Broad Market Tone: - Advance/Decline Line: Substantially Higher
- Sector Performance: Most Sectors Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 35.92 -7.89%
- ISE Sentiment Index 82.0 -40.58%
- Total Put/Call 1.02 unch.
- NYSE Arms .46 +46.01%
Credit Investor Angst:- North American Investment Grade CDS Index 133.21 -4.02%
- European Financial Sector CDS Index 245.17 -2.58%
- Western Europe Sovereign Debt CDS Index 340.17 -4.17%
- Emerging Market CDS Index 339.71 -6.18%
- 2-Year Swap Spread 29.0 unch.
- TED Spread 36.0 unch.
Economic Gauges:- 3-Month T-Bill Yield .00% unch.
- Yield Curve 175.0 +8 bps
- China Import Iron Ore Spot $172.60/Metric Tonne -.17%
- Citi US Economic Surprise Index -41.80 -1.4 points
- 10-Year TIPS Spread 1.90 +10 basis points
Overseas Futures: - Nikkei Futures: Indicating +49 open in Japan
- DAX Futures: Indicating +24 open in Germany
Portfolio:
- Higher: On gains in my Technology, Medical and Retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and added to my (EEM) short
- Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 builds on recent gains on short-covering, bargain-hunting, quarter-ending window dressing, numerous Eurozone rumors and less global growth pessimism. On the positive side, Oil Tanker, Ag, Paper, Gaming, Construction, HMO, Medical, Networking, Semi and Steel shares are especially strong, rising more than +2.0%. Cyclicals and Small-Caps are outperforming. Copper is rising +4.7%. The 10-year yield is rising +9 bps to 1.99%. The Spain sovereign cds is falling -14.8% to 341.50 bps, the Belgium sovereign cds is declining -11.5% to 249.67 bps, the UK sovereign cds is declining -9.9% to 86.0 bps, the Russia sovereign cds is falling -9.7% to 290.0 bps, the Italy sovereign cds is dropping -10.5% to 448.17 bps, the France sovereign cds is falling -13.47% to 170.17 bps, the Germany sovereign cds is falling -7.69% to 100.0 bps and the Brazil sovereign cds is down -12.02% to 177.60 bps. Major European indicies rose 4-5% today. Weekly retail sales rose +4.4% versus a +4.5% gain the prior week. On the negative side, Retail, Airline and Bank shares are slightly lower to flat on the day.
(XLF) has taken a late day swoon and is now underperforming. The UBS-Bloomberg Ag Spot Index is rising +1.0%, gold is rising +1.8%, lumber is falling -2.02% and oil is gaining +3.62%. Rice is still close to its multi-year high, rising +28.4% in about 12 weeks. The average US price for a gallon of gas is -.01/gallon today to $3.48/gallon. It is up .34/gallon in about 7 months. The Western Europe Sovereign CDS Index and the European Financial Sector CDS Index are still near their records. The FRA/OIS spread is rising 1.85 bps to 43.0 bps. The China sovereign cds is still right near the highest level since April 2009. The China Development Bank Corp cds is rising another +1.03% to 331.67 bps, which is the highest since March 2009. The Shanghai Composite substantially underperformed the rest of Asia overnight, rising +.9%, and is still down -14.0% ytd. Various global credit angst gauges continue to trend higher, notwithstanding today's improvements. As well, many of the year's biggest equity losers posted the largest gains again today. It remains to be seen how much of the recent equity rally was related to quarter-end short-covering/window dressing. I continue to believe that if Europe's "solution" to an acute sovereign debt crisis is to use leveraged debt in another attempt at kicking the can down the road, any equity rally will very likely prove unsustainable over the intermediate-term. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, Eurozone debt fears, financial sector pessimism, more shorting and rising food/energy prices.
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