Broad Market Tone: - Advance/Decline Line: Substantially Higher
- Sector Performance: Every Sector Rising
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 17.96 -8.13%
- ISE Sentiment Index 96.0 +47.69%
- Total Put/Call .86 -16.50%
- NYSE Arms .44 -61.56%
Credit Investor Angst:- North American Investment Grade CDS Index 97.99 -3.45%
- European Financial Sector CDS Index 244.11 -2.43%
- Western Europe Sovereign Debt CDS Index 278.34 -.99%
- Emerging Market CDS Index 262.81 -1.58%
- 2-Year Swap Spread 28.50 -1.5 basis points
- TED Spread 39.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -52.0 +1.75 basis points
Economic Gauges:- 3-Month T-Bill Yield .08% unch.
- Yield Curve 173.0 +3 basis points
- China Import Iron Ore Spot $149.20/Metric Tonne -.07%
- Citi US Economic Surprise Index 9.2 -3.8 points
- 10-Year TIPS Spread 2.31 +4 basis points
Overseas Futures: - Nikkei Futures: Indicating a +155 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Higher: On gains in my Technology, Medical, Retail and Biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and (EEM) short
- Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is very bullish, as the S&P 500 trades back above its 50-day moving average despite Eurozone debt angst, rising global growth fears, less US economic optimism and rising energy prices. On the positive side, Coal, Alt Energy, Oil Service, Networking, Hospitals, Construction, Airlines, Computer Service and Steel shares are especially strong, rising more than +2.0%. Small-caps are outperforming. Copper is rising +.47%. Weekly retail sales rose +3.6% versus a +4.1% gain the prior week. Major Asian indices were mixed overnight as a +1.2% gain in India was offset by a -.94% decline in China. Major European indices rose around +2.5%, led by a +3.7% gain in Italy. The Bloomberg European Bank/Financial Services Index surged +4.2% today. The Spain sovereign cds is falling -4.6% to 488.76 bps, the Japan sovereign cds is down -4.1% to 99.10 bps and the Russia sovereign cds is down -3.55% to 195.86 bps. Moreover, the European Investment Grade CDS Index is down -4.6% to 137.20 bps. On the negative side, Edcuation, Restaurant, Disk Drive, Paper and Utility
shares are underperforming, rising less than +1.0%. Lumber is down -1.8%, Oil is up +1.2% and the UBS-Bloomberg Ag Spot Index is rising +.4%. The Germany sovereign cds is gaining +1.95% to 78.0 bps and the France sovereign cds is up +.35% to 190.33 bps.
US Rail Traffic continues to soften.
The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak despite investor perceptions that the US economy is accelerating.
Moreover, the Citi US Economic Surprise Index has fallen back to mid-Oct. levels. Lumber is -11.0% since its Dec. 29th high despite the better US economic data, improving sentiment towards homebuilders and the broad equity rally. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -55.0% from its Oct. 14th high and is now down around -40.0% ytd. China Iron Ore Spot has plunged -18.0% since Sept. 7th of last year. Shanghai Copper Inventories are right near a new record and have risen +762.0% ytd.
China's March copper imports fell -4.6% on the month. Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. US stocks remain extraordinarily resilient as risks continue to mount. US investor complacency regarding the situation in Europe is high, in my opinion. Copper is only rebounding slightly, bonds are holding recent gains and the euro currency is not participating in today's eurozone equity optimism. As well, the rises in German/French cds are also red flags. For the recent equity advance to maintain traction, I would 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. (ISRG) reports after the close today. While the quarter should be fine, I took a little bit off the table ahead of possible cautious commentary regarding their European biz and on recent large-cap growth stock underperformance. Long (ISRG). I expect US stocks to trade mixed-to-lower into the close from current levels on Eurozone debt angst, less US economic optimism, global growth fears and rising energy prices.
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