Broad Market Tone: - Advance/Decline Line: About Even
- Sector Performance: Mixed
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 17.89 +3.24%
- ISE Sentiment Index 125.0 +92.31%
- Total Put/Call .86 -21.10%
- NYSE Arms .80 -28.35%
Credit Investor Angst:- North American Investment Grade CDS Index 95.65 -.14%
- European Financial Sector CDS Index 178.93 +2.02%
- Western Europe Sovereign Debt CDS Index 350.33 +1.20%
- Emerging Market CDS Index 252.16 -.11%
- 2-Year Swap Spread 30.50 -.5 bp
- TED Spread 38.75 -1.25 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -68.0 +4.0 bps
Economic Gauges:- 3-Month T-Bill Yield .10% +1 bp
- Yield Curve 163.0 -4 bps
- China Import Iron Ore Spot $140.50/Metric Tonne +1.08%
- Citi US Economic Surprise Index 47.80 -10.2 points
- 10-Year TIPS Spread 2.26 -2 bps
Overseas Futures: - Nikkei Futures: Indicating -34 open in Japan
- DAX Futures: Indicating +4 open in Germany
Portfolio:
- Higher: On gains in my Biotech, Medical, Retail and Tech sector longs
- Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish, as the S&P 500 reverses morning losses and trades slightly higher despite rising Eurozone debt angst, high energy prices, global growth fears and recent equity gains. On the positive side, Oil Tanker, paper, Bank, Hospital, Retail and Airline shares are especially strong, rising more than +.75%. Oil is falling -1.5%, Gold is down -.2% and Copper is rising +.2%. (XLF) is outperforming and the Transports are trading better today with oil's decline. On the negative side, Coal, Steel, Disk Drive and Education shares are
under meaningful pressure, falling more than -.75%. Technology shares are underperforming today. The UBS-Bloomberg Ag Spot Index is rising +.86% and Lumber is declining -.95%. The Germany sovereign cds index is rising +2.03% to 82.38 bps, the Japan sovereign cds is rising +1.7% to 124.0 bps, the Israel sovereign cds is gaining +1.5% to 191.83 bps and the Brazil sovereign cds is gaining +2.8% to 139.0 bps. Lumber is -2.5% since its Dec. 29th high despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the weekly MBA Purchase Applications Index has been around the same level since May 2010. The Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down over -50.0% ytd. The 10Y T-Note Yield, which is falling another -5 bps to 1.92%, remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data.
Despite more positive US economic data today, the
Philly Fed/ADS Real-Time Business Conditions Index has declined -6.0% over the last 5 days and continues to trend lower from its peak in mid-December.
The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. Overall, credit gauge improvement has stalled over the last few weeks and these gauges are still at stressed levels.
China Iron Ore Spot has plunged -22.4% since Sept. 7th of last year. Shanghai Copper Inventories are up +687.0% ytd and are still very near their recent all-time high. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. Major Asian indices were mostly lower overnight, led down by India’s -2.7% decline. India shares had been one of this year’s best-performers, but have declined -4.6% over the last five days. Major European indices fell around -.5%, led down by a -1.1% decline in Italian stocks. The Bloomberg European Bank/Financial Services Index is down -1.42% today. As usual, US equity dip-buyers appeared in aggressive fashion after opening weakness. Stocks remain extremely resilient to all negative news. I would normally view this as a positive, but with bullish investor sentiment already elevated given the macro backdrop this positive technical action is breeding even more complacency. However, as long as the largest company in the world, market leader (AAPL), continues to trades as if shot from a cannon, it is hard to envision a meaningful market correction materializing. US stocks are still technically extended short-term and are right near intermediate-term resistance, which likely means more sideways action near-term. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, high energy prices, global growth fears, profit-taking, technical selling, less tech sector optimism and more shorting.
1 comment:
Thanks for the report that copper Shanghai Copper Inventories are near their all time high.
Stockpiles of copper are used as collateral for lending in China. And these are high only because the spigot of credit liquidity is running full open in China as well as around the world.
When steel stocks, SLX, turn lower on competitive currency devaluation, the whole financial China Structure, CHIM, CHIX, CHII, and TAO, will crumble.
And when the debt trade finally gives way, and financial armageddon comes, then diktat not fiat money, will rule economically in ten regions of global governance.
In a credit depleted world, people ih China, Europe, and North America, will look to sovereign leaders, and place their trust in them, giving them their full allegiance.
Volatility TVIX,VIXY,VIXM, rose Monday as World Shares, VT, traded lower, led so by EWX, EEM, VSS, and EEB, as the Dow came ust in under 13,000, and the S&P traded at its highest since 2008.
On Monday, the trade lower in the world shares means that the global debt trade is coming to an end on the exhaustion of US central bank and ECB credit policies, as the ECB now has effected sovereignty over national debt with its Greek Debt Collective Action Clause Initiative, and as the EU ECB and IMF Troika have issued 3 Memorandum with 38 stipulations in addition to the Initial Memorandum of the Second Greek Bailout Agreement, and as fears arise over the possibility of Greek Default on its sovereign debt.
As long as you like trading, might you please consider creating a special section, possibly with charts, on Volatility TVIX, VIXY, VIXM.
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