Wednesday, March 31, 2010

Stocks Lower into Final Hour on Tax Hike Fears, Profit-Taking, More Shorting, Rising Sovereign Debt Angst

Broad Market Tone:

  • Advance/Decline Line: Slightly Lower
  • Sector Performance: Most Declining
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 17.60 +2.74%
  • ISE Sentiment Index 124.0 unch.
  • Total Put/Call .88 +3.53%
  • NYSE Arms 1.21 -18.54%
Credit Investor Angst:
  • North American Investment Grade CDS Index 87.73 bps +1.68%
  • European Financial Sector CDS Index 74.67 bps +1.68%
  • Western Europe Sovereign Debt CDS Index 79.67 bps +4.46%
  • Emerging Market CDS Index 231.70 bps +.87%
  • 2-Year Swap Spread 17.0 bps +2.0 bps
  • TED Spread 14.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .15% +1 bp
  • Yield Curve 282.0 bps +1 bp
  • China Import Iron Ore Spot $155.0/Metric Tonne +.91%
  • Citi US Economic Surprise Index +33.80 -2.1 points
  • 10-Year TIPS Spread 2.26% +4 bps
Overseas Futures:
  • Nikkei Futures: Indicating +41 open in Japan
  • DAX Futures: Indicating +5 open in Germany
  • Slightly Lower: On losses in my Retail and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as stocks move to session lows into the final hour. On the positive side, Oil Service, Gold, Energy and Airline stocks are especially strong, rising .5%+. (XLF) is outperforming today. The 10-year yield is pulling back -3 bps on the ADP report. On the negative side, Education, Retail, Homebuilding, Hospital, I-Bank, Networking, Defense, Internet and Oil Tanker shares are falling .75%+ on the day. The S&P GSCI Ag Spot Index is falling another -3.44% today and has plunged -19.2% since January 6th, which is a red flag for other commodities. The Citi Asia Economic Surprise Index is falling -17.4% today to +43.70, which is below its 200-day moving average for the first time during this recovery. The US sovereign cds is rising +10.0% to 38.50 bps and the Greece sovereign cds continues to move back up, rising another +2.1%. I suspect we could see further equity weakness tomorrow morning. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, more shorting, tax hike fears and rising sovereign debt angst.

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