Broad Market Tone: - Advance/Decline Line: Substantially Higher
- Sector Performance: Almost Every Sector Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 18.39 -5.40%
- ISE Sentiment Index 112.0 +23.08%
- Total Put/Call .85 -2.l30%
- NYSE Arms .62 -53.96%
Credit Investor Angst:- North American Investment Grade CDS Index 99.31 -3.19%
- European Financial Sector CDS Index 175.56 -4.97%
- Western Europe Sovereign Debt CDS Index 332.78 -3.83%
- Emerging Market CDS Index 261.30 -2.94%
- 2-Year Swap Spread 28.0 -2 bps
- TED Spread 48.0 -1 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -73.50 -2.0 bps
Economic Gauges:- 3-Month T-Bill Yield .05% unch.
- Yield Curve 162.0 +4 bps
- China Import Iron Ore Spot $142.80/Metric Tonne +.28%
- Philly Fed ADS Real-Time Business Conditions Index .0250 unch.
- Citi US Economic Surprise Index 49.90 -3.3 points
- 10-Year TIPS Spread 2.13 +3 bps
Overseas Futures: - Nikkei Futures: Indicating 78 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Higher: On gains in my Biotech, Medical, Retail and Tech sector longs
- Disclosed Trades: Added to my (IWM), (QQQ) hedges and then covered some of them
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bullish, as the S&P 500 tests last week's high on falling Eurozone debt angst, more financial/tech sector optimism, falling energy prices and gains in European equities. On the positive side, Coal, Alt Energy, Steel, Computer, Semi, I-Bank, Hospital, HMO, Construction, Homebuilding and Education shares are especially strong, rising more than +2.0%. Financial and Tech shares are outperforming again. Small-caps are also relatively strong. Oil is falling -1.2%, Copper is rising +1.1% and Lumber is jumping +2.9%. Oil continues to trade poorly given the stock rally, euro rally, rising interest from speculators, falling euro debt angst, subsiding emerging market hard-landing fears, improving US data and soaring Mid-east tensions. Major European equity indices rose around +2.0%, led by a +2.8% gain in Italian shares. The Bloomberg European Bank/Financial Services Index jumped +3.8%. The Portugal sovereign cds is falling -6.8% to 1,382.50 bps, the Germany sovereign cds is falling -5.5% to 86.0 bps, the France sovereign cds is down -3.7% to 174.50 bps, the Spain sovereign cds is down -5.7% to 354.33 bps and the Italy sovereign cds is down -5.7% to 392.83 bps. Moreover, the European Investment Grade CDS Index is falling -4.1% to 126.37 bps. On the negative side, Oil Tanker, Internet and Restaurant shares are
lower-to-flat on the day. The UBS-Bloomberg Ag Spot Index is up +.53%. The Portugal sovereign cds is up +27.8% in 13 days and near its recent all-time high. Lumber has declined -6.3% 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 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 is rising +3 bps to 1.83%, but remains a large concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data.
The Philly Fed’s ADS Real-Time Business Conditions Index has stalled over the last 3 weeks after showing meaningful improvement from mid-Nov. through year-end.
The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. The TED spread, 2Y Euro Swap Spread, 3M Euribor-OIS spread and Libor-OIS spread have improved, but are still at stressed levels. China Iron Ore Spot has plunged -21.0% since Sept. 7th of last year. Shanghai Copper Inventories are up over +300.0% ytd to the highest level since March of last year. Major Asian indices were mixed overnight with the Shanghai Composite falling -1.1% as it runs into technical resistance at its downward-sloping 50-day moving average. I still believe that a more cautious approach is warranted in the short-term given that several key investor sentiment gauges are registering too much complacency, stocks are technically extended, global growth is still slowing and Eurozone debt angst could flare again at any time. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, subsiding 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 global growth fears, profit-taking, more shorting and technical selling.
No comments:
Post a Comment