Monday, March 29, 2010

Stocks Higher into Final Hour on Commodity Stock Optimism, Less Economic Fear, Short-Covering

Broad Market Tone:

  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Most Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 17.97 +1.13%
  • ISE Sentiment Index 156.0 +36.84%
  • Total Put/Call .85 -7.61%
  • NYSE Arms 1.07 +55.33%
Credit Investor Angst:
  • North American Investment Grade CDS Index 86.05 bps -.56%
  • European Financial Sector CDS Index 73.46 bps +.74%
  • Western Europe Sovereign Debt CDS Index 74.34 bps -1.01%
  • Emerging Market CDS Index 233.67 bps +.01%
  • 2-Year Swap Spread 16.0 bps +2.0 bps
  • TED Spread 17.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .12% -1 bp
  • Yield Curve 283.0 bps +4 bps
  • China Import Iron Ore Spot $151.50/Metric Tonne +.26%
  • Citi US Economic Surprise Index +34.50 -1.8 points
  • 10-Year TIPS Spread 2.23% -1 bp
Overseas Futures:
  • Nikkei Futures: Indicating +99 open in Japan
  • DAX Futures: Indicating +5 open in Germany
  • Slightly Higher: On gains in my Biotech, Medical and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as stocks stabilize modestly higher after mid-day selling. On the positive side, Construction, Steel, Gold, Oil Service, Energy and Coal stocks are especially strong, rising +1.5%+. Despite a jump in commodity prices on dollar weakness, the 10-year TIPS spread is slightly lower and the 10-year yield is stable. On the negative side, Homebuilding, Restaurant, Bank, Computer Service and Software shares are lower on the day. Gauges of investor angst are relatively muted again. (XLF) is mildly underperforming. The Greece sovereign debt cds is surging +8.81% today, despite a bounce in the euro. Moreover, the Japan sovereign debt cds is up another +3.6% today and has risen +17.38% over the last 5 days. Given the recent surge in government hiring related to the census and trading holiday on Friday, I suspect the ADP Employment report, released on Wed., will take on added significance. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, tax hike fears, technical selling, rising energy prices and China bubble/trade concerns.

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