Friday, March 12, 2010

Stocks Slightly Lower into Final Hour on Profit-Taking, Technical Selling, Healthcare Reform Worries

Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Most Declining
  • Volume: Slightly Below Average
  • Market Leading Stocks: Mixed
Equity Investor Angst:
  • VIX 17.90 -.89%
  • ISE Sentiment Index 126.0 -5.26%
  • Total Put/Call .86 -7.53%
  • NYSE Arms 1.46 +201.18%
Credit Investor Angst:
  • North American Investment Grade CDS Index 82.79 bps -1.48%
  • European Financial Sector CDS Index 71.24 bps +1.87%
  • Western Europe Sovereign Debt CDS Index 65.58 bps -3.08%
  • Emerging Market CDS Index 216.58 bps -2.20%
  • 2-Year Swap Spread 21.0 bps unch.
  • TED Spread 12.0 bps +1 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .14% unch.
  • Yield Curve 274.0 bps -3 bps
  • Copper Days Demand 15.07 days -.40%
  • Citi US Economic Surprise Index +36.1 +10.1 points
  • 10-Year TIPS Spread 2.27% +2 bps
Overseas Futures:
  • Nikkei Futures: Indicating +34 open in Japan
  • DAX Futures: Indicating -6 open in Germany
  • Slightly Higher: On strength in my Retail and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the major averages are stalling near technical resistance despite a positive retail sales report. On the positive side, (IYR) has traded well throughout the day again, gaining +.64%. Retail, REIT, Paper, Oil Service, Ag, Oil Tanker and Coal shares are especially strong, rising .50%+. The Greece sovereign cds is falling another -4.5% today and the euro is bouncing on further short-covering. (GE) is surging +3.0% on heavy volume over the last hour, which is helping to lift the major averages a bit. On the negative side, Homebuilding, Disk Drive and HMO stocks are meaningfully lower on the day. Shanghai copper inventories are up another +9.4% today and are up +38.5% in five days. Stocks are stalling near resistance, are overbought and sentiment is a bit too bullish. However, with fundamentals improving, I suspect we will continue to churn over the near-term rather than see a significant pullback. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, declining energy prices and less economic fear.

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