Wednesday, May 19, 2010

Stocks Lower into Final Hour on Rising Sovereign Debt Fear, China Bubble Worries, Regulatory Concerns, More Economic Pessimism

Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Above Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 35.53 +5.90%
  • ISE Sentiment Index 86.0 -5.49%
  • Total Put/Call 1.44 +42.57%
  • NYSE Arms .60 -76.11%
Credit Investor Angst:
  • North American Investment Grade CDS Index 119.08 bps +10.47%
  • European Financial Sector CDS Index 141.89 bps +3.23%
  • Western Europe Sovereign Debt CDS Index 114.83 bps +.44%
  • Emerging Market CDS Index 278.21 bps +3.61%
  • 2-Year Swap Spread 37.0 -1 bp
  • TED Spread 32.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .16% unch.
  • Yield Curve 259.0 -4 bps
  • China Import Iron Ore Spot $155.90/Metric Tonne -4.3%
  • Citi US Economic Surprise Index +20.70 -2.1 points
  • 10-Year TIPS Spread 2.08% -10 bps
Overseas Futures:
  • Nikkei Futures: Indicating -100 open in Japan
  • DAX Futures: Indicating +22 open in Germany
  • Slightly Lower: On losses in my Technology long positions
  • Disclosed Trades: Covered some of my (IWM), (QQQQ) hedges and some of my (EEM) short
  • Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is bearish as the bulls are unable to gain upside traction despite a bounce in the euro, positive action in (XLF) and the S&P's reversal off its 200-day moving average. On the positive side, Semi, I-Banking, Drug and Education stocks are higher on the day. The rise in the euro, profit-taking and plunging inflation expectations are weighing on gold. On the negative side, Gaming, Construction, Paper, Gold, Oil Tanker, Alt Energy, Coal, Homebuilding and Steel shares are under meaningful pressure, falling 1.75%+. Cyclicals and Small-caps are underperforming. Most CDS indices are surging meaningfully again today. The Asia Ex Japan High Yield CDS Index is soaring +18.3% today to 505.0 bps. CDS indices need to begin coming in for a durable bottom in stocks to take hold. It is a negative to see the NSYE Arms at a low level despite today's losses. However, some other gauges of investor angst are now elevated, the S&P 500 held technical support this morning, (XLF) is trading better, the euro is bouncing and stocks are very oversold, which could lead to a significant rally at any time. I expect US stocks to trade mixed-to-higher into the close from current levels on technical buying, short-covering, a euro bounce and bargain-hunting.


Anonymous said...

Gary said...


Anonymous said...

Has the time arrived to buy GOOG