Wednesday, November 09, 2011

Stocks Falling Substantially into Final Hour on Soaring Eurozone Debt Angst, Rising Global Growth Fears, Financial Sector Pessimism, Technical Selling


Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 35.82 +30.35%
  • ISE Sentiment Index 74.0 -10.84%
  • Total Put/Call 1.34 +9.84%
  • NYSE Arms 6.38 +919.69%
Credit Investor Angst:
  • North American Investment Grade CDS Index 125.77 +1.35%
  • European Financial Sector CDS Index 256.60 +11.87%
  • Western Europe Sovereign Debt CDS Index 345.0 +2.01%
  • Emerging Market CDS Index 310.49 +10.10%
  • 2-Year Swap Spread 42.0 +6 bps
  • TED Spread 44.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .00% unch.
  • Yield Curve 174.0 -9 bps
  • China Import Iron Ore Spot $134.40/Metric Tonne +6.41%
  • Citi US Economic Surprise Index 24.30 +.7 point
  • 10-Year TIPS Spread 2.03 -10 bps
Overseas Futures:
  • Nikkei Futures: Indicating -185 open in Japan
  • DAX Futures: Indicating -71 open in Germany
Portfolio:
  • Lower: On losses in my Tech, Retail, Biotech and Medical sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, 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 rolls over again at its 200-day moving average on rising Eurozone debt angst, rising global growth worries, greater financial sector pessimism, profit-taking, more shorting and technical selling. On the positive side, Oil Tanker and Telecom shares are holding up relatively well, falling less than -2.0%. Gold is falling -1.01% and the UBS-Bloomberg Ag Spot Index is down -1.6%. On the negative side, Coal, Alt Energy, Energy, Oil Service, Steel, Software, Disk Drive, Networking, Bank, I-Bank, Construction and Homebuilding shares are under significant pressure, falling more than -5.0%. Oil is only -1.0% lower, copper is falling -3.8% and Lumber is falling -1.7%. India shares bucked gains in the rest of Asia overnight, falling -1.2%, and are now down -15.4% ytd. Major European equity indices fell 2-4% today. Italian shares are now down -25.3% ytd. The Germany sovereign cds is up +5.1% to 93.87 bps, the France sovereign cds is rising +7.11% to 196.85 bps, the Italy sovereign cds is up +9.63% to 570.83 bps, the Spain sovereign cds is gaining +7.4% to 430.51 bps, the Ireland sovereign cds is gaining +3.9% to 758.25 bps, the Belgium sovereign cds is up +7.54% to 315.0 bps, the Brazil sovereign cds is surging +6.34% to 153.99 bps, the Russia sovereign cds is gaining +7.5% to 225.0 bps, the UK sovereign cds is gaining +5.95% to 93.99 and the Israel sovereign cds is up +6.14% to 180.43 bps. Rice is still close to its multi-year high, rising +24.0% in about 4 months. The Italian 10-year yield jumped +48 bps to 7.25% today, which is the highest since June 1997. The Italian/German 10-Year Yield Spread is jumping another +55.79 bps to 552.57 bps, which is another new all-time high. The TED spread continues to trend higher and is at the highest since June 2010. The Libor-OIS spread is now at the widest since July 2009. The 2-Year Euro Swap spread is also making a new cycle high today, which is also noteworthy considering the recent strong equity advance. China Iron Ore Spot has plunged -34.20% since February 16th and -30.2% since Sept. 7th. It appears as though the debt problems in Italy are now already spinning out of control, which greatly raises the odds of full recession in the Eurozone and thus the global economy. Moreover, some of the new rumored "solutions" coming out of the region today would have very negative intermediate-term consequences. I had anticipated further equity strength into month-end, but it may now come from lower levels. I suspect many of the large funds that do have solid gains this year will be back in profit-protecting mode. I will I expect US stocks to trade modestly lower into the close from current levels on rising Eurozone debt angst, greater financial sector pessimism, rising global growth worries, profit-taking, more shorting and technical selling.

1 comment:

Anonymous said...

Chart of the day

http://www.businessinsider.com/the-mcrib-could-prove-that-mcdonalds-is-more-a-massive-commidies-trader-than-a-restaurant-chain-2011-11