BETWEEN THE HEDGES

Friday, October 05, 2012

Market Week in Review

Posted by Gary .....at 7:20 PM

S&P 500 1,460.93 +1.41%*

The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Posted by Gary .....at 7:15 PM

Indices

S&P 500 1,460.93 +1.41%
DJIA 13,610.15 +1.29%
NASDAQ 3,136.18 +.64%
Russell 2000 842.86 +.65%
Value Line Geometric(broad market) 363.63 +1.13%
Russell 1000 Growth 678.13 +1.17%
Russell 1000 Value 722.46 +1.63%
Morgan Stanley Consumer 852.48 +1.99%
Morgan Stanley Cyclical 990.66 +2.27%
Morgan Stanley Technology 684.66 +.03%
Transports 5,046.43 +3.14%
Utilities 479.93 +.88%
Bloomberg European Bank/Financial Services 84.46 +3.66%
MSCI Emerging Markets 41.74 +.50%
Lyxor L/S Equity Long Bias 1,056.31 +.11%
Lyxor L/S Equity Variable Bias 804.13 +.10%
Lyxor L/S Equity Short Bias 539.66 unch.

Sentiment/Internals

NYSE Cumulative A/D Line 159,405 +1.93%
Bloomberg New Highs-Lows Index 287.0 +140
Bloomberg Crude Oil % Bulls 34.2 -9.5%
CFTC Oil Net Speculative Position 215,880 -6.67%
CFTC Oil Total Open Interest 1,556,877 +.07%
Total Put/Call .91 -8.08%
OEX Put/Call 1.36 +67.90%
ISE Sentiment 86.0 -12.0%
NYSE Arms 1.23 -26.63%
Volatility(VIX) 14.33 -8.90%
S&P 500 Implied Correlation 45.42 -6.98%
G7 Currency Volatility (VXY) 7.60 -3.31%
Smart Money Flow Index 11,670.95 +.22%
Money Mkt Mutual Fund Assets $2.564 Trillion -.50%
AAII % Bulls 33.86 -6.2%
AAII % Bears 33.23 -8.86%

Futures Spot Prices

CRB Index 307.62 -.54%
Crude Oil 89.88 -2.41%
Reformulated Gasoline 295.25 +1.30%
Natural Gas 3.40 +2.38%
Heating Oil 315.59 +.25%
Gold 1,780.80 +.41%
Bloomberg Base Metals Index 219.42 +.04%
Copper 377.80 +.65%
US No. 1 Heavy Melt Scrap Steel 347.67 USD/Ton -3.78%
China Iron Ore Spot 104.20 USD/Ton unch.
Lumber 276.10 -1.57%
UBS-Bloomberg Agriculture 1,681.22 -.93%

Economy

ECRI Weekly Leading Economic Index Growth Rate +4.7% +90 basis points
Philly Fed ADS Real-Time Business Conditions Index -.4282 +6.36%
S&P 500 Blended Forward 12 Months Mean EPS Estimate 111.98 -.01%
Citi US Economic Surprise Index 43.5 +37.7 points
Fed Fund Futures imply 58.0% chance of no change, 42.0% chance of 25 basis point cut on 10/24
US Dollar Index 79.34 -.69%
Yield Curve 148.0 +8 basis points
10-Year US Treasury Yield 1.74% +11 basis points
Federal Reserve's Balance Sheet $2.791 Trillion +.14%
U.S. Sovereign Debt Credit Default Swap 49.34 +30.57%
Illinois Municipal Debt Credit Default Swap 197.0 -4.09%
Western Europe Sovereign Debt Credit Default Swap Index 140.42 -5.04%
Emerging Markets Sovereign Debt CDS Index 199.85 -7.23%
Saudi Sovereign Debt Credit Default Swap 86.93 -4.49%
Iraq Sovereign Debt Credit Default Swap 483.28 +4.15%
China Blended Corporate Spread Index 405.0 -10 basis points
10-Year TIPS Spread 2.57% +15 basis points
TED Spread 25.5 -1.25 basis points
2-Year Swap Spread 14.0 +.75 basis point
3-Month EUR/USD Cross-Currency Basis Swap -22.0 +4.25 basis points
N. America Investment Grade Credit Default Swap Index 93.96 -6.1%
European Financial Sector Credit Default Swap Index 178.63 -12.23%
Emerging Markets Credit Default Swap Index 214.38 -3.98%
CMBS Super Senior AAA 10-Year Treasury Spread 97.0 unch.
M1 Money Supply $2.360 Trillion -.47%
Commercial Paper Outstanding 975.10 -1.50%
4-Week Moving Average of Jobless Claims 375,00 +1,000
Continuing Claims Unemployment Rate 2.6% unch.
Average 30-Year Mortgage Rate 3.36% -4 basis points
Weekly Mortgage Applications 1,020.40 +16.6%
Bloomberg Consumer Comfort -36.9 +2.8 points
Weekly Retail Sales +2.40% unch.
Nationwide Gas $3.79/gallon unch.
U.S. Heating Demand Next 7 Days 41.0% above normal
Baltic Dry Index 845.0 +10.3%
China (Export) Containerized Freight Index 1,214.62 -1.01%
Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 22.50 unch.
Rail Freight Carloads 257,225 +2.79%

