Friday, March 26, 2010

Stocks Slightly Lower into Final Hour on Profit-Taking, North/South Korea Worries, China Bubble/Trade Concerns, Tax Hike Fears

Broad Market Tone:

  • Advance/Decline Line: Slightly Lower
  • Sector Performance: Most Declining
  • Volume: About Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 18.18 -1.20%
  • ISE Sentiment Index 111.0 -.89%
  • Total Put/Call .90 +5.88%
  • NYSE Arms .67 -28.86%
Credit Investor Angst:
  • North American Investment Grade CDS Index 86.53 bps +.30%
  • European Financial Sector CDS Index 74.0 bps -4.43%
  • Western Europe Sovereign Debt CDS Index 76.25 bps +1.22%
  • Emerging Market CDS Index 233.69 bps +2.31%
  • 2-Year Swap Spread 14.0 bps +2.0 bps
  • TED Spread 16.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .13% unch.
  • Yield Curve 279.0 bps unch.
  • Copper Days Demand n/a
  • Citi US Economic Surprise Index +36.30 -4.5 points
  • 10-Year TIPS Spread 2.24% 2 bps
Overseas Futures:
  • Nikkei Futures: Indicating -41 open in Japan
  • DAX Futures: Indicating +3 open in Germany
  • Slightly Higher: On gains 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 reverse morning gains again despite a bounce in the euro and lower long-term rates. On the positive side, Gold, Steel and Gaming stocks are especially strong, rising +1.0%+. Cyclicals are slightly outperforming today. The Spain sovereign cds is falling -4.2%. On the negative side, Education, HMO, Disk Drive and Software shares are under meaningful pressure, falling more than 1%. Gauges of investor angst are relatively muted again today. (XLF) had been outperforming earlier in the day, but has moved to session lows and is now in line with the market. The MSCI Asia Pacific Index has so far failed to take out its January 15th high and may be forming a double top. While I still expect to see further US stock weakness near-term, I am surprised in the bears inability to gain meaningful traction over the last two days, given the news. As well, certain key stocks continue to trade very well. I expect US stocks to trade modestly lower into the close from current levels on profit-taking, tax hike fears, technical selling and China bubble/trade concerns.

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