Friday, September 23, 2011

Stocks Rising into Final Hour on Less Eurozone Debt Angst, Short-Covering, Bargain-Hunting, Technical Buying

Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: About Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 42.16 +1.96%
  • ISE Sentiment Index 137.0 +57.47%
  • Total Put/Call 1.14 -8.80%
  • NYSE Arms .91 -63.85%
Credit Investor Angst:
  • North American Investment Grade CDS Index 144.50 -2.54%
  • European Financial Sector CDS Index 263.93 -4.45%
  • Western Europe Sovereign Debt CDS Index 356.0 +.58%
  • Emerging Market CDS Index 367.28 -.50%
  • 2-Year Swap Spread 30.0 -2 bps
  • TED Spread 37.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .00% unch.
  • Yield Curve 159.0 +7 bps
  • China Import Iron Ore Spot $174.10/Metric Tonne -.91%
  • Citi US Economic Surprise Index -40.80 +.2 point
  • 10-Year TIPS Spread 1.75 +3 basis points
Overseas Futures:
  • Nikkei Futures: Indicating -150 open in Japan
  • DAX Futures: Indicating -10 open in Germany
  • Slightly Higher: On gains in my Biotech, Medical, Tech and Retail sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
  • Market Exposure: 50% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish, as the S&P 500 is unable to bounce meaningfully, despite recent losses, technical support, a precious metals collapse, less Eurozone debt angst, numerous Eurozone rumors and less financial sector pessimism. On the positive side, Steel, Construction, Homebuilding, Education and Airline shares are especially strong, rising more than +1.5%. Cyclicals and small-caps are outperforming. (XLF) has also outperformed throughout the day. The UBS-Bloomberg Ag Spot Index is down -1.43%, Silver is plunging -14.8% and Gold is down -5.5%. The 10-year yield is rising +11 bps to 1.83%. The France sovereign cds is down -3.2% to 196.0 bps, the Spain sovereign cds is falling -5.1% to 414.3 bps and the Italy sovereign cds is declining -3.68% to 518.33 bps. Major European indicies rose 1-2% today. On the negative side, Energy, Oil Service, Ag, Drug and Gaming shares are lower on the day. Copper is plunging -5.96% and Lumber is down -2.24%. Rice is still very near its multi-year high, rising +29.0% in about 11 weeks. The average US price for a gallon of gas is -.02/gallon today to $3.54/gallon. It is up .40/gallon in about 7 months. The Germany sovereign cds is gaining +3.03% to 107.83 bps, the Russia sovereign cds is soaring +7.9% to 309.83 bps, the Israel sovereign cds is gaining +4.47% to 218.45 bps, the China sovereign cds is jumping 6.7% to 158.85 bps, the Japan sovereign cds is rising +1.82% to 143.19 bps and the UK sovereign cds is gaining +1.26% to 95.83 bps. The Germany sovereign cds made another new record high today. The China sovereign cds is braking to the highest level since April 2009. The Russia sovereign cds is breaking out to the highest since July 2009. The Western Europe Sovereign CDS Index is making another new all-time high and the European Financial Sector CDS Index is still very near its record. The Emerging Markets Sovereign CDS Index is surging 21.0 bps today to a record 285.9 bps. The 2-Year Euro Swap Spread is at the highest since December 2008. The 3-Month Euribor-OIS Spread is rising +4 bps to the highest since March 2009. The TED spread is at the highest level since July 2010 despite Europe's recent efforts. The China Blended Corporate Spread Index is continuing its parabolic move higher, rising another +26.0 bps to 780.0 bps, which is the highest since March 2009. South Korean stocks plunged -5.7% overnight and are back at their August lows, falling -17.2% ytd. Philippine shares also plummeted -5.1% and are now down -7.5% ytd. Hong Kong shares fell another -1.4% overnight to the lowest since July 2009 and are now down -23.3% ytd. Ukraine shares dropped to new multi-year lows, falling -1.9% and are now down -42.8% ytd. Various credit gauges continue to indicate intense global recession fears. Gauges of Asian credit are now rapidly deteriorating. The S&P 500 bounced off the lower end of its recent trading range again. However, given how oversold we are, technical support, less Eurozone debt angst, the break in the precious metals fever, a bounce in financials and numerous rumors out of Europe, today's lackluster equity breadth and volume is noteworthy. I still believe the situation in Europe must at least stabilize very soon or a full test, and likely break, of the August lows is likely over the coming weeks. I expect US stocks to trade mixed-to-lower into the close from current levels on rising global debt angst, global growth worries, US tax hike concerns, more shorting and margin selling.


jack foley said...

I expect to see a serious bailout soon which will rally markets in te short term

Anonymous said...