Best Performing Style

Large-Cap Value +1.63%

Worst Performing Style

Large-Cap Growth +.29%

Leading Sectors

Homebuilders +5.9%
Airlines +5.1%
Banks +3.6%
Road & Rail +3.2%
Biotech +3.2%

Lagging Sectors

Oil Service -1.4%
Networking -1.6%
Alternative Energy -1.7%
Restaurants -2.0%
Computer Hardware -3.9%

Weekly High-Volume Stock Gainers (18)

SRPT, CRDN, OCN, NC, MDRX, CHUY, MFRM, GNRC, SPSC, GWAY, MUR, TBBK, DFRG, WLP, PCS, AZZ, EBSB and TSRO

Weekly High-Volume Stock Losers (13)

UBA, AIMC, RPM, LXK, ADTN, HPQ, GMAN, HMSY, FNP, EXPR, MSCI, INFA and NUVA

Weekly Charts
ETFs

Stocks

*5-Day Change

Stocks Reversing Lower into Final Hour on Rising Global Growth Fears, Mid-East Unrest, Tech/Commodity Sector Weakness, Technical Selling

Posted by Gary .....at 3:32 PM

Today's Market Take:

Broad Market Tone:

Advance/Decline Line: Lower
Sector Performance: Mixed
Volume: Below Average
Market Leading Stocks: Underperforming

Equity Investor Angst:

VIX 14.22 -2.13%
ISE Sentiment Index 82.0 -37.4%
Total Put/Call .90 +12.5%
NYSE Arms 1.42 +116.35%

Credit Investor Angst:

North American Investment Grade CDS Index 94.86 bps -.23%
European Financial Sector CDS Index 178.79 bps -3.76%
Western Europe Sovereign Debt CDS Index 137.77 bps -4.13%
Emerging Market CDS Index 214.09 bps -1.53%
2-Year Swap Spread 14.0 +.75 basis point
TED Spread 25.5 unch.
3-Month EUR/USD Cross-Currency Basis Swap -22.25 +.75 basis point

Economic Gauges:

3-Month T-Bill Yield .10% unch.
Yield Curve 147.0 +5 basis points
China Import Iron Ore Spot $104.20/Metric Tonne unch.
Citi US Economic Surprise Index 43.50 +25.8 points
10-Year TIPS Spread 2.57 +2 basis points

Overseas Futures:

Nikkei Futures: Indicating +29 open in Japan
DAX Futures: Indicating -40 open in Germany

Portfolio:

Slightly Higher: On gains in my Biotech/Retail sector longs and index hedges
Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
Market Exposure: Moved to 25% Net Long

Today's Headlines

Posted by Gary .....at 3:00 PM

Bloomberg:

