Broad Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- VIX 31.65 +.09%
- ISE Sentiment Index 82.0 +3.5%
- Total Put/Call .99 -18.85%
- NYSE Arms 1.15 +61.11%
Credit Investor Angst:
- North American Investment Grade CDS Index 115.31 +.48%
- European Financial Sector CDS Index 219.69 +2.71%
- Western Europe Sovereign Debt CDS Index 304.17 unch.
- Emerging Market CDS Index 267.65 +1.42%
- 2-Year Swap Spread 31.0 +2 bps
- TED Spread 32.0 unch.
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 196.0 -3 bps
- China Import Iron Ore Spot $180.40/Metric Tonne +.28%
- Citi US Economic Surprise Index -48.1 +5.0 points
- 10-Year TIPS Spread 2.04% +1 bp
Overseas Futures:
- Nikkei Futures: Indicating +61 open in Japan
- DAX Futures: Indicating -41 open in Germany
Portfolio:
- Slightly Lower: On losses in my Retail, Tech and Biotech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and added to my (EEM) short
- Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 reverses morning gains again on rising Eurozone debt angst, more financial sector pessimism, more shorting, profit-taking, emerging markets inflation fears, global growth worries and technical selling. On the positive side, Homebuilding shares are rising on the day. Lumber is gaining +1.16% and the UBS-Bloomberg Ag Spot Index is falling -1.68%. On the negative side, Education, Insurance, Hospital, Biotech, I-Bank, Bank, Disk Drive, Paper, Oil Tanker, Alt Energy and Defense shares are under meaningful pressure, falling more than -1.75%.
Small-caps and cyclicals are substantially underperforming. (XLF) has traded poorly throughout the day. The 10-year yield is falling too much given today's data, falling -9 bps to 2.14%. Oil is rising +.14%, Gold is rising +.15% and Copper is down -1.34%. Rice is making another new multi-year high today and has risen +34.1% in about 8 weeks. The average US price for a gallon of gas is +.01/gallon today to $3.63/gallon. It is up .49/gallon in about 7 months. The Greece sovereign cds is gaining +1.44% to 2,293.70 bps, the France sovereign cds is rising +5.83% to 163.17 bps, the Spain sovereign cds is gaining +4.95% to 375.25 bps, the Italy sovereign cds is jumping +6.25% to 383.07 bps, the Portugal sovereign cds is gaining +3.75% to 952.28 bps, the Belgium sovereign cds is soaring +8.36% to 249.50 bps and the US sovereign cds is up +2.43% to 51.37 bps. The Eurozone Financial Sector CDS Index is still near it recent all-time high. The Citi Eurozone Economic Surprise Index has plunged -108.9 points in about 3 weeks to -102.80. The UBS-Bloomberg Ag Spot Index is still near its recent record high, which is also a large negative. The 3-Month Euro Basis Swap is gapping -10.15 bps down today and is back near its recent low at -89.78 bps. The Shanghai Composite did not participate in the Asian equity rally for the 4th consecutive day overnight and is down -8.97% ytd. Germany's DAX also continues to trade poorly as it fell another -.94% today and is now down -17.5% ytd. As well, the euro currency remains heavy despite equity trader optimism over developments in the region. Brazil's interest rate cut last night will very likely prove a large mistake as their inflation expectations are getting to very problematic levels. The AAII % Bulls jumped to 38.62 this week, while the % Bears fell to 32.3%, which is another negative given the backdrop. Gauges of eurozone debt angst are bubbling higher again, which is a large concern. The set-up for traders into tomorrow's likely weaker-than-expected jobs report is not ideal. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, rising financial sector pessimism, global growth worries, emerging markets inflation fears, more shorting, profit-taking and technical selling.
