Thursday, April 21, 2011

Stocks Rising into Final Hour on Earnings Optimism, Technical Buying, Less Tech Sector Pessimism, Short-Covering

Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 14.68 -2.59%
  • ISE Sentiment Index 123.0 -2.38%
  • Total Put/Call .98 +2.08%
  • NYSE Arms 1.05 -28.54%
Credit Investor Angst:
  • North American Investment Grade CDS Index 93.06 +.08%
  • European Financial Sector CDS Index 90.25 +5.01%
  • Western Europe Sovereign Debt CDS Index 186.08 bps +2.20%
  • Emerging Market CDS Index 203.50 -.50%
  • 2-Year Swap Spread 18.0 +1 bp
  • TED Spread 22.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .05% unch.
  • Yield Curve 273.0 -1 bp
  • China Import Iron Ore Spot $178.90/Metric Tonne +.22%
  • Citi US Economic Surprise Index 11.60 +8.2 points
  • 10-Year TIPS Spread 2.60% -2 bps
Overseas Futures:
  • Nikkei Futures: Indicating -20 open in Japan
  • DAX Futures: Indicating +18 open in Germany
  • Higher: On gains in my Medical and Tech sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 builds on recent gains, despite US/European debt fears, emerging markets inflation worries, rising food/energy prices, Mideast unrest and Japan concerns. On the positive side, Education, Construction, Insurance, HMO, Medical Equipment, I-Banking, Computer Service, Networking, Disk Drive, Computer, Internet, Ag, Oil Service and Coal shares are especially strong, rising more than 1.0%. Cyclicals and Small-caps are outperforming again. The MS Tech Index is also trading relatively well. Copper is rising +1.01%. The Japan sovereign cds is falling -3.73% to 80.09 bps. The 10-Year Yield is falling -1 bps to 3.4%. The AAII % Bulls fell to 32.16 this week, while the % Bears fell to 30.99, which is also a positive. On the negative side, Restaurant, Homebuilding, Drug and Semi shares are under pressure, falling more than .75%. Oil is rising +.86%, the UBS-Bloomberg Ag Spot Index is rising +.87% and lumber is declining -2.81%. The US price for a gallon of gas is unch. today at $3.84/gallon. It is up .72/gallon in 65 days. The Ireland sovereign cds is climbing +3.34% to 643.51 bps and the Greece sovereign cds is gaining +6.85% to 1,422.05 bps. The Greece and Portugal sovereign cds are making new record highs again. The Ireland sovereign cds is now approaching its record. The US dollar continues to trade very poorly given the rise in eurozone debt angst. The market's resilience remains extraordinary and today's action is technically healthy ahead of a three-day weekend. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech sector pessimism, earnings optimism, buyout speculation and technical buying.

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