Metro Cuts Profit Forecast as Europe Slowdown Hurts Sales. Metro AG (MEO), Germany’s biggest retailer, cut its 2012 profit forecast, saying Europe’s sovereign-debt crisis is weighing on sales in the south and east of the region. Earnings before interest and taxes will decline to about 2 billion euros ($2.6 billion) in 2012, the Dusseldorf-based retailer said in a statement today. It had previously forecast earnings would be about the same as 2011’s 2.37 billion euros. The shares fell the most in about 10 months. “The European consumer environment has worsened further in recent weeks against the backdrop of rising unemployment, which has hit a new record high in the euro zone,” said the company, which owns Media Markt electronics stores. “This has also started to materially affect Metro Group’s business development, especially in southern Europe and parts of eastern Europe.”
Spain Deterred From Bailout Request as EU Questions Deficit Plan. Spain has been deterred from triggering the currency union’s rescue mechanisms because of concerns about how, and even whether, the process would work, Deputy Prime Minister Soraya Saenz de Santamaria said today. “We need to have all the elements on the table and also the certainty that it would materialize” before making a bailout request, Saenz said at press conference in Madrid following the government’s weekly Cabinet meeting. Her comments help explain why Spanish officials have sought to damp expectations of a bailout request amid rising criticism of their plans to tame the budget deficit. Prime Minister Mariano Rajoy has said he is considering a request for European Union bond buying to try to bring down borrowing costs that remain more than 100 basis points above their average for the last decade. EU deficit enforcer Olli Rehn and Spanish central bank governor Luis Maria Linde this week both questioned the math that the government says will deliver the country’s deficit- reduction commitments over the next 15 months. Spain’s high funding costs are complicating the debt-reduction effort. “There is a rising fear that the 2013 budget and the stress tests may have been some sort of window dressing to get European assistance,” Thomas Costerg, an economist at Standard Chartered Bank in London, said yesterday by e-mail.
Merkel’s First Greek Crisis Visit May Mark Turning Point. German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro. Merkel’s visit to the Greek capital Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency regime.
Al-Qaeda Affiliates Getting Stronger, Says U.S. Official. Terrorist groups in Mali and Yemen that are affiliated with al-Qaeda are “gaining strength,” in large part by taking hostages for ransom, a senior U.S. Treasury official said today. “The U.S. government estimates that terrorist organizations have collected approximately $120 million in ransom payments over the past eight years,” said Deputy Treasury Secretary David Cohen in a speech to the Royal Institute of International Affairs at Chatham House in London. U.S. intelligence officials are investigating whether the two main groups Cohen cited, al-Qaeda in the Islamic Maghreb and al-Qaeda in the Arabian Peninsula, may have played a role in the Sept. 11 attack on a U.S. diplomatic post in Benghazi, Libya, that killed Christopher Stevens, the American ambassador to Libya, and three other Americans.
India’s NSE Says 59 Erroneous Orders Caused Index Plunge. The National Stock Exchange of India said 59 erroneous orders prompted a plunge in equities that briefly erased about $58 billion in value, underscoring growing global concern about the integrity of financial markets. Trading in the S&P CNX Nifty (NIFTY) Index and some individual companies stopped at 9:49 a.m. in Mumbai for 15 minutes after the 50-stock gauge tumbled as much as 16 percent. The volume of stocks in the benchmark index that were traded today almost doubled from the 100-day average, according to data compiled by Bloomberg. An index of Indian stocks traded in New York slipped as much as 1 percent.
Food Prices May Stay High in Next Six Months on Drought: FAO. Global food prices will probably stay high in the next six months after drought in the U.S. and Russia cut grain supplies, said the United Nations. The global market “will switch to a short supply mode” for the first time in two years, said Hiroyuki Konuma, the regional representative for Asia and Pacific at the UN’s Food & Agriculture Organization. “We will have to monitor it very cautiously,” he said in a phone interview on Oct. 3.
Oil Heads for Third Weekly Drop on Supply/Demand Worries. Futures are set to cap the longest run of weekly decreases since June after the Energy Department reported on Oct. 3 that U.S. crude output rose to 6.52 million barrels a day last week, the most since December 1996. Crude oil for November delivery fell $2.18, or 2.4 percent, to $89.53 a barrel at 1:49 p.m. on the New York Mercantile Exchange. The contract dropped as low as $89.01. Prices are down 2.9 percent this week. Brent oil for November settlement slipped 95 cents, or 0.8 percent, to $111.63 a barrel on the London-based ICE Futures Europe exchange.

