  • China Import Iron Ore Spot $171.50/Metric Tonne -.12%
  • Citi US Economic Surprise Index -29.50 +7.0 points
  • 10-Year TIPS Spread 1.76 -7 basis points
Overseas Futures:
  • Nikkei Futures: Indicating -110 open in Japan
  • DAX Futures: Indicating -42 open in Germany
Portfolio:
  • Slightly Lower: On losses in my Tech and Retail sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, and then covered some
  • Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is very bearish, as the S&P 500 falls back near session lows on rising global debt angst, rising tech/financial sector pessimism, global growth worries and technical selling. On the positive side, Biotech shares are rising slightly on the day. The UBS-Bloomberg Ag Spot Index is plunging -3.7% and oil is falling -4.2%. On the negative side, Coal, Alt Energy, Oil Tanker, Oil Service, Agriculture, Steel, I-Banking, Construction, Homebuilding, Gaming, Education, Airline and Road & Rail shares are under severe pressure, falling more than -4.0%. Cyclical shares are substantially underperforming. The tech and financial sectors have also underperformed throughout the day. The 10-year yield is falling too much again, declining -8 bps to 1.92%. Lumber is falling -3.9% and copper is dropping -3.5%. Rice is still close to its multi-year high, rising +26.0% in about 12 weeks. The average US price for a gallon of gas is -.01/gallon today to $3.45/gallon. It is up .31/gallon in about 7 months. The Germany sovereign cds is gaining +5.03% to 112.17 bps, the France sovereign cds is rising +5.2% to 186.33 bps, the Russia sovereign cds is jumping +6.84% to 310.0 bps, the China sovereign cds is soaring +14.22% to 197.32 bps and the Brazil sovereign cds is rising +6.59% to 198.62 bps. The Western Europe Sovereign CDS Index and the European Financial Sector CDS Index are still near their records. The 3-Month Euro Basis Swap fell -.3 bp to -104.87 bps. The Asia-Pacific Sovereign CDS Index is surging another +2.07% today to a new record 169.60 bps. The China sovereign cds is now at the highest level since March 2009. The China Development Bank Corp cds is rising another +3.5% to 352.52 bps, which is also the highest since March 2009. As well, the China Blended Corporate Spread Index, which has been moving higher in a parabolic fashion, is making another new multi-year high, rising +72.0 bps to 912.0 bps. The Hang Seng, which continues to trade very poorly, fell another -2.3% overnight, leaving it down -23.6% ytd at the lowest level since July 2009. Major European stock indices fell 1-2% today. Brazilian equities are under pressure again, falling -2.3% today and are now down -24.9% ytd. Various global credit angst gauges continue to trend higher despite Europe's efforts, which remains a large negative. Many argue that a global recession is priced into stocks at current levels. However, (IR), which was already down substantially from its highs, lowered guidance and is falling another -12.2%, which is a large broad market negative. Stocks inability to mount much of a short-covering/bargain-hunting rally this week, after such a bad quarter, is also a negative for the intermediate-term. I expect US stocks to trade mixed-to-higher into the close from current levels on quarter-end short-covering/window-dressing, lower food/energy prices and bargain-hunting.

1 comment:

Anonymous said...

http://www.marketwatch.com/story/more-companies-issuing-q3-profit-warnings-2011-09-30