Wednesday, March 10, 2010

Stocks Rising into Final Hour on Tech Sector Optimism, Less Financial Sector Pessimism, Short-Covering, Technical Buying

Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Almost Every Sector Higher
  • Volume: Above Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 18.07 +.84%
  • ISE Sentiment Index 142.0 -6.58%
  • Total Put/Call .72 +5.88%
  • NYSE Arms .63 -18.36%
Credit Investor Angst:
  • North American Investment Grade CDS Index 81.99 bps -1.41%
  • European Financial Sector CDS Index 65.90 bps -13.14%
  • Western Europe Sovereign Debt CDS Index 67.08 bps -3.94%
  • Emerging Market CDS Index 226.88 bps -1.69%
  • 2-Year Swap Spread 21.0 bps -1 basis point
  • TED Spread 11.0 bps unch.
Economic Gauges:
  • 3-Month T-Bill Yield .14% unch.
  • Yield Curve 281.0 bps -1 basis point
  • Copper Days Demand 15.18 days -.09%
  • Citi US Economic Surprise Index +14.80 -2.2 points
  • 10-Year TIPS Spread 2.25% +2.0 bps
Overseas Futures:
  • Nikkei Futures: Indicating +67 open in Japan
  • DAX Futures: Indicating -13 open in Germany
  • Higher: On strength in my Biotech, Financial and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the major averages build on recent gains with the bears failing to capitalize on yesterday's afternoon weakness. On the positive side, (XLF) has traded pretty well throughout the day, gaining +.9%. Technology shares are also outpeforming, rising +1.0%. Hospital, Airline, Bank, Semi and Oil Tankers stocks are estpecially strong, rising 2.0%+. The implosion in the euro financial sector cds index is a major positive. As well, sovereign cds remain under meaningful pressure again today. The decline in gold is noteworthy considering today's euro strength, equity gains and uptick in inflation expectations. On the negative side, Telecom, Homebuilding and Retail stocks are slightly lower on the day. Shanghai copper inventories are up another +5.4% today and are back near their Dec. 2009 highs. On of my longs, (GOOG), is surging up through its 50-day moving average on volume today. As I said a couple of weeks ago, I believe the shares are attractive for both short and longer-term investors around current levels. We are seeing some more modest late day profit-taking in the broad market, but so far weakness isn't meaningful. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, stable long-term rates, tech sector optimism and diminishing financial sector pessimism.

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