MarketWatch.com:

Brace for worst earnings since recession rebound. S&P 500 firms slated to report earnings drop; low-balling is typical. This earnings season threatens to be one of the roughest since U.S. companies started to pull themselves out of the Great Recession — even if, as usual, results don’t live up to the worst of the gloom-and-doom forecasts. Revenue streams are drying up as China’s growth slows and Europe reels from crisis to crisis. Companies are finding fewer places to cut costs.
QE3 was a sign of failure. When Federal Reserve Chairman Ben Bernanke announced a new round of unconventional monetary stimulus last month, he couched it in the language of grim necessity, saying:

CNBC:

Zero Hedge:

Business Insider:

24/7 Wall St.:

Federal Employment Set to Tumble Off Fiscal Cliff. About 14% of the total federal government workforce could lose their jobs if U.S. lawmakers cannot figure out a way to avoid the looming fiscal cliff. That’s 277,000 non-military jobs, of which 48,000 would be lost to civilian defense workers and 229,000 would be lost to non-defense workers.

DailyFX:

Decline in German Factory Orders Dissapoints Expectations. German manufacturing orders dropped by 1.3% in August (seasonally adjusted), disappointing expectations for a 0.5% drop, and a reverse from July’s revised 0.3% rise in factory orders. Manufacturing orders were 4.8% less than August 2011, according to the Economy Ministry.

HedgeEye.com:

Jobs Report: Fuzzy Math? (graphs)

Reuters:

US stuck with 'extraordinary' level of vacant homes-Fed's Duke. The U.S. housing bust has saddled the country with an "extraordinary" level of abandoned properties, inflicting heavy costs on the wider community which may warrant government aid to ease the problem, a top U.S. central banker said on Friday. "In order to see the robust economic recovery we all want, we need to deal effectively with the large volume of vacant and distressed properties throughout the country," said Federal Reserve Board Governor Elizabeth Duke.
VW cuts output target, halts German Passat plant. Volkswagen halted production in Germany of its Passat cars this week as part of a wider move to cut its group output target for the year by about 300,000 vehicles because of the European market slump, company sources said. The global production target for the VW group, which includes luxury division Audi, has been cut to 9.4 million cars this year, up on last year's output of 8.5 million but short of the goal originally set for this year of about 9.7 million, the sources said on Friday.
California gasoline prices jump 17 cents a gallon overnight. California gas prices rose 17 cents a gallon overnight due to supply disruptions at some refineries and seasonally low inventories, bringing the one-week increase in the Golden State to nearly 36 cents. The average retail price of gasoline was $4.486 on Friday morning, up from $4.315 on Thursday and $4.131 a week ago, according to AAA data. The average price was $3.818 a year ago. The average price is just 12 cents below the highest recorded statewide price of $4.61, which was reached in June of 2008. "It's insane," said Matt Hurd, 35, who works in real estate. "Especially with this thing," he added, motioning toward his white SUV. "It's going to cost triple digits to fill it up."

Handelsblatt:

IMF Reduces German Economic Growth Forecast. The IMF expects the German economy to grow .9% each year in 2012 and 2013, lower than the respective 1% and 1.4% rates forecast in July, citing the fund's World Economic Outlook to be published Oct. 9.

Bear Radar

Posted by Gary .....at 1:52 PM

Style Underperformer:

Large-Cap Growth -.20%

Sector Underperformer:

1) HMOs -1.0% 2) Coal -.90% 3) Software -.70%

Stocks Faling on Unusual Volume:

FFIV, AAPL, MRCY, SABA, SPSC, WLP, TM, IQNT, FSLR, IMOS, MBT, MVO, SRPT, NUVA, ASPS, LQDT, PNRA, MAR, BRLI, CMG, FTK, IMOS, CAKE, BJRI, CHUY, CTXS, SPLK, INFY, CALM, GMCR, PRXL, EZA and MDCO

Stocks With Unusual Put Option Activity:

1) XLY 2) RSX 3) ZNGA 4) FSLR 5) EWA

Stocks With Most Negative News Mentions:

1) MRCY 2) CAKE 3) MAR 4) BHI 5) EBAY

Charts:

Bull Radar

Posted by Gary .....at 11:25 AM

Style Outperformer:

Small-Cap Value +.75%

Sector Outperformers:

1) Homebuilding +1.65% 2) Education +1.49% 3) Airlines +1.09%

Stocks Rising on Unusual Volume:

TQNT, SAND, ALJ, ETP, INFA, PAY, AVP, OI, STZ and PBY

Stocks With Unusual Call Option Activity:

1) LINE 2) OCN 3) AVP 4) VRNG 5) ACAD

Stocks With Most Positive News Mentions:

1) OI 2) TMO 3) STZ 4) LMT 5) XOM