Broad Market Tone: - Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Volume: Around Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 39.03 +1.32%
- ISE Sentiment Index 77.0 +10.0%
- Total Put/Call 1.25 -9.42%
- NYSE Arms .67 -87.32%
Credit Investor Angst:- North American Investment Grade CDS Index 136.29 +4.36%
- European Financial Sector CDS Index 302.22 +13.29%
- Western Europe Sovereign Debt CDS Index 351.17 +5.70%
- Emerging Market CDS Index 315.65 +2.19%
- 2-Year Swap Spread 34.0 -1 bp
- TED Spread 35.0 +2 bps
Economic Gauges:- 3-Month T-Bill Yield .00% unch.
- Yield Curve 172.0 -3 bps
- China Import Iron Ore Spot $179.50/Metric Tonne unch.
- Citi US Economic Surprise Index -39.50 +2.3 points
- 10-Year TIPS Spread 1.96% -2 bps
Overseas Futures: - Nikkei Futures: Indicating -20 open in Japan
- DAX Futures: Indicating +68 open in Germany
Portfolio:
- Slightly Higher: On gains in my Tech, Biotech and Retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered some
- Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 bounced off the lower end of its recent range despite rising Eurozone debt angst, US tax hike worries, emerging markets inflation fears and global growth worries. On the positive side, Semi, Disk Drive, Networking, Retail, Internet, Bank, Insurance and Restaurant shares are especially strong, rising more than +1.0%. Tech shares held up well throughout the day. Gold is declining -2.35%. On the negative side, Coal, Ag, Steel, Paper, Drug, Hospital, Construction, Homebuilding and Road & Rail shares are under pressure, falling more than -.75%.
Cyclicals are substantially underperforming. Lumber is down -3.71%, Oil is rising +1.09% and Copper is falling -.75%. Rice is rising +.3% today and is still very near its multi-year high, rising +38.3% in about 10 weeks. The average US price for a gallon of gas is -.01/gallon today to $3.65/gallon. It is up .51/gallon in about 7 months. The China sovereign cds is jumping +11.6% to 132.77 bps, the Japan sovereign cds is gaining +11.1% to 124.15 bps, Germany sovereign cds is gaining +1.69% to 85.67 bps, the France sovereign cds is surging +4.68% to 188.50 bps, the Spain sovereign cds is surging +3.4% to 426.83 bps, the Italy sovereign cds is gaining +7.52% to 501.67 bps, the Greece sovereign cds is gaining +6.42% to 3,617.96 bps, the Ireland sovereign cds is gaining +4.91% yo 913.33 bps, the Russian sovereign cds is gaining +4.63% to 223.67 bps, the Brazil sovereign cds is rising +7.47% to 172.67 bps, the Portugal sovereign cds is gaining +6.58% to 1,211.00 bps, the Belgium sovereign cds is gaining +4.64% to 299.50 bps and the UK sovereign cds is rising +2.99 to 82.33 bps. The Emerging Markets Sovereign CDS Index is soaring +14.2% to 256.50 bps. Moreover, the Eurozone Investment Grade CDS Index is surging +9.05% to 190.28 bps, which is a new record high. The Greece, Spain, Belgium, Portugal and Italy sovereign cds are hitting all-time highs today. The France and Germany sovereign cds are very close to their record highs. The Eurozone Financial Sector and Western European Sovereign CDS Indices are making new all-time highs. The 3-Month Euribor-OIS Spread is rising +2 bps to a new multi-year high at 85.0 bps. The 3-Month Euro Basis Swap is dropping -5.32 bps to a multi-year low of -112.53 bps. The China Corporate Blended Spread Index is surging +24 bps to a multi-year high of 657.0 bps. The The UBS-Bloomberg Ag Spot Index is still near its recent record high, which is also a large negative. The rise in oil despite euro weakness and global growth worries is becoming a concern and is related to escalating violence in the Mideast. Hong Kong stocks plunged -4.21% overnight and are down -17.4% ytd, which puts them back to their recent lows. The major European stock indices plunged around -3.0% today and are making new multi-year lows. German stocks are now down -26.7% ytd, French stocks are down -25.0% ytd, Spain stocks are down -22.5% ytd and Italy stocks are down -33.2% ytd. Most gauges of eurozone debt angst remain very elevated and continue to surge higher, which remains a large negative. The euro currency is oversold near-term, but still has substantial downside risk longer-term. Stocks are rallying into the final hour on rumors that China plans to purchase Italian debt. These rumors have been persistent throughout the entire Eurozone debt crisis. Moreover, while this would likely buy Europe some more time, it doesn't change the underlying deterioration of the fundamentals in the region. Until the fundamentals stabilize and credit angst subsides, any stock rallies will likely remain short-term in nature. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, less financial sector pessimism, technical buying and China/eurozone debt rumors.
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