Thursday, May 20, 2010

Stocks Sharply Lower on Heavy Volume on Regulatory Fears, Rising Economic Pessimism, Increasing Sovereign Debt Worries, Technical Selling

Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Every Sector Declining
  • Volume: Heavy
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 42.74 +20.64%
  • ISE Sentiment Index 86.0 -5.49%
  • Total Put/Call 1.51 +9.42%
  • NYSE Arms 1.84 +257.85%
Credit Investor Angst:
  • North American Investment Grade CDS Index 123.0 bps +3.29%
  • European Financial Sector CDS Index 151.96 bps +5.50%
  • Western Europe Sovereign Debt CDS Index 114.83 bps +4.06%
  • Emerging Market CDS Index 303.47 bps +9.19%
  • 2-Year Swap Spread 39.0 +2 bps
  • TED Spread 33.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .16% unch.
  • Yield Curve 252.0 -7 bps
  • China Import Iron Ore Spot $154.60/Metric Tonne -.83%
  • Citi US Economic Surprise Index +19.20 -1.5 points
  • 10-Year TIPS Spread 1.95% -13 bps
Overseas Futures:
  • Nikkei Futures: Indicating -215 open in Japan
  • DAX Futures: Indicating -12 open in Germany
  • Lower: On losses in my Technology, Medical, Biotech and Retail long positions
  • Disclosed Trades: Added to my (IWM), (QQQQ) hedges and added to my EEM short
  • Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 is breaking down through its 200-day moving average on heavy volume. On the positive side, Education, Homebuilding and Semi stocks are holding up relatively well. The rise in the euro, profit-taking and plunging inflation expectations are weighing on gold again. Oil is falling meaningfully again despite the rise in the euro. On the negative side, Road & Rail, Gaming, Steel, Oil Service, Oil Tanker, Gold and Airline shares are under meaningful pressure, falling 4.0%+. Cyclicals and Small-caps are underperforming again. Most CDS indices are surging meaningfully again today. The Euro Investment Grade CDS Index is jumping another +6.55% to 119.83 bps. The Spain, Portugal and Greece sovereign cds are soaring over +10% each today. As well, the Russia sovereign cds is surging 13.1% to 201.42 bps. I expect US stocks to trade mixed-to-lower into the close from current levels on technical selling, more shorting, forced selling, rising sovereign debt angst, increasing financial sector pessimism, more economic fear, tax hike worries and regulatory fears.


Anonymous said...

Anonymous said...

Gary said...