Broad Market Tone: - Advance/Decline Line: Substantially Higher
- Sector Performance: Every Sector Rising
- Volume: Light
- Market Leading Stocks: Underperforming
Equity Investor Angst: - VIX 29.97 -8.63%
- ISE Sentiment Index 70.0 -40.68%
- Total Put/Call .95 -18.10%
- NYSE Arms .46 -46.34%
Credit Investor Angst:- North American Investment Grade CDS Index 129.17 +.21%
- European Financial Sector CDS Index 250.59 -2.58%
- Western Europe Sovereign Debt CDS Index 342.67 -1.32%
- Emerging Market CDS Index 301.23 -.18%
- 2-Year Swap Spread 45.0 unch.
- TED Spread 46.0 +1 bp
Economic Gauges:- 3-Month T-Bill Yield .00% unch.
- Yield Curve 182.0 +1 bp
- China Import Iron Ore Spot $134.80/Metric Tonne +2.15%
- Citi US Economic Surprise Index 34.30 +2.4 points
- 10-Year TIPS Spread 2.09 unch.
Overseas Futures: - Nikkei Futures: Indicating +75 open in Japan
- DAX Futures: Indicating +2 open in Germany
Portfolio:
- Slightly Higher: On gains in my Tech, Retail, Medical and Biotech sector longs
- Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added some back
- Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 builds on yesterday's gains as it approaches its 200-day moving average again despite Eurozone debt angst, rising global growth worries and rising energy prices. On the positive side, Oil Tanker, Steel, Semi, Construction and Road & Rail shares are especially strong, rising more than +2.5%. Small-caps and cyclicals are outperforming. Tech share have traded well throughout the day. Copper is rising +2.77%, Lumber is up +3.2% and the UBS-Bloomberg Ag Spot Index is down -.33%. Major European equity indices rose 2-3% today. The Italian/German 10-Year Yield spread is falling another -54.61 bps to 456.21 bps. The Italy sovereign cds is falling -4.94% to 540.0 bps, the UK sovereign cds is down -3.77% to 89.33 bps, and the Ireland sovereign cds is down -3.3% to 725.66 bps. Moreover, the European Investment Grade CDS Index is falling -4.64% to 166.85 bps. On the negative side, Telecom, Insurance, Drug, Biotech, I-Bank, Ag and Energy shares are underperforming, rising less than +1.5%
. Oil is rising +1.2% and Gold is jumping +1.7%. India shares fell -1.0% overnight and are now down -16.2% ytd. The Israel sovereign cds is up +.48% to 187.13 bps, the Brazil sovereign cds is rising +1.35% to 159.33 bps and the France sovereign cds is just -.9% lower to 201.17 bps. Rice is still close to its multi-year high, rising +22.5% in about 4 months. The TED spread continues to trend higher and is at the highest since June 2010. The 2-Year Swap spread is rising to the highest since June 2010 today. The FRA/OIS Spread is now at the highest since June 2010. The Libor-OIS spread is now at the widest since July 2009, which is also noteworthy considering the recent strong equity advance. China Iron Ore Spot has plunged -28.2% since February 16th and -23.9% since Sept. 7th. Oil continues to trade well and a convincing surge above $105/bbl. would be another large negative for the fragile global economy. Select market-leading stocks are still underperforming today, which is always a red flag. Moreover, volume is very poor. Finally, credit gauges in Europe, which have deteriorated substantially this week, are not confirming the recent equity advance. I remain cautious. If the situation in Europe begins to show substantial improvement with confirmation in credit gauges and the S&P 500 can convincingly take out its 200-day moving average I would likely become more aggressive on the long-side into year-end. I expect US stocks to trade modestly lower into the close from current levels on Eurozone debt angst, rising global growth worries, rising energy prices, profit-taking, more shorting and technical selling.
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