Monday, March 15, 2010

Stocks Reversing Higher into Final Hour on Short-Covering, Bargain-Hunting, Lower Energy Prices


Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Most Declining
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 18.09 +2.90%
  • ISE Sentiment Index 101.0 -18.55%
  • Total Put/Call .81 -5.81%
  • NYSE Arms 1.17 -26.20%
Credit Investor Angst:
  • North American Investment Grade CDS Index 84.98 bps +2.65%
  • European Financial Sector CDS Index 71.75 bps +2.89%
  • Western Europe Sovereign Debt CDS Index 67.42 bps +2.71%
  • Emerging Market CDS Index 221.28 bps +1.97%
  • 2-Year Swap Spread 19.50 bps -1.5 bps
  • TED Spread 12.0 bps unch.
Economic Gauges:
  • 3-Month T-Bill Yield .14% unch.
  • Yield Curve 276.0 bps +2 bps
  • Copper Days Demand 15.18 days +.71%
  • Citi US Economic Surprise Index +36.30 +.2 point
  • 10-Year TIPS Spread 2.26% -1 basis point
Overseas Futures:
  • Nikkei Futures: Indicating -21 open in Japan
  • DAX Futures: Indicating +31 open in Germany
Portfolio:
  • Slightly Lower: On weakness in my Biotech and Tech long positions
  • Disclosed Trades: Added an emerging market short, added to (GOOG) long
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is neutral as the major averages are trading at session highs despite healthcare/financial reform fears. On the positive side, (XLF) has outperformed for most of the day and is now in positive territory. Retail, Restaurant, Hospital, Medical and Telecom shares are especially strong, rising .50%+. The US dollar has traded very well throughout the day, while commodities have weakened. On the negative side, Commodity, Gaming and Semi stocks are meaningfully lower on the day, falling -1.5%+. The action in Chinese shares remains a big concern. As well, underperformance by US market leaders is a red flag. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, stable long-term rates and declining energy prices.

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