Monday, August 09, 2010

Stocks Rising into Final Hour on Technical Buying, Short-Covering, Mostly Positive Earnings Reports


Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Rising
  • Volume: Below Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 22.04 +1.38%
  • ISE Sentiment Index 134.0 +36.73%
  • Total Put/Call .82 -11.83%
  • NYSE Arms 1.12 -31.61%
Credit Investor Angst:
  • North American Investment Grade CDS Index 103.0 bps -.82%
  • European Financial Sector CDS Index 102.69 bps +1.22%
  • Western Europe Sovereign Debt CDS Index 119.66 bps -.38%
  • Emerging Market CDS Index 208.67 bps -1.22%
  • 2-Year Swap Spread 20.0 unch.
  • TED Spread 27.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .14% unch.
  • Yield Curve 228.0 -3 bps
  • China Import Iron Ore Spot $144.50/Metric Tonne unch.
  • Citi US Economic Surprise Index -33.0 -.1 point
  • 10-Year TIPS Spread 1.79% +1 bp
Overseas Futures:
  • Nikkei Futures: Indicating +63 open in Japan
  • DAX Futures: Indicating +9 open in Germany
Portfolio:
  • Higher: On gains in my Retail, Biotech and Technology long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 is trading near session highs, despite the decline in the euro and recent stock gains. On the positive side, Airline, Homebuilding, Wireless, Internet, Restaurant and Gaming stocks are especially strong, rising 1.5%+ on the day. Small-Cap shares are outperforming. (IYR) has outperformed throughout the day. Copper continues to trade well, rising another +.6%. On the negative side, Tobacco, Computer, Gold, Ag, Oil Service, Oil Tanker and Coal shares are slightly lower on the day. The 10-year yield is hovering near recent lows, which is a negative. Volume is very light today, however it is a big positive that expectations regarding any significant FOMC move tomorrow have been ratcheted down, yet stocks are at the upper end of their recent trading range. One of my longs, (VRX), is hitting another new all-time high today. While I still see substantial upside to the shares longer-term, I would wait for a pullback to purchase additional shares. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, less financial sector pessimism and mostly positive earnings reports.

No comments: