Tuesday, April 05, 2011

Stocks Slightly Higher into Final Hour on Buyout Speculation, Lower Energy Prices, Short-Covering

Broad Market Tone:

  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Mixed
  • Volume: Slightly Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 16.90 -3.43%
  • ISE Sentiment Index 110.0 +7.84%
  • Total Put/Call .83 -21.70%
  • NYSE Arms .81 -21.96%
Credit Investor Angst:
  • North American Investment Grade CDS Index 93.51 +.29%
  • European Financial Sector CDS Index 84.25 -.90%
  • Western Europe Sovereign Debt CDS Index 163.83 bps -.81%
  • Emerging Market CDS Index 199.34 +.32%
  • 2-Year Swap Spread 17.0 -1 bp
  • TED Spread 23.0 -3 bps
Economic Gauges:
  • 3-Month T-Bill Yield .06% +2 bps
  • Yield Curve 266.0 unch.
  • China Import Iron Ore Spot $173.90/Metric Tonne unch.
  • Citi US Economic Surprise Index +37.10 -4.0 points
  • 10-Year TIPS Spread 2.59% +4 bps
Overseas Futures:
  • Nikkei Futures: Indicating +70 open in Japan
  • DAX Futures: Indicating +35 open in Germany
  • Slightly Higher: On gains in my Medical, Retail and Biotech sector longs
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite weaker economic data, growing Mideast unrest, eurozone debt worries, more hawkish fed commentary and recent equity gains. On the positive side, Paper, Semi, Disk Drive, Biotech, Retail and Education shares are especially strong, rising 1.0%+. Small-caps are outperforming. The Ireland sovereign cds is falling -3.61% to 577.87 bps. Oil is falling -.49%. On the negative side, Airline, Road & Rail, Insurance and HMO shares are under pressure, falling more than -1.0%. The Transports are underperforming. Gold is surging +1.36% and Lumber is falling -2.55%. The 10-year yield is rising +7 bps. The US price for a gallon of gas is up +.03 today to $3.69/gallon. It is up .57/gallon in 49 days. Weekly retail sales rose +1.9% this week versus a +2.3% gain the prior week. This was the weakest showing since the week of March 2nd, 2010 and down from a +3.6% gain the week of January 4th of this year. The Portugal sovereign cds is rising +1.03% to 585.17 bps, the Russia sovereign cds is rising +2.35% to 124.35 bps and the Hungary sovereign cds is gaining +1.88% to 230.39 bps. Despite the deal in semis, tech overall isn't trading very well again, which is a big negative. I still think that the tech and financial sectors must join in the recent rally soon for it to gain much traction from current levels. Both sectors remain below their 50-day moving averages with poor leadership. Trading has become very choppy again and breadth/volume remain lackluster. Odds are increasing for a pullback in the major averages from around current levels. One of my longs, (GOOG), is under pressure today on news of a US FTC antitrust probe. This uncertainty will likely cap any gains in the shares for awhile. Longer-term, I still see meaningful upside in the shares from around current levels. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, profit-taking, technical selling, emerging market inflation fears, Mideast unrest and Japan concerns.

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